James River Group Holdings, Inc. · NASDAQ:JRVR
James River — Q4 2016 Earnings Presentation
25 slides from James River's earnings presentation, Mar 2, 2017
Slide 1: Compounding Value through an Unrelenting Focus on Underwriting Profit
Compounding Value through an Unrelenting Focus on Underwriting Profit Fourth Quarter 2016 Investor Presentation
Slide 2: Disclosure: Forward-Looking Statements
An Unrelenting Focus on Underwriting Profit Disclosure Forward - Looking Statements This presentation contains “forward - looking statements” within the meaning of the U . S . Federal Securities laws, including the Private Securities Litigation Reform Act of 1995 . These statements can be identified
Slide 3: Company Overview
An Unrelenting Focus on Underwriting Profit 3 Company Overview
Slide 4: Company Overview
An Unrelenting Focus on Underwriting Profit Company Overview 4 We are an underwriting company with a proven history of generating profits We offer modest primary casualty limits to US - based businesses 2016 Group - wide Net Written Premiums by Type 2016 Group - wide NWP: $558mm 2016 Group - wide Ne
Slide 5: Company Overview: Reliable, high returns on tangible equity
An Unrelenting Focus on Underwriting Profit Company Overview 5 Seek to deliver reliable, high returns on tangible equity • Unrelenting focus on underwriting profit with low volatility • Strong balance sheet • Non - cyclical, lower risk / high return fee business • Consistent investment returns • Eff
Slide 6: Company Overview: Leadership
An Unrelenting Focus on Underwriting Profit Company Overview: Leadership 6 Adam Abram Robert Myron Chairman & Chief Executive Officer James River Group Holdings President & Chief Operating Officer James River Group Holdings • Founder and Chairman of James River Group • Founder and CEO of Front Royal
Slide 7: Company Overview: A History of Creating Value for Investors
An Unrelenting Focus on Underwriting Profit Company Overview: A History of Creating Value for Investors 7 Our Specialty Market History 1992 – Adam Abram and a group of investors purchase Front Royal, Inc. , for $3 million 1994 – Front Royal purchases Colony Insurance Company , a Richmond, VA based E
Slide 8: Company Overview: Org Structure
An Unrelenting Focus on Underwriting Profit Company Overview: Org Structure James River Group Holdings, Ltd. Bermuda Domicile JRG Reinsurance Company, Ltd. 3 Bermuda Domicile James River Group Holdings UK Limited E&S Segment 1 US Domicile Specialty Admitted Segment 2 US Domicile 1. Segment includes
Slide 9: Profitability of E&S vs. Total P&C Industry
An Unrelenting Focus on Underwriting Profit Profitability of E&S vs. Total P&C Industry Avg. Combined Ratios 1999 – 2015 9 Difference of 7 percentage points Company Overview: E&S Focus Profitable specialty underwriting Source: A.M. Best data and research, SNL Our business is heavily concentrated in
Slide 10: Company Overview: Conservative Reserving
An Unrelenting Focus on Underwriting Profit Company Overview: Conservative Reserving We have an established track record of favorable reserve development ▪ Consistent Methodology • Reserves have consistently been established using a blend of various actuarially - accepted reserving methodologies • G
Slide 11: Underwriting Segments
An Unrelenting Focus on Underwriting Profit 11 Underwriting Segments
Slide 12: E&S Segment: Profitable specialty underwriting
An Unrelenting Focus on Underwriting Profit E&S Segment Profitable specialty underwriting • E&S business underwritten by specialists in 13 divisions organized by product or industry segment • 81.5% average combined ratio from 2010 - 2016 • Focus on small and medium - sized commercial accounts • Appr
Slide 13: E&S Segment: Broad risk appetite permits us to pick our spots
An Unrelenting Focus on Underwriting Profit E&S Segment Broad risk appetite permits us to ‘pick our spots’ Each Excess & Surplus Lines policy is underwritten by in - house specialists with deep technical expertise across 13 underwriting divisions 13 ($ in millions) Lead U/W Years of Year Year Year I
Slide 14: E&S Segment: Demonstrated Underwriting Discipline
An Unrelenting Focus on Underwriting Profit E&S Segment Demonstrated Underwriting Discipline Source: Company filings, A.M. Best d ata and research We have proven our willingness to expand and contract when market conditions dictate, and have a strong track record of profitable underwriting 14 E&S Se
Slide 15: Specialty Admitted Segment: A focus on fee income
An Unrelenting Focus on Underwriting Profit Specialty Admitted Segment A focus on fee income Approach to admitted market emphasizes fee income business 15 Gross Written Premiums ($mm) Combined Ratio Composition (%) Growth: (43.9)% 188.3% 53.2% 100.3% • Specialty admitted insurance coverages in the U
Slide 16: Casualty Reinsurance Segment: Low volatility underwriting
An Unrelenting Focus on Underwriting Profit Casualty Reinsurance Segment Low volatility underwriting 16 Third Party Reinsurance Combined Ratio (%) Third Party Gross Written Premiums ($mm) Growth: (47.6)% 32.9% (16.5)% 6.9% Third - party proportional and working - layer excess casualty business focus
Slide 17: Investment Strategy
An Unrelenting Focus on Underwriting Profit Investment Strategy T raditional approach augmented by higher yielding alternatives with solid risk adjusted returns Our investment portfolio consists of investment grade fixed maturity securities, selectively supplemented by non - traditional investments
Slide 18: Composition of Return on Tangible Equity
An Unrelenting Focus on Underwriting Profit 2015 2016 Underwriting Leverage (NPE) 1.0x 1.1x Underwriting Profit Ratio 6.0% 5.7% Underwriting Contribution 5.9% 6.0% Cash & Invested Assets / Tangible Equity 2.8x 2.8x Investment Yield 3.4% 3.8% Investment Contribution 9.5% 10.7% Interest Expense ($6.3)
Slide 19: Summary Financial Results
An Unrelenting Focus on Underwriting Profit Summary Financial Results 19 Note: 2013 and 2014 per share values retroactively adjusted for 50/1 stock split. ($ in millions) 2013 2014 2015 2016 Selected Income Statement Information Gross Written Premiums $368.5 $518.8 $572.2 $737.4 Net Written Premiums
Slide 20: Consistent Growth in Tangible Equity
An Unrelenting Focus on Underwriting Profit Consistent Growth in Tangible Equity 20 We have consistently grown tangible equity per share We are active capital managers ($295 million of dividends and share repurchases since 2013) We increased our regular dividend per share by 50% during Q4 2016 $378
Slide 21: Appendix
Appendix
Slide 22: James River Group Key Metrics
An Unrelenting Focus on Underwriting Profit James River Group Key Metrics Exchange/Ticker NASDAQ / “JRVR” Initial Public Offering $21.00 (December 12, 2014) Current Share Price $43.74 (Closing Price February 24, 2017) Market Capitalization $1.274 billion (February 24, 2017 market close) 2016 Dividen
Slide 23: Non-GAAP Measures Reconciliation: Underwriting Profit
An Unrelenting Focus on Underwriting Profit Non - GAAP Measures Reconciliation 23 Underwriting Profit (Loss) ($mm) 2013 2014 2015 2016 Underwriting profit (loss) of the operating segments: Excess and Surplus Lines 43.5$ 35.1$ 47.6$ 47.2$ Specialty Admitted Insurance (3.9) 0.0 1.1 2.9 Casualty Reinsu
Slide 24: Non-GAAP Measures Reconciliation: Adjusted Net Operating Income
An Unrelenting Focus on Underwriting Profit Non - GAAP Measures Reconciliation 24 ($mm) Adjusted Net Operating Income 2013 2014 2015 2016 Income as reported 67.3$ 44.7$ 53.5$ 74.5$ Net realized investment (gains) losses (9.4) (0.9) 4.1 (5.2) Initial public offering costs - 13.2 - - Registration cost
Slide 25: Compounding Value through an Unrelenting Focus on Underwriting Profit
Compounding Value through an Unrelenting Focus on Underwriting Profit [email protected]
James River Group Holdings — Q4 2016 Earnings Presentation on 6ix