James River Group Holdings, Inc. · NASDAQ:JRVR
James River — Q3 2019 Earnings Presentation
23 slides from James River's earnings presentation, November 2019
Slide 1: Third Quarter 2019 Investor Presentation
Third Quarter 2019 Investor Presentation
Slide 2: Disclosure
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, intend, pro
Slide 3: Table of Contents
Table of Contents Franchise Overview Slide 4 Comparative Market Highlights Slide 16 Appendix Slide 19 3
Slide 4: Franchise Overview
Franchise Overview
Slide 5: Our Strategy
Our Strategy We seek to deliver consistent, top tier returns on tangible equity and generate sector leading value creation ⚫ Our strategy is to generate superior underwriting margins from our niche casualty focused risks, while growing both non risk fee income and investment income ⚫ Our largest bus
Slide 6: Focus on Attractive Part of P&C Market
Focus on Attractive Part of P&C Market • We are a specialty, low volatility underwriting company with a proven history of generating consistent profits • Our focus has been to significantly grow our two primary businesses given the attractive opportunities to put capital to work • Our key area of fo
Slide 7: Our Business
Our Business Specialty Admitted Casualty Reinsurance E&S Segment Segment Segment • Represents over 75% of group • Specialty admitted insurance • Third-party proportional and premium and is underwritten by coverages in the US, including a working-layer excess casualty specialists in 13 divisions util
Slide 8: Targeted Growth in Gross Written Premium
Targeted Growth in Gross Written Premium Growth driven by strong renewal pricing and submission growth in core E&S and expansion of our fee based fronting business ($ in Millions) E&S Segment Specialty Admitted Segment Casualty Reinsurance Segment $688 $657 $374 $316 $235 $530 $490 $283 $293 $184 $1
Slide 9: Our Specialty Market History
Our Specialty Market History We have a long history of success in building niche businesses and generating top tier returns for investors On pace to write more than $200 million of specialty James River YE 2018 Adam Abram and premiums in the calendar James River James River successfully a group of y
Slide 10: E&S Focus | Profitable, Niche Specialty Underwriting
E&S Focus | Profitable, Niche Specialty Underwriting Profitability of E&S vs. Total P&C Industry • Our business is heavily concentrated in E&S Casualty (92% of 2018 NWP; generated by Avg. Combined Ratios 2000–2018 both the E&S and Casualty Reinsurance Difference of segments). 5 percentage points • W
Slide 11: Broad Risk Appetite Permits Us to 'Pick Our Spots'
$656.5 Broad Risk Appetite Permits Us to ‘Pick Our Spots’ Our high caliber underwriting team, and use of proprietary technology, provide significant expertise to price our increased submission flow of highly underwritten risks • During the first three quarters of 2019, rates have increased 3.9% acro
Slide 12: 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 Core E&S – GWP Growth vs. Total E&S Industry 40.0% 21.1 21.3 GWP Growth (%) 20.0% 12.8 22.1 8.2 18.5 11.0 11.2 (3.8) 6.
Slide 13: 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) 13
Slide 14: Traditional Investment Approach Augmented by Higher Yielding Alternatives
Traditional Investment Approach Augmented by Higher Yielding Alternatives Investment Portfolio (as of September 30, 2019) Commentary 12% 3% Fixed Maturity Securities • Our investment portfolio consists of investment 3% 66% grade fixed maturity securities, selectively Equity Securities supplemented b
Slide 15: Capital Management Maximizes Shareholder Value
Capital Management Maximizes Shareholder Value Capital Management History $1,050 • Current focus on growing $984 book value given the Dividends and Share Repurchases ($ mm) $950 attractive opportunities to $897 Tangible Equity Plus Cumulative put capital to work in our $845 $850 core E&S business $7
Slide 16: Comparative Market Highlights
Comparative Market Highlights
Slide 17: Consistent Top Tier Returns
Consistent Top Tier Returns Best in class risk reward generated with low volatility, sector-leading returns 18.0% AMSF, 15.6% 16.0% 4-Yr Average Operating ROATE KNSL, 14.4% 14.0% RLI, 12.1% 12.0% JRVR, 11.2% 10.0% MKL, 8.1% WRB, 8.6% 8.0% 6.0% ARGO, 4.9% 4.0% 2.0% 0.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0%
Slide 18: Our Current Valuation Supports Meaningful Upside
Our Current Valuation Supports Meaningful Upside P/TBV vs Operating ROTE1 Price/Next Twelve Month Consensus Earnings 40.0x 6.0x 35.0x KNSL 5.0x RLI 30.0x Price to Next 12 Mths EPS Median = 22.9x 4.0x 25.0x Price to TBV 3.0x 20.0x MKL AMSF 15.0x 2.0x WRB JRVR 10.0x 1.0x ARGO 5.0x 0.0x 0.0x 6.0% 8.0%
Slide 19: Appendix
Appendix
Slide 20: 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 $34.95 (Closing Price November 7, 2019) ⚫ Market Capitalization $1.062 billion (November 7, 2019 market close) ⚫ LTM Dividend / Yield $1.20 per share = 3.4% yiel
Slide 21: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Non-GAAP Reconciliation Underwriting Profit (Loss) YTD Q3 YTD Q3 ($mm) 2015 2016 2017 2018 2018 2019 Underwriting profit (loss) of the operating segments: Excess and Surplus Lines $ 47.6 $ 47.2 $ 29.7 $ 42.8 $ 32.7 $ (0.4) Specialty Admitted Insurance 1.1 2.9 3.2 7.0
Slide 22: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Non-GAAP Reconciliation ($mm) YTD Q3 YTD Q3 Adj. Net Operating Income 2015 2016 2017 2018 2018 2019 Income as reported $ 53.5 $ 74.5 $ 43.6 $ 63.8 $ 52.2 $ 17.9 Net realized inv. (gains) losses 4.1 (5.2) 1.4 4.4 0.4 1.0 Initial public offering costs - - - - - - Divid
Slide 23: InvestorRelations@jrgh.net
InvestorRelations@jrgh.net
James River Group Holdings — Q3 2019 Earnings Presentation on 6ix