James River Group reports $103.5m loss
James River Group Holdings Ltd, the Bermudian-based insurance holding company, has reported a net loss of $103.5 million, or $3.37 per diluted share, in the first quarter.
That compares with a net loss of $36.8 million, or $3.54 per share, for the same period a year ago.
Adjusted net operating loss for the first quarter was $108.8 million, compared to adjusted net operating income of $15.4 million for the same period in 2020.
The company reported 35.6 per cent growth in core, excluding commercial auto, excess and surplus lines gross written premium and a 14.6 per cent increase in E&S renewal pricing, each versus the prior year quarter.
This renewal rate increase is ahead of that of the prior year quarter. Core E&S gross written premium has grown 85.7 per cent since the first quarter of 2019.
James River said fronting business within the specialty admitted segment “grew meaningfully as recently added programmes continued to mature and expand”. Segment GWP grew 23.6 per cent and fee income 21.8 per cent, each versus the prior year quarter.
However, the company said there was $168.7 million of unfavourable development in the E&S segment, inclusive of $170 million of unfavourable development in commercial auto, primarily driven by a previously cancelled account that has been in runoff since 2019.
The company reported gross written premium of $373.3 million.
The group combined ratio was 199.2 per cent versus 100.6 per cent in the prior year quarter.
Net investment income for the first quarter was $15.1 million, which compares to $20.8 million for the same period in 2020. The decrease was principally caused by lower investment income from restricted cash due to a decline in short term investment yields, and lower investment income from the company’s bank loan portfolio resulting from a smaller portfolio and lower investment yields.
The company’s board of directors has declared a cash dividend of 30 cents per common share, payable on June 30 to all shareholders of record on June 14.
Frank D’Orazio, the company’s chief executive officer, said: “During the quarter, we continued to experience higher than expected reported losses in our large commercial auto account in runoff.
“In response, we meaningfully changed our actuarial methodology, resulting in a material strengthening of reserves. We believe this overhang has been eliminated, and that we are now fully able to focus on our prospective business and what continues to be a historically strong E&S marketplace.
“Core E&S gross written premiums increased 35.6 per cent this quarter compared to the same period a year ago, and submission volume remains strong. We benefited from a 14.6 per cent increase in E&S renewal rates, our 17th consecutive quarter in which E&S rates have increased. The compounded annual aggregated rate increase in our core E&S renewal book has been 36.4 per cent over those 17 quarters.
“The fronting business of our specialty admitted insurance segment continues to grow meaningfully, as segment premium increased by 23.6 per cent and fee income increased by 21.8 per cent during the quarter. Our franchise is well positioned for future success.”
James River also announced that it has priced the previously announced underwritten public offering of 5.65 million of its common shares at a price to the public of $31 per share, or an aggregate of $175.15 million.
The company said it expects to use the net proceeds from the offering for general corporate purposes. The offering is expected to close on May 10.
James River owns and operates a group of specialty insurance and reinsurance companies, including Bermudian-based JRG Reinsurance Company Ltd, which was founded in 2007.
The company operates in three specialty property-casualty insurance and reinsurance segments: excess and surplus lines, specialty admitted insurance and casualty reinsurance.
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