Good morning, ladies and gentlemen, welcome to James River Group Q2 2023 earnings call. I would now like to introduce you to your host for today's call, Brett Shirreffs, Investor Relations at James River Group. 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 1 on your telephone keypad. If you would like to withdraw your question, again, press star 1. Thank you. Brett, you may begin your conference. Good morning, everyone, welcome to the James River Group second 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 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, copy of which can be found on our website at www.jrvrgroup.com. Lastly, unless otherwise specified, for the 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 the introduction, Brett. Good morning, everyone, welcome to our second quarter 2023 earnings call. I'm pleased to be joining you today to provide additional color on our strong second quarter results, while also sharing some thoughts on market conditions and future opportunities for James River. Our results released last night reflect strong positive momentum as we delivered yet another consistent quarter, our 6th in a row, of a mid-teens return on tangible common equity excluding AOCI. We continue to see robust growth in our E&S segment as hard market conditions persist and strong performance from our investment portfolio, contributing to our attractive results for shareholders. For the second quarter, we reported adjusted net operating income of $20.6 million. Consistent with our prior guidance, adjusted net operating return on tangible common equity, ex AOCI, was 14.8% for the quarter and 15.5% year to date. Tangible common equity per share has increased more than 17% before dividends through the first half of the year, as we delivered strong underwriting profit and investment returns. As I alluded to, E&S market conditions remain very attractive as we recorded an 11% renewal rate increase for the quarter, our 26th consecutive quarter of positive rate growth, bringing our compounded rate change to 10.2% for the year and 72.3% since 2017. The 11% increase in renewal pricing this quarter is as strong as it has been since the 14.1% effective rate change we experienced in the second quarter of last year and exceeds the 9.9% we reported for the full year 2022. Beyond excess property, energy, environmental, and our excess casualty division led the way relative to rate change, meaningfully above our expectations as our core product lines in E&S continue to achieve rate levels in excess of our view of loss trends and the assumptions in our 2023 business plan. Conditions in excess casualty, our largest E&S underwriting division, remain especially attractive as we achieved an 11.6% rate increase for the quarter. Additionally, our excess property unit continues to enjoy a very opportune trading environment, experiencing nearly 30% premium growth for the quarter and 42.4% premium growth at the midpoint of the year from the strength of year-to-date rate change totaling 77.8%. As I have reported in the past, we have not changed our attachment strategy or risk appetite while posting these production results. While our excess property underwriters are clearly taking advantage of favorable market conditions and experiencing healthy rate-driven premium growth, we continue to believe that our property writing will still account for less than 10% of the E&S segment's overall premium. Taken in concert across our underwriting division, we believe our results and the trends that we see in our business support our outlook for favorable future pricing conditions for the E&S market and continued opportunities for profitable growth for James River. During the second quarter, we saw strong new and renewal submission trends for the segment overall, and some of our larger divisions experienced accelerating submission growth rates relative to the last few quarters. In General Casualty, we saw submission growth increase from 9% in the first quarter to 13% in the second quarter. In Excess Casualty, submission growth improved to 12% in the second quarter, supporting continued premium growth opportunities. Core E&S, which excludes our commercial auto division, grew gross written premiums by 9% in the second quarter, driven by strong growth in excess casualty, general casualty, manufacturers and contractors, and excess property. Net earned premium growth for the segment was 15.3% in the second quarter. Additionally, we continue to demonstrate prudent portfolio management in the segment. Commercial auto premiums declined by 33% as we've reduced our appetite for certain risk classes within the sector and have been pushing rates more aggressively. We also non-renewed over $7 million of primary liability habitational premiums, choosing not to follow new entrant aggression in the space. As we have noted before, as a bottom line focused organization, we're maintaining our underwriting discipline and taking actions that we believe are needed to preserve our underwriting margins for the future. From a profitability standpoint, the combined ratio in E&S was 87.8% for the quarter, as we generated $19 million of underwriting profit. Overall, our E&S segment had a tremendous first half of the year, with double-digit rate increases, 15% growth in earned premium, and nearly $40 million of underwriting income. We expect to carry this strong momentum not only into the second half of the year, but well into 2024. Turning to specialty admitted, gross written premiums increased 10% for the second quarter, with net premiums increasing 58%. Our workers' compensation premium, including our large fronted program, declined 4% on a gross basis, while our remaining fronting business grew 15.6%, as new programs have gained traction and existing programs continued to achieve rate and build scale in the quarter. The workers' compensation trends we've been discussing for several years now largely continued in the quarter, with modest improvement in rates in our individual risk book, as well as moderated rate decline in our California workers' compensation program. By our account, since 2016, rates have now declined nearly 50% in California workers' compensation. As a result, we made the disciplined decision to non-renew our large California workers' compensation program during the quarter. Persistent rate pressure and tighter reinsurance capacity has significantly challenged our opportunity for future profitability on the program and led us to this underwriting and portfolio management decision. As a point of reference, the program accounted for approximately 7% of company-wide gross written premium and 2% of net earned premium over the last four quarters. Our conservative approach to managing fronted programs extends to all facets of the business, including our security and collateral requirements, which has served us well amidst industry allegations and investigations of fraudulent collateral plaguing the sector. I'm pleased to advise that we have no direct exposure to the parties involved in the allegations and have successfully confirmed all of our letters of credit with the respective issuing banks. The segment's combined ratio for the quarter was 98.4%, with the increase from the prior year primarily due to a higher expense ratio in our individual risk workers' compensation business related to a change in reinsurance structure that incepted at the beginning of the year. Lastly, turning to casualty reinsurance or JRG Re, the segment continues to perform as expected. Earned premium in the quarter of $26.7 million reflects premium earned on all in-force treaties, including $4 million of premium adjustment. We were able to produce a small underwriting profit and continue to expect the segment to operate at about breakeven. The segment's results included $3 million of prior year development on business not subject to the segment's block portfolio transfer or LPT, as well as $5.8 million of development on treaties covered by the LPT. The remaining limit on the retroactive reinsurance that was put in place effective October 1st of 2021 is now $45 million. Overall, I'm extremely pleased with our second quarter results and remain appreciative of the commitment and dedication of all the employees here at James River. We continue to demonstrate the strong earnings power of the franchise and remain well-positioned to take advantage of the resolute and attractive trading conditions in the E&S market. Our focus remains on deploying capital where we're confident we can achieve consistent and attractive returns for shareholders. I'm excited for the second half of the year as we continue to build on the company's strong momentum. With that, let me turn the call over to Sarah. Thanks very much, Frank. Good morning to everyone. Thanks for joining us today. This quarter, we're reporting adjusted net operating income of $0.53 per share. Tangible book value per common share increased 16.3% before dividend, or 17.3% after, from the start of the year to $11.06. This quarter reflects a solid underwriting performance, a meaningful contribution from net investment income, and continued growth. We are delivering $20.6 million of adjusted net operating income this quarter, which included $11.4 million of underwriting profit and $25.2 million of net investment income, each on a pretax basis. Our combined ratio this quarter was 94.6% and largely identical on a year-to-date basis. For the quarter, adjusted net operating return on tangible common equity, ex AOCI, was 14.8%. Including AOCI, our annualized return moves from 14.8% to 19.9%. Our expense ratio for the quarter was 27.5%, consistent with what we had set out earlier this year. The ratio ticked up a year ago, consistent with the expectations previously communicated, certainly around our reinsurance structures. On to investment. The level of investment income was again very strong at $25.2 million, largely comparable to $25.8 million we reported in the prior quarter. Recall that last quarter, we had a $1.2 million contribution from the sale of two of our renewable energy investments above carrying value. Net investment income grew 71% from the prior year quarter. Reinvestment rates moved higher with interest rates. We continue to have strong cash flow. Reinvestment yields in the core fixed income portfolio averaged 5%. We continue to see reinvestment rates in excess of our average 3.9% book yield during the quarter. The combination of our growing base of invested assets, natural portfolio turnover, exposure to floating rate assets positions us well to continue to deliver strong NII. Our duration came down slightly to four. With respect to credit, collateral, and reinsurance, a few comments following on from what Frank mentioned a few minutes ago. As collateral quality, especially in the fronting business, has received heightened attention in recent weeks, we thought it would be helpful to share a few thoughts on how we approach ceded reinsurance for our organization overall. We've long had a best practices approach that includes active management of an approved reinsurer list. As you can see from the public disclosures, certainly around our reinsurance recoverables, we have either partnered with high-quality reinsurers or require meaningful collateral. To that end, we have both rating and surplus requirements. I'd note a minimum A.M. Best rating of A- or better on the ratings front, and if those are not met, we require collateral to support recoverables. Our collateral does include select letters of credit, and as Frank mentioned, we recently reconfirmed each of these with the issuing bank. Many of our collateral calculations are updated quarterly, and the balance certainly annually. Finally, with regard to our tax rate. Our tax rate year to date is 23.9%, and as always, is impacted by the geographic location of profits across our business. With that, let me turn it back to the moderator to open the line for questions. This time, I would like to remind everyone, in order to ask a question, press star, then the number 1 on your telephone keypad. Press star, then the number 1 on your telephone keypad. Our first question comes from the line of Mark Hughes from Truist Securities. Mark, your line's now open. Thank you. Good morning. Good morning, Mark. Sarah, with the non-renewal of the California workers' comp program, is there going to be any notable impact on the expense ratio, any kind of stranded costs or anything like that in the near term? If you have a drop, say, in fee income, will that impact the overall expense ratio going forward? That's a great question, Mark. I think to highlight, Frank had a few stats in there as the relative size of this relative to the overall organization. I would also say that one of the influences on the non-renewal was that the program had, I would say, minimal profitability to some lack of profit, especially over the last few quarters. I don't see a meaningful impact on that, just given the overall profitability of where the program had been over the last few quarters. It will take also a couple of quarters for us to fully see kind of the lack of the business coming through on paper. I think that as we go for the rest of the year, we don't expect to see a meaningful impact on the expense ratio overall, just given how that program had been performing of late. Frank, you had mentioned that you expect the momentum to continue into 2024. What do you see in the market that gives you confidence? You described a positive inflection in some pricing or submissions in Q2. When you think about the durability of the cycle, what jumps out at you? Thanks, Mark. I really haven't seen any change in what I perceive to be our opportunity set for the remainder of the year and beyond. We saw very healthy growth opportunities, really broad-based across much of the platform during the second quarter, with the majority of our underwriting divisions again reporting solid growth. Nearly all divisions reporting very positive renewal rate changes. We also saw strong submission trends continue in the second quarter, with growth in new submissions up 5%, growth in overall submissions up in some of our larger departments fairly significantly, 13% in general casualty, 12% in excess casualty. These dynamics, strong rate increases, healthy submission trends, suggest to me that favorable market conditions should certainly persist for 2023. On the $45 million in remaining limit, how are you seeing the claims closing or being resolved within that book that's subject to the retroactive reinsurance? Anything you can tell us about how long these claims have been in process, what the close rate is like, just to give us some sense of the adequacy of that $45 million? Sure. Let me start first with the process that we go through each quarter. Our actuaries review every single treaty and treaty year and respond to what they're seeing. We're not doing it annually or semi-annually. We're looking at it at a very granular level. If you're talking specifically about the portfolio that is subject to the LPT, we saw $5.8 million of development, not surprisingly, driven by construction and construction defect claims, particularly for policies written during the 2014 to 2018 underwriting years. Just in terms of the limit remaining, we feel very confident in our reserve position, and that the $45 million limit under the LPT is adequate. In terms of, I guess, your question relative to payout, we think about that in terms of the business subject to the LPT, excuse me, having a mean payout of approximately seven years. That's specifically for the business subject to the LPT. For the remainder of the portfolio, a bit shorter, mean payout of probably closer to four to five years. Thank you. Your next question comes from the line of Meyer Shields from KBW. Mayer, your line is now open. Great, thanks. Good morning. I want to stick on the topic of casualty reserve changes, if I can. Can you give us maybe some color on whether the quarterly charges, both LPT and non, were loss emergence or just changing, I shouldn't say just, but were changing assumptions in terms of loss trend or other factors? Again, this is just part of the quarterly process that our actuaries go through in terms of responding to what they're seeing. I just talked in some detail in terms of what we saw relative to the portfolio subject to the LPT. For the portfolio not subject to the LPT, basically, we saw small amounts of development across a number of treaties back to the 2016 to 2019 years. These are GL based, so hospitality and premises based. Nothing notable stands out. Again, very small amounts. They are looking at them on a quarterly basis, like I said, and reacting to what they're seeing. No change in methodology necessarily. No, I understand that. When you say what they're seeing, are those actual claim payments? Responding to, sure, claim payments and the activity coming through on the bordereaux. Okay, thanks. That's helpful. Second question, I guess. When we look at the casualty reinsurance accident year loss ratio, it was about four and a half points better in the second quarter than the first. I'm assuming it's a relatively long-tail line. Hoping you could talk us through what underpinned that. Sure. Meyer, this is Sarah. I would look at that number more on a year-to-date basis, which is within 100 to 200 basis points of where it's been historically, that high 50s number. We had some movement of IBNR as we were just booking individual treaties with regard to some of the auto premium we've seen year-to-date. I wouldn't focus on just the quarterly dynamics and think more about it in terms of a year-to-date number. That's what's driving that, some of the way that we had it accounted for in booked additional IBNR as we saw some auto premium coming in early in the year. Okay, fantastic. Thank you very much. Your next question comes from the line of Tracy Benguigui from Barclays. Tracy, your line is now open. Thank you. Good morning. Within E&S, you've been getting nice pricing increases, especially on a compounded basis. You've also made some positive changes to your business mix, like less commercial auto and you're non-renewing some habitational premiums. Help me understand why aren't we seeing improvements in your E&S accident year loss ratio? Thanks, Tracy. Good morning. Our accident year loss ratio during the second quarter was up a little more than one point compared to the prior-year quarter, a little less than a point compared to our full-year 2022. We had mentioned, I believe, earlier in the year that we slightly raised our view on loss cost trend on the portfolio into the high single digits, which just felt prudent given the uncertainty in the current inflationary environment as well as the unknown relative to future periods when these claims are actually paid. Just given the longer tail nature of casualty business, we thought that was prudent. We're going to continue to be cautious, and you're seeing some of this conservatism evidenced in the loss picks themselves, along with what I would just call normal fluctuations in the business mix which includes the higher retention we took on our largest line, excess casualty. Excess casualty historically has been a very profitable line for us. It has taken on significant rate, as you allude to. Just given the nature of the product, it initially books at a higher loss ratio than some of our other product lines. We believe the reserves that we're retaining there will prove impactful over time. Overall, we just think it's prudent given today's environment as well as our own recent experience, to take this type of posture. Okay. That's helpful to understand the conservatism in your current loss picks. What about prior year loss picks? Do you feel like they should be holding up? If you have a different view of loss trend, how should we think about prior year loss picks? You're talking about the most recent years? I would say we're being patient just relative to some of those prior accident years. Again, as you allude to, we've taken significant rate increases, approximately 10% or better, each of the last three years, and looking good in 2023 at the midway point. I think we are outpacing loss trends and building margin, we're going to take a cautious approach. Okay. Real quick, what% of your fixed income portfolio is floating rate? I'll come back to you. I was going to say 15%-20% overall, if you're including up to the bank loan portfolio and then the other floating rate securities we've got in the portfolio, Tracy. Okay. Thank you. Again, if you would like to ask a question, press star, then the number one on your telephone keypad. Your next question comes from the line of Brian Meredith from UBS. Brian, your line is now open. Thanks. Frank, I was hoping you could talk a little bit about what's left in the Specialty Admitted business. I guess you're losing around 20% of the premium there from this California comp treaty. What is it? Is it program fronting business? I know there was a traditional comp program. Maybe talk a little bit about what's left there. Thanks, Brian. Specialty Admitted has always consisted of our individual risk workers' comp unit, which is not impacted by the program. The program is going away. We have the remainder of our fronting business. We continue to have a favorable long-term outlook for the fronting business. We believe it provides diversification and balance to the overall organization without consuming that much additional capital. I do think that the well-publicized operational issues at several of the competitors in the space provides an opportunity, a real possibility that the opportunity set will be increased significantly for responsible carriers in the space in the coming months. It just simply stands to reason that program managers, MGAs, reinsurance partners will be seeking out fronting carriers who have not had operational issues that have recently plagued the sector. I think Falls Lake should be a winner in that context. We're certainly optimistic. Great. Then I'm just curious about the California treaty that you're non-r enewing. I'm just trying to understand why it was unprofitable given it was, I assume it was a fronting business, right? You're not taking any risk on that, are you? You don't take any risk on your fronting business. Is it just more that the premiums were down so much, it was just hard to make it profitable just from a servicing perspective? Well, I'd say two things, Brian. One, some of our business in the fronting space is completely fronted and some of our business, we actually retain some risk. We did retain some risk here. Beyond that, the reinsurance market was just very stretched thin because of the rate environment that I alluded to. Being off nearly 50 points of rate over the last several years just made it very difficult for the program to come together. Just to be clear, this isn't a program going somewhere else, to move it to another program. It's just that there's no way forward for all the partners that can make money on this just based on where we perceive the profitability of the business to be. Makes sense. Then one other just quick one here. On the E&S business, talking about 11% plus rate, premium growth is only running, I guess, 9% ex commercial auto. Is there a mix shift going on? What's going on there that's not letting you actually get premium growth that's in line or in excess of rate? No, that's a good question. I'm sure you can appreciate that the challenge isn't growing in this market environment. I think most reputable carriers can do that. It's really ensuring that you're growing profitably at acceptable profit hurdles while managing volatility based on your risk appetite. We spend a lot of time internally monitoring the performance of each of our underwriting divisions to make sure that we're accelerating growth or pulling back accordingly based on the trends that we see. Speaking specifically to E&S growth results in the quarter, some of our larger underwriting divisions, like excess casualty, manufacturers and contractors, general casualty, they all reported double-digit premium increases during the second quarter. Building on strong growth from the first quarter. Beyond that, our energy division had a great quarter with 24% growth. As I mentioned in my prepared remarks, excess property produced very strong rate-driven growth. I don't think we've seen any significant changes in the opportunity set for the E&S business, which continues to be broad-based. As I alluded to in my comments earlier, overall growth results for the segment were impacted by a reduction within our commercial auto division, where we've just taken a decision to push rate more aggressively and been taking some selected portfolio management actions. As a result, what does that mean? Commercial auto premiums were down 33% in Q2 compared to the prior year, which resulted in about a two-point drag on our E&S growth rate. We also non-renewed a very large primary liability habitational account where we couldn't get our required pricing and terms. Not just pricing, but just terms. There was a competitor willing to delegate underwriting authority, something that we weren't willing to do. That impacted the growth in the quarter as well. Really, these are underwriting actions that are a routine part of portfolio management across the entire organization, and we believe it aligns our focus on producing attractive underwriting margin for the long term. Great. Thank you. There are no further questions at this time. I would like to turn the call back over to Frank D'Orazio. Frank, over to you. Thank you. Before we close, I do want to acknowledge that two longstanding members of our board, Michael Oakes and our founder, Adam Abram, chose not to stand for re-election at our AGM last month and have retired from the board. We thank them both for their 20 years of service to James River as executives and directors of our company, certainly wish them well in the future. Personally, I know that I'm looking forward to working with Ollie Sherman in his new capacity as board chairman. 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 a few months to discuss our third quarter results, we certainly hope you enjoy the remainder of your summer. This concludes today's conference call. You may now disconnect.