James River (JRVR) Q2 E&S Premium Up 3%

Key Points

• Non-GAAP earnings per share were in line with expectations at $0.23 for Q2 2025, while GAAP revenue was just below estimates at $152.6 million for Q2 2025.

• The Excess & Surplus (E&S) segment achieved a record $300.4 million in gross written premium in Q2 2025, but Specialty Admitted performance weakened sharply.

• The quarterly dividend was reduced to $0.01 per share from $0.05 in the prior year.

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James River Group (NASDAQ:JRVR), a specialty insurance provider focused on Excess & Surplus (E&S) lines and Specialty Admitted insurance, released its second quarter 2025 results on August 4, 2025. The company’s Non-GAAP earnings per share were in line with analyst expectations at $0.23. However, GAAP revenue of $152.6 million was just below the $153.65 million consensus estimate. While the quarter was notable for record new business in its core E&S segment, overall profit metrics declined, and lower performance in the Specialty Admitted segment offset these gains.

Source: Analyst estimates for the quarter provided by FactSet.

Understanding James River Group's business and strategy

James River Group is best known for its focus on the E&S insurance market. E&S stands for "Excess & Surplus," an insurance category that covers unique or hard-to-place risks that standard carriers often avoid. This business lets the company respond quickly to changes in risk and pricing, providing customized solutions for clients ranging from small businesses to mid-sized casualty exposures.

The company also operates in the Specialty Admitted insurance segment, which provides insurance programs for specific types of businesses, typically in partnership with managing general agents. James River's recent strategy has centered on strengthening its E&S franchise, investing in better underwriting tools, and reducing both risk and cost in less profitable business lines. Effective risk selection, expense management, and strong broker relationships are the main factors driving its performance.

Quarter highlights: E&S growth, pricing momentum, and segment divergence

The second quarter was marked by strong progress in E&S, the group's largest business line. Gross written premium in E&S was $300.4 million, up 3% year over year, reflecting rising demand and sustained rate increases. The company reported an E&S renewal rate of 13.9%, with the largest E&S casualty division seeing a renewal rate above 24%. Submission volume was also strong, with new submissions up 5% and renewals up 16%.

Underwriting performance in E&S improved meaningfully. The E&S segment posted a combined ratio of 91.7%, down from 95.4% a year ago, with underwriting profit surging 82% to $11.7 million (non-GAAP). The combined ratio is a key insurance metric showing claims and expenses as a share of premiums earned -- anything below 100% means the segment is generating profit just from underwriting. James River made clear via management comments that "we are focused on enhancing profitability and strengthening operational efficiency" reflected by ongoing pricing discipline and lower expense ratios within E&S.

While the E&S segment gained ground, the Specialty Admitted business registered a sharp decline in gross written premium. Gross written premium plunged 35% to $77.6 million, and net earned premium (GAAP) for the Specialty Admitted Insurance segment dropped 51% to $11.2 million. The combined ratio for the Specialty Admitted Insurance segment was 112.6%, signaling notable underwriting losses of $1.4 million. This reflects the company’s decision to shrink its exposure in this segment rather than risk greater losses.

Investment income declined 17.7% to $20.5 million year over year, mainly because of a smaller investment base after recent reinsurance transactions. The company reported net realized and unrealized investment losses of $0.4 million. Collectively, these investment results also weighed on overall profitability this quarter, in line with management commentary from past calls about a more conservative investment approach following major asset shifts.

Expense and cost control remained an important highlight. The overall group expense ratio improved from 32.7% in Q1 2025 to 30.5%, driven by reduced general and administrative costs. Year to date, tangible common equity—a measure of core capital strength (non-GAAP)—grew 12.8% and now stands at $343.7 million.

A small quarterly dividend was declared at $0.01 per share, as the company manages through ongoing challenges in some segments.

Key products, risk structure, and segment shifts

The main product line at James River is its E&S business, which offers a variety of casualty insurance policies (for example, excess casualty insurance for businesses needing extra liability coverage). These casualty-focused solutions mainly target risks that standard insurers shun or have less appetite for, such as construction liability, small-business risks, and other niche insurance needs. The Specialty Admitted insurance segment targets program business, often with managing general agents, providing tailored coverage for specialty classes including automobile business.

James River limits potential large losses through a reinsurance structure. This means it buys additional insurance from other insurers to cap its maximum losses on older policies. As of the end of Q2 2025, there was $103.8 million in unused “aggregate limit” in these reinsurance contracts -- a key distinction, as it helps insulate overall results from weather and disaster events common in the insurance industry.

Adverse reserve development, which means having to set aside more money for past claims, remains a focus for James River. In Q2 2025, total adverse reserve development (GAAP, for business not subject to retroactive reinsurance accounting) was $3.0 million, down from $10.7 million a year ago and now mostly sheltered by the company’s legacy reinsurance arrangements. Management continues to monitor these legacy exposures closely but has reduced the risk of large surprises by transferring much of the risk externally. Meanwhile, the accident year loss ratio in E&S—losses from policies issued in the current year relative to premiums—improved slightly to 63.5% versus 64.2% a year ago.

The shrinking of the Specialty Admitted segment reflects a deliberate strategy. Net written premium for the Specialty Admitted Insurance segment fell 53% year over year, and the segment produced an underwriting loss. Management stated: “Gross written premium for the fronting and program business declined 21.3% compared to the prior year quarter in Q1 2025, as the Company manages this segment to retain minimal risk.” Expense reductions have helped, with year-to-date costs falling 21.3% in the first six months of 2025 compared to the same period in 2024.

Looking ahead: Management focus and key areas to watch

Management did not offer specific forward guidance for revenue or earnings in the upcoming quarter or year. Instead, it reiterated a commitment to growing the E&S business, controlling expenses, and maintaining underwriting discipline. Prior commentary also pointed to a planned redomestication of the holding company, which should eventually reduce the tax rate and produce a one-time benefit when complete. No further details or targets were included in this quarter’s release.

For investors, the most important storylines for upcoming periods are whether James River can continue its E&S growth and maintain pricing power, and how well it can contain reserve development. The company’s large broker concentration in E&S, diminished investment income, and ongoing reinsurance dependency remain areas to monitor. Any significant changes in the dividend policy or material transactions in runoff business may also warrant close attention.

JRVR pays a regular dividend, which was reduced to $0.01 per share in the period.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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