JRVR - Earnings call transcript Q2 2022 | James River Group Holdings, Ltd.

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Operator

Welcome to the James River Group Second Quarter 2022 Earnings Conference Call. My name is Hilda and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] And now I would now like to turn the call over to Mr. Relations. Investor Head, Shirreffs, Brett Mr. Shirreffs you begin. may

Brett Shirreffs

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

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

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

Frank D'Orazio

Thank back today you on second Brett. I'm everyone introduction, on color our call. pleased quarter morning all to the well welcome our as with strong Good and half plans. for operating across continued provide additional throughout that to entire of teams be the and the executed to we E&S leader business first momentum market our Undoubtedly, of the have the organization on remain has their a exceptionally year. in you

our been have expectations. profitability met optimizing able haven't We to that capitalize while on opportunities portfolios market

and XX% ratio XX.X% first making half profitable the second have becomes we in across efforts both this QX midway done and River of underwriting enterprise posted of investments also management at building other financial year. have in These while framework platforms our point resulted company. the We the more as sure a results to out the for the strong and for stronger very James and make the year risk combined a quarter

almost results just came I to second extremely a strong ago referenced pleased by quarter produced on basis. enterprise since risk These key bit profit common for has moment the into our XX.X% earnings on and profits. our return focus the consistent three expand topic excellent segments Our in on underwriting and the during tangible delivering by a are company our all I underwriting quarter, management that executive years been year-to-date the are end, and our framework by discipline building and management and ERM staff I two the team equity net demonstrating second enterprise driven potential of of of new focused adding a adjusted risk the am priority on fabric just XX.X% that operating embedding company. our our joined remain while To expertise ago. risk organization. that at We an any on out functional measure for the a Board

We integrating the processes lead and our to will term. expect more across longer these enhance business organization returns over that the throughout company the continue stable to

the the we conditions in macro remain remaining briefly of of broader of to healthy. majority economy, the that state Turning quite markets mindful operate the and

for outlook margins balance strong. and remains sheet near-term growth our in at confident are We attractive our

the compounding In in a Rate improvement as to remain X.X second E&S levels renewal year. from loss quarters in pricing in sustained the sector. strongest feel benefit discipline experienced pockets are admitted for level book that we've we increases to well we've the marketplace of our market excess driving rate change in-force, or continues consecutive during seen Our were broadly aggregate, renewal increases the industry remains quarter our extremely years XX.X%. retention underwriting XX trend. positive view producing high certain rate that cost we in Clearly, of lines and dislocation and of surplus excess

changes any historically reminder, cited information occurred model. a Level change in limits change basis at rate As the exposure rate have is level. we that transaction pure exposure and This the attachments a setting is that adjusted.

in any market would through seen if end E&S of longer. overall us at lead not in have not dynamics least We this our to that the should year, persist change pricing not believe momentum that

expertise value attractive SME relationships wholesale for franchise space clients our to well shareholders. Our with positioned distribution us and in and the serve generate leave returns

profitability increased segment rate premiums I saw in broad-based rate from by our grew a In experienced XX driven it Consistent to we of double-digit second positive quarter. increases, across consecutive results renewal rate XX.X% quarter, our over XX.X%, and Before underwriting net me change, divisions highlights significant we results premiums second while share the of additional premium premium turn gross segment, strong quarter. experiencing the Sarah, with some let E&S growth trends last growth the our growth notable positive XX.X%. with XX our for by

strong Our higher underwriting growth, both where quarter terms the particularly trends Submission much renewal were remain our casualty general ratio. than the a up from to activity largest casualty and divisions renewal way continued prior year in led have in conversion of robust, in continues portfolio our excess book. we XX% with more

renewal change first second in XX.X% from As the previously, sequentially to to quarter. increased rate quarter alluded the X.X% in

ahead dynamic experienced trends we've for have increase On a and comfortably XX%, is our quarter-to-quarter is planned basis, of renewal likely loss we from the rate few change and rate both As a expect over changes last year-to-date to fluctuated years, our is the segment. expected bit which rate that continue. cost

job casualty, of headline we reduced including casualty, remains entertainment, our classes, Carriers rate excess For larger property excess number casualty, few to our by product divisions say had and driven a sports safe think increases healthcare property. fairly capacity and underwriting is the double-digit perspective, certainly some it's these many like for for increase appetite still and a we excess of the also rate in and but industries. for that lines, risk quarter, excess tight From general the have our has push to of think and of based rate again Underwriting thresholds XX.X%, has broadly our million. $XX exceed organization at the are us offering perspective, came on need consistent they making of plan. abated. ratio I underwriters aware the good income From hasn't that rate in year. allowed combined the compress was a limits quarter E&S with results meet this to or first our very from a of and dynamic XXXX profitability This our done

our by XX% was underwriting basis. on as Our the many XX% quarter approximately year-to-date evident than focused quarter program $XX trends third of related compensation we topline market. in results consecutive pressure In continued the workers' the second quarter shared was million. profit rate followed segment a compensation and declined same Specialty on This in greater In marketplace. California last Admitted, our our total, workers' premiums impacted particularly the during of

compensation We diversification. ongoing program has reduce experienced market several have solid remain of fronting been disciplined second scale a to continues growth business counter-cyclical to appropriate. for quarter been what topline carefully workers' years and during and and remainder when the our and our managing through and The where build

late workers' program that premiums year, XX% and program acquired was Excluding of and first year. business our last a have compensation the half fronting partner approximately during the increased

the the while programs in quarter to segment $X.X We million. year X% fee for income quarter prior new add have increased to from the continued

$X quarter reduced non-renewed wrote treaties. we as million from several or participation the our of we Reinsurance, Casualty to premium Turning during second

development, business $X was in We segment. as this generate of prospective the in XX.X% excited for as each to conditions in Overall, continue be are our no earnings the from returns selective we underwriting segment well the reserve shareholders. in included segments particularly The sector very our broad and of investing the the the combined to for E&S underwriting for with for and performance investment the long-term our and resulting Market our profit income. to with favorable platform attractive authorizations of continuing participations second million the ratio are of contributions in our growth quarter. goal and we by group remain

outlook For is reasons, James River believe that let call all the we these over the Sarah. And with firmly me strong. to turn very for

Sarah Doran

approximately quarter underwriting River comparable quarter profit of of X% income This from morning, pre-tax over a million income Thanks, income $XX.X million of included and Operating everyone. XX and on from and quarter was James investment year. adjusted last the moving XX% each net XXXX. a million up had net strong good basis. another last into $XX.X solid delivering and further Frank, operating

first half the for year, adjusting the adjusted in competitors other even returns change equity return XX.X% was For equity net income, of the common which operating common on comprehensive this on and accumulated most tangible quarter. tangible our benefited

quarter Our meaningfully the from OTCE year. this of accelerated first

favorable are prior in accident many in to due XXXX. we segment and workers' million Specialty stable that quarter this remain recognizing $X.X development years in back prior to Admitted is of reserves our dating quarters compensation as Our

related loss of rate this activity book. first last, the the As in we raised of given slightly our some compensation second and continued we quarters workers' between impacts quarter soft and the did pick

last that continued ratio Our competitive models. of of enjoy with as quarter to expense largely and XX.X% a advantage business was to similar others compared we identical

mentioned income was As quarter. this million $XX.X investment earlier,

are X.XX% compared portfolio average the income that. improved new particular about fixed this sequentially XXX portfolio. of Income benefit yields part rates current and the of to Overall, We X% book during our first basis yield in from starting in as the million of in million see money higher the that to $XX.X $XX.X to weighted reinvestment year. quarter points from the ahead quarter of are approximately

X.X is Our portfolio duration years.

reinvestment of from or portfolio about $XX.X flow will over this XX% We expect our and quarter continues for reset million over million the next be that year-to-date. operations Cash opportunity have to the strong at year. existing $XXX

our portfolio second so portfolio. to due exposure, our were bank including Lastly million to largely on during $XX.X $XX losses largely portfolio this equity realized investments, AOCI of cash. secured about which grade less declined loan million represent our and preferred XX% loan in quarter, senior In our the total, investment bank quarter. is about portfolio preferred

million, quality income The rates. plus. the A reminder, the tend and all second preferred mature until unrealized an equity a maturities quarter during they with substantially common As hold the equity which income of portfolio Series fixed decline We driven was quarter. a $XXX.X average credit ended remains in our the we fixed we in and of of quarter issued position the tangible by million includes tangible interest rise $XXX.X of first to

to key the facility leverage ratios full AOCI equity exclude While GAAP impacted preferred and our securities or our debt capital agency significant credit give impact equity, the structure. interest also and in changes the rating moves of rate

Given this second financial leverage excellent conclusion, River the our quarter. quarter, position. quarter our strategic XX% this ratio as James unchanged from per and last In facilities, ended was at debt

let ample We moderator line attractive And have current with it open scale for company. to capital in the our the environment turn the continue very that to to see opportunities invest questions. and back continue to me to operate and to

Operator

Thank you. [Operator Please Truist. Hughes Instructions] And we ahead. Mark from have go

Mark Hughes

Yes. Thank Good you much. very morning.

Frank D'Orazio

Good morning, Mark.

Mark Hughes

well ahead in Are you is pricing of loss kind that costs. any of loss movements mentioned there cost you Frank, inflation. seeing

in you around pointed think think more I to book and you out are pick inflation? in was motivating as But seeing broadly you maybe how describe the it soft picks pricing well loss up you I some there. workers' the anything activity comp

Frank D'Orazio

Sure.

of at year. trend cost So for view we loss increased XXXX of end last our the

the I review as or as make maybe well address XXX remember this Unit lines process our is it. than Excess as range our trend of you when we assumptions did with concerning we the with Property part auto certain as workers' E&S of all comp we portfolio Commercial think the smaller. is perhaps and as we to before spoken event of our of about we even basis for regularly a in think quarterly points higher mid-single-digit high with And we've business need segment. areas so less relative of some look X% inflation, to our change in at our our more portfolio to feel as

and loss discuss a trend, view difference line. in we same trend of our to product tend on line for loss focus that exposure when So between trend the we particular

exposure essence, fairly would in we trend we is view majority impacted that I our and the bit remained healthy suggest inflation operate So portfolio offset have loss a captures an fortunately exposure of basis. trend and markets in to of the

are a captured premium rate positive we've perspective, being those been change. and jumped in So from rate formulas. collecting But exposure our

on X.X for Now years the portfolio so. or E&S

rate at change excess So, broadly ahead not our trend, rate rate XX%. well our only margin change to yes, assumption in point especially and collected business XXXX of you expansion, at of with We're as XXXX we in but loss positive speaks when that more the of expansion margin halfway our as XXXX. XXXX in consider that of both plan view XX% in positive well

Mark Hughes

you in there? can that's seeing in anything any Thank that, to ongoing. premium of context be I quantify the that then for impact think in it interested of know client you don't slowdown makes quarter, And base you're that. there if but the is comes you audit your kind of the the would And when in SME economy, any details

Frank D'Orazio

juncture. perceived it's Yes, on what Well as negative well. But in issues of in that wouldn't of of up relative exposure year. course macro there trends U.S. at premium occur our our capture I this at or at would component basis, say any this to We at of not some to entire new show see addition basis audits and least broader see audits. I concerns, seeing we this juncture renewal this revenues formulas point. the fundamentals. growth the exposure economic to solid quarterly to insurance see we just business something premium a despite continue premium at kind It's see We're relative the just any over

Mark Hughes

hear Sarah turnover. of bps then we yield to maybe yield points new QX? assume you QX per higher about XX on XX I portfolio what extra you're saw the XXX what bps money to saying maybe similar basis of quarter, And Should access portfolio

Sarah Doran

Mark, unreasonable I an assumption, not That's think.

Mark Hughes

Okay, thank you.

Operator

Shields question Please ahead. from next go from comes Our Meyer KBW.

Meyer Shields

Sarah, new quarter any have morning. meaningful question. can River, I seen in third that to-date? on yields James the When about talk for if follow-up Good Thanks. change we you money

Sarah Doran

think I are basis the say I is in about higher. basis, points book a yield can it's to where Yes, we XXX best compared

the across from -- terribly we where there. Meyer, So end of where not at were from think different the our we're up it's end about quarter. the portfolio, composite X% I

last whole the current so, the in at month that over that's I frame portfolio. or So of we're what rates but how looking terms across reinvestment

Meyer Shields

other Okay, fantastic. questions. A small of couple

any First rates all, commission changes of in specifically ceding with any?

Frank D'Orazio

to anything Not of. No. speak

to of appreciate about Meyer? in ceded overrides treaties, just relative terms talking what the You're we the

Meyer Shields

yes. Exactly,

Frank D'Orazio

core past renewals with came major just relative year. maybe that years consistent Fairly to our up

Meyer Shields

and lot relative to, Okay, portfolio Uber news. shown don't ago? Excess about for that that's non- the Casualty. of while final And a general good overall you talk then business in casualty Can few a you've growth of tail of question, talk the of I or years line know,

Frank D'Orazio

Sure.

to So bit. tend be first about portfolio let's right. a first the We talk a player excess

we're we're going tail the playing we're primary. in excess a primary. so over right not mezzanine not over So we're right of excess the majority of vast player, time The right high writing $X player, certainly our than to And be XX% a even limits would your a primary profile of our on less gross fairly on general layers, basis. are still a tight but longer casualty or I basis. is gross over say, million well limit is

as may and as So to it's tail a of excess players relative tower of or as the program, might top you long long et other you play just that with think think mid-tower cetera. not or as throughout concerns

in there. we So products have tough

You can have exposures, have GL et exposures cetera. auto you can

component exposure think couple realm primary our the of how I what the say, to that not of to would be is the about say, of speak of on it's obviously years depending tail that, to the base But going than, GL. out primary we - it not let's of a the longer driving So risk, book.

Meyer Shields

Okay needed. that's That's perfect. you. Thank all I

Operator

next comes UBS. Please ahead. Brian from Our from question Meredith go

Brian Meredith

thanks a Yes, here. couple

XX% thinking to Sarah, quarter little was the XX% XX% First, about? to the should were a tax lower you XX% this number think is maybe I us It we lower last rate. this quarter, of still be telling

Sarah Doran

Brian. for I the think end little Obviously, That's in from it different probably we we'll was are bit the a where what right up. around XX% year. quarter,

think related would I the to due that's experienced of to quick that. reminder, first LPT push the the just that up going think tax a the quarter that's Bermuda that's we about terms effective I as in losses in in And to So it - rate.

Brian Meredith

And was terrific. curious. Okay just then Frank, I

Why levels You that deceleration are rates you the your different? in think - do whereas achieved. that are obviously improvement rate the quarter, in and a in nice people a a all in meaningful you lot seen rate of this experiencing industry activity is moderation

Frank D'Orazio

I changes my kind excess ahead specialist driven the our increases. comments, number double-digit I definitely. But including seen said just them the particularly entertainment, earlier we across of expected you're property, our we're a divisions, I've and rate is renewal by underwriting like increases excess also for of same XXXX. us seeing I where most have well headline healthcare, of generally of And again, divisions, dynamics at areas, where other rates sports we to segment. E&S mean, be in casualty, market. rate admitted healthy Well referencing, in Like think underwriting some in been of rate some saw relative the that to in increased larger

market favorable to throughout that continue can broadly So momentum the think, pricing that the we we push rest the of suggests year. I conditions, certainly have

Brian Meredith

Any Got you differences away then, a stuff now my of that's guess, in kind that on? just from all great. curious. of quarters going we're activity I last question, And was submission noticeable the of that couple

Frank D'Orazio

Well, Again, our terms where up positive we book. submissions, double-digit for in growth points our on renewal efficient first second like renewal our use of ratios in And because seen conversion our we've saw our submissions. a the time so the high are quarter. quarter-over-quarter in us, in just underwriters' very that's it's been real quarter, XX of increases

to to prior, So steady as years. over been last experiencing we we've relative change holding just the is longer, very rate particularly growth given see the our which continue of on great that over couple renewals to again,

Brian Meredith

very thanks helpful. Absolutely it's

Frank D'Orazio

you. Thank

Operator

Tracy Benguigui Barclays. [Operator from go Please ahead. Instructions] Next we in line, have

Tracy Benguigui

side. I'm taking picks wondering there workers' color the your component an provide wage that others morning, Good for up from comp. hearing is We're loss additional if you on on could exposure

XX% represents claim. of indemnity think I So

more considerations? few more well, you as you adverse So made Particularly little would comments about a why on have bit other few a a view. want to hear a

Frank D'Orazio

Tracy. do I'm happy No, to Sure. that,

the talking comp California California, for that, we been in erosion been several have again, time, have And as important softening Southeast, just it's to some our in other, the different distinctively we've a portfolios, and about So the focused portfolios, note workers' in for rates program. one very rate particularly years. two

writer. the So down very disappointed weeks. Workers rate to Bureau few a the we're forward put were We Comp the California was XX-state in not to shot Rating see that recommended last increase

increase So than recommendation, it, for we a understood the X%. greater an bit was as of

anticipated. but is for pricing up us, XXXX comp is change XX%, California make not to enough as For which offset, wage roughly that than workers' gap. an our for we large program greater recognize certainly down And

and trying in current accident we're So to year. be responsive conservative be may the

As for the releases, we've we've market different at took have large time a Falls and release. been Specialty our relative writing California Admitted, the been writing conditions our comfortable And been at just look Frankly, for continuum. that comp actions risk our retentions workers' program and that since XXXX. individual and Lake with quarterly we long or we to felt along reserves the

Tracy Benguigui

In which years from? the were releases coming

Frank D'Orazio

given portfolios for years. it's is both a a again, - number number instances in A this we've And in not written number huge of - year. these any one

really years. So across it's number of a

Sarah Doran

went Tracy. said to I it think back I XXXX,

there started working and of [ph] kind So more currently.

Tracy Benguigui

Okay. tail I it has think do Do passed XXXX? experience about time long a you mean line? how since think because you enough is

Sarah Doran

most old obviously, we're you those about continued with looking what reserves. the in California and out. those Southeastern then We're that think six very if book years, years part. in small We've comfortable our for redundancy the at And book, is, had years. Again, consistent exposure

are where have comfortable been conservative here. and with we very pretty I think we're

Tracy Benguigui

Got question. it. And my last

at will just premiums by first given of And the million. $XXX us year, versus year casualty half are this the you've down that premiums million last. look if So $XX I down guidance go

of slow the the expect we the should will cadence look how to half down? like year it So second

Sarah Doran

one Frank, want Frank you take that do let - to I'll or...?

Frank D'Orazio

to the expect. I Sarah, we're that and or of think where say we want you said just year would we in take And you I pace if might broadly, that? where million Well, add you and halfway point of out again, going the finished if on through finished to don't the kind XXXX about there you we're fact know the to $XXX kind

Sarah Doran

the Yes, second than larger and of the year, last of even the just year every just I is that year, quarter significantly to that half kind not context, say the that's frame to was in one would of it. way - Tracy, first half put

at is, those we we're piece we're and basis quarter-by-quarter I opportunity as think the to decisions single to anything in renewal his I a in single anything. to us. other do make be or every market and comes every said, think Frank beholden said as to going write as look the going don't comments,

would will point the to But degree, the to book real-time I course last some think of those decisions. So also cadence I over year. in be, the

Tracy Benguigui

you. Thank

Operator

we Frank will have no moment, final to Mr. Executive call turn now this I the Officer, further Chief questions. At for D'Orazio, remarks.

Frank D'Orazio

listening thank the forward you, to Thank again and call We you a today enjoy And this in you. our to morning. time the your everyone for discuss results. few for we and speaking I want on look received QX to day. questions their Thank with months

Operator

Thank for you, gentlemen. conference. ladies participating. concludes and Thank today's This you

disconnect. now may You

James River (JRVR) 2 Aug 222022 Q2 Earnings call transcript