CORRECTED-James River promotes Sutherland to E&S president as it delivers sub-100 combined ratio in earnings miss

By David Bull

May 5 - (The Insurer) - James River Group Holdings generated adjusted net operating income of $9.1 million in the first quarter that was down from $14.8 million in the prior-year period and missed Wall Street forecasts as it also announced E&S segment leader Richard Schmitzer is retiring and to be replaced by Todd Sutherland.

Schmitzer is currently CEO of the E&S segment and will step down from the position at the end of July after 15 years and officially retire during the fourth quarter after more than 45 years in the industry.

Sutherland, who is currently senior vice president for management liability in the specialty carrier’s E&S division, has taken up the position of president of the segment with immediate effect. He will report direct to James River CEO Frank D’Orazio. The position of E&S CEO is being retired.

In its earnings release, the Bermuda-based specialty carrier reported adjusted net operating income per share of $0.19 a share, down on $0.39 in Q1 2024 and below the consensus analysts forecast of $0.27.

Its combined ratio increased from 95.3% to 99.5%, with a loss ratio that was up from 66.4% to 66.8% on a reported basis and an expense ratio that climbed from 28.9% to 32.7%.

James River’s accident year loss ratio improved, however, from 66.7% to 65.5%.

Overall gross premiums written were down from $330.8 million to $294.4 million, with net premiums down from $138.2 million to $128.0 million.

The reported combined ratio in James River’s E&S division was up from 87.3% to 91.5%, with an accident year loss ratio that improved from 64.3% to 63.4%.

The division is the insurer’s largest, with GPW that was flat at $213.2 million, and NPW down 2 points to $115.1 million.

James River said that it achieved renewal rate change of 7.8% in its E&S business, with the majority of its underwriting divisions reporting pricing increases, and “strong” submission growth of 6%.

SPECIALTY ADMITTED UW LOSS

The carrier’s consolidated results were negatively affected by its specialty admitted insurance division, where the combined ratio increased from 97.0% to 102.1%, with a loss ratio that deteriorated from 78.4% to 85.0% and an accident year loss ratio that worsened from 80.1% to 85.9%.

GPW was down 30.7% to $81.1 million, with NPW down 37.9% to $12.9 million.

The insurer said GPW for its fronting and program business declined 21.3% as it manages the segment to retain minimal risk.

In its earnings release, James River also disclosed that there was a small downward adjustment of $0.5 million to the closing purchase price of its deal to sell JRG Re to Fleming. The buyer had claimed there should be a $54.1 million downward adjustment and the disputed amount was submitted to an independent accounting firm for final resolution.

The determination came on April 18 and James River said the outcome is final and binding in relation to the purchase price.