James River Group Holdings, Inc.

Good morning. My name is Carrie and I will be your conference operator today. At this time, I would like to welcome everyone to the James River Group Q3 2025 Earnings Conference 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 then the number one on your telephone keypad. If you would like to withdraw your question, press Star 1 again. Thank you. I would now like to turn the call over to Bob Zimbardo with Investor Relations. Please go ahead.

Thank you, operator, and good morning, everybody, and welcome to the James River Group's third quarter 2025 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 of our most recent Form 10-K and other reports and filings we have made with the SEC. 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 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, Bob. Good morning, everyone, and welcome to James River's third quarter 2025 earnings call. I'm pleased to be joining you today on this Election Day morning and would like to start by emphasizing the fact that we feel a focus on profitability, above all else, is a critical north star for success in a transitioning property and casualty marketplace. We believe the underwriting and de-risking actions that we've taken throughout James River demonstrate that commitment, and the fruits of our labor are beginning to show up in our operating results, specifically in the company's bottom line performance that we'll discuss today. As usual, I'll start the conversation and we'll turn it over to Sarah before we open up the discussion for questions. We ended the third quarter with an annualized adjusted net operating return on tangible common equity of 19.3%, well above our mid-teens return target, and with 32 cents per share of adjusted net operating income, notably tangible common book value per share has grown 23.4% year-to-date. Our group combined ratio of 94% is down over 40 percentage points from the 135.5% reported in the third quarter of 2024, and also down more than four percentage points compared to the 98.6% we reported in the second quarter of this year. We're very proud of our deliberate efforts to significantly reduce our expense ratio, now at 28.3%, reflecting a decrease of more than three percentage points compared to the prior year quarter and two percentage points lower than our second quarter this year. Since the start of the year, we have taken actions to make lasting changes and increase efficiency across our organization with savings largely attributed to headcount and professional fee reductions. These savings, coupled with the impact of our anticipated redomicile, have created material and tangible efficiencies for the company going forward. In a few minutes, Sarah will provide additional context and detail regarding these actions. As alluded to, James River continues to build a resilient E&S business that prioritizes profitability. This focus is extremely relevant in today's transitioning market where competition continues to increase, particularly in larger accounts and across property risks where rate pressures persist. While our portfolio is not immune to these headwinds, we remain constructive on the market opportunity ahead given our positioning, which emphasizes small to medium-sized casualty risks and specialty third-party lines with limited property exposure. As we have previously discussed, we continue to be intentional in our shift to smaller accounts with lower average premiums, which we believe have historically proven to be more profitable in larger account segments of the market. Our segment leadership reorganization, now complete, has created a more agile structure focused on improving speed while driving execution and accountability. Underwriting teams have leaned into smaller accounts and delivered strong performance in our specialty divisions. Empowered by technology and data, our underwriters are acting decisively and efficiently with continued overwhelming support from our wholesale broker partners. While our innovation journey continues, we're focused on streamlining our workflows with the benefit of technology and greater efficiency in our underwriting operations. In our E&S segment, we remain focused on profitable underwriting production, business mix improvements, and appropriate underwriting governance. Year-to-date, rates are up 11% across casualty lines in the aggregate, moderating since last quarter, but still comfortably in excess of our view of lost cost trends. For the quarter, casualty rates increased 6.1%, with notable gains in commercial auto at plus 29.8%, energy at plus 19%, excess casualty at plus 10%, and general casualty at plus 7.9%. Submission volumes, which rose 3% over the prior year quarter, are up nearly 5% year-to-date, while our average renewal premium size is down 12.7%, also year-to-date. Over the past several years, we've worked diligently to refine our underwriting appetite, institute tools for better performance monitoring, and further embed the culture of enterprise risk management throughout the organization. These efforts are paying off, particularly in the most recent accident years. After 33 months, the reported loss ratio for the 2023 accident year reflects a 21% improvement compared to 2020, despite a significant increase in earned premium. Claim count decreases for the same period are in the low to mid-teen percentages as well. This performance gave us the confidence to modestly increase our net retention at our mid-year reinsurance treaty renewal. This quarter, the E&S net retention on the portfolio exceeded 58% for the first time in over two years up from 56 percent in the same quarter last year. From a production standpoint, gross written premiums declined 8.9 percent compared to the prior year quarter. However, production dynamics were not uniform in this segment. Six of our 15 underwriting departments showed growth led by our specialty division, which grew by 4 percent in aggregate compared to the prior year quarter, and includes allied health, energy, environmental, life sciences, management liability, and professional liability. Within specialty, allied health has now grown 20-plus percent for a second consecutive quarter, while energy and life sciences grew at 16 percent and 10 percent, respectively. These departments are delivering strong performance with what we believe are attractive margins, and we're encouraged by the continued opportunity these divisions hold. Our excess CASD and general CASD portfolios were down 4 percent and 2 percent, respectively, reflecting increased competition, as well as our intentional focus on smaller accounts And in excess casualty specifically, our more conservative positioning on large commercial auto fleets, acknowledging many of the same unattractive dynamics that market competitors continue to report. Although a small line of business for us, rates were down 19.6% and subsequently gross premiums decreased by 38.2% in our excess property unit, where for the second year in a row, we continue to see greater market pressures than anywhere else in our portfolio due to a significant increase in market appetite and capacity. However, the biggest driver of decreased production for the segment in the quarter was in our manufacturers and contractors division, which decreased its gross premium writings by 30% or $13.5 million. While we have seen increased competition in certain pockets of the market, this is an area where we have taken direct underwriting ad response to an increased frequency of low severity claims over the last several quarters, despite frequency being down across our other 14 underwriting departments. While we believe some of the increased frequency may be attributable to the Florida statute change introduced last year, we've taken deliberate actions to reduce our exposure to subcontractors serving the tract home building space, as we believe this subclass has been a driver of the uptake we've experienced in low severity frequency. As mentioned, while E&S gross premiums declined by 8.9% in the quarter, net earned premium grew 1%, which helped to drive $16.4 million in underwriting income and a much improved 88.3% combined ratio. Our accident year loss ratio of 63.5% was 1.2 points lower than the prior year quarter, simply due to business mix, but consistent on a year-to-date basis. As our press release highlighted during the quarter, we completed our annual detailed valuation review, or DVR, process. As a reminder, the DVR is the first principal's ground-up review of all assumptions and selections underpinning our ENS segments reserve base. By definition, our actuaries complete this in-depth study once a year during the third quarter. This review of our entire ENS reserve balance provides a detailed analysis of the assumptions underlying reserves, adding additional rigor to our internal quarterly actuarial processes. While the company has long completed its DVR parameter process during the third quarter, this is the third annual review of what has evolved into a much deeper and more granular process. The outcome of our DVR process is a $51 million charge in accident years 2022 and prior, which we ceded to the legacy covers that we purchased last year. The largest portion of the charge is driven by other liability occurrence and product completed operations related to accident years 2020 to 2022. In essence, we feel the legacy covers are serving their purpose as intended, responding to any development from older years as they reach maturity, while allowing for the company's more recent years to age favorably, given the numerous underwriting actions and positive indicators reflected in those years. I should point out that while it varies by line of business for the majority of our portfolio, our tail continues to be characterized as 75% developed at about five years, meaning that the underwriting years of concern, 2022 and prior, are largely already at that vintage or older. We continue to see a stark contrast in the indicators and performance of the portfolio between the 2022 and prior years and the positive performance trends of the more recent accident years of 2023 forward. Claims frequency is meaningfully down in those most recent years as are incurred losses despite meaningful portfolio growth since 2020. Importantly, we have not experienced any adverse development for the period of 2023 through the current accident year and our diagnostics continue to substantiate our favorable view of those years. Moving on from E&S, as discussed in prior quarters, we are actively managing our specialty admitted fronting business with a focus on expense management and significantly reduced net retentions as we take meaningful underwriting actions based on our view of the sector's dynamics and a decisive shift away from commercial auto. As a result, segment expenses have declined 44% year-to-date as we've continued to manage expenses aggressively while also reducing our net premium retention to below 5% this quarter. Despite the reductions in both gross premiums and net retentions, we continue to renew programs that meet our underwriting criteria while selectively reviewing new opportunities. Looking ahead, our strategy remains sharply focused on profitability. We expect to maintain discipline continue our deliberate mixed shift towards smaller, more profitable accounts, and uphold underwriting guardrails in challenging areas. We are closely monitoring casualty pricing trends, submission velocity, and quote-to-bind efficiency to ensure we remain data-driven and responsive to market signals. Expense management will remain a core area of focus as we seek to improve operational leverage without compromising the quality of our underwriting or claim service. Now, I'll turn the call over to Sarah to expand on several of the areas that we referenced this morning before we open up the call to questions.