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Legacy loss drags James River to Q3 net loss

Bermuda-based James River Group Holdings Ltd has reported a third quarter 2021 net loss of $23.9 million.

That compares to net income of $26.3 million for the third quarter of 2020.

Adjusted net operating loss for the third quarter was $26.8 million, compared to adjusted net operating income of $17.4 million for the same period in 2020.

The company reported 21.3 per cent growth in Excess and Surplus Lines gross written premium and 8.7 per cent increase in E&S renewal pricing, each versus the prior year quarter, with nearly all underwriting divisions reporting positive growth and rate increases.

The segment experienced its 19th consecutive quarter of renewal rate increases, compounding to 45.9 per cent over the same period.

Net catastrophes losses were $5 million in the third quarter and related to Hurricane Ida.

Because the company purchases significant property catastrophe reinsurance, it said it does not expect any additional net catastrophe losses from events during the quarter. The losses were primarily related to the Excess Property book in the E&S segment.

As previously announced, James River said, third quarter results include a pre-tax loss of $29.6 million recognised as adverse loss and loss adjustment expense reserve development in the E&S segment.

This is associated with the loss portfolio transfer reinsurance transaction executed during the third quarter that reinsures substantially all of the legacy portfolio of commercial auto policies.

Absent the catastrophe losses, an additional $8.1 million of reinstatement premiums related to casualty treaties and the LPT impact, the combined ratio for the E&S segment would have been 83.4 per cent, which compares to 85.2 per cent in the prior year quarter, the company said.

Fronting gross written premium within the specialty admitted segment grew 11.6 per cent driven by the expansion of recently added programmes, while gross fee income increased 21.5 per cent over the prior year quarter.

Frank D'Orazio, the company’s chief executive officer, said: “With the legacy transaction executed during the third quarter, we have brought economic finality to substantially all of our commercial auto run off portfolio, allowing us to fully focus on the demonstrated strengths of our specialty insurance franchise.

“Our E&S and specialty admitted segments continue to deliver strong growth and underlying profitability. The E&S segment recorded its 19th consecutive quarter of positive rate impact, achieving a positive 14.5 per cent rate change on a year to date basis, while specialty admitted grew fee income by 21.5 per cent in the quarter as the segment continues to build scale.

“While our third quarter results were impacted by the aforementioned legacy transaction and reinsurance reinstatements, catastrophe losses stemming from Hurricane Ida and elevated prior year casualty reinsurance losses, overall macro and industry conditions remain very favourable and allow us to continue to focus on executing our corporate objectives.”

Frank D'Orazio, chief executive officer of James River Group Holdings Ltd (File photograph)

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Published November 04, 2021 at 10:20 am (Updated November 04, 2021 at 5:47 pm)

Legacy loss drags James River to Q3 net loss

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