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jrvr-20210505
0001620459false00016204592021-05-052021-05-05

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):May 5, 2021
JAMES RIVER GROUP HOLDINGS, LTD.
(Exact name of registrant as specified in its charter)
Bermuda001-3677798-0585280
(State or other jurisdiction of incorporation)(Commission File Number)(IRS 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)
(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))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Shares, par value $0.0002 per shareJRVRNASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging 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. ☐



Item 2.02Results of Operations and Financial Condition.
On May 5, 2021, James River Group Holdings, Ltd. (the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 2021. 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 7.01Regulation FD Disclosure.
The Company will make available a pre-recorded conference call discussing its first quarter results today, May 5, 2021 at 4:30 p.m. Eastern Time. Investors may access the pre-recorded conference call by dialing (800) 708-4539, Conference ID# 50150593. A replay of the conference call will be available beginning tomorrow May 6, 2021 at 8:00 a.m. Eastern Time by dialing (855) 859-2056 or (404) 537-3406, Conference ID# 50150593.

Item 8.01Other Events.
(a) On May 5, 2021, the Company announced that its Board of Directors declared a cash dividend of $0.30 per common share of the Company to be paid on June 30, 2021 to shareholders of record on June 14, 2021.
(b) The Company intends to hold the 2021 annual general meeting of shareholders (the “2021 Annual Meeting”) on October 26, 2021. The record date, time and location of the 2021 Annual Meeting will be set forth in the proxy statement for the 2021 Annual Meeting to be distributed to shareholders prior to the meeting.
The date of the 2021 Annual Meeting represents a change of more than 30 days from the anniversary date of the Company’s 2020 annual general meeting of shareholders (the “2020 Annual Meeting”). As a result, the deadlines for shareholder proposals set forth in our definitive proxy statement for the 2020 Annual Meeting are no longer effective. Shareholder proposals intended for inclusion in the Company’s definitive proxy statement for the 2021 Annual Meeting pursuant to Rule 14a-8 of Exchange Act must be received by August 17, 2021 (which the Company believes is a reasonable time before it begins to print and send its proxy materials). Any such shareholder proposal should be sent to our registered office c/o Conyers Corporate Services (Bermuda) Limited, Clarendon House, P.O. Box HM 1022, Hamilton HM DX, Bermuda. Any such proposal must comply with the requirements of Rule 14a-8.
In accordance with the Company’s Third Amended and Restated Bye-laws (the “Bye-laws”), shareholders who intend to nominate a person for election as a director or submit a proposal regarding any other matter of business at the 2021 Annual Meeting must deliver written notice of the shareholder’s intention to do so, which notice must include the information required by the Bye-laws. To be timely, the shareholder’s notice must be delivered to or mailed and received by the Company’s Secretary at the registered office of the Company identified above no earlier than June 28, 2021 and no later than August 17, 2021.
Item 9.01Financial Statements and Exhibits.
(d)    Exhibits
The following Exhibit is furnished as a part of this Form 8-K:
Exhibit No.
Description
99.1
104Cover Page Interactive Data File (embedded within the Inline XBRL document)


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: May 5, 2021
By: /s/ Sarah C. Doran
 Sarah C. Doran
 Chief Financial Officer
Document
Exhibit 99.1

https://cdn.kscope.io/10ebd004b44b68824678c6eaa1c6243d-a20192stqtrjrvrpressrimage.jpg    
JAMES RIVER ANNOUNCES FIRST QUARTER
2021 RESULTS

▪First Quarter 2021 Net Loss of $103.5 million - ($3.37 per diluted share) and Adjusted Net Operating Loss1 of $108.8 million - ($3.54 per diluted share)

▪35.6% growth in Core (excluding Commercial Auto) Excess and Surplus Lines ("E&S") Gross Written Premium and 14.6% increase in E&S renewal pricing, each versus the prior year quarter. This renewal rate increase is ahead of that of the prior year quarter. Core E&S Gross Written Premium has grown 85.7% since the first quarter of 2019

▪Fronting business within the Specialty Admitted segment grew meaningfully as recently added programs continued to mature and expand. Segment Gross Written Premium grew 23.6% and fee income 21.8%, each versus the prior year quarter

▪An expense ratio of 28.9% for the quarter versus 34.2% for the first quarter of the prior year

▪$168.7 million of unfavorable development in the E&S segment, inclusive of $170.0 million of unfavorable development in Commercial Auto, primarily driven by a previously canceled account that has been in runoff since 2019

▪James River will make available a pre-recorded conference call discussing its first quarter results today, May 5, 2021 at 4:30 p.m. Eastern Time. Investors may access the pre-recorded conference call by dialing (800) 708-4539, Conference ID# 50150593. A replay of the conference call will be available beginning tomorrow May 6, 2021 at 8:00 a.m. Eastern Time by dialing (855) 859-2056 or (404) 537-3406, Conference ID# 50150593.

Pembroke, Bermuda, May 5, 2021 - James River Group Holdings, Ltd. ("James River" or the "Company") (NASDAQ: JRVR) today reported first quarter 2021 net loss of $103.5 million ($3.37 per diluted share), compared to net loss of $36.8 million ($1.21 per diluted share) for the first quarter of 2020. Adjusted net operating loss1 for the first quarter of 2021 was $108.8 million ($3.54 per diluted share), compared to adjusted net operating income1 of $15.4 million ($0.50 per diluted share) for the same period in 2020.

1 Adjusted Net Operating (Loss) Income is a non-GAAP financial measure. See “Reconciliation of Non-GAAP Financial Measures” at the end of this Press Release.


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Wellesley House, 90 Pitts Bay Road, Pembroke HM 08, Bermuda
Mailing address l P.O. Box 1502, Hamilton HM FX, Bermuda
Tel 441.278.4580 l Fax 441.278.4588

JRVR Announces First Quarter Results
Page 2
May 5, 2021

Earnings Per Diluted ShareThree Months Ended
March 31,
20212020
Net Loss$(3.37)$(1.21)
Adjusted Net Operating (Loss) Income 1
$(3.54)$0.50 
1 See "Reconciliation of Non-GAAP Measures" below.

Frank D'Orazio, the Company’s Chief Executive Officer, commented, “During the quarter, we continued to experience higher than expected reported losses in our large commercial auto account in runoff. In response, we meaningfully changed our actuarial methodology, resulting in a material strengthening of reserves. We believe this overhang has been eliminated, and that we are now fully able to focus on our prospective business and what continues to be a historically strong E&S marketplace. Core E&S gross written premiums increased 35.6% this quarter compared to the same period a year ago, and submission volume remains strong. We benefited from a 14.6% increase in E&S renewal rates, our 17th consecutive quarter in which E&S rates have increased. The compounded annual aggregated rate increase in our Core E&S renewal book has been 36.4% over those seventeen quarters. The fronting business of our Specialty Admitted Insurance segment continues to grow meaningfully, as segment premium increased by 23.6% and fee income increased by 21.8% during the quarter. Our franchise is well positioned for future success.”
First Quarter 2021 Operating Results
•Gross written premium of $373.3 million, consisting of the following:
Three Months Ended
March 31,
($ in thousands)20212020% Change
Excess and Surplus Lines$181,358 $136,197 33 %
Specialty Admitted Insurance127,036 102,802 24 %
Casualty Reinsurance64,861 44,842 45 %
$373,255 $283,841 32 %

•Net written premium of $174.6 million, consisting of the following:
Three Months Ended
March 31,
($ in thousands)20212020% Change
Excess and Surplus Lines$108,433 $92,206 18 %
Specialty Admitted Insurance22,005 13,356 65 %
Casualty Reinsurance44,161 29,092 52 %
$174,599 $134,654 30 %

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JRVR Announces First Quarter Results
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May 5, 2021

•Net earned premium of $160.6 million, consisting of the following:
Three Months Ended
March 31,
($ in thousands)20212020% Change
Excess and Surplus Lines$113,708 $99,739 14 %
Specialty Admitted Insurance16,357 13,283 23 %
Casualty Reinsurance30,528 32,896 (7)%
$160,593 $145,918 10 %

•Core E&S gross written premium increased 35.6% (eight out of twelve core underwriting divisions grew). Due to continued stronger relative growth in our Excess Casualty underwriting division, where we cede a larger portion of risk as compared to other lines, retention in this segment declined and net written premium increased at a lower rate than gross written premium;
•Gross written premium for the Specialty Admitted Insurance segment increased from the prior year quarter due to a 29.9% increase in premiums written in our fronting business. Net written premium increased at a greater rate than gross written premium due to a higher premium retention on fronted business;
•Gross and net written premium in the Casualty Reinsurance segment increased from the prior year quarter primarily due to a change in the renewal date of one large treaty;
•There was overall unfavorable reserve development of $170.1 million compared to unfavorable reserve development of $0.9 million in the prior year quarter (representing a 105.9 and 0.6 percentage point increase to the Company’s loss ratio in the periods, respectively);
•Pre-tax (unfavorable) favorable reserve development by segment was as follows:
Three Months Ended
March 31,
($ in thousands)20212020
Excess and Surplus Lines$(168,651)$3 
Specialty Admitted Insurance1,000 1,011 
Casualty Reinsurance(2,483)(1,888)
$(170,134)$(874)
•The prior year reserve development in the quarter included $168.7 million of adverse development in the E&S segment, driven by the aforementioned $170.0 million of unfavorable development in the commercial auto division and $1.4 million of favorable development in Core E&S. The Specialty Admitted Insurance segment experienced $1.0 million of favorable development in its individual risk workers' compensation business. The Casualty Reinsurance segment experienced $2.5 million of unfavorable development;
•Group combined ratio of 199.2% versus 100.6% in the prior year quarter;
•Group expense ratio of 28.9% decreased from 34.2% in the prior year quarter, principally due to expense reduction initiatives and growth in lines of business with lower net commissions;
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JRVR Announces First Quarter Results
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May 5, 2021

•Gross fee income by segment was as follows:
Three Months Ended
March 31,
($ in thousands)20212020% Change
Excess and Surplus Lines$— $1,275 (100)%
Specialty Admitted Insurance5,128 4,211 22 %
$5,128 $5,486 (7)%
•Fee income in the E&S segment decreased from its level in the prior year quarter due to the aforementioned 2019 cancellation of the large commercial auto account. Fee income in the Specialty Admitted Insurance segment increased due to the continued growth of fronting relationships;
•Net investment income was $15.1 million, a decrease of 27.6% from the prior year quarter. Further details can be found in the "Investment Results" section below.

Investment Results
Net investment income for the first quarter of 2021 was $15.1 million, which compares to $20.8 million for the same period in 2020. The decrease was principally caused by lower investment income from restricted cash due to a decline in short term investment yields, and lower investment income from our bank loan portfolio resulting from a smaller portfolio and lower investment yields.
The Company’s net investment income consisted of the following:
Three Months Ended
March 31,
($ in thousands)20212020% Change
Renewable Energy Investments$(681)$1,000 -
Other Private Investments1,015 (483)-
All Other Net Investment Income14,75520,319(27)%
Total Net Investment Income$15,089 $20,836 (28)%
The Company’s annualized gross investment yield on average fixed maturity, bank loan and equity securities for the three months ended March 31, 2021 was 3.2% (versus 3.6% for the three months ended March 31, 2020). The yield decreased primarily as a result of the sale of floating rate bank loan investments during the second quarter of 2020.
Taxes
Generally the Company's 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. The Company had pre-tax losses and tax benefits for the three months ended March 31, 2021 and March 31, 2020, and the tax rate in the respective periods was 26.5% and 10.7%. The full year 2021 tax rate is expected to approximate the 26.5% reported for the first quarter of 2021.

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JRVR Announces First Quarter Results
Page 5
May 5, 2021

Tangible Equity
Pre-dividend tangible book value2 of $430.8 million at March 31, 2021 was a decrease of 25.4% from tangible book value of $577.4 million after dividends at December 31, 2020, due to a net loss of $103.5 million and after tax unrealized losses in the Company's fixed income investment portfolio of $42.7 million due to an increase in interest rates during the quarter. Absent the decrease in unrealized gains, pre-dividend tangible book value would have decreased 18.0%.
March 31, 2021 tangible book value of $421.5 million after dividends decreased 27.0% from $577.4 million at December 31, 2020.
Capital Management
The Company announced that its Board of Directors declared a cash dividend of $0.30 per common share. This dividend is payable on Wednesday, June 30, 2021 to all shareholders of record on Monday, June 14, 2021.
Conference Call
James River will make available a pre-recorded conference call discussing its first quarter results today, May 5, 2021 at 4:30 p.m. Eastern Time. Investors may access the pre-recorded conference call by dialing (800) 708-4539, Conference ID# 50150593.

A replay of the pre-recorded conference call will be available beginning tomorrow, May 6, 2021, at 8:00 a.m. Eastern Time. Investors may access the replay of the pre-recorded conference call by dialing (855) 859-2056 or (404) 537-3406, Conference ID# 50150593.
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, anticipate, plan, estimate, guidance 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: 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 may impact 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; 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 and adequately protect our company
2 Pre-dividend tangible book value and tangible book value are non-GAAP financial measures. See “Reconciliation of Non-GAAP Financial Measures” at the end of this press release.
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May 5, 2021

against financial loss; 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 their reimbursement obligations; 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; 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 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; 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; exposure to credit risk, interest rate risk and other market risk in our investment portfolio; 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”); and changes in our financial condition, regulations or other factors that may restrict our subsidiaries’ ability to pay us dividends. 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 filed with the SEC on February 26, 2021 and our Quarterly Report on Form 10-Q filed with the SEC on the date of this release. These forward-looking statements speak only as of the date of this release and the Company does 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, Ltd.’s 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 (loss) profit, adjusted net operating (loss) income, tangible book value, adjusted net operating income return on average tangible book value (which is calculated as annualized adjusted net operating (loss) income divided by average tangible book value), and pre-dividend tangible book value per share, are referred to as non-GAAP measures. These non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those measures determined in accordance with GAAP. Reconciliations of such measures to the most comparable GAAP figures are included at the end of this press release.
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JRVR Announces First Quarter Results
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May 5, 2021

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. The Company operates in three specialty property-casualty insurance and reinsurance segments: Excess and Surplus Lines, Specialty Admitted Insurance and Casualty Reinsurance. Each of the Company’s regulated insurance subsidiaries are rated “A” (Excellent) by A.M. Best Company.
Visit James River Group Holdings, Ltd. on the web at www.jrgh.net
For more information contact:
Sarah Casey Doran
Chief Financial Officer
InvestorRelations@jrgh.net
(441) 278-4580
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JRVR Announces First Quarter Results
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May 5, 2021

James River Group Holdings, Ltd. and Subsidiaries
Condensed Consolidated Balance Sheet Data
(Unaudited)

 
March 31, 2021December 31, 2020
($ in thousands, except for share data)
ASSETS
Invested assets:
Fixed maturity securities, available-for-sale, at fair value$1,800,151 $1,783,642 
Equity securities, at fair value90,877 88,975 
Bank loan participations, at fair value
160,880 147,604 
Short-term investments51,198 130,289 
Other invested assets55,863 46,548 
Total invested assets2,158,969 2,197,058 
Cash and cash equivalents183,491 162,260 
Restricted cash equivalents751,668 859,920 
Accrued investment income11,634 10,980 
Premiums receivable and agents’ balances, net391,982 369,577 
Reinsurance recoverable on unpaid losses, net878,732 805,684 
Reinsurance recoverable on paid losses42,566 46,118 
Deferred policy acquisition costs63,606 62,953 
Goodwill and intangible assets218,142 218,233 
Other assets408,917 330,289 
Total assets$5,109,707 $5,063,072 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Reserve for losses and loss adjustment expenses$2,413,846 $2,192,080 
Unearned premiums674,343 630,371 
Funds held751,668 859,920 
Senior debt262,300 262,300 
Junior subordinated debt104,055 104,055 
Accrued expenses52,351 55,989 
Other liabilities211,516 162,749 
Total liabilities4,470,079 4,267,464 
Total shareholders’ equity639,628 795,608 
Total liabilities and shareholders’ equity$5,109,707 $5,063,072 
Tangible equity (a)$421,486 $577,375 
Tangible equity per common share outstanding (a)
$13.70 $18.84 
Total shareholders’ equity per common share
   outstanding
$20.78 


$25.96 
Common shares outstanding
30,774,930 30,649,261 
(a)    See “Reconciliation of Non-GAAP Measures”.
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JRVR Announces First Quarter Results
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May 5, 2021

James River Group Holdings, Ltd. and Subsidiaries
Condensed Consolidated (Loss) Income Statement Data
(Unaudited)
Three Months Ended
March 31,
20212020
($ in thousands, except for share data)
REVENUES
Gross written premiums$373,255 $283,841 
Net written premiums174,599 134,654 
Net earned premiums160,593 145,918 
Net investment income15,089 20,836 
Net realized and unrealized gains (losses) on investments (a)6,272 (58,407)
Other income1,026 1,937 
Total revenues182,980 110,284 
EXPENSES
Losses and loss adjustment expenses273,500 96,856 
Other operating expenses47,381 51,621 
Other expenses621 — 
Interest expense2,216 2,876 
Amortization of intangible assets91 149 
Total expenses323,809 151,502 
Loss before taxes(140,829)(41,218)
Income tax benefit(37,369)(4,403)
NET LOSS$(103,460)$(36,815)
ADJUSTED NET OPERATING (LOSS) INCOME (b)$(108,795)$15,418 
LOSS PER SHARE
Basic
$(3.37)$(1.21)
Diluted
$(3.37)$(1.21)
ADJUSTED NET OPERATING (LOSS) INCOME PER SHARE
Basic
$(3.54)$0.51 
Diluted (c)$(3.54)$0.50 
Weighted-average common shares outstanding:
Basic
30,713,986 30,476,307 
Diluted30,713,986 30,476,307 
Cash dividends declared per common share$0.30 $0.30 
Ratios:
Loss ratio170.3 %66.4 %
Expense ratio (d)28.9 %34.2 %
Combined ratio199.2 %100.6 %
Accident year loss ratio64.4 %65.8 %
(a) Includes gains (losses) of $1.7 million and $3.9 million for the change in net unrealized gains/losses on equity securities and bank loan participations in the three months ended March 31, 2021, respectively ($(13.3) million and $(43.9) million in the three months ended March 31, 2020, respectively).
(b) See "Reconciliation of Non-GAAP Measures".
(c) Common share equivalents of 309,443 were dilutive for the calculation of diluted adjusted net operating income per share for the three months ended March 31, 2020.
(d) Calculated with a numerator comprising other operating expenses less gross fee income (in specific instances when the Company is not retaining insurance risk) included in “Other income” in our Condensed Consolidated Income Statements of $927,000 and $1.6 million for the three months ended March 31, 2021 and 2020, respectively, and a denominator of net earned premiums.
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May 5, 2021


James River Group Holdings, Ltd. and Subsidiaries
Segment Results

EXCESS AND SURPLUS LINES
Three Months Ended
March 31,
20212020% Change
($ in thousands)
Gross written premiums$181,358 $136,197 33.2 %
Net written premiums$108,433 $92,206 17.6 %
Net earned premiums$113,708 $99,739 14.0 %
Losses and loss adjustment expenses(241,742)(65,529)268.9 %
Underwriting expenses(22,912)(26,098)(12.2)%
Underwriting (loss) profit (a), (b)$(150,946)$8,112 — 
Ratios:
Loss ratio212.6 %65.7 %
Expense ratio20.1 %26.2 %
Combined ratio232.7 %91.9 %
Accident year loss ratio64.3 %65.7 %
(a) See "Reconciliation of Non-GAAP Measures".
(b) Underwriting results include fee income of $— million and $1.3 million for the three months ended March 31, 2021 and 2020, respectively. These amounts are included in “Other income” in our Condensed Consolidated Income Statements.

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JRVR Announces First Quarter Results
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May 5, 2021

SPECIALTY ADMITTED INSURANCE
Three Months Ended
March 31,
20212020% Change
($ in thousands)
Gross written premiums$127,036 $102,802 23.6 %
Net written premiums$22,005 $13,356 64.8 %
Net earned premiums$16,357 $13,283 23.1 %
Losses and loss adjustment expenses(10,742)(9,905)8.5 %
Underwriting expenses(4,349)(4,366)(0.4)%
Underwriting profit (loss) (a), (b)$1,266 $(988)— 
Ratios:
Loss ratio65.7 %74.6 %
Expense ratio26.6 %32.8 %
Combined ratio92.3 %107.4 %
Accident year loss ratio71.8 %82.2 %
(a) See "Reconciliation of Non-GAAP Measures".
(b) Underwriting results include fee income of $5.1 million and $4.2 million for the three months ended March 31, 2021 and 2020, respectively.

CASUALTY REINSURANCE
Three Months Ended
March 31,
20212020% Change
($ in thousands)
Gross written premiums$64,861 $44,842 44.6 %
Net written premiums$44,161 $29,092 51.8 %
Net earned premiums$30,528 $32,896 (7.2)%
Losses and loss adjustment expenses(21,016)(21,422)(1.9)%
Underwriting expenses(11,137)(11,267)(1.2)%
Underwriting (loss) profit (a)$(1,625)$207 — 
Ratios:
Loss ratio68.8 %65.1 %
Expense ratio36.5 %34.3 %
Combined ratio105.3 %99.4 %
Accident year loss ratio60.7 %59.4 %
(a) See "Reconciliation of Non-GAAP Measures".

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JRVR Announces First Quarter Results
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May 5, 2021

RECONCILIATION OF NON-GAAP MEASURES

Underwriting (Loss) Profit

The following table reconciles the underwriting (loss) profit by individual operating segment and for the entire Company to consolidated loss 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 (loss) profit of operating segments. Our definition of underwriting (loss) profit of operating segments and underwriting (loss) profit may not be comparable to that of other companies.
Three Months Ended
March 31,
20212020
(in thousands)
Underwriting (loss) profit of the operating segments:
Excess and Surplus Lines
$(150,946)$8,112 
Specialty Admitted Insurance
1,266 (988)
Casualty Reinsurance
(1,625)207 
Total underwriting (loss) profit of operating segments(151,305)7,331 
Other operating expenses of the Corporate and Other segment(8,056)(8,279)
Underwriting loss (a)(159,361)(948)
Net investment income15,089 20,836 
Net realized and unrealized gains (losses) on investments (b)6,272 (58,407)
Other income(522)326 
Interest expense(2,216)(2,876)
Amortization of intangible assets(91)(149)
Consolidated loss before taxes$(140,829)$(41,218)
(a) Included in underwriting results for the three months ended March 31, 2021 and 2020 is fee income of $5.1 million and $5.5 million, respectively.
(b) Includes gains (losses) of $1.7 million and $3.9 million for the change in net unrealized gains/losses on equity securities and bank loan participations in the three months ended March 31, 2021, respectively ($(13.3) million and $(43.9) million in the three months ended March 31, 2020, respectively).

Adjusted Net Operating (Loss) Income

We define adjusted net operating (loss) income as net (loss) income excluding net realized and unrealized gains (losses) on investments, and certain non-operating expenses such as professional service fees related to various strategic initiatives and the filing of registration statements for the offering of securities, and severance costs associated with terminated employees. We use adjusted net operating (loss) 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. Adjusted net operating (loss) income should not be viewed as a substitute for net (loss) income calculated in accordance with GAAP, and our definition of adjusted net operating (loss) income may not be comparable to that of other companies.

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JRVR Announces First Quarter Results
Page 13
May 5, 2021

Our loss before taxes and net loss reconciles to our adjusted net operating (loss) income as follows:
Three Months Ended March 31,
20212020
Loss Before TaxesNet Loss(Loss) Income Before TaxesNet (Loss) Income
(in thousands)
Loss as reported$(140,829)$(103,460)$(41,218)$(36,815)
Net realized and unrealized (gains) losses on investments (a)(6,272)(5,751)58,407 52,233 
Other expenses527 416 — — 
Adjusted net operating (loss) income$(146,574)$(108,795)$17,189 $15,418 
(a) Includes gains (losses) of $1.7 million and $3.9 million for the change in net unrealized gains/losses on equity securities and bank loan participations in the three months ended March 31, 2021, respectively ($(13.3) million and $(43.9) million in the three months ended March 31, 2020, respectively).

Tangible Equity (per Share) and Pre-Dividend Tangible Equity (per Share)

We define tangible equity as 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 March 31, 2021, December 31, 2020, and March 31, 2020 and reconciles tangible equity to tangible equity before dividends for March 31, 2021.
March 31, 2021December 31, 2020March 31, 2020
($ in thousands, except for share data)EquityEquity per shareEquityEquity per shareEquityEquity per share
Shareholders' equity$639,628 $20.78 $795,608 $25.96 $720,317 $23.60 
Goodwill and intangible assets218,142 7.08 218,233 7.12 218,622 7.16 
Tangible equity$421,486 $13.70 $577,375 $18.84 $501,695 $16.44 
Dividends to shareholders for the three months ended March 31, 20219,343 0.30 
Pre-dividend tangible equity$430,829 $14.00 
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