James River Group Holdings, Inc.

Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the James River Group Q2 2025 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 would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw a question again, press the star 1. I would now like to turn the conference over to Bob Zimardo, Senior Vice President of Investor Relations. You may begin.

Good morning, everybody, and welcome to the James River Group second quarter 2025 earnings conference call. During the call, we'll 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 of our most recent Form 10-K and our 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. 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. 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 for 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, Bob. Good morning, everyone, and welcome to James River's second quarter 2025 earnings call. I'm thrilled to be joining you today to share the details of another strong quarter of improved performance and increasing momentum throughout our flagship ENS business. We ended the second quarter with an annualized adjusted net operating return on tangible common equity of 14%, consistent with the mid-teens return target we've guided towards, and 23 cents per share of adjusted net operating income for the second quarter. While we now have delivered consecutive quarters evidencing the prudence of our decisions to de-risk and upgrade our underwriting governance processes, we also continue to demonstrate our willingness to take the necessary steps to support our overriding objective, to increase profitability and deliver shareholder value as a leading specialty insurer in the ENS space. You will hear a few key themes repeated throughout our collective comments today, focused on one, our organizational positioning, two, our people, and three, the company's drive for profitability. As usual, I'll start the conversation and we'll then turn it over to Sarah before we open up the discussion for questions. But first, I'd like to start by spending a few moments on the concept of portfolio positioning because our belief is it materially impacts overall profitability. Positioning includes many elements, business mix, reinsurance strategy, customer focus, pricing and underwriting approach, management structure, and operational efficiency. Over the last two years, we've built a consistent feedback loop and significantly improved our performance monitoring, allowing us to evaluate shifting market conditions and trends in our data to adjust our underwriting and risk management approach accordingly. That work is now producing tangible results, building momentum in both performance and execution, particularly in the most recent accident years. Perhaps not surprisingly, the company's focus and core competency continues to reflect a uniquely wholesale dedicated DNS portfolio, which has made us extremely relevant to the same distribution partners that we have listened to, serviced, and traded with since 2003. Our portfolio was focused on US-based small and medium enterprises, predominantly in third-party lines, with limited exposure to more commoditized sectors such as excess property and primary commercial auto. Limiting our relative exposure to natural catastrophe risk, as well as potential future downstream impacts from the administration's tariff policy. I believe what we're seeing in this quarter's results is a reflection of much of that same broader positioning. Steady underwriting discipline and strong broker relationships, operating in a compelling rate environment, and translating into healthy submission flow, demonstrable positive rate change, and consistent performance. It is creating meaningful momentum, not just in profitability, but in confidence inside the organization as we continue to chart the company's turnaround. Gross written premium for casualty ENS increased 4% compared to the prior year quarter, accelerating from 1% of casualty growth reported in the first quarter this year. Overall, the ENS segment grew 3% over the same comparable period, an encouraging indicator of our ambitions to profitably grow the segment while we're focusing on smaller accounts and further taking advantage of market opportunities. Notably, this marks the first time we've surpassed 300 million in ENS gross written premiums in a single quarter, a meaningful milestone for the segment, and additionally noteworthy as we have made a number of significant underwriting changes over the last three years in particular, again, while focusing on smaller commercial accounts. While our larger divisions, Exis Casualty, General Casualty, and Manufacturers and Contractors continue to gain traction and scale, we also saw 25% growth in allied health and 12% growth in energy during the quarter. Renewal rates remained healthy across most divisions with overall casualty rates up .5% in the quarter, including rate change of over 20% in our Exis Casualty portfolio on both a second quarter and -to-date basis. Additionally, submission volume increased 6% during the quarter, reflecting both the continued overall strength of the ENS market and the depth of our broker-partner relationships. Given the significant portfolio management underwriting changes that we have made since 2023 and the continued strong indicators from those corresponding accident years, showing a notable drop in claims counts, we took the opportunity to increase the retention of our mid-year ENS casualty quota share in an effort to keep more of the underwriting profits we continue to feel excited about. Additionally, during the treaty renewal process, we improved overall pricing on the program and received more treaty authorizations than we were seeking while adding several new quality reinsurance partners to our stable of existing panel members, which is just another positive external validation of the underwriting actions and portfolio repositioning that has taken place over the last few years. In our specialty admitted segment, we remain opportunistically positioned with very deliberate low net retentions across our fronted programs business as we have significantly culled the commercial auto components that we believe do not meet our profitability or reinsurance security hurdles. And finally, as disclosed last month, we are pleased that the Southern District of New York has granted our request for dismissal of the federal matter related to the sale of our former Bermuda reinsurance entity. Now, with respect to our people, you will recall that I mentioned management structure and operational efficiency earlier in my remarks, and I'm extremely excited about the new energy and leadership structure that has been unveiled in our ENS segment. Following Todd Sutherland's appointment as president of our ENS business in May, we have taken a hard look at how we are managing our 15 divisions across the ENS. Prospectively, those divisions will roll up into one of five primary business segments where we have further empowered designated leaders to manage the segment to achieve our growth and profitability objectives. We strongly believe this evolution increases our ability to stay nimble, allowing us to more quickly and thoughtfully respond to market dynamics and opportunities while driving increased underwriting accountability and responsibility throughout the ENS underwriting leadership at James River. Additionally, we sought to compliment our already deep bench at James River with appointments that will bring new energy and additional expertise to our company. The past quarter saw us welcome Val Langenberg as group chief information officer and promote and introduce Justin Zaharis as our new group chief claims officer. Together, they will be instrumental in advancing our initiatives across data, technology, and claims respectively. And more recently, Joel Cavaniss joined our board of directors with decades of property and casualty wholesale distribution leadership experience. That suffices to say we're very excited to have his presence and expertise on the board of James River. We will continue to remain focused on profitability and seek to maximize underwriting opportunities while managing risk and expenses across the company. We've made significant progress on operating efficiency and expense management this quarter and look forward to our planned redomicile to the United States likely later this year, a move which is expected to bring operational efficiencies as well as significant one-time and ongoing cost savings to the organization. With an underwriting profit of $11.7 million, the combined ratio in the ENS segment was 91.7%, nearly four points lower than the prior year quarter, and complemented by widespread price increases and growth across most underwriting divisions. In our ENS portfolio, average premium per policy declined almost 20%, while policies in force rose slightly compared to the second quarter of 2024. This dynamic, coupled with the strong rate changes we just discussed, exemplifies our deliberate strategy to target small to medium-sized accounts that have historically been more profitable and least vulnerable to turnover. As mentioned previously, we are managing our specialty-admitted fronting business concentrating on expense management and maintaining very low net retentions. Segment expenses in the first half of the year have declined over 20% compared to the same period last year. Sarah will follow up in more detail around the reduction notably in G&A. Overall, fronting premiums declined 31%, reflective of our demonstrated shift to reduce commercial auto exposure in the segment while upholding our underwriting and reinsurance security standards. In short, we're excited and encouraged by the energy and direction of James River and feel the steps we have taken to position the franchise for greater and more consistent profitability while further strengthening the leadership team will lead to a stronger company and greater returns for our shareholders. And with that, I'll now turn the call over to Sarah.