JRVR - Earnings call transcript Q1 2018 | James River Group Holdings, Ltd.

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Operator

Good day, ladies and gentlemen, and welcome to the Q1 2018 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 be given at that time. [Operator Instructions] As a reminder, this conference may be recorded. I will now like to turn the conference over to our host of today's call, Mr. Copeland. Kevin

begin. may You

Kevin Copeland

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

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

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

Bob Myron

morning Kevin, from, also with Sarah Relations today are and you, Myron, who for leads Bob just Thank CFO, Copeland, and good Officer This us. who me Chief Kevin Investment you our everyone. Doran, Investor is and our heard

prepared line and of three a start. in few substantial a to year segments, as had press underwriting a great ago, to and year is remarks, questions. highlighted each our have then off a forward we We top results showing strong taking performance We in your bottom look The with our improvement from release.

with a overall. had we thrilled core for XX.X% am pricing each Our combined in we pricing them. in came favorable in at very book the and increases and segments, of combined ratio by with all development pleased E&S our reserve renewal the in group ratios compelling received three I

down, terms our roughly While investment performed ago our with performance year well, relative expectations. in to absolute was in line investments a

these the some to of in Let detail, I'll then Sarah same. few things more do ask and about a me talk

in strong a on commercial up of was opportunities in divisions. of was up growth growth, segment, overall the and core of in X growth Part growth minute, The our and we was of part in which which XX rate XX%, up some auto In and from XX%, had healthcare, increases casualty, we activity XXX%, energy, growth general we and by and saw largest substantially discuss book, XX%. In E&S which will increases, particular, divisions. submission strong increased assisted division have strong larger from which in more account. most the Regarding our obtained our in E&S growth allied was accounts. it grew underlying had was this I in rate we

like admitted very like home the substantial select the variety admitted to growth mentioned of to and last in underlying is as last strong In fronting it for decrease from we XX% from by put the late. As segment, I'd I segments of that X%. submission of In X% to in the the the division. we E&S restaurant right year. on the some on workers' Those said that healthcare single for price increased individual last economy, book approximately improved and are focus flow underwriting accounts a the results, last From casualty, submissions in the written segment. and casualty growth some overall which segment continued more flow, and E&S specialty quarter. were XXXX the we gross contractors end XX% in ratios in two bottom by perspective, energy accounts. quarter. but expect mentioned segment reinsurance have the space, This of written due premiums specialty But grew in comp, written strong segment line by did smaller note the we up to risk Submissions for reinsurance the the had results were energy with the of coming casualty quarter, causes new large particular have the division had allied out increases the fronted year, admitted grow the was is what general the and in been on books of had hard and gross in new the profitable the they deals nursing renewals growth, space combined year In refine segment, of good as divisions there lowest now, we market. premium a

business respect driven auto, quarter. to by with segment up commercial allied in division. was core XX% pricing Now in excluding pricing, in healthcare we the all renewal the as the was define which E&S, This

in Excluding E&S very X% the core still quarter, rates the compelling. our allied which is healthcare up were division,

casualty As forward underlying increases index we the impacting we segment, primary treaty our margins the can of segment, were loss in a X% we but, were not to up the In pricing. was will achieve and specialty X%. marketplace increase always, X% contracts in reinsurance increases going the believe changes, rate on price current best increase In steady. admitted compensation underlying down cost for retention approximate seek approximately workers' net held materially rates. while rates due This overall an reinsurance

that loss basis. year sequential time our a as having core year pleased year group, Let favorable four combined the compelling to accident deliver conservative in points making Overall, picks year and quarter I the commercial same year as higher the points for were XX.X% both quarter. accident quarter X.X due loss QX reserve bit a am loss ratio ongoing ratio the auto in development increased was of of and speak segment, basis, pick This our me and our On XX% XX.X%, three from and a prudent well pick, at at we to book. approximately total group a accident premium the division accident of from able E&S whole to a XXXX was while loss E&S increase about this group-wide earned of the for weighting approach a ago. IBNR our to all up reserves reserves. segments, lastly, picks in as end our our increased percentage net a on at accident In booking

Lastly, expectations commercial this was to Sarah let turn our Sarah? line that, over me our loss Doran, With quarter. emergence CFO. auto call with the in

Sarah Doran

Thank Good morning, you, everyone. Bob.

pieces are the We and start of very year, and the prospects the excited our on about our strength. continued business, sheet in outlook. the and to our fill go for quarter balance ahead the some our moving to blanks I'll

made $XX.X reporting million. are million, quarter we For profit the of underwriting an net first operating profits $X.X and of of $XX.X generated XXXX, million, of income

the I'll equity net take are moment income Effective the in the further will all of between to reflected gains fair value far losses have in of rather quarter January a and realized now and the into the and of the Before forward. securities in are net two accounting change in net and on highlight a on changes in other than difference so first the operating income too income GAAP results, sheet, I effect components income there unrealized comprehensive XXXX, X, creating balance P&L. get investments creates income effective likely net volatility which non-GAAP going

our sale new the accounting The allowance the from is And and of equity on change the the securities second bank in or unrealized losses first resulting losses loan includes the are pronouncement. on the investments, from portfolio. pre-tax gains gains valuation which

loss gains just equity quarter. value in for of recognized net offset quarter pre-tax sales on by a the This we comments. which results of the income, $X.X a on stay $XXX,XXX within investment was I'll pre-tax investment securities partially million realized of more few during

same the This income compared last quarter, decreased our net XX% to investment quarter as year. about

of from energy first year our The last an exceptional included quarter performance portfolio. renewable

up results $XX million sponsor. be While from fixed and by volatile, renewable income in and generally they rates by other meaningfully quarter, this energy both income portfolio our our revaluations investment the as portfolios are core interest influenced private was can

quarter to the This have these compared of investment rising quarter value of negatively year, outsized annualized this contribution continue they as to return an first to extent been Despite contributors quarter the time. the rate the These rates influenced rise. to this could last produced lower assets the income environment occur and continue to XX.X%. our assets, still of over market

from strong million last future $XX.X year. in increased million flow about float sequential This $XX.X compared We invested of quarter to XX% our the a over year-over-year. and is and this first earnings, continue grew to cash the quarter assets quarter operating as as was enjoy flow our almost businesses, to as cash benefit X%

competitive key ratio, we this a expense ours. said, the advantage as to Turning of we have view as

in ratio XXXX. franchise of effective first is group of expense that ratio for year. in XX.X% the through XX.X% a XX.X% this quarter This come quarter attractive is has mid increased the scale. quarter business expense of our The decreased third to mix We and of believe equal and as XX%'s and our quarter compared business. mix to decrease very This last changes to

Finally, a moment on taxes.

tax rate quarter effective X.X%. Our this was

As before, at country can larger we've exercises time. first option has to the the fluctuates as of income from for tax the said us in RSUs, which period by based timing but and of rate of as on generally well and any mix the quarter happen period jurisdiction the vesting been

tangible of quarter. higher rising generally one. fixed number quarter historical higher months year rates by was I $X Operating leverage, likely equity of shareholders' to slightly impact was continue few paid the slightly of the portfolio. that to points that to $XXX.X think we moving than averages unrealized down end written our will on the tax premiums dividends last to was quarter of XX million believe trailing therefore are covers the or there from list. a $XX.X ended losses last be and We million Net of about million our to times at equity, my tangible Bob, it full net of from with So on year. we everything similar rate, at pieces and but this income X.XX income the offset after rate million, a tax $XXX.X than

Let me it turn you. to back

Bob Myron

open questions? Operator, the can line for Thank please you, Sarah. you

Operator

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

Your line is open.

Randy Binner

difficulty] [technical have just I

Operator

is And Mr. open. Binner line your

Bob Myron

should All the right. move to on next. Maybe we

Sarah Doran

The next question?

Operator

next Carletti of comes question open. and is our JMP your Matt Securities from And line

Matt Carletti

know you just is it's of you're loss about appropriate? kind the to? you anything or three was since seeing were little bit, the trends what happened quarter, in with time I I could you daily else at give Is actions more than expand else that that you there comment maybe hoping months additional emergence point Bob, like in that took was kind said to can the but things kind of of can you on you there claims last been point auto only commercial how that your expectations. anything line a comfort

Bob Myron

look this there think Obviously, that at isn't is I something a but say. Yes. carefully, more lot we pretty to

emergence loss for you're think be, we it what of to that terms and comparing in was actual. expectation then might the And an have we quarter, line. think I always in

in reasonable so with reasonable that up a was ended which ratio, segment. that combined development ratio, the up that and loss result ended overall for the And segment, favorable loss having a we

our that we given So we I in think obviously pleased are about results there beyond was it we're the had that, with that expectations. consistent QX. months about And three

Matt Carletti

relates the Okay. other And question core then pricing to my in only E&S.

way the April have in number, it release, in Health. kind you give look? April, acceleration you I think little a X% did ex-Allied one I I How but to did of XX% QX too think persist that other? or it you know saying inflect the quoted in saw caught might I be the kind you or of and did press

Bob Myron

don't for that April month. we we how have to information close are really given yet, Yes, rate

reemphasize so ex that we we really X% renewals. good get increase is health, continuing me on just that And that go rate which allied to back a the heard And you correctly Yes, would to did this let in I are beginning. an current we'll and of just that you don't increases earnings. have we have activity, in We right And of on release to terms QX data lot when rate seek now. QX a give April environment. update

Matt Carletti

the answers on to year. nice and great. congrats a you Okay, start for Thank the

Operator

And from Mark our line open, your Mr. is SunTrust. comes Hughes. of next Hughes And question

Mark Hughes

improved, picks loss picks? year? Are prior business the given come think of year, there the the little when sense steady? relatively or core E&S a they loss has last in about picks a down loss the is us Have more on give pricing you those Can conservatism that we the

Bob Myron

Yes. Thanks, Mark.

that before seek prudent as basically pick philosophically, this a remarks, just And always I always in to we're high of or XX%s. think we similar the my in mentioned always book, in respect. XX%s sort prepared and in that we've continuing approach conservative I regard. sort low to of a is take said And So

make - bit, we've that's lot It philosophical I And may think than different we a these with earned prudent little booking start we want that just sure even really, the in the different box a it's and really is than in not the what so context again, of think that that premium to out approach, that up of we and done increases, past. be conservative. and, we've something a pricing

Mark Hughes

book, beyond much in auto somewhere commercial got When that of the an speak? is to so get inflection that where know, In emergence? there confidence sort point you you more do where, the once you've - loss point, is

Bob Myron

writing It's the the a the shorter tail rest average type that book of of in segment. clearly, we're than liability general business

when to I confidence. as months of you time time But passes, year, think more with relative we year have of losses the and reported to think you've and individual ultimate, paid really XX to you as to amount relative beyond underwriting closed. to significant of the underwriting we underlying of passes I the that end respect start increasing always, have losses any more a got certainty and for claims XX levels sort ultimate of gain think

of so some covering time piece general or anything It's liability. not a it's to bit damage four as you risks, the it not liability. sort add be that? take it like Sarah, it's these that. would all property than because, might five-year But know, a does you physical in of to thing shorter we're any of So

Sarah Doran

expansive. pretty that's No,

I think covers Thanks. everything. that

Mark Hughes

following way? its I And a 'XX like predictable? i.e. then Is like guess, look more does in 'XX pattern, similar acting it that

Bob Myron

Yes.

large expectations the comment, in think said year previous the finished underwriting And just account, for largest a our I we've division consistent just renewal, because general that XX, go loss February emergence the 'XX for - segment, right, on is was up 'XX first with the which this that within back would So generally. to the I before.

Mark Hughes

Thank you much. very

Operator

next of And Instructions] comes our KBW. Shields Meyer question [Operator from

line open. is Your

Meyer Shields

different tail questions. of of this growth, quick is Two non-core? rest the meaningfully One, seeing allied all sorry, health book I'm that E&S? the on where you're the than core

Bob Myron

different, don't think lot a it's I no.

the I something broken think fall something nursing of that a home a think and there, slip hip like type about it you or if claims that. in or like be a might or

certainly that there, primary don't not that. principally it a going And for a is I an than because have contractor's tremendously we're something like so And it's it's to like part book. or but think defect construction claim different like of is a It's tail, excess writing GL right?

Meyer Shields

call at look back if based I add rate million is the on investment money like run core up on a yields? accounting portfolio When looks $X.X the net income, going investment of base I the XX%. impact I'll that good standard change, it it forward new income Is

Sarah Doran

Kevin, view have to different. don't Chief to be And I so. think a I ask Officer, want on Investment it's chime that our I'll you that. in if going

Kevin Copeland

absolutely. Yes,

loss. clear, that actually a net investment Meyer, wouldn't realized It item. run This if income, modifying quarter as would to be through line loss in that went you're good that's income be forward. a just the rate booked But looking unrealized be

Meyer Shields

Okay.

I'm get So clear. to I trying that guess

is XX-X the right the So number?

Kevin Copeland

XX-X the non-private The - is for sorry, your investment XX-X portfolio? after number

Meyer Shields

Yes, excluding private. the it's renewable other XX-XXX and energy

Kevin Copeland

Yes.

Meyer Shields

Okay.

Kevin Copeland

be That Yes, - be good would that going yes. a run would forward. rate exactly,

Meyer Shields

No, that know there's Okay. change the commercial the change within rate to Is last auto. And fee that. question. there - account one increase largest clarifies structure? a Any I on any that

Sarah Doran

just in this next itself you will account Meyer, that likely we fees quarters through in change and quarter, last the geography, didn't less way increased is change, the but that bit little a coming will see this over it mentioned couple we premium. Yes, the - that, and structure for

fee more premium. will business of as we for So that account

Meyer Shields

should we assume XXX% carries Okay. premium that that combined And ratio?

Sarah Doran

wouldn't. I

Meyer Shields

Okay.

Bob Myron

claims - of previously fee some are that booking were as the - that fees handling now fees handling now as a claims requirement this premium. there's book we basically, we've income to Yes, got

the so loss of then it. P&L probably And written to a earned, and through it's and then got flow expense to applied have and ratio ratio as sort

going to fee show that segment, - for - for how a to in going income. we decrease what it's optically it's So we cause

Sarah Doran

the profitability here. For of same fees, but level

Bob Myron

economics it's as affecting But really not the significantly.

Sarah Doran

Yes.

Meyer Shields

look - Okay. underwriting underwriting look I to to similar what current meant profit fee will expected Yes, the The to profit profitability. similar ask. that's will

Sarah Doran

fair. Remember as just year. that X, we'll so the think renewal forward an I was have March last indirect comparison that's going from now

Meyer Shields

Right.

Operator

questions showing time. like call management. over this back to further And would to I'm no now the at I turn

Bob Myron

everyone, you, Thank for to interest your today. your time look speaking and next And with forward you we quarter.

James River (JRVR) 6 May 182018 Q1 Earnings call transcript