|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Bermuda
|
98-0585280
|
(State of Incorporation)
|
(IRS Employer Identification No.)
|
Wellesley House, 2
nd
Floor
90 Pitts Bay Road, Pembroke, Bermuda
|
HM 08
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer
x
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
Emerging Growth Company
o
|
|
|
|
Page
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|
||
|
||
|
||
|
||
|
•
|
the inherent uncertainty of estimating reserves and the possibility that incurred losses may be greater than our loss and loss adjustment expense reserves;
|
•
|
inaccurate estimates and judgments in our risk management may expose us to greater risks than intended;
|
•
|
the potential loss of key members of our management team or key employees and our ability to attract and retain personnel;
|
•
|
adverse economic factors resulting in the sale of fewer policies than expected or an increase in the frequency or severity of claims, or both;
|
•
|
a decline in our financial strength rating resulting in a reduction of new or renewal business;
|
•
|
reliance on a select group of brokers and agents for a significant portion of our business and the impact of our potential failure to maintain such relationships;
|
•
|
reliance on a select group of customers for a significant portion of our business and the impact of our potential failure to maintain such relationships;
|
•
|
losses resulting from reinsurance counterparties failing to pay us on reinsurance claims, insurance companies with whom we have a fronting arrangement failing to pay us for claims, or an insured group of companies with whom we have an indemnification arrangement failing to perform their reimbursement obligations;
|
•
|
changes in laws or government regulation, including tax or insurance law and regulations;
|
•
|
the ongoing effect of Public Law No. 115-97, informally titled the Tax Cuts and Jobs Act, which may have a significant effect on us including, among other things, by potentially increasing our tax rate, as well as on our shareholders;
|
•
|
in the event we do not qualify for the insurance company exception to the passive foreign investment company (“PFIC”) rules and are therefore considered a PFIC, there could be material adverse tax consequences to an investor that is subject to U.S. federal income taxation;
|
•
|
the Company or any of its foreign subsidiaries becoming subject to U.S. federal income taxation;
|
•
|
a failure of any of the loss limitations or exclusions we utilize to shield us from unanticipated financial losses or legal exposures, or other liabilities;
|
•
|
losses from catastrophic events which substantially exceed our expectations and/or exceed the amount of reinsurance we have purchased to protect us from such events;
|
•
|
potential effects on our business of emerging claim and coverage issues;
|
•
|
exposure to credit risk, interest rate risk and other market risk in our investment portfolio;
|
•
|
our ability to obtain reinsurance coverage at prices and on terms that allow us to transfer risk and adequately protect our company against financial loss;
|
•
|
the potential impact of internal or external fraud, operational errors, systems malfunctions or cyber security incidents;
|
•
|
our ability to manage our growth effectively;
|
•
|
inadequacy of premiums we charge to compensate us for our losses incurred;
|
•
|
failure to maintain effective internal controls in accordance with Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”);
|
•
|
changes in our financial condition, regulations or other factors that may restrict our subsidiaries’ ability to pay us dividends; and
|
•
|
other risks and uncertainties discussed under “Risk Factors” and elsewhere in this Annual Report.
|
Item 1.
|
BUSINESS
|
Gross Written Premiums by Segment
|
|
Gross Written Premiums
Year Ended December 31, 2018 |
|
% of Total
|
|||
|
|
(in thousands)
|
|
|
|
||
Excess and Surplus Lines segment
|
|
$
|
656,538
|
|
|
56.3
|
%
|
Specialty Admitted Insurance segment
|
|
374,346
|
|
|
32.1
|
%
|
|
Casualty Reinsurance segment
|
|
135,889
|
|
|
11.6
|
%
|
|
|
|
$
|
1,166,773
|
|
|
100.0
|
%
|
Gross Written Premiums by Market
|
|
|
|
|
|||
Non-admitted markets
|
|
$
|
788,781
|
|
|
67.6
|
%
|
Admitted markets
|
|
377,992
|
|
|
32.4
|
%
|
|
|
|
$
|
1,166,773
|
|
|
100.0
|
%
|
|
|
Gross Written Premiums
Year Ended December 31,
|
|||||||||||||||||||||
E&S Division
|
|
2018
|
|
Percentage
of Total
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Commercial Auto
|
|
$
|
322,126
|
|
|
49.1
|
%
|
|
$
|
247,960
|
|
|
$
|
110,050
|
|
|
$
|
73,770
|
|
|
$
|
34,605
|
|
Manufacturers and Contractors
|
|
79,160
|
|
|
12.1
|
%
|
|
85,719
|
|
|
83,279
|
|
|
78,315
|
|
|
72,063
|
|
|||||
Excess Casualty
|
|
66,452
|
|
|
10.1
|
%
|
|
51,160
|
|
|
43,574
|
|
|
32,458
|
|
|
31,688
|
|
|||||
General Casualty
|
|
54,127
|
|
|
8.2
|
%
|
|
38,097
|
|
|
36,858
|
|
|
30,972
|
|
|
25,853
|
|
|||||
Energy
|
|
33,942
|
|
|
5.2
|
%
|
|
29,704
|
|
|
29,709
|
|
|
30,623
|
|
|
28,980
|
|
|||||
Allied Health
|
|
30,450
|
|
|
4.6
|
%
|
|
19,181
|
|
|
14,413
|
|
|
13,513
|
|
|
9,707
|
|
|||||
Excess Property
|
|
16,963
|
|
|
2.6
|
%
|
|
14,447
|
|
|
14,083
|
|
|
12,498
|
|
|
11,795
|
|
|||||
Life Sciences
|
|
16,636
|
|
|
2.5
|
%
|
|
12,981
|
|
|
11,132
|
|
|
8,917
|
|
|
10,155
|
|
|||||
Small Business
|
|
14,808
|
|
|
2.3
|
%
|
|
11,307
|
|
|
9,104
|
|
|
6,916
|
|
|
6,971
|
|
|||||
Environmental
|
|
10,499
|
|
|
1.6
|
%
|
|
7,920
|
|
|
5,321
|
|
|
4,437
|
|
|
3,431
|
|
|||||
Professional Liability
|
|
5,916
|
|
|
0.9
|
%
|
|
6,326
|
|
|
8,361
|
|
|
10,046
|
|
|
10,784
|
|
|||||
Sports and Entertainment
|
|
3,685
|
|
|
0.5
|
%
|
|
3,021
|
|
|
2,221
|
|
|
2,667
|
|
|
2,753
|
|
|||||
Medical Professionals
|
|
1,774
|
|
|
0.3
|
%
|
|
2,297
|
|
|
2,739
|
|
|
3,585
|
|
|
3,922
|
|
|||||
Total
|
|
$
|
656,538
|
|
|
100.0
|
%
|
|
$
|
530,120
|
|
|
$
|
370,844
|
|
|
$
|
308,717
|
|
|
$
|
252,707
|
|
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||||||
State
|
|
Gross
Written
Premiums
|
|
% of
Total
|
|
Gross
Written
Premiums
|
|
% of
Total
|
|
Gross
Written Premiums |
|
% of
Total |
|
Gross
Written Premiums |
|
Gross
Written Premiums |
|||||||||||||
California
|
|
$
|
213,729
|
|
|
32.6
|
%
|
|
$
|
153,340
|
|
|
28.9
|
%
|
|
$
|
114,107
|
|
|
30.8
|
%
|
|
$
|
125,343
|
|
|
$
|
94,837
|
|
New York
|
|
54,417
|
|
|
8.3
|
%
|
|
47,585
|
|
|
9.0
|
%
|
|
39,407
|
|
|
10.6
|
%
|
|
24,314
|
|
|
19,970
|
|
|||||
Florida
|
|
47,918
|
|
|
7.3
|
%
|
|
55,502
|
|
|
10.5
|
%
|
|
35,765
|
|
|
9.6
|
%
|
|
23,853
|
|
|
17,295
|
|
|||||
Texas
|
|
31,604
|
|
|
4.8
|
%
|
|
29,567
|
|
|
5.6
|
%
|
|
26,708
|
|
|
7.2
|
%
|
|
24,491
|
|
|
21,644
|
|
|||||
Illinois
|
|
20,893
|
|
|
3.2
|
%
|
|
25,853
|
|
|
4.9
|
%
|
|
16,548
|
|
|
4.5
|
%
|
|
8,335
|
|
|
7,295
|
|
|||||
Massachusetts
|
|
19,758
|
|
|
3.0
|
%
|
|
13,587
|
|
|
2.5
|
%
|
|
8,496
|
|
|
2.3
|
%
|
|
4,835
|
|
|
3,010
|
|
|||||
Nevada
|
|
19,484
|
|
|
3.0
|
%
|
|
8,144
|
|
|
1.5
|
%
|
|
4,452
|
|
|
1.2
|
%
|
|
3,460
|
|
|
3,472
|
|
|||||
Washington
|
|
17,329
|
|
|
2.6
|
%
|
|
13,697
|
|
|
2.6
|
%
|
|
10,270
|
|
|
2.8
|
%
|
|
7,069
|
|
|
6,094
|
|
|||||
Virginia
|
|
15,532
|
|
|
2.4
|
%
|
|
10,741
|
|
|
2.0
|
%
|
|
6,534
|
|
|
1.8
|
%
|
|
4,088
|
|
|
2,582
|
|
|||||
Michigan
|
|
14,290
|
|
|
2.2
|
%
|
|
4,218
|
|
|
0.8
|
%
|
|
3,189
|
|
|
0.9
|
%
|
|
3,580
|
|
|
2,047
|
|
|||||
All other states
|
|
201,584
|
|
|
30.6
|
%
|
|
167,886
|
|
|
31.7
|
%
|
|
105,368
|
|
|
28.3
|
%
|
|
79,349
|
|
|
74,461
|
|
|||||
Total
|
|
$
|
656,538
|
|
|
100.0
|
%
|
|
$
|
530,120
|
|
|
100.0
|
%
|
|
$
|
370,844
|
|
|
100.0
|
%
|
|
$
|
308,717
|
|
|
$
|
252,707
|
|
2009
|
62.6
|
%
|
2010
|
54.9
|
%
|
2011
|
48.5
|
%
|
2012
|
52.6
|
%
|
2013
|
40.4
|
%
|
2014
|
55.2
|
%
|
2015
|
54.5
|
%
|
2016
|
62.6
|
%
|
2017
|
80.2
|
%
|
2018
|
78.8
|
%
|
•
|
Individual risk workers’ compensation business, underwritten by our staff and generated by appointed agents in North Carolina, Tennessee, Virginia, South Carolina, Georgia, New Jersey, Missouri, Kansas, Pennsylvania, Massachusetts, Rhode Island, Alabama, Connecticut and Mississippi, produce 14.8% of 2018 gross written premiums in this segment, (13.9% in 2017, 21.7% in 2016, 39.5% in 2015 and 50.7% in 2014); and
|
•
|
Fronting and program business written through selected MGAs, insurance carriers, and other producers which represented 85.2% of 2018 gross written premiums in this segment, (86.1% in 2017, 78.3% in 2016, 60.5% in 2015 and 49.3% in 2014).
|
Reinsurer
|
|
Reinsurance
Recoverable as of December 31, 2018 |
|
A.M. Best Rating
December 31, 2018
|
||
|
|
(in thousands)
|
|
|
||
Swiss Reinsurance America Corporation
|
|
$
|
151,590
|
|
|
A+
|
Berkley Insurance Company
|
|
47,867
|
|
|
A+
|
|
Safety National Casualty
|
|
44,130
|
|
|
A+
|
|
North Carolina Reinsurance Facility
|
|
24,639
|
|
|
Unrated
(1)
|
|
Munich Reinsurance America
|
|
24,057
|
|
|
A+
|
|
Endurance Assurance Corporation
|
|
22,405
|
|
|
A+
|
|
Donegal Mutual Insurance Company
|
|
15,787
|
|
|
A
|
|
Cincinnati Insurance Company
|
|
14,997
|
|
|
A+
|
|
American European Insurance Company
|
|
13,044
|
|
|
B
(1)
|
|
Partner Reinsurance Company Limited
|
|
12,780
|
|
|
A
|
|
Top 10 Total
|
|
371,296
|
|
|
|
|
Other
|
|
96,075
|
|
|
|
|
Total
|
|
$
|
467,371
|
|
|
|
|
(1)
|
These reinsurers are unrated, or below “A-”. All material reinsurance recoverables from these reinsurers are collateralized.
|
•
|
Loss emergence and insured reporting patterns;
|
•
|
Underlying policy terms and conditions;
|
•
|
Business and exposure mix;
|
•
|
Trends in claim frequency and severity;
|
•
|
Changes in operations;
|
•
|
Emerging economic and social trends;
|
•
|
Inflation;
|
•
|
Changes in the regulatory and litigation environments; and
|
•
|
Discussions with third-party actuarial consultants.
|
Segment
|
|
Excess and
Surplus Lines |
|
Specialty
Admitted Insurance |
|
Casualty
Reinsurance |
|
Grand Total
|
||||||||
Calendar Year
|
|
|
|
|
|
|
|
|
||||||||
2018
|
|
$
|
(15,012
|
)
|
(1)
|
$
|
5,560
|
|
|
$
|
(8,220
|
)
|
|
$
|
(17,672
|
)
|
2017
|
|
(20,023
|
)
|
(2)
|
2,721
|
|
|
(4,170
|
)
|
|
(21,472
|
)
|
||||
2016
|
|
24,079
|
|
(3)
|
3,822
|
|
|
(4,185
|
)
|
|
23,716
|
|
||||
2015
|
|
25,424
|
|
(4)
|
3,531
|
|
|
(12,637
|
)
|
|
16,318
|
|
||||
2014
|
|
27,283
|
|
(5)
|
5,854
|
|
|
(5,719
|
)
|
|
27,418
|
|
||||
2013
|
|
40,734
|
|
(6)
|
1,410
|
|
|
(4,692
|
)
|
|
37,452
|
|
||||
2012
|
|
20,122
|
|
(7)
|
(4,898
|
)
|
|
(16,617
|
)
|
(8)
|
(1,393
|
)
|
||||
2011
|
|
21,034
|
|
|
1,712
|
|
|
(2,835
|
)
|
|
19,911
|
|
||||
2010
|
|
10,922
|
|
|
(381
|
)
|
|
(857
|
)
|
|
9,684
|
|
||||
2009
|
|
3,193
|
|
|
1,591
|
|
|
(1,067
|
)
|
|
3,717
|
|
||||
Cumulative Development
|
|
$
|
137,756
|
|
|
$
|
20,922
|
|
|
$
|
(60,999
|
)
|
|
$
|
97,679
|
|
|
(1)
|
Includes
$20.7 million
of adverse development in the commercial auto line of business that was primarily related to the 2016 contract year with one insured, partially offset by
$5.7 million
of favorable development from other divisions.
|
(2)
|
Includes $38.7 million of adverse development in the commercial auto line of business that was primarily related to the 2016 contract year with one insured, partially offset by $18.6 million of favorable development from other divisions primarily from the 2014 through 2016 accident years.
|
(3)
|
Includes $10.0 million of favorable development from the 2015 accident year, $10.7 million from the 2014 accident year and $4.5 million from the 2013 accident year.
|
(4)
|
Includes $17.3 million and $10.5 million of favorable development from the 2014 and 2013 accident year, respectively.
|
(5)
|
Includes $7.9 million of favorable development from the 2011 accident year, $4.2 million from the 2007 accident year and $5.0 million from the 2009 accident year.
|
(6)
|
Includes $11.8 million of favorable development from the 2009 accident year, $7.3 million of favorable development from the 2007 accident year and $5.8 million of favorable development from the 2008 accident year.
|
(7)
|
Includes $8.0 million of favorable development from the 2009 accident year, $4.3 million of favorable development from the 2008 accident year and $4.1 million of favorable development from the 2007 accident year.
|
(8)
|
Includes $9.0 million of adverse development on assumed crop business almost entirely from the 2011 accident year and $7.6 million of adverse development on other assumed business.
|
|
|
December 31, 2018
|
||||||||||||||||
Portfolio
|
|
Book Value
|
|
Market Value
|
|
Carrying Value
|
|
Book Yield
|
|
% of Carrying
Value
|
||||||||
|
|
($ in thousands)
|
||||||||||||||||
Core
|
|
$
|
1,243,616
|
|
|
$
|
1,226,946
|
|
|
$
|
1,226,946
|
|
|
2.96
|
%
|
|
71.0
|
%
|
Bank Loans
|
|
299,086
|
|
|
288,740
|
|
|
299,014
|
|
|
6.97
|
%
|
|
17.3
|
%
|
|||
Incremental Yield
|
|
124,838
|
|
|
127,606
|
|
|
127,606
|
|
|
6.46
|
%
|
|
7.4
|
%
|
|||
Private Investments
|
|
|
|
|
|
|
|
73,571
|
|
|
NA
|
|
|
4.3
|
%
|
|||
Total
|
|
|
|
|
|
|
|
1,727,137
|
|
|
|
|
|
100.0
|
%
|
|||
Less cash and cash equivalents in Core and Bank Loans
|
|
|
|
|
|
|
|
(49,291
|
)
|
|
|
|
|
|||||
Total Invested Assets
|
|
|
|
|
|
|
|
$
|
1,677,846
|
|
|
|
|
|
|
|
2016
|
|
2017
|
|
2018
|
|
Trailing 3 years
Ended 2018
|
||||
Core
|
|
2.34
|
%
|
|
3.09
|
%
|
|
0.73
|
%
|
|
2.05
|
%
|
Bank Loans
|
|
14.09
|
%
|
|
6.56
|
%
|
|
3.82
|
%
|
|
8.07
|
%
|
Incremental
|
|
9.23
|
%
|
|
10.86
|
%
|
|
0.42
|
%
|
|
6.74
|
%
|
Total
|
|
5.18
|
%
|
|
4.49
|
%
|
|
1.32
|
%
|
|
3.65
|
%
|
|
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
Gross Written Premiums
|
|
$
|
|
% Change
|
|
$
|
|
% Change
|
|
$
|
|
% Change
|
|||||||||
|
|
($ in thousands)
|
|||||||||||||||||||
Excess and Surplus Lines
|
|
$
|
656,538
|
|
|
23.8
|
%
|
|
$
|
530,120
|
|
|
42.9
|
%
|
|
$
|
370,844
|
|
|
20.1
|
%
|
Specialty Admitted Insurance
|
|
374,346
|
|
|
18.3
|
%
|
|
316,430
|
|
|
73.7
|
%
|
|
182,221
|
|
|
100.3
|
%
|
|||
Casualty Reinsurance
|
|
135,889
|
|
|
(42.3
|
)%
|
|
235,355
|
|
|
27.7
|
%
|
|
184,333
|
|
|
6.9
|
%
|
|||
Total
|
|
$
|
1,166,773
|
|
|
7.8
|
%
|
|
$
|
1,081,905
|
|
|
46.7
|
%
|
|
$
|
737,398
|
|
|
28.9
|
%
|
Item 1A.
|
RISK FACTORS
|
•
|
When we write “occurrence” policies in our Excess and Surplus Lines segment, we are obligated to pay covered claims, up to the contractually agreed amount, for any covered loss that occurs while the policy is in force. Losses can emerge many years after a policy has lapsed. Accordingly, our first notice of a claim or group of claims may arise many years after a policy has lapsed. Approximately 93% of our net casualty loss reserves in this segment are associated with “occurrence form” policies at
December 31, 2018
.
|
•
|
Even when a claim is received (irrespective of whether the policy is a “claims made” or “occurrence” basis form), it may take considerable time to fully appreciate the extent of the covered loss suffered by the insured and, consequently, estimates of loss associated with specific claims can increase over time.
|
•
|
New theories of liability are enforced retroactively from time to time by courts. See also “The effect of emerging claim and coverage issues on our business is uncertain” risk factor herein.
|
•
|
Volatility in the financial markets, economic events and other external factors may result in an increase in the number of claims and the severity of the claims reported. In addition, elevated inflationary conditions could, among other things, cause loss costs to increase.
|
•
|
If claims became more frequent, even if we had no liability for those claims, the cost of evaluating these potential claims could escalate beyond the amount of the reserves we have established. As we enter new lines of business, or as a result of new theories of claims, we may encounter an increase in claims frequency and greater claims handling costs than we had anticipated.
|
•
|
We regularly enter new lines of insurance, and as a consequence, we sometimes have to make estimates of future losses for risk classes with which we do not have a great deal of experience. This lack of experience may contribute to making errors of judgment when establishing reserves.
|
•
|
The increased lapse of time from the occurrence of an event to the reporting of the claim and the ultimate resolution or settlement of the claim.
|
•
|
The diversity of development patterns among different types of reinsurance treaties.
|
•
|
The necessary reliance on the ceding company for information regarding claims.
|
•
|
if we change our business practices from our organizational business plan in a manner that no longer supports our A.M. Best’s rating;
|
•
|
if unfavorable financial, regulatory or market trends affect us, including excess market capacity;
|
•
|
if our losses exceed our loss reserves;
|
•
|
if we have unresolved issues with government regulators;
|
•
|
if we are unable to retain our senior management or other key personnel;
|
•
|
if our investment portfolio incurs significant losses; or
|
•
|
if A.M. Best alters its capital adequacy assessment methodology in a manner that would adversely affect our rating.
|
•
|
the Excess and Surplus Lines segment conducted business with two brokers that produced an aggregate of
$439.7 million
in gross written premiums, or
67.0%
of that segment’s gross written premiums for the year;
|
•
|
the Specialty Admitted Insurance segment conducted business with one agency that produced
$201.7 million
in gross written premiums, representing
53.9%
of that segment’s gross written premiums for the year; and
|
•
|
the Casualty Reinsurance segment conducted business with
two
brokers that generated
$96.4 million
of gross written premiums, or
70.9%
of that segment’s gross written premiums for the year.
|
•
|
Asbestos liability applied to manufacturers of products and contractors who installed those products;
|
•
|
Apportionment of liability for settlement assigned to subcontractors who may have been involved in mundane tasks (such as installing sheetrock in a home); and
|
•
|
Court decisions, such as the 1995
Montrose
decision in California, that read policy exclusions narrowly so as to expand coverage, thereby requiring insurers to create and write new exclusions.
|
•
|
collect and properly analyze a substantial volume of data from our insureds;
|
•
|
develop, test and apply appropriate actuarial projections and rating formulas;
|
•
|
closely monitor and timely recognize changes in trends; and
|
•
|
project both frequency and severity of our insureds’ losses with reasonable accuracy.
|
•
|
insufficient or unreliable data;
|
•
|
incorrect or incomplete analysis of available data;
|
•
|
uncertainties generally inherent in estimates and assumptions;
|
•
|
our failure to implement appropriate actuarial projections and rating formulas or other pricing methodologies;
|
•
|
regulatory constraints on rate increases;
|
•
|
our failure to accurately estimate investment yields and the duration of our liability for loss and loss adjustment expenses; and
|
•
|
unanticipated court decisions, legislation or regulatory action.
|
•
|
fund liquidity needs caused by underwriting or investment losses;
|
•
|
replace capital lost in the event of significant reinsurance losses or adverse reserve developments;
|
•
|
satisfy letters of credit or guarantee bond requirements that may be imposed by our clients or by regulators;
|
•
|
meet rating agency or regulatory capital requirements; or
|
•
|
respond to competitive pressures.
|
•
|
An increase in capital-raising by companies in our lines of business, which could result in new entrants to our markets and an excess of capital in the industry;
|
•
|
The deregulation of commercial insurance lines in certain states and the possibility of federal regulatory reform of the insurance industry, which could increase competition from standard carriers for our E&S lines of insurance business; and
|
•
|
Changing practices facilitated by the Internet may lead to greater competition in the insurance business. Among the possible changes are shifts in the way in which commercial insurance is purchased, which could affect both admitted and E&S lines.
|
•
|
our operating and financial performance and prospects;
|
•
|
our quarterly or annual earnings or earnings estimates, or those of other companies in our industry;
|
•
|
failure to meet external expectations or management guidance;
|
•
|
the loss of one or more individually large clients, and its impact on our growth rate, profitability and financial condition;
|
•
|
exposure to capital market risks related to changes in interest rates, realized investment losses, credit spreads, equity prices, foreign exchange rates and performance of insurance-linked investments;
|
•
|
our creditworthiness, financial condition, performance and prospects;
|
•
|
termination of payment of dividends on our common shares, or payment of a reduced amount of dividends;
|
•
|
actual or anticipated growth rates relative to our competitors;
|
•
|
perceptions of the investment opportunity associated with our common shares relative to other investment alternatives;
|
•
|
speculation by the investment community regarding our business;
|
•
|
future announcements concerning our business or our competitors’ businesses;
|
•
|
the public’s reaction to our press releases, other public announcements and filings with the SEC;
|
•
|
changes in accounting standards, policies, guidance, interpretations or principles;
|
•
|
market and industry perception of our success, or lack thereof, in pursuing our strategy;
|
•
|
strategic actions by us or our competitors, such as acquisitions, restructurings, significant contracts or joint ventures;
|
•
|
catastrophes that are perceived by investors as impacting the insurance and reinsurance market in general;
|
•
|
changes in laws or government regulation, including tax or insurance laws and regulations;
|
•
|
potential characterization of us as a PFIC;
|
•
|
general market, economic and political conditions;
|
•
|
changes in conditions or trends in our industry, geographies or customers;
|
•
|
arrival and departure of key personnel;
|
•
|
the number of common shares that are publicly traded;
|
•
|
the offering and issuance of common shares by us, or sales of common shares by our directors or executive officers; and
|
•
|
adverse resolution of litigation against us.
|
•
|
the total voting power of any U.S. person owning more than 9.5% of our common shares will be reduced to 9.5% of the total voting power of our common shares, excluding shareholders that held more than 9.5% of our common shares on the day of completion of our IPO;
|
•
|
our board of directors has the authority to issue preferred shares without shareholder approval, which could be used to dilute the ownership of a potential hostile acquirer;
|
•
|
our shareholders may only remove directors for cause;
|
•
|
there are advance notice requirements for shareholders with respect to director nominations and actions to be taken at annual meetings; and
|
•
|
under Bermuda law, for so long as JRG Re and Carolina Re are registered under the Insurance Act, the BMA may object to a person holding more than 10%, 20%, 33% or 50% of our common shares if it appears to the BMA that the person is not or is no longer fit and proper to be such a holder (See “— There are regulatory limitations on the ownership and transfer of our common shares.”).
|
Item 1B.
|
UNRESOLVED STAFF COMMENTS
|
Item 2.
|
PROPERTIES
|
Item 3.
|
LEGAL PROCEEDINGS
|
Item 4.
|
MINE SAFETY DISCLOSURE
|
Item 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
12/12/2014
|
|
12/14
|
|
12/15
|
|
12/16
|
|
12/17
|
|
12/18
|
James River Group Holdings, Ltd.
|
|
100.00
|
|
107.11
|
|
166.93
|
|
219.56
|
|
220.59
|
|
207.89
|
Russell 2000
|
|
100.00
|
|
104.65
|
|
100.03
|
|
121.34
|
|
139.11
|
|
123.79
|
Peer Group
|
|
100.00
|
|
101.78
|
|
123.89
|
|
139.82
|
|
159.20
|
|
163.62
|
Item 6.
|
SELECTED FINANCIAL DATA
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
|
($ in thousands, except for per share data)
|
||||||||||||||||||
Operating Results:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross written premiums
(1)
|
|
$
|
1,166,773
|
|
|
$
|
1,081,905
|
|
|
$
|
737,398
|
|
|
$
|
572,194
|
|
|
$
|
518,767
|
|
Ceded written premiums
(2)
|
|
(404,101
|
)
|
|
(315,279
|
)
|
|
(179,690
|
)
|
|
(101,162
|
)
|
|
(68,684
|
)
|
|||||
Net written premiums
|
|
$
|
762,672
|
|
|
$
|
766,626
|
|
|
$
|
557,708
|
|
|
$
|
471,032
|
|
|
$
|
450,083
|
|
Net earned premiums
|
|
$
|
815,398
|
|
|
$
|
741,109
|
|
|
$
|
515,663
|
|
|
$
|
461,205
|
|
|
$
|
396,212
|
|
Net investment income
|
|
61,256
|
|
|
61,119
|
|
|
52,638
|
|
|
44,835
|
|
|
43,005
|
|
|||||
Net realized investment (losses) gains
|
|
(5,479
|
)
|
|
(1,989
|
)
|
|
7,565
|
|
|
(4,547
|
)
|
|
(1,336
|
)
|
|||||
Other income
|
|
14,424
|
|
|
17,386
|
|
|
10,361
|
|
|
3,428
|
|
|
1,122
|
|
|||||
Total revenues
|
|
885,599
|
|
|
817,625
|
|
|
586,227
|
|
|
504,921
|
|
|
439,003
|
|
|||||
Losses and loss adjustment expenses
|
|
600,276
|
|
|
555,377
|
|
|
325,421
|
|
|
279,016
|
|
|
237,368
|
|
|||||
Other operating expenses
|
|
201,035
|
|
|
196,993
|
|
|
170,828
|
|
|
157,803
|
|
|
133,055
|
|
|||||
Other expenses
|
|
1,300
|
|
|
539
|
|
|
1,590
|
|
|
730
|
|
|
16,012
|
|
|||||
Interest expense
|
|
11,553
|
|
|
8,974
|
|
|
8,448
|
|
|
6,999
|
|
|
6,347
|
|
|||||
Amortization of intangible assets
|
|
597
|
|
|
597
|
|
|
597
|
|
|
597
|
|
|
597
|
|
|||||
Total expenses
|
|
814,761
|
|
|
762,480
|
|
|
506,884
|
|
|
445,145
|
|
|
393,379
|
|
|||||
Income before income tax expense
|
|
70,838
|
|
|
55,145
|
|
|
79,343
|
|
|
59,776
|
|
|
45,624
|
|
|||||
Income tax expense
|
|
7,008
|
|
|
11,579
|
|
|
4,872
|
|
|
6,279
|
|
|
939
|
|
|||||
Net income
|
|
$
|
63,830
|
|
|
$
|
43,566
|
|
|
$
|
74,471
|
|
|
$
|
53,497
|
|
|
$
|
44,685
|
|
Adjusted net operating income
(4)
|
|
$
|
70,596
|
|
|
$
|
47,385
|
|
|
$
|
71,318
|
|
|
$
|
61,090
|
|
|
$
|
58,424
|
|
Per share data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings per share
|
|
$
|
2.14
|
|
|
$
|
1.48
|
|
|
$
|
2.56
|
|
|
$
|
1.87
|
|
|
$
|
1.57
|
|
Diluted earnings per share
|
|
$
|
2.11
|
|
|
$
|
1.44
|
|
|
$
|
2.49
|
|
|
$
|
1.82
|
|
|
$
|
1.55
|
|
Dividends declared per share
|
|
$
|
1.20
|
|
|
$
|
1.70
|
|
|
$
|
2.25
|
|
|
$
|
1.64
|
|
|
$
|
2.45
|
|
Weighted — average shares outstanding — diluted
|
|
30,307,101
|
|
|
30,273,149
|
|
|
29,894,378
|
|
|
29,334,918
|
|
|
28,810,301
|
|
|
|
At or for the Year Ended December 31,
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
|
($ in thousands, except for per share amounts and ratios)
|
||||||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and invested assets
|
|
$
|
1,850,303
|
|
|
$
|
1,611,149
|
|
|
$
|
1,442,114
|
|
|
$
|
1,350,697
|
|
|
$
|
1,310,628
|
|
Reinsurance recoverables
|
|
485,715
|
|
|
313,816
|
|
|
185,614
|
|
|
143,086
|
|
|
128,979
|
|
|||||
Goodwill and intangible assets
|
|
219,368
|
|
|
220,165
|
|
|
220,762
|
|
|
221,359
|
|
|
221,956
|
|
|||||
Total assets
|
|
3,136,776
|
|
|
2,756,695
|
|
|
2,346,533
|
|
|
2,055,497
|
|
|
1,959,292
|
|
|||||
Reserve for losses and loss adjustment expenses
|
|
1,661,459
|
|
|
1,292,349
|
|
|
943,865
|
|
|
785,322
|
|
|
716,296
|
|
|||||
Unearned premiums
|
|
386,473
|
|
|
418,114
|
|
|
390,563
|
|
|
301,104
|
|
|
277,579
|
|
|||||
Senior debt
|
|
118,300
|
|
|
98,300
|
|
|
88,300
|
|
|
88,300
|
|
|
88,300
|
|
|||||
Junior subordinated debt
|
|
104,055
|
|
|
104,055
|
|
|
104,055
|
|
|
104,055
|
|
|
104,055
|
|
|||||
Total liabilities
|
|
2,427,535
|
|
|
2,061,996
|
|
|
1,653,312
|
|
|
1,374,459
|
|
|
1,271,371
|
|
|||||
Total stockholders’ equity
|
|
709,241
|
|
|
694,699
|
|
|
693,221
|
|
|
681,038
|
|
|
687,921
|
|
|||||
GAAP Underwriting Ratios:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss ratio
(5)
|
|
73.6
|
%
|
|
74.9
|
%
|
|
63.1
|
%
|
|
60.5
|
%
|
|
59.9
|
%
|
|||||
Expense ratio
(6)
|
|
23.0
|
%
|
|
24.3
|
%
|
|
31.2
|
%
|
|
33.5
|
%
|
|
33.4
|
%
|
|||||
Combined ratio
(7)
|
|
96.6
|
%
|
|
99.2
|
%
|
|
94.3
|
%
|
|
94.0
|
%
|
|
93.3
|
%
|
|||||
Other Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Tangible equity
(8)
|
|
$
|
489,873
|
|
|
$
|
474,534
|
|
|
$
|
472,459
|
|
|
$
|
459,679
|
|
|
$
|
465,965
|
|
Tangible equity per common share outstanding
|
|
$
|
16.34
|
|
|
$
|
15.98
|
|
|
$
|
16.15
|
|
|
$
|
15.88
|
|
|
$
|
16.33
|
|
Debt to total capitalization ratio
(9)
|
|
23.9
|
%
|
|
22.6
|
%
|
|
21.7
|
%
|
|
22.0
|
%
|
|
21.9
|
%
|
|||||
Regulatory capital and surplus
(10)
|
|
$
|
681,161
|
|
|
$
|
628,877
|
|
|
$
|
605,298
|
|
|
$
|
601,436
|
|
|
$
|
593,580
|
|
Net written premiums to surplus ratio
(3)
|
|
1.1x
|
|
|
1.2x
|
|
|
0.9x
|
|
|
0.8x
|
|
|
0.8x
|
|
|
(1)
|
The amount received or to be received for insurance policies written or assumed by us during a specific period of time without reduction for acquisition costs, reinsurance costs or other deductions.
|
(2)
|
The amount of written premiums ceded to (reinsured by) other insurers.
|
(3)
|
We believe this measure is useful in evaluating our insurance subsidiaries’ operating leverage. It may not be comparable to the definition of net written premiums to surplus ratio for other companies.
|
(4)
|
Adjusted net operating income is a non-GAAP measure. We define adjusted net operating income as net income excluding net realized investment gains and losses, expenses related to due diligence costs for various merger and acquisition activities, severance costs associated with terminated employees, impairment charges on goodwill and intangible assets, gains on extinguishment of debt, expenses on a leased building we are deemed to own for accounting purposes, and professional services and other expenses associated with securities offerings and the payment of special dividends. We use adjusted net operating income as an internal performance measure in the management of our operations because we believe it gives our management and other users of our financial information useful insight into our results of operations and our underlying business performance. Adjusted net operating income should not be viewed as a substitute for net income in accordance with GAAP. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Reconciliation of Non-GAAP Measures” for a reconciliation of adjusted net operating income to net income in accordance with GAAP.
|
(5)
|
The loss ratio is the ratio, expressed as a percentage, of losses and loss adjustment expenses to net earned premiums, net of the effects of reinsurance.
|
(6)
|
The expense ratio is the ratio, expressed as a percentage, of other operating expenses to net earned premiums.
|
(7)
|
The combined ratio is the sum of the loss ratio and the expense ratio. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss.
|
(8)
|
Tangible equity is shareholders’ equity less goodwill and intangible assets. Tangible equity should not be viewed as a substitute for shareholders’ equity calculated in accordance with GAAP. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Reconciliation of Non-GAAP Measures” for a reconciliation of tangible equity to shareholders’ equity in accordance with GAAP.
|
(9)
|
The ratio, expressed as a percentage, of total indebtedness for borrowed money to the sum of total indebtedness for borrowed money and shareholders’ equity.
|
(10)
|
For our U.S. insurance subsidiaries, the excess of assets over liabilities as determined in accordance with statutory accounting principles as determined by the NAIC. For our Bermuda reinsurer, shareholders’ equity in accordance with U.S. generally accepted accounting principles (“GAAP”).
|
Item 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Sensitivity
|
|
5th Pct.
|
|
50th Pct.
|
|
Carried
|
|
95th Pct.
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Reserve for losses and loss adjustment expenses
|
|
$
|
1,061,245
|
|
|
$
|
1,191,249
|
|
|
$
|
1,194,088
|
|
|
$
|
1,337,509
|
|
Changes in reserves
|
|
(132,843
|
)
|
|
(2,839
|
)
|
|
—
|
|
|
143,421
|
|
|
Year Ended December 31,
|
|
|
|||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
|
($ in thousands)
|
|
|
|||||||
Gross written premiums
|
$
|
1,166,773
|
|
|
$
|
1,081,905
|
|
|
7.8
|
%
|
Net retention
(1)
|
65.4
|
%
|
|
70.9
|
%
|
|
|
|||
Net written premiums
|
$
|
762,672
|
|
|
$
|
766,626
|
|
|
(0.5
|
)%
|
Net earned premiums
|
$
|
815,398
|
|
|
$
|
741,109
|
|
|
10.0
|
%
|
Losses and loss adjustment expenses
|
(600,276
|
)
|
|
(555,377
|
)
|
|
8.1
|
%
|
||
Other operating expenses
|
(187,116
|
)
|
|
(179,968
|
)
|
|
4.0
|
%
|
||
Underwriting profit
(2), (3)
|
28,006
|
|
|
5,764
|
|
|
385.9
|
%
|
||
Net investment income
|
61,256
|
|
|
61,119
|
|
|
0.2
|
%
|
||
Net realized and unrealized investment losses
|
(5,479
|
)
|
|
(1,989
|
)
|
|
175.5
|
%
|
||
Other income and expense
|
(795
|
)
|
|
(178
|
)
|
|
346.6
|
%
|
||
Interest expense
|
(11,553
|
)
|
|
(8,974
|
)
|
|
28.7
|
%
|
||
Amortization of intangible assets
|
(597
|
)
|
|
(597
|
)
|
|
—
|
%
|
||
Income before taxes
|
70,838
|
|
|
55,145
|
|
|
28.5
|
%
|
||
Income tax expense
|
7,008
|
|
|
11,579
|
|
|
(39.5
|
)%
|
||
Net income
|
$
|
63,830
|
|
|
$
|
43,566
|
|
|
46.5
|
%
|
Adjusted net operating income
(4)
|
$
|
70,596
|
|
|
$
|
47,385
|
|
|
49.0
|
%
|
Ratios:
|
|
|
|
|
|
|||||
Loss ratio
|
73.6
|
%
|
|
74.9
|
%
|
|
|
|
||
Expense ratio
|
23.0
|
%
|
|
24.3
|
%
|
|
|
|
||
Combined ratio
|
96.6
|
%
|
|
99.2
|
%
|
|
|
|
|
(1)
|
Net retention is defined as the ratio of net written premiums to gross written premiums.
|
(2)
|
Underwriting profit is a non-GAAP measure. See “Reconciliation of Non-GAAP Measures” for a reconciliation to income before tax and for additional information.
|
(3)
|
Underwriting profit includes gross fee income of
$28.7 million
and
$28.3 million
for the years ended
December 31, 2018
and
2017
, respectively.
|
(4)
|
Adjusted net operating income is a non-GAAP measure. See “Reconciliation of Non-GAAP Measures” for reconciliation to net income and for additional information.
|
•
|
Net realized and unrealized investment losses of
$5.5 million
and
$2.0 million
for the years ended
December 31, 2018
and
2017
, respectively. See “- Investing Results" for more information on these realized and unrealized investment losses.
|
•
|
Interest expense of
$1.6 million
and
$1.3 million
for the years ended
December 31, 2018
and
2017
, respectively, relating to finance expenses in connection with a minority interest in a real estate partnership pursuant to which we are deemed an owner for accounting purposes. The debt is nonrecourse to us and was not arranged by us.
|
|
Year Ended December 31,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
|
Income
Before Taxes |
|
Net Income
|
|
Income
Before Taxes |
|
Net
Income |
||||||||
|
(in thousands)
|
||||||||||||||
Income as reported
|
$
|
70,838
|
|
|
$
|
63,830
|
|
|
$
|
55,145
|
|
|
$
|
43,566
|
|
Net realized and unrealized losses on investments
|
5,479
|
|
|
4,374
|
|
|
1,989
|
|
|
1,375
|
|
||||
Other expenses
|
1,100
|
|
|
941
|
|
|
539
|
|
|
575
|
|
||||
Impairment of intangible assets
|
200
|
|
|
200
|
|
|
—
|
|
|
—
|
|
||||
Dividend withholding taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
1,053
|
|
||||
Interest expense on leased building the Company is deemed to own for accounting purposes
|
1,584
|
|
|
1,251
|
|
|
1,256
|
|
|
816
|
|
||||
Adjusted net operating income
|
$
|
79,201
|
|
|
$
|
70,596
|
|
|
$
|
58,929
|
|
|
$
|
47,385
|
|
|
Year Ended December 31,
|
|
|
|||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
|
($ in thousands)
|
|
|
|||||||
Gross written premiums:
|
|
|
|
|
|
|||||
Excess and Surplus Lines
|
$
|
656,538
|
|
|
$
|
530,120
|
|
|
23.8
|
%
|
Specialty Admitted Insurance
|
374,346
|
|
|
316,430
|
|
|
18.3
|
%
|
||
Casualty Reinsurance
|
135,889
|
|
|
235,355
|
|
|
(42.3
|
)%
|
||
|
$
|
1,166,773
|
|
|
$
|
1,081,905
|
|
|
7.8
|
%
|
Net written premiums:
|
|
|
|
|
|
|||||
Excess and Surplus Lines
|
$
|
571,098
|
|
|
$
|
469,891
|
|
|
21.5
|
%
|
Specialty Admitted Insurance
|
55,840
|
|
|
60,957
|
|
|
(8.4
|
)%
|
||
Casualty Reinsurance
|
135,734
|
|
|
235,778
|
|
|
(42.4
|
)%
|
||
|
$
|
762,672
|
|
|
$
|
766,626
|
|
|
(0.5
|
)%
|
Net earned premiums:
|
|
|
|
|
|
|||||
Excess and Surplus Lines
|
$
|
555,684
|
|
|
$
|
463,521
|
|
|
19.9
|
%
|
Specialty Admitted Insurance
|
55,146
|
|
|
68,110
|
|
|
(19.0
|
)%
|
||
Casualty Reinsurance
|
204,568
|
|
|
209,478
|
|
|
(2.3
|
)%
|
||
|
$
|
815,398
|
|
|
$
|
741,109
|
|
|
10.0
|
%
|
|
Year Ended December 31,
|
|
|
|||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
|
|
|||||||||
Commercial Auto
|
$
|
322,126
|
|
|
$
|
247,960
|
|
|
29.9
|
%
|
Manufacturers & Contractors
|
79,160
|
|
|
85,719
|
|
|
(7.7
|
)%
|
||
Excess Casualty
|
66,452
|
|
|
51,160
|
|
|
29.9
|
%
|
||
General Casualty
|
54,127
|
|
|
38,054
|
|
|
42.2
|
%
|
||
Energy
|
33,942
|
|
|
29,704
|
|
|
14.3
|
%
|
||
Allied Health
|
30,450
|
|
|
19,181
|
|
|
58.8
|
%
|
||
Excess Property
|
16,963
|
|
|
14,447
|
|
|
17.4
|
%
|
||
Life Sciences
|
16,636
|
|
|
12,981
|
|
|
28.2
|
%
|
||
Small Business
|
14,808
|
|
|
11,307
|
|
|
31.0
|
%
|
||
All other divisions
|
21,874
|
|
|
19,607
|
|
|
11.6
|
%
|
||
Excess and Surplus Lines gross written premium
|
$
|
656,538
|
|
|
$
|
530,120
|
|
|
23.8
|
%
|
|
Year Ended December 31,
|
|
|
|||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
|
($ in thousands)
|
|
|
|||||||
Individual risk workers’ compensation premium
|
$
|
55,248
|
|
|
$
|
44,121
|
|
|
25.2
|
%
|
Fronting and program premium
|
319,098
|
|
|
272,309
|
|
|
17.2
|
%
|
||
Specialty Admitted gross written premium
|
$
|
374,346
|
|
|
$
|
316,430
|
|
|
18.3
|
%
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2017
|
||
Excess and Surplus Lines
|
87.0
|
%
|
|
88.6
|
%
|
Specialty Admitted Insurance
|
14.9
|
%
|
|
19.3
|
%
|
Casualty Reinsurance
|
99.9
|
%
|
|
100.2
|
%
|
Total
|
65.4
|
%
|
|
70.9
|
%
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2017
|
||
Excess and Surplus Lines
|
92.3
|
%
|
|
93.6
|
%
|
Specialty Admitted Insurance
|
87.4
|
%
|
|
95.4
|
%
|
Casualty Reinsurance
|
97.5
|
%
|
|
100.8
|
%
|
Total
|
96.6
|
%
|
|
99.2
|
%
|
|
Year Ended December 31,
|
|
|
|||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
|
($ in thousands)
|
|
|
|||||||
Gross written premiums
|
$
|
656,538
|
|
|
$
|
530,120
|
|
|
23.8
|
%
|
Net written premiums
|
$
|
571,098
|
|
|
$
|
469,891
|
|
|
21.5
|
%
|
Net earned premiums
|
$
|
555,684
|
|
|
$
|
463,521
|
|
|
19.9
|
%
|
Losses and loss adjustment expenses
|
(437,904
|
)
|
|
(371,717
|
)
|
|
17.8
|
%
|
||
Underwriting expenses
|
(74,946
|
)
|
|
(62,111
|
)
|
|
20.7
|
%
|
||
Underwriting profit
(1), (2)
|
$
|
42,834
|
|
|
$
|
29,693
|
|
|
44.3
|
%
|
Ratios:
|
|
|
|
|
|
|||||
Loss ratio
|
78.8
|
%
|
|
80.2
|
%
|
|
|
|
||
Expense ratio
|
13.5
|
%
|
|
13.4
|
%
|
|
|
|
||
Combined ratio
|
92.3
|
%
|
|
93.6
|
%
|
|
|
|
|
(1)
|
Underwriting Profit is a non-GAAP Measure. See “Reconciliation of Non-GAAP Measures” for a reconciliation to income before tax and for additional information.
|
(2)
|
Underwriting results include gross fee income of
$13.9 million
and
$17.0 million
for the years ended
December 31, 2018
and
2017
, respectively.
|
|
Year Ended December 31,
|
|
|
|||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
|
($ in thousands)
|
|
|
|||||||
Gross written premiums
|
$
|
374,346
|
|
|
$
|
316,430
|
|
|
18.3
|
%
|
Net written premiums
|
$
|
55,840
|
|
|
$
|
60,957
|
|
|
(8.4
|
)%
|
Net earned premiums
|
$
|
55,146
|
|
|
$
|
68,110
|
|
|
(19.0
|
)%
|
Losses and loss adjustment expenses
|
(32,623
|
)
|
|
(44,863
|
)
|
|
(27.3
|
)%
|
||
Underwriting expenses
|
(15,551
|
)
|
|
(20,081
|
)
|
|
(22.6
|
)%
|
||
Underwriting profit
(1), (2)
|
$
|
6,972
|
|
|
$
|
3,166
|
|
|
120.2
|
%
|
Ratios:
|
|
|
|
|
|
|||||
Loss ratio
|
59.2
|
%
|
|
65.9
|
%
|
|
|
|
||
Expense ratio
|
28.2
|
%
|
|
29.5
|
%
|
|
|
|
||
Combined ratio
|
87.4
|
%
|
|
95.4
|
%
|
|
|
|
|
(1)
|
Underwriting Profit is a non-GAAP Measure. See “Reconciliation of Non-GAAP Measures” for a reconciliation to income before tax and for additional information.
|
(2)
|
Underwriting profit includes fee income of
$14.8 million
and
$11.3 million
for the years ended
December 31, 2018
and
2017
, respectively.
|
|
Year Ended December 31,
|
|
|
|||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
|
($ in thousands)
|
|
|
|||||||
Gross written premiums
|
$
|
135,889
|
|
|
$
|
235,355
|
|
|
(42.3
|
)%
|
Net written premiums
|
$
|
135,734
|
|
|
$
|
235,778
|
|
|
(42.4
|
)%
|
Net earned premiums
|
$
|
204,568
|
|
|
$
|
209,478
|
|
|
(2.3
|
)%
|
Losses and loss adjustment expenses
|
(129,749
|
)
|
|
(138,797
|
)
|
|
(6.5
|
)%
|
||
Underwriting expenses
|
(69,716
|
)
|
|
(72,446
|
)
|
|
(3.8
|
)%
|
||
Underwriting profit (loss)
(1)
|
$
|
5,103
|
|
|
$
|
(1,765
|
)
|
|
—
|
|
Ratios:
|
|
|
|
|
|
|||||
Loss ratio
|
63.4
|
%
|
|
66.3
|
%
|
|
|
|
||
Expense ratio
|
34.1
|
%
|
|
34.5
|
%
|
|
|
|
||
Combined ratio
|
97.5
|
%
|
|
100.8
|
%
|
|
|
|
|
(1)
|
Underwriting loss is a non-GAAP Measure. See “Reconciliation of Non-GAAP Measures” for a reconciliation to income before tax and for additional information.
|
|
Year Ended December 31,
|
|
|
|||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
|
(in thousands)
|
|
|
|||||||
Renewable energy LLCs
|
$
|
2,974
|
|
|
$
|
10,578
|
|
|
(71.9
|
)%
|
Other private investments
|
2,191
|
|
|
3,501
|
|
|
(37.4
|
)%
|
||
Other invested assets
|
5,165
|
|
|
14,079
|
|
|
(63.3
|
)%
|
||
All other net investment income
|
56,091
|
|
|
47,040
|
|
|
19.2
|
%
|
||
Total net investment income
|
$
|
61,256
|
|
|
$
|
61,119
|
|
|
0.2
|
%
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Fixed maturity securities
|
$
|
34,129
|
|
|
$
|
26,833
|
|
Bank loan participations
|
18,279
|
|
|
17,388
|
|
||
Equity securities
|
5,240
|
|
|
5,045
|
|
||
Other invested assets
|
5,165
|
|
|
14,079
|
|
||
Cash, cash equivalents, and short-term investments
|
2,681
|
|
|
1,708
|
|
||
Trading losses
|
(4
|
)
|
|
(4
|
)
|
||
Gross investment income
|
65,490
|
|
|
65,049
|
|
||
Investment expense
|
(4,234
|
)
|
|
(3,930
|
)
|
||
Net investment income
|
$
|
61,256
|
|
|
$
|
61,119
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2017
|
||
Annualized gross investment yield on:
|
|
|
|
||
Average cash and invested assets
|
3.8
|
%
|
|
4.3
|
%
|
Average fixed maturity securities
|
3.7
|
%
|
|
3.6
|
%
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||
|
Cost or
Amortized
Cost
|
|
Fair Value
|
|
% of Total
Fair Value
|
|
Cost or
Amortized
Cost
|
|
Fair Value
|
|
% of Total
Fair Value
|
||||||||||
|
($ in thousands)
|
||||||||||||||||||||
Fixed maturity securities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
State and municipal
|
$
|
147,160
|
|
|
$
|
149,295
|
|
|
12.6
|
%
|
|
$
|
139,382
|
|
|
$
|
144,366
|
|
|
14.2
|
%
|
Residential mortgage-backed
|
208,869
|
|
|
204,109
|
|
|
17.2
|
%
|
|
160,379
|
|
|
158,661
|
|
|
15.6
|
%
|
||||
Corporate
|
534,024
|
|
|
524,768
|
|
|
44.3
|
%
|
|
408,857
|
|
|
413,721
|
|
|
40.7
|
%
|
||||
Commercial mortgage and asset-backed
|
199,528
|
|
|
197,025
|
|
|
16.6
|
%
|
|
182,595
|
|
|
182,611
|
|
|
18.0
|
%
|
||||
Obligations of U.S. government corporations and agencies
|
—
|
|
|
—
|
|
|
—
|
%
|
|
35,948
|
|
|
35,847
|
|
|
3.5
|
%
|
||||
U.S. Treasury securities and obligations guaranteed by the U.S. government
|
107,803
|
|
|
107,193
|
|
|
9.1
|
%
|
|
79,476
|
|
|
78,874
|
|
|
7.8
|
%
|
||||
Redeemable preferred stock
|
2,025
|
|
|
1,812
|
|
|
0.2
|
%
|
|
2,025
|
|
|
2,018
|
|
|
0.2
|
%
|
||||
Total fixed maturity securities, available-for-sale:
|
$
|
1,199,409
|
|
|
$
|
1,184,202
|
|
|
100.0
|
%
|
|
$
|
1,008,662
|
|
|
$
|
1,016,098
|
|
|
100.0
|
%
|
Standard & Poor’s or Equivalent Designation
|
|
Fair Value
|
|
% of Total
|
|||
|
|
($ in thousands)
|
|||||
AAA
|
|
$
|
197,797
|
|
|
16.7
|
%
|
AA
|
|
455,952
|
|
|
38.5
|
%
|
|
A
|
|
416,282
|
|
|
35.2
|
%
|
|
BBB
|
|
114,171
|
|
|
9.6
|
%
|
|
Below BBB and unrated
|
|
—
|
|
|
—
|
%
|
|
Total
|
|
$
|
1,184,202
|
|
|
100.0
|
%
|
Industry
|
|
Fair Value
|
|
% of Total
|
|||
|
|
($ in thousands)
|
|||||
Industrials and other
|
|
$
|
128,280
|
|
|
24.4
|
%
|
Consumer Discretionary
|
|
71,902
|
|
|
13.7
|
%
|
|
Financial
|
|
119,077
|
|
|
22.7
|
%
|
|
Health Care
|
|
79,896
|
|
|
15.3
|
%
|
|
Consumer Staples
|
|
62,623
|
|
|
11.9
|
%
|
|
Utilities
|
|
62,990
|
|
|
12.0
|
%
|
|
Total
|
|
$
|
524,768
|
|
|
100.0
|
%
|
Public/Private
|
|
Fair Value
|
|
% of Total
|
|||
|
|
($ in thousands)
|
|||||
Publicly traded
|
|
$
|
480,114
|
|
|
91.5
|
%
|
Privately placed
|
|
44,654
|
|
|
8.5
|
%
|
|
Total
|
|
$
|
524,768
|
|
|
100.0
|
%
|
|
December 31, 2018
|
|||||||||
|
Amortized
Cost
|
|
Fair Value
|
|
% of Total
Fair Value
|
|||||
|
($ in thousands)
|
|||||||||
Due in:
|
|
|
|
|
|
|||||
One year or less
|
$
|
52,312
|
|
|
$
|
52,100
|
|
|
4.4
|
%
|
After one year through five years
|
406,647
|
|
|
403,126
|
|
|
34.0
|
%
|
||
After five years through ten years
|
213,673
|
|
|
209,155
|
|
|
17.7
|
%
|
||
After ten years
|
116,355
|
|
|
116,875
|
|
|
9.9
|
%
|
||
|
788,987
|
|
|
781,256
|
|
|
66.0
|
%
|
||
Residential mortgage-backed
|
208,869
|
|
|
204,109
|
|
|
17.2
|
%
|
||
Commercial mortgage and asset-backed
|
199,528
|
|
|
197,025
|
|
|
16.6
|
%
|
||
Redeemable preferred stock
|
2,025
|
|
|
1,812
|
|
|
0.2
|
%
|
||
Total
|
$
|
1,199,409
|
|
|
$
|
1,184,202
|
|
|
100.0
|
%
|
|
Year Ended December 31,
|
|
|
|||||||
|
2017
|
|
2016
|
|
% Change
|
|||||
|
($ in thousands)
|
|
|
|||||||
Gross written premiums
|
$
|
1,081,905
|
|
|
$
|
737,398
|
|
|
46.7
|
%
|
Net retention
(1)
|
70.9
|
%
|
|
75.6
|
%
|
|
|
|||
Net written premiums
|
$
|
766,626
|
|
|
$
|
557,708
|
|
|
37.5
|
%
|
Net earned premiums
|
$
|
741,109
|
|
|
$
|
515,663
|
|
|
43.7
|
%
|
Losses and loss adjustment expenses
|
(555,377
|
)
|
|
(325,421
|
)
|
|
70.7
|
%
|
||
Other operating expenses
|
(179,968
|
)
|
|
(160,762
|
)
|
|
11.9
|
%
|
||
Underwriting profit
(2), (3)
|
5,764
|
|
|
29,480
|
|
|
(80.4
|
)%
|
||
Net investment income
|
61,119
|
|
|
52,638
|
|
|
16.1
|
%
|
||
Net realized investment (losses) gains
|
(1,989
|
)
|
|
7,565
|
|
|
—
|
|
||
Other income
|
361
|
|
|
295
|
|
|
22.4
|
%
|
||
Other expenses
|
(539
|
)
|
|
(1,590
|
)
|
|
(66.1
|
)%
|
||
Interest expense
|
(8,974
|
)
|
|
(8,448
|
)
|
|
6.2
|
%
|
||
Amortization of intangible assets
|
(597
|
)
|
|
(597
|
)
|
|
—
|
|
||
Income before taxes
|
55,145
|
|
|
79,343
|
|
|
(30.5
|
)%
|
||
Income tax expense
|
(11,579
|
)
|
|
(4,872
|
)
|
|
137.7
|
%
|
||
Net income
|
$
|
43,566
|
|
|
$
|
74,471
|
|
|
(41.5
|
)%
|
Adjusted net operating income
|
$
|
47,385
|
|
|
$
|
71,318
|
|
|
(33.6
|
)%
|
Ratios:
|
|
|
|
|
|
|||||
Loss ratio
|
74.9
|
%
|
|
63.1
|
%
|
|
|
|
||
Expense ratio
|
24.3
|
%
|
|
31.2
|
%
|
|
|
|
||
Combined ratio
|
99.2
|
%
|
|
94.3
|
%
|
|
|
|
|
(1)
|
Net retention is defined as the ratio of net written premiums to gross written premiums.
|
(2)
|
See “—Reconciliation of Non-GAAP Measures” for further detail.
|
(3)
|
Underwriting profit includes fee income of $28.3 million and $14.2 million for the years ended December 31, 2017 and 2016, respectively.
|
•
|
$2.0 million of net realized investment losses and $7.6 million of net realized investment gains for the years ended December 31, 2017 and 2016, respectively. Net realized investment losses in 2017 were primarily from $4.0 million of impairment losses on one equity security and an increase in the allowance for credit losses on impaired bank loans, offset by realized gains of $1.3 million from the sale of bank loan participations, $328,000 from the sale of fixed maturity securities and $369,000 from the sale of equity securities. Net realized investment gains in 2016 include net realized gains from equity securities of $4.8 million and net realized gains from fixed maturity securities of $1.8 million.
|
•
|
$539,000 and $1.6 million of other expenses for the years ended December 31, 2017 and 2016, respectively. Other expenses for 2017 include $535,000 of legal and other professional services related to secondary share offerings in 2017. Other expenses for 2016 include $1.5 million of employee severance costs.
|
•
|
Interest expense for the years ended December 31, 2017 and 2016 include $1.3 million and $1.4 million, respectively, relating to finance expenses in connection with a minority interest in a real estate partnership pursuant to which we are deemed an owner for accounting purposes. The debt is nonrecourse to us and was not arranged by us. See Note 1 to the Notes to the Audited Consolidated Financial Statements for additional information with respect to our minority interest.
|
|
Year Ended December 31,
|
||||||||||||||
|
2017
|
|
2016
|
||||||||||||
|
Income
Before
Taxes
|
|
Net Income
|
|
Income
Before
Taxes
|
|
Net
Income
|
||||||||
|
(in thousands)
|
||||||||||||||
Income as reported
|
$
|
55,145
|
|
|
$
|
43,566
|
|
|
$
|
79,343
|
|
|
$
|
74,471
|
|
Net realized investment losses (gains)
|
1,989
|
|
|
1,375
|
|
|
(7,565
|
)
|
|
(5,207
|
)
|
||||
Other expenses
|
539
|
|
|
575
|
|
|
1,590
|
|
|
1,136
|
|
||||
Dividend withholding taxes
|
—
|
|
|
1,053
|
|
|
—
|
|
|
—
|
|
||||
Interest expense on leased building the Company is deemed to own for accounting purposes
|
1,256
|
|
|
816
|
|
|
1,412
|
|
|
918
|
|
||||
Adjusted net operating income
|
$
|
58,929
|
|
|
$
|
47,385
|
|
|
$
|
74,780
|
|
|
$
|
71,318
|
|
|
Year Ended December 31,
|
|
|
|||||||
|
2017
|
|
2016
|
|
% Change
|
|||||
|
($ in thousands)
|
|
|
|||||||
Gross written premiums:
|
|
|
|
|
|
|||||
Excess and Surplus Lines
|
$
|
530,120
|
|
|
$
|
370,844
|
|
|
42.9
|
%
|
Specialty Admitted Insurance
|
316,430
|
|
|
182,221
|
|
|
73.7
|
%
|
||
Casualty Reinsurance
|
235,355
|
|
|
184,333
|
|
|
27.7
|
%
|
||
|
$
|
1,081,905
|
|
|
$
|
737,398
|
|
|
46.7
|
%
|
Net written premiums:
|
|
|
|
|
|
|||||
Excess and Surplus Lines
|
$
|
469,891
|
|
|
$
|
316,922
|
|
|
48.3
|
%
|
Specialty Admitted Insurance
|
60,957
|
|
|
55,803
|
|
|
9.2
|
%
|
||
Casualty Reinsurance
|
235,778
|
|
|
184,983
|
|
|
27.5
|
%
|
||
|
$
|
766,626
|
|
|
$
|
557,708
|
|
|
37.5
|
%
|
Net earned premiums:
|
|
|
|
|
|
|||||
Excess and Surplus Lines
|
$
|
463,521
|
|
|
$
|
301,404
|
|
|
53.8
|
%
|
Specialty Admitted Insurance
|
68,110
|
|
|
52,281
|
|
|
30.3
|
%
|
||
Casualty Reinsurance
|
209,478
|
|
|
161,978
|
|
|
29.3
|
%
|
||
|
$
|
741,109
|
|
|
$
|
515,663
|
|
|
43.7
|
%
|
•
|
Commercial Auto division (representing 46.8% of this segment’s 2017 business) which increased $137.9 million (or 125.3%) over the prior year. This division is focused on underwriting the hired and non-owned auto liability exposures for a variety of industry segments with a particular niche for insuring organizations that operate networks connecting independent contractors with customers.
|
•
|
Excess Casualty division (representing 9.7% of this segment’s 2017 business) which increased $7.6 million (or 17.4%) over the prior year.
|
•
|
Allied Health division (representing 3.6% of this segment’s 2017 business) which increased $4.8 million (or 33.1%) over the prior year.
|
•
|
Environmental division (representing 1.5% of this segment’s 2017 business) which increased $2.6 million (or 48.8%) over the prior year; and
|
•
|
Manufacturers and Contractors division (representing 16.2% of this segment’s 2017 business) which increased $2.4 million (or 2.9%) over the prior year.
|
|
Year Ended December 31,
|
|
|
|||||||
|
2017
|
|
2016
|
|
% Change
|
|||||
|
($ in thousands)
|
|
|
|||||||
Workers’ compensation premiums
|
$
|
44,121
|
|
|
$
|
39,627
|
|
|
11.3
|
%
|
Specialty admitted fronting and program business
|
272,309
|
|
|
142,594
|
|
|
91.0
|
%
|
||
Total
|
$
|
316,430
|
|
|
$
|
182,221
|
|
|
73.7
|
%
|
|
Year Ended December 31,
|
||||
|
2017
|
|
2016
|
||
Excess and Surplus Lines
|
88.6
|
%
|
|
85.5
|
%
|
Specialty Admitted Insurance
|
19.3
|
%
|
|
30.6
|
%
|
Casualty Reinsurance
|
100.2
|
%
|
|
100.4
|
%
|
Total
|
70.9
|
%
|
|
75.6
|
%
|
|
Year Ended December 31,
|
||||
|
2017
|
|
2016
|
||
Excess and Surplus Lines
|
93.6
|
%
|
|
84.3
|
%
|
Specialty Admitted Insurance
|
95.4
|
%
|
|
94.5
|
%
|
Casualty Reinsurance
|
100.8
|
%
|
|
100.1
|
%
|
Total
|
99.2
|
%
|
|
94.3
|
%
|
|
Year Ended December 31,
|
|
|
|||||||
|
2017
|
|
2016
|
|
% Change
|
|||||
|
($ in thousands)
|
|
|
|||||||
Gross written premiums
|
$
|
530,120
|
|
|
$
|
370,844
|
|
|
42.9
|
%
|
Net written premiums
|
$
|
469,891
|
|
|
$
|
316,922
|
|
|
48.3
|
%
|
Net earned premiums
|
$
|
463,521
|
|
|
$
|
301,404
|
|
|
53.8
|
%
|
Losses and loss adjustment expenses
|
(371,717
|
)
|
|
(188,768
|
)
|
|
96.9
|
%
|
||
Underwriting expenses
|
(62,111
|
)
|
|
(65,401
|
)
|
|
(5.0
|
)%
|
||
Underwriting profit
(1), (2)
|
$
|
29,693
|
|
|
$
|
47,235
|
|
|
(37.1
|
)%
|
Ratios:
|
|
|
|
|
|
|||||
Loss ratio
|
80.2
|
%
|
|
62.6
|
%
|
|
|
|
||
Expense ratio
|
13.4
|
%
|
|
21.7
|
%
|
|
|
|
||
Combined ratio
|
93.6
|
%
|
|
84.3
|
%
|
|
|
|
|
(1)
|
Underwriting Profit is a non-GAAP Measure. See “Reconciliation of Non-GAAP Measures” for a reconciliation to income before tax and for additional information.
|
(2)
|
Underwriting results include fee income of $17.0 million and $10.1 million for the years ended December 31, 2017 and 2016, respectively.
|
|
Year Ended December 31,
|
|
|
|||||||
|
2017
|
|
2016
|
|
% Change
|
|||||
|
($ in thousands)
|
|
|
|||||||
Gross written premiums
|
$
|
316,430
|
|
|
$
|
182,221
|
|
|
73.7
|
%
|
Net written premiums
|
$
|
60,957
|
|
|
$
|
55,803
|
|
|
9.2
|
%
|
Net earned premiums
|
$
|
68,110
|
|
|
$
|
52,281
|
|
|
30.3
|
%
|
Losses and loss adjustment expenses
|
(44,863
|
)
|
|
(30,897
|
)
|
|
45.2
|
%
|
||
Underwriting expenses
|
(20,081
|
)
|
|
(18,512
|
)
|
|
8.5
|
%
|
||
Underwriting profit
(1), (2)
|
$
|
3,166
|
|
|
$
|
2,872
|
|
|
10.2
|
%
|
Ratios:
|
|
|
|
|
|
|||||
Loss ratio
|
65.9
|
%
|
|
59.1
|
%
|
|
|
|
||
Expense ratio
|
29.5
|
%
|
|
35.4
|
%
|
|
|
|
||
Combined ratio
|
95.4
|
%
|
|
94.5
|
%
|
|
|
|
|
(1)
|
Underwriting Profit is a non-GAAP Measure. See “Reconciliation of Non-GAAP Measures” for a reconciliation to income before tax and for additional information.
|
(2)
|
Underwriting profit includes fee income of $11.3 million and $4.2 million for the years ended December 31, 2017 and 2016, respectively.
|
|
Year Ended December 31,
|
|
|
|||||||
|
2017
|
|
2016
|
|
% Change
|
|||||
|
($ in thousands)
|
|
|
|||||||
Gross written premiums
|
$
|
235,355
|
|
|
$
|
184,333
|
|
|
27.7
|
%
|
Net written premiums
|
$
|
235,778
|
|
|
$
|
184,983
|
|
|
27.5
|
%
|
Net earned premiums
|
$
|
209,478
|
|
|
$
|
161,978
|
|
|
29.3
|
%
|
Losses and loss adjustment expenses
|
(138,797
|
)
|
|
(105,756
|
)
|
|
31.2
|
%
|
||
Underwriting expenses
|
(72,446
|
)
|
|
(56,416
|
)
|
|
28.4
|
%
|
||
Underwriting loss
(1)
|
$
|
(1,765
|
)
|
|
$
|
(194
|
)
|
|
809.8
|
%
|
Ratios:
|
|
|
|
|
|
|||||
Loss ratio
|
66.3
|
%
|
|
65.3
|
%
|
|
|
|
||
Expense ratio
|
34.5
|
%
|
|
34.8
|
%
|
|
|
|
||
Combined ratio
|
100.8
|
%
|
|
100.1
|
%
|
|
|
|
|
(1)
|
Underwriting loss is a non-GAAP Measure. See “Reconciliation of Non-GAAP Measures” for a reconciliation to income before tax and for additional information.
|
|
Year Ended December 31,
|
|
|
|||||||
|
2017
|
|
2016
|
|
% Change
|
|||||
|
(in thousands)
|
|
|
|||||||
Renewable energy LLCs
|
$
|
10,578
|
|
|
$
|
3,480
|
|
|
204.0
|
%
|
Other private investments
|
3,501
|
|
|
6,056
|
|
|
(42.2
|
)%
|
||
Other invested assets
|
14,079
|
|
|
9,536
|
|
|
47.6
|
%
|
||
All other net investment income
|
47,040
|
|
|
43,102
|
|
|
9.1
|
%
|
||
Total net investment income
|
$
|
61,119
|
|
|
$
|
52,638
|
|
|
16.1
|
%
|
|
Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(in thousands)
|
||||||
Fixed maturity securities
|
$
|
26,833
|
|
|
$
|
25,917
|
|
Bank loan participations
|
17,388
|
|
|
14,486
|
|
||
Equity securities
|
5,045
|
|
|
5,617
|
|
||
Other invested assets
|
14,079
|
|
|
9,536
|
|
||
Cash, cash equivalents, and short-term investments
|
1,708
|
|
|
824
|
|
||
Trading (losses) gains
|
(4
|
)
|
|
18
|
|
||
Gross investment income
|
65,049
|
|
|
56,398
|
|
||
Investment expense
|
(3,930
|
)
|
|
(3,760
|
)
|
||
Net investment income
|
$
|
61,119
|
|
|
$
|
52,638
|
|
|
Year Ended December 31,
|
||||
|
2017
|
|
2016
|
||
Annualized gross investment yield on:
|
|
|
|
||
Average cash and invested assets
|
4.3
|
%
|
|
4.0
|
%
|
Average fixed maturity securities
|
3.6
|
%
|
|
3.5
|
%
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||
|
Cost or
Amortized
Cost
|
|
Fair Value
|
|
% of Total
Fair Value
|
|
Cost or
Amortized
Cost
|
|
Fair Value
|
|
% of Total
Fair Value
|
||||||||||
|
($ in thousands)
|
||||||||||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
State and municipal
|
$
|
139,382
|
|
|
$
|
144,366
|
|
|
13.1
|
%
|
|
$
|
101,793
|
|
|
$
|
105,841
|
|
|
10.4
|
%
|
Residential mortgage-backed
|
160,379
|
|
|
158,661
|
|
|
14.4
|
%
|
|
152,703
|
|
|
150,798
|
|
|
14.8
|
%
|
||||
Corporate
|
408,857
|
|
|
413,721
|
|
|
37.7
|
%
|
|
379,727
|
|
|
378,448
|
|
|
37.2
|
%
|
||||
Commercial mortgage and asset-backed
|
182,595
|
|
|
182,611
|
|
|
16.6
|
%
|
|
167,967
|
|
|
168,047
|
|
|
16.5
|
%
|
||||
Obligations of U.S. government corporations and agencies
|
35,948
|
|
|
35,847
|
|
|
3.3
|
%
|
|
64,823
|
|
|
65,014
|
|
|
6.4
|
%
|
||||
U.S. Treasury securities and obligations guaranteed by the U.S. government
|
79,476
|
|
|
78,874
|
|
|
7.2
|
%
|
|
71,174
|
|
|
71,120
|
|
|
7.0
|
%
|
||||
Redeemable preferred stock
|
2,025
|
|
|
2,018
|
|
|
0.2
|
%
|
|
2,025
|
|
|
1,809
|
|
|
0.2
|
%
|
||||
Total
|
1,008,662
|
|
|
1,016,098
|
|
|
92.5
|
%
|
|
940,212
|
|
|
941,077
|
|
|
92.5
|
%
|
||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Preferred stock
|
59,102
|
|
|
66,281
|
|
|
6.0
|
%
|
|
61,806
|
|
|
64,827
|
|
|
6.4
|
%
|
||||
Common stock
|
16,216
|
|
|
16,241
|
|
|
1.5
|
%
|
|
12,747
|
|
|
11,574
|
|
|
1.1
|
%
|
||||
Total
|
75,318
|
|
|
82,522
|
|
|
7.5
|
%
|
|
74,553
|
|
|
76,401
|
|
|
7.5
|
%
|
||||
Total investments
|
$
|
1,083,980
|
|
|
$
|
1,098,620
|
|
|
100.0
|
%
|
|
$
|
1,014,765
|
|
|
$
|
1,017,478
|
|
|
100.0
|
%
|
Standard & Poor’s or Equivalent Designation
|
|
Fair Value
|
|
% of Total
|
|||
|
|
($ in thousands)
|
|||||
AAA
|
|
$
|
185,202
|
|
|
18.2
|
%
|
AA
|
|
405,296
|
|
|
39.7
|
%
|
|
A
|
|
315,405
|
|
|
30.9
|
%
|
|
BBB
|
|
107,473
|
|
|
10.5
|
%
|
|
BB
|
|
1,611
|
|
|
0.2
|
%
|
|
Below BB and unrated
|
|
4,919
|
|
|
0.5
|
%
|
|
Total
|
|
$
|
1,019,906
|
|
|
100.0
|
%
|
Industry
|
|
Fair Value
|
|
% of Total
|
|||
|
|
($ in thousands)
|
|||||
Industrials and other
|
|
$
|
152,129
|
|
|
36.7
|
%
|
Consumer Discretionary
|
|
74,829
|
|
|
18.1
|
%
|
|
Financial
|
|
69,778
|
|
|
16.9
|
%
|
|
Health Care
|
|
61,461
|
|
|
14.9
|
%
|
|
Utilities
|
|
55,524
|
|
|
13.4
|
%
|
|
Total
|
|
$
|
413,721
|
|
|
100.0
|
%
|
Public/Private
|
|
Fair Value
|
|
% of Total
|
|||
|
|
($ in thousands)
|
|||||
Publicly traded
|
|
$
|
384,812
|
|
|
93.0
|
%
|
Privately placed
|
|
28,909
|
|
|
7.0
|
%
|
|
Total
|
|
$
|
413,721
|
|
|
100.0
|
%
|
|
December 31, 2017
|
|||||||||
|
Amortized
Cost
|
|
Fair Value
|
|
% of Total
Fair Value
|
|||||
|
($ in thousands)
|
|||||||||
Due in:
|
|
|
|
|
|
|||||
One year or less
|
$
|
66,852
|
|
|
$
|
66,770
|
|
|
6.6
|
%
|
After one year through five years
|
274,095
|
|
|
274,421
|
|
|
27.0
|
%
|
||
After five years through ten years
|
195,333
|
|
|
195,995
|
|
|
19.3
|
%
|
||
After ten years
|
127,383
|
|
|
135,622
|
|
|
13.3
|
%
|
||
|
663,663
|
|
|
672,808
|
|
|
66.2
|
%
|
||
Residential mortgage-backed
|
160,379
|
|
|
158,661
|
|
|
15.6
|
%
|
||
Commercial mortgage and asset-backed
|
182,595
|
|
|
182,611
|
|
|
18.0
|
%
|
||
Redeemable preferred stock
|
2,025
|
|
|
2,018
|
|
|
0.2
|
%
|
||
Total
|
$
|
1,008,662
|
|
|
$
|
1,016,098
|
|
|
100.0
|
%
|
•
|
A
$102.5 million
secured revolving facility utilized by JRG Re to issue letters of credit for the benefit of third-party reinsureds. This portion of our credit facility is secured by our investment securities. At
December 31, 2018
, the Company had
$75.5 million
of letters of credit issued under the secured facility.
|
•
|
A
$112.5 million
unsecured revolving facility to meet the working capital needs of the Company. All unpaid principal on the revolver is due at maturity. Interest accrues quarterly and is payable in arrears at 3-month
LIBOR plus a margin which is currently 1.5%
and is subject to change according to terms in the credit agreement. At
December 31, 2018
and
2017
, the Company had a drawn balance of
$73.3 million
outstanding on the unsecured revolver.
|
|
James River
Capital
Trust I
|
|
James River
Capital
Trust II
|
|
James River
Capital
Trust III
|
|
James River
Capital
Trust IV
|
|
Franklin
Holdings II
(Bermuda)
Capital
Trust I
|
|
($ in thousands)
|
||||||||
Issue date
|
May 26, 2004
|
|
December 15, 2004
|
|
June 15, 2006
|
|
December 11, 2007
|
|
January 10, 2008
|
Principal amount of trust preferred securities
|
$7,000
|
|
$15,000
|
|
$20,000
|
|
$54,000
|
|
$30,000
|
Principal amount of junior subordinated debt
|
$7,217
|
|
$15,464
|
|
$20,619
|
|
$55,670
|
|
$30,928
|
Carrying amount of junior subordinated debt net of repurchases
|
$7,217
|
|
$15,464
|
|
$20,619
|
|
$44,827
|
|
$15,928
|
Maturity date of junior subordinated debt, unless accelerated earlier
|
May 24, 2034
|
|
December 15, 2034
|
|
June 15, 2036
|
|
December 15, 2037
|
|
March 15, 2038
|
Trust common stock
|
$217
|
|
$464
|
|
$619
|
|
$1,670
|
|
$928
|
Interest rate, per annum
|
Three-Month
LIBOR plus 4.0% |
|
Three-Month
LIBOR plus 3.4% |
|
Three-Month
LIBOR plus
3.0%
|
|
Three-Month
LIBOR plus
3.1%
|
|
Three-Month
LIBOR plus
4.0%
|
Line of Business
|
|
Company Retention
|
Casualty
|
|
|
Primary Specialty Casualty, including Professional Liability
|
|
Up to $1.0 million per occurrence, subject to a $1.0 million aggregate deductible.
|
Primary Casualty
|
|
Up to $2.0 million per occurrence.
(1)
|
Excess Casualty
|
|
Up to $1.0 million per occurrence.
(2)
|
Property
|
|
Up to $5.0 million per event.
(3)
|
(1)
|
Total exposure to any one claim is generally $1.0 million.
|
(2)
|
For policies with an occurrence limit up to $10.0 million, the excess casualty treaty is set such that our retention is no more than $1.0 million.
|
(3)
|
The property catastrophe reinsurance treaty has a limit of $40.0 million with one reinstatement.
|
Line of Business
|
|
Coverage
|
Casualty
|
|
|
Workers’ Compensation
|
|
Quota share coverage for 50% of the first $600,000.
(1)(2)
Excess of loss coverage for $29.4 million in excess of $600,000.
(1)(2)
|
Auto Programs
|
|
Quota share coverage for 90% of limits up to $1.5 million liability and $5.0 million physical damage per occurrence
|
General Liability & Professional Liability – Programs
|
|
Quota share coverage for 90% - 100% of limits up to $2.0 million per occurrence.
|
Property
|
|
|
Commercial Property within Package - Programs
|
|
Quota share coverage for 100% of limits up to $25.0 million per occurrence.
|
Catastrophe Coverage
|
|
Excess of Loss coverage for $44.0 million in excess of $1.0 million
|
(1)
|
Excluding one program which has quota share coverage for 90% of the first $1.0 million per occurrence and excess of loss coverage for $49.0 million in excess of $1.0 million.
|
(2)
|
Includes any residual market pools.
|
Reinsurer
|
|
Reinsurance
Recoverable as of
December 31, 2018
|
|
A.M. Best Rating
December 31, 2018
|
||
|
|
(in thousands)
|
|
|
||
Swiss Reinsurance America Corporation
|
|
$
|
151,590
|
|
|
A+
|
Berkley Insurance Company
|
|
47,867
|
|
|
A+
|
|
Safety National Casualty
|
|
44,130
|
|
|
A+
|
|
North Carolina Reinsurance Facility
|
|
24,639
|
|
|
Unrated
(1)
|
|
Munich Reinsurance America
|
|
24,057
|
|
|
A+
|
|
Endurance Assurance Corporation
|
|
22,405
|
|
|
A+
|
|
Donegal Mutual Insurance Company
|
|
15,787
|
|
|
A
|
|
Cincinnati Insurance Company
|
|
14,997
|
|
|
A+
|
|
American European Insurance Company
|
|
13,044
|
|
|
B
(1)
|
|
Partner Reinsurance Company Limited
|
|
12,780
|
|
|
A
|
|
Top 10 Total
|
|
371,296
|
|
|
|
|
Other
|
|
96,075
|
|
|
|
|
Total
|
|
$
|
467,371
|
|
|
|
(1)
|
These reinsurers are unrated or below A-. All material reinsurance recoverable amounts from these reinsurers are collateralized.
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Cash and cash equivalents provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
290,028
|
|
|
$
|
207,816
|
|
|
$
|
154,349
|
|
Investing activities
|
(266,772
|
)
|
|
(104,741
|
)
|
|
(80,764
|
)
|
|||
Financing activities
|
(14,294
|
)
|
|
(49,364
|
)
|
|
(70,207
|
)
|
|||
Change in cash and cash equivalents
|
$
|
8,962
|
|
|
$
|
53,711
|
|
|
$
|
3,378
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|||||||||
Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Beginning of year
|
1,479,236
|
|
|
$
|
27.81
|
|
|
2,234,699
|
|
|
$
|
22.84
|
|
|
2,058,085
|
|
|
$
|
18.11
|
|
Granted
|
—
|
|
|
$
|
—
|
|
|
205,244
|
|
|
$
|
42.24
|
|
|
706,203
|
|
|
$
|
32.07
|
|
Exercised
|
(308,025
|
)
|
|
$
|
22.01
|
|
|
(898,218
|
)
|
|
$
|
18.53
|
|
|
(496,550
|
)
|
|
$
|
16.02
|
|
Forfeited
|
(55,887
|
)
|
|
$
|
35.69
|
|
|
(62,489
|
)
|
|
$
|
30.80
|
|
|
(33,039
|
)
|
|
$
|
27.68
|
|
End of year
|
1,115,324
|
|
|
$
|
29.02
|
|
|
1,479,236
|
|
|
$
|
27.81
|
|
|
2,234,699
|
|
|
$
|
22.84
|
|
Exercisable, end of year
|
814,421
|
|
|
$
|
26.46
|
|
|
846,371
|
|
|
$
|
22.35
|
|
|
1,207,479
|
|
|
$
|
18.14
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
Shares
|
|
Weighted-
Average
Grant Date
Fair Value
|
|
Shares
|
|
Weighted-
Average
Grant Date
Fair Value
|
|
Shares
|
|
Weighted-
Average
Grant Date
Fair Value
|
|||||||||
Unvested, beginning of year
|
178,882
|
|
|
$
|
37.93
|
|
|
196,800
|
|
|
$
|
24.38
|
|
|
234,922
|
|
|
$
|
21.00
|
|
Granted
|
227,481
|
|
|
$
|
39.74
|
|
|
137,034
|
|
|
$
|
42.20
|
|
|
60,291
|
|
|
$
|
32.03
|
|
Vested
|
(83,384
|
)
|
|
$
|
37.61
|
|
|
(132,764
|
)
|
|
$
|
24.24
|
|
|
(98,413
|
)
|
|
$
|
21.00
|
|
Forfeited
|
(22,837
|
)
|
|
$
|
40.21
|
|
|
(22,188
|
)
|
|
$
|
26.06
|
|
|
—
|
|
|
$
|
—
|
|
Unvested, end of year
|
300,142
|
|
|
$
|
39.22
|
|
|
178,882
|
|
|
$
|
37.93
|
|
|
196,800
|
|
|
$
|
24.38
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than 1 year
|
|
1–3 years
|
|
3–5 years
|
|
More than
5 years
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Reserve for losses and loss adjustment expenses
|
$
|
1,661,459
|
|
|
$
|
528,293
|
|
|
$
|
655,280
|
|
|
$
|
316,228
|
|
|
$
|
161,658
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
|
||||||||||
Senior debt
|
118,300
|
|
|
—
|
|
|
73,300
|
|
|
—
|
|
|
45,000
|
|
|||||
Junior subordinated debt
|
104,055
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
104,055
|
|
|||||
Operating lease obligations
|
20,963
|
|
|
3,946
|
|
|
7,297
|
|
|
5,015
|
|
|
4,705
|
|
|||||
Interest on debt obligations
|
145,397
|
|
|
11,955
|
|
|
23,647
|
|
|
14,939
|
|
|
94,856
|
|
|||||
Financing obligations
|
30,860
|
|
|
30,860
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
2,081,034
|
|
|
$
|
575,054
|
|
|
$
|
759,524
|
|
|
$
|
336,182
|
|
|
$
|
410,274
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Underwriting profit (loss) of the operating segments:
|
|
|
|
|
|
||||||
Excess and Surplus Lines
|
$
|
42,834
|
|
|
$
|
29,693
|
|
|
$
|
47,235
|
|
Specialty Admitted Insurance
|
6,972
|
|
|
3,166
|
|
|
2,872
|
|
|||
Casualty Reinsurance
|
5,103
|
|
|
(1,765
|
)
|
|
(194
|
)
|
|||
Total underwriting profit of the operating segments
|
54,909
|
|
|
31,094
|
|
|
49,913
|
|
|||
Other operating expenses of the Corporate and Other segment
|
(26,903
|
)
|
|
(25,330
|
)
|
|
(20,433
|
)
|
|||
Underwriting profit
(1)
|
28,006
|
|
|
5,764
|
|
|
29,480
|
|
|||
Net investment income
|
61,256
|
|
|
61,119
|
|
|
52,638
|
|
|||
Net realized investment (losses) gains
|
(5,479
|
)
|
|
(1,989
|
)
|
|
7,565
|
|
|||
Other income
|
505
|
|
|
361
|
|
|
295
|
|
|||
Other expenses
|
(1,300
|
)
|
|
(539
|
)
|
|
(1,590
|
)
|
|||
Interest expense
|
(11,553
|
)
|
|
(8,974
|
)
|
|
(8,448
|
)
|
|||
Amortization of intangible assets
|
(597
|
)
|
|
(597
|
)
|
|
(597
|
)
|
|||
Income before taxes
|
$
|
70,838
|
|
|
$
|
55,145
|
|
|
$
|
79,343
|
|
(1)
|
Underwriting profit includes gross fee income of
$28.7 million
,
$28.3 million
, and $14.2 million for the years ended
December 31, 2018
,
2017
, and
2016
, respectively.
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
|
Income
Before Taxes |
|
Net Income
|
|
Income
Before Taxes |
|
Net
Income |
|
Income
Before
Taxes
|
|
Net
Income
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Income as reported
|
$
|
70,838
|
|
|
$
|
63,830
|
|
|
$
|
55,145
|
|
|
$
|
43,566
|
|
|
$
|
79,343
|
|
|
$
|
74,471
|
|
Net realized and unrealized losses (gains) on investments
|
5,479
|
|
|
4,374
|
|
|
1,989
|
|
|
1,375
|
|
|
(7,565
|
)
|
|
(5,207
|
)
|
||||||
Other expenses
|
1,100
|
|
|
941
|
|
|
539
|
|
|
575
|
|
|
1,590
|
|
|
1,136
|
|
||||||
Impairment of intangible assets
|
200
|
|
|
200
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Dividend withholding taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
1,053
|
|
|
—
|
|
|
—
|
|
||||||
Interest expense on leased building the Company is deemed to own for accounting purposes
|
1,584
|
|
|
1,251
|
|
|
1,256
|
|
|
816
|
|
|
1,412
|
|
|
918
|
|
||||||
Adjusted net operating income
|
$
|
79,201
|
|
|
$
|
70,596
|
|
|
$
|
58,929
|
|
|
$
|
47,385
|
|
|
$
|
74,780
|
|
|
$
|
71,318
|
|
|
As of December 31,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
|
Equity
|
|
Equity
per share
|
|
Equity
|
|
Equity
per share
|
|
Equity
|
|
Equity
per share
|
||||||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||||||||||
Shareholders’ equity
|
$
|
709,241
|
|
|
$
|
23.65
|
|
|
$
|
694,699
|
|
|
$
|
23.39
|
|
|
$
|
693,221
|
|
|
$
|
23.69
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Goodwill
|
181,831
|
|
|
6.06
|
|
|
181,831
|
|
|
6.12
|
|
|
181,831
|
|
|
6.21
|
|
||||||
Intangible assets
|
37,537
|
|
|
1.25
|
|
|
38,334
|
|
|
1.29
|
|
|
38,931
|
|
|
1.33
|
|
||||||
Tangible equity
|
$
|
489,873
|
|
|
$
|
16.34
|
|
|
$
|
474,534
|
|
|
$
|
15.98
|
|
|
$
|
472,459
|
|
|
$
|
16.15
|
|
Dividends to shareholders for the year ended December 31, 2018
|
36,246
|
|
|
1.20
|
|
|
|
|
|
|
|
|
|
||||||||||
Pre-dividend tangible equity
|
$
|
526,119
|
|
|
$
|
17.54
|
|
|
|
|
|
|
|
|
|
Item 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
As of December 31, 2018
|
|||||||||||
|
Estimated
Fair Value
|
|
Hypothetical
Change in
Interest Rates
(bp=basis points)
|
|
Estimated
Fair Value after
Hypothetical Change
in Interest Rates
|
|
Estimated
Hypothetical Percentage
Increase (Decrease) in
Fair Value
|
|||||
|
($ in thousands)
|
|||||||||||
Total fixed maturity and preferred stock investments
|
$
|
1,244,942
|
|
|
200 bp decrease
|
|
$
|
1,353,626
|
|
|
8.7
|
%
|
|
|
|
|
100 bp decrease
|
|
1,298,848
|
|
|
4.3
|
%
|
||
|
|
|
|
100 bp increase
|
|
1,191,907
|
|
|
(4.3
|
)%
|
||
|
|
|
|
200 bp increase
|
|
1,141,612
|
|
|
(8.3
|
)%
|
||
Bank Loan Participations
|
$
|
250,697
|
|
|
200 bp decrease
|
|
$
|
254,508
|
|
|
1.5
|
%
|
|
|
|
|
100 bp decrease
|
|
251,474
|
|
|
0.3
|
%
|
||
|
|
|
|
100 bp increase
|
|
250,371
|
|
|
(0.1
|
)%
|
||
|
|
|
|
200 bp increase
|
|
250,120
|
|
|
(0.2
|
)%
|
||
Liabilities
|
$
|
235,374
|
|
|
200 bp decrease
|
|
$
|
237,485
|
|
|
0.9
|
%
|
|
|
|
|
100 bp decrease
|
|
236,372
|
|
|
0.4
|
%
|
||
|
|
|
|
100 bp increase
|
|
234,476
|
|
|
(0.4
|
)%
|
||
|
|
|
|
200 bp increase
|
|
233,668
|
|
|
(0.7
|
)%
|
|
As of December 31, 2018
|
||||||||
|
Estimated
Fair Value
|
|
Hypothetical
Price Change
|
|
Estimated
Fair Value after
Hypothetical
Change in Prices
|
||||
|
($ in thousands)
|
||||||||
Equity securities
|
$
|
78,385
|
|
|
35% increase
|
|
$
|
105,820
|
|
|
|
|
|
35% decrease
|
|
50,950
|
|
Item 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Item 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
Item 9A.
|
CONTROLS AND PROCEDURES
|
Item 9B.
|
OTHER INFORMATION
|
Item 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Item 11.
|
EXECUTIVE COMPENSATION
|
Item 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
Item 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Item 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
Item 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
Exhibit
Number
|
|
Description
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
|
|
3.5
|
|
|
3.6
|
|
|
4.1
|
|
|
4.2
|
|
Indenture, dated as of May 26, 2004, by and between James River Group, Inc. and Wilmington Trust Company, as Trustee, relating to Floating Rate Senior Debentures Due 2034+
|
4.3
|
|
Indenture, dated as of May 26, 2004, by and between James River Group, Inc. and Wilmington Trust Company, as Trustee, relating to Floating Rate Junior Subordinated Debentures Due 2034+
|
4.4
|
|
Amended and Restated Declaration of Trust of James River Capital Trust I, dated as of May 26, 2004, by and among James River Group, Inc., as Sponsor, Wilmington Trust Company, as Institutional Trustee and Delaware Trustee, the Regular Trustees (as defined therein), and the holders, from time to time, of undivided beneficial interests in James River Capital Trust I+
|
4.5
|
|
Preferred Securities Guarantee Agreement, dated as of May 26, 2004, by James River Group, Inc., as Guarantor, and Wilmington Trust Company, as Preferred Guarantee Trustee, for the benefit of the holders of James River Capital Trust I+
|
4.6
|
|
Indenture, dated as of December 15, 2004, by and between James River Group, Inc. and Wilmington Trust Company, as Trustee, relating to Floating Rate Junior Subordinated Deferrable Interest Debentures Due 2034+
|
4.7
|
|
Amended and Restated Declaration of Trust of James River Capital Trust II, dated as of December 15, 2004, by and among James River Group, Inc., as Sponsor, Wilmington Trust Company, as Institutional Trustee and Delaware Trustee, the Administrators (as defined therein), and the holders, from time to time, of undivided beneficial interests in the James River Capital Trust II+
|
4.8
|
|
Guarantee Agreement, dated as of December 15, 2004, by James River Group, Inc., as Guarantor, and Wilmington Trust Company, as Guarantee Trustee, for the benefit of the holders, from time to time, of the capital securities of James River Capital Trust II+
|
4.9
|
|
Indenture, dated June 15, 2006, by and between James River Group, Inc. and Wilmington Trust Company, as Trustee, relating to Floating Rate Junior Subordinated Deferrable Interest Debentures Due 2036+
|
4.10
|
|
Amended and Restated Declaration of Trust of James River Capital Trust III, dated as of June 15, 2006, by and among James River Group, Inc., as Sponsor, Wilmington Trust Company, as Institutional Trustee and Delaware Trustee, the Administrators (as defined therein) and the holders, from time to time, of undivided beneficial interests in the James River Capital Trust III+
|
4.11
|
|
Guarantee Agreement, dated as of June 15, 2006, by James River Group, Inc., as Guarantor, and Wilmington Trust Company, as Guarantee Trustee, for the benefit of the holders, from time to time, of the capital securities of James River Capital Trust III+
|
4.12
|
|
Indenture, dated December 11, 2007, by and between James River Group, Inc. and Wilmington Trust Company, as Trustee, relating to Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures Due 2037+
|
Exhibit
Number
|
|
Description
|
4.13
|
|
Amended and Restated Declaration of Trust, dated December 11, 2007, by and among James River Group, Inc., as Sponsor, Wilmington Trust Company, as Institutional Trustee and Delaware Trustee and the Administrators (as defined therein) and the holders, from time to time, of undivided beneficial interests in James River Capital Trust IV+
|
4.14
|
|
Guarantee Agreement, dated as of December 11, 2007, by James River Group, Inc., as Guarantor, and Wilmington Trust Company, as Guarantee Trustee, for the benefit of the holders, from time to time, of the capital securities of James River Capital Trust IV+
|
4.15
|
|
Indenture, dated as of January 10, 2008, among James River Group Holdings, Ltd. and Wilmington Trust Company, as Trustee relating to Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures Due 2038+
|
4.16
|
|
Amended and Restated Declaration of Trust, dated as of January 10, 2008, by and among James River Group Holdings, Ltd., as Sponsor, Wilmington Trust Company, as Institutional Trustee and Delaware Trustee and the Administrators (as defined therein) for the benefit of the holders, from time to time, of undivided beneficial interest in Franklin Holdings II (Bermuda) Capital Trust I+
|
4.17
|
|
Guarantee Agreement, dated as of January 10, 2008, by and among James River Group Holdings, Ltd., as Guarantor, and Wilmington Trust Company, as Guarantee Trustee, for the benefit of the holders, from time to time, of the capital securities of Franklin Holdings II (Bermuda) Capital Trust I+
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4
|
|
|
10.5
|
|
|
10.6
|
|
|
10.7
|
|
|
10.8
|
|
|
10.9
|
|
|
10.10
|
|
Exhibit
Number
|
|
Description
|
10.11
|
|
|
10.12
|
|
|
10.13
|
|
|
10.14
|
|
|
10.15
|
|
|
10.16
|
|
|
10.17
|
|
|
10.18
|
|
|
10.19
|
|
|
10.20
|
|
|
10.21
|
|
|
10.22
|
|
|
10.23
|
|
|
10.24
|
|
|
10.25
|
|
|
10.26
|
|
|
10.27
|
|
|
10.28
|
|
|
10.29
|
|
10.30
|
|
|
10.31
|
|
|
10.32
|
|
|
10.33
|
|
Exhibit
Number
|
|
Description
|
21.1
|
|
|
23.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
*
|
Denotes a management contract or compensatory plan or arrangement.
|
+
|
Exhibit not filed with the Securities and Exchange Commission pursuant to Item 601(b)(4)(iii) of Regulation S-K. The Company will furnish a copy to the SEC upon request.
|
Item 16.
|
FORM 10-K SUMMARY
|
JAMES RIVER GROUP HOLDINGS, LTD.
|
||||
By:
|
|
/s/ Robert P. Myron
|
|
February 27, 2019
|
|
|
Robert P. Myron
President and Chief Executive Officer
|
|
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NAME
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TITLE
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DATE
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/s/ Robert P. Myron
|
|
President, Chief Executive Officer and Director
|
|
February 27, 2019
|
Robert P. Myron
|
|
(Principal Executive Officer)
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|
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/s/ Sarah C. Doran
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Chief Financial Officer
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February 27, 2019
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Sarah C. Doran
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(Principal Financial Officer)
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|
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/s/ Michael E. Crow
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Principal Accounting Officer
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February 27, 2019
|
Michael E. Crow
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/s/ J. Adam Abram
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Director, Non-Executive Chairman of the Board
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February 27, 2019
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J.Adam Abram
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/s/ Janet Cowell
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Director
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February 27, 2019
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Janet Cowell
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/s/ Christopher L. Harris
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Director
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February 27, 2019
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Christopher L. Harris
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/s/ Bryan Martin
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Director
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February 27, 2019
|
Bryan Martin
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/s/ Jerry R. Masters
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Director
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February 27, 2019
|
Jerry R. Masters
|
|
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|
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/s/ Michael T. Oakes
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Director
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February 27, 2019
|
Michael T. Oakes
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/s/ Ollie L. Sherman, Jr.
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|
Director
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February 27, 2019
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Ollie L. Sherman, Jr.
|
|
|
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/s/ Sundar Srinivasan
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Director
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February 27, 2019
|
Sundar Srinivasan
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/s/ David Zwillinger
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Director
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February 27, 2019
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David Zwillinger
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Page
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Assets
|
|
|
|
|
|
||
Invested assets:
|
|
|
|
|
|
||
Fixed maturity securities:
|
|
|
|
|
|
||
Available-for-sale, at fair value (amortized cost: 2018 – $1,199,409; 2017 – $1,008,662)
|
$
|
1,184,202
|
|
|
$
|
1,016,098
|
|
Trading, at fair value (amortized cost: 2018 – $0; 2017 – $3,801)
|
—
|
|
|
3,808
|
|
||
Equity securities, at fair value (cost: 2018 – $77,152; 2017 – $75,318)
|
78,385
|
|
|
82,522
|
|
||
Bank loan participations held-for-investment, at amortized cost, net of allowance
|
260,972
|
|
|
238,214
|
|
||
Short-term investments
|
81,966
|
|
|
36,804
|
|
||
Other invested assets
|
72,321
|
|
|
70,208
|
|
||
Total invested assets
|
1,677,846
|
|
|
1,447,654
|
|
||
Cash and cash equivalents
|
172,457
|
|
|
163,495
|
|
||
Accrued investment income
|
11,110
|
|
|
8,381
|
|
||
Premiums receivable and agents’ balances, net
|
307,899
|
|
|
352,436
|
|
||
Reinsurance recoverable on unpaid losses
|
467,371
|
|
|
302,524
|
|
||
Reinsurance recoverable on paid losses
|
18,344
|
|
|
11,292
|
|
||
Prepaid reinsurance premiums
|
112,498
|
|
|
91,979
|
|
||
Deferred policy acquisition costs
|
54,450
|
|
|
72,365
|
|
||
Intangible assets, net
|
37,537
|
|
|
38,334
|
|
||
Goodwill
|
181,831
|
|
|
181,831
|
|
||
Deferred tax assets, net
|
1,054
|
|
|
—
|
|
||
Income taxes receivable
|
—
|
|
|
2,806
|
|
||
Other assets
|
94,379
|
|
|
83,598
|
|
||
Total assets
|
$
|
3,136,776
|
|
|
$
|
2,756,695
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands, except share amounts)
|
||||||
Liabilities and shareholders’ equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Reserve for losses and loss adjustment expenses
|
$
|
1,661,459
|
|
|
$
|
1,292,349
|
|
Unearned premiums
|
386,473
|
|
|
418,114
|
|
||
Payables to reinsurers
|
61,662
|
|
|
56,268
|
|
||
Senior debt
|
118,300
|
|
|
98,300
|
|
||
Junior subordinated debt
|
104,055
|
|
|
104,055
|
|
||
Accrued expenses
|
51,792
|
|
|
39,295
|
|
||
Deferred tax liabilities, net
|
—
|
|
|
5,247
|
|
||
Income taxes payable
|
1,915
|
|
|
—
|
|
||
Other liabilities
|
41,879
|
|
|
48,368
|
|
||
Total liabilities
|
2,427,535
|
|
|
2,061,996
|
|
||
Commitments and contingent liabilities
|
—
|
|
|
—
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Common Shares – $0.0002 par value; 200,000,000 shares authorized. 2018 and 2017: 29,988,460 and 29,696,682 shares issued and outstanding, respectively
|
6
|
|
|
6
|
|
||
Preferred Shares – 2018 and 2017: $0.00125 par value; 20,000,000 shares authorized; no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
645,310
|
|
|
636,149
|
|
||
Retained earnings
|
79,753
|
|
|
48,198
|
|
||
Accumulated other comprehensive (loss) income
|
(15,828
|
)
|
|
10,346
|
|
||
Total shareholders’ equity
|
709,241
|
|
|
694,699
|
|
||
Total liabilities and shareholders’ equity
|
$
|
3,136,776
|
|
|
$
|
2,756,695
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands, except share amounts)
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||
Gross written premiums
|
$
|
1,166,773
|
|
|
$
|
1,081,905
|
|
|
$
|
737,398
|
|
Ceded written premiums
|
(404,101
|
)
|
|
(315,279
|
)
|
|
(179,690
|
)
|
|||
Net written premiums
|
762,672
|
|
|
766,626
|
|
|
557,708
|
|
|||
Change in net unearned premiums
|
52,726
|
|
|
(25,517
|
)
|
|
(42,045
|
)
|
|||
Net earned premiums
|
815,398
|
|
|
741,109
|
|
|
515,663
|
|
|||
Net investment income
|
61,256
|
|
|
61,119
|
|
|
52,638
|
|
|||
Net realized and unrealized (losses) gains on investments
|
(5,479
|
)
|
|
(1,989
|
)
|
|
7,565
|
|
|||
Other income
|
14,424
|
|
|
17,386
|
|
|
10,361
|
|
|||
Total revenues
|
885,599
|
|
|
817,625
|
|
|
586,227
|
|
|||
Expenses:
|
|
|
|
|
|
|
|
|
|||
Losses and loss adjustment expenses
|
600,276
|
|
|
555,377
|
|
|
325,421
|
|
|||
Other operating expenses
|
201,035
|
|
|
196,993
|
|
|
170,828
|
|
|||
Other expenses
|
1,300
|
|
|
539
|
|
|
1,590
|
|
|||
Interest expense
|
11,553
|
|
|
8,974
|
|
|
8,448
|
|
|||
Amortization of intangible assets
|
597
|
|
|
597
|
|
|
597
|
|
|||
Total expenses
|
814,761
|
|
|
762,480
|
|
|
506,884
|
|
|||
Income before income taxes
|
70,838
|
|
|
55,145
|
|
|
79,343
|
|
|||
Income tax expense (benefit):
|
|
|
|
|
|
||||||
Current
|
12,867
|
|
|
11,943
|
|
|
(221
|
)
|
|||
Deferred
|
(5,859
|
)
|
|
(364
|
)
|
|
5,093
|
|
|||
|
7,008
|
|
|
11,579
|
|
|
4,872
|
|
|||
Net income
|
$
|
63,830
|
|
|
$
|
43,566
|
|
|
$
|
74,471
|
|
Other comprehensive (losses) income:
|
|
|
|
|
|
||||||
Net unrealized (losses) gains, net of taxes of $(444) in 2018, $2,707 in 2017, and $(1,723) in 2016
|
(22,203
|
)
|
|
9,219
|
|
|
(2,059
|
)
|
|||
Total comprehensive income
|
$
|
41,627
|
|
|
$
|
52,785
|
|
|
$
|
72,412
|
|
Per share data:
|
|
|
|
|
|
|
|
|
|||
Basic earnings per share
|
$
|
2.14
|
|
|
$
|
1.48
|
|
|
$
|
2.56
|
|
Diluted earnings per share
|
$
|
2.11
|
|
|
$
|
1.44
|
|
|
$
|
2.49
|
|
Dividend declared per share
|
$
|
1.20
|
|
|
$
|
1.70
|
|
|
$
|
2.25
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
|||
Basic
|
29,887,990
|
|
|
29,461,717
|
|
|
29,063,075
|
|
|||
Diluted
|
30,307,101
|
|
|
30,273,149
|
|
|
29,894,378
|
|
|
Number of
Common Shares Outstanding |
|
Common
Shares (Par) |
|
Preferred
Shares
|
|
Additional
Paid-in Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive (Loss) Income |
|
Total
Shareholders’ Equity |
|||||||||||||
|
(in thousands, except share amounts)
|
|||||||||||||||||||||||||
Balances at December 31, 2015
|
28,941,547
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
630,820
|
|
|
$
|
47,026
|
|
|
$
|
3,186
|
|
|
$
|
681,038
|
|
Net income
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
74,471
|
|
|
—
|
|
|
74,471
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
—
|
|
|
(2,059
|
)
|
|
(2,059
|
)
|
||||||
Dividends
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
(66,265
|
)
|
|
—
|
|
|
(66,265
|
)
|
||||||
Exercise of stock options and related excess tax benefits
|
260,672
|
|
|
—
|
|
|
|
|
|
1,536
|
|
|
—
|
|
|
—
|
|
|
1,536
|
|
||||||
Vesting of RSUs and related excess tax benefits
|
55,347
|
|
|
—
|
|
|
|
|
|
(992
|
)
|
|
—
|
|
|
—
|
|
|
(992
|
)
|
||||||
Compensation expense under share incentive plans
|
—
|
|
|
—
|
|
|
|
|
|
5,492
|
|
|
—
|
|
|
—
|
|
|
5,492
|
|
||||||
Balances at December 31, 2016
|
29,257,566
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
636,856
|
|
|
$
|
55,232
|
|
|
$
|
1,127
|
|
|
$
|
693,221
|
|
Net income
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
43,566
|
|
|
—
|
|
|
43,566
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
—
|
|
|
9,219
|
|
|
9,219
|
|
||||||
Dividends
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
(50,600
|
)
|
|
—
|
|
|
(50,600
|
)
|
||||||
Exercise of stock options and related excess tax benefits
|
358,967
|
|
|
—
|
|
|
|
|
|
(6,213
|
)
|
|
—
|
|
|
—
|
|
|
(6,213
|
)
|
||||||
Vesting of RSUs and related excess tax benefits
|
80,149
|
|
|
—
|
|
|
|
|
|
(2,182
|
)
|
|
—
|
|
|
—
|
|
|
(2,182
|
)
|
||||||
Compensation expense under share incentive plans
|
—
|
|
|
—
|
|
|
|
|
|
7,688
|
|
|
—
|
|
|
—
|
|
|
7,688
|
|
||||||
Balances at December 31, 2017
|
29,696,682
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
636,149
|
|
|
$
|
48,198
|
|
|
$
|
10,346
|
|
|
$
|
694,699
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
63,830
|
|
|
—
|
|
|
63,830
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,203
|
)
|
|
(22,203
|
)
|
||||||
Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36,246
|
)
|
|
—
|
|
|
(36,246
|
)
|
||||||
Exercise of stock options
|
237,319
|
|
|
—
|
|
|
—
|
|
|
4,045
|
|
|
—
|
|
|
—
|
|
|
4,045
|
|
||||||
Vesting of RSUs
|
54,459
|
|
|
—
|
|
|
—
|
|
|
(1,112
|
)
|
|
—
|
|
|
—
|
|
|
(1,112
|
)
|
||||||
Compensation expense under share incentive plans
|
—
|
|
|
—
|
|
|
—
|
|
|
6,228
|
|
|
—
|
|
|
—
|
|
|
6,228
|
|
||||||
Cumulative effect of adoption of ASU No. 2016-01, net of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
4,682
|
|
|
$
|
(4,682
|
)
|
|
$
|
—
|
|
||
Cumulative effect of adoption of ASU No. 2018-02
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
(711
|
)
|
|
$
|
711
|
|
|
$
|
—
|
|
||
Balances at December 31, 2018
|
29,988,460
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
645,310
|
|
|
$
|
79,753
|
|
|
$
|
(15,828
|
)
|
|
$
|
709,241
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
63,830
|
|
|
$
|
43,566
|
|
|
$
|
74,471
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Deferred policy acquisition costs
|
(93,188
|
)
|
|
(123,577
|
)
|
|
(105,659
|
)
|
|||
Amortization of policy acquisition costs
|
111,103
|
|
|
116,001
|
|
|
101,624
|
|
|||
Net realized investment losses (gains)
|
5,479
|
|
|
1,989
|
|
|
(7,565
|
)
|
|||
Impairment of intangible assets
|
200
|
|
|
—
|
|
|
—
|
|
|||
Distributions from equity method investments
|
7,499
|
|
|
7,333
|
|
|
3,467
|
|
|||
Income from equity method investments
|
(3,540
|
)
|
|
(13,209
|
)
|
|
(8,743
|
)
|
|||
Trading securities purchases, sales, and maturities, net
|
3,804
|
|
|
1,250
|
|
|
—
|
|
|||
Deferred U.S. federal income tax (benefit) expense
|
(5,859
|
)
|
|
(364
|
)
|
|
5,093
|
|
|||
Provision for depreciation and amortization
|
4,215
|
|
|
2,123
|
|
|
2,414
|
|
|||
Share based compensation expense
|
6,228
|
|
|
7,688
|
|
|
5,492
|
|
|||
Excess tax benefits from equity incentive plan transactions
|
(2,699
|
)
|
|
(2,115
|
)
|
|
3,191
|
|
|||
Change in operating assets and liabilities:
|
|
|
|
|
|
||||||
Reserve for losses and loss adjustment expenses
|
369,110
|
|
|
348,484
|
|
|
158,543
|
|
|||
Unearned premiums
|
(31,641
|
)
|
|
27,551
|
|
|
89,459
|
|
|||
Premiums receivable and agents’ balances
|
44,537
|
|
|
(87,121
|
)
|
|
(88,630
|
)
|
|||
Reinsurance balances
|
(187,024
|
)
|
|
(113,665
|
)
|
|
(68,497
|
)
|
|||
Payable to insurance companies
|
(2,029
|
)
|
|
445
|
|
|
(950
|
)
|
|||
Other
|
3
|
|
|
(8,563
|
)
|
|
(9,361
|
)
|
|||
Net cash provided by operating activities
|
290,028
|
|
|
207,816
|
|
|
154,349
|
|
|||
Investing activities
|
|
|
|
|
|
||||||
Securities available-for-sale:
|
|
|
|
|
|
||||||
Purchases – fixed maturity securities
|
(418,011
|
)
|
|
(270,014
|
)
|
|
(300,135
|
)
|
|||
Sales – fixed maturity securities
|
95,793
|
|
|
77,781
|
|
|
110,124
|
|
|||
Maturities and calls – fixed maturity securities
|
129,139
|
|
|
121,890
|
|
|
135,472
|
|
|||
Purchases – equity securities
|
(7,507
|
)
|
|
(5,540
|
)
|
|
(3,680
|
)
|
|||
Sales – equity securities
|
5,578
|
|
|
3,522
|
|
|
14,850
|
|
|||
Bank loan participations:
|
|
|
|
|
|
||||||
Purchases
|
(203,328
|
)
|
|
(240,799
|
)
|
|
(156,638
|
)
|
|||
Sales
|
123,114
|
|
|
138,214
|
|
|
51,077
|
|
|||
Maturities
|
58,742
|
|
|
69,740
|
|
|
97,097
|
|
|||
Other invested assets:
|
|
|
|
|
|
||||||
Purchases
|
(6,993
|
)
|
|
(8,913
|
)
|
|
(2,365
|
)
|
|||
Return of capital
|
921
|
|
|
—
|
|
|
226
|
|
|||
Maturities and repayments
|
—
|
|
|
—
|
|
|
6,500
|
|
|||
Securities receivable or payable, net
|
2,268
|
|
|
(2,525
|
)
|
|
1,018
|
|
|||
Short-term investments, net
|
(45,162
|
)
|
|
14,040
|
|
|
(31,574
|
)
|
|||
Other
|
(1,326
|
)
|
|
(2,137
|
)
|
|
(2,736
|
)
|
|||
Net cash used in investing activities
|
(266,772
|
)
|
|
(104,741
|
)
|
|
(80,764
|
)
|
|||
Financing activities
|
|
|
|
|
|
||||||
Senior debt issuances
|
20,000
|
|
|
10,000
|
|
|
—
|
|
|||
Dividends paid
|
(36,123
|
)
|
|
(50,832
|
)
|
|
(65,988
|
)
|
|||
Issuances of common shares under equity incentive plans
|
5,172
|
|
|
1,708
|
|
|
2,260
|
|
|||
Common share repurchases
|
(2,239
|
)
|
|
(9,448
|
)
|
|
(4,907
|
)
|
|||
Other financing activities
|
(1,104
|
)
|
|
(792
|
)
|
|
(1,572
|
)
|
|||
Net cash used in financing activities
|
(14,294
|
)
|
|
(49,364
|
)
|
|
(70,207
|
)
|
|||
Change in cash and cash equivalents
|
8,962
|
|
|
53,711
|
|
|
3,378
|
|
|||
Cash and cash equivalents at beginning of year
|
163,495
|
|
|
109,784
|
|
|
106,406
|
|
|||
Cash and cash equivalents at end of year
|
$
|
172,457
|
|
|
$
|
163,495
|
|
|
$
|
109,784
|
|
Supplemental information
|
|
|
|
|
|
||||||
Income taxes paid (refunded), net
|
$
|
8,174
|
|
|
$
|
9,848
|
|
|
$
|
(59
|
)
|
Interest paid
|
$
|
11,269
|
|
|
$
|
8,909
|
|
|
$
|
8,121
|
|
1.
|
Accounting Policies
|
•
|
James River Group Holdings UK Limited (“James River UK”) is an insurance holding company formed in 2015 in the United Kingdom (“U.K.”). The Company contributed James River Group, Inc. (“James River Group”), a U.S. insurance holding company, to James River UK in 2015.
|
•
|
James River Group is a Delaware domiciled insurance holding company formed in 2002, which owns all of the Company’s U.S.-based subsidiaries, either directly or indirectly through one of its wholly-owned U.S. subsidiaries. James River Group oversees the Company’s U.S. insurance operations and maintains all of the outstanding debt in the U.S.
|
•
|
James River Insurance Company (“James River Insurance”) is an Ohio domiciled excess and surplus lines insurance company that, with its wholly-owned insurance subsidiary, James River Casualty Company, is authorized to write business in every state and the District of Columbia.
|
•
|
Falls Lake National Insurance Company (“Falls Lake National”) is an Ohio domiciled insurance company which wholly owns Stonewood Insurance Company (“Stonewood Insurance”), a North Carolina domiciled company, and Falls Lake Fire and Casualty Company, a California domiciled company. Falls Lake National began writing specialty admitted fronting and program business in late 2013. Falls Lake Fire and Casualty Company began operations in 2016.
|
•
|
JRG Reinsurance Company, Ltd. (“JRG Re”) was formed in 2007 and commenced operations in 2008. JRG Re, a Bermuda domiciled reinsurer, primarily provides non-catastrophe casualty reinsurance to U.S. third parties and to the Company’s U.S.-based insurance subsidiaries.
|
•
|
Carolina Re Ltd ("Carolina Re") was formed in 2018 and provides reinsurance to the Company's U.S.-based insurance subsidiaries. Carolina Re is also the cedent on a stop loss reinsurance treaty with JRG Re.
|
|
Net Income
(Numerator) |
|
Weighted-Average
Common Shares (Denominator) |
|
Earnings
Per Share |
|||||
|
(in thousands, except per share data)
|
|||||||||
Year ended December 31, 2018
|
|
|
|
|
|
|
|
|
||
Basic
|
$
|
63,830
|
|
|
29,887,990
|
|
|
$
|
2.14
|
|
Common share equivalents
|
—
|
|
|
419,111
|
|
|
(0.03
|
)
|
||
Diluted
|
$
|
63,830
|
|
|
30,307,101
|
|
|
$
|
2.11
|
|
Year ended December 31, 2017
|
|
|
|
|
|
|||||
Basic
|
$
|
43,566
|
|
|
29,461,717
|
|
|
$
|
1.48
|
|
Common share equivalents
|
—
|
|
|
811,432
|
|
|
(0.04
|
)
|
||
Diluted
|
$
|
43,566
|
|
|
30,273,149
|
|
|
$
|
1.44
|
|
Year ended December 31, 2016
|
|
|
|
|
|
|||||
Basic
|
$
|
74,471
|
|
|
29,063,075
|
|
|
$
|
2.56
|
|
Common share equivalents
|
—
|
|
|
831,303
|
|
|
(0.07
|
)
|
||
Diluted
|
$
|
74,471
|
|
|
29,894,378
|
|
|
$
|
2.49
|
|
2.
|
Investments
|
|
Cost or
Amortized Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair
Value |
||||||||
|
(in thousands)
|
||||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
State and municipal
|
$
|
147,160
|
|
|
$
|
3,422
|
|
|
$
|
(1,287
|
)
|
|
$
|
149,295
|
|
Residential mortgage-backed
|
208,869
|
|
|
577
|
|
|
(5,337
|
)
|
|
204,109
|
|
||||
Corporate
|
534,024
|
|
|
1,516
|
|
|
(10,772
|
)
|
|
524,768
|
|
||||
Commercial mortgage and asset-backed
|
199,528
|
|
|
310
|
|
|
(2,813
|
)
|
|
197,025
|
|
||||
U.S. Treasury securities and obligations guaranteed by the U.S. government
|
107,803
|
|
|
235
|
|
|
(845
|
)
|
|
107,193
|
|
||||
Redeemable preferred stock
|
2,025
|
|
|
—
|
|
|
(213
|
)
|
|
1,812
|
|
||||
Total fixed maturity securities, available-for-sale
|
$
|
1,199,409
|
|
|
$
|
6,060
|
|
|
$
|
(21,267
|
)
|
|
$
|
1,184,202
|
|
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
State and municipal
|
$
|
139,382
|
|
|
$
|
5,587
|
|
|
$
|
(603
|
)
|
|
$
|
144,366
|
|
Residential mortgage-backed
|
160,379
|
|
|
723
|
|
|
(2,441
|
)
|
|
158,661
|
|
||||
Corporate
|
408,857
|
|
|
7,503
|
|
|
(2,639
|
)
|
|
413,721
|
|
||||
Commercial mortgage and asset-backed
|
182,595
|
|
|
714
|
|
|
(698
|
)
|
|
182,611
|
|
||||
Obligations of U.S. government corporations and agencies
|
35,948
|
|
|
—
|
|
|
(101
|
)
|
|
35,847
|
|
||||
U.S. Treasury securities and obligations guaranteed by the U.S. government
|
79,476
|
|
|
37
|
|
|
(639
|
)
|
|
78,874
|
|
||||
Redeemable preferred stock
|
2,025
|
|
|
—
|
|
|
(7
|
)
|
|
2,018
|
|
||||
Total fixed maturity securities, available-for-sale
|
$
|
1,008,662
|
|
|
$
|
14,564
|
|
|
$
|
(7,128
|
)
|
|
$
|
1,016,098
|
|
|
Amortized
Cost |
|
Fair
Value |
||||
|
(in thousands)
|
||||||
One year or less
|
$
|
52,312
|
|
|
$
|
52,100
|
|
After one year through five years
|
406,647
|
|
|
403,126
|
|
||
After five years through ten years
|
213,673
|
|
|
209,155
|
|
||
After ten years
|
116,355
|
|
|
116,875
|
|
||
Residential mortgage-backed
|
208,869
|
|
|
204,109
|
|
||
Commercial mortgage and asset-backed
|
199,528
|
|
|
197,025
|
|
||
Redeemable preferred stock
|
2,025
|
|
|
1,812
|
|
||
Total
|
$
|
1,199,409
|
|
|
$
|
1,184,202
|
|
|
Less Than 12 Months
|
|
12 Months or More
|
|
Total
|
||||||||||||||||||
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
State and municipal
|
$
|
19,733
|
|
|
$
|
(284
|
)
|
|
$
|
47,018
|
|
|
$
|
(1,003
|
)
|
|
$
|
66,751
|
|
|
$
|
(1,287
|
)
|
Residential mortgage-backed
|
49,180
|
|
|
(743
|
)
|
|
105,778
|
|
|
(4,594
|
)
|
|
154,958
|
|
|
(5,337
|
)
|
||||||
Corporate
|
243,384
|
|
|
(5,089
|
)
|
|
155,902
|
|
|
(5,683
|
)
|
|
399,286
|
|
|
(10,772
|
)
|
||||||
Commercial mortgage and asset-backed
|
106,423
|
|
|
(1,229
|
)
|
|
51,805
|
|
|
(1,584
|
)
|
|
158,228
|
|
|
(2,813
|
)
|
||||||
U.S. Treasury securities and obligations guaranteed by the U.S. government
|
17,618
|
|
|
(51
|
)
|
|
54,201
|
|
|
(794
|
)
|
|
71,819
|
|
|
(845
|
)
|
||||||
Redeemable preferred stock
|
1,812
|
|
|
(213
|
)
|
|
—
|
|
|
—
|
|
|
1,812
|
|
|
(213
|
)
|
||||||
Total fixed maturity securities, available-for-sale
|
$
|
438,150
|
|
|
$
|
(7,609
|
)
|
|
$
|
414,704
|
|
|
$
|
(13,658
|
)
|
|
$
|
852,854
|
|
|
$
|
(21,267
|
)
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
State and municipal
|
$
|
40,117
|
|
|
$
|
(318
|
)
|
|
$
|
10,662
|
|
|
$
|
(285
|
)
|
|
$
|
50,779
|
|
|
$
|
(603
|
)
|
Residential mortgage-backed
|
50,447
|
|
|
(261
|
)
|
|
84,193
|
|
|
(2,180
|
)
|
|
134,640
|
|
|
(2,441
|
)
|
||||||
Corporate
|
113,464
|
|
|
(846
|
)
|
|
66,954
|
|
|
(1,793
|
)
|
|
180,418
|
|
|
(2,639
|
)
|
||||||
Commercial mortgage and asset-backed
|
53,965
|
|
|
(244
|
)
|
|
25,299
|
|
|
(454
|
)
|
|
79,264
|
|
|
(698
|
)
|
||||||
Obligations of U.S. government corporations and agencies
|
3,024
|
|
|
(1
|
)
|
|
32,154
|
|
|
(100
|
)
|
|
35,178
|
|
|
(101
|
)
|
||||||
U.S. Treasury securities and obligations guaranteed by the U.S. government
|
50,760
|
|
|
(430
|
)
|
|
26,707
|
|
|
(209
|
)
|
|
77,467
|
|
|
(639
|
)
|
||||||
Redeemable preferred stock
|
2,018
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
2,018
|
|
|
(7
|
)
|
||||||
Total fixed maturity securities, available-for-sale
|
$
|
313,795
|
|
|
$
|
(2,107
|
)
|
|
$
|
245,969
|
|
|
$
|
(5,021
|
)
|
|
$
|
559,764
|
|
|
$
|
(7,128
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Fixed maturity securities
|
$
|
34,129
|
|
|
$
|
26,833
|
|
|
$
|
25,917
|
|
Bank loan participations
|
18,279
|
|
|
17,388
|
|
|
14,486
|
|
|||
Equity securities
|
5,240
|
|
|
5,045
|
|
|
5,617
|
|
|||
Other invested assets
|
5,165
|
|
|
14,079
|
|
|
9,536
|
|
|||
Cash, cash equivalents, short-term investments, and other
|
2,681
|
|
|
1,708
|
|
|
824
|
|
|||
Trading (losses) gains
|
(4
|
)
|
|
(4
|
)
|
|
18
|
|
|||
Gross investment income
|
65,490
|
|
|
65,049
|
|
|
56,398
|
|
|||
Investment expense
|
(4,234
|
)
|
|
(3,930
|
)
|
|
(3,760
|
)
|
|||
Net investment income
|
$
|
61,256
|
|
|
$
|
61,119
|
|
|
$
|
52,638
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Fixed maturity securities:
|
|
|
|
|
|
||||||
Gross realized gains
|
$
|
422
|
|
|
$
|
840
|
|
|
$
|
1,916
|
|
Gross realized losses
|
(976
|
)
|
|
(512
|
)
|
|
(106
|
)
|
|||
|
(554
|
)
|
|
328
|
|
|
1,810
|
|
|||
Equity securities:
|
|
|
|
|
|
||||||
Gross realized gains
|
—
|
|
|
429
|
|
|
4,761
|
|
|||
Gross realized losses
|
(62
|
)
|
|
(1,591
|
)
|
|
—
|
|
|||
Changes in fair values of equity securities
|
(5,970
|
)
|
|
—
|
|
|
—
|
|
|||
|
(6,032
|
)
|
|
(1,162
|
)
|
|
4,761
|
|
|||
Bank loan participations:
|
|
|
|
|
|
||||||
Gross realized gains
|
2,279
|
|
|
2,407
|
|
|
2,827
|
|
|||
Gross realized losses
|
(1,166
|
)
|
|
(3,557
|
)
|
|
(1,832
|
)
|
|||
|
1,113
|
|
|
(1,150
|
)
|
|
995
|
|
|||
Short-term investments and other:
|
|
|
|
|
|
||||||
Gross realized gains
|
—
|
|
|
1
|
|
|
3
|
|
|||
Gross realized losses
|
(6
|
)
|
|
(6
|
)
|
|
(4
|
)
|
|||
|
(6
|
)
|
|
(5
|
)
|
|
(1
|
)
|
|||
Total
|
$
|
(5,479
|
)
|
|
$
|
(1,989
|
)
|
|
$
|
7,565
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Change in gross unrealized gains (losses):
|
|
|
|
|
|
||||||
Fixed maturity securities
|
$
|
(22,643
|
)
|
|
$
|
6,571
|
|
|
$
|
(1,350
|
)
|
Equity securities
|
—
|
|
|
5,356
|
|
|
(2,433
|
)
|
|||
Total
|
$
|
(22,643
|
)
|
|
$
|
11,927
|
|
|
$
|
(3,783
|
)
|
|
Carrying Value
|
|
Investment Income
|
||||||||||||||||
|
December 31,
|
|
Year Ended December 31,
|
||||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2016
|
||||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||||||
Renewable energy LLCs
(a)
|
$
|
29,795
|
|
|
$
|
32,063
|
|
|
$
|
2,974
|
|
|
$
|
10,578
|
|
|
$
|
3,480
|
|
Renewable energy notes receivable
(b)
|
8,750
|
|
|
7,278
|
|
|
1,282
|
|
|
526
|
|
|
450
|
|
|||||
Limited partnerships
(c)
|
29,276
|
|
|
26,367
|
|
|
566
|
|
|
2,632
|
|
|
5,263
|
|
|||||
Bank holding companies
(d)
|
4,500
|
|
|
4,500
|
|
|
343
|
|
|
343
|
|
|
343
|
|
|||||
Total other invested assets
|
$
|
72,321
|
|
|
$
|
70,208
|
|
|
$
|
5,165
|
|
|
$
|
14,079
|
|
|
$
|
9,536
|
|
(a)
|
The Company’s Corporate and Other segment owns equity interests ranging from
2.6%
to
32.8%
in various LLCs whose principal objective is capital appreciation and income generation from owning and operating renewable energy production facilities (wind and solar). The LLCs are managed by an entity for which two of our directors serve as officers, and the Company’s Non-Executive Chairman has invested in certain of these LLCs. The equity method is used to account for the Company’s LLC investments. Income for the LLCs primarily reflects adjustments to the carrying values of investments in renewable energy projects to their determined fair values. The fair value adjustments are included in revenues for the LLCs. Expenses for the LLCs are not significant and are comprised of administrative and interest expenses. The Company received cash distributions from these investments totaling
$5.8 million
and
$5.6 million
for the years ended
December 31, 2018
and
2017
, respectively.
|
(b)
|
The Company's Corporate and Other segment has invested in notes receivable for renewable energy projects.
At
December 31, 2018
, the Company holds one
$8.8 million
note issued by an
entity for which two of our directors serve as officers
. The amount
invested in the note was
$7.3 million
at
December 31, 2017
. Interest on the note, which matures in 2021, is fixed at
15%
. Interest income on the note was
$1.3 million
and
$526,000
for the years ended
December 31, 2018
and
2017
, respectively. In
2016
, the outstanding balance of a
$6.5 million
note was fully repaid. Income prior to repayment of the note was
$450,000
for the year ended
December 31, 2016
.
|
(c)
|
The Company owns investments in limited partnerships that invest in concentrated portfolios including publicly-traded small cap equities, loans of middle market private equity sponsored companies, equity tranches of collateralized loan obligations ("CLOs"), and tranches of distressed home loans. Income from the partnerships is recognized under the equity method of accounting. The Company’s Corporate and Other segment held an investment in a limited partnership with a carrying value of
$3.1 million
and
$3.0 million
at
December 31, 2018
and
2017
, and recognized investment income of
$70,000
,
$394,000
, and
$455,000
for the years ended
December 31, 2018
,
2017
and
2016
, respectively. The Company’s Excess and Surplus Lines segment holds investments in limited partnerships of
$26.2 million
and
$23.4 million
at
December 31, 2018
and
2017
, respectively. Investment income of
$496,000
,
$2.2 million
, and
$4.8 million
were recognized on these investments for the years ended
December 31, 2018
,
2017
, and
2016
, respectively. At
December 31, 2018
, the Company’s Excess and Surplus Lines segment has outstanding commitments to invest another
$625,000
in these limited partnerships.
|
(d)
|
The Company's Corporate and Other segment holds
$4.5 million
of subordinated notes issued by a bank holding company for which the Company’s Non-Executive Chairman was previously the Lead Independent Director and an investor and for which one of the Company’s directors was an investor and is currently a lender (the "Bank Holding Company"). Interest on the notes, which mature in 2023, is fixed at
7.6%
per annum. Interest income on the notes was
$343,000
in each of the years ended
December 31, 2018
,
2017
and
2016
.
|
3.
|
Deferred Policy Acquisition Costs
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Balance at beginning of period
|
$
|
72,365
|
|
|
$
|
64,789
|
|
|
$
|
60,754
|
|
Policy acquisition costs deferred:
|
|
|
|
|
|
||||||
Commissions
|
72,473
|
|
|
107,387
|
|
|
92,736
|
|
|||
Underwriting and other issue expenses
|
20,715
|
|
|
16,190
|
|
|
12,923
|
|
|||
|
93,188
|
|
|
123,577
|
|
|
105,659
|
|
|||
Amortization of policy acquisition costs
|
(111,103
|
)
|
|
(116,001
|
)
|
|
(101,624
|
)
|
|||
Net change
|
(17,915
|
)
|
|
7,576
|
|
|
4,035
|
|
|||
Balance at end of period
|
$
|
54,450
|
|
|
$
|
72,365
|
|
|
$
|
64,789
|
|
4.
|
Goodwill and Intangible Assets
|
|
|
|
December 31,
|
||||||||||||||
|
|
|
2018
|
|
2017
|
||||||||||||
|
Weighted-
Average
Life
(Years)
|
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
||||||||
|
|
|
(in thousands)
|
||||||||||||||
Trademarks
|
Indefinite
|
|
$
|
22,200
|
|
|
$
|
—
|
|
|
$
|
22,200
|
|
|
$
|
—
|
|
Insurance licenses and authorities
|
Indefinite
|
|
8,964
|
|
|
—
|
|
|
9,164
|
|
|
—
|
|
||||
Identifiable intangibles not subject to amortization
|
|
|
31,164
|
|
|
—
|
|
|
31,364
|
|
|
—
|
|
||||
Broker relationships
|
24.6
|
|
11,611
|
|
|
5,238
|
|
|
11,611
|
|
|
4,641
|
|
||||
Identifiable intangible assets subject to amortization
|
|
|
11,611
|
|
|
5,238
|
|
|
11,611
|
|
|
4,641
|
|
||||
|
|
|
$
|
42,775
|
|
|
$
|
5,238
|
|
|
$
|
42,975
|
|
|
$
|
4,641
|
|
2019
|
$
|
597
|
|
2020
|
538
|
|
|
2021
|
363
|
|
|
2022
|
363
|
|
|
2023
|
363
|
|
|
Thereafter
|
4,149
|
|
|
Total
|
$
|
6,373
|
|
|
December 31, 2017
|
|
|
|
|
|
December 31, 2018
|
||||||||
|
Net Carrying
Value |
|
Amortization
|
|
Impairment
Losses |
|
Net Carrying
Value |
||||||||
|
(in thousands)
|
||||||||||||||
Excess and Surplus Lines
|
|
|
|
|
|
|
|
||||||||
Trademarks
|
$
|
19,700
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,700
|
|
Insurance licenses and authorities
|
4,900
|
|
|
—
|
|
|
—
|
|
|
4,900
|
|
||||
Broker relationships
|
6,327
|
|
|
(362
|
)
|
|
—
|
|
|
5,965
|
|
||||
|
30,927
|
|
|
(362
|
)
|
|
—
|
|
|
30,565
|
|
||||
Specialty Admitted Insurance
|
|
|
|
|
|
|
|
||||||||
Trademarks
|
2,500
|
|
|
—
|
|
|
—
|
|
|
2,500
|
|
||||
Insurance licenses and authorities
|
4,265
|
|
|
—
|
|
|
(200
|
)
|
|
4,065
|
|
||||
Broker relationships
|
642
|
|
|
(235
|
)
|
|
—
|
|
|
407
|
|
||||
|
7,407
|
|
|
(235
|
)
|
|
(200
|
)
|
|
6,972
|
|
||||
Total identifiable intangible assets
|
$
|
38,334
|
|
|
$
|
(597
|
)
|
|
$
|
(200
|
)
|
|
$
|
37,537
|
|
|
December 31, 2016
|
|
|
|
|
|
December 31, 2017
|
||||||||
|
Net Carrying
Value |
|
Amortization
|
|
Impairment
Losses |
|
Net Carrying
Value |
||||||||
|
(in thousands)
|
||||||||||||||
Excess and Surplus Lines
|
|
|
|
|
|
|
|
||||||||
Trademarks
|
$
|
19,700
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,700
|
|
Insurance licenses and authorities
|
4,900
|
|
|
—
|
|
|
—
|
|
|
4,900
|
|
||||
Broker relationships
|
6,689
|
|
|
(362
|
)
|
|
—
|
|
|
6,327
|
|
||||
|
31,289
|
|
|
(362
|
)
|
|
—
|
|
|
30,927
|
|
||||
Specialty Admitted Insurance
|
|
|
|
|
|
|
|
||||||||
Trademarks
|
2,500
|
|
|
—
|
|
|
—
|
|
|
2,500
|
|
||||
Insurance licenses and authorities
|
4,265
|
|
|
—
|
|
|
—
|
|
|
4,265
|
|
||||
Broker relationships
|
877
|
|
|
(235
|
)
|
|
—
|
|
|
642
|
|
||||
|
7,642
|
|
|
(235
|
)
|
|
—
|
|
|
7,407
|
|
||||
Total identifiable intangible assets
|
$
|
38,931
|
|
|
$
|
(597
|
)
|
|
$
|
—
|
|
|
$
|
38,334
|
|
5.
|
Property and Equipment, Net
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Building, leased for which the Company has been deemed the owner for accounting purposes (Note 21)
|
$
|
30,971
|
|
|
$
|
30,902
|
|
Electronic data processing hardware and software
|
7,423
|
|
|
6,156
|
|
||
Furniture and equipment
|
2,662
|
|
|
2,659
|
|
||
Property and equipment, cost basis
|
41,056
|
|
|
39,717
|
|
||
Accumulated depreciation
|
(17,745
|
)
|
|
(14,716
|
)
|
||
Property and equipment, net
|
$
|
23,311
|
|
|
$
|
25,001
|
|
6.
|
Reserve for Losses and Loss Adjustment Expenses
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period
|
$
|
989,825
|
|
|
$
|
761,128
|
|
|
$
|
653,534
|
|
Add: Incurred losses and loss adjustment expenses net of reinsurance:
|
|
|
|
|
|
|
|
|
|||
Current year
|
582,604
|
|
|
533,905
|
|
|
349,137
|
|
|||
Prior years
|
17,672
|
|
|
21,472
|
|
|
(23,716
|
)
|
|||
Total incurred losses and loss and adjustment expenses
|
600,276
|
|
|
555,377
|
|
|
325,421
|
|
|||
Deduct: Loss and loss adjustment expense payments net of reinsurance:
|
|
|
|
|
|
|
|
|
|||
Current year
|
86,355
|
|
|
103,205
|
|
|
39,473
|
|
|||
Prior years
|
309,658
|
|
|
223,475
|
|
|
178,354
|
|
|||
Total loss and loss adjustment expense payments
|
396,013
|
|
|
326,680
|
|
|
217,827
|
|
|||
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at end of period
|
1,194,088
|
|
|
989,825
|
|
|
761,128
|
|
|||
Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period
|
467,371
|
|
|
302,524
|
|
|
182,737
|
|
|||
Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period
|
$
|
1,661,459
|
|
|
$
|
1,292,349
|
|
|
$
|
943,865
|
|
Accident Year
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||||||||||
2009
|
|
$
|
114,834
|
|
|
$
|
110,783
|
|
|
$
|
106,480
|
|
|
$
|
98,502
|
|
|
$
|
86,691
|
|
|
$
|
81,764
|
|
|
$
|
83,431
|
|
|
$
|
83,846
|
|
|
$
|
85,470
|
|
|
$
|
85,807
|
|
2010
|
|
|
|
78,424
|
|
|
80,569
|
|
|
78,117
|
|
|
73,035
|
|
|
69,080
|
|
|
69,964
|
|
|
70,294
|
|
|
70,913
|
|
|
71,312
|
|
|||||||||||
2011
|
|
|
|
|
|
111,190
|
|
|
119,927
|
|
|
114,473
|
|
|
106,564
|
|
|
106,381
|
|
|
106,130
|
|
|
106,643
|
|
|
106,536
|
|
||||||||||||
2012
|
|
|
|
|
|
|
|
97,908
|
|
|
98,672
|
|
|
97,829
|
|
|
96,497
|
|
|
97,306
|
|
|
99,619
|
|
|
101,271
|
|
|||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
96,729
|
|
|
96,064
|
|
|
85,433
|
|
|
81,009
|
|
|
82,830
|
|
|
83,855
|
|
||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
114,942
|
|
|
104,092
|
|
|
90,267
|
|
|
82,232
|
|
|
84,074
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
126,443
|
|
|
113,417
|
|
|
104,847
|
|
|
102,434
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
138,507
|
|
|
125,093
|
|
|
126,050
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
144,349
|
|
|
131,897
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
167,004
|
|
|||||||||||||||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,060,240
|
|
Accident Year
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
2009
|
|
$
|
29,860
|
|
|
$
|
41,687
|
|
|
$
|
51,731
|
|
|
$
|
61,548
|
|
|
$
|
67,293
|
|
|
$
|
71,245
|
|
|
$
|
76,091
|
|
|
$
|
79,014
|
|
|
$
|
81,496
|
|
|
$
|
82,560
|
|
2010
|
|
|
|
13,673
|
|
|
26,418
|
|
|
35,812
|
|
|
45,641
|
|
|
52,071
|
|
|
57,371
|
|
|
61,307
|
|
|
64,214
|
|
|
65,246
|
|
|||||||||||
2011
|
|
|
|
|
|
27,684
|
|
|
53,109
|
|
|
72,732
|
|
|
81,696
|
|
|
90,884
|
|
|
94,998
|
|
|
98,684
|
|
|
99,798
|
|
||||||||||||
2012
|
|
|
|
|
|
|
|
6,944
|
|
|
33,757
|
|
|
49,604
|
|
|
63,216
|
|
|
74,869
|
|
|
82,545
|
|
|
88,812
|
|
|||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
3,867
|
|
|
14,509
|
|
|
30,382
|
|
|
44,421
|
|
|
59,641
|
|
|
66,553
|
|
||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
3,412
|
|
|
16,969
|
|
|
28,212
|
|
|
43,891
|
|
|
58,774
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,048
|
|
|
17,164
|
|
|
34,801
|
|
|
55,911
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,180
|
|
|
22,852
|
|
|
46,045
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,290
|
|
|
22,956
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|||||||||||||||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
592,655
|
|
||||||||||||||||||
All outstanding losses and loss adjustment expenses prior to 2009, net of reinsurance (33 claims outstanding)
|
|
|
|
$
|
12,187
|
|
||||||||||||||||||||||||||||||||||
Total outstanding losses and loss adjustment expenses, net of reinsurance
|
|
|
|
|
|
|
|
$
|
479,772
|
|
Accident Year
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||
2013
|
|
$
|
1,255
|
|
|
$
|
1,300
|
|
|
$
|
1,451
|
|
|
$
|
1,351
|
|
|
$
|
1,301
|
|
|
$
|
1,277
|
|
2014
|
|
|
|
20,487
|
|
|
14,071
|
|
|
17,233
|
|
|
18,953
|
|
|
19,779
|
|
|||||||
2015
|
|
|
|
|
|
30,109
|
|
|
33,113
|
|
|
35,149
|
|
|
36,139
|
|
||||||||
2016
|
|
|
|
|
|
|
|
74,340
|
|
|
109,286
|
|
|
126,791
|
|
|||||||||
2017
|
|
|
|
|
|
|
|
|
|
207,355
|
|
|
208,743
|
|
||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
255,881
|
|
|||||||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
$
|
648,610
|
|
Accident Year
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||||||||||
2009
|
|
$
|
28,691
|
|
|
$
|
28,526
|
|
|
$
|
27,535
|
|
|
$
|
28,116
|
|
|
$
|
27,795
|
|
|
$
|
26,171
|
|
|
$
|
26,169
|
|
|
$
|
26,232
|
|
|
$
|
26,194
|
|
|
$
|
25,660
|
|
2010
|
|
|
|
27,209
|
|
|
28,736
|
|
|
30,464
|
|
|
30,373
|
|
|
28,963
|
|
|
28,938
|
|
|
27,590
|
|
|
27,098
|
|
|
27,099
|
|
|||||||||||
2011
|
|
|
|
|
|
37,834
|
|
|
41,421
|
|
|
40,154
|
|
|
38,999
|
|
|
38,311
|
|
|
37,455
|
|
|
36,594
|
|
|
36,593
|
|
||||||||||||
2012
|
|
|
|
|
|
|
|
32,116
|
|
|
32,420
|
|
|
31,490
|
|
|
29,689
|
|
|
28,255
|
|
|
28,174
|
|
|
28,186
|
|
|||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
12,525
|
|
|
13,668
|
|
|
12,786
|
|
|
11,578
|
|
|
10,907
|
|
|
10,909
|
|
||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
16,638
|
|
|
16,652
|
|
|
14,620
|
|
|
13,890
|
|
|
12,704
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,938
|
|
|
21,274
|
|
|
19,741
|
|
|
18,376
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,678
|
|
|
20,299
|
|
|
18,050
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,869
|
|
|
22,071
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,432
|
|
|||||||||||||||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
216,080
|
|
Accident Year
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||||||||||
2009
|
|
$
|
7,277
|
|
|
$
|
16,945
|
|
|
$
|
21,095
|
|
|
$
|
22,646
|
|
|
$
|
24,231
|
|
|
$
|
24,192
|
|
|
$
|
24,350
|
|
|
$
|
24,418
|
|
|
$
|
25,660
|
|
|
$
|
25,660
|
|
2010
|
|
|
|
7,157
|
|
|
16,245
|
|
|
21,805
|
|
|
23,898
|
|
|
25,210
|
|
|
25,477
|
|
|
26,345
|
|
|
26,352
|
|
|
26,358
|
|
|||||||||||
2011
|
|
|
|
|
|
10,123
|
|
|
23,127
|
|
|
29,021
|
|
|
33,204
|
|
|
34,240
|
|
|
34,287
|
|
|
34,334
|
|
|
34,614
|
|
||||||||||||
2012
|
|
|
|
|
|
|
|
9,222
|
|
|
20,308
|
|
|
24,755
|
|
|
26,435
|
|
|
26,897
|
|
|
26,932
|
|
|
26,963
|
|
|||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
4,487
|
|
|
8,723
|
|
|
9,846
|
|
|
10,246
|
|
|
10,263
|
|
|
10,309
|
|
||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
4,633
|
|
|
10,648
|
|
|
12,041
|
|
|
12,236
|
|
|
12,282
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,604
|
|
|
13,285
|
|
|
15,118
|
|
|
15,889
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,664
|
|
|
10,227
|
|
|
12,135
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,546
|
|
|
12,782
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,497
|
|
|||||||||||||||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
181,489
|
|
||||||||||||||||||
All outstanding losses and loss adjustment expenses prior to 2009, net of reinsurance (4 claims outstanding)
|
|
|
|
$
|
1,056
|
|
||||||||||||||||||||||||||||||||||
Outstanding losses and loss adjustment expenses assumed from involuntary workers’ compensation pools
|
|
|
|
$
|
4,966
|
|
||||||||||||||||||||||||||||||||||
Total outstanding losses and loss adjustment expenses, net of reinsurance
|
|
|
|
|
|
|
|
$
|
40,613
|
|
Accident Year
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||
2013
|
|
$
|
104
|
|
|
$
|
80
|
|
|
$
|
52
|
|
|
$
|
52
|
|
|
$
|
52
|
|
|
$
|
52
|
|
2014
|
|
|
|
3,460
|
|
|
3,468
|
|
|
3,818
|
|
|
3,425
|
|
|
3,228
|
|
|||||||
2015
|
|
|
|
|
|
7,136
|
|
|
9,632
|
|
|
9,358
|
|
|
8,974
|
|
||||||||
2016
|
|
|
|
|
|
|
|
11,542
|
|
|
15,670
|
|
|
14,682
|
|
|||||||||
2017
|
|
|
|
|
|
|
|
|
|
21,229
|
|
|
24,271
|
|
||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
21,758
|
|
|||||||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
$
|
72,965
|
|
Accident Year
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||||||||||
2009
|
|
$
|
34,587
|
|
|
$
|
28,244
|
|
|
$
|
24,125
|
|
|
$
|
26,458
|
|
|
$
|
27,078
|
|
|
$
|
27,116
|
|
|
$
|
26,989
|
|
|
$
|
26,931
|
|
|
$
|
26,980
|
|
|
$
|
27,168
|
|
2010
|
|
|
|
64,413
|
|
|
60,476
|
|
|
61,068
|
|
|
62,714
|
|
|
61,344
|
|
|
60,949
|
|
|
60,978
|
|
|
61,619
|
|
|
62,605
|
|
|||||||||||
2011
|
|
|
|
|
|
114,908
|
|
|
103,123
|
|
|
97,366
|
|
|
97,812
|
|
|
98,993
|
|
|
99,282
|
|
|
101,276
|
|
|
103,196
|
|
||||||||||||
2012
|
|
|
|
|
|
|
|
148,251
|
|
|
132,388
|
|
|
131,281
|
|
|
135,594
|
|
|
136,813
|
|
|
139,978
|
|
|
143,305
|
|
|||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
133,230
|
|
|
130,361
|
|
|
131,352
|
|
|
134,446
|
|
|
137,801
|
|
|
143,124
|
|
||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
118,881
|
|
|
115,927
|
|
|
114,636
|
|
|
116,981
|
|
|
121,200
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119,157
|
|
|
108,870
|
|
|
108,699
|
|
|
109,117
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112,759
|
|
|
105,533
|
|
|
103,544
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
134,628
|
|
|
128,472
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121,529
|
|
|||||||||||||||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,063,260
|
|
Accident Year
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||||||||||
2009
|
|
$
|
6,487
|
|
|
$
|
9,926
|
|
|
$
|
12,956
|
|
|
$
|
16,466
|
|
|
$
|
19,672
|
|
|
$
|
21,646
|
|
|
$
|
23,024
|
|
|
$
|
23,796
|
|
|
$
|
24,649
|
|
|
$
|
25,209
|
|
2010
|
|
|
|
21,918
|
|
|
31,500
|
|
|
38,430
|
|
|
44,921
|
|
|
49,263
|
|
|
52,761
|
|
|
54,659
|
|
|
57,013
|
|
|
58,707
|
|
|||||||||||
2011
|
|
|
|
|
|
48,688
|
|
|
61,922
|
|
|
68,616
|
|
|
78,164
|
|
|
87,267
|
|
|
90,287
|
|
|
94,627
|
|
|
97,715
|
|
||||||||||||
2012
|
|
|
|
|
|
|
|
73,124
|
|
|
81,859
|
|
|
97,215
|
|
|
113,943
|
|
|
121,026
|
|
|
128,567
|
|
|
133,606
|
|
|||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
59,756
|
|
|
75,094
|
|
|
93,902
|
|
|
108,396
|
|
|
119,256
|
|
|
127,732
|
|
||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
41,421
|
|
|
58,601
|
|
|
76,302
|
|
|
89,899
|
|
|
101,366
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,021
|
|
|
53,986
|
|
|
68,002
|
|
|
80,208
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,268
|
|
|
50,905
|
|
|
65,409
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,739
|
|
|
72,891
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,903
|
|
|||||||||||||||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
793,746
|
|
||||||||||||||||||
All outstanding losses and loss adjustment expenses prior to 2009, net of reinsurance
|
|
|
|
|
|
|
|
$
|
333
|
|
||||||||||||||||||||||||||||||
Total outstanding losses and loss adjustment expenses, net of reinsurance
|
|
|
|
|
|
|
|
$
|
269,847
|
|
E&S – excluding commercial auto
|
$
|
479,772
|
|
E&S – commercial auto
|
355,171
|
|
|
Specialty Admitted – individual risk workers’ compensation
|
40,613
|
|
|
Specialty Admitted – fronting and programs
|
48,685
|
|
|
Casualty Reinsurance
|
269,847
|
|
|
Net reserve for losses and loss adjustment expenses
|
1,194,088
|
|
|
Reinsurance recoverables on unpaid losses
|
467,371
|
|
|
Gross reserve for losses and loss adjustment expenses
|
$
|
1,661,459
|
|
|
Year 1
|
|
Year 2
|
|
Year 3
|
|
Year 4
|
|
Year 5
|
|
Year 6
|
|
Year 7
|
|
Year 8
|
|
Year 9
|
|
Year 10
|
||||||||||
E&S – excluding commercial auto
|
10.0
|
%
|
|
16.0
|
%
|
|
17.4
|
%
|
|
18.0
|
%
|
|
14.5
|
%
|
|
7.9
|
%
|
|
5.6
|
%
|
|
3.4
|
%
|
|
1.1
|
%
|
|
2.3
|
%
|
E&S – commercial auto
|
21.0
|
%
|
|
38.9
|
%
|
|
15.6
|
%
|
|
14.3
|
%
|
|
6.5
|
%
|
|
3.7
|
%
|
|
|
|
|
|
|
|
|
||||
Specialty Admitted – individual risk workers’ compensation
|
28.7
|
%
|
|
33.8
|
%
|
|
13.8
|
%
|
|
6.2
|
%
|
|
3.3
|
%
|
|
1.3
|
%
|
|
1.0
|
%
|
|
0.2
|
%
|
|
0.5
|
%
|
|
0.0
|
%
|
Specialty Admitted – fronting and programs
|
7.7
|
%
|
|
16.7
|
%
|
|
7.2
|
%
|
|
1.5
|
%
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
Casualty Reinsurance
|
27.5
|
%
|
|
17.7
|
%
|
|
12.5
|
%
|
|
8.7
|
%
|
|
6.1
|
%
|
|
4.5
|
%
|
|
3.4
|
%
|
|
2.7
|
%
|
|
2.2
|
%
|
|
1.9
|
%
|
Accident Year
|
|
Incurred Losses
and Loss Adj Expenses |
|
IBNR
|
|
Cumulative # of
Reported Claims |
|||||
|
|
($ in thousands)
|
|||||||||
2009
|
|
$
|
85,807
|
|
|
$
|
2,188
|
|
|
1,698
|
|
2010
|
|
71,312
|
|
|
2,890
|
|
|
1,380
|
|
||
2011
|
|
106,536
|
|
|
3,919
|
|
|
1,465
|
|
||
2012
|
|
101,271
|
|
|
4,339
|
|
|
1,765
|
|
||
2013
|
|
83,855
|
|
|
10,248
|
|
|
2,298
|
|
||
2014
|
|
84,074
|
|
|
12,440
|
|
|
2,106
|
|
||
2015
|
|
102,434
|
|
|
21,215
|
|
|
2,434
|
|
||
2016
|
|
126,050
|
|
|
44,649
|
|
|
2,754
|
|
||
2017
|
|
131,897
|
|
|
79,836
|
|
|
2,630
|
|
||
2018
|
|
167,004
|
|
|
135,018
|
|
|
3,242
|
|
Accident Year
|
|
Incurred Losses
and Loss Adj
Expenses
|
|
IBNR
|
|
Cumulative # of
Reported Claims
|
|||||
|
|
($ in thousands)
|
|||||||||
2013
|
|
$
|
1,277
|
|
|
$
|
1
|
|
|
54
|
|
2014
|
|
19,779
|
|
|
653
|
|
|
7,761
|
|
||
2015
|
|
36,139
|
|
|
1,761
|
|
|
41,723
|
|
||
2016
|
|
126,791
|
|
|
9,206
|
|
|
88,746
|
|
||
2017
|
|
208,743
|
|
|
23,777
|
|
|
132,191
|
|
||
2018
|
|
255,881
|
|
|
155,760
|
|
|
91,798
|
|
Accident Year
|
|
Incurred Losses
and Loss Adj Expenses |
|
IBNR
|
|
Cumulative # of
Reported Claims |
||||||
|
|
($ in thousands)
|
||||||||||
2009
|
|
$
|
25,660
|
|
|
$
|
—
|
|
|
$
|
1,490
|
|
2010
|
|
27,099
|
|
|
699
|
|
|
1,604
|
|
|||
2011
|
|
36,593
|
|
|
1,786
|
|
|
1,814
|
|
|||
2012
|
|
28,186
|
|
|
1,020
|
|
|
1,323
|
|
|||
2013
|
|
10,909
|
|
|
510
|
|
|
540
|
|
|||
2014
|
|
12,704
|
|
|
422
|
|
|
850
|
|
|||
2015
|
|
18,376
|
|
|
2,177
|
|
|
975
|
|
|||
2016
|
|
18,050
|
|
|
5,010
|
|
|
833
|
|
|||
2017
|
|
22,071
|
|
|
6,434
|
|
|
1,087
|
|
|||
2018
|
|
16,432
|
|
|
5,422
|
|
|
1,170
|
|
Accident Year
|
|
Incurred Losses
and Loss Adj Expenses |
|
IBNR
|
|
Cumulative # of
Reported Claims |
|||||
|
|
($ in thousands)
|
|||||||||
2013
|
|
$
|
52
|
|
|
$
|
—
|
|
|
22
|
|
2014
|
|
3,228
|
|
|
238
|
|
|
856
|
|
||
2015
|
|
8,974
|
|
|
1,076
|
|
|
1,355
|
|
||
2016
|
|
14,682
|
|
|
3,203
|
|
|
2,792
|
|
||
2017
|
|
24,271
|
|
|
10,083
|
|
|
6,572
|
|
||
2018
|
|
21,758
|
|
|
16,058
|
|
|
5,874
|
|
Accident Year
|
|
Incurred Losses
and Loss Adj Expenses |
|
IBNR
|
||||
|
|
($ in thousands)
|
||||||
2009
|
|
$
|
27,168
|
|
|
$
|
431
|
|
2010
|
|
62,605
|
|
|
937
|
|
||
2011
|
|
103,196
|
|
|
1,427
|
|
||
2012
|
|
143,305
|
|
|
2,397
|
|
||
2013
|
|
143,124
|
|
|
3,330
|
|
||
2014
|
|
121,200
|
|
|
5,450
|
|
||
2015
|
|
109,117
|
|
|
14,595
|
|
||
2016
|
|
103,544
|
|
|
26,675
|
|
||
2017
|
|
128,472
|
|
|
52,785
|
|
||
2018
|
|
121,529
|
|
|
55,052
|
|
7.
|
Reinsurance
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Written premiums:
|
|
|
|
|
|
|
|
|
|||
Direct
|
$
|
1,027,222
|
|
|
$
|
843,719
|
|
|
$
|
549,700
|
|
Assumed
|
139,551
|
|
|
238,186
|
|
|
187,698
|
|
|||
Ceded
|
(404,101
|
)
|
|
(315,279
|
)
|
|
(179,690
|
)
|
|||
Net
|
$
|
762,672
|
|
|
$
|
766,626
|
|
|
$
|
557,708
|
|
Earned premiums:
|
|
|
|
|
|
|
|
|
|||
Direct
|
$
|
990,221
|
|
|
$
|
842,182
|
|
|
$
|
483,166
|
|
Assumed
|
208,192
|
|
|
173,472
|
|
|
164,771
|
|
|||
Ceded
|
(383,015
|
)
|
|
(274,545
|
)
|
|
(132,274
|
)
|
|||
Net
|
$
|
815,398
|
|
|
$
|
741,109
|
|
|
$
|
515,663
|
|
Losses and loss adjustment expenses:
|
|
|
|
|
|
|
|
|
|||
Direct
|
$
|
769,490
|
|
|
$
|
626,318
|
|
|
$
|
314,920
|
|
Assumed
|
131,346
|
|
|
142,818
|
|
|
108,029
|
|
|||
Ceded
|
(300,560
|
)
|
|
(213,759
|
)
|
|
(97,528
|
)
|
|||
Net
|
$
|
600,276
|
|
|
$
|
555,377
|
|
|
$
|
325,421
|
|
8.
|
Senior Debt
|
•
|
A
$102.5 million
secured revolving facility utilized by JRG Re to issue letters of credit for the benefit of third-party reinsureds. This portion of our credit facility is secured by our investment securities. At
December 31, 2018
, the Company had
$75.5 million
of letters of credit issued under the secured facility.
|
•
|
A
$112.5 million
unsecured revolving facility to meet the working capital needs of the Company. All unpaid principal on the revolver is due at maturity. Interest accrues quarterly and is payable in arrears at
LIBOR plus a margin which is currently 1.5%
, which is subject to change according to terms in the credit agreement. At
December 31, 2018
and
2017
, the Company had a drawn balance of
$73.3 million
outstanding on the unsecured revolver.
|
•
|
assume or permit to exist any indebtedness that is secured by any encumbrance on the capital stock of James River Group or any of its subsidiaries which is senior to the Senior Debt; or
|
•
|
issue, sell, transfer or otherwise dispose of any shares of, securities convertible into, or warrants, rights or options to subscribe for or purchase shares of, capital stock of any subsidiary.
|
9.
|
Junior Subordinated Debt
|
|
James River
Capital
Trust I
|
|
James River
Capital Trust II |
|
James River
Capital
Trust III
|
|
James River
Capital Trust IV |
|
Franklin
Holdings II (Bermuda) Capital Trust I |
|
($ in thousands)
|
||||||||
Issue date
|
May 26,
2004 |
|
December 15,
2004 |
|
June 15,
2006 |
|
December 11,
2007 |
|
January 10,
2008 |
Principal amount of Trust Preferred Securities
|
$7,000
|
|
$15,000
|
|
$20,000
|
|
$54,000
|
|
$30,000
|
Principal amount of Junior Subordinated Debt
|
$7,217
|
|
$15,464
|
|
$20,619
|
|
$55,670
|
|
$30,928
|
Carrying amount of Junior Subordinated Debt net of repurchases
|
$7,217
|
|
$15,464
|
|
$20,619
|
|
$44,827
|
|
$15,928
|
Maturity date of Junior Subordinated Debt, unless accelerated earlier
|
May 24,
2034 |
|
December 15,
2034 |
|
June 15,
2036 |
|
December 15,
2037 |
|
March 15,
2038 |
Trust common stock
|
$217
|
|
$464
|
|
$619
|
|
$1,670
|
|
$928
|
Interest rate, per annum
|
Three-Month LIBOR plus 4.0%
|
|
Three-Month LIBOR plus 3.4%
|
|
Three-Month LIBOR plus 3.0%
|
|
Three-Month LIBOR plus 3.1%
|
|
Three-Month LIBOR plus 4.0%
|
10.
|
Capital Stock
|
Date of
Declaration
|
|
Dividend per
Common Share
|
|
Payable to Shareholders
of Record on
|
|
Payment Date
|
|
Total Amount
|
||
2018
|
|
|
|
|
|
|
|
|
||
February 22, 2018
|
|
$0.30
|
|
March 12, 2018
|
|
March 30, 2018
|
|
$
|
9,049,476
|
|
May 1, 2018
|
|
$0.30
|
|
June 11, 2018
|
|
June 29, 2018
|
|
$
|
9,066,023
|
|
August 1, 2018
|
|
$0.30
|
|
September 10, 2018
|
|
September 28, 2018
|
|
$
|
9,080,519
|
|
November 7, 2018
|
|
$0.30
|
|
December 14, 2018
|
|
December 28, 2018
|
|
$
|
9,088,542
|
|
Total
|
|
$1.20
|
|
|
|
|
|
$
|
36,284,560
|
|
2017
|
|
|
|
|
|
|
|
|
||
February 14, 2017
|
|
$0.30
|
|
March 13, 2017
|
|
March 31, 2017
|
|
$
|
8,878,147
|
|
May 2, 2017
|
|
$0.30
|
|
June 12, 2017
|
|
June 30, 2017
|
|
$
|
8,917,471
|
|
August 1, 2017
|
|
$0.30
|
|
September 11, 2017
|
|
September 29, 2017
|
|
$
|
8,943,279
|
|
November 1, 2017
|
|
$0.30
|
|
December 15, 2017
|
|
December 28, 2017
|
|
$
|
8,974,196
|
|
November 1, 2017
|
|
$0.50
|
|
December 15, 2017
|
|
December 28, 2017
|
|
$
|
14,956,994
|
|
Total
|
|
$1.70
|
|
|
|
|
|
$
|
50,670,087
|
|
2016
|
|
|
|
|
|
|
|
|
||
February 16, 2016
|
|
$0.20
|
|
March 14, 2016
|
|
March 28, 2016
|
|
$
|
5,848,561
|
|
May 3, 2016
|
|
$0.20
|
|
June 13, 2016
|
|
June 30, 2016
|
|
$
|
5,873,582
|
|
August 3, 2016
|
|
$0.20
|
|
September 12, 2016
|
|
September 30, 2016
|
|
$
|
5,882,342
|
|
November 1, 2016
|
|
$0.30
|
|
December 16, 2016
|
|
December 29, 2016
|
|
$
|
8,847,431
|
|
November 1, 2016
|
|
$1.35
|
|
December 16, 2016
|
|
December 29, 2016
|
|
$
|
39,813,440
|
|
Total
|
|
$2.25
|
|
|
|
|
|
$
|
66,265,356
|
|
11.
|
Equity Awards
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|||||||||
Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Beginning of year
|
1,479,236
|
|
|
$
|
27.81
|
|
|
2,234,699
|
|
|
$
|
22.84
|
|
|
2,058,085
|
|
|
$
|
18.11
|
|
Granted
|
—
|
|
|
$
|
—
|
|
|
205,244
|
|
|
$
|
42.24
|
|
|
706,203
|
|
|
$
|
32.07
|
|
Exercised
|
(308,025
|
)
|
|
$
|
22.01
|
|
|
(898,218
|
)
|
|
$
|
18.53
|
|
|
(496,550
|
)
|
|
$
|
16.02
|
|
Forfeited
|
(55,887
|
)
|
|
$
|
35.69
|
|
|
(62,489
|
)
|
|
$
|
30.80
|
|
|
(33,039
|
)
|
|
$
|
27.68
|
|
End of year
|
1,115,324
|
|
|
$
|
29.02
|
|
|
1,479,236
|
|
|
$
|
27.81
|
|
|
2,234,699
|
|
|
$
|
22.84
|
|
Exercisable, end of year
|
814,421
|
|
|
$
|
26.46
|
|
|
846,371
|
|
|
$
|
22.35
|
|
|
1,207,479
|
|
|
$
|
18.14
|
|
|
Year Ended December 31,
|
||||
|
2017
|
|
2016
|
||
Risk-free interest rate
|
1.97
|
%
|
|
1.23
|
%
|
Dividend yield
|
2.85
|
%
|
|
2.50
|
%
|
Expected share price volatility
|
27.39
|
%
|
|
25.00
|
%
|
Expected life
|
5.0 years
|
|
|
5.0 years
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
Shares
|
|
Weighted-
Average
Grant Date
Fair Value
|
|
Shares
|
|
Weighted-
Average
Grant Date
Fair Value
|
|
Shares
|
|
Weighted-
Average
Grant Date
Fair Value
|
|||||||||
Unvested, beginning of year
|
178,882
|
|
|
$
|
37.93
|
|
|
196,800
|
|
|
$
|
24.38
|
|
|
234,922
|
|
|
$
|
21.00
|
|
Granted
|
227,481
|
|
|
$
|
39.74
|
|
|
137,034
|
|
|
$
|
42.20
|
|
|
60,291
|
|
|
$
|
32.03
|
|
Vested
|
(83,384
|
)
|
|
$
|
37.61
|
|
|
(132,764
|
)
|
|
$
|
24.24
|
|
|
(98,413
|
)
|
|
$
|
21.00
|
|
Forfeited
|
(22,837
|
)
|
|
$
|
40.21
|
|
|
(22,188
|
)
|
|
$
|
26.06
|
|
|
—
|
|
|
$
|
—
|
|
Unvested, end of year
|
300,142
|
|
|
$
|
39.22
|
|
|
178,882
|
|
|
$
|
37.93
|
|
|
196,800
|
|
|
$
|
24.38
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Share based compensation expense
|
$
|
6,228
|
|
|
$
|
7,688
|
|
|
$
|
5,492
|
|
U.S. tax benefit on share based compensation expense
|
$
|
716
|
|
|
$
|
2,093
|
|
|
$
|
1,532
|
|
12.
|
Income Taxes
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Federal income tax expense at applicable statutory rates
|
$
|
7,875
|
|
|
$
|
17,541
|
|
|
$
|
6,401
|
|
Tax-exempt investment income
|
(272
|
)
|
|
(586
|
)
|
|
(643
|
)
|
|||
Dividends received deduction
|
(307
|
)
|
|
(792
|
)
|
|
(880
|
)
|
|||
Excess tax benefits on share based compensation
|
(567
|
)
|
|
(2,114
|
)
|
|
—
|
|
|||
Effect of tax rate reduction on deferred tax liability
|
220
|
|
|
(3,498
|
)
|
|
—
|
|
|||
Other
|
145
|
|
|
(90
|
)
|
|
(6
|
)
|
|||
Federal income tax expense
|
$
|
7,094
|
|
|
$
|
10,461
|
|
|
$
|
4,872
|
|
U.S. state income tax (benefit) expense
|
(86
|
)
|
|
65
|
|
|
—
|
|
|||
U.S. dividend withholding tax
|
—
|
|
|
1,053
|
|
|
—
|
|
|||
Total income tax expense
|
$
|
7,008
|
|
|
$
|
11,579
|
|
|
$
|
4,872
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Deferred tax assets:
|
|
|
|
|
|
||
Accrued compensation expenses
|
$
|
2,456
|
|
|
$
|
1,712
|
|
Reserve for losses and loss adjustment expenses
|
7,482
|
|
|
3,036
|
|
||
Unearned premiums
|
5,711
|
|
|
1,709
|
|
||
Share based compensation
|
1,352
|
|
|
1,143
|
|
||
Allowance for doubtful accounts
|
829
|
|
|
579
|
|
||
Deferred policy acquisition costs
|
—
|
|
|
1,509
|
|
||
Property and equipment
|
1,909
|
|
|
1,601
|
|
||
Invested asset impairments
|
—
|
|
|
791
|
|
||
Other
|
1,903
|
|
|
1,564
|
|
||
Total deferred tax assets
|
21,642
|
|
|
13,644
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Intangible assets
|
7,461
|
|
|
7,521
|
|
||
Net unrealized gains
|
887
|
|
|
2,578
|
|
||
Deferred policy acquisition costs
|
3,491
|
|
|
—
|
|
||
Equity method investments
|
8,582
|
|
|
8,348
|
|
||
Other
|
167
|
|
|
444
|
|
||
Total deferred tax liabilities
|
20,588
|
|
|
18,891
|
|
||
Net deferred tax assets (liabilities)
|
$
|
1,054
|
|
|
$
|
(5,247
|
)
|
13.
|
Other Operating Expenses and Other Expenses
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Amortization of policy acquisition costs
|
$
|
111,103
|
|
|
$
|
116,001
|
|
|
$
|
101,624
|
|
Other underwriting expenses of the insurance segments
|
63,029
|
|
|
55,662
|
|
|
48,771
|
|
|||
Other operating expenses of the Corporate and Other segment
|
26,903
|
|
|
25,330
|
|
|
20,433
|
|
|||
Total
|
$
|
201,035
|
|
|
$
|
196,993
|
|
|
$
|
170,828
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Employee severance
|
$
|
1,386
|
|
|
$
|
147
|
|
|
$
|
1,492
|
|
Income on leased building the Company is deemed to own for accounting purposes (see Note 21)
|
(623
|
)
|
|
(248
|
)
|
|
(196
|
)
|
|||
Legal and professional services related to secondary share offerings
|
337
|
|
|
535
|
|
|
281
|
|
|||
Other
|
—
|
|
|
105
|
|
|
13
|
|
|||
Impairment of intangible asset
|
200
|
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
1,300
|
|
|
$
|
539
|
|
|
$
|
1,590
|
|
14.
|
Employee Benefits
|
15.
|
Commitments and Contingent Liabilities
|
2019
|
$
|
3,946
|
|
2020
|
3,790
|
|
|
2021
|
3,507
|
|
|
2022
|
2,639
|
|
|
2023
|
2,376
|
|
|
Thereafter
|
4,705
|
|
|
|
$
|
20,963
|
|
16.
|
Other Comprehensive (Loss) Income
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Unrealized (losses) gains arising during the period, before U.S. income taxes
|
$
|
(23,201
|
)
|
|
$
|
11,091
|
|
|
$
|
2,790
|
|
U.S. income taxes
|
483
|
|
|
(2,374
|
)
|
|
(414
|
)
|
|||
Unrealized (losses) gains arising during the period, net of U.S. income taxes
|
(22,718
|
)
|
|
8,717
|
|
|
2,376
|
|
|||
Less reclassification adjustment:
|
|
|
|
|
|
||||||
Net realized investment (losses) gains
|
(554
|
)
|
|
(835
|
)
|
|
6,572
|
|
|||
U.S. income taxes
|
39
|
|
|
333
|
|
|
(2,137
|
)
|
|||
Reclassification adjustment for investment (losses) gains realized in net income
|
(515
|
)
|
|
(502
|
)
|
|
4,435
|
|
|||
Other comprehensive (loss) income
|
$
|
(22,203
|
)
|
|
$
|
9,219
|
|
|
$
|
(2,059
|
)
|
17.
|
Segment Information
|
|
Excess and
Surplus Lines
|
|
Specialty
Admitted
Insurance
|
|
Casualty
Reinsurance
|
|
Corporate
and
Other
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
As of and for the Year Ended
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross written premiums
|
$
|
656,538
|
|
|
$
|
374,346
|
|
|
$
|
135,889
|
|
|
$
|
—
|
|
|
$
|
1,166,773
|
|
Net earned premiums
|
555,684
|
|
|
55,146
|
|
|
204,568
|
|
|
—
|
|
|
815,398
|
|
|||||
Segment revenues
|
580,785
|
|
|
56,717
|
|
|
243,178
|
|
|
4,919
|
|
|
885,599
|
|
|||||
Net investment income
|
14,456
|
|
|
3,262
|
|
|
38,838
|
|
|
4,700
|
|
|
61,256
|
|
|||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
11,553
|
|
|
11,553
|
|
|||||
Underwriting profit of operating segments
|
42,834
|
|
|
6,972
|
|
|
5,103
|
|
|
—
|
|
|
54,909
|
|
|||||
Segment goodwill
|
181,831
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
181,831
|
|
|||||
Segment assets
|
972,111
|
|
|
633,689
|
|
|
1,453,754
|
|
|
77,222
|
|
|
3,136,776
|
|
|
Excess and
Surplus Lines
|
|
Specialty
Admitted
Insurance
|
|
Casualty
Reinsurance
|
|
Corporate
and
Other
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
As of and for the Year Ended
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross written premiums
|
$
|
530,120
|
|
|
$
|
316,430
|
|
|
$
|
235,355
|
|
|
$
|
—
|
|
|
$
|
1,081,905
|
|
Net earned premiums
|
463,521
|
|
|
68,110
|
|
|
209,478
|
|
|
—
|
|
|
741,109
|
|
|||||
Segment revenues
|
493,853
|
|
|
70,366
|
|
|
240,751
|
|
|
12,655
|
|
|
817,625
|
|
|||||
Net investment income
|
15,014
|
|
|
2,532
|
|
|
31,507
|
|
|
12,066
|
|
|
61,119
|
|
|||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
8,974
|
|
|
8,974
|
|
|||||
Underwriting profit (loss) of operating segments
|
29,693
|
|
|
3,166
|
|
|
(1,765
|
)
|
|
—
|
|
|
31,094
|
|
|||||
Segment goodwill
|
181,831
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
181,831
|
|
|||||
Segment assets
|
843,486
|
|
|
439,416
|
|
|
1,379,866
|
|
|
93,927
|
|
|
2,756,695
|
|
|||||
As of and for the Year Ended
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross written premiums
|
$
|
370,844
|
|
|
$
|
182,221
|
|
|
$
|
184,333
|
|
|
$
|
—
|
|
|
$
|
737,398
|
|
Net earned premiums
|
301,404
|
|
|
52,281
|
|
|
161,978
|
|
|
—
|
|
|
515,663
|
|
|||||
Segment revenues
|
331,090
|
|
|
55,412
|
|
|
190,064
|
|
|
9,661
|
|
|
586,227
|
|
|||||
Net investment income
|
18,051
|
|
|
2,542
|
|
|
27,257
|
|
|
4,788
|
|
|
52,638
|
|
|||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
8,448
|
|
|
8,448
|
|
|||||
Underwriting profit (loss) of operating segments
|
47,235
|
|
|
2,872
|
|
|
(194
|
)
|
|
—
|
|
|
49,913
|
|
|||||
Segment goodwill
|
181,831
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
181,831
|
|
|||||
Segment assets
|
740,144
|
|
|
300,519
|
|
|
1,195,230
|
|
|
110,640
|
|
|
2,346,533
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Underwriting profit (loss) of the operating segments:
|
|
|
|
|
|
|
|
|
|||
Excess and Surplus Lines
|
$
|
42,834
|
|
|
$
|
29,693
|
|
|
$
|
47,235
|
|
Specialty Admitted Insurance
|
6,972
|
|
|
3,166
|
|
|
2,872
|
|
|||
Casualty Reinsurance
|
5,103
|
|
|
(1,765
|
)
|
|
(194
|
)
|
|||
Total underwriting profit of operating segments
|
54,909
|
|
|
31,094
|
|
|
49,913
|
|
|||
Other operating expenses of the Corporate and Other segment
|
(26,903
|
)
|
|
(25,330
|
)
|
|
(20,433
|
)
|
|||
Underwriting profit
|
28,006
|
|
|
5,764
|
|
|
29,480
|
|
|||
Net investment income
|
61,256
|
|
|
61,119
|
|
|
52,638
|
|
|||
Net realized and unrealized (losses) gains on investments
|
(5,479
|
)
|
|
(1,989
|
)
|
|
7,565
|
|
|||
Other income
|
505
|
|
|
361
|
|
|
295
|
|
|||
Other expenses
|
(1,300
|
)
|
|
(539
|
)
|
|
(1,590
|
)
|
|||
Interest expense
|
(11,553
|
)
|
|
(8,974
|
)
|
|
(8,448
|
)
|
|||
Amortization of intangible assets
|
(597
|
)
|
|
(597
|
)
|
|
(597
|
)
|
|||
Income before income taxes
|
$
|
70,838
|
|
|
$
|
55,145
|
|
|
$
|
79,343
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Commercial Auto
|
$
|
322,126
|
|
|
$
|
247,960
|
|
|
$
|
110,050
|
|
Manufacturers and Contractors
|
79,160
|
|
|
85,719
|
|
|
83,279
|
|
|||
Excess Casualty
|
66,452
|
|
|
51,160
|
|
|
43,574
|
|
|||
General Casualty
|
54,127
|
|
|
38,097
|
|
|
36,858
|
|
|||
Energy
|
33,942
|
|
|
29,704
|
|
|
29,709
|
|
|||
Allied Health
|
30,450
|
|
|
19,181
|
|
|
14,413
|
|
|||
Excess Property
|
16,963
|
|
|
14,447
|
|
|
14,083
|
|
|||
Life Sciences
|
16,636
|
|
|
12,981
|
|
|
11,132
|
|
|||
Small Business
|
14,808
|
|
|
11,307
|
|
|
9,104
|
|
|||
Professional Liability
|
5,916
|
|
|
6,326
|
|
|
8,361
|
|
|||
Environmental
|
10,499
|
|
|
7,920
|
|
|
5,321
|
|
|||
Medical Professionals
|
1,774
|
|
|
2,297
|
|
|
2,739
|
|
|||
Sports and Entertainment
|
3,685
|
|
|
3,021
|
|
|
2,221
|
|
|||
Total Excess and Surplus Lines segment
|
656,538
|
|
|
530,120
|
|
|
370,844
|
|
|||
Specialty Admitted Insurance segment
|
374,346
|
|
|
316,430
|
|
|
182,221
|
|
|||
Casualty Reinsurance segment
|
135,889
|
|
|
235,355
|
|
|
184,333
|
|
|||
Total
|
$
|
1,166,773
|
|
|
$
|
1,081,905
|
|
|
$
|
737,398
|
|
18.
|
Fair Value Measurements
|
|
Fair Value Measurements Using
|
||||||||||||||
|
Quoted Prices
in Active
Markets for
Identical Assets
Level 1
|
|
Significant
Other
Observable
Inputs
Level 2
|
|
Significant
Unobservable
Inputs
Level 3
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands)
|
||||||||||||||
Fixed maturity securities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||
State and municipal
|
$
|
—
|
|
|
$
|
149,295
|
|
|
$
|
—
|
|
|
$
|
149,295
|
|
Residential mortgage-backed
|
—
|
|
|
204,109
|
|
|
—
|
|
|
204,109
|
|
||||
Corporate
|
—
|
|
|
524,768
|
|
|
—
|
|
|
524,768
|
|
||||
Commercial mortgage and asset-backed
|
—
|
|
|
192,797
|
|
|
4,228
|
|
|
197,025
|
|
||||
U.S. Treasury securities and obligations guaranteed by the U.S. government
|
106,651
|
|
|
542
|
|
|
—
|
|
|
107,193
|
|
||||
Redeemable preferred stock
|
—
|
|
|
1,812
|
|
|
—
|
|
|
1,812
|
|
||||
Total fixed maturity securities, available-for-sale
|
$
|
106,651
|
|
|
$
|
1,073,323
|
|
|
$
|
4,228
|
|
|
$
|
1,184,202
|
|
Equity securities:
|
|
|
|
|
|||||||||||
Preferred stock
|
$
|
—
|
|
|
$
|
60,740
|
|
|
$
|
—
|
|
|
$
|
60,740
|
|
Common stock
|
16,674
|
|
|
757
|
|
|
214
|
|
|
17,645
|
|
||||
Total equity securities
|
$
|
16,674
|
|
|
$
|
61,497
|
|
|
$
|
214
|
|
|
$
|
78,385
|
|
Short-term investments
|
$
|
1,250
|
|
|
$
|
80,716
|
|
|
$
|
—
|
|
|
$
|
81,966
|
|
|
Fair Value Measurements Using
|
||||||||||||||
|
Quoted Prices
in Active
Markets for
Identical Assets
Level 1
|
|
Significant
Other
Observable
Inputs
Level 2
|
|
Significant
Unobservable
Inputs
Level 3
|
|
Total
|
||||||||
|
|
|
(in thousands)
|
|
|
||||||||||
Fixed maturity securities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||
State and municipal
|
$
|
—
|
|
|
$
|
144,366
|
|
|
$
|
—
|
|
|
$
|
144,366
|
|
Residential mortgage-backed
|
—
|
|
|
158,661
|
|
|
—
|
|
|
158,661
|
|
||||
Corporate
|
—
|
|
|
413,721
|
|
|
—
|
|
|
413,721
|
|
||||
Commercial mortgage and asset-backed
|
—
|
|
|
177,931
|
|
|
4,680
|
|
|
182,611
|
|
||||
Obligations of U.S. government corporations and agencies
|
—
|
|
|
35,847
|
|
|
—
|
|
|
35,847
|
|
||||
U.S. Treasury securities and obligations guaranteed by the U.S. government
|
78,265
|
|
|
609
|
|
|
—
|
|
|
78,874
|
|
||||
Redeemable preferred stock
|
—
|
|
|
2,018
|
|
|
—
|
|
|
2,018
|
|
||||
Total fixed maturity securities, available-for-sale
|
$
|
78,265
|
|
|
$
|
933,153
|
|
|
$
|
4,680
|
|
|
$
|
1,016,098
|
|
Equity securities:
|
|
|
|
|
|||||||||||
Preferred stock
|
$
|
—
|
|
|
$
|
66,281
|
|
|
$
|
—
|
|
|
$
|
66,281
|
|
Common stock
|
15,507
|
|
|
734
|
|
|
—
|
|
|
16,241
|
|
||||
Total equity securities
|
$
|
15,507
|
|
|
$
|
67,015
|
|
|
$
|
—
|
|
|
$
|
82,522
|
|
Trading securities:
|
|
|
|
|
|||||||||||
Fixed maturity securities
|
$
|
—
|
|
|
$
|
3,808
|
|
|
$
|
—
|
|
|
$
|
3,808
|
|
Short-term investments
|
$
|
1,000
|
|
|
$
|
35,804
|
|
|
$
|
—
|
|
|
$
|
36,804
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Beginning balance
|
$
|
4,680
|
|
|
$
|
5,000
|
|
|
$
|
5,000
|
|
Transfers out of Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|||
Transfers in to Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|||
Purchases
|
214
|
|
|
—
|
|
|
—
|
|
|||
Sales
|
—
|
|
|
—
|
|
|
—
|
|
|||
Maturities and calls
|
(452
|
)
|
|
(320
|
)
|
|
—
|
|
|||
Amortization of discount
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total gains or losses (realized/unrealized):
|
|
|
|
|
|
||||||
Included in earnings
|
—
|
|
|
—
|
|
|
—
|
|
|||
Included in other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|||
Ending balance
|
$
|
4,442
|
|
|
$
|
4,680
|
|
|
$
|
5,000
|
|
|
Fair Value Measurements Using
|
||||||||||||||
|
Quoted Prices
in Active
Markets for
Identical Assets
Level 1
|
|
Significant
Other
Observable
Inputs
Level 2
|
|
Significant
Unobservable
Inputs
Level 3
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||
Bank loan participations held-for-investment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Bank loan participations held-for-investment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,111
|
|
|
$
|
5,111
|
|
|
December 31,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||
|
(in thousands)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed maturity securities, available-for-sale
|
$
|
1,184,202
|
|
|
$
|
1,184,202
|
|
|
$
|
1,016,098
|
|
|
$
|
1,016,098
|
|
Equity securities
|
78,385
|
|
|
78,385
|
|
|
82,522
|
|
|
82,522
|
|
||||
Fixed maturity securities, trading
|
—
|
|
|
—
|
|
|
3,808
|
|
|
3,808
|
|
||||
Bank loan participations held-for-investment
|
260,972
|
|
|
250,697
|
|
|
238,214
|
|
|
236,532
|
|
||||
Cash and cash equivalents
|
172,457
|
|
|
172,457
|
|
|
163,495
|
|
|
163,495
|
|
||||
Short-term investments
|
81,966
|
|
|
81,966
|
|
|
36,804
|
|
|
36,804
|
|
||||
Other invested assets – notes receivable
|
13,250
|
|
|
18,687
|
|
|
11,778
|
|
|
17,104
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||
Senior debt
|
118,300
|
|
|
118,317
|
|
|
98,300
|
|
|
97,884
|
|
||||
Junior subordinated debt
|
104,055
|
|
|
117,057
|
|
|
104,055
|
|
|
116,569
|
|
19.
|
Statutory Matters
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Statutory net income
|
$
|
6,770
|
|
|
$
|
31,881
|
|
|
$
|
13,468
|
|
Statutory capital and surplus
|
241,668
|
|
|
219,132
|
|
|
184,859
|
|
|||
Minimum required statutory capital and surplus
|
24,850
|
|
|
25,000
|
|
|
25,000
|
|
20.
|
Dividend Restrictions
|
21.
|
Other Related Party Transactions
|
22.
|
Subsequent Events
|
23.
|
Unaudited Selected Quarterly Financial Data
|
|
2018 Quarter
|
|
2018
|
||||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Year
|
||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||
Gross written premiums
|
$
|
298,116
|
|
|
$
|
293,378
|
|
|
$
|
279,969
|
|
|
$
|
295,310
|
|
|
$
|
1,166,773
|
|
Total revenues
|
218,344
|
|
|
228,041
|
|
|
224,692
|
|
|
214,522
|
|
|
885,599
|
|
|||||
Net income
|
15,633
|
|
|
16,984
|
|
|
19,581
|
|
|
11,632
|
|
|
63,830
|
|
|||||
Comprehensive (loss) income
|
(2,914
|
)
|
|
10,426
|
|
|
15,192
|
|
|
18,923
|
|
|
41,627
|
|
|||||
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
(1)
|
$
|
0.53
|
|
|
$
|
0.57
|
|
|
$
|
0.65
|
|
|
$
|
0.39
|
|
|
$
|
2.14
|
|
Diluted
(1)
|
$
|
0.52
|
|
|
$
|
0.56
|
|
|
$
|
0.64
|
|
|
$
|
0.38
|
|
|
$
|
2.11
|
|
|
2017 Quarter
|
|
2017
|
||||||||||||||||
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Year
|
|||||||||||
(in thousands, except per share data)
|
|||||||||||||||||||
Gross written premiums
|
$
|
224,179
|
|
|
$
|
281,475
|
|
|
$
|
338,351
|
|
|
$
|
237,900
|
|
|
$
|
1,081,905
|
|
Total revenues
|
176,402
|
|
|
202,394
|
|
|
220,866
|
|
|
217,963
|
|
|
817,625
|
|
|||||
Net income
|
18,450
|
|
|
14,541
|
|
|
10,351
|
|
|
224
|
|
|
43,566
|
|
|||||
Comprehensive income (loss)
|
22,484
|
|
|
21,249
|
|
|
11,067
|
|
|
(2,015
|
)
|
|
52,785
|
|
|||||
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
(1)
|
$
|
0.63
|
|
|
$
|
0.49
|
|
|
$
|
0.35
|
|
|
$
|
0.01
|
|
|
$
|
1.48
|
|
Diluted
(1)
|
$
|
0.61
|
|
|
$
|
0.48
|
|
|
$
|
0.34
|
|
|
$
|
0.01
|
|
|
$
|
1.44
|
|
(1)
|
Since the weighted-average shares for the quarter are calculated independently of the weighted-average shares for the year, quarterly earnings per share may not total to annual earnings per share.
|
Type of Investment
|
|
Cost or
Amortized Cost
|
|
Fair
Value
|
|
Amount at
which shown
on Balance
Sheet
(1)
|
||||||
|
|
(in thousands)
|
|
|
|
|
||||||
Fixed maturity securities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
|||
State and municipal
|
|
$
|
147,160
|
|
|
$
|
149,295
|
|
|
$
|
149,295
|
|
Residential mortgage-backed
|
|
208,869
|
|
|
204,109
|
|
|
204,109
|
|
|||
Corporate
|
|
534,024
|
|
|
524,768
|
|
|
524,768
|
|
|||
Commercial mortgage and asset-backed
|
|
199,528
|
|
|
197,025
|
|
|
197,025
|
|
|||
U.S. Treasury securities and obligations guaranteed by the U.S. government
|
|
107,803
|
|
|
107,193
|
|
|
107,193
|
|
|||
Redeemable preferred stock
|
|
2,025
|
|
|
1,812
|
|
|
1,812
|
|
|||
Total fixed maturity securities, available-for-sale
|
|
1,199,409
|
|
|
1,184,202
|
|
|
1,184,202
|
|
|||
Equity securities, available-for-sale
|
|
|
|
|
|
|
|
|
|
|||
Preferred Stock
|
|
57,689
|
|
|
60,740
|
|
|
60,740
|
|
|||
Common Stock
|
|
19,463
|
|
|
17,645
|
|
|
17,645
|
|
|||
Total equity securities
|
|
77,152
|
|
|
78,385
|
|
|
78,385
|
|
|||
Bank loan participations, held-for-investment, net of allowance
|
|
260,972
|
|
|
250,697
|
|
|
260,972
|
|
|||
Short-term investments
|
|
81,966
|
|
|
81,966
|
|
|
81,966
|
|
|||
Other invested assets
|
|
|
|
|
|
29,276
|
|
|||||
Total invested assets
|
|
|
|
|
|
$
|
1,634,801
|
|
|
(1)
|
Differences between the amounts in this column and the amounts in the consolidated balance sheet are due to this schedule excluding investments in related parties.
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Assets
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
240
|
|
|
$
|
2,849
|
|
Investment in subsidiaries
|
882,407
|
|
|
910,610
|
|
||
Due from subsidiaries
|
5,775
|
|
|
—
|
|
||
Other assets
|
1,579
|
|
|
2,351
|
|
||
Total assets
|
$
|
890,001
|
|
|
$
|
915,810
|
|
Liabilities and shareholders’ equity
|
|
|
|||||
Liabilities:
|
|
|
|||||
Accrued expenses
|
$
|
2,322
|
|
|
$
|
1,406
|
|
Senior debt
|
103,300
|
|
|
83,300
|
|
||
Junior subordinated debt
|
15,928
|
|
|
15,928
|
|
||
Notes payable to subsidiary
|
40,000
|
|
|
100,000
|
|
||
Due to subsidiaries
|
18,605
|
|
|
20,043
|
|
||
Other liabilities
|
605
|
|
|
434
|
|
||
Total liabilities
|
180,760
|
|
|
221,111
|
|
||
Commitments and contingent liabilities
|
—
|
|
|
—
|
|
||
Shareholders’ equity:
|
|
|
|||||
Class A common shares
|
6
|
|
|
6
|
|
||
Additional paid-in capital
|
645,310
|
|
|
636,149
|
|
||
Retained earnings
|
79,753
|
|
|
48,198
|
|
||
Accumulated other comprehensive (loss) income
|
(15,828
|
)
|
|
10,346
|
|
||
Total shareholders’ equity
|
709,241
|
|
|
694,699
|
|
||
Total liabilities and shareholders’ equity
|
$
|
890,001
|
|
|
$
|
915,810
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Other income
|
$
|
58
|
|
|
$
|
49
|
|
|
$
|
44
|
|
Total revenues
|
58
|
|
|
49
|
|
|
44
|
|
|||
Expenses:
|
|
|
|
|
|
||||||
Other operating expenses
|
13,768
|
|
|
10,375
|
|
|
9,467
|
|
|||
Other expenses
|
337
|
|
|
640
|
|
|
293
|
|
|||
Interest expense
|
5,122
|
|
|
4,130
|
|
|
3,974
|
|
|||
Total expenses
|
19,227
|
|
|
15,145
|
|
|
13,734
|
|
|||
Loss before equity in net income of subsidiaries
|
(19,169
|
)
|
|
(15,096
|
)
|
|
(13,690
|
)
|
|||
Equity in net income of subsidiaries
|
82,999
|
|
|
58,662
|
|
|
88,161
|
|
|||
Net income
|
$
|
63,830
|
|
|
$
|
43,566
|
|
|
$
|
74,471
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Equity in other comprehensive (losses) earnings of subsidiaries
|
(22,203
|
)
|
|
9,219
|
|
|
(2,059
|
)
|
|||
Total comprehensive income
|
$
|
41,627
|
|
|
$
|
52,785
|
|
|
$
|
72,412
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
63,830
|
|
|
$
|
43,566
|
|
|
$
|
74,471
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Provision for depreciation and amortization
|
176
|
|
|
176
|
|
|
157
|
|
|||
Share based compensation expense
|
6,228
|
|
|
7,688
|
|
|
5,492
|
|
|||
Equity in undistributed earnings of subsidiaries
|
6,000
|
|
|
(23,662
|
)
|
|
(88,161
|
)
|
|||
Changes in operating assets and liabilities:
|
(5,653
|
)
|
|
684
|
|
|
(1,889
|
)
|
|||
Net cash provided by (used in) operating activities
|
70,581
|
|
|
28,452
|
|
|
(9,930
|
)
|
|||
Investing activities
|
|
|
|
|
|
||||||
Dividends from subsidiaries
|
—
|
|
|
20,000
|
|
|
80,000
|
|
|||
Net cash provided by investing activities
|
—
|
|
|
20,000
|
|
|
80,000
|
|
|||
Financing activities
|
|
|
|
|
|
||||||
Dividends paid
|
(36,123
|
)
|
|
(50,832
|
)
|
|
(65,988
|
)
|
|||
Senior debt issuance
|
20,000
|
|
|
10,000
|
|
|
—
|
|
|||
Senior debt repayments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Subsidiary note repayments
|
(60,000
|
)
|
|
—
|
|
|
—
|
|
|||
Debt issue costs paid
|
—
|
|
|
—
|
|
|
(442
|
)
|
|||
Issuances of common shares under equity incentive plans
|
5,172
|
|
|
1,708
|
|
|
2,260
|
|
|||
Common share repurchases
|
(2,239
|
)
|
|
(9,448
|
)
|
|
(4,907
|
)
|
|||
Net cash used in financing activities
|
(73,190
|
)
|
|
(48,572
|
)
|
|
(69,077
|
)
|
|||
Change in cash and cash equivalents
|
(2,609
|
)
|
|
(120
|
)
|
|
993
|
|
|||
Cash and cash equivalents at beginning of period
|
2,849
|
|
|
2,969
|
|
|
1,976
|
|
|||
Cash and cash equivalents at end of period
|
$
|
240
|
|
|
$
|
2,849
|
|
|
$
|
2,969
|
|
Supplemental information
|
|
|
|
|
|
||||||
Interest paid
|
$
|
5,052
|
|
|
$
|
4,612
|
|
|
$
|
4,676
|
|
1.
|
Accounting Policies
|
|
Deferred
Policy Acquisition Costs |
|
Reserve
for Losses and Loss Adjustment Expenses |
|
Unearned
Premiums |
|
Net
Earned Premiums |
|
Net
Investment Income |
|
Losses
and Loss Adjustment Expenses |
|
Amortization
of Policy Acquisition Costs |
|
Other
Operating Expenses |
|
Net
Written Premiums |
||||||||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Excess and Surplus Lines
|
$
|
16,736
|
|
|
$
|
960,562
|
|
|
$
|
175,231
|
|
|
$
|
555,684
|
|
|
$
|
14,456
|
|
|
$
|
437,904
|
|
|
$
|
48,299
|
|
|
$
|
88,865
|
|
|
$
|
571,098
|
|
Specialty Admitted
|
(1,829
|
)
|
|
426,315
|
|
|
84,659
|
|
|
55,146
|
|
|
3,262
|
|
|
32,623
|
|
|
(1,792
|
)
|
|
15,551
|
|
|
55,840
|
|
|||||||||
Casualty Reinsurance
|
39,543
|
|
|
274,582
|
|
|
126,583
|
|
|
204,568
|
|
|
38,838
|
|
|
129,749
|
|
|
64,596
|
|
|
69,716
|
|
|
135,734
|
|
|||||||||
Corporate and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,700
|
|
|
—
|
|
|
—
|
|
|
26,903
|
|
|
—
|
|
|||||||||
Total
|
$
|
54,450
|
|
|
$
|
1,661,459
|
|
|
$
|
386,473
|
|
|
$
|
815,398
|
|
|
$
|
61,256
|
|
|
$
|
600,276
|
|
|
$
|
111,103
|
|
|
$
|
201,035
|
|
|
$
|
762,672
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Excess and Surplus Lines
|
$
|
17,050
|
|
|
$
|
759,043
|
|
|
$
|
149,047
|
|
|
$
|
463,521
|
|
|
$
|
15,014
|
|
|
$
|
371,717
|
|
|
$
|
45,158
|
|
|
$
|
79,136
|
|
|
$
|
469,891
|
|
Specialty Admitted
|
(725
|
)
|
|
271,446
|
|
|
73,649
|
|
|
68,110
|
|
|
2,532
|
|
|
44,863
|
|
|
5,605
|
|
|
20,081
|
|
|
60,957
|
|
|||||||||
Casualty Reinsurance
|
56,040
|
|
|
261,860
|
|
|
195,418
|
|
|
209,478
|
|
|
31,507
|
|
|
138,797
|
|
|
65,238
|
|
|
72,446
|
|
|
235,778
|
|
|||||||||
Corporate and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,066
|
|
|
—
|
|
|
—
|
|
|
25,330
|
|
|
—
|
|
|||||||||
Total
|
$
|
72,365
|
|
|
$
|
1,292,349
|
|
|
$
|
418,114
|
|
|
$
|
741,109
|
|
|
$
|
61,119
|
|
|
$
|
555,377
|
|
|
$
|
116,001
|
|
|
$
|
196,993
|
|
|
$
|
766,626
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Excess and Surplus Lines
|
$
|
14,808
|
|
|
$
|
575,280
|
|
|
$
|
137,290
|
|
|
$
|
301,404
|
|
|
$
|
18,051
|
|
|
$
|
188,768
|
|
|
$
|
46,669
|
|
|
$
|
75,467
|
|
|
$
|
316,922
|
|
Specialty Admitted
|
1,767
|
|
|
128,795
|
|
|
84,156
|
|
|
52,281
|
|
|
2,542
|
|
|
30,897
|
|
|
5,968
|
|
|
18,512
|
|
|
55,803
|
|
|||||||||
Casualty Reinsurance
|
48,214
|
|
|
239,790
|
|
|
169,117
|
|
|
161,978
|
|
|
27,257
|
|
|
105,756
|
|
|
48,987
|
|
|
56,416
|
|
|
184,983
|
|
|||||||||
Corporate and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,788
|
|
|
—
|
|
|
—
|
|
|
20,433
|
|
|
—
|
|
|||||||||
Total
|
$
|
64,789
|
|
|
$
|
943,865
|
|
|
$
|
390,563
|
|
|
$
|
515,663
|
|
|
$
|
52,638
|
|
|
$
|
325,421
|
|
|
$
|
101,624
|
|
|
$
|
170,828
|
|
|
$
|
557,708
|
|
|
Direct
Amount
|
|
Ceded
to Other
Companies
|
|
Assumed
from Other
Companies
|
|
Net
Amount
|
|
Percentage
of Amount
Assumed
to Net
|
|||||||||
|
(in thousands)
|
|||||||||||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Excess and Surplus Lines Written Premiums
|
$
|
656,538
|
|
|
$
|
85,440
|
|
|
$
|
—
|
|
|
$
|
571,098
|
|
|
—
|
|
Specialty Admitted Written Premiums
|
370,684
|
|
|
318,506
|
|
|
3,662
|
|
|
55,840
|
|
|
6.6
|
%
|
||||
Casualty Reinsurance Written Premiums
|
—
|
|
|
155
|
|
|
135,889
|
|
|
135,734
|
|
|
100.1
|
%
|
||||
Total Written Premiums
|
$
|
1,027,222
|
|
|
$
|
404,101
|
|
|
$
|
139,551
|
|
|
$
|
762,672
|
|
|
18.3
|
%
|
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Excess and Surplus Lines Written Premiums
|
$
|
530,077
|
|
|
$
|
60,229
|
|
|
$
|
43
|
|
|
$
|
469,891
|
|
|
—
|
|
Specialty Admitted Written Premiums
|
313,642
|
|
|
255,473
|
|
|
2,788
|
|
|
60,957
|
|
|
4.6
|
%
|
||||
Casualty Reinsurance Written Premiums
|
—
|
|
|
(423
|
)
|
|
235,355
|
|
|
235,778
|
|
|
99.8
|
%
|
||||
Total Written Premiums
|
$
|
843,719
|
|
|
$
|
315,279
|
|
|
$
|
238,186
|
|
|
$
|
766,626
|
|
|
31.1
|
%
|
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Excess and Surplus Lines Written Premiums
|
$
|
370,802
|
|
|
$
|
53,922
|
|
|
$
|
42
|
|
|
$
|
316,922
|
|
|
—
|
|
Specialty Admitted Written Premiums
|
178,898
|
|
|
126,418
|
|
|
3,323
|
|
|
55,803
|
|
|
6.0
|
%
|
||||
Casualty Reinsurance Written Premiums
|
—
|
|
|
(650
|
)
|
|
184,333
|
|
|
184,983
|
|
|
99.6
|
%
|
||||
Total Written Premiums
|
$
|
549,700
|
|
|
$
|
179,690
|
|
|
$
|
187,698
|
|
|
$
|
557,708
|
|
|
33.7
|
%
|
|
Balance
at Beginning
of Period
|
|
Additions
Amounts
Charged to
Expense
|
|
Deductions
Amounts
Written Off
or Disposals
|
|
Balance
at End
of Period
|
||||||||
|
(in thousands)
|
||||||||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||
Allowance for Doubtful Accounts
|
$
|
2,757
|
|
|
$
|
1,504
|
|
|
$
|
(313
|
)
|
|
$
|
3,948
|
|
Allowance for Credit Losses on Bank Loans
|
3,219
|
|
|
950
|
|
|
(4,169
|
)
|
|
—
|
|
||||
Total
|
$
|
5,976
|
|
|
$
|
2,454
|
|
|
$
|
(4,482
|
)
|
|
$
|
3,948
|
|
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||
Allowance for Doubtful Accounts
|
$
|
2,136
|
|
|
$
|
1,029
|
|
|
$
|
(408
|
)
|
|
$
|
2,757
|
|
Allowance for Credit Losses on Bank Loans
|
943
|
|
|
2,424
|
|
|
(148
|
)
|
|
3,219
|
|
||||
Total
|
$
|
3,079
|
|
|
$
|
3,453
|
|
|
$
|
(556
|
)
|
|
$
|
5,976
|
|
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||
Allowance for Doubtful Accounts
|
$
|
2,778
|
|
|
$
|
814
|
|
|
$
|
(1,456
|
)
|
|
$
|
2,136
|
|
Allowance for Credit Losses on Bank Loans
|
4,310
|
|
|
(791
|
)
|
|
(2,576
|
)
|
|
943
|
|
||||
Total
|
$
|
7,088
|
|
|
$
|
23
|
|
|
$
|
(4,032
|
)
|
|
$
|
3,079
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Deferred policy acquisition costs
|
$
|
54,450
|
|
|
$
|
72,365
|
|
|
$
|
64,789
|
|
Reserve for losses and loss adjustment expenses
|
1,661,459
|
|
|
1,292,349
|
|
|
943,865
|
|
|||
Unearned premiums
|
386,473
|
|
|
418,114
|
|
|
390,563
|
|
|||
Net earned premiums
|
815,398
|
|
|
741,109
|
|
|
515,663
|
|
|||
Net investment income
|
61,256
|
|
|
61,119
|
|
|
52,638
|
|
|||
Losses and loss adjustment expenses incurred:
|
|
|
|
|
|
||||||
Current year
|
582,604
|
|
|
533,905
|
|
|
349,137
|
|
|||
Prior year
|
17,672
|
|
|
21,472
|
|
|
(23,716
|
)
|
|||
Total losses and loss adjustment expenses incurred
|
600,276
|
|
|
555,377
|
|
|
325,421
|
|
|||
Amortization of policy acquisition costs
|
111,103
|
|
|
116,001
|
|
|
101,624
|
|
|||
Paid losses and loss adjustment expenses, net of reinsurance
|
396,013
|
|
|
326,680
|
|
|
217,827
|
|
|||
Net written premiums
|
762,672
|
|
|
766,626
|
|
|
557,708
|
|
Grant Date
|
Grant Amount
|
Strike Price
|
Vested
|
Unvested
|
Expiration Date
|
2/16/2016
|
41,014
|
$32.07
|
27,342
|
13,672
|
2/15/2023
|
Grant Date
|
Unvested Restricted Share Units
|
2/16/2016
|
1,183
|
2/14/2017
|
5,692
|
2/21/18
|
10,073
|
2.
|
COMPENSATION
.
|
(a)
|
Executive will not at any time during the Term or thereafter:
|
(b)
|
Notwithstanding any provision of this Agreement to the contrary, under 18
|
5.
|
NON-COMPETITION
.
|
(vi)
|
“
Key Employees
” shall mean any executive, managerial, sales,
|
(i)
|
the Parent Company’s CEO or Board of Directors, or (y) the Companies’ Boards;
|
(i)
|
A diminution in Executive’s Base Salary; or
|
7.
|
COMPENSATION AND BENEFITS UPON TERMINATION
.
|
(d)
|
For purposes of this Agreement, “
Termination Date
” means the date of
|
i.
|
the purchase or other acquisition (other than from Holdings), in a single transaction or series of related transactions, by any person, entity or group of persons, within the meaning of Section 13(d) or 14(d) of the Exchange Act (excluding, for this purpose, Holdings or its subsidiaries or any employee benefit plan of Holdings or its subsidiaries), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Act) of 50% or more of either the then-outstanding Shares or the combined voting power of Holdings’ then-outstanding voting securities entitled to vote generally in the election of directors;
|
ii.
|
consummation of a reorganization, merger, amalgamation or consolidation involving Holdings, in each case with respect to which persons who were the shareholders of Holdings immediately prior to such reorganization,
|
iii.
|
a liquidation or dissolution of Holdings, or the sale of all or substantially all of the assets of Holdings; provided, however, an event described above shall be considered a Change in Control hereunder only if it also constitutes a “change in control event” under Section 409A of the Code, to the extent necessary to avoid the adverse tax consequences thereunder with respect to any payment subject to Section 409A of the Code.
|
17.
|
DISPUTE RESOLUTION
.
|
i.
|
the purchase or other acquisition (other than from the Company), in a single transaction or series of related transactions, by any person, entity or group of persons, within the meaning of Section 13(d) or 14(d) of the Exchange Act (excluding, for this purpose, the Company or its subsidiaries or any employee benefit plan of the Company or its subsidiaries), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Act) of 50% or more of either the then-outstanding Shares or the combined voting power of the Company’s then-outstanding voting securities entitled to vote generally in the election of directors;
|
ii.
|
consummation of a reorganization, merger, amalgamation or consolidation involving the Company, in each case with respect to which persons who were the shareholders of the Company immediately prior to such reorganization, merger, amalgamation or consolidation do not, immediately thereafter, own more than 50% of, respectively, the Shares and the combined voting power entitled to vote generally in the election of directors of the reorganized, merged, amalgamated or consolidated corporation’s then-outstanding voting securities; or
|
iii.
|
a liquidation or dissolution of the Company, or the sale of all or substantially all of the assets of the Company; provided, however, an event described above shall be considered a Change in Control hereunder only if it also constitutes a “change in control event” under Section 409A of the Code, to the extent necessary to avoid the adverse tax consequences thereunder with respect to any payment subject to Section 409A of the Code.
|
Subsidiary
|
|
Jurisdiction of Incorporation or Formation
|
Carolina Re, Ltd.
|
|
Bermuda
|
Falls Lake Fire and Casualty Company
|
|
California
|
Falls Lake Insurance Management Company, Inc.
|
|
Delaware
|
Falls Lake National Insurance Company
|
|
Ohio
|
Franklin Holdings II (Bermuda) Capital Trust I
|
|
Delaware
|
James River Capital Trust I
|
|
Delaware
|
James River Capital Trust II
|
|
Delaware
|
James River Capital Trust III
|
|
Delaware
|
James River Capital Trust IV
|
|
Delaware
|
James River Casualty Company
|
|
Virginia
|
James River Group Holdings UK Limited
|
|
United Kingdom
|
James River Group, Inc.
|
|
Delaware
|
James River Insurance Company
|
|
Ohio
|
James River Management Company, Inc.
|
|
Delaware
|
James River Richmond Real Estate, LLC
|
|
Virginia
|
JRG Reinsurance Company, Ltd.
|
|
Bermuda
|
Potomac Risk Services, Inc.
|
|
Virginia
|
Stonewood Insurance Company
|
|
North Carolina
|
(1)
|
|
Registration Statement (Form S-8 Nos. 333-200995 and 333-217743) of James River Group Holdings, Ltd. and
|
(2)
|
|
Registration Statement (Form S-3 No. 333-208903) of James River Group Holdings, Ltd.;
|
1.
|
I have reviewed this annual report on Form 10-K of James River Group Holdings, Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Robert P. Myron
|
|
Robert P. Myron
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
1.
|
I have reviewed this annual report on Form 10-K of James River Group Holdings, Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Sarah C. Doran
|
|
Sarah C. Doran
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Robert P. Myron
|
|
Robert P. Myron
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
February 27, 2019
|
|
|
|
/s/ Sarah C. Doran
|
|
Sarah C. Doran
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
|
February 27, 2019
|