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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2023
or
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _______ to _______
 
Commission File Number: 001-36777
JAMES RIVER GROUP HOLDINGS, LTD.
 
(Exact name of registrant as specified in its charter)
Bermuda 98-0585280
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
Wellesley House, 2nd Floor, 90 Pitts Bay Road, Pembroke HM08, Bermuda
(Address of principal executive offices)
(Zip Code)
(441) 278-4580
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Names of each exchange on which registered
Common Shares, par value $0.0002 per shareJRVRNASDAQGlobal Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x    No   ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filerNon-accelerated filer Smaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes       No   x
Number of shares of the registrant's common shares outstanding at May 1, 2023: 37,619,226



James River Group Holdings, Ltd.
Form 10-Q
Index
 Page
Number
 
   
 
   
 
   
 
   
 
   
 
   
 
   
   
 
   
   
  
 
   
  
 
2


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements may be identified by the fact that they do not relate strictly to historical or current facts. You may identify forward-looking statements in this Quarterly Report by the use of words such as “anticipates,” “estimates,” “expects,” “intends,” “plans”, “seeks” and “believes,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could.” These forward-looking statements include, among others, all statements relating to our future financial performance, our business prospects and strategy, anticipated financial position and financial strength ratings, liquidity and capital needs and other similar matters. These forward-looking statements are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.
 
Our actual results may differ materially from those expressed in, or implied by, the forward-looking statements included in this Quarterly Report as a result of various factors, many of which are beyond our control, including, among others:
 
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;
downgrades in the financial strength rating of our regulated insurance subsidiaries impacting our ability to attract and retain insurance and reinsurance business that our subsidiaries write, our competitive position, and our financial condition;
the potential loss of key members of our management team or key employees, and our ability to attract and retain personnel;
adverse economic factors resulting in the sale of fewer policies than expected or an increase in the frequency or severity of claims, or both;
the impact of a persistent high inflationary environment on our reserves, the values of our investments and investment returns, and our compensation expenses;
exposure to credit risk, interest rate risk and other market risk in our investment portfolio;
reliance on a select group of brokers and agents for a significant portion of our business and the impact of our potential failure to maintain such relationships;
reliance on a select group of customers for a significant portion of our business and the impact of our potential failure to maintain, or decision to terminate, such relationships;
our ability to obtain reinsurance coverage at prices and on terms that allow us to transfer risk, adequately protect our Company against financial loss and that supports our growth plans;
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 a former customer with whom we have an indemnification arrangement failing to perform its reimbursement obligations, and our potential inability to demand or maintain adequate collateral to mitigate such risks;
inadequacy of premiums we charge to compensate us for our losses incurred;
changes in laws or government regulation, including tax or insurance law and regulations;
changes in U.S. tax laws and the interpretation of certain provisions of the 2017 Tax Act (including associated regulations), which may be retroactive and could have a significant effect on us including, among other things, by potentially increasing our tax rate, as well as on our shareholders;
in the event we do not qualify for the insurance company exception to the passive foreign investment company (“PFIC”) rules and are therefore considered a PFIC, there could be material adverse tax consequences to an investor that is subject to U.S. federal income taxation;
the Company or any of its foreign subsidiaries becoming subject to U.S. federal income taxation;
a failure of any of the loss limitations or exclusions we utilize to shield us from unanticipated financial losses or legal exposures, or other liabilities;
3


losses from catastrophic events, such as natural disasters and terrorist acts, which substantially exceed our expectations and/or exceed the amount of reinsurance we have purchased to protect us from such events;
the effects of the COVID-19 pandemic and associated government actions on our operations and financial  performance;
potential effects on our business of emerging claim and coverage issues;
the potential impact of internal or external fraud, operational errors, systems malfunctions or cyber security incidents;
our ability to manage our growth effectively;
failure to maintain effective internal controls in accordance with Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”);
changes in our financial condition, regulations or other factors that may restrict our subsidiaries’ ability to pay us dividends;
an adverse result in any litigation or legal proceedings we are or may become subject to; and
other risks and uncertainties discussed elsewhere in this Quarterly Report.
Additional information about these risks and uncertainties, as well as others that may cause actual results to differ materially from those in the forward-looking statements, is contained in our filings with the U.S. Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 28, 2023.
Forward-looking statements speak only as of the date of this Quarterly Report. Except as expressly required under federal securities laws and the rules and regulations of the SEC, we do not have any obligation, and do not undertake, to update any forward-looking statements to reflect events or circumstances arising after the date of this Quarterly Report, whether as a result of new information or future events or otherwise. You should not place undue reliance on the forward-looking statements included in this Quarterly Report or that may be made elsewhere from time to time by us, or on our behalf. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

4

Table of Contents
 
PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements
 
 
JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES
 
Condensed Consolidated Balance Sheets
(Unaudited) March 31,
2023
December 31,
2022
 (in thousands)
Assets  
Invested assets:  
Fixed maturity securities, available-for-sale, at fair value (amortized cost: 2023 – $2,049,221; 2022 – $1,969,783)
$1,898,758 $1,783,417 
Equity securities, at fair value (cost: 2023 – $115,854; 2022 – $117,169)
116,091 118,627 
Bank loan participations, at fair value146,768 154,991 
Short-term investments25,061 107,812 
Other invested assets27,184 27,447 
Total invested assets2,213,862 2,192,294 
Cash and cash equivalents199,898 173,164 
Restricted cash equivalents104,254 103,215 
Accrued investment income15,892 14,418 
Premiums receivable and agents’ balances, net326,499 340,525 
Reinsurance recoverable on unpaid losses, net1,541,497 1,520,113 
Reinsurance recoverable on paid losses158,761 114,242 
Prepaid reinsurance premiums261,693 274,165 
Deferred policy acquisition costs54,535 59,603 
Intangible assets, net35,585 35,676 
Goodwill181,831 181,831 
Other assets110,780 127,829 
Total assets$5,205,087 $5,137,075 
 
See accompanying notes.
 

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JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES
 
Condensed Consolidated Balance Sheets (continued)
  
(Unaudited) March 31,
2023
December 31,
2022
 (in thousands, except share amounts)
Liabilities and Shareholders’ Equity  
Liabilities:  
Reserve for losses and loss adjustment expenses$2,841,993 $2,768,995 
Unearned premiums638,856 676,016 
Payables to reinsurers139,934 123,502 
Funds held297,002 310,953 
Deferred reinsurance gain36,954 20,091 
Senior debt222,300 222,300 
Junior subordinated debt104,055 104,055 
Accrued expenses43,732 59,566 
Other liabilities144,448 152,933 
Total liabilities4,469,274 4,438,411 
Commitments and contingent liabilities
Series A redeemable preferred shares – 2023 and 2022: $0.00125 par value; 20,000,000 shares authorized; 150,000 shares issued and outstanding
144,898 144,898 
Shareholders’ equity:  
Common shares – 2023 and 2022: $0.0002 par value; 200,000,000 shares authorized; 37,619,226 and 37,470,237 shares issued and outstanding, respectively
7 7 
Additional paid-in capital870,043 868,858 
Retained deficit(146,993)(152,055)
Accumulated other comprehensive loss(132,142)(163,044)
Total shareholders’ equity590,915 553,766 
Total liabilities, Series A redeemable preferred shares, and shareholders’ equity$5,205,087 $5,137,075 
 
See accompanying notes.

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 JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES
 
Condensed Consolidated Statements of Income and Comprehensive Income (Loss) (Unaudited)

 Three Months Ended
March 31,
 20232022
 (in thousands, except share amounts)
Revenues  
Gross written premiums$363,893 $359,936 
Ceded written premiums(180,673)(184,077)
Net written premiums183,220 175,859 
Change in net unearned premiums24,893 13,965 
Net earned premiums208,113 189,824 
Net investment income25,772 16,267 
Net realized and unrealized gains (losses) on investments407 (5,010)
Other income1,309 867 
Total revenues235,601 201,948 
Expenses 
Losses and loss adjustment expenses155,288 135,608 
Other operating expenses60,259 50,061 
Other expenses603 368 
Interest expense6,616 2,292 
Amortization of intangible assets91 91 
Total expenses222,857 188,420 
Income before taxes12,744 13,528 
Income tax expense3,136 3,323 
Net income9,608 10,205 
Dividends on Series A preferred shares(2,625)(875)
Net income available to common shareholders$6,983 $9,330 
Other comprehensive income (loss): 
Net unrealized gains (losses), net of taxes of $5,001 in 2023 and $(11,649) in 2022
30,902 (85,971)
Total comprehensive income (loss)$40,510 $(75,766)
Net income per common share: 
Basic$0.19 $0.25 
Diluted$0.18 $0.25 
Dividend declared per common share$0.05 $0.05 
Weighted-average common shares outstanding: 
Basic37,531,819 37,406,913 
Diluted37,785,452 37,554,662 

 
See accompanying notes.
 

 
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JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)


 
 Number of
Common
Shares
Outstanding
Common
Shares (Par)
Additional
Paid-in
Capital
Retained
Deficit
Accumulated
Other
Comprehensive
(Loss) Income
Total
 (in thousands, except share amounts)
Balances at December 31, 202237,470,237 $7 $868,858 $(152,055)$(163,044)$553,766 
Net income— — — 9,608 — 9,608 
Other comprehensive income— — — — 30,902 30,902 
Vesting of RSUs148,989 — (1,507)— — (1,507)
Compensation expense under share incentive plans— — 2,692 — — 2,692 
Dividends on Series A preferred shares— — — (2,625)— (2,625)
Dividends on common shares— — — (1,921)— (1,921)
Balances at March 31, 202337,619,226 $7 $870,043 $(146,993)$(132,142)$590,915 
 
Balances at December 31, 202137,373,066 $7 $862,040 $(166,663)$29,978 $725,362 
Net income— — — 10,205 — 10,205 
Other comprehensive loss— — — — (85,971)(85,971)
Vesting of RSUs75,248 — (922)— — (922)
Compensation expense under share incentive plans— — 1,786 — — 1,786 
Dividends on Series A preferred shares— — — (875)— (875)
Dividends on common shares— — — (1,908)— (1,908)
Balances at March 31, 202237,448,314 $7 $862,904 $(159,241)$(55,993)$647,677 

See accompanying notes.
 
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Condensed Consolidated Statements of Cash Flows (Unaudited)

 Three Months Ended March 31,
 20232022
 (in thousands)
Operating activities  
Net cash provided by operating activities (a)$19,452 $65,355 
Investing activities  
Securities available-for-sale:  
Purchases – fixed maturity securities(101,374)(154,091)
Sales – fixed maturity securities 22,450 
Maturities and calls – fixed maturity securities21,726 48,781 
Purchases – equity securities(5,081)(2,747)
Sales – equity securities6,745 5,089 
Bank loan participations:  
Purchases(8,288)(33,536)
Sales10,494 20,983 
Maturities7,755 7,571 
Other invested assets:  
Return of capital510 214 
Proceeds from sales1,153  
Short-term investments, net82,751 (10,771)
Securities receivable or payable, net2,032 10,652 
Purchases of property and equipment(1,297)(1,729)
Net cash provided by (used in) investing activities17,126 (87,134)
Financing activities  
Senior debt repayments (40,000)
Issuance of Series A preferred shares (Note 12) 144,898 
Common share repurchases(1,507)(922)
Dividends on Series A preferred shares(5,250) 
Dividends on common shares(2,048)(2,121)
Net cash (used in) provided by financing activities(8,805)101,855 
Change in cash, cash equivalents, and restricted cash equivalents27,773 80,076 
Cash, cash equivalents, and restricted cash equivalents at beginning of period276,379 292,128 
Cash, cash equivalents, and restricted cash equivalents at end of period$304,152 $372,204 
Supplemental information  
Interest paid$7,307 $2,495 
Restricted cash equivalents at beginning of period$103,215 $102,005 
Restricted cash equivalents at end of period$104,254 $102,009 
Change in restricted cash equivalents$1,039 $4 

(a) Cash provided by operating activities for the three months ended March 31, 2023 and 2022 includes the restricted cash activity above related to a former insured, per the terms of a collateral trust. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Amounts Recoverable from an Indemnifying Party and Reinsurer on Legacy Commercial Auto Book”. Excluding the restricted cash activity, cash provided by operating activities was $18.4 million and $65.4 million for the three months ended March 31, 2023 and 2022, respectively.
See accompanying notes.
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 JAMES RIVER GROUP HOLDING, LTD. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements

1.    Accounting Policies
Organization
James River Group Holdings, Ltd. (referred to as “JRG Holdings” or, with its subsidiaries, the “Company”) is an exempted holding company registered in Bermuda, organized for the purpose of acquiring and managing insurance and reinsurance entities.
The Company owns five insurance companies based in the United States (“U.S.”) focused on specialty insurance niches and a Bermuda-based reinsurance company as described below:
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.
Basis of Presentation
The accompanying condensed consolidated financial statements and notes have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and do not contain all of the information and footnotes required by U.S. GAAP for complete financial statements. The condensed consolidated financial statements include the results of the Company and its subsidiaries from their respective dates of inception or acquisition, as applicable. Readers are urged to review the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for a more complete description of the Company’s business and accounting policies. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. Interim results are not necessarily indicative of results of operations for the full year. The consolidated balance sheet as of December 31, 2022 was derived from the Company’s audited annual consolidated financial statements.
Intercompany transactions and balances have been eliminated.
Estimates and Assumptions
Preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying disclosures. Those estimates are inherently subject to change, and actual results may ultimately differ from those estimates.
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Notes to Condensed Consolidated Financial Statements (continued)


Variable Interest Entities
Entities that do not have sufficient equity at risk to allow the entity to finance its activities without additional financial support or in which the equity investors, as a group, do not have the characteristic of a controlling financial interest are referred to as variable interest entities (“VIE”). A VIE is consolidated by the variable interest holder that is determined to have the controlling financial interest (primary beneficiary) as a result of having both the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company determines whether it is the primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE’s capital structure, contractual terms, nature of the VIE’s operations and purpose, and the Company’s relative exposure to the related risks of the VIE on the date it becomes initially involved in the VIE. The Company reassesses its VIE determination with respect to an entity on an ongoing basis.
The Company holds interests in VIEs through certain equity method investments included in “other invested assets” in the accompanying condensed consolidated balance sheets. The Company has determined that it should not consolidate any of the VIEs as it is not the primary beneficiary in any of the relationships. Although the investments resulted in the Company holding variable interests in the entities, they did not empower the Company to direct the activities that most significantly impact the economic performance of the entities. The Company’s investments related to these VIEs totaled $9.2 million at March 31, 2023 and December 31, 2022, representing the Company’s maximum exposure to loss.
Income Tax Expense
Our effective tax rate fluctuates from period to period based on the relative mix of income reported by country and the respective tax rates imposed by each tax jurisdiction. For U.S.-sourced income, the Company’s U.S. federal income tax expense differs from the amounts computed by applying the federal statutory income tax rate to income before taxes due primarily to interest income on tax-advantaged state and municipal securities, dividends received income, and excess tax benefits on share based compensation. For the three months ended March 31, 2023 and 2022, our U.S. federal income tax expense was 24.6% of the income before taxes in each period. The effective rate exceeded the 21.0% U.S. statutory rate in both periods due to projected annual losses in Bermuda that do not provide a tax benefit and due to discrete items in the respective quarters primarily related to excess tax expenses associated with vested restricted share units (“RSUs”).
Adopted Accounting Standards
There were no new accounting standards adopted in 2023 that materially impacted the Company's financial statements.
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Notes to Condensed Consolidated Financial Statements (continued)


2.    Investments
The Company’s available-for-sale fixed maturity securities are summarized as follows:
 Cost or
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
 (in thousands)
March 31, 2023    
Fixed maturity securities:    
State and municipal
$388,817 $1,840 $(44,463)$346,194 
Residential mortgage-backed
471,852 2,109 (31,880)442,081 
Corporate
772,885 3,116 (56,828)719,173 
Commercial mortgage and asset-backed
341,742 149 (21,837)320,054 
U.S. Treasury securities and obligations guaranteed by the U.S. government
73,925 61 (2,730)71,256 
Total fixed maturity securities, available-for-sale$2,049,221 $7,275 $(157,738)$1,898,758 
December 31, 2022    
Fixed maturity securities:    
State and municipal
$386,456 $712 $(56,316)$330,852 
Residential mortgage-backed
437,702 801 (37,254)401,249 
Corporate
734,976 1,528 (66,292)670,212 
Commercial mortgage and asset-backed
335,066 76 (26,127)309,015 
U.S. Treasury securities and obligations guaranteed by the U.S. government
75,583 8 (3,502)72,089 
Total fixed maturity securities, available-for-sale$1,969,783 $3,125 $(189,491)$1,783,417 
The amortized cost and fair value of available-for-sale investments in fixed maturity securities at March 31, 2023 are summarized, by contractual maturity, as follows:
 Cost or
Amortized
Cost
Fair
Value
 (in thousands)
One year or less$65,003 $63,951 
After one year through five years525,508 504,265 
After five years through ten years378,716 339,759 
After ten years266,400 228,648 
Residential mortgage-backed471,852 442,081 
Commercial mortgage and asset-backed341,742 320,054 
Total$2,049,221 $1,898,758 
 
Actual maturities may differ for some securities because borrowers have the right to call or prepay obligations with or without penalties.
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Notes to Condensed Consolidated Financial Statements (continued)


The following table shows the Company’s gross unrealized losses and fair value for available-for-sale securities aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:
 Less Than 12 Months12 Months or MoreTotal
 Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
 (in thousands)
March 31, 2023      
Fixed maturity securities:      
State and municipal$69,241 $(3,073)$222,575 $(41,390)$291,816 $(44,463)
Residential mortgage-backed148,585 (4,758)177,694 (27,122)326,279 (31,880)
Corporate256,892 (9,429)334,957 (47,399)591,849 (56,828)
Commercial mortgage and asset-backed66,808 (2,291)235,846 (19,546)302,654 (21,837)
U.S. Treasury securities and obligations guaranteed by the U.S. government
22,774 (360)39,563 (2,370)62,337 (2,730)
Total fixed maturity securities, available-for-sale$564,300 $(19,911)$1,010,635 $(137,827)$1,574,935 $(157,738)
December 31, 2022      
Fixed maturity securities:      
State and municipal$241,586 $(34,840)$72,805 $(21,476)$314,391 $(56,316)
Residential mortgage-backed225,870 (18,823)98,594 (18,431)324,464 (37,254)
Corporate412,942 (33,417)167,541 (32,875)580,483 (66,292)
Commercial mortgage and asset-backed184,985 (12,829)114,955 (13,298)299,940 (26,127)
U.S. Treasury securities and obligations guaranteed by the U.S. government
47,106 (1,699)21,808 (1,803)68,914 (3,502)
Total fixed maturity securities, available-for-sale$1,112,489 $(101,608)$475,703 $(87,883)$1,588,192 $(189,491)
 
At March 31, 2023, the Company held fixed maturity securities of 543 issuers that were in an unrealized loss position with a total fair value of $1,574.9 million and gross unrealized losses of $157.7 million. None of the fixed maturity securities with unrealized losses has ever missed, or been delinquent on, a scheduled principal or interest payment. At March 31, 2023, 99.9% of the Company’s fixed maturity security portfolio was rated “BBB-” or better (“investment grade”) by Standard & Poor’s or received an equivalent rating from another nationally recognized rating agency. Fixed maturity securities with ratings below investment grade by Standard & Poor’s or another nationally recognized rating agency at March 31, 2023 had an aggregate fair value of $2.3 million and an aggregate net unrealized loss of $174,000.
The Company reviews its available-for-sale fixed maturities to determine whether unrealized losses are due to credit-related factors. An allowance for credit losses is established for any credit-related impairments, limited to the amount by which fair value is below amortized cost. Changes in the allowance for credit losses are recognized in earnings and included in net realized and unrealized gains (losses) on investments. Unrealized losses that are not credit-related are recognized in other comprehensive income.
The Company considers the extent to which fair value is below amortized cost in determining whether a credit-related loss exists. The Company also considers the credit quality rating of the security, with a special emphasis on securities downgraded below investment grade. A comparison is made between the present value of expected future cash flows for a security and its amortized cost. If the present value of future expected cash flows is less than amortized cost, a credit loss is presumed to exist and an allowance for credit losses is established. Management may conclude that a qualitative analysis is sufficient to support its conclusion that the present value of the expected cash flows equals or exceeds a security’s amortized cost. As a result of this review, management concluded that there were no credit-related impairments of fixed maturity securities at March 31, 2023, December 31, 2022, or March 31, 2022. During the three months ended March 31, 2023, management recognized an impairment loss of $85,000 for one fixed maturity security due to its intent to sell the security. For the remainder of securities in an unrealized loss position, management does not intend to sell the securities, and it is not “more likely than not” that the Company will be required to sell these securities before a recovery in their value to their amortized cost basis occurs.
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Notes to Condensed Consolidated Financial Statements (continued)


Bank loan participations are measured at fair value pursuant to the Company's election of the fair value option, and changes in unrealized gains and losses in bank loan participations are reported in the income statement as net realized and unrealized gains (losses) on investments. Applying the fair value option to the bank loan portfolio increases volatility in the Company's financial statements, but management believes it is less subjective and less burdensome to implement and maintain than the requirements of ASU 2016-13. At March 31, 2023, the Company's bank loan portfolio had an aggregate fair value of $146.8 million and unpaid principal of $164.8 million. Investment income on bank loan participations included in net investment income was $4.3 million and $2.4 million for the three months ended March 31, 2023 and 2022, respectively. Net realized and unrealized gains (losses) on bank loan participations were $1.4 million and $(2.1) million for the three months ended March 31, 2023 and 2022, respectively. For the three months ended March 31, 2023, management concluded that $1.9 million of the unrealized losses associated with loans from two issuers were due to credit-related impairments. For the three months ended March 31, 2022, management concluded that unrealized losses were largely market-driven and that none of the unrealized losses were due to credit-related impairments. Losses due to credit-related impairments are determined based upon consultations and advice from the Company's specialized investment manager and consideration of any adverse situations that could affect the borrower's ability to repay, the estimated value of underlying collateral, and other relevant factors.
Bank loan participations generally provide a higher yield than our portfolio of fixed maturities and have a credit rating that is below investment grade (i.e. below “BBB-” for Standard & Poor’s) at the date of purchase. These bank loans are primarily senior, secured floating-rate debt rated “BB”, “B”, or “CCC” by Standard & Poor’s or an equivalent rating from another nationally recognized rating agency. These bank loans include assignments of, and participations in, performing and non-performing senior corporate debt generally acquired through primary bank syndications and in secondary markets. Bank loans consist of, but are not limited to, term loans, the funded and unfunded portions of revolving credit loans, and other similar loans and investments. Management believed that it was probable at the time that these loans were acquired that the Company would be able to collect all contractually required payments receivable.
Interest income on bank loan participations is accrued on the unpaid principal balance, and discounts and premiums on bank loan participations are amortized to income using the interest method. Generally, the accrual of interest on a bank loan participation is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest. A bank loan participation may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. Generally, bank loan participations are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt. Interest received on nonaccrual loans generally is reported as investment income. There were no bank loans on nonaccrual status at March 31, 2023 or December 31, 2022.
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Notes to Condensed Consolidated Financial Statements (continued)


The Company’s net realized and unrealized gains and losses on investments are summarized as follows:
 Three Months Ended
March 31,
 20232022
 (in thousands)
Fixed maturity securities:  
Gross realized gains$ $366 
Gross realized losses(91)(164)
 (91)202 
Bank loan participations:  
Gross realized gains81 95 
Gross realized losses(1,211)(184)
Changes in fair values of bank loan participations2,545 (2,009)
 1,415 (2,098)
Equity securities:  
Gross realized gains581 24 
Gross realized losses(267)(381)
Changes in fair values of equity securities(1,221)(2,742)
 (907)(3,099)
Short-term investments and other:  
Gross realized gains3  
Gross realized losses(13)(15)
Changes in fair values of short-term investments and other  
 (10)(15)
Total$407 $(5,010)
  
Realized investment gains or losses are determined on a specific identification basis.
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Notes to Condensed Consolidated Financial Statements (continued)


The Company invests selectively in private debt and equity opportunities. These investments, which together comprise the Company’s other invested assets, are primarily focused in renewable energy, limited partnerships, and bank holding companies.
 Carrying ValueInvestment Income
 March 31,December 31,Three Months Ended
March 31,
 2023202220232022
 (in thousands)
Renewable energy LLCs (a)
Excess and Surplus Lines$9,155 $9,159 $1,003 $2,280 
Corporate & Other  170 244 
9,155 9,159 1,173 2,524 
Renewable energy notes receivable (b)
Excess and Surplus Lines1,202 1,202 36 70 
Corporate & Other1,503 1,503 45 87 
2,705 2,705 81 157 
Limited partnerships (c)
Excess and Surplus Lines9,760 10,019 251 132 
Corporate & Other1,064 1,064   
10,824 11,083 251 132 
Bank holding companies (d)
Excess and Surplus Lines4,500 4,500 86 86 
Corporate & Other    
4,500 4,500 86 86 
Total other invested assets
Excess and Surplus Lines24,617 24,880 1,376 2,568 
Corporate & Other2,567 2,567 215 331 
$27,184 $27,447 $1,591 $2,899 
 
(a)The Company's Excess and Surplus Lines segment owns equity interests ranging from 2.6% to 4.9% in various LLCs whose principal objective is capital appreciation and income generation from owning and operating renewable energy production facilities (wind and solar). The Corporate and Other segment also held an interest in one of the LLCs until the fourth quarter of 2022. The LLCs are managed by an entity for which two former directors served as officers, and the Company’s Non-Executive Chairman has invested in certain of these LLCs. The equity method is used to account for the Company’s LLC investments. Income for the LLCs primarily reflects adjustments to the carrying values of investments in renewable energy projects to their determined fair values. The fair value adjustments are included in revenues for the LLCs. Expenses for the LLCs are not significant and are comprised of administrative and interest expenses. The Company received cash distributions from these investments totaling $24,000 and $951,000 in the three months ended March 31, 2023 and 2022, respectively. During the fourth quarter of 2022, the underlying projects in two of our LLCs were sold at the manager's discretion. In the three months ended March 31, 2023, we received additional proceeds from the sales of $1.2 million comprised of $984,000 in the Excess and Surplus Lines segment and $170,000 in the Corporate and Other segment. We could receive additional contingent payments in the future according to terms of the transaction.
(b)The Company's Excess and Surplus Lines and Corporate and Other segments have invested in notes receivable for renewable energy projects. At March 31, 2023, the Company held two notes issued by an entity for which two of our former directors serve as officers. Interest on the notes, which mature in 2025, is fixed at 12%.
(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, private equity general partnership interests, commercial mortgage-backed securities, and tranches of distressed home loans. Income from the partnerships is recognized under the equity method of accounting. At March 31, 2023, the Company’s Excess and Surplus Lines segment has outstanding commitments to invest another $5.4 million in the other limited partnerships.
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Notes to Condensed Consolidated Financial Statements (continued)


(d)The Company's Excess and Surplus Lines segment holds $4.5 million of subordinated notes issued by a bank holding company for which the Company’s Non-Executive Chairman was previously the Lead Independent Director and an investor and for which one of the Company’s directors is also an investor (the "Bank Holding Company"). Interest on the notes, which mature on August 12, 2023, is fixed at 7.6% per annum.
3.    Goodwill and Intangible Assets
On December 11, 2007, the Company completed an acquisition of James River Group by acquiring 100% of the outstanding shares of James River Group common stock, referred to herein as the “Merger”. The transaction was accounted for under the purchase method of accounting, and goodwill and intangible assets were recognized by the Company as a result of the transaction. Goodwill resulting from the Merger was $181.8 million at March 31, 2023 and December 31, 2022.
The gross carrying amounts and accumulated amortization for each major specifically identifiable intangible asset class were as follows: 
  March 31, 2023December 31, 2022
 Life
(Years)
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
  ($ in thousands)
Intangible Assets     
TrademarksIndefinite$22,200 $— $22,200 $— 
Insurance licenses and authoritiesIndefinite8,964 — 8,964 — 
Identifiable intangible assets not subject to amortization 31,164 — 31,164 — 
Broker relationships24.611,611 7,190 11,611 7,099 
Identifiable intangible assets subject to amortization 11,611 7,190 11,611 7,099 
  $42,775 $7,190 $42,775 $7,099 
 
17

Table of Contents
JAMES RIVER GROUP HOLDING, LTD. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (continued)


4.    Earnings Per Share
The following represents a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per common share computations contained in the condensed consolidated financial statements:
Three Months Ended
March 31,
20232022
(in thousands, except share and per share amounts)
Net income$9,608 $10,205 
Less: Dividends on Series A preferred shares(2,625)(875)
Net income available to common shareholders$6,983 $9,330 
Weighted average common shares outstanding:
Basic37,531,819 37,406,913 
Dilutive potential common shares253,633 147,749 
Diluted37,785,452