James River Group Holdings, Inc.

Good day and thank you for standing by. Welcome to the James River Group Q1 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require assistance during the conference, please press star 0. I would now like to hand the conference over to Brett Sherriff, head of investor relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to the James River Group first quarter 2022 earnings conference call. During the call, we will be making forward-looking statements. These statements are based on current beliefs, intentions, expectations, and assumptions that are subject to various risks and uncertainties which may cause actual results to differ materially. For a discussion of such risks and uncertainties, please see the cautionary language regarding forward-looking statements in yesterday's earnings release and the risk factors in our most recent Form 10-K, Form 10-Qs, and other reports and filings we've made with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements. I will now turn the call over to Frank D'Orazio, Chief Executive Officer of James River Group.

Thank you for that introduction, Brett. Good morning, and welcome to everyone on the call. I'm pleased to be back with all of you today to provide some additional color in our first quarter, as I believe the group's earnings potential is beginning to show through in these results, and we only expect this dynamic to accelerate and become more apparent in the coming quarters. We also remain encouraged by both our continued ability to execute on our business initiatives as well as the positive trends we're seeing in the market, and believe they should both continue throughout 2022. One hallmark of our franchise that has remained consistent, despite some of the strategic actions that we've announced over the last few quarters, is that our core E&S business has continued to produce extremely attractive margins and premium growth, and our first quarter this year was no different in that respect. We also continue to make progress in delivering on our business plans for our specialty-admitted and casualty reinsurance segments, focusing our capital on our U.S. businesses while acting as nimble and opportunistic underwriters. Before turning to Sarah, I'd like to provide some commentary on the performance and outlook for each segment. In our E&S segment, we experienced compelling results from a top and bottom line perspective. Gross premium growth was 12.6% compared to the first quarter of 2021, with 10 of our 13 underwriting units experiencing double-digit growth, demonstrating significant broad-based expansion across the segment. Renewal rates increased 8.4 percent across our E&S unit, marking the 21st consecutive quarter of rate increases, totaling 52 percent over that period. In many instances, this is the fourth or fifth renewal cycle of positive rate increase on our renewal business, as accounts are remaining in the E&S marketplace longer and for multiple renewal cycles. We believe this is a key indicator to support our belief the favorable market conditions that the sector has enjoyed for several years should last throughout 2022 and likely beyond. Turning to profitability, the E&S segment reported a combined ratio of 83.7% and produced underwriting income of $21.5 million. The accident year loss ratio in the first quarter was 64.7%, roughly consistent with a 64.3% in the prior year quarter. While rate increases have moderated from the mid-teens level of a year ago, they continue to be above both our own view of loss costs and our own rate expectations for the year. As previously stated, we intend to remain patient in recognizing these favorable trends in our loss picks. In specialty admitted, we decreased our writings and workers' compensation by 12.6% while growing the rest of our fronted program book. Gross written premiums across the segment declined 1% in the quarter, driven by the declines in both our individual risk workers' compensation business and our largest program relationship that is also workers' comp focused. Excluding workers' compensation, gross written premiums in the balance of the segment grew 6.5%, despite the loss of a fronting partner that was acquired in the fourth quarter of 2021. Just as importantly, we added new fronted programs in the quarter that will diversify our exposure base prospectively as we continue to have an attractive pipeline of new opportunities in various stages of diligence. Fee income in the segment increased 8.4% during the quarter to $5.6 million. Turning to casualty reinsurance, as discussed last quarter, we expect to reduce the top line of this segment by approximately $100 million during 2022, as we continue to focus our business and capital on what we believe to be the best opportunities throughout the group. We now renewed several treaties during the first quarter that drove the segment's premium decline of approximately 54% versus the prior year period. Of the business that did renew in the quarter, we achieved significant rate increases as we focus on margin enhancement and portfolio optimization in the reinsurance segment. As initially disclosed with our fourth quarter earnings release, our Q1 underwriting results in Cassidy Reinsurance included $11.5 million of loss associated with the legacy portfolio transaction, which closed on March 31st. Overall, we are pleased with the underlying performance of the group, remain thankful for the tremendous relationships we share with our distribution partners, and firmly believe that the strategic actions we've taken over the last 18 months to do risk the balance sheet will continue to allow the earnings power of our franchise to shine through. We believe the outlook for James River is very strong. Lastly, you may have noticed we filed an 8K on April 28th, announcing the retirement of Jerry Masters from our board of directors. Jerry had served on the James River board since 2014 and was the chair of our audit committee and our lead independent director. We have benefited greatly from his service, thank him for his much-valued counsel over the last eight years, and certainly wish Jerry the best in his retirement. And with that, let me turn the call over to Sarah Dorn.