James River Group Holdings, Ltd.’s second-quarter 2019 net income increased by 20% to $20.3 million when compared with the second-quarter of 2018, while its Group combined ratio improved to 95.2%.
Adjusted net operating income improved from $17.6 million in Q2 2018 to $20.2 million in Q2 2019, while the year-to-date 2019 annualised adjusted net operating return on average tangible equity reached 15.7%.
At $17.5 million, James River’s Q2 2019 net investment income increased by $1.4 million, or 9% on the same period in 2018.
The company recorded a 30% increase in gross written premiums (GWP) in the quarter to $380 million, driven by significant expansion of its Excess and Surplus lines business segment. This line saw its GWP expand by 57% to $260 million in Q2 2019, which more than offset an 8% and 2% dip in GWP within the firm’s Specialty Admitted Insurance and Casualty Reinsurance segments, respectively.
Net written premiums increased by 27% overall to $240 million driven by 37% growth in Excess and Surplus, partly offset by a 3% decline in Specialty Admitted Insurance and a 2% decline in Casualty Reinsurance. Net earned premiums, at $199.1 million, actually declined by 4%, driven by a 36% decline in Casualty Reinsurance and an 8% decline in Specialty Admitted Insurance, which was partly offset by 8% growth in Excess and Surplus lines.
James River states that the reduction in net earned premiums in Casualty Reinsurance was in line with its expectations and is consistent with its planned reductions for the segment that started in 2018.
Unfavourable reserve development totalled $2.3 billion in the second-quarter of 2019, which is relatively unchanged from the $2.2 billion recorded in Q2 2018. The majority of this is attributable to the Casualty Reinsurance segment, which combined with unfavourable development in Excess and Surplus lines, more than offset favourable reserve development of $1.2 million in Specialty Admitted Insurance.
Chief Executive Officer (CEO), Robert P. Myron, said: “I am pleased to report that James River has had another strong quarter, generating a 95.2% combined ratio while our largest business, core E&S, experienced an increase in gross written premium of 81% with every division growing. Our core E&S gross written premium was $247 million for the first six months of 2019, which represents a 42% increase over the $175 million of premium we wrote during the first six months of 2018.
“For the ninth consecutive quarter, we were able to achieve rate increases on our core E&S renewals, which were up 5.4% in the quarter year over year, and submissions increased 20%. New business pricing was also very strong. Lastly, I am also pleased with our growth in tangible book value and Adjusted Net Operating Return on Average Tangible Equity for the year to date.”
As well as its second-quarter results, James River has announced that due to ill health, its CEO, Robert P. Myron, will step down from his role and become President and Chief Operating Officer (COO).
In light of this, Chairman of the Board and former CEO, J. Adam Abram, will assume the additional responsibilities of CEO. The management shift is effective August 5th, 2019 and is expected to be permanent. Myron will remain on the company’s Board of Directors.
Abram commented: “The Company has performed extremely well under Bob’s skillful leadership. Indeed, the results from our most recent quarter demonstrate his success as CEO. However, lingering effects from a case of Lyme disease make it impossible for Bob to perform all the duties of CEO to his satisfaction.
“In consultation with the Board of Directors, he has asked me to return as CEO. Bob and I, and the broader management team, have worked together in this configuration before, and we return to this arrangement with confidence. Our focus will remain on continuing to seek to deliver strong underwriting results, profitable growth and earning industry leading returns on equity.”
Myron added: “I have enjoyed being CEO of James River and have great confidence in our future. I look forward to working with Adam and our team to build on our momentum.”
At the same time, James River has announced the appointment of Patricia H. Roberts to its Board of Directors and to its Compensation Committee, which takes the number of Directors on the firm’s Board to eleven. Roberts is the retired President and Chairman of General Star Management Company.
“The company has a history of excellent underwriting and superior financial performance. I look forward to working with my fellow board members and management. I am very glad to join the James River Group board,” said Roberts.
