James River Group Holdings, Inc. · NASDAQ:JRVR
James River — Q4 2018 Earnings Presentation
27 slides from James River's earnings presentation, Feb 25, 2019
Slide 1: Fourth Quarter 2018 Investor Presentation
Fourth Quarter 2018 Investor Presentation
Slide 2: Disclosure: Forward-Looking Statements
Disclosure Forward - Looking Statements This press release 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, int
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: FY 2018: Improved Operating Results
FY 2018: Improved Operating Results 6 Source: SNL Financial, company filings. ($millions, except per share amounts) FY 2017 FY 2018 Gross Premiums Written 1,081.9$ 1,166.8$ 7.8% Expense Ratio 24.3% 23.0% -5.3% Combined Ratio 99.2% 96.6% -2.6% Operating Income 47.4 70.6 48.9% Operating Cash Flows 207
Slide 7: Consistent Top Tier Returns
7 Consistent Top Tier Returns Best in class risk reward generated with low volatility, sector - leading returns Source: SNL Financial Operating ROATE calculated as trailing twelve month operating returns per share through December 31, 2018 for JRVR, ARGO, KNSL, MKL, RLI, WRB, and through September 3
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 Source: SNL Financial. 1. Shareholder return represents the dividend - adjusted share price appreciation from James River’s initial public offering date of December 12, 2014 until February 21
Slide 10: Our Current Valuation Supports Meaningful Upside
Our Current Valuation Supports Meaningful Upside 10 P/TBV vs Operating ROATE 1 Price/Next Twelve Month Consensus Earnings Source: SNL Financial. Market data as of February 21, 2019. 1 Analyst Consensus Operating Return on Average Tangible Equity for the full financial year JRVR AMSF ARGO KNSL MKL RL
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
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 43% during 2017 and 24% during 2018. Avg. Combined Ratios 2000 – 2017 Difference of 5 percentage points Total P&C GWP: $327.3bn E&S GW
Slide 16: Attractive Growth in Gross Written Premium
16 Growth driven by attractive new economy risks, core E&S growth, and expansion of our fee based fronting business E&S Segment Specialty Admitted Segment Casualty Reinsurance Segment ($ 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 • 2018 has seen pricing increase of 6 . 5 % across our core (non - commercial auto) E&S business ($ in mil
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: $1,850MM Duration: Investment Portfolio (as of December 31, 2018) Net Investment Yield • Our investment portfolio consists of investment grade fixed maturity securities, selectively supplemented
Slide 22: Capital Management Maximizes Shareholder Value
Capital Management Maximizes Shareholder Value 22 Capital Management History • $407 million of capital returned since 2008 • $201 million of capital returned to shareholders since December 2014 IPO, or 43.1% of tangible book value at that time • Last twelve month d ividend yield of 2.9% 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 $41.27 (Closing Price February 21, 2019) Market Capitalization $1.236 billion (February 21, 2019 market close) LTM Dividend / Yield $1.20 per share declar
Slide 25: Non-GAAP Measures Reconciliation
Non - GAAP Measures Reconciliation 25 Non - GAAP Reconciliation Underwriting Profit (Loss) 2018 ($mm) 2014 2015 2016 2017 Underwriting profit (loss) of the operating segments: Excess and Surplus Lines $ 35.1 $ 47.6 $ 47.2 $ 29.7 $ 42.8 Specialty Admitted Insurance 0.0 1.1 2.9 3.2 7.0 Casualty Reinsu
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. Source: Company filings. Non-GAAP Reconciliation ($mm) Adj. Net Oper
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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