James River Group Holdings, the Bermuda-based insurance holdings company, has returned to profitability in the second quarter of 2020 after its investments recovered from an earlier COVID-19 shock.
The company posted a net income of $35.6 million in Q2 after a loss of $36.8 million in the first quarter of the year.
This was also an improvement on the same period in 2019, when net income totaled $20.3 million.
James River was helped to profitability by a $21.6 million realized and unrealized gain on investments, compared with just $1.1 million in Q2 2019.
The insurer’s fixed maturity investment portfolio had unrealized gains of $53.5 million, while a bank loan portfolio had unrealized gains of $26.6 million, offset partially by realized losses of $9.4 million incurred on the sale of approximately 40% of the bank loan portfolio.
But looking at the first six months of the year, James River is still looking at a realized and unrealized loss of $36.8 million due to the portfolio of bank loans, which proved very volatile during the Q1.
Overall investment income for Q2 2020 was $15.4 million, compared to $17.5 million in Q2 2019, reflecting lower investment income from our bank loan portfolio resulting from a smaller portfolio and lower investment yields.
James River also posted a combined ratio of 95.0% for the group and 84.0% in its E&S segment, an improvement of 0.2 and 5.5 points, respectively, over the prior year quarter
Core E&S gross written premium increased 18%, while net written premium increased at a lower rate due to strong growth in lines of business with lower premium retention.
Gross written premium for the Specialty Admitted Insurance segment declined from the prior year quarter due to a lower amount of premium written for our largest fronting partner, partially offset by growth in several other fronting relationships, and the continued addition of new fronting partners.
And gross and net written premium in the Casualty Reinsurance segment decreased from last year due to lower premium estimate adjustments for treaties written in prior periods, and the renewal of certain treaties at lower premium levels;
The company also saw overall unfavorable reserve development of $1.1 million compared to unfavorable reserve development of $2.3 million in Q2 2019.
“Our company has delivered a very strong quarter,” said J. Adam Abram, Chairman and Chief Executive Officer at James River. “Current market conditions throughout our three segments are very attractive. “
“Core E&S renewal pricing improved by 20%,” he continued. “This was our 14th consecutive quarter of rate increases and the highest quarterly increase in our history. We wrote $180 million of Core E&S premium this quarter, more than double the amount in the same quarter two years ago, and an increase of 18% as compared to the second quarter of last year.”
He went on: “The number of policies in force in Core E&S grew 28%. Submission flow in this segment continued its healthy pace, increasing 12% during the quarter, and accelerated in the last month of the quarter. We achieved an 84.0% combined ratio during the quarter in our E&S segment.”
