IPO Report: James River Group Holdings (JRVR)

Francis Gaskins |

James River Group Holdings (JRVR) is a Hamilton, Bermuda-based insurance holding company. JRVR owns and operates a group of specialty insurance and reinsurance companies founded by members of its management team.

Nine other companies are scheduled for the week of Dec. 8, 2014. The full IPO calendar is available at IPOpremium.

Manager, Joint-managers: Keefe Bruyette & Woods, UBS Investment Bank, FBR, and BMO Capital Markets.

Co-managers: KeyBanc Capital Markets, SunTrust Robinson Humphrey, and Scotiabank.

JRVR scheduled a $253 million IPO on with a market capitalization of $656 million at a price range midpoint of $23 for Friday, Dec. 12, 2014 on Nasdaq. SEC Documents

James River Group Holdings IPO Report


JRVR is a Bermuda-based insurance holding company. JRVR owns and operates a group of specialty insurance and reinsurance companies founded by members of its management team.


Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

annualizing Sept 9 mos


James River Group Holdings (JRVR)










Rev +8%

100% by selling shareholders; Goldman is selling most of its shares

P/E of 13.7

Price-to-book of.8

Price-to-tangible book of 1.1


JRVR is a Bermuda-based insurance holding company. JRVR owns and operates a group of specialty insurance and reinsurance companies founded by members of its management team.

For the year ended December 31, 2013, 70% of JRVR’s group-wide gross written premiums originated from the U.S. excess and surplus lines market.

Casualty insurance & reinsurance

Substantially all of JRVR’s business is casualty insurance and reinsurance, and for the year ended December  31, 2013, JRVR derived over 95% of its group-wide gross written premiums from casualty insurance and reinsurance.

JRVR’s objective is to generate compelling returns on tangible equity, while limiting underwriting and investment volatility.

RVR seeks to accomplish this by earning profits from insurance and reinsurance underwriting on a consistent basis while managing its capital opportunistically to grow tangible equity per share for its shareholders.

JRVR’s group includes three specialty property-casualty insurance and reinsurance segments: Excess and Surplus Lines, Specialty Admitted Insurance and Casualty Reinsurance. In all of its segments, JRVR tends to focus on accounts associated with small or medium-sized businesses.

Combined ratio

For the year ended December 31, 2013, JRVR wrote $368.5 million in gross written premiums, earned net income of  $67.3 million and had a combined ratio of 91.2%.

For the nine months ended September 30, 2014, JRVR’s combined ratio was 94.7%. JRVR’s combined ratio from January 1, 2008 to September 30, 2014 was 98.8%.

A combined ratio that is less than 100% indicates profitable underwriting. Earning an underwriting profit means the premiums earned in the period are greater than the sum of all losses, loss-adjustment expenses and other costs associated with operations in that same period.

Making consistent underwriting profits is important to JRVR because if it earns positive results from underwriting, JRVR can then count all of its investment income as profits.

If JRVR has underwriting losses, JRVR must use investment income or capital to cover those losses. This is why JRVR believes underwriting results are an important criterion for evaluating its performance.

According to a report issued in September 2014 by A.M. Best Company, the U.S. E&S lines market (from which JRVR earns 70% of its gross written premiums) has had meaningfully better underwriting results than the broader U.S. property-casualty industry over the five and ten year periods ending in 2013.

Intellectual property

JRVR holds U.S. federal service mark registration of its corporate logo and several other company trademark registrations or applications for registration with the U.S. Patent and Trademark Office. Such registrations protect JRVR’s intellectual property from confusingly similar use. JRVR monitors its trademarks and service marks and protect them from unauthorized use as necessary.

JRVR uses licensed and proprietary systems and technologies in its underwriting.

The licenses have terms that expire at various times from 2014 to 2028. JRVR believes that it can utilize other available systems and technologies in the event that the licenses are not renewed upon their expiration.


Excess and Surplus Lines

Competition within the E&S lines marketplace comes from a wide range of carriers.

In addition to mature E&S companies that operate nationwide, there is competition from carriers formed in recent years.

The Excess and Surplus Lines segment may also compete with national and regional carriers from the standard market willing to underwrite selected accounts on an admitted basis.

Competitors to this segment include Scottsdale Insurance Company (Nationwide Mutual Group), Markel Corporation, Burlington Insurance Group, Liberty Surplus Insurance Corporation, AXIS Capital Holdings Limited, Arch Capital Group Ltd., Admiral Insurance Co. (W. R. Berkley Corporation), Lexington Insurance Company (American International Group, Inc.), Western World Insurance Group, Inc., Mt. Hawley Insurance Company (RLI Corporation), Colony Specialty Insurance Company (Argo Group International Holdings, Ltd.) and Houston Casualty Company (HCC Insurance Holdings, Inc.).

Specialty Admitted Insurance

Due to the diverse nature of the products offered by the Specialty Admitted Insurance segment, competition comes from various sources.

The majority of the competition comes from regional companies or regional subsidiaries of national carriers in the domiciles in which they operate.

National carriers tend to compete for larger accounts along all product lines.

Competitors to this segment include Builders Mutual Insurance Company, Key Risk Insurance Company (W. R. Berkley Corporation), American Interstate Insurance Company (AMERISAFE, Inc.) and FFVA Mutual Insurance Co.

Casualty Reinsurance

The reinsurance industry is highly competitive. JRVR expects to compete with major reinsurers, most of which are well-established, have a significant operating history and strong financial strength ratings and have developed long-standing client relationships. Competitors to this segment include Maiden Holdings, Ltd., Hamilton Re, Ltd., PartnerRe Ltd. and Third Point Reinsurance Ltd.

5% shareholders pre-IPO

The D. E. Shaw Affiliates  72.6%            ​

Goldman Sachs            26.3%  ​

Post-IPO shares

D.E. Shaw:  50%

Goldman Sachs:  4.1%  ​           


JRVR intends to declare and pay quarterly dividends on its common shares, which will be its only class of common shares outstanding immediately following the offering, commencing in the first quarter of 2015.

The declaration, payment and amount of future dividends will be subject to the discretion of JRVR’s board of directors.

Use of proceeds

JRVR expects to receive $253 million from its IPO. The selling shareholders will receive all of the proceeds from this offering, and JRVR will not receive any proceeds from this offering.

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Symbol Name Price Change % Volume
JRVR James River Group Holdings Ltd. 38.74 0.56 1.47 849


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