Exhibit 99.1
JAMES RIVER GROUP REPORTS SECOND QUARTER NET INCOME OF
$8.6 MILLION OR $0.53 PER DILUTED SHARE
Gross Written Premiums for the Second Quarter Increase
29.1% Over the Prior Year
CHAPEL HILL, N.C., Aug. 2 /PRNewswire-FirstCall/ -- James River Group, Inc.
(Nasdaq: JRVR) today announced financial results for the quarter ended June 30,
2006. Highlights for the second quarter and year-to-date include:
* Net income for the second quarter of 2006 of $8.6 million compared to
net income of $4.7 million for the second quarter of 2005 ($15.4
million for the six months ended June 30, 2006 compared to $9.3
million for the same period in 2005);
* Overall combined ratio of 82.9% for the second quarter (84.3%
year-to-date);
* Underwriting profit grew 59.8% for the second quarter of 2006 (from
$5.6 million in 2005 to $9.0 million in 2006) and 39.3% for the six
month period (from $11.4 million in 2005 to $15.9 million in 2006);
* 29.1% growth in gross written premiums to $74.6 million in the second
quarter of 2006 from $57.8 million in the second quarter of 2005 (on a
year-to-date basis, a 36.2% increase to $142.8 million from
$104.8 million);
* Annualized return on average stockholders' equity of 18.6% for the
second quarter and 17.0% on a year-to-date basis through June 30,
2006; and
* Favorable development on prior years' reserves for direct business
during the second quarter of $1.3 million after tax ($2.8 million
after-tax on a year-to-date basis).
Earnings per diluted share for the second quarter of 2006 were $0.53
compared to earnings per diluted share of $0.46 for the second quarter of 2005.
Earnings per diluted share for the first six months of 2006 were $0.96 compared
to earnings per diluted share of $0.91 for the same period in 2005.
Weighted-average diluted shares outstanding for the second quarter of 2006 were
16.0 million (15.9 million on a year-to-date basis) compared to 10.2 million for
both the first six months and the second quarter of 2005. Weighted-average
diluted shares outstanding for 2006 exceeded the weighted-average diluted shares
outstanding for the prior year principally as a result of shares issued in the
Company's initial public offering in August 2005.
For the quarter ended June 30, 2006, the Excess and Surplus Insurance
segment wrote $63.8 million in gross written premiums reflecting a 29.0%
increase over the $49.5 million in gross written premiums written in the same
period in 2005. For the six months ended June 30, 2006, this segment wrote
$121.6 million in gross written premiums reflecting a 33.2% increase over the
$91.2 million in gross written premiums written in the same period in 2005. The
Excess and Surplus Insurance segment's combined ratio was 77.5% and 78.4% for
the quarter and six months ended June 30, 2006, respectively.
The Workers' Compensation Insurance segment wrote $10.8 million in gross
written premiums in the quarter ended June 30, 2006 for a 30.2% increase over
the prior year's $8.3 million in gross written premiums. For the six months
ended June 30, 2006, this segment wrote $21.2 million in gross written premiums
for a 56.4% increase over the prior year's $13.6 million in gross written
premiums. The Workers' Compensation Insurance segment's combined ratio was 95.6%
for the quarter and was 101.3% on a year-to-date basis. The year-to-date
underwriting loss for the Workers' Compensation Insurance segment of $0.2
million was driven by $0.8 million, or 4.4 points on the combined ratio, in
costs allocated from the North Carolina involuntary workers' compensation pool's
operating results.
J. Adam Abram, President and Chief Executive Officer, said, "We are pleased
with our results for the quarter. Each of our subsidiaries grew substantially
and earned solid underwriting profits. 2006 promises to be a very good year; we
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."
James River Group will hold a conference call to discuss this press release
tomorrow, August 3, 2006, at 9:00 a.m. Eastern time. Investors may access the
conference call through the 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
and through the end of business on August 10, 2006, at (617) 801-6888 (passcode:
77071799) and at the websites referenced above.
Certain matters discussed in this release are forward-looking statements,
including but not limited to the Company's 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 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)
June 30, December 31,
2006 2005
------------ ------------
($ in thousands except for
share data)
Assets
Investments:
Fixed maturity securities available for sale,
at fair value $ 433,410 $ 339,512
Cash and cash equivalents 31,766 41,029
Accrued investment income 4,878 3,988
Premiums receivable and agents' balances 28,695 32,521
Reinsurance recoverable on unpaid losses 97,852 110,514
Reinsurance recoverable on paid losses 6,520 11,544
Deferred policy acquisition costs 15,592 13,899
Other assets 53,651 44,037
Total assets $ 672,364 $ 597,044
Liabilities and stockholders' equity
Reserve for losses and loss adjustment expenses $ 263,979 $ 226,493
Unearned premiums 127,942 115,765
Senior debt 15,000 15,000
Junior subordinated debt 43,300 22,681
Funds held 17,205 21,992
Other liabilities 18,225 18,958
Total liabilities 485,651 420,889
Total stockholders' equity 186,713 176,155
Total liabilities and stockholders' equity $ 672,364 $ 597,044
Debt to total capitalization ratio 23.8% 17.6%
Book value per share including accumulated
other comprehensive loss $ 12.38 $ 11.69
Book value per share excluding accumulated
other comprehensive loss $ 12.96 $ 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 Six Months Ended
June 30, June 30,
----------------------------- -----------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
($ in thousands except for share data)
Revenues
Gross written premiums $ 74,634 $ 57,794 $ 142,799 $ 104,814
Net written premiums $ 54,824 $ 38,528 $ 108,512 $ 69,518
Net earned premiums $ 52,602 $ 31,074 $ 100,691 $ 55,906
Net investment income 4,506 2,017 8,499 3,762
Realized investment losses (49) (73) (84) (98)
Other income 46 31 88 76
Total revenues 57,105 33,049 109,194 59,646
Expenses
Losses and loss adjustment
expenses 30,214 18,960 59,431 32,354
Other operating expenses 13,384 6,480 25,409 12,173
Interest expense 896 642 1,673 1,230
Total expenses 44,494 26,082 86,513 45,757
Income before taxes 12,611 6,967 22,681 13,889
Federal income tax expense 4,060 2,282 7,301 4,598
Net income $ 8,551 $ 4,685 $ 15,380 $ 9,291
Earnings per share:
Basic $ 0.57 $ 349,033.70 $ 1.02 $ 691,518.90
Diluted $ 0.53 $ 0.46 $ 0.96 $ 0.91
Weighted-average common
shares outstanding
Basic 15,087,308 10 15,081,571 10
Diluted 16,003,075 10,244,560 15,948,666 10,179,260
Ratios:
Loss ratio 57.4% 61.0% 59.0% 57.9%
Expense ratio 25.4% 20.9% 25.2% 21.8%
Combined ratio 82.9% 81.9% 84.3% 79.6%
Annualized return on average
stockholders' equity 18.6% 21.4% 17.0% 21.5%
James River Group, Inc. and Subsidiaries
Segment Results
Excess and Surplus Insurance
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- -----------------------------
2006 2005 2006 2005
------------ ------------ ------------ -------------
($ in thousands)
Gross written premiums $ 63,788 $ 49,466 $ 121,556 $ 91,235
Net written premiums $ 45,368 $ 31,203 $ 89,944 $ 58,105
Net earned premiums $ 43,316 $ 24,423 $ 82,900 $ 45,255
Losses and loss adjustment
expenses 23,945 14,568 46,312 25,885
Underwriting expenses 9,611 4,236 18,697 8,109
Underwriting profit (a) $ 9,760 $ 5,619 $ 17,891 $ 11,261
Ratios:
Loss ratio 55.3% 59.6% 55.9% 57.2%
Expense ratio 22.2% 17.3% 22.6% 17.9%
Combined ratio 77.5% 77.0% 78.4% 75.1%
(a) See "Reconciliation of Non-GAAP Measure."
Within the Excess and Surplus Insurance segment, results by major line of
business are as follows:
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- -----------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
($ in thousands)
Casualty Lines
Net earned premiums $ 41,624 $ 23,025 $ 79,327 $ 42,700
Losses and loss adjustment
expenses $ 23,866 $ 14,807 $ 45,175 $ 27,197
Loss ratio 57.3% 64.3% 56.9% 63.7%
Property Lines
Net earned premiums $ 1,692 $ 1,398 $ 3,573 $ 2,555
Losses and loss adjustment
expenses $ 79 $ (239) $ 1,137 $ (1,312)
Loss ratio 4.7% (17.1)% 31.8% (51.3)%
Workers' Compensation Insurance
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- -----------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
($ in thousands)
Gross written premiums $ 10,846 $ 8,328 $ 21,243 $ 13,579
Net written premiums $ 9,456 $ 7,325 $ 18,568 $ 11,413
Net earned premiums $ 9,286 $ 6,651 $ 17,791 $ 10,651
Losses and loss adjustment
expenses 6,269 4,392 13,119 6,469
Underwriting expenses 2,607 2,003 4,905 3,425
Underwriting profit (loss)(a) $ 410 $ 256 $ (233) $ 757
Ratios:
Loss ratio 67.5% 66.0% 73.7% 60.7%
Expense ratio 28.1% 30.1% 27.6% 32.2%
Combined ratio 95.6% 96.2% 101.3% 92.9%
(a) See "Reconciliation of Non-GAAP Measure."
Reconciliation of Non-GAAP Measure
The following table reconciles the underwriting profit (loss) by individual
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 the definition of
underwriting profit (loss) for other companies.
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
($ in thousands)
Underwriting profit (loss) of
the insurance segments:
Excess and Surplus Insurance $ 9,760 $ 5,619 $ 17,891 $ 11,261
Workers' Compensation
Insurance 410 256 (233) 757
Total underwriting profit of
insurance segments 10,170 5,875 17,658 12,018
Other operating expenses of
the Corporate and
Other segment (1,166) (241) (1,807) (639)
Underwriting profit 9,004 5,634 15,851 11,379
Net investment income 4,506 2,017 8,499 3,762
Realized investment losses (49) (73) (84) (98)
Other income 46 31 88 76
Interest expense (896) (642) (1,673) (1,230)
Consolidated income
before taxes $ 12,611 $ 6,967 $ 22,681 $ 13,889
SOURCE James River Group, Inc.
-0- 08/02/2006
/CONTACT: Michael Oakes, Chief Financial Officer of James River Group, Inc.,
+1-919-883-4171/
/First Call Analyst: /
/FCMN Contact: /
/Web site: http://www.james-river-group.com
http://www.earnings.com /