JRVR - Earnings call transcript Q3 2017 | James River Group Holdings, Ltd.

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Operator

Good day, ladies and gentlemen, and welcome to the Q3 2017 James River Group Holdings Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would like to introduce your host for today’s conference, Mr. Investor of Head Copeland, Relations. Kevin begin. Sir, you may

Kevin Copeland

welcome Thank River James and earnings you, Good morning, Bruce. to Group call. the conference everyone, third XXXX quarter

These cause current call, are to assumptions various the we uncertainties, be to subject forward-looking During which differ and may will that are based results intentions, beliefs, statements. on risks expectations actual and making statements materially.

section forward-looking we and discussion make please Form turn Executive James River. XX-Qs with see forward-looking language not Factor Exchange Abram, regarding uncertainties, the call recent such release the update I the earnings Officer and duty statements our of risks of statements. yesterday’s Adam Commission. XX-K, For and Chief the We undertake a any Securities and and to in most other do over and of Risk filings cautionary now Form will to any Chairman reports

Adam Abram

Thank a remain decision you, quarter my and the I third everybody responsibilities and CEO colleague, call. want friend you company. words of our joining to and few Bob thank for Kevin. hand over Hello, Myron to Chairman about say conference to my

ago tenure order. her of who leadership if CFO. he been have Doran joined this side in and by were a nine CEO. call. Operating not Officer, on when member I've has you side two table his when is succession us for in years us here worked of held phone We well joined CFO since He seven we XXXX the of most private, for as roles, place. and side to well months all years, last board CFO, Chief great Bob he In has of our he's senior known many, the the as first multiple President and Sarah

the seems commitment building hands. company a our to fact a good it ago, marks and of be in franchise I'm it the the because and me underwriting, innovative opportunity great make I will I'm them change for on Sarah our founding continue other and putting to years -- company our take is proud to even to to colleagues own and better. an that So Bob, forward know confident time while will Since Chairman. company XX as making number talent, the investors. we’ve to been grown great maintain our public I offering, part look a supporting of they now, all an be this. a hundreds to healthy to of for amount thousands added Bermuda, something made have moved of work made made from and friendships expertise, of to great It's and policyholders and it experience people. a very tremendous a I've of here of and protected two the returns new I dedicated satisfying company. this lead lot and terrific day. every learned It opportunity was colleagues to with is a my opportunity fun smart their a

partners I the the and of have while our unchanged. value the market to I shareholders. our shareholder private fortunate, well think our well and to we've informed base did equity done lot fortunate very for ourselves been a good, we We've including on thoughtful deep company approach the phone you who of remain a of what's of drive many fundamental insurance and in have will understanding you tell a can market.

over Now let Bob. call me turn the to

Bob Myron

into the I’ll quarter. over taking everyone. time to It's Thank comments a the some great of morning and of make this a get good for you Adam results general company. discussion and leadership then be

Sarah I'm role as excited you. closely losses, our with critical since to lot you and our at and by Board. across And presidents with will I here, work been forward the Doran it's you've build the in to River rest I've Board us on is on but who capital strong work the your higher of achieved want strong on. of As to of great lot a we with the pleasure opportunity seven the James and mentor, and today, throughout future still call have the front which foundation to that I have substantial plus of on Adam continuing industry all In supporter a group. a partner, wake to continue senior in with and continue a management the friend I acknowledge working played segment our leaders roles to of been seek there's in of other returns team. look us. a discipline expect We've catastrophe very been our lines. me we years to our Chairman

increases to We Submissions were our up in rate divisions we see forward. of mid-to-high many In and to core seeking E&S flow. going casualty strong core be year-over-year business business, digit quarter. E&S our single the submission continue third going in our are X%

the will months, by be driven of Florida they submissions, few only flow a year California catastrophic not the expect ago. did but more good exposures way. we our last business Contractor earning demand on surge book, in we to With an submission generally Small and than likely a increase of revenues. events expect rebuild is increase in contractors contractors priced will for do Texas, the increase

over ones and area, experience auto which new written. our of growth in we're is some to premiums for them. in the being accounts commercial regularly. are in have now And We economy this writing approached continue reflected XX growth We shared in area

income in additional service to creating opportunities. ability translate this write opportunities Our area business ongoing claims growing claims and our into is can to fee expertise

out a some have segment. of in E&S get be and rolled growth for us wholesale can We the traction think to we another new agents product that source liability general contract binding recently

premiums is While our in $X,XXX account size this to underwritten $X,XXX. business $XX,XXX, book approximating individually the for generally will be around

the We've our years had growth as servicing. pricing getting dollars being claim of in nature. the casualty and flow division approaching now improved can can we opportunities believe our the we be the well capital really this in area is for run well pricing see of as a In fee traditional to from However business, handful from premium income. continue going to both strong fronting, reinsurance in We so will We're be since XX annual most in alternative we started times as opportunities as Four we new to our add think new business significant amount. forward zero and improvement we of proportional is up fee forward going but underlying there well material for grown both really opportunities reinsurance as just of rate opportunity inherit fronted to far income see sources. deals regularly see with this as respect million. In transactions segment themselves treaties benefit only transactions. this will and a are which on of business, on our approached ago

this of class is for largest small contractors. in business Our segment liability general

So our I reinsurance treaties we spoke our Several writings reinsurance have business Florida, possibly well. think in Texas material rebuild the that of can California. as of earlier impact and

and losses hearing but number in catastrophe had already We zero, government we have rise The company. I event. the territories a in quarter, of E&S levels now Irma quarter. this our in on are seedings. had year have up there led US losses with the about are of observations past that excess to happier some from certainly Houston this losses US We and area quarter brokers its $XXX not the non-standard auto in thousand losses make few from reinsurance level of principally if rest division $XX surprising it's and end are itself. written devastating of loss. from been of contractors’ We business in our would property pretax a million flood Florida. rapid The would the with billion and area flow by in The been our water the calling to industry is the a expectations plus one increased

a think our storms all number relatively the to small. risk I that of our it's for was testament strong management

heavily careful risk and the do selection property risk in we take. We or our alternatively are capped that and also reinsurer

We us. a company has strength always in three in segments, underlying our quarter lot underwriting the where this had losses, of the Profitable and segments had our most for had consecutive all of growth the we profit. catastrophe quarter. growth segment. be across was XXth the an will Excluding tenant This divisions of and a key we showed quarter underwriting had the each within

our X% as While by segment, commercial auto our well. the the quarter E&S core increase drove grew in year-over-year business E&S and over

same amount exceeded the the in ago development group. Our we had quarter a across the favorable year reserve

accident year same in significant XX.X% expenses In to than year us was ratio, and expense versus catastrophes, and advantage. excluding decline pricing gives quarter. a in has Our ago. a the the segment, both XX% This our quarter E&S our in ratio XX.X% competitive flexibility well as as continued is was combined less

XXX% quarter. million X Our gross fee in income grew $X or approximately to the million

As is as handling we've our a income expectations. internal said we as principally business. before, coming from strong, well this don't fronting was where exceeding position risk have Investment claims

had workers renewable income accident performed and some our year portfolios to to we year current comp categories fixed our also specialty continued bank from QX approximately elevated ratio be segment, We our benefit investment X%. the activity other and loan causing loss admitted very and In loss well.

$XX you book a annually. relatively premium about of at million most this know, small As business is of of

the large ratio quarter’s this year points year-to-date small year over few We have losses prior the up driving accident a however loss ratio a had is The business, book only of couple of up. in period.

years this loss leading For up had very we in activity have to XXXX, benign book business. of several

With core the specialty nature it workers' in reinsurance quarter In inherit discuss will was low-double our insurance this in quarter. and been quarters, I up quarter. book the digits in will given And were proportional in but which We rates to our the prior to this book. up benefit, reinsurance segment, X% underlying Sarah going reinsurance the by has segment, regards in were capital treaty forward. segment, in our E&S our X.X%, with great case segment, will pricing increases rates the of admitted flat, to our compensation hand see management that, mostly the to pricing down rates were as primary plan third

Sarah Doran

announced per dividend $X.XX of each Thanks, dividend special share, common share per month. $X.XX Bob. Yesterday, of declared and next payable we our board a that

of quarter in fourth our common additional common last may You $X.XX share an that year we paid remember per XX% XXXX. dividends and through by dividend the in raised

compared million $X.XX We've from per For about in $X.XX dividends written year, over expect X.X we return year. we about full or as or share the XX last net months this the done and total that times to despite leverage growing times. to XX to operating XX% over returned premiums million last shareholders to XX share taking per X.X

book to our expected positioned attractive the Looking well share. at components shareholder dividend and value. return business us as both respond is and and Bob view strong We important opportunities of support we’ve the mentioned, growth pricing. we way an we've manage to both business benefit to ROTE capital our to return that The well from as our capital our special opportunities provide believe delivered growth the and to as to attractive for

see public capital we to a dollar that we our always are utilize ago. returned to hold return becoming and earnings forward. return earn original capital, not or $XXX with generate of our every to of As over to dividends we've We've an meaningful that since majority put to and period to continuing paid thank to almost an years we equity cumulative business efficient prepared our opportunity our shareholders attractive forward investors a Over on look at in three manner. tangible able for extent remarks. returns third to IPO. the it company to the upcoming And these million for partners work of including going capital our shareholders and We operator approximately shareholders concludes this our of the

the could line question great. be would So if for open that you

Operator

[Operator first from Riley. comes Instructions] of B. And Binner the Randy our question from line

now open. Your line is

Randy Binner

Hey, good morning.

quarter actually of just with flesh your as you had and It I and good I both Bob that was roles. couple working look in to First all congratulations wanted CEO, of forward over just to retiring new Adam for taking out. on a a

you fronting, and maybe it's in give the areas? traditional on mentioned kind see of business opportunities or kind of lines more any First traditional and of where that capacity color you alternative opportunity you kind another casualty providers in there. Can if there's us on from out

Adam Abram

but capabilities interest and do continued casualty ability it's alternative obviously board, we licensure think where a property markets, mostly tremendous across modest sort from several very be think something where with is and domestic think US I interest amount at would the infrastructure broad to get about a do the a but our in something space we that certainly And Not the I E&S of in space. some admitted and there. have we're of more risk. infrastructure there we're markets risk, in we taking between property and would I the good think traditional companies in in in certainly obviously writer could that to we're position shape have overall

Bob Myron

balance property E&S a our Yet that than having we our do that is capital makes division a in risk. is not recognize model sense because property very adding and to is writing lot retain in that of volatility of more that interested we lot returns. our strong to that, actually while have we choose And market sheet. on consistent capital with the we capable of vibrant there We team in way currently taking address risk very property a very to a

we've in of And we smart the experience. to property that So capabilities, lot got of we've capital the that fit we've capabilities, risk could service underwriting there take modeling doesn't wants of the a years I expertise got our think model. got that other just deploy

the to We that. handling handle claims also have experience

well we're we're to think and that developing I do situated So that.

ability to We have the admitted also too. side the that develop on

Adam Abram

And primary many experience property. have currently, while of folks property excess we our in only write

Randy Binner

right Just comp losses good comp discreet on losses, that's and book general of necessarily in like not representative like the sounds set the of is line because a it now. a

the were losses what there? a little color can on you more us large give just So

Adam Abram

just -- we've where have, large of periods up in to in and we of retention amounts a basically It's material the that just business recent taken losses had $XXX,XXX a Yeah. $XXX,XXX. have few book more that we’ve

this loss is had benign activity. mentioned, As years from on we following very several where

of blip really here It is pricing like don't underwriting. in result a it's result terms been just some of a bit not as So loss think seems a little I there's a activity. that it larger of and of

As loss some saw mention, accident offset periods. an coming on we not for pretty good favorable that awful good the from ratio the That to book up prior and was year year-to-date a the development that. lot reserve through is

Randy Binner

large – event, like saying people you When claim was losses, large series there not like It's more you’re an not mean of accident, back. actual it's out going on a like and an coming

Adam Abram

is is Yeah. to catastrophe not a individual a Absolutely. an accident. Yeah. workplace so It’s It speak. accident. It

Operator

line our Mark of from question Hughes next And from the SunTrust. comes

Mark Hughes

improvement. The development, were underlying Have in to that ratio that, up. -- the helped this prior in The the anything business, you you the quarter basis. a quarter quarter Was there E&S mentioned on had basis flat had that corner? was you the probability, quarter, unusual you excluding the point were turned combined excluding there XXX you Last same cats, profitability?

Adam Abram

that know don't unusual. necessarily I there was

which approximately continuing fee a in income, resulted component I by of growing up think ratio, framed reduction having of is that. which ended the a the certainly XX% that, and but segment expense a

see pleased things, a the that of well as margin as performance a improvement definitely part of income. and of it. both we're well ratio number mean, And improvement was the combination fee book expense of underlying that's the growth to there. I Obviously, as So as

Mark Hughes

stable point The a or rideshare of was in points about that a ratio. grow little we sequentially. loss continue to the to fairly ratio basis assuming loss move continues up bit had up Will terms XX

Sarah Doran

Yes.

E&S up core the a bit faster book. book, little has in still we auto I grown decent think growth it although could pick see commercial than because E&S more book the core

just that a seen the we've it So business higher be fourth of bit through course has, with Mark. that little in year, the change the that of kind for mix keeping the than I quarter would expect could

Mark Hughes

down? the those continue presumably ratio would under And to circumstances expense come

Sarah Doran

That's right. That’s it. the second piece of

auto, it, set With continue the in the ratio, the structural to growing to down. fee to commercial would equal through the way et is attributes that income up various it, come being of cetera, and all relative again that book you things that core the comes book, expect expense

Mark Hughes

is I how new capital nicely, perspective, you core capital rideshare the increases, you're opportunities, support on growing business business base? looking the times, you’re wonder the rate a current X.X from at can

Sarah Doran

we We that. room have to certainly support think

capital use, we can We think have, we additional i.e., could, that debt I we capacity. have

think is, where I leverage can book the slightly written at it be higher. that our maybe

look certainly not, opportunities feel we to business our So way, do limited capital. at in any by

a So, and of see it's it’s that not best of just writing best returning we the advantage taking business business opportunity. that question of obviously business and turning a can away, question the

Adam Abram

would I that. it's areas to terms capital be don't we the be in a And going put is after on of in not different with what after group. business across going believe priced to the business agree of want in number feel a constraint limiting books. the higher we that We that to got going we've going

Mark Hughes

to going increases what good your on book, high be you rate and your feel to happen, starting seeking how there. began, you’re mid casualty indicated already do early to is You that single digit it about you have sense in success the

Bob Myron

folks just we're along we level really has to think underwriting it I desk, It’s And more passed been the that the what what seeking, is right. are well. getting those leadership of as down to what we've of started. -

And going for completely it's - and warranted. we it's get so think there update to to quarter. on But we’ll out obviously you expecting it it take have our we're an next

Operator

of next And question Meyer the from comes Shields line KBW. our from

line is now open. Your

Meyer Shields

improvements. flexibility of as ratio a Bob, you the consequence when some talk about expense expense

on you elaborate meant? can what you So,

Bob Myron

in only but general I in - frame overhead. well going I seeking – mid mean, talked lower the are think you that overall specialist price just level the but that us to just about, higher be running we business, or look, in so think I mid XXs we flexibility I going definitely also XXs Yeah speak to as the - add versus it because doesn't at flexibility to really, gives account gives it we sometimes that commercial our not the individual see staff, think it us a which of to increases

a always philosophy were could and XXs be that we've pretty So lean. we constraining. that would of running different the up reasonably high in if a had just rolled sleeves situation think be I here it

Meyer Shields

frequency when you time same talked the [indiscernible] trend rideshare? reported personal they Last seeing Are the declining auto. about sort of [indiscernible] in in

Adam Abram

a sort decline not change most say there I seeing significant we've not a of would say is there. would I that we're in frequency. from recently seen necessarily what

Meyer Shields

And don’t there reinsurance rates if to a up question, go may is can them have faster very on protection then the than timing where last up issue meaningful, any, you primary bought but of know you property the I is even extent there it's book, effective that side. the push

Adam Abram

that So, our timing renewed trap going interestingly July, caught get and good I’m most in to they reinsurance speak. property that of were so question, in is not so necessarily June expecting to

no, So, think I don't so.

Operator

And of our from from line Brian question UBS. the comes next Meredith

Your line is open.

Brian Meredith

for A all. couple questions here you

First the of kind that year perspective, of the a just current year. figure is all what that we the in here, was of development action get quick so a dollar of from run true underlying question segment, just rate numbers kind

Sarah Doran

come you that fingertips. my can have I at I don’t on Brain. that back to

Brian Meredith

E&S brokers to and in distribution with you risk. you about happens as always I’m something little price more, kind Bob, trends of And you why talking dive of more. What getting acceleration the your loss to seeing you need rate just telling that Has into found to get bit an you're in trend? are and Historically, that increases? just a you Adam, agents perception rates and changed? these increase Are I’ve loss to that respect an get that. want then I casualty in pushing for when curious and the

Adam Abram

understood years relatively loss increases. longer years. there in of on feedback rates I We A that the about think tremendous us tails prudent in in having with very -- when to year nature they been be - and looking the among based for and to think well time really will competitors insurance there's the the writing, estimates and think are we're on people's lot for flat the writing to makes of want loss think casualty in allocate or couple and one of price is there this This the an but it's It's customers of is the recognition of be the for we have expectation in tail push And an companies. and industry, that you're people represent that market careful relatively of just five in not of rates or their moment for a their and is every going our a the cases to in back be flat and is a hope is wake four there merits this that business, we been this that getting -- some they is from We there's an to provider insurance appropriate are five the some increases. where four the insurance we're think that be record on understanding brokers unique senior capital industry. capital writing expectation capital. for of course market leadership sense or things, to it's business, rate this, that business this is for has across our of the there capital, five I that in a to also four our a -- the

rate and course be they of pricing I and expect for business of will of this think board for I the that accounts. the is class but by to to the be add? of line price risk to of Bob, increases. Now, or think we expect and in remains all the pushing we're in some code of you digit the have looking by history absolutely itself the be how when appropriately risk class nature seen, raise in plays going be something that out across But or push the and risk will that high-single digit to do for we're of rates the mid-single the alone individual don't industry others that rates increases going

Bob Myron

Yeah.

can't which couple but And down, X% thoughts, the Adam cost so think in of speak. the X% balancing Just of of loss along when a one for just have made us in here, costs, a nature years while to we, additional part, several we with obvious the I loss inflation, just somebody ignore underlying trends and example, been like. hurt benign, healthcare right, gets row

obviously increases point So there okay, in there -- to been has Adam's increases some that is from we have coming about loss have been of and and our been think -- account the that places margins this. cost duration corresponding take but inflation. unavoidable to rate It's necessarily without further into tail I have

capital I going increased reinsurance. coming. likely substantial other in cost are reinsurance get think going phone most to a E&S, earlier there to increases in be likely in it’s loss. this amount an call particular the we is, E&S from it’s our further reinsurance of are almost entirely that have expectation But of excess By discussion [indiscernible] providers. we It’s to coming of on

it's a completely of more reasons So couple warranted. why

Brian Meredith

increases your think casualty on those than more you right? side, do the But property

Bob Myron

put people hasn’t are reconciled. have not of that the loss that a not mean we conference lot to is sort and of difference There We what -- unreconciled out price as been been industry there obviously relative increases or conferences, think people's there I to property well. very be casualty -- are time spend you could losses still that, calls. prices getting estimates well the in I out listen other

I cost trend think is loss increases increases insurance I more for that a broadly. towards more for there mean P&C broadly. P&C

Brian Meredith

and kind the how effect kind trend they And the look -- segment and of increase had kind of underlying excess in that's the have loss adjust of you that couple E&S I’m for ratios, pricing moved business just up your last because at I curious, loss Have of of kind been some if they your of if rideshare of or on in they stable? obviously the trended years? have

Bob Myron

and but been very to they a bit had in the be terms we've now loss up is up that bit, bit of on a year, business off not to a haven't a problematic We've past, several putting more little this or have recent on loss the elevated level. where deem that would very put little there's put level activity They've recent of little moved been of activity on we benign years. years priced low in and we a over but it then the

Operator

And Instructions] no showing at [Operator I questions am further time. this

Adam Abram

you your thank on Sarah and we quarters investing very results company you in all Thank team Well, and and with alongside you interest being a our time. for to to and you. to much and Bob future forward reporting look of for long

Operator

disconnect. does gentlemen, day. for thank you and program a participation This your have in and Ladies all today’s the may conference. you Everyone, conclude great

James River (JRVR) 2 Nov 172017 Q3 Earnings call transcript