Good day everyone, welcome to the James River Group Q1 2023 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star one again. For operator's assistant throughout the call, press star zero. Finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Brett Shirreffs, head of investor relations, to begin the conference. Over to you. Thanks, good morning, everyone. Welcome to the James River Group first quarter 2023 earnings conference call. During the call, we will be making forward-looking statements. These statements are based on current beliefs, intentions, expectations, and assumptions that are subject to various risks and uncertainties, which may cause actual results to differ materially. For a discussion of such risks and uncertainties, please see the cautionary language regarding forward-looking statements in yesterday's earnings release and the risk factors of our most recent Form 10-K and other reports and filings we have made with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements. In addition, during this presentation, we may reference non-GAAP financial measures such as adjusted net operating income, underwriting profit, tangible equity, tangible common equity, and adjusted net operating return on tangible common equity. Please refer to our earnings press release for a reconciliation of these numbers to GAAP. A copy of which can be found on our website at www.jrvrgroup.com. Lastly, unless otherwise specified, for reasons described in our earnings press release, all underwriting performance ratios referred to are for our business that is not subject to retroactive reinsurance accounting for loss portfolio transfers. I will now turn the call over to Frank D'Orazio, Chief Executive Officer of James River Group. Thank you for that introduction, Brett. Good morning, welcome to everyone on the call. I'm pleased to be joining you today to provide additional color on our strong first quarter results, while also sharing some thoughts on market conditions and growth opportunities for our company. The results we released last night demonstrate a continuation of the positive momentum we established five quarters ago as we delivered another strong quarter of consistent mid-double digit returns on tangible equity. We delivered impressive premium growth in our flagship E&S segment in concert with solid underwriting profitability and a meaningful increase in our investment income. Additionally, our shareholders continue to benefit from the strategic actions we executed in prior quarters to protect our balance sheet. All in, we produced adjusted net operating income of $21.6 million, our highest quarterly total in more than three years. Our adjusted net operating return on tangible common equity ex-AOCI was 16.3% in the first quarter, which is consistent with the guidance we provided on our fourth quarter call, and by all means, a very strong result. Tangible common equity per share increased 15% from year-end 2022. In short, we're off to a very strong start to the year. As I have frequently commented, our focus remains on producing consistent earnings and returns for shareholders, and I believe we're delivering on that objective. We are also experiencing numerous positive developments throughout the organization that inspire confidence in our future, whether through investments in technology to amplify our efficiency and growth, or our plans to further diversify our E&S product offerings. The momentum we are seeing in the market reinforces our decision to focus our resources on the core strengths of our business. We believe our franchise has few public company peers relative to its concentration of true E&S business, and we remain optimistic about the outlook for James River and confident in our ability to produce returns in line with our expectations, as we've now done for the last five consecutive quarters. Turning to the market for a moment. During the first quarter in our E&S segment, we were pleased to achieve renewal rate increases of 8.9%, which was almost 250 basis points higher than the rate change we received in Q4 2022, and moderately higher than the prior year quarter. Further support that demonstrates the strength of the market conditions in our core product lines and reaffirms our view that we are achieving rate increases ahead of our view of loss trends, as well as the assumptions in our business plan for 2023. As many of our peers have discussed, pricing in the property market led the way during the first quarter. Our excess property book experienced renewal rate increases of 45%, while all of our remaining underwriting units achieved positive rate increases in the first quarter, with the vast majority of our E&S segment reporting increases in the high single or low double-digit range. As we have noted in the past, headline pricing metrics will fluctuate from quarter to quarter, but I am encouraged by the breadth of the market strength to begin the year, particularly after 25 consecutive quarters of positive rate, now compounding to upwards of 68%. These conditions continue to support our outlook for profitable growth. Looking at our E&S results more closely, gross premium written increased 12.1%, while net premium increased 17.3% during the first quarter. Submission activity remained strong and increased year-over-year for both new and renewal submissions, while our policy count grew by 13%. The combined ratio in E&S was 86.8% during the first quarter, and we reported $20 million of underwriting profit for the period. Our combined ratio increased three points from the prior year quarter, with approximately two points of this driven by the change in our retention in the excess casualty unit and its impact on the expense ratio. Our accident year loss ratio increased one point from the prior year quarter. Much of this increase is related to business mix, but we also continue to be patient in reflecting the rate increases we have achieved at our initial loss picks. We believe we are prudently building an attractive reserve base for the future. From a commercial auto standpoint, we did recognize $41 million of adverse prior year development on the business subject to the commercial auto LPT that we put in place during the third quarter of 2021. We believe the development is fully covered by the LPT, which has been provided without an aggregate limit. Overall, E&S has had a great start to the year, with strong top-line momentum and a continued focus on profitability. Just as importantly, we remain excited about the market opportunities for the business going forward. Moving to the specialty admitted segment, gross premiums written were down less than 1%, while net premium increased 32%. On a gross basis, our workers' compensation premium declined 7%, while the remainder of our fronting business grew a little bit more than 2% as fee income increased by 3% relative to the prior year quarter. In workers' compensation during the quarter, we saw some stabilization in rates in our individual risk unit, with pricing up 1%, while rates in our California workers' compensation program continued to experience more pressure. The market remains competitive, and we have proactively reduced these portfolios as a result of our pricing and underwriting discipline. The increase in our net premium this quarter is due to a change in the reinsurance structure on January 1st within the primary layer of our individual risk book. While we have a long track record of profitability in this business, we will continue to actively manage the portfolio to navigate changing market conditions and ensure long-term profitability. In our fronting business, we continue to have an active pipeline of opportunities in front of us, while several of our existing programs continue to gain scale and push rate increases. During a period where the reinsurance market has tightened for new programs and operational issues have been exposed at several competitors, our focus remains on underwriting profitability and tightly managed collateral and security requirements. Turning briefly to our casualty reinsurance segment, JRG Re, the results this quarter reflect earned premium on in-force treaties that were written in prior years, as well as $10 million of premium adjustments recorded in the quarter. These adjustments are on plan but a normal occurrence in our business and are generally earned as written. The segment reported a small underwriting profit during the quarter, despite some modest reserve strengthening. Reserve movements amounted to a few small changes in IBNR on older accident years. We also experienced some development on treaties that are subject to the Casualty Re LPT, totaling $7.8 million. At the end of the first quarter, we had an aggregate limit of $51 million remaining on the Casualty Re LPT. To summarize, our first quarter 2023 results further demonstrate the strength and earnings potential of our franchise, as well as the underwriting culture we have worked to develop and enhance over the past two years. We are thrilled to be back on our front foot with a refocused energy, expanding our valuable and unique franchise through attractive market conditions and select new products. We will continue to deploy our capital where we have the most confidence in generating consistent profitability and attractive returns for shareholders. The E&S market continues to show signs of strength, and we remain very excited about the opportunities ahead of us. With that, let me turn the call over to Sarah. Thanks very much, Frank, and good morning to everybody. Thanks for joining us today. We are starting out the year in a very strong financial position, a continuation of our powerful momentum these last 5 quarters. This quarter, we are reporting adjusted net operating income of $0.56 per share, an increase of over 50% as compared to the prior year quarter. Tangible book value per common share increased 14.7% from last quarter to $10.91, carrying strong momentum forward into 2023. We are delivering $21.6 million of adjusted net operating income this quarter, which included $10.6 million of underwriting profit and $25.8 million of net investment income, each on a pre-tax basis. For the quarter, adjusted net operating return on tangible common equity excluding AOCI was 16.3%, as Frank mentioned, an increase of over 60 basis points from last quarter and over 230 basis points from the full year 2022. Including AOCI, our annualized return moves from 16.3% to 22.5%. Our expense ratio for the quarter was 28.4%, in line with what we cited from this year during our last earnings call in February. Our expense ratio is higher from a year ago for 2 primary reasons. Most impactfully, as previously discussed, we decided to increase the retention in our excess casualty line within E&S. That line represents about a third of the segment. We did this at mid-year last year by reducing the quota share we purchase by about 10%. This is a line that has taken on about 135% of cumulative rate over the last 6 years, roughly double the increase that we have seen in the full E&S segment. We believe this is meaningfully in excess of our loss costs, and given our long and positive experience in this line, we wanted to retain more of our underwriting profits. In the meantime, this will mean less of an expense offset in the form of reduced overall ceding commission. Second, and to a much lesser extent, given the amount of earned premium in the segment, the changes we made to our reinsurance structure within our specialty admitted segment at one-one will have a similar impact of reducing ceding commission and its resultant reduction of expenses. Taken together, these 2 items increase the group expense ratio by about two and a half points compared to the prior year quarter, in line with what we discussed back in February. Turning to investment income. As mentioned earlier, the level of NII was a second consecutive record this quarter at $25.8 million. It grew 12.9% from the sequential quarter and 58.4% from the prior year quarter. Reinvestment rates moved higher with interest rates. We have had strong cash flow, and we also continue to benefit from the opportunistic sale of a portion of our renewable energy portfolio, which we announced last quarter. Approximately $1.2 million of this total NII is related to the sale of 2 of our renewable energy investments above carrying value. Reinvestment yields in the core fixed income portfolio averaged 4.8% during the quarter, and we continue to see rates in excess of our average 3.9% book yields. I would note that our reinvestment rates were higher during the fourth quarter of last year, above 5%, so we have ticked down a bit during the first quarter. The combination of our growing base of invested assets, natural portfolio turnover, and exposure to floating rate assets positions us well to continue to deliver strong NII. I would note, however, that we trimmed a bit of our bank loan portfolio during the quarter, given the strength in that market earlier in the year. We've also seen reinvestment rates move a little bit lower to 4.5% during April. Altogether, with the $1.2 million non-recurring gain in our renewable energy portfolio, this was an exceptionally strong NII quarter. Let me take a second now to just make a few comments on investments, given recent economic and market events. We continue to maintain our conservative approach to our investment process, and our portfolio remains high quality with an average credit quality of A-plus. Our overall exposure to banks is about 10% of invested assets, and the majority of that is in G-SIBs. We have no exposure to Silicon Valley Bank, Signature, or First Republic Bank, nor exposure to contingent convertibles. Our exposure to regional banks is less than 2% of our invested assets and is in high-quality names. Finally, regarding our tax rate. Our tax rate for the quarter was 24.6%, and as always, is impacted by the geographic location of profits across our business. We do expect our effective tax rate to be modestly lower than it was this quarter on a full year basis. We're off to a great start in 2023 and continue to see very attractive opportunities to invest and continue to scale our company. With that, I'll turn it back to the operator to open the line for questions. Thank you. At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. We'll pause for a moment to compile the Q&A roster. Your first question comes from Brian Meredith. Brian, your line is open. Yes. Thank you. A couple questions here for you, Mike and Sarah. The first one, Mike, maybe talk a little bit about your business mix in the E&S business and the growth you're putting on there, particularly when it comes to the excess property business. Geographically, where is that business? Is it CAT exposed? Is this something we should think about going forward with James River that maybe, given the opportunities in that market, you may have a little bit of more CAT volatility in your results, or am I thinking that the wrong way? Sure, Brian. Thanks for the question. Let me talk first, I guess, just more broadly about the opportunities that we're seeing, and then I want to address your property question more specifically. We saw very healthy growth opportunities across most of our E&S platform during the first quarter, with the majority of our underwriting divisions reporting solid growth and all divisions reporting positive renewal rate changes. We also saw continued strong growth in renewal submissions. In particular, they were up 8%, while new submission activity also showed growth. I would say that most of our underwriting divisions have experienced continued renewal submission growth, and our three largest divisions, excess casualty, general casualty, and manufacturers and contractors, all experienced renewal submission growth of more than 10%, with general casualty coming in above 20%. We saw a similar dynamic from a policy count perspective across the segment. Policies in force increased nearly 13%, as I said earlier. That was led by excess casualty, that was up 19%, general casualty also up 19% manufacturers and contractors up 17%. We would expect to see these trends continue certainly through 2023. From a gross premium standpoint, in Q1, some of our larger underwritings experienced strong growth, like excess casualty, which was up 16%, manufacturers and contractors, which was up 18%. We also saw some growth in some of our smaller underwriting units, like small business, up 14.5%. Sports and entertainment up 23.1%. Maybe to your point, excess property, which grew 68.6%, with most of that coming from rate. The first quarter, just relative to your question on property, the first quarter has historically been a quarter where we've seen growth opportunities in property, and that was very much the case in Q1 2023. As I suggested, premiums were up significantly due to very strong rate increases. Although premiums were up almost 70%, they were off of a relatively small base in comparison to the segment. We wrote $16.5 million of GWP in excess property. That represents about 7% of our E&S premium and less than 5% of the total group premium. Policy count actually declined 7% from the prior year quarter. This is a market where you can see some significant growth based on rate, but not necessarily increase your exposure all that much. We're not expecting to make any significant changes to our appetite for property exposure. We have a continued focus on our target classes and achieving meaningful rate increases. Again, market is definitely facing capacity stress. I expect we'll see some growth around the edges there relative to premium volume, but again, driven by rate. In terms of the portfolio and the location of from a risk, I would say CAT exposed Southeast and Gulf wind. We see some Texas wind, to a lesser extent, some California and Pacific Northwest quake. As I said, policy count is actually down. We are not putting on commensurate exposure with the premium increase that we're seeing. Our attachment strategy hasn't really changed. Quite frankly, we were at year-end 2021, I want to say, attaching on average at about $33.2 million. I think that moved down $1 million as of year-end 2022. Staying the course, if anything, probably being more selective just relative to the industry classes that we're pursuing. Excellent. Thank you. That was helpful. My second question, just pivoting over to the admitted segment. 102.3% combined ratio. Is that a level of the combined ratio that you're kind of comfortable with? Are you earning acceptable return on capital above 100 combined ratio in that segment? Brian, what I'd say is on a calendar year basis, the specialty admitted segment has generally had a long track record of profitable results, which has been aided over time by favorable reserve development. We have a strong team leading this business, and they've carefully managed the top line through the cycle. We obviously can't control what happens in the market, particularly in the workers' comp market, but we can actively manage our portfolio and navigate marketing conditions. That doesn't end with some decision that we make on a reinsurance structure. Longer term, we certainly expect the business to continue to be profitable. The fundamentals, as you know, Brian, it's two separate business units. The fundamentals of the workers' compensation market are challenged right now. The fronting program business does provide some nice balance for our E&S segment based on the strong fee income, and the capital light structure of the segment. Great. Thank you. Your next question comes from Meyer Shields. Meyer, your line is open. Thanks. First question, I don't know if this is for Frank or for Sarah, based on the evolution of business mix, specifically, I guess the growth within excess casualty, is the duration of your liabilities and therefore the duration of your targeted investment portfolio changing over the last two, three years? I don't think so, Meyer. I think most of our E&S book is longer duration business, our investment portfolio's had a duration around four for quite some time. I don't think we feel like we need to manage the asset liability mix exactly with the business mix. I think we're very close, continuing to grow in excess casualty, which is now a third of the book, as we've said, is probably making it a little bit longer, I would say it's largely a rounding error compared to the rest of the business mix in the segment. Okay. Understood. Thanks. Second question, I guess when I look at either the net underwriting expenses or the expenses growth of fee income and specialty admitted, they're up something like 20% on a year-over-year basis, I was hoping you could talk through what's driving that and whether we should expect that growth to persist. Sure. You're just focused on the net underwriting expenses and specialty admitted, just to be super clear on your question, right? In net or growth, seeing some growth rates. Yep. I think much of it is really just due to the change in the reinsurance structure that we mentioned, not having the quota share at 1/1 on the workers' comp business. That was providing a significant amount of offset towards expenses in that segment in the form of the ceding commission. I think that will continue to, call it, grade down as the business earns in over the next couple quarters. We certainly had some contribution from ceding commission in this first quarter, I think there will be less of that going forward considering that was a 1/1 non-renewal. That's really the biggest dynamic. I think there's small things around just regular G&A, it is really being driven by the change in the reinsurance structure. You see to some degree an offset there in the form of a loss ratio, and that some of the structure contributes as it kind of feeds into some other components of that. Of course, the increase on the net overall, just given that we've moved away from that structure. Okay, perfect. That was my follow-up. I'm all set. Thank you. Thank you. Next question comes from Tracy. Tracy, your line is open. Thank you. Sticking with the expense ratio, I'm just wondering the lower ceding commission, was that considered in your 28% guidance for the year or is that something you may want to revisit as we go through the remainder of the year? No. I gave that guidance on our February call, Tracy, and thank you for the clarifying question of around 28%, and we consider the 28.4 around 28% that we delivered this quarter. The change in the reinsurance structures, both that we've mentioned, were incorporated in that guidance. Perfect. I also realize it's tough just to completely exit business. I did see you had some gross written premium in your reinsurance business this quarter. How should we think about that through the course of the year? Is that something where we could expect that to go closer to zero in the near term? Yeah, that's a great question. I appreciate you clarifying that. We had about $10 million of audit premium adjustments in that line this quarter. That's what you're seeing. Otherwise, the business is effectively grading down through the suspension of underwriting activities. I would say that premium adjustments driven by premium mods, et cetera, are a very consistent thing in that business for us, for anyone. Those are coming from multiple treaties, multiple lines, et cetera. We don't typically budget those because you don't have line of sight into them. They're also earned as they're written, so they're having really an immediate effect on the quarter. I would also say that $10 million is a little higher than it has been in previous quarters as well. Again, there's really no pattern to it. It just happens as a normal course of the business. I would expect, and we have expected that the top line, that there's little to no GWP, NWP, the earned continues to grade down as I think we've said, just to take a moment to clarify. The business that we write in that segment does earn over a multi-year period. We certainly were expecting earned premium in the segment to continue for the year. The gross and the written, I know those were entirely driven by the audit premium adjustments. Perfect. Thank you. Thanks for the question. Again, if you would like to ask a question, press star, then the number one on your telephone keypad. Your next question comes from Mark Hughes. Mark, your line is open. Yeah, thank you. Good morning. Tara, the ceded premium in the E&S, it's 36%. I assume that's influenced by mix. Is that a good run rate if Excess Casualty continues to grow more quickly? Will that grade up over time? I think that's a good run rate, Mark. I think we would expect kind of a similar mix as we look at the balance of the year and certainly in our plan, we do. To speak a little bit out of both sides of my mouth, certainly given rate and dynamics every quarter it can bump around, but I think that's a fine assumption. There's no other kind of one-off or anomaly that I'm seeing in the quarter that would make me give you different advice. Yeah. Then in specialty admitted, the earned this quarter around $21 million. Your gross written has been relatively stable. If one were to assume it was to remain stable, would the earned also remain stable at about $21 million? I'm just trying to understand the relationship between the written and earned more clearly. Would that be the case? I think that's right. The relationship should be pretty straightforward. I think we certainly would expect and hope to continue to put on new programs as we did this quarter. I think that those develop in terms of premium impact. They can develop slowly as they come online. Yeah. Then a question for Frank. Is this the right growth rate in this environment of low double digits is a very healthy growth? I know you've been bringing in new people, and I think your appetite around what you retain and what you write has been maybe evolving over time. Does it feel like with what you're seeing with submission growth, with the book of business you're finding attractive that's in front of you, is this a sensible growth rate for you? I'll ask it that way. Yeah, Mark. Thanks for the question. I would say that we're very pleased with the growth opportunities that we see in front of us. We're pleased with where the rate environment is across the portfolio, and we are starting to think about broadening out our product set and diversifying it, and we announced a new initiative over the course of the quarter. I'd say that growth rates will fluctuate, obviously, from quarter to quarter. Given where the rate environment is right now, we feel comfortable with the current rate. Understood. Thank you. Again, if you'd like to ask a question, please press star, then the number 1 on your telephone keypad. There are no further questions at this time. I turn back the call over to Brett. Actually, I'll take that. I want to thank everyone listening on the call for their time today and for the questions we received this morning. We look forward to speaking with you again in just a few months to discuss our second quarter results. Thank you, and enjoy your day. This concludes today's conference call. You may now disconnect. Thank you.