James River Group Holdings, Ltd. owns and operates a group of specialty insurance companies that focuses on underwriting small and middle market casualty risks within the U.S. excess and surplus (E&S) lines market.
Substantially all of the company’s business is casualty insurance. The company writes very little property or catastrophe insurance, and no property catastrophe reinsurance.
During 2024, the company completed several strategic actions, including closing the sale of JRG Reinsurance C...
James River Group Holdings, Ltd. owns and operates a group of specialty insurance companies that focuses on underwriting small and middle market casualty risks within the U.S. excess and surplus (E&S) lines market.
Substantially all of the company’s business is casualty insurance. The company writes very little property or catastrophe insurance, and no property catastrophe reinsurance.
During 2024, the company completed several strategic actions, including closing the sale of JRG Reinsurance Company Ltd. (JRG Re), to focus its business around its U.S. insurance businesses, and adverse development cover for the company’s Excess and Surplus Lines business. The company’s continuing operations consist of two operating segments, Excess and Surplus Lines and Specialty Admitted Insurance, and a third segment, Corporate and Other.
The Excess and Surplus Lines segment sells E&S commercial lines liability and property insurance in every U.S. state and the District of Columbia through James River Insurance Company (James River Insurance) and its wholly-owned subsidiary, James River Casualty Company (James River Casualty). The Excess and Surplus Lines segment produced 71.0% of the company’s gross written premiums, and 87.5% of its net written premiums from continuing operations for the year ended December 31, 2024. James River Insurance and James River Casualty are both non-admitted carriers. Non-admitted carriers writing in the E&S market are not bound by most of the rate and form regulations imposed on standard market companies, allowing them flexibility to change the coverage terms offered and the rate charged without the time constraints, and financial costs and delays associated with the filing of such changes with state regulators, and seeking approval for the filings. The Excess and Surplus Lines segment distributes primarily through wholesale insurance brokers.
The Specialty Admitted Insurance segment has admitted licenses and the authority to write excess and surplus lines insurance in 50 states and the District of Columbia through Falls Lake National Insurance Company (Falls Lake National) and its wholly-owned subsidiaries, Stonewood Insurance Company (Stonewood Insurance), and Falls Lake Fire and Casualty Company (Falls Lake Fire and Casualty). The Specialty Admitted Insurance segment produced 29.0% of the company’s gross written premiums, and 12.5% of its net written premiums from continuing operations for the year ended December 31, 2024. The Specialty Admitted Insurance segment primarily writes fronting business, where it retains a minority share of the risk, generally 10%-35%, and seeks to earn fee income. When it fronts, it uses its legal authority, financial strength rating, underwriting experience, and claims infrastructure to write insurance to service clients (usually managing general agents and reinsurers) who assume the vast majority of the risk on each fronted policy. Because it retains little premium or risk in its fronted business, the company can allocate less capital per dollar of revenue to fronted policies than to policies where it retains more risk, which enhances its returns on equity. The Specialty Admitted Insurance segment accepts applications for insurance from a variety of sources, including fronting and program administrators, as well as managing general agents (MGAs).
The Corporate and Other segment consists of the management and treasury activities of the company’s holding companies.
The company’s discontinued operations include JRG Re, which consisted of the remaining operations of the former Casualty Reinsurance segment, and which, prior to the suspension of its underwriting activities in 2023, provided proportional and working layer casualty reinsurance to third parties. The sale of JRG Re, which closed on April 16, 2024, resulted in the company’s disposition of its casualty reinsurance business and related assets.
Strategy
The company’s strategies are to respond rapidly to market opportunities and challenges, and use timely and accurate data.
Business Segments
Excess and Surplus Lines Segment
The company underwrites non-admitted E&S business through its subsidiaries, James River Insurance and James River Casualty (together, James River, which comprises the company’s Excess and Surplus Lines segment), from offices in Richmond, Virginia; Scottsdale, Arizona; and Atlanta, Georgia. The Excess and Surplus Lines segment is the company’s largest segment. James River has been engaged in the E&S insurance market.
The company’s Excess and Surplus Lines segment underwrites property-casualty insurance in all states and the District of Columbia. It utilizes a network of authorized wholesale brokers and general agents throughout the United States.
Companies that underwrite on an E&S lines basis operate under a different regulatory structure than standard market carriers. E&S lines carriers are generally permitted to craft the terms of the insurance contract to suit the particular risk they are assuming. E&S lines carriers are, for the most part, free of rate and form regulation. In contrast, standard market carriers are generally required to use approved insurance forms, and to charge rates that have been authorized by or filed with state insurance departments. However, as E&S carriers, the company’s insurance subsidiaries in the Excess and Surplus Lines segment are not backed by any state’s guarantee fund, and in most states, these subsidiaries may only write coverage for an insured after they have been declined coverage by the standard market.
The company’s Excess and Surplus Lines segment underwrites coverage for a wide range of commercial businesses and does not write personal lines insurance. Applications for insurance are presented to the company by authorized wholesale brokers who are engaged by retail agents to assist in coverage procurement.
Claims for business written and retained by the Excess and Surplus Lines segment are managed by the company’s internal claims department, although it uses independent adjusters for inspection and payment of certain claims.
Excess Casualty underwrites excess liability coverage for a variety of risk classes, including manufacturers, contractors, distributors, and transportation risks. The company writes excess liability coverage above its own primary policies, as well as policies issued by third parties. When it writes above others’ policies, it is selective regarding underlying carriers, focusing on the nature of the business, the financial strength of the carrier, their pricing, and their claims handling capabilities.
General Casualty writes primary liability coverage on businesses exposed to premises liability type claims, including real estate, mercantile and retail operations, apartments and condominiums, hotels and motels, restaurants, bars, taverns, and schools.
Manufacturers and Contractors writes primary general liability coverage for a variety of classes, including manufacturers of consumer, commercial, and industrial products, as well as general and trade contractors.
Excess Property writes property risks providing limits in various layers above the primary coverage layer for a variety of classes, including apartments, condominiums, resorts, shopping centers, offices, and general commercial properties.
Energy writes risks engaged in the business of energy production, distribution, or mining, and the manufacture of equipment used in the energy business segment. Examples of classes underwritten by this division include oil and gas exploration companies, oil or gas well drillers, oilfield consultants, oil or gas lease operators, oil well servicing companies, oil or gas pipeline construction companies, fireworks manufacturing, mining-related risks, utilities, and utility contractors.
Small Business includes both brokerage and delegated authority contract binding, focusing on accounts with annual primary liability insurance premiums of less than $20,000, and more typically below $10,000.
Allied Health underwrites casualty insurance for allied health and social service types of risks, such as long-term care facilities, independent living apartments, group homes, halfway houses, and shelters, drug rehabilitation, home health care, and medical staffing enterprises.
Commercial Auto underwrites primarily the hired and non-owned auto liability exposures for a variety of industry segments, including package and food delivery services.
Life Sciences underwrites general liability, products liability, and/or professional liability coverage for manufacturers, distributors, and developers of biologics (antibodies & vaccines used for the prevention of disease), nutraceuticals (health, nutrition, and herbal supplements), human clinical trials, pharmaceuticals (mainly generics and over-the-counters), and medical devices. This division also writes a book of various types of business engaged in the medical and adult-use cannabis industry.
Sports and Entertainment underwrites primary liability coverage for sports, recreation, and entertainment-related risks, including special events, family entertainment centers, tourist attractions, health clubs, sports complexes, and other sport and event venues.
Environmental underwrites contractors’ pollution liability, products pollution liability, site-specific pollution liability, and consultant’s professional liability coverage on a stand-alone basis and in conjunction with the general liability coverage. Typically, the company writes environmental coverage for contractors who are not engaged in environmental remediation work on an occurrence form.
Professional Liability writes professional liability coverage for accountants, architects, engineers, lawyers, and certain other professions.
Medical Professionals underwrites non-standard physicians’ professional liability for individuals or small groups. The company’s healthcare business is a mix of both surgical and non-surgical classes.
Management Liability, a new underwriting division in 2023, writes excess management liability coverage, inclusive of directors & officers liability, employment practices liability, and fiduciary liability. The division underwrites a wide range of industries except for financial institutions and cryptocurrency firms. The company writes publicly traded risks, privately held risks, and not-for-profit risks.
The General Casualty, Manufacturers and Contractors, Small Business, Commercial Auto, and Sports and Entertainment divisions write primary liability coverage. Allied Health, Medical Professional, and Professional Liability division coverages are issued on a claims-made and reported basis.
Excess Property writes shared and layered limits property risks, providing limits in various layers above another carrier’s primary coverage layer for a variety of commercial line classes, including apartments, condominiums, resorts, shopping centers, offices, and general commercial properties.
Marketing and Distribution
The Excess and Surplus Lines segment distributes its products through a select group of authorized E&S lines brokers who can consistently produce reasonable volumes of quality business. These brokers procure policies for their clients from the company, as well as from other insurance companies. As of December 31, 2024, the segment had authorized close to 100 broker groups to submit applications to the company. The Excess and Surplus Lines segment generally makes broker authorizations by brokerage office and underwriting division. The segment does not grant its brokers underwriting or claims authority. The segment does delegate limited authority under several programs underwritten by exclusive general agents, as well as a growing but still limited number of general agents underwriting small-account commercial risks through its online contract binding portal.
The company’s Excess and Surplus Lines segment selects its brokers based upon management’s review of the experience, knowledge, and business plan of each broker. While many of the company’s Excess and Surplus Lines segment’s brokers have more than one office, it evaluates each office as if it were a separate entity. Brokers must be able to demonstrate an ability to produce both the quality and quantity of business that the company seeks. Brokers unable to produce consistently profitable business, or who produce unacceptably low volumes of business, may be terminated. The company’s Excess and Surplus Lines segment’s underwriters visit brokers regularly to discuss the products that the company offers and the needs of the brokers.
Underwriting
The company’s Excess and Surplus Lines segment’s staff includes over 200 individuals directly employed in underwriting policies as of December 31, 2024. The company is very selective about the policies it binds. The company’s Excess and Surplus Lines segment binds approximately 3% of new submissions and one out of every four new quotes. If the company’s underwriters cannot reasonably expect to bind coverage at the combination of premiums and coverage that meet its standards, they are encouraged to quickly move on to another prospective opportunity. For the year ended December 31, 2024, the company received approximately 327,000 submissions (new and renewal, excluding commercial auto policies), quoted over 62,000 policies, and bound more than 26,000 policies.
The company designs its internal processing and data collection systems to provide its management team with accurate and relevant information in real-time. The company collects premium, commission, and claims data, including detailed information regarding policy price, terms, conditions, and the nature of the insured’s business. This data allows the company to analyze trends in its business, including results by individual broker, underwriter, and class of business, and expand or contract its operations quickly in response to market conditions. The company relies on its information technology systems in this process. Additionally, the claims staff also contributes to the company’s underwriting operations through its communication of claims information to its underwriters.
Claims
Over 70 claims professionals with significant experience in the property-casualty industry support the company’s Excess and Surplus Lines segment as of December 31, 2024.
The company’s excess and surplus lines business generally results in claims from premises/operations liability, professional liability, hired and non-owned auto liability, auto physical damage, first-party property losses, and products liability. Approximately 92% of all claims received are closed within five years in the Excess and Surplus Lines segment.
Commercial Auto Loss Portfolio Transfer
On September 27, 2021, 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, to reinsure substantially all of the Excess and Surplus Lines segment's legacy portfolio of commercial auto policies previously issued to Rasier for which James River is not otherwise indemnified by Rasier.
Combined Loss Portfolio Transfer and Adverse Development Cover
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).
Adverse Development Cover
The company commenced a multi-pronged strategic partnership with Enstar. As part of this, on November 11, 2024, Enstar, through its subsidiary Cavello Bay Reinsurance Limited (Cavello Bay), entered into an adverse development cover agreement with James River (E&S Top Up ADC).
Specialty Admitted Insurance Segment
The Falls Lake Insurance Companies (Falls Lake) comprise the company’s other U.S. insurance segment, Specialty Admitted Insurance. Falls Lake consists of Falls Lake National (an Ohio domiciled company, licensed in 49 states and the District of Columbia, and registered as a surplus lines company in California), and its subsidiaries Stonewood Insurance (an Ohio domiciled company) and Falls Lake Fire and Casualty (a California domiciled company).
Fronting & Program Business
In the company’s fronting business, it issues insurance policies for another insurance company, which may not have the licensure, product suite, or rating to serve its desired market, or for a program supported by reinsurance or alternative capital provider(s). In a fronting arrangement, the company gives selected MGAs authority to act on its behalf to produce, underwrite, and administer policies that meet its underwriting and pricing guidelines. The company generally retains 10%-35% of the underwriting risk in its fronting business. The issuance of the company’s policy makes it contractually responsible to the insured in the event they experience a covered loss. The company enters into these arrangements selectively with counterparties that have significant experience and market presence in specialty classes of property-casualty risk or automobile business. The company only works with MGAs who permit it to actively engage with them through a combination of onsite and offsite resources to facilitate its real-time supervision of their work. Underwriting, claims, and financial performance are subject to regular review by the company’s staff, and it holds appropriate collateral to manage counterparty credit risk. The company grants limited authority for underwriting and claims administration and employs a rigorous review process to ensure the authority is appropriately used within the terms of its contract, and that collateral held by the company is appropriate. The company charges fees as a percentage of gross written premiums for issuing these policies. The company establishes fronting opportunities through a variety of sources, including direct carrier relationships, MGAs, reinsurers, and reinsurance brokers.
The company focuses its coverage on casualty risks in its fronting business, although some property insurance is written. The company seeks to limit its risk generally through reinsurance, either on a proportional or excess of loss basis, or sometimes both. For initial claims oversight and administration, the company generally outsources frequency layer claims management authority to third-party administrators up to the first $100,000 of a claim with its management oversight, and then provides supervisory control above this amount.
Under the terms of these program agreements, the company pays fixed commissions, often with a profit contingency. The company’s fronting business is distributed primarily through MGAs and fronting and program managers.
Actions to Reduce Workers' Compensation Book
In June 2023, the company non-renewed its large California workers' compensation program in the Specialty Admitted Insurance segment. This action was taken due to persistent rate pressure and tighter reinsurance capacity.
On September 25, 2023, the company announced that certain of its subsidiaries entered into an agreement to sell the renewal rights to the Individual Risk Workers' Compensation (IRWC) business in the Specialty Admitted Insurance segment. The IRWC business, previously underwritten by the company’s staff and generated by appointed agents in 13 states, produced 1.0% of 2024 gross written premiums in this segment. The transaction included the full operations of the business, including underwriting, loss control, and claims, and the transfer of the employees supporting the business. The transaction, which closed on September 29, 2023, was aligned with the company’s strategy to focus its resources on core businesses where it has meaningful scale.
Competition
Excess and Surplus Lines
Competitors in this segment include ACE Westchester Specialty Group (Chubb), AmRisc Insurance Company (Truist Insurance Holdings), Apollo Syndicate, Alleghany Corporation (Berkshire Hathaway), Allied World Assurance Company, Ltd., AmTrust Financial Services, Inc., Arch Capital Group Ltd., Arrowhead General Insurance Agency, Inc., Aspen Insurance Holdings Limited, Ategrity Specialty Insurance Company, AXA XL, Axis Insurance Company (Axis Capital Holdings Limited), Beazley Group (Lloyd’s), Berkshire Hathaway Specialty Insurance, Brit Insurance (Lloyd’s), Colony Specialty Insurance Company (Argo Group International Holdings, Ltd.), Endurance Specialty (Sompo), Fairfax Financial Holdings, Ltd., Hamilton Insurance Group, Ltd., Hiscox Insurance Company (Lloyd’s), Houston Casualty Company (a subsidiary of Tokio Marine HCC), Kinsale Capital Group, Inc., Lexington Insurance Company (American International Group, Inc.), Markel Corporation, Navigators Insurance Company (Hartford), OneBeacon (Intact Financial Corporation), Old Republic International Corporation, PHLY E&S (Philadelphia Consolidated Holding Corp., Tokio Marine), ProAssurance Corporation, QBE Insurance Group Ltd., RLI Corp., Scottsdale Insurance Company (Nationwide E&S), Skyward Specialty Insurance Group, Inc., Starr Insurance Company (C.V. Starr & Company), StarStone Specialty Insurance Co., Swiss Re Ltd., United Specialty Insurance Company, W.R. Berkley, and other large national and multi-national insurance carriers.
Specialty Admitted Insurance
Competition for the company’s fronting business includes, but is not limited to, State National (part of Markel), Argo Group, Clear Blue, Spinnaker, Trisura, Red Point, Equity Insurance Company, Worth Insurance, and Amtrust.
Regulation
The company is designated as a non-resident for Bermuda exchange control purposes by the Bermuda Monetary Authority (BMA).
The company must comply with the provisions of the Companies Act 1981 of Bermuda (the Companies Act), regulating the payment of dividends and making distributions from contributed surplus.
The company’s insurance subsidiaries are required to file quarterly and annual reports with the appropriate regulatory agency in its state of domicile, and with The National Association of Insurance Commissioners (NAIC), based on applicable statutory regulations, which differ from the U.S. generally accepted accounting principles.
The company continues to monitor whether additional states in which it conducts business adopt the NAIC’s Insurance Data Security Model Law.
On December 20, 2019, the Terrorism Risk Insurance Act of 2002 and its successors, the Terrorism Risk Insurance Extension Act of 2005, the Terrorism Risk Insurance Program Reauthorization Act of 2007, and the Terrorism Risk Insurance Program Reauthorization Act of 2015 (collectively, the Terrorism Acts), were extended through December 31, 2027. Under the Terrorism Acts, commercial property and casualty insurers, in exchange for making terrorism insurance available, may be entitled to be reimbursed by the federal government for a portion of their aggregate losses. As required by the Terrorism Acts, the company offers policyholders in specific lines of commercial insurance the option to elect terrorism coverage.
Intellectual Property
The company holds the U.S. federal service mark registration of its corporate logo, and several other company trademark registrations with the U.S. Patent and Trademark Office.
History
James River Group Holdings, Ltd. was founded in 2002. The company was incorporated in 2007.
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