James River Group Holdings, Inc.

The following table summarizes our results:

(1)Underwriting profit and adjusted net operating income are non-GAAP measures. See “Reconciliation of Non-GAAP Measures.”

(2)Included in underwriting results for the three months ended March 31, 2025 and 2024 is gross fee income of $4.3 million, and $5.3 million, respectively.

Three Months Ended March 31, 2025 and 2024

The Company produced net income from continuing operations of $11.0 million for the three months ended March 31, 2025 compared to $23.5 million for the three months ended March 31, 2024. Adjusted net operating income was $9.1 million and $14.8 million in the respective periods.

Underwriting profits were $721,000 and $8.1 million (combined ratios of 99.5% and 95.3%) for the three months ended March 31, 2025 and 2024, respectively. Underwriting results for the three months ended March 31, 2025 include $3.1 million of premium adjustments associated with prior years including reinstatement premium in the Excess and Surplus Lines segment. The premium adjustments reduced net written and net earned premiums, and underwriting profit in the current quarter and resulted in a 2.0 percentage point increase in our combined ratio.

Our loss ratios for the three month periods were comparable. The current year ratio was elevated 1.4 points by premium adjustments associated with prior years including reinstatement premium in the Excess and Surplus Lines segment. The impact of the premium adjustments was largely offset by a lower current accident year loss ratio and segment mix with the Excess and

Surplus Lines segment representing 90.2% of consolidated net earned premiums in the three months ended March 31, 2025 compared to 84.8% in the three months ended March 31, 2024. Net reserve development on prior accident years (excluding adverse prior year development from continuing operations that is subject to retroactive reinsurance accounting - see discussion below) was negligible in both periods at $131,000 or 0.1 points favorable in the three months ended March 31, 2025 compared to $398,000 or 0.2 points favorable in the three months ended March 31, 2024.

Our expense ratio increased from 28.9% in the prior year to 32.7% in the current year primarily reflecting a higher current year expense ratio for the Excess and Surplus Lines segment driven by lower net earned premium, including the impact of $3.1 million of premium adjustments associated with prior years reinstatement premium, and higher compensation expenses. The higher expense ratio for the Excess and Surplus Lines segment was partially offset by a lower current year expense ratio for the Specialty Admitted Insurance segment and lower current year expenses for the Corporate and Other segment. The $3.1 million of premium adjustments associated with prior years including reinstatement premium in the Excess and Surplus Lines segment represented a 0.6 percentage point increase in the consolidated expense ratio for the current year quarter.

Investment income declined by $2.6 million or 11.6% in the three months ended March 31, 2025 compared to the same period in the prior year driven by lower invested assets following the funding of strategic initiatives during the last half of 2024 including the reinsurance premium paid to enter the E&S ADC and the E&S Top Up ADC, as well as lower yields. Net realized and unrealized losses on investments of $1.4 million for the three months ended March 31, 2025 include $2.3 million of net realized and unrealized losses on bank loan participations, partially offset by $918,000 of net realized and unrealized gains on equity securities. Net realized and unrealized gains of $4.6 million for the three months ended March 31, 2024 were largely due to favorable mark-to-market adjustments on equity securities of $4.2 million and bank loan participations of $359,000 (see Investing Results below).

The Company entered into a definitive agreement on November 8, 2023 to sell JRG Re. The sale closed on April 16, 2024 and discontinued operations in the prior year period includes the operating results of JRG Re which were a loss of $7.9 million for the three months ended March 31, 2024. The prior year loss from discontinued operations primarily reflects net adverse development of $7.1 million on treaties not subject to the Casualty Re loss portfolio transfer. The loss on disposal, also included in discontinued operations above, was $1.4 million and $172,000 in the three months ended March 31, 2025 and 2024, respectively.

Adjusted net operating results declined from the prior year reflecting the lower underwriting results and lower investment income. Growth in tangible common equity of 7.1% was largely driven by net income and unrealized gains on fixed maturities in other comprehensive income. Our 11.5% adjusted net operating return on tangible common equity for the three months ended March 31, 2025 compares to a 17.4% return for the three months ended March 31, 2024.

Loss Portfolio Transfers and Adverse Development Covers

Loss portfolio transfers and adverse development covers are forms of retroactive reinsurance utilized by the Company to transfer losses and loss adjustment expenses and associated risk of adverse development on covered subject business, as defined in the respective agreements, to an assuming reinsurer in exchange for a reinsurance premium. This reinsurance can bring economic finality (up to the limit of such agreements, if applicable) on the subject risks when they no longer meet the Company's risk appetite or are no longer aligned with the Company's risk management guidelines.

Commercial Auto Loss Portfolio Transfer

On September 27, 2021, James River Insurance and James River Casualty Company (together, “James River”) entered into a loss portfolio transfer transaction (the “Commercial Auto LPT”) with Aleka Insurance, Inc. (“Aleka”), a captive insurance company affiliate of Rasier LLC, to reinsure substantially all of the Excess and Surplus Lines segment's legacy portfolio of commercial auto policies previously issued to Rasier LLC and its affiliates (collectively, “Rasier”) for which James River is not otherwise indemnified by Rasier. The reinsurance coverage is structured to be fully collateralized, is not subject to an aggregate limit, and is subject to certain exclusions. The cumulative amounts ceded under the loss portfolio transfer were $459.4 million and $459.3 million as of March 31, 2025 and December 31, 2024, respectively.

On July 2, 2024, James River entered into a Combined Loss Portfolio Transfer and Adverse Development Cover Reinsurance Contract (the “E&S ADC”) with State National Insurance Company, Inc. (“State National”). The transaction closed upon signing.

The E&S ADC was effective January 1, 2024 (the “Effective Date”) and applies to James River’s Excess & Surplus Lines segment casualty portfolio losses attaching to premium earned during 2010-2023 (both years inclusive), excluding, among others, losses related to commercial auto policies issued to a former large insured or its affiliates (the “Subject Business”). Pursuant to the E&S ADC, (a) State National reinsures 85% of losses paid on and after the Effective Date in respect of the Subject Business in excess of $716.6 million up to an aggregate limit of $467.1 million (with State National’s share of the aggregate limit being $397.0 million) in exchange for a reinsurance premium paid by James River equal to $313.2 million, and (b) James River continues to manage claims and to manage and collect the benefit of other existing third-party reinsurance on the Subject Business, which third-party reinsurance inures to the benefit of the E&S ADC. The Company has $41.2 million of aggregate limit remaining on the E&S ADC at March 31, 2025.

Adverse Development Cover

On November 11, 2024, Enstar Group Limited ("Enstar"), through its subsidiary Cavello Bay Reinsurance Limited, entered into an adverse development cover agreement with James River ("E&S Top Up ADC"), pursuant to which, in exchange for a premium of $52.8 million (less an amount equal to the federal excise tax payable on the premium), Cavello Bay reinsures, effective January 1, 2024, 100% of the losses associated with James River’s Excess & Surplus Lines segment casualty portfolio losses attaching to premium earned during 2010-2023 (both years inclusive). The E&S Top Up ADC excludes losses related to commercial auto policies issued to a former large insured or its affiliates and is subject to a retention by James River of $1,183.7 million (the limit of the E&S ADC) and up to an aggregate limit of $75.0 million. The E&S Top Up ADC closed on December 23, 2024. The Company recognized a $52.8 million reduction in pre-tax income in connection with the adverse development cover upon closing. The Company has $75.0 million of aggregate limit remaining on the E&S Top Up ADC at March 31, 2025.

Retroactive Reinsurance Accounting

The Company periodically reevaluates the remaining reserves subject to the Commercial Auto LPT, the E&S ADC, and the E&S Top Up ADC, and when recognized adverse prior year development on the subject business causes the cumulative amounts ceded under the agreements to exceed the consideration paid, the agreements move into a gain position subject to retroactive reinsurance accounting under GAAP. Gains are deferred under retroactive reinsurance accounting and recognized in earnings in proportion to actual paid recoveries under the agreements using the recovery method. While the deferral of gains can introduce volatility in our results in the short-term, over the life of the contract, we would expect no economic impact to the Company as long as the counterparty performs under the contract and losses are within the limit (if any). The impact of retroactive reinsurance accounting is not indicative of our current and ongoing operations.

The following tables summarize the retroactive reinsurance accounting for the Commercial Auto LPT and the E&S ADC for the three months ended March 31, 2025 and 2024, respectively.

Premiums

Insurance premiums are earned ratably over the terms of our insurance policies, generally twelve months. The following table summarizes the change in premium volume by component and business segment:

Gross written premiums for the Excess and Surplus Lines segment (which represents 72.4% of our consolidated gross written premiums from continuing operations in the three months ended March 31, 2025) were flat with the prior year period. Amid moderating rate increases and increased competition, we are being selective in certain lines of business. Submission growth for Core E&S lines (excluding commercial auto) increased 6.3% over the prior year quarter. The number of bound policies declined 1.2%, and average premium size decreased 8.4% due to our focus on writing smaller accounts and the mix of business. Renewal rates for the Excess and Surplus Lines segment were up 7.8% compared to the three months ended March 31, 2024. The change in gross written premiums was notable in several divisions as shown below:

The components of gross written premiums for the Specialty Admitted Insurance segment (which represents 27.6% of our consolidated gross written premiums for the three months ended March 31, 2025) are as follows:

Our fronting written premium decreased from the prior year driven by several non-renewals, most notably a large California workers' compensation program in run-off representing $12.3 million of the decline in segment gross written premium. Our largest fronting relationship represented $30.7 million or 37.9% of segment gross written premium for the three months ended March 31, 2025 compared to $46.7 million or 39.8% for the three months ended March 31, 2024. The Company has received notifications of non-renewal for this relationship which will result in a full run-off of the business beginning July 1, 2025. Individual risk workers' compensation premium continues to run off following the sale of the renewal rights to that business in 2023.

Net Retention

Our net premium retention is summarized by segment as follows:

Lower net premium retention for the Excess and Surplus Lines segment in the three months ended March 31, 2025 was primarily driven by $3.1 million of premium adjustments associated with prior years including reinstatement premium which reduced net written premiums and the net retention ratio.

The net premium retention for the Specialty Admitted Insurance segment decreased for the three months ended March 31, 2025 as fronting business, where we retain a much smaller percentage, represents a greater portion of the book following the sale of the renewal rights to the individual risk workers' compensation business in 2023. The net retention on the fronting business was 15.5% for the three months ended March 31, 2025, down from 16.7% for the three months ended March 31, 2024 due to the mix of business, including the impact of certain non-renewals, and changes in reinsurance as coverages renew.

Segment Results

The following table presents our combined ratios by segment:

Excess and Surplus Lines Segment

Results for the Excess and Surplus Lines segment are as follows:

(1)Underwriting Profit is a non-GAAP Measure. See “Reconciliation of Non-GAAP Measures.”

The Excess and Surplus Lines segment produced underwriting profits of $11.7 million and $18.5 million (combined ratios of 91.5% and 87.3%) in the three months ended March 31, 2025 and 2024, respectively. The underwriting results for the three months ended March 31, 2025 were impacted by $3.1 million of premium adjustments associated with prior years including reinstatement premium which reduced net written and net earned premiums, and underwriting profit. The impact of the premium adjustments was a 2.0 percentage point increase in the segment combined ratio for the quarter.

The loss ratio for the three months ended March 31, 2025 was slightly higher than the prior year period as a 1.4 point increase related to the prior year premium adjustments was mostly offset by a lower current accident year loss ratio. Net adverse reserve development on prior accident years (excluding adverse prior year development that is subject to retroactive reinsurance accounting - see discussion above) was negligible in both periods at $10,000 favorable in the three months ended March 31, 2025 compared to $40,000 adverse in the three months ended March 31, 2024.

The expense ratio increased from 23.0% in the prior year quarter to 26.7% in the current year quarter reflecting lower net earned premium, including the impact of $3.1 million of premium adjustments associated with prior years reinstatement premium and higher compensation expenses. The premium adjustments represented a 0.6 percentage point increase in the segment expense ratio for the current year quarter.

Specialty Admitted Insurance Segment

Results for the Specialty Admitted Insurance segment are as follows:

(1)Underwriting Profit is a non-GAAP Measure. See “Reconciliation of Non-GAAP Measures.”

(2)Underwriting results include gross fee income of $4.3 million and $5.3 million for the three months ended March 31, 2025 and 2024, respectively.

The Specialty Admitted Insurance segment reported an underwriting loss of $306,000 and a combined ratio of 102.1% in the three months ended March 31, 2025. This compares to an underwriting profit of $786,000 and a combined ratios of 97.0% in the prior year period. Net favorable development in our loss estimates for prior accident years was $121,000 and $438,000 (0.8 and 1.7 points) in the three months ended March 31, 2025 and 2024, respectively.

Corporate and Other Segment

Other operating expenses for the Corporate and Other segment include personnel costs associated with the Bermuda and U.S. holding companies, professional fees, long-term incentive compensation (including share-based compensation) for the full Company, public company and various other corporate expenses. The expenses are included in our calculation of consolidated underwriting profit, and in our consolidated expense ratio and combined ratio. Total operating expenses of the Corporate and Other segment were $10.6 million and $11.1 million for the three months ended March 31, 2025 and 2024, respectively.

Investing Results

Net investment income was $20.0 million and $22.6 million for the three months ended March 31, 2025 and 2024, respectively. The Company's private investments generated income of $200,000 for the three months ended March 31, 2025 compared to losses of $145,000 for the three months ended March 31, 2024. Excluding private investments, our net investment income for the three months ended March 31, 2025 decreased 13.0% from the prior year period, principally due to lower invested assets following the funding of strategic initiatives during the last half of 2024 including the reinsurance premium paid to enter the E&S ADC and the E&S Top Up ADC, as well as lower yields. The average duration of our portfolio excluding restricted cash equivalents was 3.5 years at March 31, 2025.

Major categories of the Company’s net investment income are summarized as follows:

The following table summarizes our annualized gross investment yields:

Of our total cash and invested assets of $1,902.7 million at March 31, 2025 (excluding restricted cash equivalents), $279.4 million represents the cash and cash equivalents portion of the portfolio. The majority of the portfolio, or $1,259.6 million, is comprised of fixed maturity securities that are classified as available-for-sale and carried at fair value with unrealized gains and losses on these securities reported, net of applicable taxes, as a separate component of accumulated comprehensive income (loss). Also included in our investments are $144.0 million of bank loan participations, $87.7 million of equity securities, $79.1 million of short-term investments, and $52.8 million of other invested assets.

Bank loan participations generally provide a higher yield than our portfolio of fixed maturity securities and are primarily senior, secured floating-rate debt rated “BB”, “B”, or “CCC” by Standard & Poor’s or an equivalent rating from another nationally recognized statistical rating organization, and are therefore below investment grade. 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. They consist of, but are not limited to, term loans, the funded and unfunded portions of revolving credit facilities, and similar loans and investments. 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 our income statement as net realized and unrealized gains (losses) on investments. At March 31, 2025 and December 31, 2024, the fair market value of these securities was $144.0 million and $142.4 million, respectively.

For the three months ended March 31, 2025, the Company recognized net realized and unrealized investment losses of $1.4 million, including $640,000 of net unrealized losses on bank loan participations, $708,000 of net unrealized gains for the change in the fair value of equity securities, $1.7 million of net realized investment losses on the sale of bank loan participations, $210,000 of net realized investment gains on the sale of equity securities, and $25,000 of net realized investment gains on the sale of fixed maturity securities.

For the three months ended March 31, 2024, the Company recognized net realized and unrealized investment gains of $4.6 million, including $359,000 of net unrealized gains on bank loan participations, $4.2 million of net unrealized gains for the change in the fair value of equity securities, $640,000 of net realized investment losses on the sale of bank loan participations, $947,000 of net realized investment gains on the sale of equity securities, and $311,000 of net realized investment losses on the sale of fixed maturity securities.

In conjunction with its outside investment managers, the Company performs quarterly reviews of all securities within its investment portfolio to determine whether any impairment has occurred. As a result of this review, management concluded that there were no credit-related impairments of fixed maturity securities at March 31, 2025, December 31, 2024, or March 31, 2024. At March 31, 2025, 100.0% 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. Management does not intend to sell available-for-sale securities in an unrealized loss position, 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.

The amortized cost and fair value of our available-for-sale fixed maturity securities were as follows:

The following table sets forth the composition of the Company’s portfolio of available-for-sale fixed maturity securities by rating as of March 31, 2025:

The amortized cost and fair value of our available-for-sale investments in fixed maturity securities summarized by contractual maturity are as follows:

Other Income and Expense

Other income and expense items netted to income of $355,000 and $179,000 for the three months ended March 31, 2025 and 2024, respectively. Non-operating expenses included in the respective totals were $563,000 and $732,000, primarily consisting of legal and other professional fees and other expenses related to various strategic initiatives and litigation that the Company is involved in. The non-operating expenses were offset by $835,000 and $709,000 of broker incentive rebates in the Excess and Surplus Lines segment, as well as other miscellaneous income in the respective periods.

Interest Expense

Interest expense was $5.5 million and $6.5 million for the three months ended March 31, 2025 and 2024, respectively. See “—Liquidity and Capital Resources—Sources and Uses of Funds” for more information regarding our senior bank debt facilities and trust preferred securities.

Amortization of Intangibles and Impairment of Intangible Assets

The Company recorded $91,000 of amortization of intangible assets in each of the three months ended March 31, 2025 and 2024.

Income Tax Expense

Our effective tax rate fluctuates from period to period based on the relative mix of income from continuing operations reported by country and the respective tax rates imposed by each tax jurisdiction. Statutory tax rates are 0% and 21% for Bermuda and the U.S. For the three months ended March 31, 2025 and 2024, our effective tax rate on income from continuing operations was 31.4% and 28.7%, respectively. The Company does not receive a U.S. tax deduction for losses at JRG Holdings, our only Bermuda entity. JRG Holdings had losses in both periods primarily due to holding company expenses and interest expense. 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 and expenses on share based compensation.

Reserves

An indicator of reserve strength that we monitor closely is the percentage of our gross and net loss reserves that are comprised of incurred but not reported (“IBNR”) reserves.

The Company’s gross reserve for losses and loss adjustment expenses at March 31, 2025 was $3,081.5 million. Of this amount, 73.4% relates to amounts that are IBNR. This amount was 73.3% at December 31, 2024. The Company’s gross reserves for losses and loss adjustment expenses by segment are summarized as follows:

At March 31, 2025, the amount of net reserves (prior to the $1.5 million allowance for uncollectible reinsurance recoverables) of $1,095.8 million that related to IBNR was 63.9%. This amount was 63.5% at December 31, 2024. The Company’s net reserves for losses and loss adjustment expenses by segment are summarized as follows:

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Funds

Our sources of funds consist primarily of premiums written, investment income, reinsurance recoveries, proceeds from sales and redemptions of investments, borrowings on our credit facilities, and the issuance of common shares and Series A Preferred Shares. We use operating cash flows primarily to pay operating expenses, losses and loss adjustment expenses, reinsurance premiums, and income taxes. Cash flow from operations may differ substantially from net income. The potential for a large claim under an insurance contract means that substantial and unpredictable payments may need to be made within relatively short periods of time.

The following table summarizes our cash flows:

Cash used in operating activities excluding restricted cash equivalents was $51.8 million for the three months ended March 31, 2025. This compares to cash provided by operating activities excluding restricted cash equivalents of $23.1 million for the three months ended March 31, 2024 (including cash provided by operating activities from continuing operations excluding restricted cash equivalents of $47.5 million and cash used in operating activities of discontinued operations of $24.4 million).

Cash used in investing activities of $53.0 million for the three months ended March 31, 2025 reflects efforts to enhance the yield in our investment portfolio by investing available cash and cash equivalents into higher yielding investments. Cash provided by investing activities of $47.5 million for the three months ended March 31, 2024 mostly reflects the run-off of JRG Re and the withdrawal of invested assets to fund claims and operating expenses. Cash and cash equivalents excluding restricted cash equivalents comprised 14.7% and 13.9% of total cash and invested assets at March 31, 2025 and 2024, respectively. Cash used in investing activities from continuing operations was $10.9 million and cash provided by investing activities of discontinued operations was $58.4 million in the prior year period.

Cash provided by financing activities of $21.9 million for the three months ended March 31, 2025 includes a $25.0 million borrowing under the 2013 Facility (as defined below), $600,000 of dividends paid to common shareholders, $2.0 million of dividends paid on the Series A Preferred Shares, and $545,000 of payroll taxes withheld and remitted on net settlement of RSUs. Cash used in financing activities of $5.5 million for the three months ended March 31, 2024 includes $2.0 million of dividends paid to common shareholders, $2.6 million of dividends paid on the Series A Preferred Shares, and $824,000 of payroll taxes withheld and remitted on net settlement of RSUs.

The activity in restricted cash equivalents for the three months ended March 31, 2025 and 2024 relates to a former insured, per the terms of a collateral trust. See Amounts Recoverable from an Indemnifying Party and Reinsurer on Legacy Commercial Auto Book below.

Dividends

We are organized as a Bermuda holding company with our operations conducted by our wholly-owned subsidiaries. Accordingly, our holding company may receive cash through loans from banks, issuance of equity and debt securities, corporate service fees or dividends received from our subsidiaries and/or other transactions. Our U.S. holding company may receive cash in a similar manner and also through payments from our subsidiaries pursuant to our U.S. consolidated tax allocation agreement.

The payment of dividends by our subsidiaries to us is limited by statute. In general, the laws and regulations applicable to our domestic insurance subsidiaries limit the aggregate amount of dividends or other distributions that they may declare or pay within any 12-month period without advance regulatory approval. Generally, the limitations are based on the greater of statutory net income for the preceding year or 10.0% of statutory surplus at the end of the preceding year. In addition, insurance regulators have broad powers to prevent reduction of statutory surplus to inadequate levels and could refuse to permit the payment of dividends calculated under any applicable formula. See “Item 1. Business—U.S. Insurance Regulation—State Regulation” for additional information. The maximum amount of dividends available to the U.S. holding company from our U.S. insurance subsidiaries during 2025 without regulatory approval is $64.3 million.

Holders of the Series A Preferred Shares are entitled to a dividend at the rate of 7% of the $1,000 liquidation preference per share (the “Liquidation Preference”) per annum, paid in cash, in-kind in common shares or in Series A Preferred Shares, at our election. On October 1, 2029, and each five-year anniversary thereafter, the dividend rate will reset to a rate equal to the five-year U.S. treasury rate plus 5.2%, provided that the dividend rate shall not exceed 8.0%. Dividends accrue and are payable quarterly. Cash dividends of $2.0 million and $2.6 million were paid in the three months ended March 31, 2025 and 2024, respectively.

At March 31, 2025, the Bermuda holding company had $24.6 million of cash and cash equivalents. The U.S. holding company had $15.9 million of cash and invested assets, comprised of cash and cash equivalents of $12.3 million, equities of $3.2 million and other invested assets of $464,000, which are not subject to regulatory restrictions. Additionally, our U.K. intermediate holding company had no invested assets and cash of less than ten thousand dollars at March 31, 2025.

Credit Agreements

At March 31, 2025, the Company had a $257.5 million senior revolving credit facility (as amended or amended and restated, the “2013 Facility”). The 2013 Facility was comprised of the following at March 31, 2025:

•A $212.5 million unsecured revolving facility to meet the working capital needs of the Company. All unpaid principal on the revolver is due at maturity. Interest accrues quarterly and is payable in arrears, currently at 1-month SOFR (the Company, per the terms of the credit agreement, can elect between one, three, or six month interest periods) plus a 0.1% SOFR index adjustment and a SOFR margin (1.75% at March 31, 2025), which is subject to change according to terms in the credit agreement. At March 31, 2025, the Company had a drawn balance of $210.8 million outstanding on the unsecured revolver.

•A $45.0 million secured revolving facility to issue letters of credit for the benefit of third-party reinsureds. At March 31, 2025, the Company had $1.3 million of letters of credit issued under the secured facility, all of which are collateralized by a back-to-back letter of credit issued by Comerica Bank on behalf of JRG Re.

On July 7, 2023, the Company entered into a Third Amended and Restated Credit Agreement for the 2013 Facility which, among other things, extended the maturity date of such facility until July 7, 2026 and increased the applicable interest rate and letter of credit fees. The 2013 Facility has been amended from time to time, including on April 16, 2024 when the 2013 Facility was amended in connection with the closing of the sale of JRG Re by the Company to (i) release JRG Re as a borrower and release all collateral pledged by JRG Re thereunder, and (ii) decrease the secured revolving facility commitment from $102.5 million to $45.0 million.

Additionally, the 2013 Facility provides for an accordion feature that permits the Company to request that one or more lenders (without the consent of the other lenders) or one or more financial institutions which were not previously party to the 2013 Facility (with the consent of the administrative agent) provide it with increases in the secured or unsecured revolving credit facilities of up to an aggregate of $100.0 million. The Company’s ability to request such increases in the revolving credit facility is subject to its compliance with customary conditions set forth in the 2013 Facility.

The 2013 Facility contains certain financial and other covenants (including minimum net worth, maximum ratio of total adjusted debt outstanding to total capitalization, and financial strength ratings) with which the Company was in compliance at March 31, 2025.

Senior Debt and Trust Preferred Securities

On May 26, 2004, we issued $15.0 million of senior debt due April 29, 2034. The senior debt is not redeemable by the holder or subject to sinking fund requirements. Interest accrues quarterly and is payable in arrears at a floating rate per annum equal to the 3-month SOFR plus 4.11%. This senior debt is redeemable at par prior to its stated maturity at our option in whole or in part. The terms of the senior debt contain certain covenants, with which we are in compliance at March 31, 2025, and which, among other things, restrict our ability to issue senior indebtedness secured by our U.S. holding company’s common stock or its subsidiaries’ capital stock or to issue shares of its subsidiaries’ capital stock.

From May 2004 through January 2008, we sold trust preferred securities through five Delaware statutory trusts sponsored and wholly-owned by the Company or its subsidiaries. Each trust used the net proceeds from the sale of its trust preferred securities to purchase our floating-rate junior subordinated debt.

The following table summarizes the nature and terms of the junior subordinated debt and trust preferred securities outstanding at March 31, 2025 (including the Company’s repurchases of a portion of these trust preferred securities):

All of the junior subordinated debt is currently redeemable at 100.0% of the unpaid principal amount at our option.

The junior subordinated debt contains certain covenants with which we are in compliance as of March 31, 2025.

At March 31, 2025 and December 31, 2024, the Company's leverage ratio was 28.6% and 26.6%, respectively. The leverage ratio is defined in our 2013 Facility as the ratio of adjusted consolidated debt to total capital. Adjusted consolidated debt treats trust preferred securities as equity capital up to 15% of total capital. The Series A Preferred Shares represent equity capital for purposes of the leverage ratio calculation under the credit agreements. Total capital is defined as total debt plus tangible equity excluding accumulated other comprehensive income. The maximum leverage ratio permitted by the agreements is 35.0%.

James River Insurance has access to certain credit products including advances through its membership in the Federal Home Loan Bank. Any advances would be in the form of collateralized short-term borrowings not to exceed 30% of the Company's total assets.

Ceded Reinsurance

Our insurance segments enter into reinsurance contracts to limit our exposure to potential losses arising from large risks, to protect against the aggregation of several risks in a common loss occurrence, and to provide additional capacity for growth. Our reinsurance is contracted under excess of loss and proportional quota share reinsurance contracts. In excess of loss reinsurance, the reinsurer agrees to assume all or a portion of the ceding company’s losses in excess of a specified amount. The premiums payable to the reinsurer are negotiated by the parties based on their assessment of the amount of risk being ceded to the reinsurer because the reinsurer does not share proportionately in the ceding company’s losses. In proportional quota share reinsurance, the reinsurer agrees to assume a specified percentage of the ceding company’s losses arising out of a defined class of business in exchange for a corresponding percentage of premiums. The Company also utilizes facultative reinsurance to reduce the amount of exposure it retains on individual accounts according to its guidelines for accepting risk across various industry segments, locations and types of exposure. For the three months ended March 31, 2025 and 2024, our net premium retention was 43.5% and 41.8%, respectively.

The following is a summary of our Excess and Surplus Lines segment’s ceded reinsurance in place as of March 31, 2025:

(1) Excluding Excess Casualty.

(2) Total exposure to any one claim is generally $694,000.

(3) The property catastrophe reinsurance treaty has a limit of $20.0 million per event with one reinstatement.

We use catastrophe modeling software to analyze the risk of severe losses from hurricanes and earthquakes on our exposure. We utilize the model in our risk selection, pricing, and to manage our overall portfolio probable maximum loss (“PML”) accumulations. A PML is an estimate of the amount we would expect to pay in any one catastrophe event within a given annual probability of occurrence (i.e. a return period or loss exceedance probability).

In our Excess and Surplus Lines segment, we write a small book of excess property insurance, but we do not write primary property insurance. The Excess and Surplus Lines segment has a specific proportional quota share treaty in effect to cover property risks. The proportional quota share treaty along with facultative reinsurance helps ensure that our net retained limit per risk will be $5.0 million or less.

Also in our Excess and Surplus Lines segment, a specialty casualty treaty providing $9.0 million in excess of $2.0 million coverage is subject to reinstatement premiums for treaty years spanning July 1, 2017 through July 1, 2022.

Based upon the property catastrophe modeling of our Excess and Surplus Lines and Specialty Admitted segments, it would take an event greater than the 1 in 1,000 year PML to exhaust our $20.0 million property catastrophe reinsurance. In the event of a catastrophe loss exhausting our $20.0 million property catastrophe reinsurance, we estimate our pre-tax cost would not exceed 2.5% of shareholders’ equity, including reinstatement premiums and net retentions. In addition to this retention, we would retain any losses in excess of our reinsurance coverage limits.

The Commercial Auto LPT with Aleka reinsures substantially all of the Excess and Surplus Lines segment’s legacy portfolio of commercial auto policies previously issued to Rasier. See “Amounts Recoverable from an Indemnifying Party and Reinsurer on Legacy Commercial Auto Book” below for further information on this reinsurance agreement.

The E&S ADC with State National applies to James River’s Excess & Surplus Lines segment casualty portfolio losses attaching to premium earned during 2010-2023 (both years inclusive), excluding, among others, losses related to commercial auto policies issued to a former large insured or its affiliates. See “Combined Loss Portfolio Transfer and Adverse Development Cover” above for further information on this reinsurance agreement.

The E&S Top Up ADC with Enstar, through its subsidiary Cavello Bay Reinsurance Limited, reinsures 100% of the losses associated with James River’s Excess & Surplus Lines segment portfolio losses attaching to premium earned during 2010-2023 (both years inclusive). This agreement excludes losses related to commercial auto policies issued to a former large insured or its affiliates. It is subject to a retention by James River of $1,183.7 million (the limit of the E&S ADC) and up to an aggregate limit of $75.0 million. See “Enstar Strategic Partnership” above for further information on this reinsurance agreement.

The following is a summary of our Specialty Admitted Insurance segment’s ceded reinsurance in place as of March 31, 2025:

Our Specialty Admitted Insurance segment purchases reinsurance for at least 62.5% of the exposed limits on specialty admitted property-casualty business. While the segment focuses on casualty business, incidental property risk is incurred in the fronting and program business. The segment is covered for $20.0 million in excess of $5.0 million per occurrence to manage its property exposure to an approximate 1 in 1,000 year PML.

For individual risk workers' compensation business, now in runoff, we purchased $29.5 million excess of $500,000 per occurrence. This coverage expired on December 31, 2023.

In the aggregate, we believe our pre-tax group-wide PML from a 1 in 1,000 year property catastrophe event would not exceed 2.5% of shareholders’ equity, inclusive of reinstatement premiums payable.

The Company’s insurance segments remain liable to policyholders if its reinsurers are unable to meet their contractual obligations under applicable reinsurance agreements. We establish an allowance for credit losses for our current estimate of uncollectible reinsurance recoverables. At March 31, 2025, the allowance for credit losses on reinsurance recoverables was $1.5 million. To minimize exposure to significant losses from reinsurance insolvencies, the Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk. The Company generally seeks to purchase reinsurance from reinsurers with A.M. Best financial strength ratings of “A-” (Excellent) or better. The Company’s reinsurance contracts generally require reinsurers that are not authorized as reinsurers under U.S. state insurance regulations or that experience rating downgrades from rating agencies below specified levels to fund their share of the Company’s ceded outstanding losses and loss adjustment expense reserves, typically through the use of irrevocable and unconditional letters of credit. In fronting arrangements, which the Company conducts through its Specialty Admitted Insurance segment, we are subject to credit risk with regard to insurance companies who act as reinsurers for us in such arrangements. We require collateral, in the form of a trust arrangement or letter of credit, to secure the obligations of the insurance entity for whom we are fronting.

At March 31, 2025, we had reinsurance recoverables on unpaid losses of $1,984.3 million (net of a $1.5 million allowance for credit losses) and reinsurance recoverables on paid losses of $127.6 million, and all material recoverable amounts were from companies with A.M. Best ratings of “A-" (Excellent) or better, or are collateralized by the reinsurer for our benefit through letters of credit or funds on deposit in trust accounts.

Amounts Recoverable from an Indemnifying Party and Reinsurer on Legacy Commercial Auto Book

James River previously issued a set of commercial auto insurance contracts (the “Rasier Commercial Auto Policies”) to Rasier under which James River pays losses and loss adjustment expenses on the contracts. James River has indemnity agreements with Rasier (non-insurance entities) (collectively, the “Indemnity Agreements”) and is contractually entitled to reimbursement for the portion of the losses and loss adjustment expenses paid on behalf of Rasier under the Rasier Commercial Auto Policies and other expenses incurred by James River. On September 27, 2021, James River entered into the Commercial Auto LPT with Aleka to reinsure substantially all of the Rasier Commercial Auto Policies for which James River is not otherwise indemnified by Rasier under the Indemnity Agreements.

Each of Rasier and Aleka are required to post collateral equal to 102% of James River's estimate of the respective party's obligations in trusts pursuant to the terms of the Indemnity Agreements and the Commercial Auto LPT, respectively. At March 31, 2025, the total balance of collateral securing Rasier's obligations under the Indemnity Agreements was $66.1 million and Aleka's obligations under the Commercial Auto LPT was $30.6 million. At March 31, 2025, the total reinsurance recoverables under the Commercial Auto LPT was $29.2 million.

While the Commercial Auto LPT brings economic finality to substantially all of the Rasier Commercial Auto Policies, the Company has credit exposure to Rasier and Aleka under the Indemnity Agreements and the Commercial Auto LPT if the estimated losses and expenses of the Rasier Commercial Auto Policies grow at a faster pace than the growth in our collateral balances. In addition, we have credit exposure if our estimates of future losses and loss adjustment expenses and other amounts recoverable under the Indemnity Agreements and the Commercial Auto LPT, which are the basis for establishing the collateral balances, are lower than actual amounts paid or payable. The amount of our credit exposure in any of these instances could be material. To mitigate these risks, we closely and frequently monitor our exposure compared to our collateral held, and we request additional collateral in accordance with the terms of the Commercial Auto LPT and Indemnity Agreements when our analysis indicates that we have uncollateralized exposure.

Ratings

The A.M. Best Company financial strength rating for our U.S. insurance subsidiaries is “A-” (Excellent) with a negative outlook. This rating reflects A.M. Best’s opinion of our insurance subsidiaries’ financial strength, operating performance and ability to meet obligations to policyholders and is not an evaluation directed towards the protection of investors. The A- rating is the fourth highest rating of the thirteen ratings issued by A.M. Best and is assigned to insurers that have, in A.M. Best’s opinion, an excellent ability to meet their ongoing obligations to policyholders.

The financial strength ratings assigned by A.M. Best have an impact on the ability of our regulated subsidiaries to attract and retain agents and brokers and on the risk profiles of the submissions for insurance that our subsidiaries receive. We believe the “A-” (Excellent) ratings assigned to our U.S. insurance subsidiaries allow our subsidiaries to actively pursue relationships with the agents and brokers identified in their marketing plans.

Series A Preferred Shares

The Company closed on the issuance and sale of 150,000 Series A Preferred Shares on March 1, 2022 for an aggregate purchase price of $150.0 million, or $1,000 per share, in a private placement. The Series A Preferred Shares are convertible into the Company’s common shares at the option of the holder at any time, or at the Company’s option under certain circumstances. Dividends on the Series A Preferred Shares accrue quarterly at the rate of 7% of the Liquidation Preference per annum, which may be paid in cash, in-kind in common shares or in Series A Preferred Shares, at the Company’s election.

On November 11, 2024, the Company amended the Certificate of Designations setting forth the terms of the Series A Preferred Shares to, among other things, convert 37,500 outstanding Series A Preferred Shares with a liquidation value of $37.5 million to common shares at a per share price of $6.40. Following the conversion, 112,500 Series A Preferred Shares remain outstanding.

EQUITY

Total common shares outstanding increased from 45,644,318 at December 31, 2024 to 45,892,706 at March 31, 2025, reflecting 248,388 common shares issued in the three months ended March 31, 2025 related to vesting of RSUs.

Share Based Compensation Expense

The Company recognized $2.7 million of share based compensation expense in each of the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, the Company had $8.5 million of unrecognized share based compensation expense expected to be charged to earnings over a weighted-average period of 2.2 years.

Equity Incentive Plans

RSUs

The following table summarizes RSU activity:

Outstanding RSUs granted to employees generally vest ratably over a three-year vesting period in the case of time-vest RSUs and cliff vest at the end of a three-year performance period in the case of PRSUs. RSUs granted to non-employee directors generally have a one year vesting period. The RSUs granted in 2025 and 2024 include 620,108 and 231,492 PRSU awards, respectively. Initial PRSU awards are granted at the 100% target performance level. The Company projects the level of achievement for each award during the performance period and periodically adjusts the number of outstanding awards to reflect the number of awards expected to vest.

Options

At December 31, 2023, the Company had 74,390 options outstanding with an average weighted exercise price of $42.17. The options lapsed in the three months ended March 31, 2024, after which, there have been no options outstanding.

Underwriting Performance Ratios

The following table provides the underwriting performance ratios of the Company's continuing operations inclusive of the business subject to retroactive reinsurance accounting. There is no economic impact to the Company over the life of a retroactive reinsurance contract so long as any additional losses subject to the contract are within the limit of the contract and the counterparty performs under the contract. Retroactive reinsurance accounting is not indicative of our current and ongoing operations. Management believes that providing loss ratios and combined ratios on business not subject to retroactive reinsurance accounting gives the users of our financial statements useful information in evaluating our current and ongoing operations.

RECONCILIATION OF NON-GAAP MEASURES

See “Key Metrics” above for descriptions of why management believes the following Non-GAAP measures provide useful information about our financial condition and results of operation.

Reconciliation of Underwriting Profit

We define underwriting profit as net earned premiums and gross fee income (in specific instances when the Company is not retaining insurance risk) less losses and loss adjustment expenses on business from continuing operations not subject to retroactive reinsurance accounting and other operating expenses. Other operating expenses include the underwriting, acquisition, and insurance expenses of the operating segments and, for consolidated underwriting profit, the expenses of the Corporate and Other segment. Our definition of underwriting profit may not be comparable to that of other companies.

The following table reconciles the underwriting profit of the operating segments by individual segment to consolidated income from continuing operations before income taxes:

(1)Included in underwriting results for the three months ended March 31, 2025 and 2024 is gross fee income of $4.3 million and $5.3 million, respectively.

Reconciliation of Adjusted Net Operating Income

Adjusted net operating income is defined as income available to common shareholders excluding a) income (loss) from discontinued operations, b) the impact of retroactive reinsurance accounting, c) net realized and unrealized gains (losses) on investments, d) certain non-operating expenses such as professional service fees related to certain lawsuits, various strategic initiatives, and the filing of registration statements for the offering of securities, e) severance costs associated with terminated employees, and f) deemed dividends recorded with the amendment of the Series A Preferred Shares. Adjusted net operating income should not be viewed as a substitute for net income calculated in accordance with GAAP, and our definition of adjusted net operating income may not be comparable to that of other companies.

Our income available to common shareholders reconciles to our adjusted net operating income as follows:

Tangible Equity (per Share) and Tangible Common Equity (per Share)

Tangible equity is defined as shareholders' equity plus mezzanine Series A Preferred Shares and the deferred retroactive reinsurance gain less goodwill and intangible assets, net of amortization. Tangible equity per share represents tangible equity divided by the sum of total common shares outstanding plus the common shares resulting from an assumed conversion of the outstanding Series A Preferred Shares into common shares (at the conversion price effective as of the last day of the applicable period). Tangible common equity is defined as shareholders' equity plus the deferred retroactive reinsurance gain less goodwill and intangible assets, net of amortization. Tangible common equity per share represents tangible common equity divided by the total common shares outstanding. Our definitions of tangible equity, tangible equity per share, tangible common equity and tangible common equity per share may not be comparable to that of other companies, and they should not be viewed as a substitute for shareholders’ equity and shareholders’ equity per share calculated in accordance with GAAP.

The following table reconciles shareholders’ equity to tangible common equity as of March 31, 2025, December 31, 2024, and March 31, 2024: