James River Group Holdings, Inc. · NASDAQ:JRVR
James River — Q1 2019 Earnings Presentation
27 slides from James River's earnings presentation, May 2019
Slide 1: First Quarter 2019 Investor Presentation
First 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 Overview Slide 4 Our Business Slide 11 Financial Highlights Slide 17 Appendix Slide 23 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 casualty
Slide 6: Q1 2019: Improved Operating Results
Q1 2019: Improved Operating Results ($millions, except per share amounts) Q1 2019 Q1 2018 Change Gross Premiums Written $ 327.3 $ 298.1 9.8% Expense Ratio 22.6% 24.9% -9.2% Combined Ratio 96.2% 96.4% -0.2% Operating Income 21.7 16.6 31.0% Net Investment Income 19.4 13.3 46.6% TBV per Share Before th
Slide 7: Consistent Top Tier Returns
Consistent Top Tier Returns Best in class risk reward generated with low volatility, sector-leading returns 18.0% KNSL, 15.4% AMSF, 15.5% 16.0% 4-Yr Average Operating ROATE JRVR, 13.1% 14.0% RLI, 12.6% 12.0% 10.0% WRB, 8.4% 8.0% ARGO, 5.7% MKL, 6.2% 6.0% 4.0% 2.0% 0.0% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5%
Slide 8: Leading Expense and Scale Benefit
Leading Expense and Scale Benefit 1 Our material expense advantage is a key competitive advantage 40.0 Expense advantage of 12.0% 34.6 34.0 34.1 34.4 34.5 34.6 35.0 33.8 35.2 33.6 33.6 30.0 31.5 25.0 24.4 23.1 22.6 20.0 15.0 10.0 5.0 - 2013 2014 2015 2016 2017 2018 2019Q1 James River Peer Average 2
Slide 9: Leading Value Creation
Leading Value Creation We have delivered best in class shareholder returns since becoming a public company Total Shareholder Return Since JRVR IPO 1 4 Year Avg Operating ROATE 3 425% 375% 325% 18.0% 275% 16.0% 14.0% 225% 12.0% 175% Median = 108.1% 10.0% 8.0% 125% 6.0% 75% 4.0% 25% 2.0% 0.0% -25% KNS
Slide 10: Our Current Valuation Supports Meaningful Upside
Our Current Valuation Supports Meaningful Upside P/TBV vs Operating ROATE1 Price/Next Twelve Month Consensus Earnings 40.0x 7.0x 35.0x 6.0x KNSL 30.0x Median = 22.7x Price to Next 12 Mths EPS 5.0x 25.0x RLI Price to TBV 4.0x 20.0x 3.0x AMSF 15.0x MKL JRVR 2.0x WRB 10.0x ARGO 1.0x 5.0x 0.0x 0.0x 6.0%
Slide 11: Our Business
Our Business
Slide 12: Our Business
Our Business Specialty Admitted Casualty Reinsurance E&S Segment Segment Segment • E&S business underwritten by • Specialty admitted insurance • Third-party proportional and specialists in 13 divisions coverages in the US, including a working-layer excess casualty organized by product or growing fee
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: 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 $200 million of specialty James River YE 2018 Adam Abram and premiums in the calendar James River James River successfully a group of y
Slide 15: E&S Focus | Profitable, Niche Specialty Underwriting
E&S Focus | Profitable, Niche Specialty Underwriting Profitability of E&S vs. Total P&C Industry • Our business is heavily concentrated in E&S Casualty (92% of 2018 NWP and generated Avg. Combined Ratios 2000–2017 by both the E&S and Casualty Reinsurance Difference of segments). 5 percentage points
Slide 16: Attractive Growth in Gross Written Premium
Attractive Growth in Gross Written Premium Growth driven by attractive new economy risks, core E&S growth, and expansion of our fee based fronting business ($ in Millions) E&S Segment Specialty Admitted Segment Casualty Reinsurance Segment $657 $530 $374 $316 $235 $371 $309 $184 $172 $182 $136 $187
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&S
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% James River 42.9 GWP Growth 40.0% 31.3 GWP Growth (%) 21.1 21.3 2
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 Investment Portfolio (as of March 31, 2019) Commentary 4% 7% Fixed Maturity Securities • Our investment portfolio consists of investment 5% 66% grade fixed maturity securities, selectively Equity Securities supplemented by non
Slide 22: Capital Management Maximizes Shareholder Value
Capital Management Maximizes Shareholder Value Capital Management History $1,050 $951 • $416 million of capital Dividends and Share Repurchases ($ mm) $950 $897 returned since 2008 Tangible Equity Plus Cumulative • $210 million of capital $845 $850 $792 returned to $750 $713 shareholders since $672
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 $1.20 per share = 2.6% yield1 ⚫ Gross
Slide 25: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Non-GAAP Reconciliation Underwriting Profit (Loss) Q1 Q1 ($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 $ 11.3 $ 13.1 Specialty Admitted Insurance 1.1 2.9 3.2 7.0 1.7 1.7
Slide 26: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Non-GAAP Reconciliation ($mm) Adj. Net Operating Income 2015 2016 2017 2018 Q1 2018 Q1 2019 Income as reported $ 53.5 $ 74.5 $ 43.6 $ 63.8 $ 15.6 $ 22.7 Net realized inv. (gains) losses 4.1 (5.2) 1.4 4.4 0.7 (1.0) Initial public offering costs - - - - - - Dividend wi
Slide 27: InvestorRelations@jrgh.net
Compounding Value through an Unrelenting Focus on Underwriting Profit InvestorRelations@jrgh.net
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