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☒
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Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2019
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☐
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _______ to _______
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JAMES RIVER GROUP HOLDINGS, LTD.
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Bermuda
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98-0585280
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of each class
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Trading Symbol(s)
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Names of each exchange on which registered
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|||
Common Shares, par value $0.0002 per share
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JRVR
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NASDAQ
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Global Select Market
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Large accelerated filer
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x
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
Number
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•
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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;
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•
|
the potential loss of key members of our management team or key employees and our ability to attract and retain personnel;
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•
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adverse economic factors resulting in the sale of fewer policies than expected or an increase in the frequency or severity of claims, or both;
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•
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a decline in our financial strength rating resulting in a reduction of new or renewal business;
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•
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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;
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•
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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;
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•
|
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;
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•
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changes in laws or government regulation, including tax or insurance law and regulations;
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•
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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 taxes on our shareholders;
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•
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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;
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•
|
the Company or any of its foreign subsidiaries becoming subject to U.S. federal income taxation;
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•
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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;
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•
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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;
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•
|
potential effects on our business of emerging claim and coverage issues;
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•
|
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”); and
|
•
|
changes in our financial condition, regulations or other factors that may restrict our subsidiaries’ ability to pay us dividends.
|
|
(Unaudited)
September 30, 2019 |
|
December 31,
2018 |
||||
|
(in thousands)
|
||||||
Assets
|
|
|
|
|
|
||
Invested assets:
|
|
|
|
|
|
||
Fixed maturity securities, available-for-sale, at fair value (amortized cost: 2019 – $1,338,131; 2018 – $1,199,409)
|
$
|
1,377,323
|
|
|
$
|
1,184,202
|
|
Equity securities, at fair value (cost: 2019 – $78,906; 2018 – $77,152)
|
88,840
|
|
|
78,385
|
|
||
Bank loan participations held-for-investment, at amortized cost, net of allowance
|
249,907
|
|
|
260,972
|
|
||
Short-term investments
|
49,884
|
|
|
81,966
|
|
||
Other invested assets
|
65,864
|
|
|
72,321
|
|
||
Total invested assets
|
1,831,818
|
|
|
1,677,846
|
|
||
|
|
|
|
||||
Cash and cash equivalents
|
256,302
|
|
|
172,457
|
|
||
Accrued investment income
|
13,603
|
|
|
11,110
|
|
||
Premiums receivable and agents’ balances, net
|
360,587
|
|
|
307,899
|
|
||
Reinsurance recoverable on unpaid losses
|
614,827
|
|
|
467,371
|
|
||
Reinsurance recoverable on paid losses
|
40,822
|
|
|
18,344
|
|
||
Prepaid reinsurance premiums
|
167,338
|
|
|
112,498
|
|
||
Deferred policy acquisition costs
|
60,970
|
|
|
54,450
|
|
||
Intangible assets, net
|
37,090
|
|
|
37,537
|
|
||
Goodwill
|
181,831
|
|
|
181,831
|
|
||
Other assets
|
95,728
|
|
|
95,433
|
|
||
Total assets
|
$
|
3,660,916
|
|
|
$
|
3,136,776
|
|
|
(Unaudited)
September 30, 2019 |
|
December 31,
2018 |
||||
|
(in thousands, except share amounts)
|
||||||
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
||
Liabilities:
|
|
|
|
|
|
||
Reserve for losses and loss adjustment expenses
|
$
|
1,941,307
|
|
|
$
|
1,661,459
|
|
Unearned premiums
|
510,109
|
|
|
386,473
|
|
||
Payables to reinsurers
|
131,093
|
|
|
61,662
|
|
||
Senior debt
|
98,300
|
|
|
118,300
|
|
||
Junior subordinated debt
|
104,055
|
|
|
104,055
|
|
||
Accrued expenses
|
57,637
|
|
|
51,792
|
|
||
Other liabilities
|
49,446
|
|
|
43,794
|
|
||
Total liabilities
|
2,891,947
|
|
|
2,427,535
|
|
||
Commitments and contingent liabilities
|
|
|
|
|
|
||
Shareholders’ equity:
|
|
|
|
|
|
||
Common Shares – 2019 and 2018: $0.0002 par value; 200,000,000 shares authorized; 30,401,270 and 29,988,460 shares issued and outstanding, respectively
|
6
|
|
|
6
|
|
||
Preferred Shares – 2019 and 2018: $0.00125 par value; 20,000,000 shares authorized; no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
655,998
|
|
|
645,310
|
|
||
Retained earnings
|
78,344
|
|
|
79,753
|
|
||
Accumulated other comprehensive income (loss)
|
34,621
|
|
|
(15,828
|
)
|
||
Total shareholders’ equity
|
768,969
|
|
|
709,241
|
|
||
Total liabilities and shareholders’ equity
|
$
|
3,660,916
|
|
|
$
|
3,136,776
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands, except share amounts)
|
||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross written premiums
|
$
|
388,228
|
|
|
$
|
279,969
|
|
|
$
|
1,095,565
|
|
|
$
|
871,463
|
|
Ceded written premiums
|
(164,359
|
)
|
|
(106,528
|
)
|
|
(424,045
|
)
|
|
(298,438
|
)
|
||||
Net written premiums
|
223,869
|
|
|
173,441
|
|
|
671,520
|
|
|
573,025
|
|
||||
Change in net unearned premiums
|
(10,495
|
)
|
|
31,249
|
|
|
(68,880
|
)
|
|
40,817
|
|
||||
Net earned premiums
|
213,374
|
|
|
204,690
|
|
|
602,640
|
|
|
613,842
|
|
||||
Net investment income
|
17,878
|
|
|
16,410
|
|
|
54,844
|
|
|
45,801
|
|
||||
Net realized and unrealized (losses) gains on investments
|
(2,357
|
)
|
|
467
|
|
|
331
|
|
|
(407
|
)
|
||||
Other income
|
2,579
|
|
|
3,125
|
|
|
8,160
|
|
|
11,841
|
|
||||
Total revenues
|
231,474
|
|
|
224,692
|
|
|
665,975
|
|
|
671,077
|
|
||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|||||
Losses and loss adjustment expenses
|
214,084
|
|
|
150,387
|
|
|
501,064
|
|
|
448,754
|
|
||||
Other operating expenses
|
41,692
|
|
|
49,180
|
|
|
132,287
|
|
|
155,714
|
|
||||
Other expenses
|
372
|
|
|
(131
|
)
|
|
1,055
|
|
|
(34
|
)
|
||||
Interest expense
|
2,594
|
|
|
2,991
|
|
|
8,086
|
|
|
8,459
|
|
||||
Amortization of intangible assets
|
149
|
|
|
149
|
|
|
447
|
|
|
447
|
|
||||
Total expenses
|
258,891
|
|
|
202,576
|
|
|
642,939
|
|
|
613,340
|
|
||||
(Loss) income before taxes
|
(27,417
|
)
|
|
22,116
|
|
|
23,036
|
|
|
57,737
|
|
||||
Income tax (benefit) expense
|
(2,250
|
)
|
|
2,535
|
|
|
5,168
|
|
|
5,539
|
|
||||
Net (loss) income
|
(25,167
|
)
|
|
19,581
|
|
|
17,868
|
|
|
52,198
|
|
||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|||||
Net unrealized gains (losses), net of taxes of $638 and $3,949 in 2019 and $(407) and $(1,134) in 2018
|
9,457
|
|
|
(4,389
|
)
|
|
50,449
|
|
|
(29,494
|
)
|
||||
Total comprehensive (loss) income
|
$
|
(15,710
|
)
|
|
$
|
15,192
|
|
|
$
|
68,317
|
|
|
$
|
22,704
|
|
Per share data:
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic (loss) earnings per share
|
$
|
(0.83
|
)
|
|
$
|
0.65
|
|
|
$
|
0.59
|
|
|
$
|
1.75
|
|
Diluted (loss) earnings per share
|
$
|
(0.83
|
)
|
|
$
|
0.64
|
|
|
$
|
0.58
|
|
|
$
|
1.72
|
|
Dividend declared per share
|
$
|
0.30
|
|
|
$
|
0.30
|
|
|
$
|
0.90
|
|
|
$
|
0.90
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
30,382,105
|
|
|
29,935,216
|
|
|
30,230,490
|
|
|
29,861,467
|
|
||||
Diluted
|
30,382,105
|
|
|
30,380,145
|
|
|
30,659,389
|
|
|
30,290,183
|
|
|
Number of
Common Shares Outstanding |
|
Common
Shares (Par) |
|
Preferred
Shares |
|
Additional
Paid-in Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Total
|
|||||||||||||
|
(in thousands, except share amounts)
|
|||||||||||||||||||||||||
Balances at June 30, 2019
|
30,330,675
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
653,151
|
|
|
$
|
112,729
|
|
|
$
|
25,164
|
|
|
$
|
791,050
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,167
|
)
|
|
—
|
|
|
(25,167
|
)
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,457
|
|
|
9,457
|
|
||||||
Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,218
|
)
|
|
—
|
|
|
(9,218
|
)
|
||||||
Exercise of stock options
|
70,595
|
|
|
—
|
|
|
—
|
|
|
1,068
|
|
|
—
|
|
|
—
|
|
|
1,068
|
|
||||||
Compensation expense under share incentive plans
|
—
|
|
|
—
|
|
|
—
|
|
|
1,779
|
|
|
—
|
|
|
—
|
|
|
1,779
|
|
||||||
Balances at September 30, 2019
|
30,401,270
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
655,998
|
|
|
$
|
78,344
|
|
|
$
|
34,621
|
|
|
$
|
768,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balances at December 31, 2018
|
29,988,460
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
645,310
|
|
|
$
|
79,753
|
|
|
$
|
(15,828
|
)
|
|
$
|
709,241
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,868
|
|
|
—
|
|
|
17,868
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,449
|
|
|
50,449
|
|
||||||
Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,557
|
)
|
|
—
|
|
|
(27,557
|
)
|
||||||
Exercise of stock options
|
336,533
|
|
|
—
|
|
|
—
|
|
|
6,799
|
|
|
—
|
|
|
—
|
|
|
6,799
|
|
||||||
Vesting of RSUs
|
76,277
|
|
|
—
|
|
|
—
|
|
|
(1,374
|
)
|
|
—
|
|
|
—
|
|
|
(1,374
|
)
|
||||||
Compensation expense under share incentive plans
|
—
|
|
|
—
|
|
|
—
|
|
|
5,263
|
|
|
—
|
|
|
—
|
|
|
5,263
|
|
||||||
Adoption of ASU No. 2016-02, derecognition of build-to-suit lease, (see Note 1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,280
|
|
|
—
|
|
|
8,280
|
|
||||||
Balances at September 30, 2019
|
30,401,270
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
655,998
|
|
|
$
|
78,344
|
|
|
$
|
34,621
|
|
|
$
|
768,969
|
|
|
Number of
Common Shares Outstanding |
|
Common
Shares (Par) |
|
Preferred
Shares |
|
Additional
Paid-in Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Total
|
|||||||||||||
|
(in thousands, except share amounts)
|
|||||||||||||||||||||||||
Balances at June 30, 2018
|
29,917,821
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
641,290
|
|
|
$
|
66,677
|
|
|
$
|
(18,730
|
)
|
|
$
|
689,243
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,581
|
|
|
—
|
|
|
19,581
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,389
|
)
|
|
(4,389
|
)
|
||||||
Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,080
|
)
|
|
—
|
|
|
(9,080
|
)
|
||||||
Exercise of stock options
|
32,299
|
|
|
—
|
|
|
—
|
|
|
372
|
|
|
—
|
|
|
—
|
|
|
372
|
|
||||||
Compensation expense under share incentive plans
|
—
|
|
|
—
|
|
|
—
|
|
|
1,681
|
|
|
—
|
|
|
—
|
|
|
1,681
|
|
||||||
Balances at September 30, 2018
|
29,950,120
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
643,343
|
|
|
$
|
77,178
|
|
|
$
|
(23,119
|
)
|
|
$
|
697,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balances at December 31, 2017
|
29,696,682
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
636,149
|
|
|
$
|
48,198
|
|
|
$
|
10,346
|
|
|
$
|
694,699
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52,198
|
|
|
—
|
|
|
52,198
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,494
|
)
|
|
(29,494
|
)
|
||||||
Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,189
|
)
|
|
—
|
|
|
(27,189
|
)
|
||||||
Exercise of stock options
|
210,134
|
|
|
—
|
|
|
—
|
|
|
3,175
|
|
|
—
|
|
|
—
|
|
|
3,175
|
|
||||||
Vesting of RSUs
|
43,304
|
|
|
—
|
|
|
—
|
|
|
(777
|
)
|
|
—
|
|
|
—
|
|
|
(777
|
)
|
||||||
Compensation expense under share incentive plans
|
—
|
|
|
—
|
|
|
—
|
|
|
4,796
|
|
|
—
|
|
|
—
|
|
|
4,796
|
|
||||||
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 September 30, 2018
|
29,950,120
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
643,343
|
|
|
$
|
77,178
|
|
|
$
|
(23,119
|
)
|
|
$
|
697,408
|
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Operating activities
|
|
|
|
|
|
||
Net cash provided by operating activities
|
$
|
213,787
|
|
|
$
|
251,913
|
|
Investing activities
|
|
|
|
|
|
||
Securities available-for-sale:
|
|
|
|
|
|
||
Purchases – fixed maturity securities
|
(327,725
|
)
|
|
(367,279
|
)
|
||
Sales – fixed maturity securities
|
102,030
|
|
|
82,498
|
|
||
Maturities and calls – fixed maturity securities
|
85,921
|
|
|
113,980
|
|
||
Purchases – equity securities
|
(4,975
|
)
|
|
(6,274
|
)
|
||
Sales – equity securities
|
3,131
|
|
|
3,180
|
|
||
Bank loan participations:
|
|
|
|
|
|
||
Purchases
|
(73,102
|
)
|
|
(165,878
|
)
|
||
Sales
|
41,707
|
|
|
98,739
|
|
||
Maturities
|
34,303
|
|
|
43,139
|
|
||
Other invested assets:
|
|
|
|
|
|
||
Purchases
|
—
|
|
|
(6,993
|
)
|
||
Return of capital
|
1,477
|
|
|
260
|
|
||
Redemptions
|
7,016
|
|
|
—
|
|
||
Short-term investments, net
|
32,082
|
|
|
(3,415
|
)
|
||
Securities receivable or payable, net
|
10,673
|
|
|
3,064
|
|
||
Purchases of property and equipment
|
(442
|
)
|
|
(595
|
)
|
||
Net cash used in investing activities
|
(87,904
|
)
|
|
(205,574
|
)
|
||
Financing activities
|
|
|
|
|
|
||
Senior debt repayment
|
(20,000
|
)
|
|
—
|
|
||
Dividends paid
|
(27,463
|
)
|
|
(27,024
|
)
|
||
Issuance of common shares under equity incentive plans
|
7,961
|
|
|
4,296
|
|
||
Common share repurchases
|
(2,536
|
)
|
|
(1,898
|
)
|
||
Other financing activities
|
—
|
|
|
(791
|
)
|
||
Net cash used in financing activities
|
(42,038
|
)
|
|
(25,417
|
)
|
||
Change in cash and cash equivalents
|
83,845
|
|
|
20,922
|
|
||
Cash and cash equivalents at beginning of period
|
172,457
|
|
|
163,495
|
|
||
Cash and cash equivalents at end of period
|
$
|
256,302
|
|
|
$
|
184,417
|
|
Supplemental information
|
|
|
|
|
|
||
Interest paid
|
$
|
9,510
|
|
|
$
|
8,380
|
|
•
|
James River Group Holdings UK Limited (“James River UK”) is an insurance holding company formed in 2015 in the United Kingdom (“U.K.”). JRG Holdings 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 is an Ohio domiciled excess and surplus lines insurance company that, with its wholly-owned insurance subsidiary, James River Casualty Company, a Virginia domiciled 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 and its subsidiaries primarily write specialty admitted fronting and program business and individual risk workers' compensation insurance.
|
•
|
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, through December 31, 2017, to the Company’s U.S.-based insurance subsidiaries.
|
•
|
Carolina Re Ltd (“Carolina Re”) was formed in 2018 and as of January 1, 2018 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.
|
Years ending December 31,
|
(in thousands)
|
|
|
2019
|
$
|
959
|
|
2020
|
3,680
|
|
|
2021
|
3,491
|
|
|
2022
|
3,293
|
|
|
2023
|
3,099
|
|
|
Thereafter
|
4,706
|
|
|
Total lease payments
|
19,228
|
|
|
Less imputed interest
|
(2,159
|
)
|
|
Total operating lease liabilities
|
$
|
17,069
|
|
|
Cost or
Amortized Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair
Value |
||||||||
|
(in thousands)
|
||||||||||||||
September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
State and municipal
|
$
|
145,016
|
|
|
$
|
9,460
|
|
|
$
|
(89
|
)
|
|
$
|
154,387
|
|
Residential mortgage-backed
|
245,315
|
|
|
2,849
|
|
|
(951
|
)
|
|
247,213
|
|
||||
Corporate
|
603,524
|
|
|
21,887
|
|
|
(231
|
)
|
|
625,180
|
|
||||
Commercial mortgage and asset-backed
|
230,417
|
|
|
5,221
|
|
|
(434
|
)
|
|
235,204
|
|
||||
U.S. Treasury securities and obligations guaranteed by the U.S. government
|
111,834
|
|
|
1,538
|
|
|
(40
|
)
|
|
113,332
|
|
||||
Redeemable preferred stock
|
2,025
|
|
|
—
|
|
|
(18
|
)
|
|
2,007
|
|
||||
Total fixed maturity securities, available-for-sale
|
$
|
1,338,131
|
|
|
$
|
40,955
|
|
|
$
|
(1,763
|
)
|
|
$
|
1,377,323
|
|
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
|
|
|
Cost or
Amortized Cost |
|
Fair
Value |
||||
|
(in thousands)
|
||||||
One year or less
|
$
|
76,678
|
|
|
$
|
77,005
|
|
After one year through five years
|
459,889
|
|
|
470,945
|
|
||
After five years through ten years
|
205,048
|
|
|
214,952
|
|
||
After ten years
|
118,759
|
|
|
129,997
|
|
||
Residential mortgage-backed
|
245,315
|
|
|
247,213
|
|
||
Commercial mortgage and asset-backed
|
230,417
|
|
|
235,204
|
|
||
Redeemable preferred stock
|
2,025
|
|
|
2,007
|
|
||
Total
|
$
|
1,338,131
|
|
|
$
|
1,377,323
|
|
|
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)
|
||||||||||||||||||||||
September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
State and municipal
|
$
|
14,250
|
|
|
$
|
(87
|
)
|
|
$
|
667
|
|
|
$
|
(2
|
)
|
|
$
|
14,917
|
|
|
$
|
(89
|
)
|
Residential mortgage-backed
|
21,623
|
|
|
(34
|
)
|
|
60,059
|
|
|
(917
|
)
|
|
81,682
|
|
|
(951
|
)
|
||||||
Corporate
|
17,310
|
|
|
(149
|
)
|
|
29,627
|
|
|
(82
|
)
|
|
46,937
|
|
|
(231
|
)
|
||||||
Commercial mortgage and asset-backed
|
18,225
|
|
|
(70
|
)
|
|
52,823
|
|
|
(364
|
)
|
|
71,048
|
|
|
(434
|
)
|
||||||
U.S. Treasury securities and obligations guaranteed by the U.S. government
|
105
|
|
|
(1
|
)
|
|
16,030
|
|
|
(39
|
)
|
|
16,135
|
|
|
(40
|
)
|
||||||
Redeemable preferred stock
|
2,007
|
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
2,007
|
|
|
(18
|
)
|
||||||
Total fixed maturity securities, available-for-sale
|
$
|
73,520
|
|
|
$
|
(359
|
)
|
|
$
|
159,206
|
|
|
$
|
(1,404
|
)
|
|
$
|
232,726
|
|
|
$
|
(1,763
|
)
|
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
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands)
|
||||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross realized gains
|
$
|
445
|
|
|
$
|
12
|
|
|
$
|
1,033
|
|
|
$
|
394
|
|
Gross realized losses
|
(9
|
)
|
|
(225
|
)
|
|
(494
|
)
|
|
(700
|
)
|
||||
|
436
|
|
|
(213
|
)
|
|
539
|
|
|
(306
|
)
|
||||
Bank loan participations:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross realized gains
|
79
|
|
|
186
|
|
|
229
|
|
|
1,766
|
|
||||
Gross realized losses
|
(6,056
|
)
|
|
—
|
|
|
(9,056
|
)
|
|
(1,106
|
)
|
||||
|
(5,977
|
)
|
|
186
|
|
|
(8,827
|
)
|
|
660
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross realized gains
|
11
|
|
|
—
|
|
|
11
|
|
|
—
|
|
||||
Gross realized losses
|
(78
|
)
|
|
—
|
|
|
(96
|
)
|
|
(62
|
)
|
||||
Changes in fair values of equity securities
|
3,251
|
|
|
494
|
|
|
8,700
|
|
|
(695
|
)
|
||||
|
3,184
|
|
|
494
|
|
|
8,615
|
|
|
(757
|
)
|
||||
Short-term investments and other:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross realized gains
|
1
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Gross realized losses
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
(4
|
)
|
||||
|
—
|
|
|
—
|
|
|
4
|
|
|
(4
|
)
|
||||
Total
|
$
|
(2,357
|
)
|
|
$
|
467
|
|
|
$
|
331
|
|
|
$
|
(407
|
)
|
|
Carrying Value
|
|
Investment Income
|
||||||||||||||||||||
|
September 30,
|
|
December 31,
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Renewable energy LLCs (a)
|
$
|
31,618
|
|
|
$
|
29,795
|
|
|
$
|
1,602
|
|
|
$
|
329
|
|
|
$
|
2,510
|
|
|
$
|
2,070
|
|
Renewable energy notes receivable (b)
|
8,750
|
|
|
8,750
|
|
|
328
|
|
|
328
|
|
|
984
|
|
|
954
|
|
||||||
Limited partnerships (c)
|
20,996
|
|
|
29,276
|
|
|
(631
|
)
|
|
989
|
|
|
2,166
|
|
|
2,307
|
|
||||||
Bank holding companies (d)
|
4,500
|
|
|
4,500
|
|
|
85
|
|
|
85
|
|
|
257
|
|
|
257
|
|
||||||
Total other invested assets
|
$
|
65,864
|
|
|
$
|
72,321
|
|
|
$
|
1,384
|
|
|
$
|
1,731
|
|
|
$
|
5,917
|
|
|
$
|
5,588
|
|
(a)
|
The Company’s Corporate and Other segment owns equity interests ranging from 2.6% to 32.2% 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 one of our directors serves as an officer, and the Company’s Chairman and Chief Executive Officer ("CEO") 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 $687,000 and $2.8 million in the nine months ended September 30, 2019 and 2018, respectively.
|
(b)
|
The Company's Corporate and Other segment has invested in notes receivable for renewable energy projects. At September 30, 2019, the Company holds an $8.8 million note issued by an entity for which one of our directors serves as an officer. Interest on the note, which matures in 2021, is fixed at 15.0%. Interest income on the note was $328,000 and $984,000 for the three and nine months ended September 30, 2019, respectively ($328,000 and $954,000 for the three and nine months ended September 30, 2018, respectively).
|
(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 $3.3 million at September 30, 2019. The Company recognized investment income of $182,000 and $474,000 on the investment for the nine months ended September 30, 2019 and 2018, respectively. The Company’s Excess and Surplus Lines segment holds investments in limited partnerships of $17.7 million at September 30, 2019. Investment income of $2.0 million and $1.8 million was recognized on the investments for the nine months ended September 30, 2019 and 2018, respectively. At September 30, 2019, 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 Chairman and CEO 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 holder of the subordinated notes (the "Bank Holding Company"). Interest on the notes, which mature on August 12, 2023, is fixed at 7.6% per annum. Interest income on the notes was $257,000 in both the nine months ended September 30, 2019 and 2018, respectively.
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
Life
(Years) |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
||||||||
|
|
|
($ in thousands)
|
||||||||||||||
Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trademarks
|
Indefinite
|
|
$
|
22,200
|
|
|
$
|
—
|
|
|
$
|
22,200
|
|
|
$
|
—
|
|
Insurance licenses and authorities
|
Indefinite
|
|
8,964
|
|
|
—
|
|
|
8,964
|
|
|
—
|
|
||||
Identifiable intangibles not subject to amortization
|
|
|
31,164
|
|
|
—
|
|
|
31,164
|
|
|
—
|
|
||||
Broker relationships
|
24.6
|
|
11,611
|
|
|
5,685
|
|
|
11,611
|
|
|
5,238
|
|
||||
Identifiable intangible assets subject to amortization
|
|
|
11,611
|
|
|
5,685
|
|
|
11,611
|
|
|
5,238
|
|
||||
|
|
|
$
|
42,775
|
|
|
$
|
5,685
|
|
|
$
|
42,775
|
|
|
$
|
5,238
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands, except share and per share amounts)
|
||||||||||||||
Net (loss) income to shareholders
|
$
|
(25,167
|
)
|
|
$
|
19,581
|
|
|
$
|
17,868
|
|
|
$
|
52,198
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
30,382,105
|
|
|
29,935,216
|
|
|
30,230,490
|
|
|
29,861,467
|
|
||||
Common share equivalents
|
—
|
|
|
444,929
|
|
|
428,899
|
|
|
428,716
|
|
||||
Diluted
|
30,382,105
|
|
|
30,380,145
|
|
|
30,659,389
|
|
|
30,290,183
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.83
|
)
|
|
$
|
0.65
|
|
|
$
|
0.59
|
|
|
$
|
1.75
|
|
Common share equivalents
|
—
|
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
(0.03
|
)
|
||||
Diluted
|
$
|
(0.83
|
)
|
|
$
|
0.64
|
|
|
$
|
0.58
|
|
|
$
|
1.72
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands)
|
||||||||||||||
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period
|
$
|
1,237,930
|
|
|
$
|
1,092,818
|
|
|
$
|
1,194,088
|
|
|
$
|
989,825
|
|
Add: Incurred losses and loss adjustment expenses net of reinsurance:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current year
|
157,113
|
|
|
138,168
|
|
|
440,810
|
|
|
436,921
|
|
||||
Prior years
|
56,971
|
|
|
12,219
|
|
|
60,254
|
|
|
11,833
|
|
||||
Total incurred losses and loss and adjustment expenses
|
214,084
|
|
|
150,387
|
|
|
501,064
|
|
|
448,754
|
|
||||
Deduct: Loss and loss adjustment expense payments net of reinsurance:
|
|
|
|
|
|
|
|
|
|
|
|||||
Current year
|
21,021
|
|
|
25,149
|
|
|
46,275
|
|
|
57,903
|
|
||||
Prior years
|
104,513
|
|
|
72,695
|
|
|
322,397
|
|
|
235,315
|
|
||||
Total loss and loss adjustment expense payments
|
125,534
|
|
|
97,844
|
|
|
368,672
|
|
|
293,218
|
|
||||
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at end of period
|
1,326,480
|
|
|
1,145,361
|
|
|
1,326,480
|
|
|
1,145,361
|
|
||||
Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period
|
614,827
|
|
|
424,400
|
|
|
614,827
|
|
|
424,400
|
|
||||
Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period
|
$
|
1,941,307
|
|
|
$
|
1,569,761
|
|
|
$
|
1,941,307
|
|
|
$
|
1,569,761
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands)
|
||||||||||||||
Unrealized gains (losses) arising during the period, before U.S. income taxes
|
$
|
10,531
|
|
|
$
|
(5,009
|
)
|
|
$
|
54,937
|
|
|
$
|
(30,934
|
)
|
U.S. income taxes
|
(690
|
)
|
|
425
|
|
|
(4,045
|
)
|
|
1,124
|
|
||||
Unrealized gains (losses) arising during the period, net of U.S. income taxes
|
9,841
|
|
|
(4,584
|
)
|
|
50,892
|
|
|
(29,810
|
)
|
||||
Less reclassification adjustment:
|
|
|
|
|
|
|
|
|
|
|
|||||
Net realized investment gains (losses)
|
436
|
|
|
(213
|
)
|
|
539
|
|
|
(306
|
)
|
||||
U.S. income taxes
|
(52
|
)
|
|
18
|
|
|
(96
|
)
|
|
(10
|
)
|
||||
Reclassification adjustment for investment gains (losses) realized in net income
|
384
|
|
|
(195
|
)
|
|
443
|
|
|
(316
|
)
|
||||
Other comprehensive income (loss)
|
$
|
9,457
|
|
|
$
|
(4,389
|
)
|
|
$
|
50,449
|
|
|
$
|
(29,494
|
)
|
|
Excess and
Surplus
Lines
|
|
Specialty
Admitted
Insurance
|
|
Casualty
Reinsurance
|
|
Corporate
and
Other
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Three Months Ended September 30, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross written premiums
|
$
|
241,045
|
|
|
$
|
100,459
|
|
|
$
|
46,724
|
|
|
$
|
—
|
|
|
$
|
388,228
|
|
Net earned premiums
|
164,759
|
|
|
14,242
|
|
|
34,373
|
|
|
—
|
|
|
213,374
|
|
|||||
Underwriting (loss) profit of insurance segments
|
(29,351
|
)
|
|
837
|
|
|
(4,288
|
)
|
|
—
|
|
|
(32,802
|
)
|
|||||
Net investment income
|
3,467
|
|
|
976
|
|
|
11,717
|
|
|
1,718
|
|
|
17,878
|
|
|||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
2,594
|
|
|
2,594
|
|
|||||
Segment revenues
|
170,734
|
|
|
16,493
|
|
|
42,403
|
|
|
1,844
|
|
|
231,474
|
|
|||||
Segment goodwill
|
181,831
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
181,831
|
|
|||||
Segment assets
|
1,186,094
|
|
|
773,677
|
|
|
1,631,569
|
|
|
69,576
|
|
|
3,660,916
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Three Months Ended September 30, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross written premiums
|
$
|
157,237
|
|
|
$
|
98,607
|
|
|
$
|
24,125
|
|
|
$
|
—
|
|
|
$
|
279,969
|
|
Net earned premiums
|
141,529
|
|
|
13,898
|
|
|
49,263
|
|
|
—
|
|
|
204,690
|
|
|||||
Underwriting profit of insurance segments
|
11,302
|
|
|
1,769
|
|
|
1,576
|
|
|
—
|
|
|
14,647
|
|
|||||
Net investment income
|
4,542
|
|
|
825
|
|
|
10,031
|
|
|
1,012
|
|
|
16,410
|
|
|||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
2,991
|
|
|
2,991
|
|
|||||
Segment revenues
|
149,807
|
|
|
14,400
|
|
|
59,416
|
|
|
1,069
|
|
|
224,692
|
|
|||||
Segment goodwill
|
181,831
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
181,831
|
|
|||||
Segment assets
|
929,408
|
|
|
630,982
|
|
|
1,393,721
|
|
|
81,323
|
|
|
3,035,434
|
|
|
Excess and
Surplus Lines |
|
Specialty
Admitted Insurance |
|
Casualty
Reinsurance |
|
Corporate
and Other |
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Nine Months Ended September 30, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross written premiums
|
$
|
687,871
|
|
|
$
|
292,884
|
|
|
$
|
114,810
|
|
|
$
|
—
|
|
|
$
|
1,095,565
|
|
Net earned premiums
|
457,352
|
|
|
39,688
|
|
|
105,600
|
|
|
—
|
|
|
602,640
|
|
|||||
Underwriting (loss) profit of insurance segments
|
(439
|
)
|
|
3,758
|
|
|
(4,061
|
)
|
|
—
|
|
|
(742
|
)
|
|||||
Net investment income
|
13,240
|
|
|
2,791
|
|
|
34,875
|
|
|
3,938
|
|
|
54,844
|
|
|||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
8,086
|
|
|
8,086
|
|
|||||
Segment revenues
|
481,745
|
|
|
45,169
|
|
|
134,731
|
|
|
4,330
|
|
|
665,975
|
|
|||||
Segment goodwill
|
181,831
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
181,831
|
|
|||||
Segment assets
|
1,186,094
|
|
|
773,677
|
|
|
1,631,569
|
|
|
69,576
|
|
|
3,660,916
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Nine Months Ended September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross written premiums
|
$
|
490,121
|
|
|
$
|
283,108
|
|
|
$
|
98,234
|
|
|
$
|
—
|
|
|
$
|
871,463
|
|
Net earned premiums
|
410,627
|
|
|
41,504
|
|
|
161,711
|
|
|
—
|
|
|
613,842
|
|
|||||
Underwriting profit of insurance segments
|
32,718
|
|
|
4,380
|
|
|
5,049
|
|
|
—
|
|
|
42,147
|
|
|||||
Net investment income
|
11,934
|
|
|
2,375
|
|
|
27,710
|
|
|
3,782
|
|
|
45,801
|
|
|||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
8,459
|
|
|
8,459
|
|
|||||
Segment revenues
|
434,146
|
|
|
43,791
|
|
|
189,196
|
|
|
3,944
|
|
|
671,077
|
|
|||||
Segment goodwill
|
181,831
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
181,831
|
|
|||||
Segment assets
|
929,408
|
|
|
630,982
|
|
|
1,393,721
|
|
|
81,323
|
|
|
3,035,434
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands)
|
||||||||||||||
Underwriting (loss) profit of the insurance segments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Excess and Surplus Lines
|
$
|
(29,351
|
)
|
|
$
|
11,302
|
|
|
$
|
(439
|
)
|
|
$
|
32,718
|
|
Specialty Admitted Insurance
|
837
|
|
|
1,769
|
|
|
3,758
|
|
|
4,380
|
|
||||
Casualty Reinsurance
|
(4,288
|
)
|
|
1,576
|
|
|
(4,061
|
)
|
|
5,049
|
|
||||
Total underwriting (loss) profit of insurance segments
|
(32,802
|
)
|
|
14,647
|
|
|
(742
|
)
|
|
42,147
|
|
||||
Other operating expenses of the Corporate and Other segment
|
(7,302
|
)
|
|
(6,526
|
)
|
|
(22,641
|
)
|
|
(21,264
|
)
|
||||
Underwriting (loss) profit
|
(40,104
|
)
|
|
8,121
|
|
|
(23,383
|
)
|
|
20,883
|
|
||||
Net investment income
|
17,878
|
|
|
16,410
|
|
|
54,844
|
|
|
45,801
|
|
||||
Net realized and unrealized (losses) gains on investments
|
(2,357
|
)
|
|
467
|
|
|
331
|
|
|
(407
|
)
|
||||
Amortization of intangible assets
|
(149
|
)
|
|
(149
|
)
|
|
(447
|
)
|
|
(447
|
)
|
||||
Other income and expenses
|
(91
|
)
|
|
258
|
|
|
(223
|
)
|
|
366
|
|
||||
Interest expense
|
(2,594
|
)
|
|
(2,991
|
)
|
|
(8,086
|
)
|
|
(8,459
|
)
|
||||
(Loss) income before taxes
|
$
|
(27,417
|
)
|
|
$
|
22,116
|
|
|
$
|
23,036
|
|
|
$
|
57,737
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands)
|
||||||||||||||
Amortization of policy acquisition costs
|
$
|
21,258
|
|
|
$
|
27,511
|
|
|
$
|
63,029
|
|
|
$
|
86,381
|
|
Other underwriting expenses of the operating segments
|
13,132
|
|
|
15,143
|
|
|
46,617
|
|
|
48,069
|
|
||||
Other operating expenses of the Corporate and Other segment
|
7,302
|
|
|
6,526
|
|
|
22,641
|
|
|
21,264
|
|
||||
Total
|
$
|
41,692
|
|
|
$
|
49,180
|
|
|
$
|
132,287
|
|
|
$
|
155,714
|
|
|
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
|
$
|
—
|
|
|
$
|
154,387
|
|
|
$
|
—
|
|
|
$
|
154,387
|
|
Residential mortgage-backed
|
—
|
|
|
247,213
|
|
|
—
|
|
|
247,213
|
|
||||
Corporate
|
—
|
|
|
625,180
|
|
|
—
|
|
|
625,180
|
|
||||
Commercial mortgage and asset-backed
|
—
|
|
|
235,204
|
|
|
—
|
|
|
235,204
|
|
||||
U.S. Treasury securities and obligations guaranteed by the U.S. government
|
112,826
|
|
|
506
|
|
|
—
|
|
|
113,332
|
|
||||
Redeemable preferred stock
|
—
|
|
|
2,007
|
|
|
—
|
|
|
2,007
|
|
||||
Total fixed maturity securities, available-for-sale
|
$
|
112,826
|
|
|
$
|
1,264,497
|
|
|
$
|
—
|
|
|
$
|
1,377,323
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Preferred stock
|
—
|
|
|
69,552
|
|
|
—
|
|
|
69,552
|
|
||||
Common stock
|
15,065
|
|
|
4,179
|
|
|
44
|
|
|
19,288
|
|
||||
Total equity securities
|
$
|
15,065
|
|
|
$
|
73,731
|
|
|
$
|
44
|
|
|
$
|
88,840
|
|
Short-term investments
|
$
|
—
|
|
|
$
|
49,884
|
|
|
$
|
—
|
|
|
$
|
49,884
|
|
|
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
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2019
|
|
September 30, 2018
|
|
September 30, 2019
|
|
September 30, 2018
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Beginning balance
|
$
|
3,099
|
|
|
$
|
4,680
|
|
|
$
|
4,442
|
|
|
$
|
4,680
|
|
Transfers out of Level 3
|
(3,010
|
)
|
|
—
|
|
|
(7,238
|
)
|
|
—
|
|
||||
Transfers in to Level 3
|
—
|
|
|
—
|
|
|
3,010
|
|
|
—
|
|
||||
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Maturities, calls and paydowns
|
—
|
|
|
(316
|
)
|
|
—
|
|
|
(316
|
)
|
||||
Amortization of discount
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total gains or losses (realized/unrealized):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Included in earnings
|
(45
|
)
|
|
—
|
|
|
(170
|
)
|
|
—
|
|
||||
Included in other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Ending balance
|
$
|
44
|
|
|
$
|
4,364
|
|
|
$
|
44
|
|
|
$
|
4,364
|
|
|
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)
|
||||||||||||||
September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||
Bank loan participations held-for-investment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,361
|
|
|
$
|
6,361
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||
Bank loan participations held-for-investment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
Carrying
Value |
|
Fair Value
|
|
Carrying
Value |
|
Fair Value
|
||||||||
|
(in thousands)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed maturity securities, available-for-sale
|
$
|
1,377,323
|
|
|
$
|
1,377,323
|
|
|
$
|
1,184,202
|
|
|
$
|
1,184,202
|
|
Equity securities
|
88,840
|
|
|
88,840
|
|
|
78,385
|
|
|
78,385
|
|
||||
Bank loan participations held-for-investment
|
249,907
|
|
|
242,628
|
|
|
260,972
|
|
|
250,697
|
|
||||
Cash and cash equivalents
|
256,302
|
|
|
256,302
|
|
|
172,457
|
|
|
172,457
|
|
||||
Short-term investments
|
49,884
|
|
|
49,884
|
|
|
81,966
|
|
|
81,966
|
|
||||
Other invested assets – notes receivable
|
13,250
|
|
|
18,767
|
|
|
13,250
|
|
|
18,687
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||
Senior debt
|
98,300
|
|
|
101,256
|
|
|
118,300
|
|
|
118,317
|
|
||||
Junior subordinated debt
|
104,055
|
|
|
125,008
|
|
|
104,055
|
|
|
117,057
|
|
Date of Declaration
|
|
Dividend per Common Share
|
|
Payable to Shareholders of Record on
|
|
Payment Date
|
|
Total Amount
|
||||
|
|
|
|
|
|
|
|
|
||||
2019
|
|
|
|
|
|
|
|
|
||||
February 20, 2019
|
|
$
|
0.30
|
|
|
March 11, 2019
|
|
March 29, 2019
|
|
$
|
9,146,357
|
|
April 30, 2019
|
|
0.30
|
|
|
June 10, 2019
|
|
June 28, 2019
|
|
9,204,804
|
|
||
July 30, 2019
|
|
0.30
|
|
|
September 16, 2019
|
|
September 30, 2019
|
|
9,230,801
|
|
||
|
|
$
|
0.90
|
|
|
|
|
|
|
$
|
27,581,962
|
|
|
|
|
|
|
|
|
|
|
||||
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
|
|
||
|
|
$
|
0.90
|
|
|
|
|
|
|
$
|
27,196,018
|
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
||||||||||
|
Shares
|
|
Weighted-
Average Exercise Price |
|
Shares
|
|
Weighted-
Average Exercise Price |
||||||
Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
||
Beginning of period
|
1,115,324
|
|
|
$
|
29.02
|
|
|
1,479,236
|
|
|
$
|
27.81
|
|
Granted
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Exercised
|
(450,514
|
)
|
|
$
|
26.68
|
|
|
(280,683
|
)
|
|
$
|
21.03
|
|
Forfeited
|
(12,058
|
)
|
|
$
|
36.84
|
|
|
(42,215
|
)
|
|
$
|
36.86
|
|
End of period
|
652,752
|
|
|
$
|
30.50
|
|
|
1,156,338
|
|
|
$
|
29.13
|
|
Exercisable, end of period
|
599,241
|
|
|
$
|
29.44
|
|
|
841,763
|
|
|
$
|
26.64
|
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
||||||||||
|
Shares
|
|
Weighted-
Average Grant Date Fair Value |
|
Shares
|
|
Weighted-
Average Grant Date Fair Value |
||||||
|
|
|
|
|
|
|
|
|
|
||||
Unvested, beginning of period
|
300,142
|
|
|
$
|
39.22
|
|
|
178,882
|
|
|
$
|
37.93
|
|
Granted
|
197,078
|
|
|
$
|
42.56
|
|
|
218,475
|
|
|
$
|
39.75
|
|
Vested
|
(111,212
|
)
|
|
$
|
39.90
|
|
|
(63,191
|
)
|
|
$
|
40.92
|
|
Forfeited
|
(22,445
|
)
|
|
$
|
41.32
|
|
|
(5,889
|
)
|
|
$
|
40.81
|
|
Unvested, end of period
|
363,563
|
|
|
$
|
40.69
|
|
|
328,277
|
|
|
$
|
38.51
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands)
|
||||||||||||||
Share based compensation expense
|
$
|
1,779
|
|
|
$
|
1,681
|
|
|
$
|
5,263
|
|
|
$
|
4,796
|
|
U.S. tax benefit on share based compensation expense
|
211
|
|
|
198
|
|
|
631
|
|
|
569
|
|
•
|
The Excess and Surplus Lines segment offers commercial excess and surplus lines liability and property insurance in every U.S. state, the District of Columbia, Puerto Rico and the U.S. Virgin Islands through James River Insurance Company and its wholly-owned subsidiary, James River Casualty Company;
|
•
|
The Specialty Admitted Insurance segment focuses on niche classes within the standard insurance markets, such as workers’ compensation coverage for residential contractors, light manufacturing operations, transportation workers and healthcare workers and fronting business, where we retain a small percentage of the risk and seek to earn fee income by allowing other carriers and producers to use our licensure, ratings, expertise and infrastructure. This segment has admitted licenses and the authority to write excess and surplus lines insurance in 49 states and the District of Columbia;
|
•
|
The Casualty Reinsurance segment primarily provides proportional and working layer casualty reinsurance to third parties (primarily through reinsurance intermediaries) and stop loss reinsurance to Carolina Re Ltd (“Carolina Re”), through JRG Reinsurance Company Ltd. (“JRG Re”), both Bermuda-based reinsurance companies. JRG Re has also in the past provided reinsurance to the Company's U.S. based insurance subsidiaries through a quota-share reinsurance agreement; Carolina Re was formed in 2018 to do this as well; and
|
•
|
The Corporate and Other segment consists of the management and treasury activities of our holding companies, interest expense associated with our debt, and expenses of our holding companies, including public company expenses, that are not reimbursed by our insurance segments.
|
|
Three Months Ended
September 30, |
|
%
|
|
Nine Months Ended
September 30, |
|
%
|
||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
|
($ in thousands)
|
|
|
||||||||||||||||||
Gross written premiums
|
$
|
388,228
|
|
|
$
|
279,969
|
|
|
38.7
|
%
|
|
$
|
1,095,565
|
|
|
$
|
871,463
|
|
|
25.7
|
%
|
Net retention (1)
|
57.7
|
%
|
|
62.0
|
%
|
|
|
|
|
61.3
|
%
|
|
65.8
|
%
|
|
|
|
||||
Net written premiums
|
$
|
223,869
|
|
|
$
|
173,441
|
|
|
29.1
|
%
|
|
$
|
671,520
|
|
|
$
|
573,025
|
|
|
17.2
|
%
|
Net earned premiums
|
$
|
213,374
|
|
|
$
|
204,690
|
|
|
4.2
|
%
|
|
$
|
602,640
|
|
|
$
|
613,842
|
|
|
(1.8
|
)%
|
Losses and loss adjustment expenses
|
(214,084
|
)
|
|
(150,387
|
)
|
|
42.4
|
%
|
|
(501,064
|
)
|
|
(448,754
|
)
|
|
11.7
|
%
|
||||
Other operating expenses
|
(39,394
|
)
|
|
(46,182
|
)
|
|
(14.7
|
)%
|
|
(124,959
|
)
|
|
(144,205
|
)
|
|
(13.3
|
)%
|
||||
Underwriting (loss) profit (2), (3)
|
(40,104
|
)
|
|
8,121
|
|
|
‒
|
|
|
(23,383
|
)
|
|
20,883
|
|
|
‒
|
|
||||
Net investment income
|
17,878
|
|
|
16,410
|
|
|
8.9
|
%
|
|
54,844
|
|
|
45,801
|
|
|
19.7
|
%
|
||||
Net realized and unrealized (losses) gains on investments
|
(2,357
|
)
|
|
467
|
|
|
‒
|
|
|
331
|
|
|
(407
|
)
|
|
‒
|
|
||||
Other income and expense
|
(91
|
)
|
|
258
|
|
|
‒
|
|
|
(223
|
)
|
|
366
|
|
|
‒
|
|
||||
Interest expense
|
(2,594
|
)
|
|
(2,991
|
)
|
|
(13.3
|
)%
|
|
(8,086
|
)
|
|
(8,459
|
)
|
|
(4.4
|
)%
|
||||
Amortization of intangible assets
|
(149
|
)
|
|
(149
|
)
|
|
‒
|
|
|
(447
|
)
|
|
(447
|
)
|
|
‒
|
|
||||
(Loss) income before taxes
|
(27,417
|
)
|
|
22,116
|
|
|
‒
|
|
|
23,036
|
|
|
57,737
|
|
|
(60.1
|
)%
|
||||
Income tax (benefit) expense
|
(2,250
|
)
|
|
2,535
|
|
|
‒
|
|
|
5,168
|
|
|
5,539
|
|
|
(6.7
|
)%
|
||||
Net (loss) income
|
$
|
(25,167
|
)
|
|
$
|
19,581
|
|
|
‒
|
|
|
$
|
17,868
|
|
|
$
|
52,198
|
|
|
(65.8
|
)%
|
Adjusted net operating (loss) income (4)
|
$
|
(22,208
|
)
|
|
$
|
19,402
|
|
|
‒
|
|
|
$
|
19,682
|
|
|
$
|
53,540
|
|
|
(63.2
|
)%
|
Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss ratio
|
100.3
|
%
|
|
73.5
|
%
|
|
|
|
|
83.1
|
%
|
|
73.1
|
%
|
|
|
|
||||
Expense ratio
|
18.5
|
%
|
|
22.5
|
%
|
|
|
|
|
20.8
|
%
|
|
23.5
|
%
|
|
|
|
||||
Combined ratio
|
118.8
|
%
|
|
96.0
|
%
|
|
|
|
|
103.9
|
%
|
|
96.6
|
%
|
|
|
|
(1)
|
Net retention is defined as the ratio of net written premiums to gross written premiums.
|
(2)
|
Underwriting (loss) profit is a non-GAAP measure. See “Reconciliation of Non-GAAP Measures” for a reconciliation to (loss) income before tax and for additional information.
|
(3)
|
Included in underwriting results for the three and nine months ended September 30, 2019 is gross fee income of $6.1 million and $18.7 million, respectively ($6.8 million and $22.4 million for the same periods in the prior year).
|
(4)
|
Adjusted net operating (loss) income is a non-GAAP measure. See “Reconciliation of Non-GAAP Measures” for reconciliation to net (loss) income and for additional information.
|
•
|
Net realized and unrealized investment (losses) gains of $(2.4) million and $467,000 for the three months ended September 30, 2019 and 2018, respectively. See “— Investing Results" for more information on these realized and unrealized investment (losses) gains.
|
•
|
Interest expense of $404,000 for the three months ended September 30, 2018 relating to finance expenses in connection with a minority interest in a real estate partnership pursuant to which we were previously deemed an owner for accounting purposes. Effective with the Company's adoption of ASU 2016-02, Leases (Topic 842) on January 1, 2019, the Company
|
|
Three Months Ended September 30,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
(Loss) Income
Before Taxes |
|
Net
(Loss) Income |
|
Income
Before Taxes |
|
Net
Income |
||||||||
|
($ in thousands)
|
||||||||||||||
(Loss) income as reported
|
$
|
(27,417
|
)
|
|
$
|
(25,167
|
)
|
|
$
|
22,116
|
|
|
$
|
19,581
|
|
Net realized and unrealized investment losses (gains)
|
2,357
|
|
|
2,665
|
|
|
(467
|
)
|
|
(397
|
)
|
||||
Other expenses
|
372
|
|
|
294
|
|
|
(131
|
)
|
|
(101
|
)
|
||||
Interest expense on leased building the Company was previously deemed to own for accounting purposes
|
—
|
|
|
—
|
|
|
404
|
|
|
319
|
|
||||
Adjusted net operating (loss) income
|
$
|
(24,688
|
)
|
|
$
|
(22,208
|
)
|
|
$
|
21,922
|
|
|
$
|
19,402
|
|
•
|
Net realized and unrealized investment gains (losses) of $331,000 and $(407,000) for the nine months ended September 30, 2019 and 2018, respectively. See “— Investing Results" for more information on these realized and unrealized investment gains (losses).
|
•
|
Interest expense of $1.2 million for the nine months ended September 30, 2018 relating to finance expenses in connection with a minority interest in a real estate partnership pursuant to which we were previously deemed an owner for accounting purposes. Effective with the Company's adoption of ASU 2016-02, Leases (Topic 842) on January 1, 2019, the Company is no longer deemed the owner for accounting purposes and there is no comparable expense for the nine months ended September 30, 2019.
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
Income
Before Taxes |
|
Net
Income |
|
Income
Before Taxes |
|
Net
Income |
||||||||
|
($ in thousands)
|
||||||||||||||
Income as reported
|
$
|
23,036
|
|
|
$
|
17,868
|
|
|
$
|
57,737
|
|
|
$
|
52,198
|
|
Net realized and unrealized investment (gains) losses
|
(331
|
)
|
|
980
|
|
|
407
|
|
|
366
|
|
||||
Other expenses
|
1,055
|
|
|
834
|
|
|
(34
|
)
|
|
45
|
|
||||
Interest expense on leased building the Company was previously deemed to own for accounting purposes
|
—
|
|
|
—
|
|
|
1,179
|
|
|
931
|
|
||||
Adjusted net operating income
|
$
|
23,760
|
|
|
$
|
19,682
|
|
|
$
|
59,289
|
|
|
$
|
53,540
|
|
|
Three Months Ended
September 30, |
|
%
|
|
Nine Months Ended
September 30, |
|
%
|
||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
|
($ in thousands)
|
|
|
||||||||||||||||||
Gross written premiums:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Excess and Surplus Lines
|
$
|
241,045
|
|
|
$
|
157,237
|
|
|
53.3
|
%
|
|
$
|
687,871
|
|
|
$
|
490,121
|
|
|
40.3
|
%
|
Specialty Admitted Insurance
|
100,459
|
|
|
98,607
|
|
|
1.9
|
%
|
|
292,884
|
|
|
283,108
|
|
|
3.5
|
%
|
||||
Casualty Reinsurance
|
46,724
|
|
|
24,125
|
|
|
93.7
|
%
|
|
114,810
|
|
|
98,234
|
|
|
16.9
|
%
|
||||
|
$
|
388,228
|
|
|
$
|
279,969
|
|
|
38.7
|
%
|
|
$
|
1,095,565
|
|
|
$
|
871,463
|
|
|
25.7
|
%
|
Net written premiums:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Excess and Surplus Lines
|
$
|
171,715
|
|
|
$
|
135,141
|
|
|
27.1
|
%
|
|
$
|
522,200
|
|
|
$
|
432,307
|
|
|
20.8
|
%
|
Specialty Admitted Insurance
|
14,570
|
|
|
14,022
|
|
|
3.9
|
%
|
|
43,625
|
|
|
42,327
|
|
|
3.1
|
%
|
||||
Casualty Reinsurance
|
37,584
|
|
|
24,278
|
|
|
54.8
|
%
|
|
105,695
|
|
|
98,391
|
|
|
7.4
|
%
|
||||
|
$
|
223,869
|
|
|
$
|
173,441
|
|
|
29.1
|
%
|
|
$
|
671,520
|
|
|
$
|
573,025
|
|
|
17.2
|
%
|
Net earned premiums:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Excess and Surplus Lines
|
$
|
164,759
|
|
|
$
|
141,529
|
|
|
16.4
|
%
|
|
$
|
457,352
|
|
|
$
|
410,627
|
|
|
11.4
|
%
|
Specialty Admitted Insurance
|
14,242
|
|
|
13,898
|
|
|
2.5
|
%
|
|
39,688
|
|
|
41,504
|
|
|
(4.4
|
)%
|
||||
Casualty Reinsurance
|
34,373
|
|
|
49,263
|
|
|
(30.2
|
)%
|
|
105,600
|
|
|
161,711
|
|
|
(34.7
|
)%
|
||||
|
$
|
213,374
|
|
|
$
|
204,690
|
|
|
4.2
|
%
|
|
$
|
602,640
|
|
|
$
|
613,842
|
|
|
(1.8
|
)%
|
|
Three Months Ended
September 30, |
|
%
|
|
Nine Months Ended
September 30, |
|
%
|
||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
|
($ in thousands)
|
||||||||||||||||||||
Commercial Auto
|
$
|
108,368
|
|
|
$
|
80,159
|
|
|
35.2
|
%
|
|
$
|
307,913
|
|
|
$
|
238,498
|
|
|
29.1
|
%
|
General Casualty
|
24,917
|
|
|
10,024
|
|
|
148.6
|
%
|
|
89,897
|
|
|
41,302
|
|
|
117.7
|
%
|
||||
Excess Casualty
|
32,062
|
|
|
17,098
|
|
|
87.5
|
%
|
|
78,708
|
|
|
41,764
|
|
|
88.5
|
%
|
||||
Manufacturers & Contractors
|
25,320
|
|
|
20,980
|
|
|
20.7
|
%
|
|
76,857
|
|
|
60,614
|
|
|
26.8
|
%
|
||||
Energy
|
18,632
|
|
|
9,778
|
|
|
90.6
|
%
|
|
35,751
|
|
|
27,905
|
|
|
28.1
|
%
|
||||
Excess Property
|
6,825
|
|
|
3,723
|
|
|
83.3
|
%
|
|
24,085
|
|
|
13,258
|
|
|
81.7
|
%
|
||||
Allied Health
|
7,235
|
|
|
3,390
|
|
|
113.4
|
%
|
|
21,868
|
|
|
26,933
|
|
|
(18.8
|
)%
|
||||
All other divisions
|
17,686
|
|
|
12,085
|
|
|
46.3
|
%
|
|
52,792
|
|
|
39,847
|
|
|
32.5
|
%
|
||||
Excess and Surplus Lines gross written premium
|
$
|
241,045
|
|
|
$
|
157,237
|
|
|
53.3
|
%
|
|
$
|
687,871
|
|
|
$
|
490,121
|
|
|
40.3
|
%
|
|
Three Months Ended
September 30, |
|
%
|
|
Nine Months Ended
September 30, |
|
%
|
||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
|
($ in thousands)
|
||||||||||||||||||||
Individual risk workers’ compensation premium
|
$
|
15,618
|
|
|
$
|
13,848
|
|
|
12.8
|
%
|
|
$
|
48,599
|
|
|
$
|
39,243
|
|
|
23.8
|
%
|
Fronting and program premium
|
84,841
|
|
|
84,759
|
|
|
0.1
|
%
|
|
244,285
|
|
|
243,865
|
|
|
0.2
|
%
|
||||
Specialty Admitted gross written premium
|
$
|
100,459
|
|
|
$
|
98,607
|
|
|
1.9
|
%
|
|
$
|
292,884
|
|
|
$
|
283,108
|
|
|
3.5
|
%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Excess and Surplus Lines
|
71.2
|
%
|
|
85.9
|
%
|
|
75.9
|
%
|
|
88.2
|
%
|
Specialty Admitted Insurance
|
14.5
|
%
|
|
14.2
|
%
|
|
14.9
|
%
|
|
15.0
|
%
|
Casualty Reinsurance
|
80.4
|
%
|
|
100.6
|
%
|
|
92.1
|
%
|
|
100.2
|
%
|
Total
|
57.7
|
%
|
|
62.0
|
%
|
|
61.3
|
%
|
|
65.8
|
%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Excess and Surplus Lines
|
117.8
|
%
|
|
92.0
|
%
|
|
100.1
|
%
|
|
92.0
|
%
|
Specialty Admitted Insurance
|
94.1
|
%
|
|
87.3
|
%
|
|
90.5
|
%
|
|
89.4
|
%
|
Casualty Reinsurance
|
112.5
|
%
|
|
96.8
|
%
|
|
103.8
|
%
|
|
96.9
|
%
|
Total
|
118.8
|
%
|
|
96.0
|
%
|
|
103.9
|
%
|
|
96.6
|
%
|
|
Three Months Ended
September 30, |
|
%
|
|
Nine Months Ended
September 30, |
|
%
|
||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
|
($ in thousands)
|
||||||||||||||||||||
Gross written premiums
|
$
|
241,045
|
|
|
$
|
157,237
|
|
|
53.3
|
%
|
|
$
|
687,871
|
|
|
$
|
490,121
|
|
|
40.3
|
%
|
Net written premiums
|
$
|
171,715
|
|
|
$
|
135,141
|
|
|
27.1
|
%
|
|
$
|
522,200
|
|
|
$
|
432,307
|
|
|
20.8
|
%
|
Net earned premiums
|
$
|
164,759
|
|
|
$
|
141,529
|
|
|
16.4
|
%
|
|
$
|
457,352
|
|
|
$
|
410,627
|
|
|
11.4
|
%
|
Losses and loss adjustment expenses
|
(176,154
|
)
|
|
(111,292
|
)
|
|
58.3
|
%
|
|
(399,996
|
)
|
|
(321,518
|
)
|
|
24.4
|
%
|
||||
Underwriting expenses
|
(17,956
|
)
|
|
(18,935
|
)
|
|
(5.2
|
)%
|
|
(57,795
|
)
|
|
(56,391
|
)
|
|
2.5
|
%
|
||||
Underwriting (loss) profit (1), (2)
|
$
|
(29,351
|
)
|
|
$
|
11,302
|
|
|
‒
|
|
|
$
|
(439
|
)
|
|
$
|
32,718
|
|
|
‒
|
|
Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss ratio
|
106.9
|
%
|
|
78.6
|
%
|
|
|
|
|
87.5
|
%
|
|
78.3
|
%
|
|
|
|||||
Expense ratio
|
10.9
|
%
|
|
13.4
|
%
|
|
|
|
|
12.6
|
%
|
|
13.7
|
%
|
|
|
|||||
Combined ratio
|
117.8
|
%
|
|
92.0
|
%
|
|
|
|
|
100.1
|
%
|
|
92.0
|
%
|
|
|
(1)
|
Underwriting (Loss) Profit is a non-GAAP Measure. See “Reconciliation of Non-GAAP Measures” for a reconciliation to (loss) income before tax and for additional information.
|
(2)
|
Underwriting results include gross fee income of $2.2 million and $7.1 million for the three and nine months ended September 30, 2019, respectively ($3.0 million and $11.5 million for the same periods in the prior year).
|
|
Three Months Ended
September 30, |
|
%
|
|
Nine Months Ended
September 30, |
|
%
|
||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
|
($ in thousands)
|
||||||||||||||||||||
Gross written premiums
|
$
|
100,459
|
|
|
$
|
98,607
|
|
|
1.9
|
%
|
|
$
|
292,884
|
|
|
$
|
283,108
|
|
|
3.5
|
%
|
Net written premiums
|
$
|
14,570
|
|
|
$
|
14,022
|
|
|
3.9
|
%
|
|
$
|
43,625
|
|
|
$
|
42,327
|
|
|
3.1
|
%
|
Net earned premiums
|
$
|
14,242
|
|
|
$
|
13,898
|
|
|
2.5
|
%
|
|
$
|
39,688
|
|
|
$
|
41,504
|
|
|
(4.4
|
)%
|
Losses and loss adjustment expenses
|
(9,481
|
)
|
|
(8,246
|
)
|
|
15.0
|
%
|
|
(25,085
|
)
|
|
(25,283
|
)
|
|
(0.8
|
)%
|
||||
Underwriting expenses
|
(3,924
|
)
|
|
(3,883
|
)
|
|
1.1
|
%
|
|
(10,845
|
)
|
|
(11,841
|
)
|
|
(8.4
|
)%
|
||||
Underwriting profit (1), (2)
|
$
|
837
|
|
|
$
|
1,769
|
|
|
(52.7
|
)%
|
|
$
|
3,758
|
|
|
$
|
4,380
|
|
|
(14.2
|
)%
|
Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss ratio
|
66.6
|
%
|
|
59.3
|
%
|
|
|
|
63.2
|
%
|
|
60.9
|
%
|
|
|
||||||
Expense ratio
|
27.5
|
%
|
|
28.0
|
%
|
|
|
|
27.3
|
%
|
|
28.5
|
%
|
|
|
||||||
Combined ratio
|
94.1
|
%
|
|
87.3
|
%
|
|
|
|
90.5
|
%
|
|
89.4
|
%
|
|
|
(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 results include gross fee income of $4.0 million and $11.6 million for the three and nine months ended September 30, 2019, respectively ($3.8 million and $10.9 million for the same periods in the prior year).
|
|
Three Months Ended
September 30, |
|
%
|
|
Nine Months Ended
September 30, |
|
%
|
||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
|
($ in thousands)
|
||||||||||||||||||||
Gross written premiums
|
$
|
46,724
|
|
|
$
|
24,125
|
|
|
93.7
|
%
|
|
$
|
114,810
|
|
|
$
|
98,234
|
|
|
16.9
|
%
|
Net written premiums
|
$
|
37,584
|
|
|
$
|
24,278
|
|
|
54.8
|
%
|
|
$
|
105,695
|
|
|
$
|
98,391
|
|
|
7.4
|
%
|
Net earned premiums
|
$
|
34,373
|
|
|
$
|
49,263
|
|
|
(30.2
|
)%
|
|
$
|
105,600
|
|
|
$
|
161,711
|
|
|
(34.7
|
)%
|
Losses and loss adjustment expenses
|
(28,449
|
)
|
|
(30,849
|
)
|
|
(7.8
|
)%
|
|
(75,983
|
)
|
|
(101,953
|
)
|
|
(25.5
|
)%
|
||||
Underwriting expenses
|
(10,212
|
)
|
|
(16,838
|
)
|
|
(39.4
|
)%
|
|
(33,678
|
)
|
|
(54,709
|
)
|
|
(38.4
|
)%
|
||||
Underwriting (loss) profit (1)
|
$
|
(4,288
|
)
|
|
$
|
1,576
|
|
|
‒
|
|
|
$
|
(4,061
|
)
|
|
$
|
5,049
|
|
|
‒
|
|
Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss ratio
|
82.8
|
%
|
|
62.6
|
%
|
|
|
|
72.0
|
%
|
|
63.0
|
%
|
|
|
||||||
Expense ratio
|
29.7
|
%
|
|
34.2
|
%
|
|
|
|
31.8
|
%
|
|
33.9
|
%
|
|
|
||||||
Combined ratio
|
112.5
|
%
|
|
96.8
|
%
|
|
|
|
103.8
|
%
|
|
96.9
|
%
|
|
|
(1)
|
Underwriting (Loss) Profit is a non-GAAP Measure. See “Reconciliation of Non-GAAP Measures” for a reconciliation to (loss) income before tax and for additional information.
|
|
Gross Reserves at September 30, 2019
|
||||||||||
|
Case
|
|
IBNR
|
|
Total
|
||||||
|
($ in thousands)
|
||||||||||
Excess and Surplus Lines
|
$
|
432,618
|
|
|
$
|
739,194
|
|
|
$
|
1,171,812
|
|
Specialty Admitted Insurance
|
178,042
|
|
|
309,653
|
|
|
487,695
|
|
|||
Casualty Reinsurance
|
111,524
|
|
|
170,276
|
|
|
281,800
|
|
|||
Total
|
$
|
722,184
|
|
|
$
|
1,219,123
|
|
|
$
|
1,941,307
|
|
|
Net Reserves at September 30, 2019
|
||||||||||
|
Case
|
|
IBNR
|
|
Total
|
||||||
|
($ in thousands)
|
||||||||||
Excess and Surplus Lines
|
$
|
381,754
|
|
|
$
|
576,382
|
|
|
$
|
958,136
|
|
Specialty Admitted Insurance
|
37,125
|
|
|
54,356
|
|
|
91,481
|
|
|||
Casualty Reinsurance
|
108,533
|
|
|
168,330
|
|
|
276,863
|
|
|||
Total
|
$
|
527,412
|
|
|
$
|
799,068
|
|
|
$
|
1,326,480
|
|
|
Three Months Ended
September 30, |
|
|
|
Nine Months Ended
September 30, |
|
|
||||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
|
($ in thousands)
|
|
|
||||||||||||||||||
Renewable energy LLCs
|
$
|
1,602
|
|
|
$
|
329
|
|
|
386.9
|
%
|
|
$
|
2,510
|
|
|
$
|
2,070
|
|
|
21.3
|
%
|
Other private investments
|
(218
|
)
|
|
1,402
|
|
|
‒
|
|
|
3,407
|
|
|
3,518
|
|
|
(3.2
|
)%
|
||||
Other invested assets
|
1,384
|
|
|
1,731
|
|
|
(20.0
|
)%
|
|
5,917
|
|
|
5,588
|
|
|
5.9
|
%
|
||||
All other net investment income
|
16,494
|
|
|
14,679
|
|
|
12.4
|
%
|
|
48,927
|
|
|
40,213
|
|
|
21.7
|
%
|
||||
Total net investment income
|
$
|
17,878
|
|
|
$
|
16,410
|
|
|
8.9
|
%
|
|
$
|
54,844
|
|
|
$
|
45,801
|
|
|
19.7
|
%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
($ in thousands)
|
||||||||||||||
Fixed maturity securities
|
$
|
10,229
|
|
|
$
|
8,673
|
|
|
$
|
29,876
|
|
|
$
|
24,513
|
|
Bank loan participations
|
4,752
|
|
|
4,713
|
|
|
14,978
|
|
|
13,265
|
|
||||
Equity securities
|
1,326
|
|
|
1,258
|
|
|
3,958
|
|
|
3,932
|
|
||||
Other invested assets
|
1,384
|
|
|
1,731
|
|
|
5,917
|
|
|
5,588
|
|
||||
Cash, cash equivalents, short-term investments, and other
|
1,184
|
|
|
1,157
|
|
|
3,490
|
|
|
1,646
|
|
||||
Gross investment income
|
18,875
|
|
|
17,532
|
|
|
58,219
|
|
|
48,944
|
|
||||
Investment expense
|
(997
|
)
|
|
(1,122
|
)
|
|
(3,375
|
)
|
|
(3,143
|
)
|
||||
Net investment income
|
$
|
17,878
|
|
|
$
|
16,410
|
|
|
$
|
54,844
|
|
|
$
|
45,801
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Annualized gross investment yield on:
|
|
|
|
|
|
|
|
|
|
|
|
Average cash and invested assets
|
3.8
|
%
|
|
4.0
|
%
|
|
3.9
|
%
|
|
3.8
|
%
|
Average fixed maturity securities
|
3.7
|
%
|
|
3.8
|
%
|
|
3.8
|
%
|
|
3.6
|
%
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||
|
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
|
$
|
145,016
|
|
|
$
|
154,387
|
|
|
11.2
|
%
|
|
$
|
147,160
|
|
|
$
|
149,295
|
|
|
12.6
|
%
|
Residential mortgage-backed
|
245,315
|
|
|
247,213
|
|
|
17.9
|
%
|
|
208,869
|
|
|
204,109
|
|
|
17.2
|
%
|
||||
Corporate
|
603,524
|
|
|
625,180
|
|
|
45.5
|
%
|
|
534,024
|
|
|
524,768
|
|
|
44.3
|
%
|
||||
Commercial mortgage and asset-backed
|
230,417
|
|
|
235,204
|
|
|
17.1
|
%
|
|
199,528
|
|
|
197,025
|
|
|
16.6
|
%
|
||||
U.S. Treasury securities and obligations guaranteed by the U.S. government
|
111,834
|
|
|
113,332
|
|
|
8.2
|
%
|
|
107,803
|
|
|
107,193
|
|
|
9.1
|
%
|
||||
Redeemable preferred stock
|
2,025
|
|
|
2,007
|
|
|
0.1
|
%
|
|
2,025
|
|
|
1,812
|
|
|
0.2
|
%
|
||||
Total fixed maturity securities, available-for-sale
|
$
|
1,338,131
|
|
|
$
|
1,377,323
|
|
|
100.0
|
%
|
|
$
|
1,199,409
|
|
|
$
|
1,184,202
|
|
|
100.0
|
%
|
Industry
|
Fair Value
|
|
% of Total
|
|||
|
($ in thousands)
|
|||||
Industrials and Other
|
$
|
143,049
|
|
|
22.9
|
%
|
Financial
|
171,630
|
|
|
27.5
|
%
|
|
Consumer Discretionary
|
88,571
|
|
|
14.2
|
%
|
|
Health Care
|
88,036
|
|
|
14.1
|
%
|
|
Consumer Staples
|
67,123
|
|
|
10.7
|
%
|
|
Utilities
|
66,771
|
|
|
10.6
|
%
|
|
Total
|
$
|
625,180
|
|
|
100.0
|
%
|
Public/Private
|
Fair Value
|
|
% of Total
|
|||
|
($ in thousands)
|
|||||
Publicly traded
|
$
|
560,436
|
|
|
89.6
|
%
|
Privately placed
|
64,744
|
|
|
10.4
|
%
|
|
Total
|
$
|
625,180
|
|
|
100.0
|
%
|
|
September 30, 2019
|
|||||||||
|
Amortized
Cost
|
|
Fair
Value
|
|
% of
Total Value
|
|||||
|
($ in thousands)
|
|||||||||
Due in:
|
|
|
|
|
|
|
|
|
||
One year or less
|
$
|
76,678
|
|
|
$
|
77,005
|
|
|
5.6
|
%
|
After one year through five years
|
459,889
|
|
|
470,945
|
|
|
34.2
|
%
|
||
After five years through ten years
|
205,048
|
|
|
214,952
|
|
|
15.6
|
%
|
||
After ten years
|
118,759
|
|
|
129,997
|
|
|
9.4
|
%
|
||
Residential mortgage-backed
|
245,315
|
|
|
247,213
|
|
|
17.9
|
%
|
||
Commercial mortgage and asset-backed
|
230,417
|
|
|
235,204
|
|
|
17.2
|
%
|
||
Redeemable preferred stock
|
2,025
|
|
|
2,007
|
|
|
0.1
|
%
|
||
Total
|
$
|
1,338,131
|
|
|
$
|
1,377,323
|
|
|
100.0
|
%
|
•
|
A $102.5 million secured revolving facility used 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 September 30, 2019, the Company had $64.1 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 September 30, 2019, 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%
|
|
|
Company Retention
|
Casualty
|
|
|
Primary Specialty Casualty, including Professional Liability
|
|
Up to $1.0 million per occurrence, subject to a $1.0 million aggregate deductible. (1)
|
Primary Casualty
|
|
Up to $2.0 million per occurrence. (2)
|
Excess Casualty
|
|
Up to $1.0 million per occurrence. (3)
|
Property
|
|
Up to $5.0 million per event. (4)
|
(1)
|
Except for Life Sciences quota share carve out, which is up to $2.0 million per occurrence
|
(2)
|
Total exposure to any one claim is generally $1.0 million.
|
(3)
|
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.
|
(4)
|
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 85-90% 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 87.5% - 100% of limits up to $2.0 million per occurrence.
|
Umbrella and Excess Casualty - Programs
|
|
Quota share coverage for 92.5%-100% of limits up to $10.0 million per occurrence, and excess of loss coverage for $5.0 million in excess of $10.0 million.
|
Property
|
|
|
Commercial Property within Package - Programs
|
|
Quota share coverage for 100% of limits up to $25.0 million per occurrence. (3)
|
Catastrophe Coverage
|
|
Excess of Loss coverage for $44.0 million in excess of $1.0 million per occurrence.
|
(1)
|
Excluding one program which has quota share coverage for 89% of the first $1.0 million per occurrence and excess of loss coverage for $49.0 million in excess of $1.0 million per occurrence.
|
(2)
|
Includes any residual market pools.
|
(3)
|
Excluding one program which has quota share coverage for 80% of the first $500,000 and excess of loss coverage for $39.5 million in excess of $500,000 per risk per occurrence.
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
|
($ in thousands)
|
||||||
Cash and cash equivalents provided by (used in):
|
|
|
|
|
|
||
Operating activities
|
$
|
213,787
|
|
|
$
|
251,913
|
|
Investing activities
|
(87,904
|
)
|
|
(205,574
|
)
|
||
Financing activities
|
(42,038
|
)
|
|
(25,417
|
)
|
||
Change in cash and cash equivalents
|
$
|
83,845
|
|
|
$
|
20,922
|
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
||||||||||
|
Shares
|
|
Weighted-
Average Exercise Price |
|
Shares
|
|
Weighted-
Average Exercise Price |
||||||
Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
||
Beginning of period
|
1,115,324
|
|
|
$
|
29.02
|
|
|
1,479,236
|
|
|
$
|
27.81
|
|
Granted
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Exercised
|
(450,514
|
)
|
|
$
|
26.68
|
|
|
(280,683
|
)
|
|
$
|
21.03
|
|
Forfeited
|
(12,058
|
)
|
|
$
|
36.84
|
|
|
(42,215
|
)
|
|
$
|
36.86
|
|
End of period
|
652,752
|
|
|
$
|
30.50
|
|
|
1,156,338
|
|
|
$
|
29.13
|
|
Exercisable, end of period
|
599,241
|
|
|
$
|
29.44
|
|
|
841,763
|
|
|
$
|
26.64
|
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
||||||||||
|
Shares
|
|
Weighted-
Average Grant Date Fair Value |
|
Shares
|
|
Weighted-
Average Grant Date Fair Value |
||||||
|
|
|
|
|
|
|
|
|
|
||||
Unvested, beginning of period
|
300,142
|
|
|
$
|
39.22
|
|
|
178,882
|
|
|
$
|
37.93
|
|
Granted
|
197,078
|
|
|
$
|
42.56
|
|
|
218,475
|
|
|
$
|
39.75
|
|
Vested
|
(111,212
|
)
|
|
$
|
39.90
|
|
|
(63,191
|
)
|
|
$
|
40.92
|
|
Forfeited
|
(22,445
|
)
|
|
$
|
41.32
|
|
|
(5,889
|
)
|
|
$
|
40.81
|
|
Unvested, end of period
|
363,563
|
|
|
$
|
40.69
|
|
|
328,277
|
|
|
$
|
38.51
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands)
|
||||||||||||||
Underwriting (loss) profit of the insurance segments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Excess and Surplus Lines
|
$
|
(29,351
|
)
|
|
$
|
11,302
|
|
|
$
|
(439
|
)
|
|
$
|
32,718
|
|
Specialty Admitted Insurance
|
837
|
|
|
1,769
|
|
|
3,758
|
|
|
4,380
|
|
||||
Casualty Reinsurance
|
(4,288
|
)
|
|
1,576
|
|
|
(4,061
|
)
|
|
5,049
|
|
||||
Total underwriting (loss) profit of insurance segments
|
(32,802
|
)
|
|
14,647
|
|
|
(742
|
)
|
|
42,147
|
|
||||
Other operating expenses of the Corporate and Other segment
|
(7,302
|
)
|
|
(6,526
|
)
|
|
(22,641
|
)
|
|
(21,264
|
)
|
||||
Underwriting (loss) profit (1)
|
(40,104
|
)
|
|
8,121
|
|
|
(23,383
|
)
|
|
20,883
|
|
||||
Net investment income
|
17,878
|
|
|
16,410
|
|
|
54,844
|
|
|
45,801
|
|
||||
Net realized and unrealized (losses) gains on investments
|
(2,357
|
)
|
|
467
|
|
|
331
|
|
|
(407
|
)
|
||||
Amortization of intangible assets
|
(149
|
)
|
|
(149
|
)
|
|
(447
|
)
|
|
(447
|
)
|
||||
Other income and expenses
|
(91
|
)
|
|
258
|
|
|
(223
|
)
|
|
366
|
|
||||
Interest expense
|
(2,594
|
)
|
|
(2,991
|
)
|
|
(8,086
|
)
|
|
(8,459
|
)
|
||||
(Loss) income before taxes
|
$
|
(27,417
|
)
|
|
$
|
22,116
|
|
|
$
|
23,036
|
|
|
$
|
57,737
|
|
(1)
|
Included in underwriting results for the three and nine months ended September 30, 2019 is gross fee income of $6.1 million and $18.7 million, respectively ($6.8 million and $22.4 million for the same periods in the prior year).
|
|
Three Months Ended September 30,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
(Loss) Income
Before Taxes |
|
Net
(Loss) Income |
|
Income
Before Taxes |
|
Net
Income |
||||||||
|
($ in thousands)
|
||||||||||||||
(Loss) income as reported
|
$
|
(27,417
|
)
|
|
$
|
(25,167
|
)
|
|
$
|
22,116
|
|
|
$
|
19,581
|
|
Net realized and unrealized investment losses (gains)
|
2,357
|
|
|
2,665
|
|
|
(467
|
)
|
|
(397
|
)
|
||||
Other expenses
|
372
|
|
|
294
|
|
|
(131
|
)
|
|
(101
|
)
|
||||
Interest expense on leased building the Company was previously deemed to own for accounting purposes
|
—
|
|
|
—
|
|
|
404
|
|
|
319
|
|
||||
Adjusted net operating (loss) income
|
$
|
(24,688
|
)
|
|
$
|
(22,208
|
)
|
|
$
|
21,922
|
|
|
$
|
19,402
|
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
Income
Before
Taxes
|
|
Net
Income
|
|
Income
Before
Taxes
|
|
Net
Income
|
||||||||
|
($ in thousands)
|
||||||||||||||
Income as reported
|
$
|
23,036
|
|
|
$
|
17,868
|
|
|
$
|
57,737
|
|
|
$
|
52,198
|
|
Net realized and unrealized investment (gains) losses
|
(331
|
)
|
|
980
|
|
|
407
|
|
|
366
|
|
||||
Other expenses
|
1,055
|
|
|
834
|
|
|
(34
|
)
|
|
45
|
|
||||
Interest expense on leased building the Company was previously deemed to own for accounting purposes
|
—
|
|
|
—
|
|
|
1,179
|
|
|
931
|
|
||||
Adjusted net operating income
|
$
|
23,760
|
|
|
$
|
19,682
|
|
|
$
|
59,289
|
|
|
$
|
53,540
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
Equity
|
|
Equity per
Share |
|
Equity
|
|
Equity per
Share |
||||||||
|
($ in thousands, except share amounts)
|
||||||||||||||
Shareholders’ equity
|
$
|
768,969
|
|
|
$
|
25.29
|
|
|
$
|
709,241
|
|
|
$
|
23.65
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Goodwill
|
181,831
|
|
|
5.98
|
|
|
181,831
|
|
|
6.06
|
|
||||
Intangible assets
|
37,090
|
|
|
1.22
|
|
|
37,537
|
|
|
1.25
|
|
||||
Tangible equity
|
$
|
550,048
|
|
|
$
|
18.09
|
|
|
$
|
489,873
|
|
|
$
|
16.34
|
|
Dividends to shareholders for the nine months ended September 30, 2019
|
27,557
|
|
|
0.90
|
|
|
|
|
|
||||||
Pre-dividend tangible equity
|
$
|
577,605
|
|
|
$
|
18.99
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
3.5
|
|
|
|
|
|
3.6
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32
|
|
|
|
|
|
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
|
|
|
|
|
|
James River Group Holdings, Ltd.
|
|
|
|
|
|
Date:
|
November 7, 2019
|
By:
|
/s/ J. Adam Abram
|
|
|
|
J. Adam Abram
|
|
|
|
Chief Executive Officer and
Chairman of the Board
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Date:
|
November 7, 2019
|
By:
|
/s/ Sarah C. Doran
|
|
|
|
Sarah C. Doran
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
To Executive:
|
J. Adam Abram
[Redacted]
Chapel Hill, NC 27514
|
To James River:
|
James River Group, Inc.
1414 Raleigh Road, Suite 405
Chapel Hill, NC 27517-3600
|
To the Company:
|
James River Group Holdings, Ltd.
Attn: The Secretary
Clarendon House
2 Church Street
Hamilton HM 11 Bermuda
|
1.
|
I have reviewed this quarterly report on Form 10-Q 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(s) 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(s) 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/ J. Adam Abram
|
|
J. Adam Abram
|
|
Chief Executive Officer and Chairman
|
|
(Principal Executive Officer)
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q 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(s) 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(s) 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/ J. Adam Abram
|
|
J. Adam Abram
|
|
Chief Executive Officer and Chairman
|
|
(Principal Executive Officer)
|
|
November 7, 2019
|
|
|
|
/s/ Sarah C. Doran
|
|
Sarah C. Doran
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
|
November 7, 2019
|