Exhibit 99.1
JAMES RIVER GROUP REPORTS FIRST QUARTER 2006 NET INCOME OF $6.8 MILLION OR
$0.43 PER DILUTED SHARE
Gross Written Premiums Increase 45.0% Over the First Quarter of 2005
CHAPEL HILL, N.C., May 3 /PRNewswire-FirstCall/ -- James River Group, Inc.
(Nasdaq: JRVR) today announced financial results for the quarter ended March 31,
2006. Highlights for the first quarter include:
- Net income for the first quarter of 2006 of $6.8 million compared to
net income of $4.6 million for the first quarter of 2005;
- Overall combined ratio of 85.8%;
- 45.0% growth in gross written premiums to $68.2 million from $47.0
million in the first quarter of 2005;
- Annualized return on stockholders' equity of 15.3%; and - Favorable
development on prior years' reserves of $986,000 after tax.
Earnings per diluted share for the first quarter of 2006 were $0.43
compared to earnings per diluted share of $0.46 for the first quarter of 2005.
Net income for the first quarter of 2006 included $145,000 of after-tax costs
associated with the expensing of stock options in accordance with FASB Statement
123(R) which the Company adopted on January 1, 2006. Weighted- average diluted
shares outstanding for the first quarter of 2006 were 15,894,193 compared to
10,113,230 in the first quarter of 2005. Weighted- average diluted shares
outstanding for the first quarter of 2006 exceeded the weighted-average diluted
shares outstanding for the first quarter of 2005 principally as a result of
shares issued in the Company's initial public offering in August 2005.
For the first quarter, the Excess and Surplus Insurance segment wrote $57.8
million in gross written premiums reflecting a 38.3% increase over the $41.8
million in gross written premiums written in the first quarter of 2005. The
Excess and Surplus Insurance segment's combined ratio was 79.5% for the first
quarter of 2006.
The Workers' Compensation Insurance segment wrote $10.4 million in gross
written premiums in the first quarter of 2006 compared to $5.3 million in the
first quarter of 2005, an increase of 98.0%. The Workers' Compensation Insurance
segment's combined ratio was 107.6% for the quarter. The underwriting loss in
the Workers' Compensation Insurance segment was driven by uncharacteristically
high loss activity in the quarter and significantly increased costs from the
Company's allocation of the involuntary state workers' compensation pool's
operating results.
J. Adam Abram, President and Chief Executive Officer, said, "Our premium
growth remains strong and pricing across our business remains attractive. We
believe we have significant opportunities for profitable growth. We continue to
make progress in settling our losses from the 2005 hurricanes and saw little
change in our estimated cost of those events during the first quarter. We have
also significantly reduced our property exposure going into the 2006 hurricane
season. For 2006, we continue to anticipate achieving an annual return on
average equity of at least 15% and writing at a combined ratio of between 80%
and 90%. We also expect growth in gross written premiums of between 20% and 30%
for 2006."
Abram added, "We are disappointed to report an underwriting loss in our
Workers' Compensation Insurance segment for the quarter. Nonetheless, we expect
that our Workers' Compensation Insurance segment will earn an underwriting
profit for the year."
James River Group will hold a conference call to discuss this press release
tomorrow, May 4, 2006, at 9:00 a.m. Eastern time. Investors may access the
conference call through the Internet by going to
http://www.james-river-group.com and clicking on the Investor Relations link, or
by going to http://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 and through the end of business
on May 11, 2006, at (617) 801-6888 (passcode: 42183175) and at the websites
referenced above.
Certain matters discussed in this release are forward-looking statements,
including but not limited to the Company's belief as to the adequacy of its
reserves, opportunities for profitable growth, exposure to future hurricane
related losses, and its expectations of its operating results for 2006. 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, the accuracy of its assumptions underlying its catastrophe model,
actual losses incurred by policyholders in hurricanes that have occurred and
that will occur 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, 2005. 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.
James River Group, Inc. and Subsidiaries
Summarized Consolidated Balance Sheet Data
(Unaudited)
March 31, December 31,
2006 2005
-------------- --------------
(dollars in thousands, except
share data)
Assets
Investments:
Fixed maturity securities
available-for-sale, at fair value $ 383,941 $ 339,512
Total investments 383,941 339,512
Cash and cash equivalents 48,961 41,029
Accrued investment income 4,063 3,988
Premiums receivable and agents' balances 27,245 32,521
Reinsurance recoverable on unpaid losses 106,031 110,514
Reinsurance recoverable on paid losses 5,421 11,544
Deferred policy acquisition costs 15,318 13,899
Other assets 45,964 44,037
Total assets $ 636,944 $ 597,044
Liabilities and stockholders' equity
Reserve for losses and loss adjustment
expenses $ 249,358 $ 226,493
Unearned premiums 121,176 115,765
Senior debt 15,000 15,000
Junior subordinated debt 22,681 22,681
Funds held 19,248 21,992
Other liabilities 28,937 18,958
Total liabilities 456,400 420,889
Total stockholders' equity 180,544 176,155
Total liabilities and stockholders'
equity $ 636,944 $ 597,044
Debt to total capitalization ratio 17.3% 17.6%
Book value per share including
accumulated other comprehensive loss $ 11.97 $ 11.69
Book value per share excluding
accumulated other comprehensive loss $ 12.38 $ 11.91
Common shares outstanding 15,087,308 15,070,053
James River Group, Inc. and Subsidiaries
Summarized Consolidated Income Statement Data
(Unaudited)
Three Months Ended
March 31,
--------------------------------
2006 2005
-------------- --------------
(dollars in thousands, except
share data)
Revenues
Gross written premiums $ 68,165 $ 47,020
Net written premiums $ 53,688 $ 30,990
Net earned premiums $ 48,089 $ 24,832
Net investment income 3,993 1,745
Realized investment losses (35) (25)
Other income 42 45
Total revenues 52,089 26,597
Expenses
Losses and loss adjustment expenses 29,217 13,394
Other operating expenses 12,025 5,693
Interest expense 777 588
Total expenses 42,019 19,675
Income before taxes 10,070 6,922
Federal income tax expense 3,241 2,316
Net income $ 6,829 $ 4,606
Earnings per share:
Basic $ 0.45 $ 342,485.20
Diluted $ 0.43 $ 0.46
Weighted-average common shares outstanding:
Basic 15,075,771 10
Diluted 15,894,193 10,113,230
Ratios:
Loss ratio 60.8% 53.9%
Expense ratio 25.0% 22.9%
Combined ratio 85.8% 76.9%
Annualized return on average
stockholders' equity 15.3% 22.5%
James River Group, Inc. and Subsidiaries
Segment Results
Excess and Surplus Insurance
Three Months Ended
March 31,
--------------------------------
2006 2005
-------------- --------------
(dollars in thousands)
Gross written premiums $ 57,768 $ 41,769
Net written premiums $ 44,576 $ 26,902
Net earned premiums $ 39,584 $ 20,832
Losses and loss adjustment expenses 22,367 11,317
Underwriting expenses 9,086 3,873
Underwriting profit(1) $ 8,131 $ 5,642
Ratios:
Loss ratio 56.5% 54.3%
Expense ratio 23.0% 18.6%
Combined ratio 79.5% 72.9%
(1) See "Reconciliation of Non-GAAP Measures" on tables below.
Within the Excess and Surplus Insurance segment, results by major line of
business are as follows:
Three Months Ended
March 31,
-------------------------------
2006 2005
-------------- -------------
(dollars in thousands)
Casualty Lines
Net earned premiums $ 37,702 $ 19,675
Losses and loss adjustment expenses $ 21,309 $ 12,390
Loss ratio 56.5% 63.0%
Property Lines
Net earned premiums $ 1,882 $ 1,157
Losses and loss adjustment expenses $ 1,058 $ (1,073)
Loss ratio 56.2% (92.7)%
Workers' Compensation Insurance
Three Months Ended
March 31,
--------------------------------
2006 2005
-------------- --------------
(dollars in thousands)
Gross written premiums $ 10,397 $ 5,251
Net written premiums $ 9,112 $ 4,088
Net earned premiums $ 8,505 4,000
Losses and loss adjustment expenses 6,850 2,077
Underwriting expenses 2,298 1,422
Underwriting (loss) profit(1) $ (643) $ 501
Ratios:
Loss ratio 80.5% 51.9%
Expense ratio 27.0% 35.6%
Combined ratio 107.6% 87.5%
(1) See "Reconciliation of Non-GAAP Measures" on tables below.
Reconciliation of Non-GAAP Measures
The following table reconciles the underwriting profit (loss) of the
insurance segments by individual segment to consolidated income before taxes.
Our definition of underwriting profit (loss) may not be comparable to the
definition of underwriting profit (loss) for other companies. We evaluate the
performance of our insurance segments and allocate resources based primarily on
underwriting profit (loss) of insurance segments. We believe that this is a
useful measure for investors in evaluating the performance of our insurance
segments because our objective is to consistently earn underwriting profits.
Three Months Ended
March 31,
--------------------------------
2006 2005
-------------- --------------
(in thousands)
Underwriting profit (loss) of the
insurance segments:
Excess and Surplus Insurance segment $ 8,131 $ 5,642
Workers' Compensation Insurance segment (643) 501
Total underwriting profit of insurance
segments 7,488 6,143
Net investment income 3,993 1,745
Realized investment losses (35) (25)
Other income 42 45
Other operating expenses of the Corporate
and Other segment (641) (398)
Interest expense (777) (588)
Consolidated income before taxes $ 10,070 $ 6,922
SOURCE James River Group, Inc.
-0- 05/03/2006
/CONTACT: Michael Oakes, Chief Financial Officer of James River Group,
Inc., +1-919-883-4171/
/Web site: http://www.james-river-group.com/
(JRVR)