James River reports $42m net loss in Q3’24 with higher CoR

James River Group Holdings has released its financial results for the third quarter of 2024, posting total revenues of $191.4 million, despite a net loss of $42.0 million, and a higher combined ratio of 135.5% compared to Q3 2023.

For last year’s third quarter, the Group reported total revenues of $210.3 million as well as a net income of $19.55 million and a combined ratio of 93.6%.

The firm also reported a net loss from continuing operations available to common shareholders was $40.7 million.

It also noted that its adjusted net operating loss of $28.2 million for Q3 2024 was “largely attributable to the previously announced $52.2 million of excess consideration paid over reserves ceded in connection with the Excess and Surplus Lines (E&S) combined loss portfolio transfer adverse development reinsurance contract (E&S ADC) that closed on July 2, 2024.”

This quarter’s adjusted net operating loss figure was also due to the $19.2 million of additional adverse development ceded to the E&S ADC, which was recorded as a deferred reinsurance gain on the company’s balance sheet, and $4.8 million of adverse development retained by the company.

The above were partially offset by strong investment income and underwriting profit from James River’s Specialty Admitted segment, the firm noted.

James River also reported gross written premiums (GWP)of $330.4 million and net written premiums of $147.33 million for Q3 2024, which compared to the $342.8 million and $145.9 million, respectively, reported in Q3 2023.

The Group’s total underwriting profit of operating segments fell to $48.3 million in this year’s third quarter, compared to the $ $20.3 million in the same period last year.

James River’s Excess and Surplus Lines (E&S) segment saw GWP growth of 6%, to 23.2 million, and positive renewal rate change of 8.6%. While the segment reported a 136.1% combined ratio, the current accident year combined ratio for the segment was 92.6%.

The company’s Specialty Admitted Insurance segment combined ratio of 91.3%, with fronting and program GWP growth of 8.7%, excluding the non-renewed workers’ compensation programs.

GWP premium for the Specialty Admitted Insurance segment declined 20.3%, to $100.2 million, compared to Q3 2023, with the reduction due to the impact of the non-renewed workers’ compensation program during Q2 2023 and the sale of the renewal rights of the individual risk workers’ compensation business during Q3 2023.

Net investment income increased 8.1%, compared to the prior year quarter, with all asset classes reporting higher income.

In its report, James River noted the start of its multi-pronged strategic partnership with Enstar.

Under this partnership, Cavello Bay, a wholly owned subsidiary of Enstar, has agreed to purchase $12.5 million of newly issued common shares at a per share price of $6.40 (subject to certain closing conditions), in addition to 637,640 common shares it already owns through purchases in the open market.

Additionally, subsidiaries of the company have entered into an adverse development reinsurance agreement with Cavello Bay, directly above the existing E&S ADC, with a limit of $75 million and no co-participation.

James River also restructured its preferred shares held by Gallatin Point Capital. A portion of the shares, equivalent to $37.5 million, were converted to common shares at a price of $6.40 per share. The remaining preferred shares, with a liquidation preference of $112.5 million, will continue to receive a quarterly dividend of 7% for five years, capped at 8% thereafter.

Moreover, the conversion premiums for these remaining shares were increased to 130% for voluntary conversion and 200% for mandatory conversion, based on the new $6.40 conversion price.

Frank D’Orazio, the Company’s Chief Executive Officer, commented: “With the strategic actions we are announcing – notably the addition of Enstar as both a significant shareholder and strategic partner and the continued commitment of Gallatin Point – our highly regarded E&S franchise is significantly de-risked and well positioned to take advantage of strong market support amid a robust E&S environment. Momentum in our Core E&S franchise has continued to build each quarter during 2024 as we continue to balance attractive market conditions with underwriting discipline.”

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