JRVR James River

Brett Shirreffs Head of IR
Sarah Doran CFO
Frank D'Orazio CEO
Mark Hughes Truist
Matt Carletti JMP
Brian Meredith UBS
Cullen Johnson B. Riley
Derek Han KBW
Call transcript
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Thank you for standing by and welcome to the James River Group Holdings Third Quarter 2021 Earnings Call. [Operator Instructions] As a reminder today's program is being recorded. And now, I'd like to introduce your host for today's program, Brett Shirreffs, Head of Investor Relations. Please go ahead, sir.

Brett Shirreffs

Thank you, Jonathan. welcome conference James call. and quarter Group everyone, earnings XXXX morning, to River the third Good

intentions, that During forward-looking and differ are beliefs, materially. statements. call, uncertainties, These and the we actual statements based will which may on results various subject to are be cause making expectations, risks assumptions to current

Securities we with forward-looking Exchange made the not XX-K, River D'Orazio, have For do now Officer cautionary and undertake statements I'll Form duty forward-looking the earnings release XX-Qs, language call any the and update most of factors Executive Commission. Form in risks Frank our uncertainties, to James and reports such Chief discussion to We other regarding a over turn please the any of risk and see and yesterday's recent of statements. filings, Group.

Frank D'Orazio

year we've for you you completed morning having to organization first everyone of review a that the I and CEO. but to timing join cover moment, originally given welcome the first first call, Good for James introduction, a yesterday the again, to on Thank certainly results I pleasure at some like just this XX River plan It's to as set call. Brett. months. the of in I'd reflect progress goals my the the on the achieved quarter in of and my

management past a very new deep told two enterprise growing who management generation. directors took addition roles guidance income as framework senior us in same call which income program. business in who been first with trailing I I Board overhang have our time, Company also I eliminate my us, February, valuable are emphasize we strong the and last on strengthen E&S of primary executing to CEO, its carrier been just reserves. our with to you adding throughout run opportunity priced believe, successful priorities, pivotal said Officer, Board and this insurance and focus quarter with provided limit industry emphasize we've laser close our the fee of business playing core remained expanded the in long risk surrounding the to to bolster unit, late on the in to basis written industry experienced organization invest with team. also million fully joined has two on here and independent XX-month off our agreement added as position has without $XXX gross E&S collateralized, experience, capabilities and leader profitable approximately I've on our the and two place secondly, auto the Chief team ensure portfolio to very strong an front a growth by an and River reins And highly were organization. we I in highlighted E&S very that Claims significantly risk would my provide transfer joined the best-in-class The increases Admitted will and to the loss I of put Actuary of premiums at attractive held strong as businesses. I As September, fee Directors James rate an in time the was undoubtedly At portfolio. Chief which fronting driving in core fronting and that objectives we the are added coverage having Specialty highly the these leadership market aggregate with very in our commercial a our my unit new franchises, out When our

E&S core XX%. as well we've subsequent Over in grow dislocation quarters, rate taken the as of the market by four book increases advantage the to

more With in loss available this excess segment entire to as count we've us over last in million increased core renewal the quotes stay longer while to should be the our few GWP. each marketplace last by $XXX E&S able trend. business E&S XX% portfolio Accounts on the have nearly in year. the Rates in-force been quarters, XX% exceeding over in provide quarters last for of continue meaningfully grown has today, of opportunities than to the policy soon our during the four

quarter, our recent from that on in the around remain month of Our E&S saw we and segment partners. our volume QX business call acceleration validation I we wholesale preferred this XX.X% a market significant a in destination equity that during last grew a which our earnings slowdown a new time May of valued mentioned offering. most is for brief the

returned business momentum normal July and New volume continued June QX. to and during during that has

rate should Just soft environment with associated Concerns as today. underwriting, and social lead effect of exist importantly, hangover that discipline me current created continue that market have interest of low the and the the well into market climate XXXX. pricing continued to the macroeconomic this still hardening change, a conditions underwriting believe era inflation, impact market's

the to fee of and of XXXX. capabilities arena, the opportunities relative in no benefit recent basis the Specialty on robust $XXX grown third our gross will I up doubt almost dynamic in segment leader, than of in premium the opportunities joined be we of fronting James income this written our has E&S approximately XX% XX% will I to and XX-month what Given and we a market our by from team, was underwriting as to relationships quarter Admitted trailing million us, terms market of experienced continue see the sector. since River, a that or In more continue front franchise most an casualty the business and quarter, expert in our in have

fronting experience Growth quarter as as have decade. has we added nearly and team we've years our was the quarter, straight are new be XXXX submission that dismiss business can this due reinsurers the renewal exchange. program lumpy. take would for been us to fronting quarter. this and programs the bit I that the our downgrade renewed our in and of activity been large digits renewal our few our than do, which space results It quarter. was next is likely to A- with capable be would relationships a also produce We've a suggestion, apart of growth experienced swings this for more to very another quarter I I since in if partners programs this rating opportunities up the have program new but for prospects long-term level can hampered third a by not to and the But running premium XX-month this have was the for fronting in of both growth support newer in in slowed begun segment. an this so now still Most can strong as all note XX% underwriting largely the over business complete up nature from We believe business and absolute during results cycles. program stable set our that competitors for our would any carry not panel a our our and fourth team same and I for rating deal-driven during months, business up our bind of that line double prior-year expect in deep to from more, relationships. recent of segment top-line programs. program segment

this outlook pipeline for We deals and business my remain optimism healthy continue to and new of have intact. a

it clear Although I'm pleased bottom-line key the with want focused we to that remain a in company. our proven growth segments, make I

continues Our E&S the to attractive report combined margins in with business ratios XX%s. low very underlying

underwriting in is rates that segment. and Our at driving growing Specialty income income Admitted segment double-digit fee

I Now, that my turning referenced to second priority earlier.

key provided bring transferred run know, off cost been portfolio. that in auto in was has for transaction basis sheet removed the month-long finding were hard very all priority execute counterparty outcome. River. a you helped finality finality a to this The our us. our able the and off related is introduced distraction that leadership make supports known to QX. the The a transaction exposure on worked reserves, entire After balance As methodology economic a further change to our And solution This we're process of to a very to our legacy and fully-collateralized to with for options ultimate of a believe happen James that team to commercial to the we economic portfolio actuarial was meaningfully. I evaluate significant well strengthen legacy transaction, pleased to substantially a run

the We result return have executed benefited from a as stable a transaction. ratings outlook to of a

stabilize to result a not in our we've Moving now insurance our fabulous forward, This market for the decade, segment. businesses, my Re front quite in opportunity have and in remains business addition our over priority the frankly, standards. is focusing to that a Casualty that been met of is on

Before joined than organization, the substantially shrink recent down made from the decision to more the years XX% ago. was it's a business peak and few I its

a that indications disappointing of forward Re obvious that saw loss top-line and exposure warrant feel while this segment. More activity businesses. to the already significantly our million was QX treaties have I businesses. at the older The insurance XXXX We'll to accident reserve higher emergence higher the write. shrink U.S. the on or but emergence significantly to booking Casualty we insurance of Re's we reserves will the unprofitable during we not and in for not to prospects from that our the is treaties came more that the extremely scale most treaties $XX.X does primarily from the the calendar, increased general arrived underwritten our from committed booked become the focus reacting our I'm persistence of this when in putting better reflects QX for much QX. acceptable do fronting organization years, focus segment year. begin meaningfully course we the and be can over next action we is continue reserve segment of analyze the our the exiting reserve our to related going no the in about as bound Since increased continue largely of the the we accident consistently focus on performance The River, While take coming development Casualty in came returning our quarter quickly to at segment. reduce and strengthening U.S. three-quarters development point recent for options of largely actuarial longer the to of and we've liability investment our year and organization proven the on XXXX. future. underwriting of is to is immediate of of and to years businesses to writings our growth was than half That XXXX Nearly greater indication James is by The years.

Casualty for basis with now quarter external just XXXX are few annual reserves actuaries itself. were our on an of and the I'll estimate we held reviewed the by third-party market received. beginning Re on reserves close Our with the conditions a comments at consistent and

Our rate quarter The basis. headline to units. at and the E&S quarter year-to-date second stands third in XX.X% rate larger was some a of the increase moderation slowdown X.X% our in relative reflected on a

this of third For particularly XX% and example, of loss achieved ahead already the view rates down given quarter. quarter, second but casualty the of our rate in were XX% line the level, of attractive in trend, business a in from that nearly very in amount is excess up

line, over XXth jump the This quarter increases this in has E&S XXXX, rate increases moderation rate of terms overall significant and in rate In our I renewal rate XX% growth before compared would compounding were given that, improvements half point objectives. that third combined second the total, to and represented quarter to period saw pursue the of over significant quarter. with the rate acceleration we of casualty stable excess QX in out us in first confidence the conditions consecutive the QX segment, period. experiencing in similar Excluding also XXXX. to

Company. events absent, ratios the combined earlier, is the continue for business see be mentioned what margin expansion I producing E&S underlying a to would XX%s and As the the non-recurring quarter, across we low in

There advantage the XX.X% is of the about percentage our transaction, After of off Company, forward, to and X E&S our very in conditions. market these of and no Specialty which a very longer E&S to Admitted. from profitably take as completing X meaningfully run points, continue Overall, the June we IBNR be favorable core our has increased ample by increases both to reserves points respectively, auto XX. feel we're Going should business the and good commercial LPT E&S XX.X% to our results. current strength us ability operating opportunity in our of and burdened for in grow across

remain on equity. let stable, are me distribution focused we ratings and our to on strong call capital and Our remain and our our attractive returns deploying partners effectively embraced underwriting And the teams turn with that, over generating by Sarah.

Sarah Doran

Good morning, Frank. Thanks, everyone.

Frank's as commercial economic was a focus LPT going our loss. few to XX of quarter net some million that to well $XX.X current financial run $XX.X the of quarter Given loss comments aforementioned executed portfolio. comments a end other September, all for reported months, the bringing the This substantially by night, operating loss the we I'm we and on auto extensive of at key million a on auto discrete commercial off well the quarter, had as finality as past impacted my the items. of Last parts as

impacts will which had two the Casualty commented the also We other adverse in explain a the further Frank Reinsurance on segment. has in on moment. unique developments quarter, I already

the So X-K as signing mentioned the expense. and is with first, the to the commercial auto of claims we of conjunction is E&S, filing of majority our to unique the the quarter related in LPT, of transaction the sum impacts which in there impact

Second, of impact there $X Ida is million the cat the losses. net

small the written diversified many portfolio We has Company years, geographically property have a excess is that heavily which reinsured. for

of losses of $XX provides at such for million in reinsurance Our limit. million $X and

substantial treaty. surplus a share We from also benefit

in reinstatement the due treaties $X reason, reinsurance, the of loss net few first casualty Last, years. million experienced function in the we coverage was premiums arise. that is loss treaties of provide $X.X work on which losses losses we not million caused first Generally, have in these losses those different casualty unique, premiums such grow. by this a should reinstatement are treaty, what but of that accident free for that quarter further should had our For premiums a Reinstatement reinstatement treaties excess is of we of are. years, premium to thereafter,

excess been net rate a XX%, have net and the for as net growth million, in net quarter. is protect earned years, premium the $X.X Frank written the and ratio loss have earned quarter. year treaties of last losses the in written in combined for and these accident with year-to-date our prior $X.X consistent in three would and earned to core developed straight related LPT which XX.X%, impacts, prior E&S net current would in auto these our mentioned, casualty reduction E&S again performance a As to Absent as written Absent premium million the premiums, the the E&S the net ex-cat compared for has which premium last XX.X% grown by XX% loss about segment adjusted reinstatement year. fully premium would and commercial and in quarter year the have respectively, served improved reduce reinstatement by over X been E&S. acceleration XX.X%, E&S ratios points historical accident quarter, casualty of in to years comparable the from prior related The ratio meaningful the

for lower on taxes, was adjustments segment this to our debt fees as expense licenses, our from Re to earned. E&S our this This by certain Admitted ratio commission Specialty XX% reductions expense and the favorable to Moving and compared also last had partially benefited Casualty by we and scale XX.X% within continue higher due X ratio segments. which XX.X% We expenses, less a scale expense and Specialty premium year of served offset in to about build It last the Group the meaningfully the accruals segment lower ratio Group-wide quarter. third expense points. in Admitted sliding to bad quarter to in and quarter, quarter was

and The the income investment $XX.X returns Finally, due the quarter Net X% ratios both last well increase onto some our private X% about year respectively. and investments. We investments. prior XX%, third other was ended target from of quarter from X.X energy from leverage renewable million, and operating times to portfolio quarter. the quarter third increased of the for is and of increase our within an

back So it will that, I to with hand Frank.

Frank D'Orazio

for please up lines Thank from the open our you, Sarah. listeners. questions Operator,


[Operator Truist. Hughes Instructions] Mark Our first of the line from from comes question

Your question please.

Mark Hughes

Chief Chief -- impact Is you Officer, any to and did in the mentioned there any that the Claims Actuary Casualty reserve that new Re influence the approach way development?

Frank D'Orazio

our know, Dave joined in Chief -- No. joined Not necessarily, you our and September. retired as the Actuary this at end prior just organization of quarter, August, the

quarter, essence, has full methodology. his to relative So, change key QX relative finished In of the Re initial was Casualty completely been a a for you to not the while he not was review, saw us in with quarter he part what no review.

Mark Hughes

Okay. in that -- reinstatement that about that And the That unusual reinstatement then drove the a trigger a my that you would of have talk that bit in magnitude more the premium. little particular could that? circumstances would you loss premium, least at experience

would little be helpful. Just on a detail that more

Sarah Doran

Sure, bit can Mark. I conceptualize that It's Sarah. a to help more.

As on had them had treaties is think if And that E&S this losses in a XOL of about, in the for E&S that ran structure, better for term, years, from I year they're mentioned, treaty. that the we those casualty have lack we cetera. of many, the two I same we've different et years many both

So, we two premiums. different triggered reinstatement

then the As for mentioned, reinstatement of you premium, a I get reinstatements. pay free and number first typically you

say, and on any net But likely within losses one does kind to we're anything five accident low helps losses X% on cover focus with four would writing would of the divisions have treaties makes our or compared business. grown call a different have a have way -- volatility through be those E&S. conceptually And for these So impact priced a that fair large with, to largely in been years, financial been range triggered which when came is much, our particular import to a there of it few growth, is, as future. is of they here see the $X randomness are from our is, reinstatement not to E&S where said for premium. future they years $X balance This the same which further down to what relatively think extend would the weren't point we a things quarter factor sheet, foreseeable there we consider to here had obviously the expect growing that going the to we to plays through those we the I but the premiums is way, some in yes, million ago regard fact, million in reinstatement I both amount there XOL I protects of our

Mark Hughes

the underlying market, what what the on social little of characterization is nature industry the sort issue? Anything perhaps, a just end of this inflation, more of loss,

Frank D'Orazio

Yes. Sure.

referencing Not So, the segment. not losses unit reinstatement a large you of familiar energy there, underwriting unit. sure two are came it's that but energy how our you're the out with

did we think roughly on premium million last oilfield services. in year focused about I primarily $XX

or of limits been We to It underground mining to a limits for historically down. out underwriting profitable have of cut us, of very department has big coal, the that push underwriting the are policy business of type segment. volatility not line take has we pushed been but E&P within some Certainly, a underwriting shop. there our

more limits have roughly a out policies $X little we the should that I under less, would unit $X I of than million million, or say. of that say now, half So, write

Mark Hughes

commentary the Okay. the activity early in flow of any And business fourth in quarter? then terms

Frank D'Orazio

that I I and right. QX, mean in I we sure. say would referenced guess So, this

continued in the and terms quarter E&S in into rest but it saw well. really quarter some in and the and May, the So up right we through growth picked as that fourth of in slowdown June July, back of

in policies on is force, of small So, XX%, is numbers XX%. count up that business our up about binders initiative

to support our the removed. continue We benefit negative of strong see wholesalers, from the outlook

was particularly quite been the positive, all since stabilized. it's outlook So,


the comes question from with Carletti next of Our line Matt JMP.

please. question, Your

Matt Carletti

indications, Is top-line What back could that to we color hoping but many about, are or I deeper consistently to you've said Is there have to Re. always to -- if or and a commentary like reserve planning the shrink, study it indications considering those shrinking circle something look that's caught I book, Uber give to you're back of more isn't to are do it been kept an issues? is I'm economic you it just reinsurance, as reserve short. care going I us address prior your here take at, Casualty expect at I you Kind quarters to or some there particularly over years actuarial you forward mean because actuarial you ADC trying or was is above issue, you a starting it's commitment finality make book Re? I actuarial there finality was to the know to you been on willing QX. bring LPT in what what approach? significantly to commented possibility of back the the to get hoping of in And economic to Casualty is kind brought a a on the commitment Frank, back changing considered?

Frank D'Orazio

Matt. good question. No, a It's

So operations, terminology, it's underwriting strategic relative two-step but action, you're right, to back relative to use your to also process book. then the the a

to finish actuarial the for review segment. So our we're going

first associated Dave's to to our options, we able we're is going to portfolio, Casualty fairly that our with with than But we quarter on that exploring some especially portfolio. organization doing working Re the be now. what auto and can off value if accomplish and certainty the added but commercial the that book thoughtfully, after going I'm this to the were I'm improve again it your run particularly options to others, So, more complex be full point, open open to to

Matt Carletti

it get expect the dive the on deeper sense suspect we or reporting something with long through place. you a or like timing, that's do that on sounds to the Any than taking that -- QX numbers? side And could take would is longer

Frank D'Orazio

the quarter. expecting reserves to our complete of in the first review We're

Matt Carletti

you. Thank Great. Yes.

Frank D'Orazio

underway. is This Yes.


Meredith comes UBS. question Brian next the from of Our from line

question please. Your

Brian Meredith

here. A couple Yes. of ones Thanks.

implications have forward, winddown the tax that on reinsurance some down, The taking we type limiting a quickly. it tax to any at effect or aware be of, that it of all Just doing to is factor any need will transaction? of rate going

Sarah Doran

want We wouldn't pace on we're Brian, what's business, not drive to to think implications. and tax for the No. that business do I going right the

we many here I committed about team this out think what think kind force not be different tax full reason, and that's to can wouldn't things there's looking segment the hold of is a forward. I as going at to doing. on

Brian Meredith

Understood. tax Okay. But will rate going it forward? have an here your implication for

Sarah Doran

Yes. days Again, this, I don't seeing see not it, implication, Brian. meaningful I'm in but We're early a right.

Brian Meredith

obviously a understand cat reinsurance lot was, I what unfamiliar Can got losses happened, question, unusual? the curious, can you quarter you've you maybe great second loss so in it's that said excess River then cat describe And had just with you I'm with guess, what it property, -- maybe kind and I it in of what was protection. something you James and of so why the

Frank D'Orazio

Sure, Brian.

the was really to basis, driven our engineered the was to book our on $XX you always event. and loss in mentioned a book, our billion very excess About E&S you $XX it's level, fact small, on one heavily EP core no that It's X% X% So, than of reinsured well-diversified know, this well pretty GWP. fairly perform by as million less as property geographically, it's year been X,XXX business. to

you terms that our when how think or loss. have I evaluated we I we some We're were event. to very is, potential how think of large think performs have we very underwriting And noteworthy from about a this that's fairly going this event. conservative well unit loss in it

a for -- are where this We get into standpoint, can't based worse event our on from us. is property protection attached


from comes question the Johnson B. line Cullen next from of Riley. Our

Your please. question,

Cullen Johnson

my taking for questions. Thanks

retention move higher or fluctuation the an fronting a ratio at was that you than the in standard pretty there? that just more was to intentional Looking quarter book, quarter think

Sarah Doran

book, great and And That intentional lumpy, Cullen. certain it's over go they is as I and as at was an XX% but might going there Obviously, think characterized time. probably be don't. that depending should when that not up Frank average when come be said, there'd on deals move, XX%, to as different to a I've going to XX% feel average, to we've in whole be That's overall Yes. just said, we've points question, our stated. that on our the some but that intention you're on book, as

-- So

Cullen Johnson

Okay. we portfolio. at kind last across about Great. of loss entire mid-single digits figure roughly trends about talked Is you. I cost here? way a quarter that still then, the to that Thank And broadly think think reasonable

Frank D'Orazio

Yes. No.

versus think it, When so. feel trend. we've at Again, XX think I I the where there at good primary a that think mid-single the the a of the of time, our limits. over level, about are take right anything and $Xmillion over portfolio think digits, good about high slightly way rate a has look casualty if we the it's don't that we changed. excess kind we experienced very view to about maybe you above on last quarters, XX% that for of period


KBW. Han next of line from the Our from Derek question comes

Your question, please.

Derek Han

loss within some know year your that the that. for E&S how lot I inflation reflect development you Good about picks lines? detail, details could the was what on some in morning. doing Kind study you're hoping I on that? Thanks. the I And accident know of you but that I reserve implies social color a hoping still was Casualty but RE in provide of do consistent kind talked for average

Frank D'Orazio

Yes. Sure.

seen aspects So to inflation. insurance it. some listen, have I some exposure certainly social all of companies We've think

phenomenon. also book, the the like probably about the most. if overall, business, talking XXXX-XXXX we're I based than think, insulated inflation that SME industry think on focus you're talks a think, our on about I more E&S I little social bit

kind I it that's fine. our to got this last on a to at the five baked it think take bit think close pretty to factored I some is up you've relative But We ticking that something picks. little a the history. years, basis extent, been look into of and a we're over loss seven has your and of loss exposure obviously into overall views

Derek Han

I any competition and business. launches know get you've then second carriers know kind peers? seeing And I the are were growth my in into start-ups past on fronting there good and But so. other or from of you the pretty some recent increased question is space? year had the there

Frank D'Orazio

Yes. No.

as quarter. programs suggest I got XX% space, I submission we've been would QX six in fronting now, last XX the and for is particularly months bullish various And in think I takes like my space. you're At over Falls good. There the new this Lake leader up it very entrants stages of very time, actually the been in prepared said say some activity many to strong, pipeline right have We've strong segment. right. onboard I point a is is about actually is would considered program, for months, has growth new any program. a the our a prospects diligence. three bound several oftentimes we're the as but in to comments, during given

lead-time the there a more has of notice the expect a I another provision And onboard is more over book We quarter. roll given two to on a we're to fourth a and because got cancellation just incumbent. bit it's a think little that notice of

prospects the growth So again, for excited about in very segment. this I'm


session of hand This you. question-and-answer the remarks. Frank conclude any for I'd to like does back today's program Thank the further to program.

Frank D'Orazio

time thank And staff of wrap for the appreciation your with make continuing this to to questions want next profitably day. and Thank results. I by the to continue on this our insurance to operator. our for call early year our you, Company. Thank look discuss reiterating their we River you for corporate the up U.S. to James stronger received morning. the you. QX to our and more forward listening I'll on and Okay. a my profitable I ability everyone deliver grow call enjoy today, segments to while speaking again objectives


ladies participation today's for you, program. and conference. Thank conclude gentlemen, your in This does the

You disconnect. Good may now day.