By David Bull

March 4 - (The Insurer) - Shares in James River lost almost a third of their value in early trading in New York on Tuesday after the repositioned specialty insurer missed Wall Street earnings forecasts for the fourth quarter.

After markets closed on Monday, the company reported a $40.8 million Q4 net operating loss with a combined ratio that deteriorated by 57 percentage points to 155.1% as a result of its previously announced excess and surplus lines adverse development reinsurance cover with Enstar.

At $0.99 a share, the operating loss for the period missed consensus for a $0.46-a-share deficit.

There was also an 8.0% drop-off in gross written premium to $358.3 million, as a fall in specialty admitted of 31.7% was only partially offset by a 1.2% increase in top line at the carrier’s E&S division.

The adjusted net operating loss of $40.9 million for the quarter compared with adjusted operating income of $12.4 million in the same period of 2023.

James River said the Q4 loss was largely down to the previously announced $52.8 million of consideration paid in connection with the cover secured with Enstar’s Cavello Bay Reinsurance Limited arm, which closed on December 23.

For the full year, the consolidate combined ratio deteriorated to 117.6% from 96.5% in 2023.

In a note released after the earnings release on Monday, KBW analyst Meyer Shields said the fourth-quarter miss reflected James River falling short on its core loss and expense ratios, retained reserve development and investment income.

“We expect (James River) shares to trade down on the headline EPS miss, persistent retained adverse reserve development, and bigger-than-expected written premium decline,” he said.

Shares in the company were trading at $3.46 at 10:21 a.m. ET, down 29.4%.