• Net Investment Income: $93.1 million, a 10.8% increase over 2023.
• E&S Accident Year Combined Ratio: 91.8% for 2024; 89.3% excluding legacy structure purchases.
• E&S Accident Year Loss Ratio: 64.3%, 2.4 points higher than the previous year.
• Positive Renewal Rate Change: 9% in 2024, consistent with 2023.
• E&S Business Growth: 2% for Q4; 11.2% excluding excess casualty.
• Reserve Increase: $38.4 million for the quarter, $8.9 million on a net basis.
• Specialty Admitted Combined Ratio: 95.3% for Q4; 92.2% for the full year.
• Underwriting Profit Growth: 68.6% over the prior year for Specialty Admitted.
• Expense Ratio Improvement: From 19.6% in 2023 to 14.4% in 2024 for Specialty Admitted.
• Gross Premiums Growth: 8.3% for Specialty Admitted in 2024.
• Adjusted Net Operating Loss: $40.8 million or $0.99 per share for Q4.
• Net Loss from Continuing Operations: $92.7 million or $2.25 per share for Q4.
• Top Up Adverse Development Cover Payment: $52.8 million.
• Deemed Dividend: $27 million from Series A preferred shares amendment.
• Net Investment Income for Q4: $22 million.
• Operating Return on Tangible Common Equity Guidance for 2025: Mid-teens.

• Warning! GuruFocus has detected 3 Warning Signs with JRVR.

Release Date: March 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• James River Group Holdings Ltd (NASDAQ:JRVR) successfully executed several transactions and initiatives, including the divestiture of its Bermuda reinsurance operation, positioning the company for future growth.
• The investment portfolio performed well, generating $93.1 million of net investment income, a 10.8% increase over 2023.
• The company reported a positive renewal rate change of 9% in 2024, maintaining strong market momentum.
• Submission growth reached record highs, with significant increases in manufacturers, contractors, and general casualty.
• The Specialty Admitted segment achieved a combined ratio of 95.3% in Q4 and 92.2% for the full year, with underwriting profit growth of 68.6% over the prior year.

Negative Points

• James River Group Holdings Ltd (NASDAQ:JRVR) reported an adjusted net operating loss of $40.8 million for the fourth quarter, largely due to retroactive reinsurance transactions.
• The company experienced a net loss from continuing operations available to common shareholders of $92.7 million.
• The accident year combined ratio for the E&S segment was 91.8%, with a loss ratio of 64.3%, reflecting a cautious approach.
• The year-end increase in reserves for the E&S segment was driven by higher severity and frequency in certain segments, particularly in Florida.
• The deemed dividend resulting from the amendment to the Series A preferred shares reduced shareholders' equity by $27 million.

Q & A Highlights

Q: Can you provide insights on the submission growth and competitive dynamics for 2025? A: Frank D'Orazio, CEO, explained that they observed a 9% submission growth in Q4 2024, with significant increases in divisions like sports and entertainment, environmental, and general casualty. Excluding the excess casualty division, growth would have been 11.2%. The conclusion of their strategic review and reaffirmation of their rating should provide additional tailwinds into 2025. Competition remains strong, particularly in the property market, but overall dynamics haven't changed significantly from 2024.

Q: How are you approaching loss picks for 2025, especially in excess and general casualty? A: Frank D'Orazio noted that they have adopted a slightly more conservative approach, with loss picks slightly higher across the portfolio, driven by increases in excess and general casualty. Overall, they project the loss trend to remain in the high single-digit range, with some divisions in the mid-single digits and others in the low double digits.

Q: What impact did the retroactive reinsurance structures have on your financials? A: Sarah Doran, CFO, explained that the $52.8 million payment for the top-up adverse development cover reduced net written and earned premium, affecting the loss and expense ratios. Without these impacts, the E&S segment would have had an 89.3% accident year combined ratio, compared to the reported 115.1%. The Group accident year combined ratio would have been 94.9% instead of 117.6%.

Q: Can you elaborate on the deemed dividend and its impact on financials? A: Sarah Doran clarified that the deemed dividend resulted from changes to Series A preferred shares, which increased their value by $27 million. This accounting adjustment reduced shareholders' equity by the same amount, impacting tangible common equity by about $0.60 per share and net income to common shareholders. However, it did not affect underwriting capital.

Q: What are your expectations for 2025 in terms of operating return and reserve position? A: Sarah Doran stated that they expect to generate a mid-teen operating return on tangible common equity in 2025, supported by a similar accident year loss ratio as 2024. They have $116.2 million of aggregate limit available for future losses, providing significant comfort with their reserve position, which they believe is as strong as it has been in years.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.