James River Group Holdings, Inc. · NASDAQ:JRVR
James River — Q2 2019 Earnings Presentation
27 slides from James River's earnings presentation, Aug 13, 2019
Slide 1: Second Quarter 2019 Investor Presentation
Second Quarter 2019 Investor Presentation
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, inte
Slide 3: Table of Contents
Overview Slide 4 Our Business Slide 11 Financial Highlights Slide 17 Appendix Slide 23 Table of Contents 3
Slide 4: Overview
Overview
Slide 5: Our Strategy
Our Strategy We deliver consistent, top tier returns on tangible equity and generate sector leading value creation ; We are executing a clear growth strategy while maintaining superior underwriting margins and growing both non - risk fee and investment income ; We target niche low volatility casualt
Slide 6: Q2 2019: Improved Operating Results
Q2 2019: Improved Operating Results 6 Source: Company filings. ($millions, except per share amounts) Q2 2019 QTD Q2 2018 QTD Gross Premiums Written 380.0$ 293.4$ 29.5% Expense Ratio 21.3% 23.1% -7.8% Combined Ratio 95.2% 97.3% -2.2% Operating Income 20.2 17.6 14.8% Net Investment Income 17.5 16.1 8.
Slide 7: Consistent Top Tier Returns
7 Consistent Top Tier Returns Best in class risk reward generated with low volatility, sector - leading returns Source: data Copyright © 2019, S&P Global Market Intelligence (and its affiliates, as applicable). Data as of August 9, 2019 . Operating ROATE calculated as trailing twelve month operating
Slide 8: Leading Expense and Scale Benefit
Our material expense advantage is a key competitive advantage Leading Expense and Scale Benefit 8 1 GAAP expense ratio; all other expenses adjusted for inclusion in the expense ratio. 2 Peer Group: Amerisafe Inc. (AMSF), Argo Group International Holdings, Ltd. (ARGO), Kinsale Capital Group Inc. (KNS
Slide 9: Leading Value Creation
Leading Value Creation We have delivered best in class shareholder returns since becoming a public company 9 1. Shareholder return represents the dividend - adjusted share price appreciation from James River’s initial public offering date of December 12, 2014 until August 9, 2019. 2. KNSL’s total sh
Slide 10: Our Current Valuation Supports Meaningful Upside
Our Current Valuation Supports Meaningful Upside 10 P/TBV vs Operating ROTE 1 Price/Next Twelve Month Consensus Earnings Source: data Copyright © 2019, S&P Global Market Intelligence (and its affiliates, as applicable). Data as of August 9, 2019. 1 Analyst consensus operating earnings per share for
Slide 11: Our Business
Our Business
Slide 12: Our Business
12 Our Business E&S Segment Specialty Admitted Segment Casualty Reinsurance Segment • E&S business underwritten by specialists in 13 divisions organized by product or industry segment • 88.5% average combined ratio from 2014 - 2018 • Leading market for new economy risks led by transportation network
Slide 13: Franchise Overview: Negligible Property Exposure
Franchise Overview 13 Negligible Property Exposure 2018 Group - wide NWP: $763mm 2018 Group - wide Net Written Premiums by Type 2018 Group - wide Net Written Premiums by Coverage • We are a specialty, low volatility underwriting company with a proven history of generating consistent profits • Our ke
Slide 14: Company history and milestones
Adam Abram and a group of investors purchase Front Royal, Inc., for $3 million • James River Group, Inc. is formed with $58 million of capital and a single insurance subsidiary, James River Insurance Company, an E&S underwriter • Stonewood Insurance Company is formed in Raleigh, NC to write highly i
Slide 15: E&S Focus: Profitable, Niche Specialty Underwriting
15 E&S Focus | Profitable, Niche Specialty Underwriting Profitability of E&S vs. Total P&C Industry E&S Gaining Share of P&C Insurance Market E&S segment GWP grew by 24% during 2018 and 34% YTD Q2 2019 over YTD Q2 2018 Avg. Combined Ratios 2000 – 2017 Difference of 5 percentage points Total P&C GWP:
Slide 16: Growth driven by new economy risks, core E&S and fronting
16 Growth driven by attractive new economy risks, core E&S growth, and expansion of our fee based fronting business E&S Segment Specialty Admitted Segment Casualty Reinsurance Segment ($ in Millions) E&S Segment Specialty Admitted Segment Casualty Reinsurance Segment PROFITABLE SPECIALTY UNDERWRITIN
Slide 17: Financial Highlights
Financial Highlights
Slide 18: Broad Risk Appetite Permits Us to 'Pick Our Spots'
Broad Risk Appetite Permits Us to ‘Pick Our Spots’ 18 Each Excess & Surplus Lines policy is underwritten by in - house specialists with deep technical expertise across 13 underwriting divisions • During the first half of 2019 , rates have increased 4 . 2 % across our core (non - commercial auto) E&S
Slide 19: Demonstrated Underwriting Discipline
(3.8) (23.1) (25.0) (15.9) 12.8 21.1 21.3 31.3 22.2 20.1 42.9 (3.5) (6.2) (4.1) (3.8) (1.8) 11.8 8.4 6.7 2.5 2.8 5.8 (40.0%) (20.0%) 0.0% 20.0% 40.0% 60.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 GWP Growth (%) JRVR E&S Market Demonstrated Underwriting Discipline Source: Company filin
Slide 20: A Growing Fee Business
A Growing Fee Business 20 Fee Income Example $656.5 James River (Via Falls Lake subsidiaries) Insured Companies (Managing General Agents) Capacity Providers (Highly rated reinsurers assume underwriting risk and reward)
Slide 21: Traditional Investment Approach Augmented by Higher Yielding Alternatives
21 Traditional Investment Approach Augmented by Higher Yielding Alternatives Total Cash and Investments: $1,935MM Duration: Investment Portfolio (as of June 30, 2019) Net Investment Yield • Our investment portfolio consists of investment grade fixed maturity securities, selectively supplemented by n
Slide 22: Capital Management Maximizes Shareholder Value
Capital Management Maximizes Shareholder Value 22 Capital Management History • $425 million of capital returned since 2008 • $219 million of capital returned to shareholders since December 2014 IPO, or 47.1% of tangible book value at that time • Last twelve month d ividend yield of 2.5% 1 1. Calcula
Slide 23: Appendix
Appendix
Slide 24: James River Group Key Metrics
James River Group Key Metrics 24 ; Exchange/Ticker NASDAQ / “JRVR” ; Initial Public Offering $21.00 (December 12, 2014) ; Current Share Price $48.03 (Closing Price August 9, 2019) ; Market Capitalization $1.459 billion (August 9, 2019 market close) ; LTM Dividend / Yield $1.20 per share = 2.5% yield
Slide 25: Non-GAAP Measures Reconciliation
Non - GAAP Measures Reconciliation 25 Source: Company filings. Non - GAAP Reconciliation Underwriting Profit (Loss) 2018 YTD Q2 2018 YTD Q2 2019 ($mm) 2015 2016 2017 Underwriting profit (loss) of the operating segments: Excess and Surplus Lines $ 47.6 $ 47.2 $ 29.7 $ 42.8 $ 21.4 $ 28.9 Specialty Adm
Slide 26: Non-GAAP Measures Reconciliation
Non - GAAP Measures Reconciliation 26 Note: In the Tangible Equity Table, 2008 to 2013 shares outstanding are retroactively adjusted for 50/1 stock split. Addition all y, all amounts are as of December 31 for each period indicated, except YTD Q2 2018 and YTD Q2 2019 which are as of June 30. Source:
Slide 27: Compounding Value through an Unrelenting Focus on Underwriting Profit
Compounding Value through an Unrelenting Focus on Underwriting Profit InvestorRelations@jrgh.net
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