James River Group Holdings, Inc.

Thank you for standing by. My name is Benjamin and I'll be your conference operator today. At this time, I would like to welcome everyone to James River Group Q2 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star one in your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. I would like to turn the call over to Zachary Scheidel, Investor Relations. Please go ahead.

Good morning, everyone, and welcome to the James River Group second quarter 2024 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 and yesterday's earnings release and the risk factors of our most recent Form 10-K and 10-Q and other reports and filings we have made with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements. In addition, during this presentation, we may reference non-GAAP financial measures, such as adjusted net operating income, underwriting profit, tangible equity, tangible common equity, and adjusted net operating return on tangible common equity. Please refer to our earnings press release for a reconciliation of these numbers to GAAP, a copy of which can be found on our website at www.jrvrgroup.com. Lastly, unless otherwise specified, for the reasons described in our earnings press release, all underwriting performance ratios referred to are for our continuing operations and business that is not subject to retroactive reinsurance accounting or loss portfolio transfers. I will now turn the call over to Frank D'Orazio, Chief Executive Officer of James River Group.

Thank you for that introduction, Zach. Good morning, everyone, and welcome to our second quarter 2024 earnings call. I'm pleased to be joining you today to provide additional color on our second quarter results, in addition to providing some commentary on market conditions and the future outlook for James River. Before we get into the results for the quarter, I'd like to take a moment to comment on two strategic items at the company. First, we executed and announced a combined adverse development cover and loss portfolio transfer for our E&S segment shortly after the end of the second quarter. The transaction was structured to de-risk the organization while bolstering the balance sheet. The coverage will also provide a higher level of certainty for our shareholders by reducing significant reserve volatility while allowing us to focus on the future profitable growth of James River. Second, the strategic review process that we began at the end of last year remains ongoing. The Board continues to consider and thoughtfully evaluate a range of options, and there's no set timeline for the completion of this process. Now, turning to our results for the quarter, the franchise has continued its strong start to 2024, reporting net income from continuing operations of 31 cents per share, adjusted net operating income of 33 cents per share, and a 14.9% adjusted operating return on tangible common equity. Our flagship E&S business continues to benefit from strong submission growth and rate increases, which present optimal conditions for the underwriting and profitable growth of our heavily SME-weighted platform. Submission growth was once again strong during the second quarter, increasing 10% with growth in both new and renewal submissions. In total, we saw over 80,000 submissions during the second quarter, a continuation of the strong trends we've experienced over the last several quarters. I would highlight our environmental and general casualty divisions, which saw submission growth of 37% and 33% respectively, while X's casualty saw submission growth of 9%. In addition to strong submission growth, our E&S business continues to experience favorable pricing conditions across the different divisions. Renewal rates for the quarter were up 9.1% across the segment, and 9.7% year-to-date. A majority of our underlying divisions recorded pricing increases in the high single or low double-digit range for the quarter, and pricing strength continues to come from our larger underlying divisions. Rates in energy were up more than 20%, excess casualty up more than 12%, and general casualty up more than 6%. Rate change continues to exceed our view of loss trends, as well as the pricing assumptions in our 2024 business plan. We remain confident that we are continuing to generate attractive margins on this portfolio. Our E&S casualty divisions, which exclude excess property, grew by over 5% during the quarter. However, property rate increases have moderated amid a market with significantly more capacity than recent past quarters. While we believe rates remain attractive in the E&S excess property market, we've seen increased competition on our renewal portfolio, which led to the reduction in production this quarter. We've observed several market participants aggressively increasing limits in catastrophe-exposed areas while providing premium reductions. We've remained disciplined in our underwriting approach, and as a result of these dynamics, gross premium from our excess property unit declined 28% during the quarter. With this reduction in excess property writings, overall, the E&S segment grew its premium base by 2.3% during the second quarter. We've also continued our work in re-underwriting our large account exposures in our excess casualty division. While the premium impact was less significant than during the first quarter, there were still a handful of large six and seven figure accounts that we chose to non-renew during the quarter. Nonetheless, we feel confident in the underwriting actions we've taken and are pleased with the overall portfolio and the opportunities we're seeing in the market. Our ENS combined ratio was strong at 95.4%, producing $6.4 million of underwriting income. The accident year loss ratio was 64.2% for the second quarter, which was a 180 basis point improvement from the prior year. We also strengthened reserves for the ENS segment by $10.7 million during the quarter, heavily focused on other liability occurrence and general casualty, and to a lesser extent, excess casualty and commercial auto for the 2017 to 2020 years. Additionally, we experienced no CAT losses in the quarter. As I mentioned previously, early in July, we entered into a combined adverse development cover loss portfolio transfer agreement with State National. This transaction, effective as of January 1st, 2024, provides the ENS segment with $160 million in adverse development reinsurance coverage for accident years 2010 through 2023, and is subject to a 15% co-participation by James River. As a result, The adverse development experience this quarter is expected to be recognized as a reinsurance recoverable during the next quarter. Turning to specialty admitted, gross written premiums in our fronting and programs business increased in excess of 12% compared to the prior year quarter and 17% year-to-date, excluding the impact of workers' compensation business that is now in runoff. Many of our existing programs continue to show substantial growth and benefit from positive renewal rate changes available in the market. The segment produced an excellent combined ratio of 85% and an under-running profit of $3.4 million for the second quarter. We benefited from the recognition and collection of approximately $1 million of boards, bureaus, and taxes from prior periods in the second quarter. We have experienced infrequent adjustments like this in the past, and they can have an outsized impact given the size of the segment. Undoubtedly, we are pleased with specialty emitters' performance this quarter and the segment's continued execution of our objectives. Overall, we continue to see strong rate increases in excess of expected loss trend and consistent submission opportunities across James River. We look forward to the second half of 2024 to provide additional opportunities to profitably expand the franchise as we remain focused on generating consistent and attractive returns for shareholders. And with that, I'll ask Sarah to provide some additional color on the quarter.