Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- James River Group Holdings Ltd (JRVR, Financial) reported net income from continuing operations of $0.31 per share, up from $0.25 per share in the same period last year.
- The company's E&S segment saw strong submission growth, increasing by 10% with notable growth in environmental and general casualty divisions.
- Renewal rates for the E&S segment were up 9.1% for the quarter and 9.7% year to date, indicating favorable pricing conditions.
- The specialty admitted segment produced an excellent combined ratio of 85% and an underwriting profit of $3.4 million for the second quarter.
- Net investment income increased by 37% to $24.9 million from the prior year quarter, reflecting strong investment performance.
Negative Points
- Gross premiums from the excess property unit declined by 28% during the quarter due to increased competition and more capacity in the market.
- The overall combined ratio increased to 99.3% from 98.9% a year ago, indicating a slight deterioration in underwriting performance.
- The company experienced $10.7 million in adverse reserve development, primarily related to the 2017 to 2020 accident years.
- The loss ratio increased to 73% from 70.7% a year ago, reflecting higher claims costs.
- James River Group Holdings Ltd (JRVR) expects to recognize a reduction in pretax income of approximately $44 million in the third quarter due to the adverse development cover and loss portfolio transfer agreement.
Q & A Highlights
James River Group Holdings Ltd (JRVR) Q2 2024 Earnings Call Highlights
Q: Could you discuss the impact of the smaller property book on the core loss ratio and the premium growth prospects between the property book and the casualty book going forward?
A: Sarah Doran, CFO: The impact on the core loss ratio is negligible due to the historical size of the property book. The retained portion is small, so it doesn't materially affect the loss ratios.
Frank D'Orazio, CEO: The property market saw shifts with increased capacity and competition, leading to a reduction in production. However, general casualty saw significant submission growth and rate increases, indicating strong growth prospects.
Q: The core loss ratio within the E&S segment ticked down year over year. Do you have any updated view of your current accident year loss specifically within the casualty lines?
A: Sarah Doran, CFO: We have maintained our loss picks and there has been no material change in our annual loss trend for casualty lines from the end of last year.
Q: Any movements in the 2022, 2023 reserves and your view on tort inflation and the inflationary environment?
A: Frank D'Orazio, CEO: The reserve development was primarily related to the 2017-2020 accident years within general casualty, excess casualty, and commercial auto lines. We have not changed our view of loss trend relative to the current year.
Q: With the reduction in the property book, is there any impact on general casualty production?
A: Frank D'Orazio, CEO: There is less of a package dynamic in the E&S market, and much of what we see is on a mono-line basis. General casualty has seen significant increases in submission activity, healthy rate, and good growth.
Q: Can you go over the Q3 guidance mentioned earlier in the call?
A: Sarah Doran, CFO: We expect to recognize a reduction in pretax income of approximately $44 million in the third quarter due to the LPT, ADC transaction signed on July 2. Additionally, $8 million of adverse development experienced this quarter will be booked as a recoverable in Q3.
Q: When you think about the trajectory of the excess property from a seasonal standpoint, will it have as meaningful an impact in Q3 as Q2?
A: Frank D'Orazio, CEO: Q2 is typically larger for cat-exposed property due to storm season dynamics. Q3 generally has fewer renewal opportunities, so the impact will be less significant.
Q: Any plans for adding staff or new lines of business?
A: Frank D'Orazio, CEO: Staff retention has been good, and we are investing in management liability. We are constantly evaluating where to add resources to take advantage of the current market cycle.
Q: Regarding the re-underwriting effort, are there other accounts that may be re-underwritten in Q3?
A: Frank D'Orazio, CEO: Much of the re-underwriting work has been done, particularly focusing on large commercial auto exposures. We continue to focus on growth in smaller insured sectors and SME business.
Q: How much do you think interest rates have kept a lid on price increases in long-tail lines like general casualty?
A: Frank D'Orazio, CEO: Interest rates have had less impact than one might think. The focus remains on making money through underwriting, particularly in long-tail lines.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
