James River Group Holdings, Inc. · NASDAQ:JRVR
James River — Q1 2019 Earnings Presentation
27 slides from James River's earnings presentation, May 10, 2019
Slide 1: First Quarter 2019 Investor Presentation
First Quarter 2019 Investor Presentation Disclosure
Slide 2: Forward-Looking Statements
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, intend, project, antic
Slide 3: Table of Contents
Table of Contents Overview Our Business Financial Highlights Appendix
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 casualty
Slide 6: Q1 2019: Improved Operating Results
Q1 2019: Improved Operating Results Gross Premiums Written $ 327.3 $ 298.1 9.8% Expense Ratio Combined Ratio 22.6% 96.2% 24.9% 96.4% -9.2% -0.2% Operating Income Net Investment Income 21.7 19.4 16.6 13.3 31.0% 46.6% TBV per Share Before the Deduction of Dividends Operating Return on Tangible Equity
Slide 7: Consistent Top Tier Returns
Consistent Top Tier Returns Best in class risk reward generated with low volatility, sector-leading returns 18.0% AMSF, Ÿ 15.5% 16.0% 14.0% KNSL, Ÿ 15.4% JRVR, Ÿ 13.1% RLI, Ÿ 12.6% 12.0% 10.0% WRB, Ÿ 8.4% 8.0% ARGO, Ÿ 5.7% MKL, Ÿ 6.2% 6.0% 4.0% 2.0% 0.0% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%
Slide 8: Leading Expense and Scale Benefit
Leading Expense and Scale Benefit Our material expense advantage is a key competitive advantage 1 23.1 Ÿ 22.6 20.0 Ÿ 15.0 Ÿ 10.0 Ÿ 5.0 Ÿ - 2013 2014 2015 2016 2017 2018 2019Q1 James Ÿ River Peer Ÿ Average 2 1 GAAP expense ratio; all other expenses adjusted for inclusion in the expense ratio. 2 Peer
Slide 9: Leading Value Creation
Leading Value Creation We have delivered best in class shareholder returns since becoming a public company 425% 375% 325% 18.0% 275% 16.0% 14.0% 225% 12.0% 175% Median Ÿ = Ÿ 108.1% 10.0% 8.0% 125% 6.0% 75% 4.0% 2.0% 25% 0.0% -25% 2 AMSF KNSL JRVR RLI WRB MKL ARGO KNSL Ÿ JRVR RLI ARGO WRB AMSF MKL 1.
Slide 10: Our Current Valuation Supports Meaningful Upside
Our Current Valuation Supports Meaningful Upside 40.0x 7.0x 35.0x 6.0x KNSL 30.0x Price Ÿ to Ÿ Next Ÿ 12 Ÿ Mths Ÿ EPS 5.0x 25.0x 2.0x WRB 10.0x 1.0x 5.0x 0.0x 0.0x 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 2019 Ÿ Consensus ROATE R2 Ÿ = 0.5265 Source: SNL Financial. Market data as of May 3, 2019.
Slide 11: Our Business
Our Business
Slide 12: Our Business
Our Business E & S 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 networking companies - Focus on small and medium-sized commercia
Slide 13: Franchise Overview
Franchise Overview - We are a specialty, low volatility underwriting company with a proven history of generating consistent profits - Our key area of focus is small and medium sized commercial account Excess & Surplus Lines casualty business with $1 million per occurrence limits and approximately $2
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 $58 million of capital and a single insurance subsidiary, James River Insurance Company, an E & S underwriter - Stonewood Insurance Company is formed in Raleigh, NC to write highly
Slide 15: E & S Focus | Profitable, Niche Specialty Underwriting
E & S Focus | Profitable, Niche Specialty Underwriting ? Our business is heavily concentrated in E & S Casualty (92% of 2018 NWP and generated by both the E & S and Casualty Reinsurance segments). ? We have focused on building an attractive portfolio of new economy risks ? E & S is the most profitab
Slide 16: Growth driven by new economy risks, core E&S and fronting
16 Growth driven by attractive new economy risks, core E & S growth, and expansion of our fee based fronting business E & S Segment Specialty Admitted Segment Casualty Reinsurance Segment($ in Millions) Segment Specialty Admitted Segment Casualty Reinsurance Segment PROFITABLE SPECIALTY UNDERWRITING
Slide 17: Financial Highlights
Financial Highlights
Slide 18: Broad Risk Appetite Permits Us to Pick Our Spots
$656.5 Broad Risk Appetite Permits Us to ?Pick Our Spots? Each Excess & Surplus Lines policy is underwritten by in-house specialists with deep technical expertise across 13 underwriting divisions ? During the first quarter of 2019, rates have increased 2.6% across our core (non-commercial auto) E &
Slide 19: Demonstrated Underwriting Discipline
? Demonstrated Underwriting Discipline We have proven our willingness to expand and contract when market conditions dictate, and have a strong track record of profitable underwriting E & S Segment GWP Growth vs. Total E & S Industry 60.0% (3.8) (23.1) (25.0) (15.9) 12.8 21.1 21.3 31.3 22.2 20.1 (3.5
Slide 20: A Growing Fee Business
$656.5 A Growing Fee Business Fee Income Example James River (Via Falls Lake subsidiaries) Insured Companies(Managing General Agents) Capacity Providers(Highly rated reinsurers assume underwriting risk and reward) 20
Slide 21: Traditional Investment Approach Augmented by Higher Yielding Alternatives
Traditional Investment Approach Augmented by Higher Yielding Alternatives Commentary ? Our investment portfolio consists of investment grade fixed maturity securities, selectively supplemented by non-traditional investments ? Examples of non-traditional investments we have made include: ? Participat
Slide 22: Capital Management Maximizes Shareholder Value
Capital Management Maximizes Shareholder Value Capital Management History $1,050 $950 $850 $750 $650 $550 $450 $350 $388 $442 $482 $529 $559 $479 $466 $460 $472 $475 $490 $535$388$442$506$553$584$615$672$713$792$845$897$9512008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1 2019 ? $416 million
Slide 23: Appendix
Appendix
Slide 24: James River Group Key Metrics
James River Group Key Metrics ? Exchange/Ticker NASDAQ / ?JRVR? Initial Public Offering $21.00 (December 12, 2014) Current Share Price $45.30 (Closing Price May 3, 2019) Market Capitalization $1.366 billion (May 3, 2019 market close) LTM Dividend / Yield $1.20 per share = 2.6% yield1 Gross Written P
Slide 25: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Non-GAAP Reconciliation Underwriting Profit (Loss) ($mm) 2015 2016 2017 2018 Q1 2018 Q1 2019 Underwriting profit (loss) of the operating segments: Excess and Surplus Lines Specialty Admitted Insurance Casualty Reinsurance Total underwriting profit of operating segmen
Slide 26: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Non-GAAP Reconciliation ($mm) Adj. Net Operating Income 2015 2016 2017 Q1 2019 Q1 2018 2018 Income as reported $ 53.5 $ 74.5 $ 43.6 $ 63.8 Net realized inv. (gains) losses 4.1 (5.2) 1.4 4.4 Initial public offering costs ---Dividend withholding taxes 2.5 -1.0 Other ex
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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