UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):	February 18, 2015	
 
JAMES RIVER GROUP HOLDINGS, LTD.
 
(Exact name of registrant as specified in its charter)
 
Bermuda	001-36777	98-0585280	
(State or other jurisdiction	(Commission	(IRS Employer	
of incorporation)	File Number)	Identification No.)	
 
32 Victoria Street, Hamilton Bermuda	HM 12	
(Address of principal executive offices)	(Zip Code)	
 
Registrant’s telephone number, including area code:	+1-441-278-4580	

 
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
 
 	¨	Written Communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 	¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 	¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 	¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

  

 	
  
Item 2.02 Results of Operations and Financial Condition
 
On February 18, 2015, James River Group Holdings, Ltd. (the “Company”) issued a press release announcing its financial results for its fourth quarter and fiscal year ended December 31, 2014. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K (this “Form 8-K”).
 
The information in this Item 2.02 and in Exhibit 99.1 furnished herewith shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act unless specifically stated by the Company.
 
Item 9.01 Financial Statements and Exhibits
 
(d)	 	Exhibits	
 
The following Exhibit is furnished as a part of this Form 8-K:
 
Exhibit No.	 	Description	
 	 	 	
99.1	 	Press Release of the Company dated February 18, 2015	

 	
  
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 	JAMES RIVER GROUP HOLDINGS, LTD.	
 	 	 	
Dated:  February 18, 2015	By:	/s/ J. Adam Abram	
 	 	J. Adam Abram	
 	 	Chief Executive Officer	

 	
  
EXHIBIT INDEX
 
Exhibit No.	 	Description	
 	 	 	
99.1	 	Press Release of the Company dated February 18, 2015	

 

Exhibit 99.1

 
FOR IMMEDIATE RELEASE
 
JAMES RIVER GROUP HOLDINGS REPORTS FOURTH QUARTER NET
OPERATING INCOME OF $18.8 MILLION OR $0.65 PER DILUTED SHARE
______________________________
 
OPERATING RETURN ON TANGIBLE EQUITY OF 12.4% FOR 2014
______________________________
 
COMBINED RATIO OF 90.3% FOR FOURTH QUARTER AND 93.5% FOR 2014
______________________________
 
DECLARES $0.16 PER SHARE DIVIDEND
______________________________
 
Hamilton, Bermuda, February 18, 2015- James River Group Holdings, Ltd. (NASDAQ: JRVR) today announced financial results for the fourth quarter and year ended December 31, 2014.
 
Highlights for the fourth quarter include:
 	·	Overall growth in gross written premiums of 22.7% to $103.2 million in the quarter compared to $84.1 million in the fourth quarter of 2013; comprised of the following:	
 	o	Growth in our Excess and Surplus Lines segment of 38.9% to $70.2 million from $50.5 million in 2013;	
 	o	Growth in our Specialty Admitted Insurance segment of $15.9 million, increasing to $18.9 million from $3.0 million in the fourth quarter of 2013; and a	
 	o	Reduction in our Casualty Reinsurance segment of 54.0% to $14.1 million from $30.6 million in the fourth quarter of 2013.	
 	·	Growth in net written premium for the quarter was 16.3% to $82.5 million compared to $70.9 million in the fourth quarter of 2013;	
 	·	A combined ratio of 90.3% compared to 83.9% in the prior year;	
 	·	Net operating income in 2014 of $18.8 million compared to $18.3 million in the prior year;	
 	·	Diluted operating earnings per share of $0.65 compared to $0.64 in the prior year;	
 	·	Net income in 2014 of $8.9 million compared to $18.0 million in the prior year, with the fourth quarter of 2014 including $11.4 million, on an after-tax basis, of costs related to the Company’s IPO;	
 	·	Fully diluted earnings per share of $0.31 compared to $0.63 in the prior year, with the fourth quarter of 2014 including $0.39 per share of cost related to the Company’s IPO; and	
 	·	An operating return on tangible equity for the quarter of 4.1%.	
  
32 Victoria Street, Milner Place, Hamilton HM 12, Bermuda
Mailing address l P.O. Box 1502, Hamilton HM FX, Bermuda
Tel 441.278.4580 l Fax 441.278.4588
 
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JRVR Announces Fourth Quarter Results	
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February 18, 2015	
 
Highlights for the year ended December 31, 2014, include:
 	·	Overall growth in gross written premiums of 40.8% to $518.8 million for all of 2014 compared to $368.5 million in 2013; comprised of the following:	
 	o	Growth in our Excess and Surplus Lines segment of 31.3% to $252.7 million from $192.4 million in 2013;	
 	o	Growth in our Specialty Admitted Insurance segment of $38.8 million; increasing to $59.4 million from $20.6 million in 2013; and	
 	o	Growth in our Casualty Reinsurance segment of 32.9% to $206.7 million from $155.5 million in 2013.	
 	·	Growth in net written premium for all of 2014 was 38.4% to $450.1 million compared to $325.2 million in 2013;	
 	·	A combined ratio of 93.5% compared to 91.2% in the prior year;	
 	·	Net operating income of $58.4 million compared to $58.9 million in the prior year;	
 	·	Diluted operating earnings per share of $2.03 compared to $1.93 in the prior year;	
 	·	Net income in 2014 of $44.7 million compared to $67.3 million in the prior year, with 2014 including $13.2 million, on an after-tax basis, of costs related to the Company’s IPO;	
 	·	Fully diluted earnings per share of $1.55 compared to $2.21 in the prior year, with 2014 including $0.46 of costs related to the Company’s IPO; and	
 	·	An operating return on tangible equity for the year of 12.4%.	
 
J. Adam Abram, Chairman and Chief Executive Officer, said, “We are pleased to have such good results to report to our new shareholders who purchased shares in our initial public offering.  We achieved a 93.5% combined ratio in 2014, with all segments reporting underwriting profits.  Moreover, we believe we enter 2015 with a solid balance sheet.”
 
“Our tangible book value grew by 3.0% during the fourth quarter. Going forward, we seek to report steady underwriting profits and deliver consistent returns on equity for our shareholders.” 
 
“In keeping with our Board’s emphasis on capital efficiency and management, the Directors voted to declare a $0.16 per share dividend to be paid March 31.” 
 
Net operating earnings per diluted share for the fourth quarter of 2014 were $0.65 and excluded $0.39 per share of costs related to the initial public offering of the Company’s common shares which was completed in December 2014. This amount compares to $0.64 for the same period in 2013. Net operating earnings per share for the year ended December 31, 2014 were $2.03 and excluded $0.46 per share of costs related to the Company’s initial public offering. This amount compares to $1.93 for the year ended 2013. Diluted shares outstanding were 28.9 million for the quarter and 28.8 million for the year ended December 31, 2014 (28.8 million and 30.5 million, respectively, in the prior year).
 
Fully diluted earnings per share for the fourth quarter of 2014 were $0.31. This amount compares to $0.63 for the same period in 2013. Fully diluted earnings per share for the year ended December 31, 2014 were $1.55. This amount compares to $2.21 for the year ended 2013.
 
The combined ratio for the Company was 90.3% (comprised of a loss ratio of 59.4% and an expense ratio of 30.9%) for the fourth quarter of 2014. This compares to a combined ratio of 83.9% (comprised of a loss ratio of 52.3% and an expense ratio of 31.6%) in the prior year. For
 
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JRVR Announces Fourth Quarter Results	
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February 18, 2015	
 
the full year, the combined ratio for the Company was 93.5% (comprised of a loss ratio of 59.9% and an expense ratio of 33.6%) for 2014. This compares to a combined ratio of 91.2% (comprised of a loss ratio of 56.2% and an expense ratio of 35.0%) in the prior year.
 
Results for the fourth quarter and year ended December 31, 2014 include favorable reserve development on prior accident years of $8.3 million and $27.4 million, respectively. In the prior year, this favorable reserve development was $17.0 million and $37.5 million, respectively. On an after-tax basis, favorable reserve development for the fourth quarter and year ended December 31, 2014 are $7.1 million and $23.9 million, respectively (in the prior year, these after-tax, favorable reserve development amounts were $15.3 million and $33.1 million, respectively).
 
The improvement in the overall expense ratio in the fourth quarter as well as the full year 2014 compared to the same periods in 2013 was primarily due to the increase in our earned premiums which grew 35.0% in the fourth quarter of 2014 to $110.2 million from $81.6 million and 20.8% for all of 2014 to $396.2 million from $328.1 million in 2013.
 
The Excess and Surplus Lines segment’s combined ratio was 77.6% and 82.5% for the quarter and year ended December 31, 2014, respectively. In the prior year, this segment’s results were 56.3% and 69.3%, respectively. In the quarter and year ended December 31, 2014, we recognized $9.0 million and $27.3 million in favorable reserve development representing 15.7 points and 13.9 points of the loss and combined ratio, respectively. In the same periods in 2013, we recognized $15.0 million and $40.7 million in favorable reserve development representing 39.0 points and 28.7 points of the loss and combined ratio, respectively.
 
The Specialty Admitted Insurance segment’s combined ratio was 90.5% for the quarter and 99.9% for the year ended December 31, 2014. In the prior year, this segment’s results were 124.4% and 121.6%, respectively. In the quarter and year ended December 31, 2014, we recognized $2.6 million and $5.9 million in favorable reserve development representing 27.1 points and 20.6 points of the loss and combined ratio, respectively. In the same periods in 2013, we recognized $951,000 and $1.4 million in favorable reserve development representing 20.2 points and 7.9 points of the loss and combined ratio, respectively. Additionally the expense ratio for the quarter and year ended December 31, 2014 of 39.4% and 46.5%, respectively, has begun to show the effects of the successful ramp up of the programs and fronting business along with an overall increase in earned premiums in this segment. For the same periods in the prior year, the expense ratios were 53.7% and 54.2%, respectively.
 
The Casualty Reinsurance segment’s combined ratio was 99.4% and 99.6% for the quarter and year ended December 31, 2014, respectively. In the prior year, this segment’s results were 102.3% and 101.5%, respectively. In the quarter and year ended December 31, 2014, we recognized $3.3 million and $5.7 million of adverse reserve development representing (7.7) points and (3.3) points of the loss and combined ratio, respectively. In the same periods in 2013, we recognized $1.0 million of favorable reserve development in the quarter and $4.7 million in adverse reserve development for the year representing 2.6 points and (2.8) points of the loss and combined ratio, respectively.
 
Net investment income for the fourth quarter of 2014 was $9.8 million. This amount compares to $10.7 million for the same period in 2013. For all of 2014, our net investment income was $43.0
 
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JRVR Announces Fourth Quarter Results	
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February 18, 2015	
 
million compared to $45.4 million in the prior year. In both instances, this reduction was due to the $70 million dividend we paid on September 30, 2014, which reduced our investable assets, as well as declining portfolio yields, offset by positive operating cash flow. Our balance of cash and invested assets grew 7.7% from $1,217.1 million at December 31, 2013 to $1,310.6 million and 0.7% for the quarter from $1,302.1 million at September 30, 2014. Our annualized gross investment yield on average fixed maturity securities for the quarter and year ended December 31, 2014 was 3.3% and 3.5%, respectively. The average duration of our portfolio, excluding bank loans, as of December 31, 2014 was 3.8.
 
Dividend
 
The Company also announced that its Board of Directors declared a cash dividend of $0.16 per common share. The dividend is payable on Tuesday, March 31, 2015 to all shareholders of record on Monday, March 16, 2015.
 
Conference Call
 
James River Group Holdings will hold a conference call to discuss this press release tomorrow, February 19, 2015, at 9:00 a.m. Eastern time. Investors may access the conference call by dialing (877) 930-8055 Conference ID# 73179935 or via the internet by going to  www.jrgh.net  and clicking on the Investor Relations link. Please visit the website at least 15 minutes early to register, download and install any necessary audio software. A replay will be available shortly after the call and through the end of business on March 18, 2015 at the number and website referenced above.
 
Forward Looking Statements
 
This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. In some cases, such forward-looking statements may be identified by terms such as believe, expect, seek, may, will, intend, project, plan, estimate or similar words. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Although it is not possible to identify all of these risks and factors, they include, among others, the following: losses exceeding reserves; loss of key members or our management or employees; adverse economic factors; a decline in our financial strength; loss of a group of brokers or agents that generate significant portions of our business; losses in our investment portfolio; additional government or market regulation; potentially becoming subject to United States taxation and other risks described in the Company's filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this release and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise .
 
Non-GAAP Financial Measures
 
In presenting James River Group Holdings’ results, management has included financial measures that are not calculated under standards or rules that comprise accounting principles generally accepted in the United States (GAAP). Such measures, including underwriting profit, net operating income, and return on tangible equity are referred to as non-GAAP measures. These non-GAAP measures may be defined or calculated differently by other companies. These
 
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JRVR Announces Fourth Quarter Results	
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February 18, 2015	
 
measures should not be viewed as a substitute for those determined in accordance with GAAP. Reconciliations of such measures to the most comparable GAAP figures are included at the end of this press release.
 
About James River Group Holdings, Ltd.
 
James River Group Holdings, Ltd. is a Bermuda-based insurance holding company which owns and operates a group of specialty insurance and reinsurance companies founded by members of our management team. The Company operates in three specialty property-casualty insurance and reinsurance segments: Excess and Surplus Lines, Specialty Admitted Insurance and Casualty Reinsurance. The Company tends to focus on accounts associated with small or medium-sized businesses in each of its segments. Each of the Company’s regulated insurance subsidiaries are rated “A-” (Excellent) with a “positive outlook” by A.M. Best Company.
 
Visit James River Group Holdings, Ltd. on the web at www.jrgh.net
 
For more information contact:
 
Robert Myron
President and Chief Operating Officer
1-441-278-4583
InvestorRelations@jrgh.net
 
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JRVR Announces Fourth Quarter Results	
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February 18, 2015	
 
James River Group Holdings, Ltd. and Subsidiaries
Summarized Consolidated Balance Sheet Data
(Unaudited)
 
 	 	December 31,
2014	 	 	December 31,
2013	 	
 	 	($ in thousands, except for share amounts)	 	
ASSETS	 	 	 	 	 	 	 	 	
Invested assets:	 	 	 	 	 	 	 	 	
Fixed maturity securities, available-for-sale	 	$	756,963	 	 	$	663,118	 	
Fixed maturity securities, trading	 	 	7,388	 	 	 	17,306	 	
Equity securities, available-for-sale	 	 	67,905	 	 	 	66,807	 	
Bank loan participations held-for-investment	 	 	239,511	 	 	 	197,659	 	
Short-term investments	 	 	131,856	 	 	 	71,518	 	
Other invested assets	 	 	33,622	 	 	 	42,066	 	
Total investments	 	 	1,237,245	 	 	 	1,058,474	 	
 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	 	73,383	 	 	 	158,604	 	
Accrued investment income	 	 	7,273	 	 	 	7,156	 	
Premiums receivable and agents’ balances	 	 	162,527	 	 	 	135,889	 	
Reinsurance recoverable on unpaid losses	 	 	127,254	 	 	 	119,467	 	
Reinsurance recoverable on paid losses	 	 	1,725	 	 	 	1,010	 	
Deferred policy acquisition costs	 	 	60,202	 	 	 	46,204	 	
Goodwill and intangible assets	 	 	221,956	 	 	 	222,553	 	
Other assets	 	 	67,727	 	 	 	57,436	 	
Total assets	 	$	1,959,292	 	 	$	1,806,793	 	
 	 	 	 	 	 	 	 	 	
LIABILITIES AND SHAREHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	
Reserve for losses and loss adjustment expenses	 	$	716,296	 	 	$	646,452	 	
Unearned premiums	 	 	277,579	 	 	 	218,532	 	
Senior debt	 	 	88,300	 	 	 	58,000	 	
Junior subordinated debt	 	 	104,055	 	 	 	104,055	 	
Accrued expenses	 	 	31,107	 	 	 	14,535	 	
Other liabilities	 	 	54,034	 	 	 	63,729	 	
Total liabilities	 	 	1,271,371	 	 	 	1,105,303	 	
 	 	 	 	 	 	 	 	 	
Total shareholders’ equity	 	 	687,921	 	 	 	701,490	 	
Total liabilities and shareholders’ equity	 	$	1,959,292	 	 	$	1,806,793	 	
 	 	 	 	 	 	 	 	 	
Tangible equity	 	$	465,965	 	 	$	478,937	 	
Tangible equity per common share outstanding	 	$	16.33	 	 	$	16.78	 	
Total shareholders’ equity per common share outstanding	 	$	24.10	 	 	$	24.58	 	
Common shares outstanding	 	 	28,540,350	 	 	 	28,540,350	 	
Debt to total capitalization ratio	 	 	21.9	%	 	 	18.8	%	
 
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February 18, 2015	
 
James River Group Holdings, Ltd. and Subsidiaries
Summarized Consolidated Income Statement Data
(Unaudited)
 
 	 	Three Months Ended
December 31,	 	 	Years Ended
December 31,	 	
 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 	 	($ in thousands, except for share data)	 	
REVENUES	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross written premiums	 	$	103,151	 	 	$	84,098	 	 	$	518,767	 	 	$	368,518	 	
Net written premiums	 	$	82,465	 	 	$	70,903	 	 	$	450,083	 	 	$	325,166	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net earned premiums	 	$	110,155	 	 	$	81,569	 	 	$	396,212	 	 	$	328,078	 	
Net investment income	 	 	9,816	 	 	 	10,672	 	 	 	43,005	 	 	 	45,373	 	
Net realized investment gains (losses)	 	 	342	 	 	 	(373	)	 	 	(1,336	)	 	 	12,619	 	
Other income	 	 	382	 	 	 	69	 	 	 	1,122	 	 	 	222	 	
Total revenues	 	 	120,695	 	 	 	91,937	 	 	 	439,003	 	 	 	386,292	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EXPENSES	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Losses and loss adjustment expenses	 	 	65,432	 	 	 	42,683	 	 	 	237,368	 	 	 	184,486	 	
Other operating expenses	 	 	34,084	 	 	 	25,765	 	 	 	133,055	 	 	 	114,804	 	
Other expenses	 	 	13,164	 	 	 	72	 	 	 	16,012	 	 	 	677	 	
Interest expense	 	 	1,686	 	 	 	1,577	 	 	 	6,347	 	 	 	6,777	 	
Amortization of intangible assets	 	 	150	 	 	 	552	 	 	 	597	 	 	 	2,470	 	
Total expenses	 	 	114,516	 	 	 	70,649	 	 	 	393,379	 	 	 	309,214	 	
Income before taxes	 	 	6,179	 	 	 	21,288	 	 	 	45,624	 	 	 	77,078	 	
Federal income tax expense (benefit)	 	 	(2,687	)	 	 	3,258	 	 	 	939	 	 	 	9,741	 	
NET INCOME	 	$	8,866	 	 	$	18,030	 	 	$	44,685	 	 	$	67,337	 	
NET OPERATING INCOME	 	$	18,785	 	 	$	18,333	 	 	$	58,424	 	 	$	58,918	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EARNINGS PER SHARE	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.31	 	 	$	0.63	 	 	$	1.57	 	 	$	2.21	 	
Diluted	 	$	0.31	 	 	$	0.63	 	 	$	1.55	 	 	$	2.21	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
NET OPERATING INCOME PER SHARE	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.66	 	 	$	0.64	 	 	$	2.05	 	 	$	1.94	 	
Diluted	 	$	0.65	 	 	$	0.64	 	 	$	2.03	 	 	$	1.93	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average common shares outstanding:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	28,540,350	 	 	 	28,537,900	 	 	 	28,540,350	 	 	 	30,442,950	 	
Diluted	 	 	28,878,751	 	 	 	28,769,250	 	 	 	28,810,301	 	 	 	30,500,800	 	
Cash dividends declared per common share	 	$	0.00	 	 	$	0.00	 	 	$	2.45	 	 	$	0.00	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ratios:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss ratio	 	 	59.4	%	 	 	52.3	%	 	 	59.9	%	 	 	56.2	%	
Expense ratio	 	 	30.9	%	 	 	31.6	%	 	 	33.6	%	 	 	35.0	%	
Combined ratio	 	 	90.3	%	 	 	83.9	%	 	 	93.5	%	 	 	91.2	%	
 
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JRVR Announces Fourth Quarter Results	
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February 18, 2015	
 
James River Group Holdings, Ltd. and Subsidiaries
Segment Results
 
EXCESS AND SURPLUS LINES
 
 	 	Three Months Ended
December 31,	 	 	Years Ended
December 31,	 	
 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 	 	($ in thousands)	 	
Gross written premiums	 	$	70,163	 	 	$	50,514	 	 	$	252,707	 	 	$	192,394	 	
Net written premiums	 	$	57,506	 	 	$	38,205	 	 	$	208,124	 	 	$	155,064	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net earned premiums	 	$	57,473	 	 	$	38,472	 	 	$	195,786	 	 	$	141,826	 	
Losses and loss adjustment expenses	 	 	30,784	 	 	 	12,074	 	 	 	108,146	 	 	 	57,250	 	
Underwriting expenses	 	 	13,842	 	 	 	9,574	 	 	 	53,427	 	 	 	41,053	 	
Underwriting profit (a)	 	$	12,847	 	 	$	16,824	 	 	$	34,213	 	 	$	43,523	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ratios:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss ratio	 	 	53.6	%	 	 	31.4	%	 	 	55.2	%	 	 	40.4	%	
Expense ratio	 	 	24.1	%	 	 	24.9	%	 	 	27.3	%	 	 	28.9	%	
Combined ratio	 	 	77.6	%	 	 	56.3	%	 	 	82.5	%	 	 	69.3	%	
 
(a) See "Reconciliation of Non-GAAP Measures."
 
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JRVR Announces Fourth Quarter Results	
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February 18, 2015	
 
SPECIALTY ADMITTED INSURANCE
 
 	 	Three Months Ended
December 31,	 	 	Years Ended
December 31,	 	
 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 	 	($ in thousands)	 	
Gross written premiums	 	$	18,933	 	 	$	3,005	 	 	$	59,380	 	 	$	20,594	 	
Net written premiums	 	$	11,373	 	 	$	2,631	 	 	$	36,228	 	 	$	18,169	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net earned premiums	 	$	9,602	 	 	$	4,713	 	 	$	28,449	 	 	$	17,908	 	
Losses and loss adjustment expenses	 	 	4,905	 	 	 	3,330	 	 	 	15,179	 	 	 	12,066	 	
Underwriting expenses	 	 	3,786	 	 	 	2,533	 	 	 	13,237	 	 	 	9,710	 	
Underwriting profit (loss) (a)	 	$	911	 	 	$	(1,150	)	 	$	33	 	 	$	(3,868	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ratios:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss ratio	 	 	51.1	%	 	 	70.7	%	 	 	53.4	%	 	 	67.4	%	
Expense ratio	 	 	39.4	%	 	 	53.7	%	 	 	46.5	%	 	 	54.2	%	
Combined ratio	 	 	90.5	%	 	 	124.4	%	 	 	99.9	%	 	 	121.6	%	
 
(a) See "Reconciliation of Non-GAAP Measures."
 
CASUALTY REINSURANCE
 
 	 	Three Months Ended
December 31,	 	 	Years Ended
December 31,	 	
 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 	 	($ in thousands)	 	
Gross written premiums	 	$	14,055	 	 	$	30,579	 	 	$	206,680	 	 	$	155,530	 	
Net written premiums	 	$	13,586	 	 	$	30,067	 	 	$	205,731	 	 	$	151,933	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net earned premiums	 	$	43,080	 	 	$	38,384	 	 	$	171,977	 	 	$	168,344	 	
Losses and loss adjustment expenses	 	 	29,743	 	 	 	27,279	 	 	 	114,043	 	 	 	115,170	 	
Underwriting expenses	 	 	13,094	 	 	 	11,997	 	 	 	57,267	 	 	 	55,734	 	
Underwriting profit (loss) (a)	 	$	243	 	 	$	(892	)	 	$	667	 	 	$	(2,560	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ratios:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss ratio	 	 	69.0	%	 	 	71.1	%	 	 	66.3	%	 	 	68.4	%	
Expense ratio	 	 	30.4	%	 	 	31.3	%	 	 	33.3	%	 	 	33.1	%	
Combined ratio	 	 	99.4	%	 	 	102.3	%	 	 	99.6	%	 	 	101.5	%	
 
(a) See "Reconciliation of Non-GAAP Measures."
 
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JRVR Announces Fourth Quarter Results	
Page 10	
February 18, 2015	
 
RECONCILIATION OF NON-GAAP MEASURES
 
The following table reconciles the underwriting profit (loss) by individual operating segment and of the whole Company to consolidated income before taxes. We believe that these measures are useful to investors in evaluating the performance of our Company and its operating segments because our objective is to consistently earn underwriting profits. We evaluate the performance of our operating segments and allocate resources based primarily on underwriting profit (loss) of operating segments. Our definition of underwriting profit (loss) of operating segments and underwriting profit (loss) may not be comparable to that of other companies.
 
 	 	Three Months Ended	 	 	Years Ended	 	
 	 	December 31,	 	 	December 31,	 	
 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 	 	($ in thousands)	 	
Underwriting profit (loss) of the operating segments:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Excess and Surplus Lines	 	$	12,847	 	 	$	16,824	 	 	$	34,213	 	 	$	43,523	 	
Specialty Admitted Insurance	 	 	911	 	 	 	(1,150	)	 	 	33	 	 	 	(3,868	)	
Casualty Reinsurance	 	 	243	 	 	 	(892	)	 	 	667	 	 	 	(2,560	)	
Total underwriting profit of operating segments	 	 	14,001	 	 	 	14,782	 	 	 	34,913	 	 	 	37,095	 	
Other operating expenses of the Corporate and Other segment	 	 	(3,362	)	 	 	(1,661	)	 	 	(9,124	)	 	 	(8,307	)	
Underwriting profit	 	 	10,639	 	 	 	13,121	 	 	 	25,789	 	 	 	28,788	 	
Net investment income	 	 	9,816	 	 	 	10,672	 	 	 	43,005	 	 	 	45,373	 	
Net realized investment gains (losses)	 	 	342	 	 	 	(373	)	 	 	(1,336	)	 	 	12,619	 	
Other income	 	 	382	 	 	 	69	 	 	 	1,122	 	 	 	222	 	
Interest expense	 	 	(1,686	)	 	 	(1,577	)	 	 	(6,347	)	 	 	(6,777	)	
Other expenses	 	 	(13,164	)	 	 	(72	)	 	 	(16,012	)	 	 	(677	)	
Amortization of intangible assets	 	 	(150	)	 	 	(552	)	 	 	(597	)	 	 	(2,470	)	
Consolidated income before taxes	 	$	6,179	 	 	$	21,288	 	 	$	45,624	 	 	$	77,078	 	
 
We define net operating income as net income excluding net realized investment gains and losses, expenses related to due diligence costs for various merger and acquisition activities, costs associated with our initial public offering, severance costs associated with terminated employees, impairment charges on goodwill and intangible assets and gains on extinguishment of debt. We use net operating income as an internal performance measure in the management of our operations because we believe it gives our management and other users of our financial information useful insight into our results of operations and our underlying business performance. Net operating income should not be viewed as a substitute for net income calculated in accordance with GAAP, and our definition of net operating income may not be comparable to that of other companies.
 
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JRVR Announces Fourth Quarter Results	
Page 11	
February 18, 2015	
 
Our income before taxes and net income for the three months and years ended December 31, 2014 and 2013, respectively, reconciles to our net operating income as follows:
 
 	 	Three and Twelve Months Ended December 31,
2014	 	
 	 	Three Months	 	 	Twelve Months	 	
 	 	Income
Before
Taxes	 	 	Net
Income	 	 	Income
Before
Taxes	 	 	Net
Income	 	
 	 	($ in thousands)	 	
Income as reported	 	$	6,179	 	 	$	8,866	 	 	$	45,624	 	 	$	44,685	 	
Net realized investment (gains) losses	 	 	(342	)	 	 	(1,613	)	 	 	1,336	 	 	 	(890	)	
Initial public offering costs	 	 	13,074	 	 	 	11,367	 	 	 	14,930	 	 	 	13,223	 	
Other expenses	 	 	90	 	 	 	58	 	 	 	1,082	 	 	 	977	 	
Interest expense on leased building the Company is deemed to own for accounting purposes	 	 	164	 	 	 	107	 	 	 	659	 	 	 	429	 	
Net operating income	 	$	19,165	 	 	$	18,785	 	 	$	63,631	 	 	$	58,424	 	
 
 	 	Three and Twelve Months Ended December 31,
2013	 	
 	 	Three Months	 	 	Twelve Months	 	
 	 	Income
Before
Taxes	 	 	Net
Income	 	 	Income
Before
Taxes	 	 	Net
Income	 	
 	 	($ in thousands)	 	
Income as reported	 	$	21,288	 	 	$	18,030	 	 	$	77,078	 	 	$	67,337	 	
Net realized investment (gains) losses	 	 	373	 	 	 	150	 	 	 	(12,619	)	 	 	(9,427	)	
Other expenses	 	 	72	 	 	 	46	 	 	 	677	 	 	 	577	 	
Interest expense on leased building the Company is deemed to own for accounting purposes	 	 	165	 	 	 	107	 	 	 	663	 	 	 	431	 	
Net operating income	 	$	21,898	 	 	$	18,333	 	 	$	65,799	 	 	$	58,918	 	
 
We define tangible equity as the sum of shareholders’ equity less goodwill and intangible assets (net of amortization). Our definition of tangible equity may not be comparable to that of other companies, and it should not be viewed as a substitute for shareholders’ equity calculated in accordance with GAAP. We use tangible equity internally to evaluate the strength of our balance sheet and to compare returns relative to this measure. The following table reconciles shareholders’ equity to tangible equity for the years ended December 31, 2014 and 2013.
 
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JRVR Announces Fourth Quarter Results	
Page 12	
February 18, 2015	
 
 	 	December 31,	 	
 	 	2014	 	 	2013	 	
 	 	($ in thousands)	 	
 	 	 	 	 	 	 	
Shareholders’ equity	 	$	687,921	 	 	$	701,490	 	
Less: Goodwill and intangible assets	 	 	221,956	 	 	 	222,553	 	
Tangible equity	 	$	465,965	 	 	$	478,937	 	
 
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