James River Group Holdings, Inc. Q1 FY2026 earnings call

• Frank D'Orazio discussed that E&S results were negatively impacted by a reinsurance reinstatement charge, and the organization restructured E&S treaty placements in July 2023 to prevent future outside adjustments. • Viewed market opportunity with heightened discipline, noting greatest rate push opportunity in Exit Casualty Division and growth opportunities in Specialty Lines Division and Small Business Unit. • Mentioned pressure on rates in excess property division and increasing competitive pressure in primary general casualty department, with underwriters navigating opportunities prudently. • Prioritized initiatives for efficiency, including reducing G&A expenses by 11% during the quarter. • Rollout of AI-enabled underwriting workbench technology underway, with first two underwriting departments rolled out this quarter. • Underlying loss trends stable, reserves reflect improved risk selection, and de minimis favorable reserve development of $165,000 split between ENS and specialty admitted. • Ceded $16.2M of development to ENS top-up adverse development cover with $7.5M remaining.

For the segment, casualty rates were positive at 7.7% for the quarter. Submission growth was strong at 4%, and for the first time in several quarters, modestly grew gross written premiums across E&S casualty and specialty portfolios with seven of 14 underwriting divisions reporting positive growth. Excluding certain divisions, casualty portfolio was up over 6% y-o-y. Specialty lines were up 6% driven by professional liability, energy, and healthcare; excess casualty premiums increased 15%. E&S combined ratio was 96.5% (68% loss ratio, 28.5% expense ratio); absent reinsurance reinstatement impact, ENS combined ratio would be 91.8%. Net loss to common shareholders was $10.9M vs net income of $7.6M in Q1 2025. Operating earnings were $5.8M or 12 cents per diluted share vs $9.1M or 19 cents per share. G&A expenses declined 11% y-o-y. Net investment income was $21.3M, up 6.6% y-o-y. Tangible common equity per share declined modestly to $8.77.

• No specific upward/downward revision mentioned, but noted the combination of underwriting improvements, appetite changes, expense vigilance, and technology adoption will help optimize SME platform and differentiate wholesale-only distribution model. • Expressed confidence in being well positioned for 2026 and looking forward to updating on progress in a few months.

• Forward-looking statements are subject to various risks and uncertainties detailed in cautionary language regarding forward-looking statements in earnings release and risk factors of recent Form 10-K and other SEC filings. • Underwriting performance ratios referred to are for continuing operations not subject to retroactive reinsurance accounting for lost portfolio transfers. • Investment portfolio had some volatility, with largest driver of net realized and unrealized investment losses being the diversified bank loan portfolio which represents about 8% of total cash invested assets.

Q: Good morning. Frank, you had mentioned a little more competition in the primary general casualty. Where do you see that coming from? How significant do you think that is?

A: In casualty lines, we've seen fairly aggressive MGAs and overall increase in capacity from carriers interested in the E&S sector. Also some newer competition competing on price and terms and conditions in GC space.

Q: Sarah, on the adverse development cover, the top-up cover, What do the total reserves that are covered by that, and then if you've got it in front of you, how much has been paid on those expected losses?

A: I don't have the page right in front of me, but very little of the reserve subject to those structures would have been paid by now.

Q: Frank, you talked about the AI-enabled technology on the underwriter's workbench, I think. Could you expand a little bit more on that, kind of what are the – kind of practical implications of their day-to-day underwriting activity, and what do you think it could mean in terms of either efficiency, underwriting effectiveness?

A: We spent the last few years updating core systems enabling us to invest in AI technologies enabled workbenches. It's a competitive enabler, optimizing operational efficiency through clearance, risk prioritization, data ingestion, and facilitating quote and bind processes, allowing quicker quote turnaround.

Q: Frank, just following up on the market conditions, perhaps you can kind of give us a little color on what's going on as far as movements between E&S and the admitted markets. We've heard that we're starting to see some business move back to the admitted market.

A: We've seen business move back to admitted market, particularly in property and now some standard lines like primary casualty. Market's been transitioning, with some business getting attention of admitted market, more specific to certain classes of business.

Q: Sarah, just one other just quick question on this reinstatement, just trying to get my hands around it. So I think what's going on here, right, is that because there was perhaps some development on this claim is why you had the reinstatement premium come true. Is that true?

A: The 9x2 covers majority of ENS book, it's a prospective treaty. Reinstatement premiums are fairly frequent, but this quarter it was more sizable due to a larger claim that settled. There is a fair amount in that book protected by the treaty on an ongoing basis.