Exhibit 99.1
FOR IMMEDIATE RELEASE Contact: Michael Oakes
- --------------------- Chief Financial Officer
(919) 883-4171
JAMES RIVER GROUP REPORTS FIRST QUARTER NET INCOME OF $10.1 MILLION OR $0.63
PER DILUTED SHARE
------------------------------
ACHIEVES AN 18.5% ANNUALIZED RETURN ON AVERAGE EQUITY AND 17.5% GROWTH IN
GROSS WRITTEN PREMIUMS
CHAPEL HILL, North Carolina - (April 30, 2007) - James River Group, Inc.
(NASDAQ: JRVR) today announced financial results for the first quarter ended
March 31, 2007.
Highlights for the first quarter include:
o Net income in 2007 of $10.1 million, or $0.63 per diluted share
compared to net income of $6.8 million, or $0.43 per diluted share
in the first quarter of 2006;
o An annualized return on average stockholders' equity of 18.5%;
o A combined ratio of 83.3% compared to 85.8% for the first quarter of
the prior year;
o An underwriting profit of $10.1 million compared to $6.8 million in
the first quarter of the prior year; and
o Overall growth in gross written premiums of 17.5% to $80.1 million
in the quarter -- from $68.2 million in the first quarter of 2006.
Growth in casualty lines was 21.0% to $73.4 million from $60.6
million in the first quarter of 2006. Gross written premiums in
property lines decreased from $7.5 million to $6.7 million.
Earnings per diluted share for the first quarter of 2007 were $0.63 compared to
$0.43 for the same period in 2006. Diluted shares outstanding were 16.2 million
at March 31, 2007 and exceeded those at March 31, 2006 of 15.9 million. Results
for the quarter ended March 31, 2007 include net after-tax favorable reserve
development on prior accident years of direct business written by the Company of
$1.9 million. In the prior year, the favorable reserve development was $1.5
million.
For the quarter ended March 31, 2007, the Excess and Surplus Insurance segment
wrote $65.5 million in gross written premiums reflecting a 13.3% increase over
the $57.8 million written in the same period in 2006. Casualty gross written
premiums, which represent the largest portion of the premiums written by the
Excess and Surplus Insurance segment, totaled $58.8 million for the quarter, a
16.9% increase over the $50.2 million written in the same period in 2006.
The Excess and Surplus Insurance segment's combined ratio was 82.8% and 79.5%
for the quarter ended March 31, 2007 and 2006, respectively.
The Workers' Compensation Insurance segment wrote $14.6 million in gross written
premiums for the quarter ended March 31, 2007 for a 40.5% increase over the
$10.4 million written in the same period in 2006. The Workers' Compensation
Insurance segment's combined ratio was 77.9% for the first quarter of 2007 and
benefited from both low claims frequency and low claims severity during the
quarter. The Workers' Compensation Insurance segment loss ratio of 49.5%
included 7.2 points of favorable reserve development on prior accident years of
direct business written by the Company. The combined ratio for the Workers'
Compensation Insurance segment was 107.6% for the same period in the prior year.
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300 Meadowmont Village Circle, Suite 333 o Chapel Hill, North Carolina 27517
o 919.883.4171 o
Fax 919.883.4177
www.james-river-group.com
JRVR Announces First Quarter Results
Page 2
April 30, 2007
J. Adam Abram, President and Chief Executive Officer, said, "We are pleased to
report these good results to our shareholders. Each of our underwriting segments
continued to produce excellent results, our annualized return on average equity
of 18.5% was attractive and our book value per share increased to $14.76 during
the quarter even after our first quarterly dividend of $0.15 per share."
Mr. Abram continued, "Our management teams found opportunities to grow each of
our segments. Our Workers' Compensation Insurance segment had a great quarter
with substantial premium growth and low claims costs. Our Excess and Surplus
Insurance segment also grew significantly even in the face of increasing
competition. We believe our low expense ratio business model is very powerful in
this environment."
"Looking forward to the balance of 2007," Mr. Abram added, "we anticipate our
gross written premiums will increase between 10% and 20% over the prior year and
that our return on average equity will be 15% or greater."
James River Group will hold a conference call to discuss this press release
tomorrow, May 1, 2007, at 9:00 a.m. Eastern time. Investors may access the
conference call via internet by going to www.james-river-group.com and clicking
on the Investor Relations link, or by going to www.earnings.com. Please visit
the website at least 15 minutes early to register, download and install any
necessary audio software. A replay will be available shortly after the call for
seven days at (617) 801-6888 (passcode: 22688670) and at the websites referenced
above.
Certain matters discussed in this release are forward-looking statements,
including but not limited to the Company's outlook for 2007, expected growth in
gross written premiums and return on average equity. Such statements involve
risks and uncertainties that could cause actual results to differ materially
from those in the forward-looking statements. Potential risks and uncertainties
include the accuracy of assumptions underlying the Company's outlook and other
risks described in the Company's filings with the Securities and Exchange
Commission, including the Company's Form 10-K for the fiscal year ended December
31, 2006. These forward-looking statements represent the Company's judgment as
of the date of this release. The Company disclaims any intent or obligation to
update these forward-looking statements.
James River Group, Inc. is an insurance holding company that owns and manages
specialty property/casualty insurance companies with the objective of
consistently earning underwriting profits. Each of the Company's two insurance
company subsidiaries is rated "A-" (Excellent) by A.M. Best Company. Founded in
September 2002, the Company wrote its first policy in July 2003 and currently
underwrites in two specialty areas: excess and surplus lines in 48 states and
the District of Columbia; and workers' compensation, primarily for the
residential construction industry in North Carolina and, in 2007, Virginia.
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JRVR Announces First Quarter Results
Page 3
April 30, 2007
James River Group, Inc. and Subsidiaries
Summarized Consolidated Balance Sheet Data
(Unaudited)
March 31, December 31,
2007 2006
----------------- -----------------
($ in thousands, except for share
data)
ASSETS
Investments available-for-sale, at fair value:
Fixed maturity securities $ 519,122 $ 486,016
Equity securities 17,080 8,703
----------------- -----------------
Total investments 536,202 494,719
Cash and cash equivalents 33,281 40,319
Accrued investment income 5,580 5,471
Premiums receivable and agents' balances 34,128 34,862
Reinsurance recoverable on unpaid losses 91,926 90,495
Reinsurance recoverable on paid losses 3,522 7,041
Deferred policy acquisition costs 15,730 15,005
Other assets 54,107 53,809
----------------- -----------------
Total assets $ 774,476 $ 741,721
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Reserve for losses and loss adjustment expenses $ 324,356 $ 300,294
Unearned premiums 133,690 131,286
Senior debt 15,000 15,000
Junior subordinated debt 43,300 43,300
Funds held 13,778 15,567
Other liabilities 20,930 21,882
----------------- -----------------
Total liabilities 551,054 527,329
Total stockholders' equity 223,422 214,392
----------------- -----------------
Total liabilities and stockholders' equity $ 774,476 $ 741,721
================= =================
Debt to total capitalization ratio 20.7% 21.4%
Book value per share including accumulated other
comprehensive loss $ 14.76 $ 14.18
Book value per share excluding accumulated other
comprehensive loss $ 14.81 $ 14.27
Common shares outstanding 15,136,208 15,117,308
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JRVR Announces First Quarter Results
Page 4
April 30, 2007
James River Group, Inc. and Subsidiaries
Summarized Consolidated Income Statement Data
(Unaudited)
Three Months Ended
March 31,
-----------------------------------
2007 2006
------------------ ---------------
($ in thousands, except for share
data)
REVENUES
Gross written premiums $ 80,088 $ 68,165
================== ===============
Net written premiums $ 63,870 $ 53,688
================== ===============
Net earned premiums $ 60,249 $ 48,089
Net investment income 5,771 3,993
Net realized investment losses (8) (35)
Other income 70 42
------------------ ---------------
Total revenues 66,082 52,089
EXPENSES
Losses and loss adjustment expenses 34,268 29,217
Other operating expenses 15,909 12,025
Interest expense 1,284 777
------------------ ---------------
Total expenses 51,461 42,019
------------------ ---------------
Income before taxes 14,621 10,070
Federal income tax expense 4,494 3,241
------------------ ---------------
NET INCOME $ 10,127 $ 6,829
================== ===============
EARNINGS PER SHARE
Basic $ 0.67 $ 0.45
================== ===============
Diluted $ 0.63 $ 0.43
================== ===============
Weighted-average common shares outstanding:
Basic 15,124,368 15,075,771
================== ===============
Diluted 16,156,456 15,894,193
================== ===============
Cash dividends declared per common $ 0.15 $ 0.00
share
================== ===============
Ratios:
Loss ratio 56.9% 60.8%
Expense ratio 26.4% 25.0%
Combined ratio 83.3% 85.8%
Annualized return on average
stockholders' equity 18.5% 15.3%
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JRVR Announces First Quarter Results
Page 5
April 30, 2007
James River Group, Inc. and Subsidiaries
Segment Results
EXCESS AND SURPLUS INSURANCE
Three Months Ended
March 31,
---------------------------
2007 2006
-------------- -----------
($ in thousands)
Gross written premiums $ 65,479 $ 57,768
============== ===========
Net written premiums $ 49,623 $ 44,576
============== ===========
Net earned premiums $ 47,389 $ 39,584
Losses and loss adjustment expenses 27,903 22,367
Underwriting expenses 11,314 9,086
-------------- -----------
Underwriting profit (a) $ 8,172 $ 8,131
============== ===========
Ratios:
Loss ratio 58.9% 56.5%
Expense ratio 23.9% 23.0%
Combined ratio 82.8% 79.5%
(a) See "Reconciliation of Non-GAAP Measures."
Within the Excess and Surplus Insurance segment, results by major line of
business are as follows:
Three Months Ended
March 31,
-----------------------------
2007 2006
-------------- -------------
($ in thousands)
CASUALTY LINES
Gross written premiums $ 58,757 $ 50,249
Net earned premiums $ 46,886 $ 37,702
Losses and loss adjustment expenses $ 26,982 $ 21,309
Loss ratio 57.5% 56.5%
PROPERTY LINES
Gross written premiums $ 6,722 $ 7,519
Net earned premiums $ 503 $ 1,882
Losses and loss adjustment expenses $ 921 $ 1,058
Loss ratio 183.1% 56.2%
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JRVR Announces First Quarter Results
Page 6
April 30, 2007
WORKERS' COMPENSATION INSURANCE
Three Months Ended
March 31,
----------------------------------
2007 2006
----------------- ---------------
($ in thousands)
Gross written premiums $ 14,609 $ 10,397
================= ===============
Net written premiums $ 14,247 $ 9,112
================= ===============
Net earned premiums $ 12,860 $ 8,505
Losses and loss adjustment expenses 6,365 6,850
Underwriting expenses 3,650 2,298
----------------- ---------------
Underwriting profit (loss) (a) $ 2,845 $ (643)
================= ===============
Ratios:
Loss ratio 49.5% 80.5%
Expense ratio 28.4% 27.0%
Combined ratio 77.9% 107.6%
(a) See "Reconciliation of Non-GAAP Measures."
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JRVR Announces First Quarter Results
Page 7
April 30, 2007
RECONCILIATION OF NON-GAAP MEASURES
The following table reconciles the underwriting profit (loss) by individual
insurance segment and of the whole Company to consolidated income before taxes.
We believe that these measures are useful to investors in evaluating the
performance of our Company and its insurance segments because our objective is
to consistently earn underwriting profits. We evaluate the performance of our
insurance segments and allocate resources based primarily on underwriting profit
(loss) of insurance segments. Our definition of underwriting profit (loss) of
insurance segments and underwriting profit (loss) may not be comparable to that
of other companies.
Three Months Ended
March 31,
-----------------------------
2007 2006
-------------- -------------
(in thousands)
Underwriting profit (loss) of the insurance segments:
Excess and Surplus Insurance $ 8,172 $ 8,131
Workers' Compensation Insurance 2,845 (643)
-------------- -------------
Total underwriting profit of insurance segments 11,017 7,488
Other operating expenses of the Corporate and
Other segment (945) (641)
-------------- -------------
Underwriting profit 10,072 6,847
Net investment income 5,771 3,993
Net realized investment losses (8) (35)
Other income 70 42
Interest expense (1,284) (777)
-------------- -------------
Consolidated income before taxes $ 14,621 $ 10,070
============== =============
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