JRVR - Earnings call transcript Q1 2022 | James River Group Holdings, Ltd.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and thank you for standing by. Welcome to the James River Group Q1 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to Brett Sheriff, Head of Investor Relations. Please go ahead.

Brett Shirreffs

you. Thank and Conference James Call. everyone, Quarter Group to Earnings XXXX welcome morning, River the First Good

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

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

Frank D’Orazio

as additional for dynamic I you results, expect with coming the only to morning, beginning is become of to everyone that the and we and in back potential welcome this some show quarters. Good earnings on introduction, pleased through accelerate apparent to today all be on Thank in these to color and you our more the I'm first quarter call. Brett. to group's believe provide

was growth. attractive and different we've our hallmark continued they business premium respect. And continued remain quarters encouraged One as that E&S is actions and market remained by despite seeing has should this to We first that some quarter in XXXX. few well also of our has both extremely throughout produce of our both the ability announced believe initiatives year our we're consistent over on last the that in no the as strategic to core margins our continue business execute the franchise trends positive

underwriters. in as segment, to plans continue on opportunistic progress while nimble our our also and acting Reinsurance capital focusing make Casualty for U.S. Specialty businesses and our our Admitted business on delivering We

Sarah, the and we to line to expansion like segment. commentary the demonstrating some XXXX, a performance E&S turning accounts segment. segment, the rate renewal increased growth Gross compelling E&S of believe perspective. is first Before the increase top the XX% belief over units bottom period. and of renewal Renewal key E&S instances, XX has growth, experienced broad-based X.X% in was for on throughout from We market each quarter cycle XXst XXXX multiple significant cycles. for indicator to our experiencing positive sector this I'd underwriting quarter conditions favorable the outlook unit, beyond. the that results on totaling are longer several years XX.X% fourth provide remaining premium to that In double-digit In marketplace across across fifth consecutive compared should rates with as our the our marking last for is business increases, and likely enjoyed a of renewal and many that of our rate support or XX this our

million. XX.X% XX.X%, a quarter. quarter The segment ratio with Turning produced year to first combined a the income in year profitability. $XX.X of loss ratio was accident E&S underwriting of consistent reported XX.X% the in prior The and roughly

costs both to from they have for -- year our that, expectations the above rate the our to level be of continued ago mid-teens be view and moderated had year. own While increases a continue they loss own rate above of

workers' our intend writings our favorable Admitted, and in we to remain compensation we decreased both focused. by picks. while largest in our X% and workers' declines that comp program also the in in across recognizing the loss fronting driven stated, growing program written is the our previously relationship XX.X% compensation of by In premiums As rest workers' book. Specialty these our declined patient Gross risk the individual trends segment quarter, business

compensation, partner grew segment in a was X.X% workers' the despite the premiums acquired in loss fronting gross of the XXXX. Excluding that of balance fourth the written quarter of

Just quarter attractive diversify will as as exposure to pipeline new prospectively continue in Fee quarter have base income during opportunities segment an increased programs various $X.X importantly, the that of we fronted our in of added in the the we new diligence. X.X% million. stage to

casualty reinsurance. to Turning

of capital to last As million we discussed XXXX line in expect group. XX% our as the drove during the by business the of we this period. to top to opportunities that the premium approximately on in achieved margin throughout believe as portfolio optimization quarter, be quarter, We focus we year renewed prior segment. the Of that the segment's the several we Reinsurance increases and approximately business reduce $XXX treaties enhancement significant we quarter focus first on the versus the renew what and decline continue during best segment did now rate

we million transaction, remain for power As portfolio legacy very believe XX. initially of associated our share Reinsurance sheet on with to that of shine the last is continue for the disclosed allow James the performance taken $XX.X with underwriting with the the thankful our earnings our the derisk our strong. River fourth to We which months XX are distribution actions of Casualty will relationships with we've over results included quarter QX group, outlook Overall, the balance through. March we earnings tremendous loss believe in the partners underlying strategic pleased release, to and firmly the franchise closed

Board Director. and of Audit our Committee an may our Lead retirement of since on from and Independent April X-K served on you the we the have noticed announcing Directors. XXXX our James Jerry was of had Lastly, XX, Board Jerry Chair Masters filed the River

from And and greatly counsel turn X valued certainly in to the him Doran. his Jerry call thank his his much over benefited last service, the best years with have me for let We the wish that, Sarah over retirement.

Sarah Doran

good morning, Frank, Thanks, and everyone.

we reinsures income $XX.X for million quarter segment the income. now investment million we combined and our agreement and loss million the XXXX, by casualty we profit For reinsurance executed income. quarter, $X the group of net first as in of of underwriting which ratio $XX.X operating $XX.X quarter, reduced The most delivered X.X by included elevated of the million previously points portfolio announced. transfer This percentage reserves, first underwriting of

impact year an XX.X%. of loss ratio the the the generated Excluding have accident of would transaction, segment

Our impact annualized net tangible was return on made average quarter. operating the common the by was equity discrete this transaction. Again, for the XX.X% lower of

common be of tangible per share, with grow would for book expectation in the XXXX double-digit our our a continues and group earn we Our tangible strong across also on underwriting to both value return profits segments low equity U.S. excluding AOCI. that

ratios. in expense from same considerably the we to from and quarter the well down build points River a continue ratios were last growth. to while X year. year. the profitability continues the continues insurance was our James expense on our for expense revenue quarter, This have due of to is as competitive both quarter our ratio. loss on operating to XX% down It very first Moving last almost growth scale Both to businesses, management as expense the focus outpace to

believe spending to the business franchise expense Admitted. a and continue our U.S. covered year. is a results attractive largely this extremely it's segments, for of ratio We XX% worth mix but to on the Frank moment that Specialty XX%

business. the writing our conditions, reduced we but grow workers' other risks to continue market the given compensation mentioned, we've fronting As in

of less than compelling in businesses. counts have those comp, decreased parts be continue rates to claims our other workers' in While

then the our XX.X% XX.X% when loss loss influenced year year, the workers' segment a is factor accident compensation point different loss This that a that ratio. quarters expense the I impacts current year segment last at quarter. broadly ratio accident had combined ratio. of quarter, a we in year current none last increased which year, we with produced one-off would ratio also half of that ratio The consistent the and second of out few were

Realized X% equity were Moving of decrease Investment portfolio. as quarter returns income renewable private increased evenly from of our portfolio on. $X this from common value attributed our loan grew each rate fair the bank of energy small and to floating investments. almost about we benefited dividend-paying million a this portfolio losses in quarter, our

operating maturities the that the $XX.X of portfolio current reinvestment opportunity between will bank our our to the year. we XX% have our coming over cash expect quarter we flow portfolio, addition this floating the generated for and that strong characterizes of the rest loan near-term In and rate exposure or million over of portfolio reset

reflecting our of April, Net a unrealized fixed quarter the month XXX first basis in of fair our decline current $XX portfolio. rate value of the was the above income points the year, of yield reinvestment decreased million for During our about investment X.XX%. portfolio gains

remains portfolio tend quality And the value we all reminder, hold and until of or they to maturities unrealized position and a fixed an of credit our on finally, average substantially fixed recover the their income fair loss mature taxes. As A+.

discrete vested restricted It the rate was units. with by tax quarter this excess to effective tax related items, XX.X%. Our elevated associated tax primarily expenses was stock

While strategic impact be we there ended are In first the quarter the to rate to to many points our James an position. tax will in financial of believe closer conclusion, that River year full continue XX%. excellent rate, and

the the and the $XXX.X back scale last includes to turn preferred and equity to We line which attractive capital continue I invest million opportunities our it with ample issued have And and A tangible of We questions. to moderator to that, company. of quarter. to Series current to for we quarter operate equity tangible ended common environment with in continue million, open very $XXX.X see the will the

Operator

first Mark [Operator with Hughes Truist. line Instructions] of comes the Our question from

Mark Hughes

expressed you. might when positive when gives cycle, it let's at you the XXXX, what more the suggests market, look Frank, you optimism Yes. around into say, XXXX. . the of through that? signals and it What about Thank -- that progression you extend you think

Frank D’Orazio

really year. of first driving of rate few signs shown months in the have broader macro increases the think the I not any slowing momentum factors

obviously underlying very has far as inflation growth So a fundamentals and strong, emerged economic thus and remain factor.

expect to be for rate throughout and successful So are push year. the I to continue carriers going

and strong flow fronting of new units a our terms quarter, we In business. across in saw underwriting home almost all the opportunities first good our seeing program growth in production, of and we're E&S

marketplace we're continuation seeing the suggests trends. just So everything of recent that the in the

Mark Hughes

I XX.X% Sarah, losses think, return the quarter, you X tangible points Re. of included on this which Casualty described, in

Your guidance that bit add double those back If full we returns little should the is the Is for points, higher? low conservatism. for be a year. X digit

Sarah Doran

added in the the to back If the the question, on ROE the to Yes. higher, we I X.X high for equity, be return considerably ratio combined tangible would Mark. common teens. Thanks think,

think, wonderful quarter. portfolio up feel do a I for there we certainly -- the double-digit low about conservatism course bit think a that had this from do of the like And energy renewable We And ROTE feel pushed, feel is in that's our But versus NII we sure. For quarter. over we there. of our kind year. contribution expectations, I good our little of expectation achieving this

Mark Hughes

And well? be the likely in turnover this it be portfolio you've that year. year mentioned similar the Would to about as next XX%

Sarah Doran

of and would be similar the is and terms think that So as what portfolio year half say terms if over that that. maturing combination I half what's the it's the floating of And a next about I would rate year, XX% each. of that and in would to pretty in is turnover,

Mark Hughes

underlying Yes. the comp in appetite? program, account? in Understood. your there any -- that The a their change just the was the relationship large in or Was Specialty allocation nature program, that of the change underlying Admitted, with workers'

Frank D’Orazio

focused. pressure the comp that large couple California some of seeing we've happens to be Mark, workers' years comp rates for program and workers' last No, on

terms we've the program But been last so what that of years. rate bringing really couple we retention it's in environment. And the our assume down over of on

a Now writer. not XX-state we're

risk a rates in closer have, rates I Southeast We the terms as would the still Broadly, individual Southeast on and the program. then focuses individual know, a the unit that in comp orders behaving off, are and you comp this bit we're an but seeing decreased in seeing large say unit double-digit large risk leveling program. to pressure workers' we're better, that of

And wouldn't rationally. of change so conditions in to say I responding kind the if market appetite. It's any that has

Operator

question the line from UBS. Meredith next Brian Our of with comes

Brian Meredith

of quick couple for ones here you. A

expense expense guiding first And the to here you ratio. ratio. back XX% the still to you're a is quarter in had a first historically, XX% First, if I Sorry, I highest XX% know your look typically, quarter.

why going be is to still XX%? it XX% to So

Sarah Doran

Sure.

reduced Brian, given the that in just expense You're one fourth right. the excuse throughout but point the We've the the reductions achieved is our I'd me, It had significant in -- we've periods. performance highest, is quarter, of typically recent the things out compensation our ratios. had company Mark that in apologies, organization

sheet We year. in not our We that are and comfortable obviously like balance that with this our earnings anticipating feel would there. anything very happen forecast

part of expectation. that that So is

quarter as that's think the point probably because look and I out power artificially forward. turning the fourth going been organization important at is we low has that to

Brian Meredith

though. at Got looking second you. if But I'm quarter, third the and

Sarah Doran

given last have year, down Look, the fluctuate at, I of biggest can pushed given but in the for any XX% really has Yes. piece ratio the for quarter, think example, it expense our the the annual it XX% that would quarter, think, in just year. to I which it was down been, fourth scale,

Brian Meredith

question, And looks then up on E&S, I'm quite in basis. that? rate excess a look to your trend and then a was I the second curious, year-over-year ratio loss be that underlying just Any given actually in good. for it continues If reason of

Frank D’Orazio

to theme patient relative we've consistent is both loss going kind that just with be year-to-year. -- loss to let I time. change One, based don't that it's those last season how just of just things. business on been to that ratios on set mix number, about the we're and ratios in fairly the changes and we to over right? and relative stressing just going year, forget the conservative right we mean, two that's So the the overall, from But say would I Well,

Brian Meredith

you're Great. lines 'XX? business versus we'll looking changes popping And any areas that XXXX in Any Frank, in significant up you're or or quarter in first of mix your the business in that XX-Q more? see at that

Frank D’Orazio

of segment fronting I'd carrier been say that being primarily more our I appetite the E&S mean the past. risk with consistent is Specialty segment. a and fairly Admitted in we've in No, taking the

are of of the been referenced kind double-digit I in growth terms most that really showing E&S out In segment. XX quarter. the throughout it's of XX, of consistent growth, believe, our the before I segments

So really well. very strong and pricing holding is up very

the quarters rate we're point, And some change now it renewal we're rate started ago of seeing terms book. we're relative lines And years increases. kind on that of increases being consecutive in throughout rate market back to this off extremely At So meaningful. XX is rate seeing of rates. this few it a leaders double-digit to in

to quarter. mention well. market our great submissions it comments submission the would in E&S just mentioned extremely over other the stats And much is in for is and XX% that's So we with prepared and longer. I Business it see. as renewal grew in -- positive. staying And point that's us see the We this

in market. clip faster a that's So and quarters with earlier than hard in last this quarter line

percentages. beneficial to familiarity XX% extremely roughly renewals our us. a low very call We them, of risk. our it, So bind high quote with given just and XX high percentage the of -- XXs,

So those business. new our ratios on of buying quote are and multiples

up quoting capital. very it's ratios efficient in increase in efficient So is renewal very use -- course, just of of of and, a underwriters' of our terms terms having the going renewals the our of time a use an

Operator

with KBW. [Operator Instructions] Our of the next Meyer question Shields line comes from

Meyer Shields

year-over-year up Two The related basis. and a questions. in net of went surplus excess ratio growth on

you thoughts could now where about, ceding trend? in on we're commissions long-term trends underlying growth and hoping was seeing talk to what maybe I So net I guess,

Sarah Doran

Frank start that. Maybe in. with can I'll jump

went or two, that correctly. up at it I'm if think a I Meyer, point looking

jump. where not grow And is just sensitivity on this So we're going any given really in a to the big quarter.

percentage. in much it X, I think quarters, about our ago, X/X was think excess years I smaller casualty past line, E&S. X example, of a about that's for

heavily has grown, up line ceding line that as the So because reinsured. it's ratio that is pushed

lines underwriting at great going given the that some little outpacing any bit divisions, rate quarter. different And with grew if really faster lines different paces are and think So kind doesn't overall was But still in in of I that to quarter. XX grow We're in line. a everything. that -- growth great seeing other

just So years very how now much for in would kind the and going and River. in mixed Those those quarter. as ended frame. be to James though, unchanged treaties well, add, as that's I many really been we to kind have renewing summer partners time the many, just of treaties structures at of are

big through structures, that's working Clearly, we're or to not a necessarily. about of are any but it's A, that that, to big expecting: cost we we think changes how changes those it. lifetime So B, the

the we that not to depend the on ceded divisions the if grow see and cost the ceded, to where rate will helps. much, will on see impact on we So that, but expecting where growth the of continue different piece and through P&L, the it that

Meyer Shields

does. It

Second appreciably? orders say, the is is the compensation -- question earned of premium mix Admitted, to should earned premium in changing sorry, Specialty I contribution net

Sarah Doran

it's The specifically lower around contribution I given the earned grown business of parts it, we've just and that, from look the confident not question. I'm the a little net now. business, not be going of say quarters couple this that's fronting to It I'm fronting at case wouldn't that that's your a of other quarter, but from year a appreciable was now bit an change, we or as

write pretty importantly, because want remain business of I dependent, the lumpy in fronting lack we way as most can to a the know, in it's better ability to think be our that of-deal growth as things and nimble it. you change describe kind business to for so pretty

I think consistent. that's going to

Operator

We of Compass the Casey have Alexander question a from with line Point.

Casey Alexander

was $XX question. Casualty quick written of How about million versus million a last Re Just year. the $XX gross

expect at you the written written gross level for Re? that bringing down, play year. How a So it of during compared look the to you as said. the of would reasonable it year how that obviously, you're out for fairly gross Is you Casualty balance to

Sarah Doran

amount. That you for always a the and is about quarter it it's segment, quarter, pointed Casey. by the was as first the quarter largest almost fair $XX that largest million, for our So out -- there,

of the And basis. on trend we're said a going we to the are to -- because down pretty million out full year quarter take the that the largest. course expect book first already $XXX year the is of would I So we've over significantly

in think I from GWP segment. So out, on here smaller see you'll that quarters

Casey Alexander

All right. Great. That's very helpful.

-- you you a what a what renewable net energy, . from contribution would normalized call level sort what of income large going call investment normalized Brett, one you going Just for for Obviously, have forward? would would do you forward? a level

Brett Shirreffs

break Yes. over for more there, portfolio, income a of Casey, million in stable release quarter. I of part investment the the our think little the reported out $XX the detail net earnings we

details does provided mentioned, Sarah in rates reinvestment portfolio the And she existing of yield. energy than the bit renewable portfolio around a some terms As quite quarter-to-quarter. bounce being higher also

portfolio, stable higher $XX a continue and million we trend more part the the change of reinvest the the should to So bit as portfolio.

Operator

I'm time. showing at no turn to now I further would this D’Orazio. like conference questions back to the Frank

Frank D’Orazio

you. to the I want for James QX you, is to a look it of year. results, thank the employees with dedication enjoy that and and thank To Thank I received our call discuss QX Thank your as River, our hard again for on for in their work the day. this to you and everyone start you your very today I earlier, all morning. suggested their time in few to a questions listening Okay. solid we delivering forward certainly results. speaking of months

Operator

concludes participating. This Thank for call. today's you conference

You may now disconnect.

James River (JRVR) 14 May 222022 Q1 Earnings call transcript