Good morning. My name is Carrie, and I will be your conference operator today. At this time, I would like to welcome everyone to the James River Group Q3 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Bob Zimardo with Investor Relations. Please go ahead.

Thank you, operator, and good morning, everybody, and welcome to the James River Group Third Quarter 2025 Earnings Conference Call. During the call, we will be making forward-looking statements. These statements are based on current beliefs, intentions, expectations and assumptions that are subject to various risks and uncertainties, which may cause actual results to differ materially. For a discussion of such risks and uncertainties, please see the cautionary language regarding forward-looking statements in yesterday's earnings release and the risk factors of our most recent Form 10-K and other reports and filings we have made with the SEC. We do not undertake any duty to update any forward-looking statements. In addition, during this presentation, we may reference non-GAAP financial measures. Please refer to our earnings press release for a reconciliation of these numbers to GAAP, a copy of which can be found on our website. Lastly, unless otherwise specified for the reasons described in our earnings press release, all underwriting performance ratios referred to are for our continuing operations and business that is not subject to retroactive reinsurance accounting for loss portfolio transfers. I will now turn the call over to Frank D’Orazio, Chief Executive Officer of James River Group. Frank D’Orazio: Thank you for that introduction, Bob. Good morning, everyone, and welcome to James River's Third Quarter 2025 Earnings Call. I'm pleased to be joining you today on this election day morning and would like to start by emphasizing the fact that we feel a focus on profitability above all else, is a critical North Star for success in a transitioning property and casualty marketplace. We believe the underwriting and derisking actions that we've taken throughout James River demonstrate that commitment and the fruits of our labor are beginning to show up in our operating results, specifically in the company's…

Thanks very much, Frank. Good morning, everyone, and thanks for joining us today. We continue to make notable progress on our strategic goals through 2025 in our efforts to increase lasting operating efficiency while demonstrating the stability of our balance sheet. This quarter, we're reporting a small net loss from continuing operations available to common shareholders of $376,000 or about $0.01 per diluted share. On an adjusted net operating basis, we're reporting $17.4 million or $0.32 of income per share. As Frank mentioned, our annualized operating return on tangible common equity for the quarter was 19.3% and tangible common book value per share increased 23.4% from the start of the year to $8.24 a share as we've made meaningful strides to grow our capital base. Strong investment results and a meaningful improvement in AOCI from market interest rate reductions this quarter provided some uplift. Our third quarter combined ratio of 94% consists of a 65.7% loss ratio and a 28.3% expense ratio much improved from the 135.5% we reported in the prior year quarter, and that's really driven by strong performance across our E&S segment. On a year-to-date basis, we reported an expense ratio of 30.5%, which is below our full year 31% target. Just as a reminder, we started the year with an expense ratio of 32.7%. Year-to-date, we've recorded lasting savings of about $8 million coming out of all 3 of our reportable segments, E&S, Specialty Admitted and Corporate. The largest area of reduction has come from reduced compensation expense across the group. And notably, we began the year with 640 full-time employees and had 590 or 50 fewer by the end of the third quarter. We've also reduced costs meaningfully in areas like rent and professional fees. The 28.3% group expense ratio this quarter is more notable…

[Operator Instructions] Your first question will come from Mark Hughes with Truist Securities.

Frank, you had spoken about the recent accident years, 2023 and forward, you're seeing a much more favorable loss experience. Any way to distinguish how much of that might be just your underwriting actions versus the broader market trends perhaps in the last couple of years? Frank D’Orazio: Thanks, Mark. I think our view is it's heavily tied to the underwriting actions that we took. It's such a dichotomy in terms of experience. We kind of went through the number just relative to the decrease in claim counts as well as the reduction in incurred losses. So if you remember, we instituted a number of sublimits and exclusions. We exited certain classes. We really, at the same time, also improved our performance monitoring and the rate in which we do that and some of the processes relative to feedback loops within the organization. So I would say it is directly tied to the underwriting actions we've taken as well as the rate environment. So we have been able to produce rate in excess of our view of loss trends. So that obviously helps as well.

Yes, very good. Sarah, did you provide any sort of expense ratio target? I think you may have commented on that in the past. But with the improvement this quarter, it sounds like more expense savings flowing through the P&L. Is there a particular target you've got in mind?

Yes. Thanks, Mark. I think our full year target is consistent with what we've said a couple of quarters ago, and that's 31%, which would be certainly down from where we started the year at 32% and change. So I still feel very good about that. I'm obviously hesitating a little bit because we're doing this while we're making the underwriting changes, which has pushed down net earned. So I'm much more focused on the dollars we've taken out of the organization because I think those dollars have permanently left the organization than the ratio because I think the ratio also is going to miss the tax savings and the additional benefits that we're getting through the red. But a long way of saying, I still feel good about 31%, but I think there are other levers there that tell the story in a more effective way as well.

And then excess property, I know it's small in your book. Rates are down, business is down. What's your judgment about where that stands now? It was obviously a light storm season. Is that business continuing to see further declines and not your book necessarily, but just kind of your judgment of market conditions? Is it softening further here in the fourth quarter? Or is that maybe stabilized? Frank D’Orazio: Yes, Mark. Well, I think you kind of alluded to it. I mean the industry U.S. property losses, the experience this year is certainly well within most carriers' plans. So my expectation would be from a rate environment perspective, I would expect more of the same, so double-digit rate decreases. We're also seeing some loosening up of terms and conditions. So just plenty of capacity out there, whether it's carrier, MGA and MGU. So I guess the wildcard would be that if something significant, very significant, like $50 billion event type significant happen between now and year-end, that could be perhaps a game changer to kind of slow down the rate of the aggression in the property marketplace. But right now, that's what we see. We're kind of thinking more of the same.

Your next question will come from Brian Meredith with UBS.

A couple of questions here for you. First, I'm just curious, the reserve charge that took that went to the ADC cover, the lines of business that, that was involved in, how much of that business are you still writing today? And was anything kind of learned through that study that maybe affected your kind of thoughts on what you're underwriting today and how you're booking stuff? Frank D’Orazio: Yes. Sure, Brian. Let me take a crack at that. So we're talking about primarily the charge being driven by other liability occurrence and product completed operations from 2020 to 2022. The other liability occurrence primarily was non [indiscernible] space. These are lines of business that we're still in, so that would include energy, sports and entertainment, some elements of general casualty and then the product completed operations charts clearly coming out of MC. I'll draw a direct kind of parallel to the actions that we're taking first in MC. We've done a pretty deep analysis of what we see as an increase in low severity claims over the last, call it, 1.5 years or so and have made the decision to take some significant underwriting actions relative to tracked homebuilding in a number of different states. So we're not necessarily exiting the class, but we've got certain prohibited applications that we're paying attention to and a number of guidelines relative to the class. So I would say that's already in process. And I would say relative to the OLO, the other liability occurrence, those are changes that have been kind of, I think, already recognized and built into the organization over the last couple of years of underwriting changes that we've really started commencing at the end of '22.

Great. And then the second question, I'm just curious, maybe you can provide some outlook and what you think the ultimate happens with your Specialty Admitted segment. I mean it looks like it's shrunk pretty meaningfully. Frank D’Orazio: It has, Brian. And so we developed a view that we wanted to significantly reduce the commercial auto exposure in the portfolio based on our view of the behavior in the sector as well as the rated reinsurance market appetite, and we wanted to take less risk there. So we've greatly reduced our net retentions, and that view has not changed. You kind of see that playing through from quarter-to-quarter. We have -- I would say we've kind of picked our horses, so to speak, and have a handful of active programs today, mostly fully fronted. We feel like they're on a very solid footing and stable with low net retentions. We're now less than 5% in terms of retention. It's a far cry from where we've been in the past and certainly, I would say, a fraction of where probably the rest of the sector is. And we're continuing to focus on expense management. So as you know, the segment capital contributes fairly meaningfully to net investment income, circa, call it, 20% or so. And so we've shown and stated in the past that we'll continue to manage the business to take advantage of what we view as profitable opportunities that meet our criteria.

Got you. I was just wondering, it's getting so small, just the relevance of that business in the marketplace? And does it make sense in even being in it?

I think we're tag teaming on the question, Brian. I think we're -- the way that we thought about managing the segment, we're certainly still in it. We're getting inquiries into it. We've got active programs, but we're managing it for profitability. So to Frank's point, getting the retention is actually at 3.7% this quarter, managing the expenses. We've taken over 1/3 of the expenses out of it. I think that there's very little that we're able to or have to continue to invest in it to keep it online. I would also say is that the last thing I'd say is I think those profitability ratios that you're probably looking at as well, they've become, I think, less important indicators of the health of the business when you see net written premium drop 94% quarter-over-quarter. So as we look at this to manage net investment income and to focus on the rest of our business, it's not much of an effort as we've continued to move forward there. Frank D’Orazio: Yes. And I guess if I just one final word on it, Brian. Our track record, I think, has demonstrated that we regularly evaluate all of our businesses and underwriting units to make sure they fit our corporate goals and objectives and it's just good stewardship, and we'll continue to do that.

There are no further questions at this time. And I'll turn the call back over to management for any closing remarks. Frank D’Orazio: Thank you, operator. As we approach the end of 2025, it's worth reflecting on the transformation this company has undergone. Our experienced and reenergized leadership team continues to build and improve James River, distinguished by underwriting profitability while flexibly reallocating capital to the most attractive opportunities as market dynamics evolve. I'm pleased with our continued progress as an organization. With every passing quarter, we're seeing the demarcation between the company's legacy performance and the more recent accident years characterized by significant underwriting changes and marked improvement in performance. Our primary goal remains to enhance shareholder value through consistent and deliberate execution over the years ahead. Thank you to all for listening to the call today. We look forward to speaking to you again in a few months.

Thank you for your participation. This does conclude today's conference. You may now disconnect.