James River Group Holdings, Inc. · NASDAQ:JRVR
James River — Q3 2022 Earnings Presentation
25 slides from James River's earnings presentation, Nov 16, 2022
Slide 1: Investor Presentation Third Quarter 2022
Investor Presentation Third Quarter 2022
Slide 2: Disclosure: Forward-Looking Statements
Disclosure Forward - Looking Statements This presentation contains forward - looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995 . In some cases, such forward - looking statements may be identified by terms such as believe, expect, seek, may, will, shou
Slide 3: Executive Summary
Executive Summary
Slide 4: Overview of James River
4 Overview of James River x Unique franchise predominantly focused on the Excess and Surplus lines market and fronting and program business x Target low volatility casualty risk with low retentions and little property exposure x Focused on the small and middle market, where we have meaningful expert
Slide 5: Our Business
Our Business 5 • We are a specialty, low volatility underwriting company with an attractive, sizeable Excess & Surplus (“E&S”) franchise and s cal ing “capital light” fronting business experiencing an extremely robust market for property and casualty risk. • Little catastrophe or cyber underwriting
Slide 6: Attractive Growth Businesses
$190 $218 $235 $261 $282 $334 $517 $669 $799 $857 $21 $59 $91 $182 $316 $374 $388 $409 $492 $488 2013 2014 2015 2016 2017 2018 2019 2020 2021 3Q22 LTM Core E&S Specialty Admitted Commercial Auto Casualty Re 6 Attractive Growth Businesses Historical GWP ($M) (2) Quarterly Core E&S Renewal Rate Increa
Slide 7: What is Driving Growth in the E&S Market?
7 What is Driving Growth in the E&S Market? The E&S market began experiencing rate hardening in late 2018 / early 2019 and the hardening significantly accelerated in 2020 driven by the Global Pandemic. Admitted market carriers have been tightening underwriting guidelines or non - renewing business,
Slide 8: The E&S Market is Highly Attractive
$25.4 $27.3 $28.9 $29.8 $29.9 $31.5 $34.6 $40.3 $47.6 $62.9 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 8 The E&S Market is Highly Attractive U.S. Excess & Surplus Lines DWP ($BN) Profitability of E&S Industry vs. Total P&C Industry: 10 Year Combined Ratio P&C Industry 2012 – 2021 Average Comb
Slide 9: E&S: Broad Risk Appetite Permits Us to 'Pick Our Spots'
E&S: Broad Risk Appetite Permits Us to ‘Pick Our Spots’ 9 • 13 separate underwriting divisions focused on growth in very attractive markets. • Renewal rates increased more than 13% in each of 2020 and 2021 across our E&S business, as well as 11% during the first nine months of 2022. • The 8% renewal
Slide 10: Finding Profitable Growth Opportunities
Finding Profitable Growth Opportunities 10 Attractive underwriting conditions have allowed for meaningful growth in our Core E&S book at highly profitable margins Achieving meaningful scale at highly attractive rates – disciplined underwriting culture Highly profitable Core E&S underwriting margins,
Slide 11: Specialty Admitted: Growth With Limited Risk Retention
Specialty Admitted: Growth With Limited Risk Retention 11 Fronted Programs GWP (1) Fee Income (1) Fronted programs premium represent 89% of the GWP of our Specialty Admitted Segment (1) Consistent and predictable stream of earnings $ in millions (1) Presented on an LTM basis as of the period indicat
Slide 12: We Represent a Unique Investment Opportunity
0.0% 0.9% 1.3% 2.5% 2.6% 4.5% 5.3% 0% 27% 31% 33% 35% 59% 100% 12 We Represent a Unique Investment Opportunity 2022 YTD Cat Losses % of Loss Ratio (1) 2021 E&S DWP as a % of total GWP (2) Our focus on low volatility, niche casualty E&S business and prudent reinsurance purchasing results in little ca
Slide 13: Balance Sheet and Leverage Metrics
3Q 2021 4Q 2021 1Q 2022 2Q 2022 3Q 2022 Assets Total Invested Assets $2,061.4 $2,130.5 $2,125.0 $2,038.0 $2,176.0 Cash and Cash Equivalents 220.6 190.1 270.2 350.7 187.5 Goodwill and Intangible Assets 218.0 217.9 217.8 217.7 217.6 Total Assets 4,784.1 4,948.6 5,267.2 5,265.3 5,205.5 Liabilities and
Slide 14: Investment Portfolio Commentary
Investment Portfolio 14 Commentary • Balanced portfolio focused on high quality fixed maturities, with small allocation to unique strategies to enhance returns. • Weighted average rating of A+ across the portfolio, similar to recent periods. • Total cash and invested assets increased 4% from the pri
Slide 15: Key Investment Highlights
Key Investment Highlights 15 Significant valuation upside when compared to public trading multiples of E&S focused peers Large and Expanding Addressable Market Valuation Upside Potential Strengthened reserves as well as LPT transactions covering run off commercial auto and the majority of historical
Slide 16: Appendix: 3Q 2022 Earnings
Appendix: 3Q 2022 Earnings
Slide 17: Consolidated Performance Commentary
17 Consolidated Performance Commentary • Gross written premium increased 3% due primarily to an increase in Casualty Re and Specialty Admitted, partially offset by a slight decline in E&S. • Net written and net earned premium growth was 20% and 11%, respectively, reflecting higher premium retention
Slide 18: E&S Segment Performance Commentary
18 E&S Segment Performance Commentary • Gross written premium declined 6% from the prior year quarter, primarily due to discrete actions and pricing strategies impacting select underwriting divisions. • Net written and net earned premium growth of 10% and 16%, respectively, due to higher premium ret
Slide 19: Specialty Admitted Segment Performance Commentary
19 Specialty Admitted Segment Performance Commentary • Gross written premium increased 2%, reflecting an 8% reduction in individual risk workers’ compensation and 3% growth in fronting and program premium. • Excluding a large workers’ compensation focused program, fronting and program premium increa
Slide 20: Casualty Reinsurance Segment Performance Commentary
20 Casualty Reinsurance Segment Performance Commentary • Gross written premium increased significantly compared to the prior year quarter primarily driven by premium adjustments and a timing difference with one renewal and extension. • Segment gross written premiums are expected to decline by approx
Slide 21: Appendix: Underwriting Performance Ratios & Non-GAAP Reconciliation
Appendix: Underwriting Performance Ratios & Non - GAAP Reconciliation
Slide 22: Underwriting Performance Ratios
Underwriting Performance Ratios 22 Source: Company filings. Note: During the third quarter of 2022, due to adverse paid loss trends on the legacy commercial auto portfolio, the Company rec ognized adverse prior year development of $46.7 million on the reserves subject to the commercial auto loss por
Slide 23: Non-GAAP Measures Reconciliation
Non - GAAP Measures Reconciliation 23 $ in millions Source: Company filings. Adjusted Net Operating Income (Loss) 2019 2020 2021 3Q21 3Q22 Income (Loss) Available to Common Shareholders $38.3 $4.8 ($172.8) ($23.9) ($7.2) Losses and Loss Adjustment Expenses - Retroactive Reinsurance - - - - 16.4 Net
Slide 24: Non-GAAP Measures Reconciliation: Tangible Equity
Non - GAAP Measures Reconciliation 24 $ in millions Source: Company filings. Tangible Equity & Tangible Common Equity 2019 2020 2021 3Q21 3Q22 Shareholders’ Equity $778.6 $795.6 $725.4 $813.6 $526.8 Plus: Series A Redeemable Preferred Shares - - - - 144.9 Plus: Deferred Reinsurance Gain - - - - 20.8
Slide 25: InvestorRelations@jrgh.net
InvestorRelations@jrgh.net
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