James River Group Holdings, Inc.: Form 10-Q for the period ended Mar 31, 2026

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” 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, 2025. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026, 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, 2025.

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, Inc. and its subsidiaries. Unless the context indicates or suggests otherwise, references to “the Company”, “we”, “us” and “our” refer to James River Group Holdings, Inc. and its subsidiaries.

Our Business

James River Group Holdings, Inc. owns and operates a group of specialty property and casualty insurance companies focused on underwriting small and middle market casualty risks within the U.S. excess and surplus (“E&S”) lines market. Our objective is to generate compelling returns on tangible common equity while limiting underwriting and investment volatility. We seek to accomplish this by earning profits from insurance underwriting and generating meaningful risk-adjusted investment returns, while managing our capital.

We report our continuing operations in three reportable segments:

• The Excess & 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 through its fronting business, where we retain a minority share of the risk and seek to 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 losses recognized on the disposal of JRG Reinsurance Company Ltd. (“JRG Re”). The sale of JRG Re, which previously comprised the remaining operations of the former Casualty Reinsurance segment, closed on April 16, 2024, and resulted in the disposition of the Company's 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 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 ‘‘Item 2. 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 group’s insurance subsidiaries is “A-” (Excellent) with a negative outlook. This rating reflects A.M. Best’s evaluation 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 rating for our operating insurance companies of “A-” (Excellent) 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 insurance 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 insurance subsidiaries allow our Excess & Surplus Lines segment to actively pursue relationships with the agents and brokers identified in its marketing plans. If we remain on negative outlook for an extended period of time, A.M. Best may downgrade our rating, which would have a materially adverse effect on our ability to continue to write new business.

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, f) deemed dividends recorded with the amendment of the Series A Preferred Shares, and g) the one-time tax benefit from the Domestication for business interest expenses. 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.

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

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.

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, 2025. There have been no significant changes to any of these policies during the current year.

Recent Strategic Actions

Domestication of James River Group Holdings, Inc. (“JRG Holdings”)

On November 7, 2025, we changed our jurisdiction of incorporation from Bermuda to Delaware, and we refer to this change as the “Domestication”. On the effective date, our common shares issued and outstanding immediately prior to the effective time of the Domestication automatically converted by operation of law into an equivalent number of shares of common stock of James River Group Holdings, Inc., a Delaware corporation. The Company recognized a one-time tax benefit of $14.1 million related to business interest expense effective with the Domestication. 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, as well as bring additional operating efficiencies. In connection with the Domestication, the Company dissolved James River Group Holdings UK Limited, its prior UK intermediate holding company, effective December 23, 2025.

RESULTS OF OPERATIONS

The following table summarizes our results:

($ in thousands)

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

(2) Included in underwriting results for the three months ended March 31, 2026 and 2025 is gross fee income of $1.5 million, and $4.3 million, respectively.

Three Months Ended March 31, 2026 and 2025

The Company reported a net loss from continuing operations of $8.8 million for the three months ended March 31, 2026. This compares to net income from continuing operations of $11.0 million for the three months ended March 31, 2025. Adjusted net operating income was $5.8 million and $9.1 million in the respective periods.

Underwriting results were a loss of $6.2 million (combined ratio of 104.6%) for the three months ended March 31, 2026 compared to an underwriting profit of $721,000 (combined ratio of 99.5%) for the three months ended March 31, 2025. Underwriting results for the respective periods include $6.7 million and $3.1 million of premium adjustments associated with prior years including reinstatement premiums in the Excess & Surplus Lines segment which reduced net written and net earned premiums, and underwriting profit. The impact of the premium adjustments was a 4.9 and 2.0 percentage point increase in our combined ratios in the respective periods. The premium adjustments in the current period were primarily reinstatement premiums driven by one large claim ceded to a $9.0 million excess of $2.0 million treaty. The Company has less than $10.0 million of remaining exposure to additional reinstatement premiums on this treaty.

The loss ratio for the current year period was 2.4 points higher than the prior year due to a slightly higher current accident year loss ratio and the impact of premium adjustments in the Excess & Surplus Lines segment (3.2 points and 1.4 points in the respective periods). Net reserve development on prior accident years (excluding adverse prior year development that is subject to deferral under retroactive reinsurance accounting - see discussion below) was $165,000 and $131,000 favorable in the three months ended March 31, 2026 and 2025, respectively.

Our expense ratio increased from 32.7% in the prior year to 35.4% in the current year primarily reflecting the premium adjustments in the Excess & Surplus Lines segment which represented a 1.7 and 0.6 percentage point increase in the consolidated expense ratio in the respective periods. The higher current year expense ratio also reflects lower ceding commissions in the Excess & Surplus Lines segment as we are retaining a greater percentage of the business we are writing in the segment and the decline in net earned premiums in the Specialty Admitted segment due to our selective approach to new fronting opportunities and the non-renewal of several programs. General and administrative expenses for the total Company were down $4.0 million compared to the prior year.

Investment income increased by $1.3 million or 6.6% in the three months ended March 31, 2026 compared to the same period in the prior year driven by higher income from our private investments reflecting growth in our structured private credit investments, partially offset by lower yields elsewhere in the portfolio. Net realized and unrealized losses on investments of $6.6 million for the three months ended March 31, 2026 include $4.9 million and $1.8 million of net realized and unrealized losses on bank loan participations and equity securities, respectively. This compares to net realized and unrealized losses of $1.4 million for the three months ended March 31, 2025 which included $2.3 million of net realized and unrealized losses on bank loan participations, partially offset by $918,000 of net realized and unrealized gains on equity securities (see Investing Results below).

Discontinued operations include losses recognized on the sale of JRG Re. For the three months ended March 31, 2026, the loss on disposal of $149,000 included additional selling costs incurred by the Company related to the sale of JRG Re net of a tax benefit. For the three months ended March 31, 2025, the loss on disposal of $1.4 million included a final downward adjustment to the closing date purchase price plus interest of $520,000 and $894,000 of additional selling costs incurred by the Company related to the sale of JRG Re.

Adjusted net operating income declined from the prior year due to the lower underwriting results, partially offset by higher investment income. Tangible common equity declined 1.3% in the three months ended March 31, 2026 driven by the net loss for the period and unrealized losses on fixed maturities in other comprehensive income caused by higher interest rates. Our 5.7% adjusted net operating return on tangible common equity for the three months ended March 31, 2026 compares to an 11.5% return for the three months ended March 31, 2025.

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 guidelines.

Commercial Auto Loss Portfolio Transfer

On September 27, 2021, James River Insurance 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 & 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 was $451.4 million as of both March 31, 2026 and December 31, 2025.

Combined Loss Portfolio Transfer and Adverse Development Cover

On July 2, 2024, James River entered into a Combined Loss Portfolio Transfer and Adverse Development Cover Reinsurance Contract (the “E&S ADC”) with State National Insurance Company, Inc. (“State National”). The transaction closed upon signing.

The E&S ADC was effective January 1, 2024 (the “Effective Date”) and applies to James River’s Excess & Surplus Lines segment casualty portfolio losses attaching to premium earned during 2010-2023 (both years inclusive), excluding, among others, losses related to commercial auto policies issued to a former large insured or its affiliates (the “Subject Business”). 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 of $35.0 million (net of the Company's 15% retention) recognized on the subject business of the E&S ADC in the year ended December 31, 2025 exhausted the remaining limit of the E&S ADC.

Adverse Development Cover

On November 11, 2024, Enstar, through its subsidiary Cavello Bay Reinsurance Limited (“Cavello Bay”), entered into an adverse development cover agreement with James River (“E&S Top Up ADC”), pursuant to which, 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 & Surplus Lines segment casualty portfolio losses attaching to premium earned during 2010-2023 (both years inclusive). The E&S Top Up ADC excludes losses related to commercial auto policies issued to a former large insured or its affiliates and is subject to a retention by James River of $1,183.7 million (the limit of the E&S ADC executed on July 2, 2024) and up to an aggregate limit of $75.0 million. 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 adverse development cover upon closing. In 2025, $51.4 million of adverse development was ceded to the E&S Top Up ADC, reducing the aggregate limit remaining on the E&S Top Up ADC to $23.6 million at December 31, 2025. In the three months ended March 31, 2026, an additional $16.2 million of adverse development was ceded to the E&S Top Up ADC, further reducing the aggregate limit remaining on the E&S Top Up ADC to $7.5 million at March 31, 2026. Of the $16.2 million, $14.8 million was subject to deferral under retroactive reinsurance accounting.

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 the Company's operating 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. The impact of retroactive reinsurance accounting is not indicative of the Company's current and ongoing operations.

The following tables summarize the retroactive reinsurance accounting for the Commercial Auto LPT, the E&S ADC, and the E&S Top Up ADC for the three months ended March 31, 2026 and 2025, respectively.

(in thousands)

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)

40

Gross written premiums for the Excess & Surplus Lines segment (which represents 89.8% of our consolidated gross written premiums in the three months ended March 31, 2026) were flat with the prior year period as we continue to prioritize profitable growth in small to medium sized accounts. The market for Excess Property remains challenging. Submissions increased 3.5% over the prior year quarter and renewal rates were up 6.6% compared to the three months ended March 31, 2025. The change in gross written premiums by primary underwriting division is shown below:

($ in thousands)

Gross written premiums for the Specialty Admitted Insurance segment (which represents 10.2% of our consolidated gross written premiums in the three months ended March 31, 2026) declined 70.3% from the prior year reflecting non-renewals of programs. We are being selective with fronting opportunities, focusing on low net retentions and placing strong, rated, reinsurance support. The fronting and reinsurance markets are currently very competitive, and we have refined our underwriting appetite meaningfully over the last few years. The segment currently has four active programs.

Net Retention

Our net premium retention is summarized by segment as follows:

Net premium retention for the Excess & Surplus Lines segment increased in the current year due to changes made in our reinsurance coverage to retain more of the business we write. This was partially offset by the impact of higher premium adjustments in the current year associated with prior years including reinstatement premium ($6.7 million and $3.1 million in the three months ended March 31, 2026 and 2025, respectively) which reduced net written premiums and the net retention ratio in both periods.

The lower net premium retention for the Specialty Admitted Insurance segment in 2026 reflects our focus on low net retentions, the impact of certain non-renewals in our fronting business, and changes in reinsurance as coverages renew.

Segment Results

Excess & Surplus Lines Segment

Results for the Excess & Surplus Lines segment are as follows:

($ in thousands)

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

The Excess & Surplus Lines segment produced underwriting profits of $4.7 million and $11.7 million (combined ratios of 96.5% and 91.5%) in the three months ended March 31, 2026 and 2025, respectively. The underwriting results in the respective periods were impacted by $6.7 million and $3.1 million of premium adjustments associated with prior years including reinstatement premium which reduced net written and net earned premiums, and underwriting profit. The impact of the premium adjustments was a 4.7 and 2.0 percentage point increase in the segment combined ratio for the respective quarters.

The loss ratio for the three months ended March 31, 2026 increased from the prior year due to a higher current accident year loss ratio and the impact of premium adjustments (an additional 3.3 points and 1.4 points in the respective periods). Net reserve development on prior accident years (excluding adverse prior year development that is subject to deferral under retroactive reinsurance accounting - see discussion above) was $100,000 and $10,000 favorable in the three months ended March 31, 2026 and 2025, respectively.

The expense ratio increased from 26.7% in the prior year to 28.5% in the current year primarily reflecting the premium adjustments which represented a 1.4 and 0.6 percentage point increase in the segment expense ratio in the respective periods. The higher current year expense ratio also reflects lower ceding commissions in the segment as we are retaining a greater percentage of the business we write.

Specialty Admitted Insurance Segment

Results for the Specialty Admitted Insurance segment are as follows:

($ in thousands)

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

(2) Underwriting results include gross fee income of $1.5 million and $4.3 million for the three months ended March 31, 2026 and 2025, respectively.

The Specialty Admitted Insurance segment reported underwriting losses of $1.8 million and $306,000 for the three months ended March 31, 2026 and 2025, respectively. Lower written and earned premium volumes in 2026 reflect our selective approach to new fronting opportunities and the non-renewal of several programs. Net development in our loss estimates for prior accident years was $65,000 and $121,000 favorable in the three months ended March 31, 2026 and 2025, respectively. We are closely managing expenses for the segment. Underwriting expenses decreased 48.8% from the prior year driven by a $2.9 million decrease in compensation and other general and administrative expenses, partially offset by a decrease in net ceding commissions.

Corporate and Other Segment

Other operating expenses for the Corporate and Other segment include personnel costs associated with the holding companies, professional fees, long-term incentive compensation (including share-based compensation) for the full Company, public company expenses 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 $9.1 million for the three months ended March 31, 2026, down from $10.6 million in the prior year due to lower compensation expenses.

Investing Results

Net investment income was $21.3 million and $20.0 million for the three months ended March 31, 2026 and 2025, respectively. Income from the Company's private investments ($1.8 million and $200,000 in the respective periods) increased due to the growth of our investments in structured private credit. Excluding private investments, our net investment income for the three months ended March 31, 2026 decreased 1.5% from the prior year period principally due to lower yields. The average duration of our portfolio excluding restricted cash equivalents was 3.5 years at March 31, 2026.

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 $1,955.6 million at March 31, 2026 (excluding restricted cash equivalents), $227.6 million represents the cash and cash equivalents portion of the portfolio. The majority of the portfolio, or $1,434.4 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 $153.3 million of bank loan participations, $72.3 million of equity securities, $597,000 of short-term investments, and $67.4 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 March 31, 2026 and December 31, 2025, the fair market value of these securities was $153.3 million and $155.1 million, respectively.

For the three months ended March 31, 2026, the Company recognized net realized and unrealized investment losses of $6.6 million, including $3.6 million of net unrealized losses on bank loan participations, $1.8 million of net unrealized losses for the change in the fair value of equity securities, $1.3 million of net realized investment losses on the sale of bank loan participations, and $35,000 of net realized investment gains on the sale of fixed maturity securities.

For the three months ended March 31, 2025, the Company recognized net realized and unrealized investment losses of $1.4 million, including $640,000 of net unrealized losses on bank loan participations, $708,000 of net unrealized gains for the change in the fair value of equity securities, $1.7 million of net realized investment losses on the sale of bank loan participations, $210,000 of net realized investment gains on the sale of equity securities, and $25,000 of net realized investment gains on the sale of fixed maturity securities.

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 March 31, 2026, December 31, 2025, or March 31, 2025. At March 31, 2026, 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)

The following table sets forth the composition of the Company’s portfolio of available-for-sale fixed maturity securities by rating as of March 31, 2026:

($ in thousands)

44

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 items netted to income of $759,000 and $355,000 for the three months ended March 31, 2026 and 2025, respectively. Non-operating expenses included in the respective totals were $128,000 and $563,000, primarily consisting of legal and other professional fees and other expenses related to various strategic initiatives, employee severance, and litigation that the Company is involved in. The non-operating expenses were offset by $815,000 and $835,000 of broker incentive rebates in the Excess & Surplus Lines segment, as well as other miscellaneous income in the respective periods.

Interest Expense

Interest expense was $5.6 million and $5.5 million for the three months ended March 31, 2026 and 2025, respectively. 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 $91,000 of amortization of intangible assets in each of the three months ended March 31, 2026 and 2025.

Income Tax Expense

The Company’s U.S. federal income tax expense differs from the amount computed by applying the federal statutory income tax rate of 21% to income before taxes primarily due to interest income on tax-advantaged state and municipal securities, dividends received income, and excess tax benefits and expenses on share based compensation. Prior to the Company's domestication from Bermuda to the U.S. on November 7, 2025, the Company's effective tax rate was impacted by the relative mix of income from continuing operations reported by country and the statutory tax rates of 0% and 21% imposed by Bermuda and the U.S., respectively. The Company did not receive a U.S. tax deduction for losses in Bermuda in the prior year period resulting from Bermuda holding company expenses and interest expense. For the three months ended March 31, 2026 and 2025, our effective tax rate on (loss) income from continuing operations was (17.5%) and 31.4%, respectively. The effective rate for the three months ended March 31, 2026 was below the federal statutory income tax rate of 21% primarily because of excess tax expenses on share based compensation. RSU awards vest on the anniversary of their grant date which are predominately in the first quarter of each year.

The Company has a deferred tax asset of $11.7 million at March 31, 2026 associated with unrealized losses in the Company’s available-for-sale fixed maturity securities portfolio. The unrealized losses are attributable to changes in market interest rates and other economic factors rather than credit-related factors of the issuers. The Company does not intend to sell available-for-sale debt 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 fair value to their amortized cost basis occurs. The Company’s hold to recovery assertion related to investments in an unrealized loss position is considered a tax planning strategy. Both the cash generated by the Company from operating activities and the unused capacity on the Company’s unsecured revolving credit facilities reduce the likelihood of having to sell debt securities in an unrealized loss position. As a result, the Company has concluded that no valuation allowance is required for the deferred tax asset associated with unrealized losses on its investments at March 31, 2026.

The Company also has a deferred tax asset of $14.1 million at March 31, 2026 associated with the effects of our 2025 domestication on the business interest expense deduction. The carryforward period for this tax benefit is unlimited and does not expire, but the annual utilization on the consolidated U.S. federal income tax return is limited to the separate company (in this case, our ultimate holding company) that generated the benefit. The Company has developed tax planning strategies that we believe are prudent and feasible to increase the utilization of the carryforward in future tax years. These strategies include reducing interest expense and increasing investment income and overall pre-tax income - both at that specific entity (the ultimate holding company). As a result, the Company has concluded that no valuation allowance is required for the deferred tax asset at March 31, 2026.

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 March 31, 2026 was $3,087.8 million. Of this amount, 75.1% relates to amounts that are IBNR. This amount was 75.9% at December 31, 2025. The Company’s gross reserves for losses and loss adjustment expenses by segment are summarized as follows:

($ in thousands)

At March 31, 2026, the amount of net reserves (prior to the $1.7 million allowance for uncollectible reinsurance recoverables) of $1,071.6 million that related to IBNR was 78.1%. This amount was 73.5% at December 31, 2025. 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)

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Cash used in operating activities excluding restricted cash equivalents was $760,000 for the three months ended March 31, 2026. This compares to cash used in operating activities excluding restricted cash equivalents of $51.8 million for the three months ended March 31, 2025. Both periods reflect lower premium collections in the Specialty Admitted Insurance segment due to the non-renewal of several programs. The prior year period was also negatively impacted by timing of reinsurance settlements.

Cash used in investing activities was $29.4 million and $53.0 million for the three months ended March 31, 2026 and 2025, respectively, reflecting the Company's efforts to enhance the yield in our investment portfolio by investing available cash and cash equivalents into higher yielding investments. Cash and cash equivalents excluding restricted cash equivalents represented 11.6% and 14.7% of total cash and invested assets at March 31, 2026 and 2025.

Cash used in financing activities of $3.2 million for the three months ended March 31, 2026 includes $521,000 of dividends paid to common shareholders, $2.0 million of dividends paid on the Series A Preferred Shares, and $671,000 of payroll taxes withheld and remitted on net settlement of RSUs. Cash provided by financing activities of $21.9 million for the three months ended March 31, 2025 includes a $25.0 million borrowing under the Previous Credit Agreement (as defined below), $600,000 of dividends paid to common shareholders, $2.0 million of dividends paid on the Series A Preferred Shares, and $545,000 of payroll taxes withheld and remitted on net settlement of RSUs.

The activity in restricted cash equivalents for the three months ended March 31, 2026 and 2025 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

Our operations are conducted by our wholly-owned subsidiaries. Accordingly, our holding companies may receive cash through loans from banks, issuance of equity and debt securities, corporate service fees, dividends received from our subsidiaries, or through payments from our subsidiaries pursuant to our 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 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. On March 31, 2026, James River Insurance paid a $30.0 million dividend to its parent, James River Group. The remaining amount of dividends available to our holding companies from our insurance subsidiaries during 2026 without regulatory approval is $66.1 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 stock 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 $2.0 million were paid in each of the three months ended March 31, 2026 and 2025.

At March 31, 2026, our holding companies had $33.1 million of cash and invested assets, comprised of cash and cash equivalents of $32.8 million and other invested assets of $369,000, which are not subject to regulatory restrictions.

Credit Agreements

On June 12, 2025, the Company entered into a Credit Agreement (the “Credit Agreement”). The Credit Agreement replaced the Company’s Third Amended and Restated Credit Agreement dated July 7, 2023 (the “Previous Credit Agreement”), which 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 had 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 the Secured Overnight Financing Rate (“SOFR”) plus a specified margin (2.75% at March 31, 2026) based on the Company’s Leverage Ratio (as defined in the Credit Agreement). In addition, the Company will pay an unused facility fee on each lender’s commitment (0.3% at March 31, 2026).

At March 31, 2026, the Company had a drawn balance of $210.8 million outstanding under 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 the Company 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 March 31, 2026.

In connection with the Credit Agreement, James River Group entered into a Continuing Guaranty of Payment dated June 12, 2025 pursuant to which James River Group guarantees the payment and performance of the Company’s obligations 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 March 31, 2026, and which, among other things, restrict our ability to issue senior indebtedness secured by James River Group’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 March 31, 2026 (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 March 31, 2026.

At March 31, 2026 and December 31, 2025, the Company's leverage ratio was 27.8% and 27.5%, respectively. The leverage ratio is defined in our 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 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. These proportional quota share reinsurance agreements generally include a ceding commission paid by the reinsurer to the Company to cover acquisition costs associated with the insurance ceded. 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 three months ended March 31, 2026 and 2025, our net premium retention was 50.8% and 43.5%, respectively.

The following is a summary of our Excess & Surplus Lines segment’s ceded reinsurance in place as of March 31, 2026:

(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 & Surplus Lines segment, we write a small book of excess property insurance, but we do not write primary property insurance. The Excess & 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.

Some of our reinsurance treaties are subject to reinstatement premiums. In particular, a specialty casualty treaty in our Excess & Surplus Lines segment providing $9.0 million in excess of $2.0 million coverage is subject to reinstatement premiums for treaty years spanning July 1, 2016 through July 1, 2022. Reinstatement premiums on this treaty are subject to aggregate caps for each treaty year, and once the cap is reached, we are no longer required to pay a reinstatement premium in order to reinstate the limit under this treaty. At March 31, 2026, we have less than $10.0 million of remaining exposure to additional reinstatement premiums on this specialty casualty treaty.

Some of our reinsurance treaties are subject to loss ratio caps or aggregate limits. As of March 31, 2026, ceded losses to our reinsurance treaties were within these caps and aggregate limits, where applicable; however, less than $500,000 of limit remains available with respect to a reinsurer in one of our 2021 excess casualty reinsurance treaties.

Based upon the property catastrophe modeling of our Excess & 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 & 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 reinsures James River’s Excess & Surplus Lines segment casualty portfolio losses attaching to premium earned during 2010-2023 (both years inclusive), excluding, among others, losses related to commercial auto policies issued to a former large insured or its affiliates. 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 & 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.

The following is a summary of our Specialty Admitted Insurance segment’s ceded reinsurance in place as of March 31, 2026:

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 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 March 31, 2026, the allowance for credit losses on reinsurance recoverables was $1.7 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 March 31, 2026, we had reinsurance recoverables on unpaid losses of $2,014.6 million (net of a $1.7 million allowance for credit losses) and reinsurance recoverables on paid losses of $82.8 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 March 31, 2026, the total balance of collateral securing Rasier's obligations under the Indemnity Agreements was $35.2 million and Aleka's obligations under the Commercial Auto LPT was $16.8 million. At March 31, 2026, the total reinsurance recoverables under the Commercial Auto LPT was $9.9 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 the collateral balances. In addition, the Company has credit exposure if its 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 the Company's credit exposure in any of these instances could be material. To mitigate these risks, the Company closely and frequently monitors its exposure compared to the collateral held, and requests additional collateral in accordance with the terms of the Commercial Auto LPT and Indemnity Agreements when its analysis indicates that it has uncollateralized exposure.

Ratings

The A.M. Best Company financial strength rating for our group’s regulated 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 rating for our U.S. operating insurance companies of “A-” (Excellent) 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 insurance 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 Excess & Surplus Lines segment to actively pursue relationships with the agents and brokers identified in its 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 shares of common stock 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 stock 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 shares of common stock at a per share price of $6.40. Following the conversion, 112,500 Series A Preferred Shares remain outstanding.

EQUITY

The Company issued 268,272 shares of common stock related to the vesting of restricted share units (“RSUs”) in the three months ended March 31, 2026, increasing the total shares of common stock outstanding from 45,968,584 at December 31, 2025 to 46,236,856 at March 31, 2026.

Share Based Compensation Expense

The Company recognized $1.5 million and $2.7 million of share based compensation expense in the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the Company had $11.4 million of unrecognized share based compensation expense expected to be charged to earnings over a weighted-average period of 2.5 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 2026 and 2025 include 372,873 and 620,108 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.

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 (loss) of the operating segments by individual segment to consolidated income (loss) before income taxes:

(in thousands)

(1) Included in underwriting results for the three months ended March 31, 2026 and 2025 is gross fee income of $1.5 million and $4.3 million, respectively.

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, f) deemed dividends recorded with the amendment of the Series A Preferred Shares, and g) the one-time tax benefit from Domestication for business interest expenses. 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)

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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 shares of common stock outstanding plus the shares of common stock 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 shares of common stock 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 March 31, 2026, December 31, 2025, and March 31, 2025:

($ in thousands, except share amounts)

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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, 2025.

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 March 31, 2026, 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 March 31, 2026.

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 March 31, 2026 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 March 31, 2026 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, except as follows:

We may be unable to obtain reinsurance coverage at reasonable prices or on terms that provide us adequate protection.

We purchase reinsurance in many of our lines of business to help manage our exposure to insurance risks that we underwrite and to reduce volatility in our results.

The availability and cost of reinsurance are subject to prevailing market conditions, both in terms of price and available capacity, each of which can affect our business volume and profitability. The availability of reasonably affordable reinsurance is a critical element of our business plan. One important way we utilize reinsurance is to reduce volatility in claims payments by limiting our exposure to losses from large risks. Another way we use reinsurance is to purchase substantial protection against concentrated losses when we enter new markets. In addition, the ability to obtain reinsurance is critical to our fee-based fronting business. As a result, our ability to manage volatility, mitigate significant losses, expand into new markets, grow by offering insurance to new kinds of enterprises, or grow our fronting business may be limited by the unavailability of reasonably priced reinsurance. We may not be able to obtain reinsurance on acceptable terms or from entities with satisfactory creditworthiness. In such event, if we are unwilling to accept the terms or credit risk of potential reinsurers, we would have to reduce the level of our underwriting commitments, which would reduce our revenues. Reinsurance capacity has become more restricted making reinsurance placements more challenging in recent years.

Many reinsurance companies exclude certain coverages from, or alter terms in, the reinsurance contracts we enter into with them. Some exclusions relate to risks that we cannot in turn exclude from the policies we write due to business or regulatory constraints. In addition, reinsurers are imposing terms, such as lower per occurrence and aggregate limits, and more exclusions, limiting the protection provided under the reinsurance contract. For example, some of our reinsurance treaties are subject to loss ratio caps or aggregate limits. While ceded losses to our reinsurance treaties were within these loss ratio caps and aggregate limits, where applicable, as of March 31, 2026, less than $500,000 of limit remains available with respect to a reinsurer in one of our 2021 excess casualty reinsurance treaties. If ceded losses were to exceed the loss ratio cap or aggregate limit that applies to a reinsurer’s participation on a given reinsurance contract, the Company would not have reinsurance coverage from that reinsurer's share of losses in excess of such loss ratio cap or aggregate limit, which could have a material adverse effect on our business, liquidity and results of operations. As a result, we, like other direct insurance companies, write insurance policies which to some extent do not have the benefit of reinsurance protection. These gaps in reinsurance protection expose us to greater risk and greater potential losses. For example, certain reinsurers have excluded coverage for terrorist acts or priced such coverage at unreasonably high rates. Many direct insurers, including us, have written policies without terrorist act exclusions and in many cases we cannot exclude terrorist acts because of regulatory constraints. We may, therefore, be exposed to potential losses as a result of terrorist acts. See also “Item 1. Business — Purchase of Reinsurance” in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 3, 2026.

In addition to the traditional prospective reinsurance described above, we have purchased retroactive reinsurance in the form of loss portfolio transfers and adverse development covers on certain books of our business. This retroactive reinsurance may prove to be inadequate to cover the adverse loss development on the subject business. In particular, the ES Top Up ADC purchased in 2024 has a $75.0 million limit, $7.5 million of which remains available as of March 31, 2026.