James River Group Holdings, Inc.: Form 10-Q for the period ended Sep 30, 2025

The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors. Factors that could cause such differences are discussed in the sections entitled “Special Note Regarding Forward-Looking Statements”, Part II, Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q, and Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2025, or for any other future period. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024.

The accompanying condensed consolidated financial statements and related notes have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and include the accounts of James River Group Holdings, Ltd. and its subsidiaries. Unless the context indicates or suggests otherwise, references to “the Company”, “we”, “us” and “our” refer to James River Group Holdings, Ltd. and its subsidiaries.

Our Business

James River Group Holdings, Ltd. (“JRG Holdings”) is a Bermuda-based holding company. We own and operate a group of five insurance companies with the objective of generating compelling returns on tangible equity while limiting underwriting and investment volatility. We seek to accomplish this by earning profits from insurance underwriting and generating meaningful investment returns, while managing our capital to meet our risk management, regulatory and rating agency requirements.

We report our continuing operations in three reportable segments:

• The Excess and Surplus Lines segment offers commercial excess and surplus lines liability and property insurance in every U.S. state, the District of Columbia, Puerto Rico and the U.S. Virgin Islands through James River Insurance Company and its wholly-owned subsidiary, James River Casualty Company;
• The Specialty Admitted Insurance segment focuses on niche classes within the standard insurance markets with a primary focus on fronting business, where we retain a minority share of the risk and earn fee income by allowing other carriers and producers to use our licensure, ratings, expertise and infrastructure. Through Falls Lake National and its subsidiaries, this segment has admitted licenses and the authority to write excess and surplus lines insurance in 50 states and the District of Columbia and distributes through a variety of sources, including program administrators and managing general agents;
• The Corporate and Other segment consists of the management, technology, and treasury activities of our holding companies, interest expense associated with our debt, and expenses of our holding companies, including public company expenses and long-term incentive compensation (including share-based compensation) for the group.

Our discontinued operations include JRG Reinsurance Company Ltd. (“JRG Re”), which comprised 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. On November 8, 2023, the Company entered into a definitive agreement to sell JRG Re. 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. The Company has no continued involvement with JRG Re following the sale.

All of the Company’s U.S.-domiciled insurance subsidiaries are party to an intercompany reinsurance “pooling” agreement that distributes the net underwriting results among the group companies based on their approximate pro-rata level of statutory capital and surplus to the total Company statutory capital and surplus. We report all segment information in this ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ prior to the effects of intercompany reinsurance, consistent with the manner in which we evaluate the operating performance of our reportable segments.

The A.M. Best Company financial strength rating for our U.S. insurance subsidiaries is “A-” (Excellent).

Key Metrics

We discuss certain key metrics, described below, which we believe provide useful information about our business and the operational factors underlying our financial performance.

Underwriting profit is a non-GAAP measure commonly used in the property and casualty insurance industry to evaluate underwriting performance. We believe that the disclosure of underwriting profit by individual segment and of the Company as a whole is useful to investors, analysts, rating agencies and other users of our financial information in evaluating our performance because our objective is to consistently earn underwriting profits. We evaluate the performance of our segments and allocate resources based primarily on the potential for 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. See “Reconciliation of Non-GAAP Measures” for a reconciliation of underwriting profit to income from continuing operations before taxes and for additional information.

Loss ratio, expressed as a percentage, is the ratio of losses and loss adjustment expenses on business from continuing operations not subject to retroactive reinsurance accounting to net earned premiums. Our definition of loss ratio may not be comparable to that of other companies. See “Underwriting Performance Ratios” for a reconciliation of underwriting ratios.

Accident year loss ratio, expressed as a percentage, is the ratio of losses and loss adjustment expenses for the current accident year (excluding development on prior accident year reserves) to net earned premiums for the current year (excluding ceded earned premium associated with adverse development covers covering prior accident years and net earned premium adjustments on certain reinsurance treaties with reinstatement premiums associated with prior years).

Expense ratio, expressed as a percentage, is the ratio of other operating expenses net of gross fee income included in other income to net earned premiums.

Combined ratio is a measure of underwriting performance calculated as the sum of the loss ratio and the expense ratio. A combined ratio of less than 100% indicates an underwriting profit, while a combined ratio greater than 100% reflects an underwriting loss. Our definition of combined ratio may not be comparable to that of other companies. See “Underwriting Performance Ratios” for a reconciliation of underwriting ratios.

Adjusted net operating income is an internal performance measure used in the management of our operations. We believe it gives our management and other users of our financial information useful insight into our results of operations and our underlying business performance. 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 is a non-GAAP measure and should not be viewed as a substitute for net income calculated in accordance with GAAP. Our definition of adjusted net operating income may not be comparable to that of other companies. See “Reconciliation of Non-GAAP Measures” for a reconciliation of income available to common shareholders to adjusted net operating income.

Tangible equity is defined as shareholders' equity plus mezzanine Series A Preferred Shares (as defined below) and the unrecognized deferred retroactive reinsurance gain less goodwill and intangible assets, net of amortization. Tangible equity is a non-GAAP measure and should not be viewed as a substitute for shareholders’ equity calculated in accordance with GAAP. Our definition of tangible equity may not be comparable to that of other companies. See “Reconciliation of Non-GAAP Measures” for a reconciliation of shareholders' equity to tangible equity.

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 unrecognized deferred retroactive reinsurance gain less goodwill and intangible assets, net of amortization. We believe tangible common equity is a good measure to evaluate the strength of our balance sheet and to compare returns relative to this measure. Key financial measures that we use to assess our longer term financial performance include the percentage growth in our tangible common equity per share and our return on tangible common equity. Tangible common equity is a non-GAAP measure and should not be viewed as a substitute for shareholders’ equity calculated in accordance with GAAP. Our definition of tangible common equity may not be comparable to that of other companies. See “Reconciliation of Non-GAAP Measures” for a reconciliation of shareholders' equity to tangible common equity.

Adjusted net operating return on tangible common equity is defined as annualized adjusted net operating income expressed as a percentage of the average quarterly tangible common equity balances in the respective period.

Tangible common equity per share represents tangible common equity divided by the total common shares outstanding.

Net retention is defined as the ratio of net written premiums to gross written premiums.

Gross investment yield is annualized investment income before any deductions for fees and expenses, expressed as a percentage of the average beginning and ending carrying values of those investments during the period.

Unless specified otherwise, all references to our defined metrics above in this “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” are for our business from continuing operations that is not subject to retroactive reinsurance accounting. Management believes that the lack of economic impact of retroactive reinsurance accounting makes the presentation of our key metrics on business not subject to retroactive reinsurance accounting helpful to the users of our financial information. See “Underwriting Performance Ratios” and “Reconciliation of Non-GAAP Measures.”

Critical Accounting Policies and Estimates

In preparing the unaudited condensed consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses for the reporting period. Actual results could differ significantly from those estimates.

The most critical accounting policies involve significant estimates and include those used in determining the reserve for losses and loss adjustment expenses and investment valuation and impairment. For a detailed discussion of each of these policies, refer to our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to any of these policies during the current year.

Recent Strategic Actions

Enstar Strategic Relationship

The Company commenced a multi-pronged strategic relationship with Enstar Group Limited (“Enstar”). As part of this, on November 11, 2024, Enstar, through its subsidiary Cavello Bay Reinsurance Limited (“Cavello Bay”), entered into (i) a subscription agreement to purchase $12.5 million of the Company’s common shares at a share price of $6.40, which shares are in addition to 637,640 shares Enstar previously purchased in the open market, and (ii) an adverse development cover agreement with James River (the “E&S Top Up ADC”). Pursuant to the E&S Top Up ADC, 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 and Surplus Lines segment casualty 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. Enstar’s purchase of common shares and 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 E&S Top Up ADC upon closing. In the three months ended September 30, 2025, the Company recognized additional adverse development on the subject business of the E&S ADC that exhausted the remaining limit of the E&S ADC and resulted in $22.5 million of losses ceded to the E&S Top Up ADC. As a result, the Company has $52.5 million of aggregate limit remaining on the E&S Top Up ADC at September 30, 2025.

Series A Preferred Share Amendment

On November 11, 2024, the Company amended the Certificate of Designations setting forth the terms of the Series A Preferred Shares held by GPC Partners to, among other things, (i) convert $37.5 million of the outstanding Series A Preferred Shares to common stock at a per share price of $6.40 (the “Minimum Price”), (ii) increase the voluntary conversion price from 127.5% to 130% of the Minimum Price, (iii) increase the mandatory conversion price from 130% to 200% of the voluntary conversion price, (iv) delay the first date on which the dividend rate re-sets from March 1, 2027 to October 1, 2029, (v) cap the dividend rate at 8%, (vi) eliminate the adverse development anti-dilution adjustment provision, and (vii) limit transfers of the Series A Preferred Shares without the Company’s consent if, after the transfer, the transferee would hold 9.9% or more of the voting equity of the Company or, in the event of an A.M. Best downgrade of James River Insurance Company below A- (Excellent), 19.9% of the voting equity.

Domestication of JRG Holdings

As previously announced, we intend to change our jurisdiction of incorporation from Bermuda to Delaware, and we refer to this change as the “Domestication”. The Domestication does not require shareholder approval. On the effective date of the Domestication, expected to be on or around November 7, 2025, our common shares issued and outstanding immediately prior to the effective time of the Domestication will automatically convert by operation of law into an equivalent number of shares of common stock of James River Group Holdings, Inc., a Delaware corporation (“James River Delaware”). The Domestication is expected to lower the Company’s effective tax rate, as holding company expenses and interest expense (previously incurred in Bermuda and ineligible for U.S. tax deduction) will receive a U.S. tax deduction in future periods. For more information about the Domestication, please see our prospectus filed with the Securities and Exchange Commission on August 19, 2025, (the “Domestication Prospectus”), which is available on the Securities and Exchange Commission’s website at www.sec.gov (http://www.sec.gov).

RESULTS OF OPERATIONS

The following table summarizes our results:

($ in thousands)

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

(2) Included in underwriting results for the three and nine months ended September 30, 2025 and 2024 is gross fee income of $2.9 million and $11.2 million, respectively ($5.2 million and $16.1 million in the respective prior year periods).

Three Months Ended September 30, 2025 and 2024

The Company produced net income from continuing operations of $1.6 million and adjusted net operating income of $17.4 million for the three months ended September 30, 2025 compared to a net loss from continuing operations of $38.1 million and an adjusted net operating loss of $28.2 million for the three months ended September 30, 2024. The net loss from continuing operations and adjusted net operating loss in the prior year quarter was largely attributable to $57.0 million of adverse development recorded in the Excess and Surplus Lines segment including a $52.2 million reserve charge upon execution of the E&S ADC (consideration paid in excess of initial reserves).

Underwriting results were a profit of $8.9 million (combined ratio of 94.0%) for the three months ended September 30, 2025 compared to a loss of $56.8 million (combined ratio of 135.5%) for the three months ended September 30, 2024. The underwriting loss in the prior year quarter was largely driven by the aforementioned $57.0 million of adverse development recorded in the Excess and Surplus Lines segment. Underwriting results for the three months ended September 30, 2025 and 2024 include $3.8 million and $5.2 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 respective quarters, and resulted in increases to our combined ratio of 2.3 and 4.3 percentage points, respectively.

The loss ratio for the three months ended September 30, 2025 improved compared to the prior year quarter largely driven by 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) which was $2.6 million or 1.8 points favorable in the three months ended September 30, 2025 compared to $56.9 million or 35.6 points adverse in the three months ended September 30, 2024. The adverse reserve development in the three months ended September 30, 2024 included $57.0 million of net adverse development in the Excess and Surplus Lines segment, including the $52.2 million reserve charge upon execution of the E&S ADC (consideration paid in excess of initial reserves). Premium adjustments associated with prior years including reinstatement premium in the Excess and Surplus Lines segment increased the respective loss ratios by 1.7 and 3.3 points. The loss ratio for the current year quarter also benefited from a lower current accident year loss ratio and segment mix with the Excess and Surplus Lines segment representing 94.4% of consolidated net earned premiums in the three months ended September 30, 2025 compared to 87.0% in the three months ended September 30, 2024.

Our expense ratio decreased from 31.4% in the prior year quarter to 28.3% in the current year quarter reflecting expense reductions across all segments and favorable commission adjustments related to run-off programs in our Specialty admitted Insurance segment. Refer to the Segment Results section below for further discussion of the segment expense ratios. Premium adjustments associated with prior years including reinstatement premium in the Excess and Surplus Lines segment increased the respective consolidated expense ratios by 0.6 and 1.0 points in the respective three month periods.

Investment income declined by $1.6 million or 7.0% in the three months ended September 30, 2025 compared to the same period in the prior year primarily due to a lower interest rate environment impacting yields across several areas of the portfolio, a reduction in the portfolio's common equity allocation which was made in the fourth quarter of 2024, and a one-time payment of $819,000 in the prior year quarter related to the sale of an asset in the renewable energy portfolio. Net realized and unrealized gains on investments were lower in the current year quarter largely due to lower net favorable mark-to-market adjustments on our equity securities and bank loan participations ($1.4 million and $4.2 million in the respective quarters), reflecting increases in their fair values in the periods (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 include losses on the disposal of JRG Re of $572,000 and $1.3 million in the three months ended September 30, 2025 and 2024, respectively.

Adjusted net operating results improved by $45.6 million from the prior year quarter reflecting the profitable underwriting results in the current year period, partially offset by lower investment income. Growth in tangible common equity of 10.1% in the current quarter was largely driven by net income and unrealized gains on fixed maturities in other comprehensive income due to a decline in interest rates. Our 19.3% adjusted net operating return on tangible common equity for the three months ended September 30, 2025 compares to a 32.8% loss for the three months ended September 30, 2024.

Nine Months Ended September 30, 2025 and 2024

The Company produced net income from continuing operations of $17.7 million and adjusted net operating income of $38.2 million for the nine months ended September 30, 2025 compared to a net loss from continuing operations of $91,000 and an adjusted net operating loss of $700,000 for the nine months ended September 30, 2024. The net loss from continuing operations and adjusted net operating loss in the prior year was largely attributable to $67.7 million of adverse development recorded in the Excess and Surplus Lines segment including a $52.2 million reserve charge upon execution of the E&S ADC (consideration paid in excess of initial reserves).

Underwriting results were a profit of $11.6 million (combined ratio of 97.4%) for the nine months ended September 30, 2025 compared to a loss of $47.4 million (combined ratio of 109.6%) for the nine months ended September 30, 2024. The underwriting loss in the prior year was largely driven by the aforementioned $67.7 million of adverse development recorded in the Excess and Surplus Lines segment. Underwriting results for the respective nine month periods include $9.6 million and $6.4 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 and increased our combined ratio by 2.0 and 1.4 percentage points in the respective periods.

Our loss ratio of 66.9% for the nine months ended September 30, 2025 improved compared to the prior year loss ratio of 80.8% primarily reflecting 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) which was $291,000 or 0.1 points adverse in the nine months ended September 30, 2025 compared to $67.1 million or 13.6 points adverse in the nine months ended September 30, 2024. The adverse reserve development in the nine months ended September 30, 2024 included $67.7 million of net adverse development in the Excess and Surplus Lines segment, including the $52.2 million reserve charge upon execution of the E&S ADC (consideration paid in excess of initial reserves). Premium adjustments associated with prior years including reinstatement premium in the Excess and Surplus Lines segment increased the respective loss ratios by 1.4 and 1.1 points. The current year loss ratio also benefited from a lower current accident year loss ratio and segment mix with the Excess and Surplus Lines segment representing 92.4% of consolidated net earned premiums in the nine months ended September 30, 2025 compared to 85.9% in the nine months ended September 30, 2024.

Our expense ratio increased from 28.8% in the prior year to 30.5% in the current year reflecting higher expense ratios for both operating segments, partially offset by lower expenses in the Corporate and Other segment. Refer to the Segment Results section below for further discussion of the segment expense ratios. Premium adjustments associated with prior years including reinstatement premium in the Excess and Surplus Lines segment increased the respective consolidated expense ratios by 0.6 and 0.4 points.

Investment income declined by $8.7 million or 12.2% in the nine months ended September 30, 2025 compared to the same period in the prior year driven by lower invested assets following the funding of strategic initiatives during the second 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 $484,000 for the nine months ended September 30, 2025 include $1.9 million of net realized and unrealized losses on bank loan participations, partially offset by $1.4 million of net realized and unrealized gains on equity securities. Net realized and unrealized gains of $6.4 million for the nine months ended September 30, 2024 were largely due to favorable mark-to-market adjustments on equity securities of $8.3 million (see Investing Results below).

Discontinued operations in the prior year period includes the operating results of JRG Re which were a loss of $13.6 million for the nine months ended September 30, 2024. The prior year loss from discontinued operations primarily reflects net adverse development of $7.1 million on treaties not subject to the Casualty Reinsurance loss portfolio transfer and $9.5 million of realized and unrealized losses on fixed maturity securities. The loss on disposal, also included in discontinued operations above, was $2.3 million and $2.7 million in the nine months ended September 30, 2025 and 2024, respectively.

Adjusted net operating results improved $38.9 million from the prior year due to the higher underwriting results, partially offset by lower investment income. Growth in tangible common equity of 24.2% for the nine months ended September 30, 2025 was largely driven by net income and unrealized gains on fixed maturities in other comprehensive income due to a decline in interest rates. Our 15.0% adjusted net operating return on tangible common equity for the nine months ended September 30, 2025 compares to a 0.3% loss for the nine months ended September 30, 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 strategy. In addition to the E&S Top Up ADC described in “Recent Strategic Actions”, the Company also participates in the following retroactive reinsurance agreements.

Commercial Auto Loss Portfolio Transfer

On September 27, 2021, James River Insurance Company 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 $458.0 million and $459.3 million as of September 30, 2025 and December 31, 2024, respectively.

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 and 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. Additional adverse development on the subject business of the E&S ADC in the three months ended September 30, 2025 exhausted the remaining limit of the E&S ADC.

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 and nine months ended September 30, 2025 and 2024, respectively.

(in thousands)

44

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:

($ in thousands)

Gross written premiums for the Excess and Surplus Lines segment (which represents 79.5% of our consolidated gross written premiums from continuing operations in the nine months ended September 30, 2025) declined by 8.9% and 1.8% from the three and nine month periods in the prior year. Given changes in our underwriting appetite, we are being selective in certain lines of business. Submissions for Core E&S lines (excluding commercial auto) were 2.7% and 4.9% higher compared to the three and nine month periods in the prior year, however, the ratio of bound policies as a percentage of quotes dropped 8.9% and 6.4%, respectively. Average premium size decreased 8.4% and 11.5%, respectively, due to our focus on writing smaller accounts and the mix of business. Renewal rates for the Excess and Surplus Lines segment were up 5.5% and 10.3% compared to the three and nine months ended September 30, 2024, respectively. The change in gross written premiums was notable in several divisions as shown below:

($ in thousands)

45

Gross written premiums for the Specialty Admitted Insurance segment (which represents 20.5% of our consolidated gross written premiums for the nine months ended September 30, 2025) declined from the three and nine month periods in the prior year driven by several non-renewals in our fronting business, reflective of the Company's strategy to remain opportunistic in the current market environment and manage this segment to retain minimal risk. 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:

Net premium retention for the Excess and Surplus Lines segment in the three and nine months ended September 30, 2025 was impacted by $3.8 million and $9.6 million ($5.2 million and $6.4 million in the respective three and nine month prior year periods) 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 fronting business in the Specialty Admitted Insurance segment declined in the three and nine months ended September 30, 2025 as compared to the respective prior year periods due to the mix of business, including the impact of certain non-renewals in our fronting business, 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:

($ in thousands)

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

The Excess and Surplus Lines segment produced underwriting profits of $16.4 million and $39.8 million (combined ratios of 88.3% and 90.5%) in the three and nine months ended September 30, 2025, respectively. This compares to underwriting losses of $50.2 million and $25.2 million (combined ratios of 136.1% and 105.9%) in the three and nine months ended September 30, 2024, respectively. The underwriting losses in the prior year periods were largely attributable to net adverse development including a $52.2 million reserve charge upon execution of the E&S ADC (see loss ratio discussion below). The segment underwriting results were also impacted by premium adjustments of $3.8 million and $9.6 million in the three and nine months ended September 30, 2025, respectively ($5.2 million and $6.4 million in the respective prior year periods) that were associated with prior years including reinstatement premium which reduced net written and net earned premiums, and underwriting profit. The premium adjustments increased the segment combined ratios by 2.3 and 2.0 percentage points in the respective current year periods (4.9 and 1.5 percentage points in the respective prior year periods).

The segment loss ratios improved in the current year periods as compared to the respective prior year periods primarily due to net reserve development on prior accident years (excluding adverse prior year development that is subject to retroactive reinsurance accounting - see discussion above) which was $2.4 million and $52,000 (1.7 and 0.0 percentage points) favorable in the three and nine months ended September 30, 2025, respectively, compared to $57.0 million and $67.7 million (41.1 and 15.9 percentage points) of adverse development in the three and nine months ended September 30, 2024, respectively. The adverse development in the prior year periods included a $52.2 million reserve charge upon execution of the E&S ADC (consideration paid in excess of initial reserves). The premium adjustments associated with prior years including reinstatement premium increased the loss ratios by 1.7 and 1.4 percentage points in the respective current year periods (4.0 and 1.2 percentage points in the respective prior year periods).

The segment expense ratio declined in the current year quarter as compared to the prior year quarter due to a lower commission ratio, reflecting broker incentive commission adjustments in the current year quarter, as well as lower compensation and bad debt expenses. For the nine-month periods, a higher expense ratio in the current year was driven by the lower net earned premium including the impact of premium adjustments, lower ceding commissions due to changes in reinsurance treaty structure, and higher expenses for outside consulting and software. The impact of premium adjustments increased the segment expense ratio by 0.7 and 0.6 in the respective current year periods (1.0 and 0.3 percentage points in the respective prior year periods).

Specialty Admitted Insurance Segment

Results for the Specialty Admitted Insurance segment are as follows:

($ in thousands)

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

(2) Underwriting results include gross fee income of $2.9 million and $11.2 million for the three and nine months ended September 30, 2025 respectively ($5.2 million and $16.1 million in the respective prior year periods).

The Specialty Admitted Insurance segment reported underwriting losses of $352,000 and $2.1 million in the three and nine months ended September 30, 2025, respectively, compared to underwriting profits of $1.8 million and $6.0 million in the three and nine months ended September 30, 2024, respectively. Net earned premium and fee income declined compared to the three and nine month periods in the prior year due to the non-renewal of several programs, reflective of the Company's strategy to remain opportunistic in the current market environment and manage the segment to retain minimal risk. The segment loss ratios were impacted by net development in our loss estimates for prior accident years that was $236,000 favorable and $343,000 adverse in the three and nine months ended September 30, 2025, respectively, compared to $165,000 and $607,000 favorable in the three and nine months ended September 30, 2024, respectively. The segment expense ratios in the current year quarter benefited from certain sliding scale and other adjustments on certain programs which lowered commission expense. The Company continues to closely manage expenses in this segment.

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 $7.2 million and $26.1 million for the three and nine months ended September 30, 2025, respectively ($8.4 million and $28.2 million in the respective prior year periods). The reduction in operating expenses from the prior year periods was primarily attributable to reduced compensation expenses and lower insurance and financial audit expenses.

Investing Results

Net investment income was $21.9 million and $62.4 million for the three and nine months ended September 30, 2025, respectively ($23.6 million and $71.1 million in the respective prior year periods). The Company's private investments generated income of $1.1 million and $2.3 million for the three and nine months ended September 30, 2025, respectively, compared to income of $1.8 million and $3.5 million in the respective prior year periods. The prior year periods included a one-time payment of $819,000 in the prior year quarter related to the sale of an asset in the renewable energy portfolio. Excluding private investments, our net investment income declined by 4.4% in the three months ended September 30, 2025 compared to the same period in the prior year primarily due to a lower interest rate environment impacting yields across several areas of the portfolio and a reduction in the portfolio's common equity allocation which was made in the fourth quarter of 2024. For the nine months ended September 30, 2025, our net investment income excluding private investments decreased 11.0% from the prior year principally due to lower invested assets following the funding of strategic initiatives during the last half of 2024 including the reinsurance premiums 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 3.4 years at September 30, 2025.

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

($ in thousands)

The following table summarizes our annualized gross investment yields:

Of our total cash and invested assets of $1,985.0 million at September 30, 2025 (excluding restricted cash equivalents), $238.8 million represents the cash and cash equivalents portion of the portfolio. The majority of the portfolio, or $1,391.9 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 $158.8 million of bank loan participations, $88.8 million of equity securities, $42.6 million of short-term investments, and $64.2 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 September 30, 2025 and December 31, 2024, the fair market value of these securities was $158.8 million and $142.4 million, respectively.

For the nine months ended September 30, 2025, the Company recognized net realized and unrealized investment losses of $484,000 ($1.2 million of net realized and unrealized investment gains for the three months ended September 30, 2025), including $1.2 million of net unrealized gains on bank loan participations, $1.0 million of net unrealized gains for the change in the fair value of equity securities, $3.1 million of net realized investment losses on the sale of bank loan participations, $329,000 of net realized investment gains on the sale of equity securities, and $21,000 of net realized investment gains on the sale of fixed maturity securities.

For the nine months ended September 30, 2024, the Company recognized net realized and unrealized investment gains of $6.4 million ($4.2 million of net realized and unrealized gains for the three months ended September 30, 2024), including $1.3 million of net unrealized losses on bank loan participations, $8.3 million of net unrealized gains for the change in the fair value of equity securities, $1.8 million of net realized investment losses on the sale of bank loan participations, $2.5 million of net realized investment gains on the sale of equity securities, and $1.0 million of net realized investment losses on the sale of fixed maturity securities, and a $207,000 impairment for one fixed maturity security. In the nine months ended September 30, 2024, $591,000 of net realized losses were recognized on sales of fixed maturities primarily to fund the premium under the E&S ADC.

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 September 30, 2025, December 31, 2024, or September 30, 2024. At September 30, 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:

($ in thousands)

49

The following table sets forth the composition of the Company’s portfolio of available-for-sale fixed maturity securities by rating as of September 30, 2025:

($ in thousands)

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

($ in thousands)

Other Income and Expense

Other income and (expense) included the following:

($ in thousands)

The non-operating expenses above primarily consist of legal and other professional fees and other expenses related to various strategic initiatives and litigation that the Company is involved in.

Interest Expense

Interest expense was $6.2 million and $17.6 million for the three and nine months ended September 30, 2025, respectively ($6.1 million and $19.0 million in the respective prior year periods). The lower expense in the nine months ended September 30, 2025 is primarily attributable to lower interest rates. 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 $90,000 of amortization of intangible assets in each of the three months ended September 30, 2025 and 2024 ($272,000 in each of the nine months ended September 30, 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 and nine months ended September 30, 2025, our effective tax rate on income from continuing operations was 39.9% and 31.9%, respectively (26.8% and 107.9% in the respective prior year periods). The Company does not receive a U.S. tax deduction for losses at JRG Holdings, our only Bermuda entity. JRG Holdings had losses in all periods presented 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.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law providing legislative changes to U.S. federal tax law. The Company continues to evaluate these changes, but the effects are not expected to have a material impact on the consolidated financial statements.

Reserves

An indicator of reserve strength that we monitor 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 September 30, 2025 was $3,116.8 million. Of this amount, 74.6% 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:

($ in thousands)

At September 30, 2025, the amount of net reserves (prior to the $1.5 million allowance for uncollectible reinsurance recoverables) of $1,087.4 million that related to IBNR was 66.2%. 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:

($ in thousands)

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:

($ in thousands)

Cash provided by operating activities excluding restricted cash equivalents was $7.1 million for the nine months ended September 30, 2025. This compares to cash used in operating activities excluding restricted cash equivalents of $210.5 million for the nine months ended September 30, 2024 (including cash used in operating activities from continuing operations excluding restricted cash equivalents of $185.4 million and cash used in operating activities of discontinued operations of $25.1 million). The current year operating activities were impacted by timing of reinsurance settlements during the first quarter and lower premium collections in the Specialty Admitted Insurance segment due to the non-renewal of several programs. The prior year cash used in operating activities primarily reflects the $313.2 million premium paid in July 2024 to effect the E&S ADC. Excluding the premium payment, cash provided by operating activities was $102.7 million.

Cash used in investing activities of $146.4 million for the nine months ended September 30, 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 $321.4 million for the nine months ended September 30, 2024 included $96.4 million of proceeds received from the sale of JRG Re (net of JRG Re's cash balances sold) and $198.0 million of proceeds from the sales of fixed maturities to provide funding for the premium due under the E&S ADC agreement. Cash and cash equivalents excluding restricted cash equivalents comprised 12.0% and 18.6% of total cash and invested assets at September 30, 2025 and 2024, respectively. Cash used in investing activities from continuing operations was $161.9 million and cash provided by investing activities of discontinued operations was $63.1 million in the prior year period.

Cash provided by financing activities of $15.7 million for the nine months ended September 30, 2025 includes a $25.0 million borrowing under the Previous Credit Agreement (as defined below), $1.2 million of issuance costs paid upon the Company's entry into the Credit Agreement (as defined below), $1.5 million of dividends paid to common shareholders, $5.9 million of dividends paid on the Series A Preferred Shares, and $646,000 of payroll taxes withheld and remitted on net settlement of RSUs. Cash used in financing activities of $38.6 million for the nine months ended September 30, 2024 includes a $21.5 million repayment of an unsecured loan, $5.8 million of dividends paid to common shareholders, $10.5 million of dividends paid on the Series A Preferred Shares, and $840,000 of payroll taxes withheld and remitted on net settlement of RSUs.

The activity in restricted cash equivalents for the nine months ended September 30, 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” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 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 $5.9 million and $10.5 million were paid in the nine months ended September 30, 2025 and 2024, respectively.

At September 30, 2025, the Bermuda holding company had $14.9 million of cash and cash equivalents. The U.S. holding company had $6.8 million of cash and invested assets, comprised of cash and cash equivalents of $3.6 million, equities of $2.8 million and other invested assets of $464,000, which are not subject to regulatory restrictions.

Credit Agreements

On June 12, 2025, JRG Holdings entered into a Credit Agreement (the “Credit Agreement”). The Credit Agreement replaced JRG Holdings’ previous Third Amended and Restated Credit Agreement dated as of July 7, 2023, as amended (the “Previous Credit Agreement”), that provided for a $212.5 million unsecured revolving credit facility and a $45.0 million secured revolving credit facility.

The Credit Agreement provides for a $212.5 million unsecured revolving credit facility available for general corporate purposes and matures on June 12, 2028. Following the sale of JRG Re, the Company no longer has a need for the secured revolving credit facility provided by the Previous Credit Agreement. The interest rates applicable to the loans under the Credit Agreement are generally based on SOFR plus a specified margin based on the Company’s Leverage Ratio (as defined in the Credit Agreement). In addition, JRG Holdings will pay an unused facility fee on each lender’s commitment.

At September 30, 2025, JRG Holdings had a drawn balance of $210.8 million outstanding on the unsecured revolver of the Credit Agreement, including $25.0 million previously borrowed on January 27, 2025 under the Previous Credit Agreement which was contributed to our regulated insurance entities.

The Credit Agreement provides for an accordion feature that permits JRG Holdings to request that one or more lenders (without the consent of the other lenders) or new financial institutions (with the consent of the Administrative Agent) provide it with increases in the credit facility of up to an aggregate of $30.0 million, subject to satisfaction of certain conditions.

The Credit Agreement contains customary representations and warranties, affirmative and negative covenants and events of default. The Credit Agreement also includes financial covenants, including a maximum leverage ratio and minimum consolidated net worth, risk-based capital ratio and financial strength rating requirements with which the Company was in compliance at September 30, 2025.

In connection with the Credit Agreement, James River Group Holdings UK Limited (“James River UK”), a private limited company incorporated under the Laws of England and Wales and a direct wholly owned subsidiary of JRG Holdings, and James River Group, Inc. (“James River Group”), a Delaware corporation and an indirect wholly owned subsidiary of JRG Holdings, each entered into a Continuing Guaranty of Payment dated June 12, 2025 (each, a “Payment Guaranty”). Pursuant to its respective Payment Guaranty, each of James River UK and James River Group guarantees the payment and performance of the obligations of JRG Holdings under the Credit Agreement and other loan documents.

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 September 30, 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 September 30, 2025 (including the Company’s repurchases of a portion of these trust preferred securities):

($ in thousands)

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 September 30, 2025.

At September 30, 2025 and December 31, 2024, the Company's leverage ratio was 28.5% and 26.6%, respectively. The leverage ratio is defined in the Credit Agreement 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 Company 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 nine months ended September 30, 2025 and 2024, our net premium retention was 46.9% and 43.5%, respectively.

The following is a summary of our Excess and Surplus Lines segment’s ceded reinsurance in place as of September 30, 2025:

(1) Excluding Excess Casualty.

(2) Total exposure to any one claim is generally $730,000.

(3) The property catastrophe reinsurance treaty has a limit of $22.0 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 Insurance segments, it would take an event greater than the 1-in-1,000 year PML to exhaust our $22.0 million property catastrophe reinsurance. In the event of a catastrophe loss exhausting our $22.0 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 and 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 and 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 September 30, 2025:

Our Specialty Admitted Insurance segment purchases reinsurance for at least 90.0% 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 $22.0 million in excess of $3.0 million per occurrence to manage its property catastrophe exposure to an approximate 1 in 1,000 year PML.

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 September 30, 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 September 30, 2025, we had reinsurance recoverables on unpaid losses of $2,027.9 million (net of a $1.5 million allowance for credit losses) and reinsurance recoverables on paid losses of $125.4 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. In addition, 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 September 30, 2025, the total balance of collateral securing Rasier's obligations under the Indemnity Agreements was $43.5 million and Aleka's obligations under the Commercial Auto LPT was $21.0 million. At September 30, 2025, the total reinsurance recoverables under the Commercial Auto LPT was $20.3 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 45,936,898 at September 30, 2025, reflecting 292,580 common shares issued in the nine months ended September 30, 2025 related to vesting of RSUs.

Share Based Compensation Expense

The Company recognized $847,000 and $4.3 million of share based compensation expense in the three and nine months ended September 30, 2025, respectively ($1.4 million and $5.7 million in the respective prior year periods). At September 30, 2025, the Company had $5.8 million of unrecognized share based compensation expense expected to be charged to earnings over a weighted-average period of 1.9 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 six months ended June 30, 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.

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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:

(in thousands)

(1) Included in underwriting results for the three and nine months ended September 30, 2025 is gross fee income of $2.9 million and $11.2 million, respectively ($5.2 million and $16.1 million in the respective prior year periods).

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:

($ in thousands)

($ in thousands)

60

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 September 30, 2025, December 31, 2024, and September 30, 2024:

($ in thousands, except share amounts)

61

Market risk is the risk of economic losses due to adverse changes in the estimated fair value of a financial instrument as the result of changes in equity prices, interest rates, foreign currency exchange rates and commodity prices. Our consolidated balance sheets include assets and liabilities with estimated fair values that are subject to market risk. Our primary market risks have been interest rate risk associated with investments in fixed maturities and equity price risk associated with investments in equity securities. We do not have material exposure to foreign currency exchange rate risk or commodity risk.

There have been no material changes in market risk from the information provided in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2024.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. In connection with the preparation of this quarterly report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of our CEO and CFO, as of September 30, 2025, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of September 30, 2025.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

The effectiveness of any system of controls and procedures is subject to certain limitations, and, as a result, there can be no assurance that our controls and procedures will detect all errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be attained.

There have been no material changes in our risk factors in the quarter ended September 30, 2025 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, except as follows:

RISKS RELATING TO THE CHANGE IN OUR PLACE OF INCORPORATION

Currently, your rights as a shareholder of JRG Holdings arise under Bermuda law as well as our existing Bermuda memorandum of association and bye-laws. Upon effectiveness of the Domestication, your rights as a shareholder of JRG Holdings will arise under Delaware law as well as our new Delaware certificate of incorporation and by-laws.

Upon effectiveness of the Domestication, the rights of stockholders of James River Delaware will arise under the new certificate of incorporation and by-laws of James River Delaware as well as Delaware law. Those new organizational documents and Delaware law contain provisions that differ in some respects from those in our current organizational documents and Bermuda law and, therefore, some of your rights as a stockholder of James River Delaware will differ from the rights you currently possess as a shareholder of JRG Holdings. For example, under Bermuda law, holders of an aggregate of not less than 20% in par value of a company’s issued share capital or any class thereof have the right to apply to the Supreme Court of Bermuda for an annulment of any amendment of the memorandum of association adopted by shareholders at any general meeting, other than an amendment that alters or reduces a company’s share capital as provided under Bermuda law. No similar right is available under Delaware law. Also, while class actions and derivative actions are generally not available to shareholders under Bermuda law, such actions are generally available under Delaware law. This change could increase the likelihood that we become involved in costly litigation, which could harm our business. Additionally, there are differences between the new organizational documents of James River Delaware and the current organizational documents of JRG Holdings. For example, while our current bye-laws require approval of our board and shareholders to amend any provision of the bye-laws, the James River Delaware by-laws may generally be amended by the board of directors of James River Delaware, as permitted under the Delaware General Corporation Law (the “DGCL”).

For a summary description of your rights as a stockholder of James River Delaware and how they differ or may differ from your rights as a shareholder of JRG Holdings, please see “Description of Capital Stock—Differences Between the Governing Corporate Law and Organizational Documents for James River Bermuda and James River Delaware” in the Domestication Prospectus. Forms of the new certificate of incorporation and by-laws of James River Delaware are attached, respectively, as Appendix A and Appendix B to the Domestication Prospectus, and we urge you to read them as well.

Our Corporate Effective Tax Rate may increase as a result of the Domestication.

Following the Domestication, James River Delaware will be subject to U.S. tax on its income and capital gains and the combined effective tax rate with respect to us and our direct and indirect subsidiaries (the “Effective Tax Rate”) may change significantly, which could materially impact our financial results, including our earnings and cash flow, and reduce the amount of cash available for dividends for periods after the Domestication. The Effective Tax Rate, which fluctuates significantly from period to period, is based upon the application of currently applicable income tax laws and regulations, as well as current judicial and administrative interpretations of these income tax laws and regulations, in various jurisdictions, including many other than the jurisdiction where we are organized and domiciled.

The highest statutory corporate tax rate for U.S. federal income tax purposes is currently 21%. The Effective Tax Rate for purposes of financial reporting may, however, vary significantly from the statutory rates under which we operate (including the U.S. statutory rate that would apply after the Domestication) because of, among other things, timing differences in the recognition of income and expense for U.S. GAAP and tax purposes. We are unable to predict with certainty the impact of the Domestication on the Effective Tax Rate going forward. In addition, the tax laws of the United States and other jurisdictions could change in the future, and those changes could cause a material increase in our Effective Tax Rate at a later date as well.

Certain holders of JRG Holdings Stock may be required to recognize gain for U.S. federal income tax purposes as a result of the Domestication.

As discussed more fully in “Material U.S. Federal Income Tax Consequences of the Domestication” in the Domestication Prospectus, it is expected that the Domestication will constitute a reorganization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended (the “Code”) (an “F Reorganization”). Assuming that the Domestication so qualifies, United States Holders (as defined in such section) of JRG Holdings Stock (as defined in such section) will be subject to Section 367(b) of the Code and, as a result:

• Subject to the discussion below concerning the application of the PFIC rules to the Domestication, a United States Holder of JRG Holdings Stock whose stock has a fair market value of less than $50,000 on the date of the Domestication and who does not actually and/or constructively own (i) 10% or more of the total combined voting power of all classes of JRG Holdings shares entitled to vote or (ii) 10% or more of the total value of all classes of JRG Holdings shares will not recognize any gain or loss and will not be required to include any part of JRG Holdings’ earnings in income.
• Subject to the discussion below concerning the application of the PFIC rules to the Domestication, a United States Holder of JRG Holdings Stock whose ordinary shares have a fair market value of $50,000 or more, but who does not actually and/or constructively own (i) 10% or more of the total combined voting power of all classes of JRG Holdings shares entitled to vote or (ii) 10% or more of the total value of all classes of JRG Holdings shares will generally recognize gain (but not loss) on the deemed receipt of James River Delaware Stock (as defined in “Material U.S. Federal Income Tax Consequences of the Domestication” in the Domestication Prospectus) in the Domestication. As an alternative to recognizing gain as a result of the Domestication, such United States Holder may file an election to include in income, as a dividend, the “all earnings and profits amount” (as defined in the regulations of the United States Treasury (the “Treasury Regulations”) under Section 367) attributable to its JRG Holdings Stock provided certain other requirements are satisfied.
• Subject to the discussion below concerning the application of the PFIC rules to the Domestication, a United States Holder of JRG Holdings Stock who on the date of the Domestication actually and/or constructively owns (i) 10% or more of the total combined voting power of all classes of JRG Holdings shares entitled to vote or (ii) 10% or more of the total value of all classes of JRG Holdings shares (a “10% Shareholder”) will generally be required to include in income, as a dividend, the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367) attributable to its JRG Holdings shares provided certain other requirements are satisfied.
• As discussed further under “Material U.S. Federal Income Tax Consequences of the Domestication” in the Domestication Prospectus, JRG Holdings believes that it is not and has not been a PFIC for U.S. federal income tax purposes. In the event that JRG Holdings is (or in some cases has been) treated as a PFIC, notwithstanding the foregoing, proposed Treasury Regulations under Section 1291(f) of the Code (which have a retroactive effective date), if finalized in their current form, generally would require a United States Holder to recognize gain as a result of the Domestication unless the United States Holder makes (or has made) certain elections discussed further under “Material U.S. Federal Income Tax Consequences of the Domestication” in the Domestication Prospectus. The tax on any such gain would be imposed at the rate applicable to ordinary income and an interest charge would apply based on a complex set of rules. It is difficult to predict whether such proposed regulations will be finalized and whether, in what form, and with what effective date, other final Treasury Regulations under Section 1291(f) of the Code will be adopted. For a more complete discussion of the potential application of the PFIC rules to United States Holders as a result of the Domestication, see “Material U.S. Federal Income Tax Consequences of the Domestication” in the Domestication Prospectus. Each United States Holder of JRG Holdings Stock is urged to consult its own tax advisor concerning the application of the PFIC rules to the exchange of JRG Holdings Stock for James River Delaware Stock pursuant to the Domestication.

The tax consequences of the Domestication are complex and will depend on a holder’s particular circumstances. All holders are strongly urged to consult their tax advisor for a full description and understanding of the tax consequences of the Domestication, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws. For a complete discussion of the material U.S. federal income tax consequences of the Domestication, see “Material U.S. Federal Income Tax Consequences of the Domestication” in the Domestication Prospectus.