UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):	May 5, 2015	
 
JAMES RIVER GROUP HOLDINGS, LTD.
 
(Exact name of registrant as specified in its charter)
 
Bermuda	 	001-36777	 	98-0585280	
(State or other jurisdiction	 	(Commission	 	(IRS Employer	
of incorporation)	 	File Number)	 	Identification No.)	
 
32 Victoria Street, Hamilton Bermuda	 	HM 12	
(Address of principal executive offices)	 	(Zip Code)	
 
Registrant’s telephone number, including area code:	+1-441-278-4580	

 
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
 
 	¨	Written Communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 	¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 	¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 	¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 	

 	
 
Item 2.02       Results of Operations and Financial Condition.
 
On May 6, 2015, James River Group Holdings, Ltd. (the “Company”) issued a press release announcing its financial results for its first quarter of 2015. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K (this “Form 8-K”).
 
The information in this Item 2.02 and in Exhibit 99.1 furnished herewith shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act unless specifically stated by the Company.
 
Item 5.07       Submission of Matters to a Vote of Security Holders.
 
On May 5, 2015, the Company held its 2015 Annual General Meeting of Shareholders (the “Annual Meeting”). The following is a summary of the final voting results for the sole matter voted upon at the Annual Meeting.
 
The approval of the appointment of Ernst & Young LLP, an independent registered public accounting firm, as the Company’s independent auditor to serve until the annual general meeting of shareholders to be held in 2016, and to authorize the board of directors, acting by the Audit Committee to determine the remuneration of Ernst & Young.
 
Votes For	27,507,443	
Votes Against	153,664	
Abstentions	11,275	
Broker Non-Votes	0	
 
Item 8.01        Other Events.
 
On May 5, 2015, our Board of Directors declared a cash dividend of $0.16 per common share, which will be paid on June 30, 2015 to shareholders of record at the close of business on June 15, 2015.
 
Item 9.01       Financial Statements and Exhibits.
 
(d)    Exhibits
 
The following Exhibit is furnished as a part of this Form 8-K:
 
Exhibit No.	 	Description	
 	 	 	
99.1	 	Press Release of the Company dated May 6, 2015	

 	
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 	JAMES RIVER GROUP HOLDINGS, LTD.	
 	 	 	
Dated:  May 6, 2015	By:	/s/ J. Adam Abram	
 	 	J. Adam Abram	
 	 	Chief Executive Officer	

 	
 
EXHIBIT INDEX
 
Exhibit No.	 	Description	
 	 	 	
99.1	 	Press Release of the Company dated May 6, 2015	

 

Exhibit 99.1

 
FOR IMMEDIATE RELEASE
 
JAMES RIVER GROUP HOLDINGS REPORTS FIRST QUARTER NET OPERATING
INCOME OF $11.7 MILLION OR $0.40 PER DILUTED SHARE

 
11.1% GROWTH IN NET OPERATING EARNINGS PER SHARE OVER THE FIRST
QUARTER OF 2014

 
23.0% GROWTH IN E&S SEGMENT GROSS WRITTEN PREMIUMS OVER THE
FIRST QUARTER OF 2014

 
DECLARES $0.16 PER SHARE QUARTERLY DIVIDEND

 
Hamilton, Bermuda, May 6, 2015 - James River Group Holdings, Ltd. (NASDAQ: JRVR) today announced financial results for the quarter ended March 31, 2015.
 
Highlights for the quarter include:
 	·	Overall gross written premiums of $131.3 million in the first quarter of 2015 as follows:	
 	o	Growth in our Excess and Surplus Lines segment of 23.0% to $75.7 million from $61.6 million in 2014;	
 	o	Growth in our Specialty Admitted Insurance segment of 79.2% to $20.9 million from $11.7 million in the first quarter of 2014; and a	
 	o	Reduction in our Casualty Reinsurance segment of 53.2% to $34.6 million from $74.0 million in the first quarter of 2014.	
 	·	Overall net written premiums for the quarter of $108.7 million as follows:	
 	o	Growth in our Excess and Surplus Lines segment of 26.2% to $62.3 million from $49.4 million in 2014;	
 	o	Growth in our Specialty Admitted Insurance segment of 37.6% to $11.5 million from $8.3 million in the first quarter of 2014; and a	
 	o	Reduction in our Casualty Reinsurance segment of 52.9% to $34.9 million from $74.1 million in the first quarter of 2014.	
 	·	A combined ratio of 97.5% compared to 98.5% in the prior year;	
 	·	Net operating income in 2015 of $11.7 million compared to $10.5 million in the prior year;	
 	·	Fully diluted operating earnings per share of $0.40 compared to $0.36 in the prior year;	
 	·	Net income in 2015 of $9.4 million compared to $9.1 million in the prior year; and	
 
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32 Victoria Street, Milner Place, Hamilton HM 12, Bermuda
Mailing address l P.O. Box 1502, Hamilton HM FX, Bermuda
Tel 441.278.4580 l Fax 441.278.4588

 	
 
JRVR Announces First Quarter Results
Page 2
May 6, 2015
 
 	·	Fully diluted earnings per share were $0.32 for both the first quarter of 2015 and 2014.	
 
J. Adam Abram, Chairman and Chief Executive Officer, said, "We are pleased to have a solid start to the year, and we remain on track to achieve our operating EPS guidance for calendar 2015. Our Excess and Surplus Lines segment, which is our largest and most profitable segment, continued to achieve very strong growth. Additionally, we achieved modest increases in our exposure adjusted rates in each of our underwriting segments during the quarter.”
 
"Our tangible book value grew by 2.1% during the first quarter of 2015, and 3.1% adding back the $0.16 dividend we paid on March 31, 2015. This growth in tangible book value is in line with our expectations. Going forward, we seek to continue to report steady underwriting profits and deliver consistent returns on tangible equity for our shareholders."
 
"In keeping with our Board's emphasis on capital efficiency and management, the Directors voted to declare a quarterly dividend of $0.16 per share to be paid on June 30, 2015."
 
Net operating earnings per diluted share for the first quarter of 2015 were $0.40 per share and excluded $0.08 per share of costs related to realized gains and losses and other non-operating expenses. This amount compares to $0.36 for the same period in 2014.
 
Fully diluted earnings per share for the first quarter of 2015 and 2014 were both $0.32.
 
The combined ratio for the Company was 97.5% (comprised of a loss ratio of 63.7% and an expense ratio of 33.8%) for the first quarter of 2015. This compares to a combined ratio of 98.5% (comprised of a loss ratio of 63.0% and an expense ratio of 35.5%) in the prior year.
 
Results for the quarter ended March 31, 2015 include favorable reserve development on prior accident years of $2.5 million. In the prior year, this favorable reserve development was $1.1 million. On an after-tax basis, favorable reserve development for the quarter is $2.0 million ($804,000 in the prior year).
 
The improvement in the overall expense ratio in the first quarter of 2015 compared to the same period in the prior year was primarily due to the increase in our earned premiums which grew 31.4% in the quarter from $89.1 million in 2014 to $117.0 million in 2015.
 
The Excess and Surplus Lines segment's combined ratio was 87.5% for the quarter ended March 31, 2015, comprised of a loss ratio of 60.3% and an expense ratio of 27.1%. In the prior year, this segment's combined ratio was 91.1% comprised of a loss ratio of 61.6% and an expense ratio of 29.6%. In the quarter, we recognized $4.9 million in pre-tax, favorable reserve development representing 8.3 points of our loss and combined ratio, respectively. In the same period in 2014, we recognized $2.4 million in pre-tax favorable reserve development representing 5.7 points of our loss and combined ratio, respectively.
 
The Specialty Admitted Insurance segment's combined ratio was 101.6% for the quarter ended March 31, 2015, (resulting in an underwriting loss of $155,000) comprised of a loss ratio of 60.7% and an expense ratio of 41.0%. In the prior year, this segment's combined ratio was 111.5%, comprised of a loss ratio of 55.1% and an expense ratio of 56.4%. In the quarter, we recognized $7,000 in pre-tax, favorable reserve development. In the same period in 2014, we
  
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JRVR Announces First Quarter Results
Page 3
May 6, 2015
 
recognized $287,000 in pre-tax, favorable reserve development representing 5.6 points of the loss and combined ratio, respectively. Additionally, the expense ratio for the quarter of 41.0% has begun to show the effects of the successful ramp up of the programs and fronting business along with an overall increase in earned premiums in this segment. For the same period in the prior year, the expense ratio was 56.4%.
 
The Casualty Reinsurance segment's combined ratio was 99.9% for the quarter ended March 31, 2015, comprised of a loss ratio of 68.3% and an expense ratio of 31.6%. In the prior year, this segment's combined ratio was also 99.9% comprised of a loss ratio of 65.4% and an expense ratio of 34.5%. In the quarter, we recognized $2.5 million of adverse reserve development representing (5.1) points of the loss and combined ratio, respectively. In the prior year, we recognized $1.6 million of adverse reserve development representing (3.8) points of the loss and combined ratio, respectively. The significant decrease in gross written premium at this segment is principally due to one contract which renewed in the first quarter of 2014 for 15 months which is scheduled for renewal in the second quarter of 2015. This contract contributed $36.7 million to this segment’s prior year gross written premium, all of which was recorded in the first quarter of 2014.
 
Net investment income for the first quarter of 2015 was $12.0 million. This amount compares to $12.5 million for the same period in 2014. Included in the total net investment income is $2.5 million and $3.3 million relating to our investments in renewable energy facilities engaged in wind and solar production for the quarter ended March 31, 2015 and 2014, respectively. Absent this investment income (which averaged $639,000 for the remaining three quarters of 2014), our net investment income increased by $368,000 (4.0%) over the first quarter of the prior year to $9.5 million (from $9.2 million). This increase in net investment income was due to a 4.3% increase in our average cash and invested assets in the first quarter of 2015 compared to the first quarter of 2014. Our annualized gross investment yield on average fixed maturity securities for the quarter ended March 31, 2015 was 3.2%, and the average duration of our portfolio was 3.0 years.
 
During the first quarter of 2015, we also recognized $2.8 million in pre-tax net realized losses primarily relating to the sale of certain securities in the energy portion of our bank loan portfolio, which at March 31, 2015 had a remaining carrying value of $25.1 million and a market value of $22.8 million.
 
Dividend
 
The Company also announced that its Board of Directors declared a cash dividend of $0.16 per common share. This dividend is payable on Tuesday, June 30, 2015 to all shareholders of record at the close of business on Monday, June 15, 2015.
 
Conference Call
 
James River Group Holdings will hold a conference call to discuss this press release tomorrow, May 7, 2015, at 9:00 a.m. Eastern time. Investors may access the conference call by dialing (877) 930-8055 Conference ID# 7710053 or via the internet by going to  www.jrgh.net  and clicking on the “Investor Relations” link. Please visit the website at least 15 minutes early to register, download and install any necessary audio software. A replay will be available shortly
 
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JRVR Announces First Quarter Results
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May 6, 2015
 
after the call and through the end of business on June 5, 2015 at the number and website referenced above.
 
Forward Looking Statements
 
This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. In some cases, such forward-looking statements may be identified by terms such as believe, expect, seek, may, will, intend, project, plan, estimate or similar words. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Although it is not possible to identify all of these risks and factors, they include, among others, the following: losses exceeding reserves; loss of key members of our management or employees; adverse economic factors; a decline in our financial strength; loss of a group of brokers or agents that generate significant portions of our business; losses in our investment portfolio; additional government or market regulation; potentially becoming subject to United States taxation and other risks described in the Company's filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this release and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, except as required by law.
 
Non-GAAP Financial Measures
 
In presenting James River Group Holding’s results, management has included financial measures that are not calculated under standards or rules that comprise accounting principles generally accepted in the United States (GAAP). Such measures, including underwriting profit, net operating income and return on tangible equity are referred to as non-GAAP measures. These non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with GAAP. Reconciliations of such measures to the most comparable GAAP figures are included at the end of this press release.
 
About James River Group Holdings, Ltd.
 
James River Group Holdings, Ltd. is a Bermuda-based insurance holding company which owns and operates a group of specialty insurance and reinsurance companies founded by members of our management team. The Company operates in three specialty property-casualty insurance and reinsurance segments: Excess and Surplus Lines, Specialty Admitted Insurance and Casualty Reinsurance. The Company tends to focus on accounts associated with small or medium-sized businesses in each of its segments. Each of the Company’s regulated insurance subsidiaries are rated “A-” (Excellent) with a “positive outlook” by A.M. Best Company.
 
Visit James River Group Holdings, Ltd. on the web at www.jrgh.net.
 
For more information contact:
 
Robert Myron
President and Chief Operating Officer
1-441-278-4583
InvestorRelations@jrgh.net
 
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JRVR Announces First Quarter Results
Page 5
May 6, 2015
 
James River Group Holdings, Ltd. and Subsidiaries
Condensed Consolidated Balance Sheet Data
(Unaudited)
 
 	 	March 31, 
2015	 	 	December 31,
2014	 	
 	 	($ in thousands, except for share amounts)	 	
ASSETS	 	 	 	 	 	 	 	 	
Invested assets:	 	 	 	 	 	 	 	 	
Fixed maturity securities, available-for-sale	 	$	739,984	 	 	$	756,963	 	
Fixed maturity securities, trading	 	 	5,816	 	 	 	7,388	 	
Equity securities, available-for-sale	 	 	77,330	 	 	 	67,905	 	
Bank loan participations, held-for-investment	 	 	203,601	 	 	 	239,511	 	
Short-term investments	 	 	161,220	 	 	 	131,856	 	
Other invested assets	 	 	55,010	 	 	 	33,622	 	
Total investments	 	 	1,242,961	 	 	 	1,237,245	 	
 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	 	71,355	 	 	 	73,383	 	
Accrued investment income	 	 	6,582	 	 	 	7,273	 	
Premiums receivable and agents’ balances	 	 	177,327	 	 	 	162,527	 	
Reinsurance recoverable on unpaid losses	 	 	129,616	 	 	 	127,254	 	
Reinsurance recoverable on paid losses	 	 	2,635	 	 	 	1,725	 	
Deferred policy acquisition costs	 	 	55,559	 	 	 	60,202	 	
Goodwill and intangible assets	 	 	221,807	 	 	 	221,956	 	
Other assets	 	 	84,611	 	 	 	67,727	 	
Total assets	 	$	1,992,453	 	 	$	1,959,292	 	
 	 	 	 	 	 	 	 	 	
LIABILITIES AND SHAREHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	
Reserve for losses and loss adjustment expenses	 	$	744,585	 	 	$	716,296	 	
Unearned premiums	 	 	273,170	 	 	 	277,579	 	
Senior debt	 	 	88,300	 	 	 	88,300	 	
Junior subordinated debt	 	 	104,055	 	 	 	104,055	 	
Accrued expenses	 	 	26,012	 	 	 	31,107	 	
Other liabilities	 	 	58,794	 	 	 	54,034	 	
Total liabilities	 	 	1,294,916	 	 	 	1,271,371	 	
 	 	 	 	 	 	 	 	 	
Total shareholders’ equity	 	 	697,537	 	 	 	687,921	 	
Total liabilities and shareholders’ equity	 	$	1,992,453	 	 	$	1,959,292	 	
 	 	 	 	 	 	 	 	 	
Tangible equity	 	$	475,730	 	 	$	465,965	 	
Tangible equity per common share outstanding	 	$	16.67	 	 	$	16.33	 	
Total shareholders’ equity per common share outstanding	 	$	24.44	 	 	$	24.10	 	
Common shares outstanding	 	 	28,540,350	 	 	 	28,540,350	 	
Debt to total capitalization ratio	 	 	21.6%	 	 	 	21.9%	 	
 
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JRVR Announces First Quarter Results
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May 6, 2015
 
James River Group Holdings, Ltd. and Subsidiaries
Condensed Consolidated Income Statement Data
(Unaudited)
 
 	 	Three Months Ended 
March 31,	 	
 	 	2015	 	 	2014	 	
 	 	($ in thousands, except for share data)	 	
REVENUES	 	 	 	 	 	 	 	 	
Gross written premiums	 	$	131,258	 	 	$	147,241	 	
Net written premiums	 	$	108,659	 	 	$	131,841	 	
 	 	 	 	 	 	 	 	 	
Net earned premiums	 	$	117,011	 	 	$	89,056	 	
Net investment income	 	 	11,986	 	 	 	12,482	 	
Net realized investment losses	 	 	(2,806)	 	 	 	(1,921)	 	
Other income	 	 	276	 	 	 	78	 	
Total revenues	 	 	126,467	 	 	 	99,695	 	
 	 	 	 	 	 	 	 	 	
EXPENSES	 	 	 	 	 	 	 	 	
Losses and loss adjustment expenses	 	 	74,484	 	 	 	56,114	 	
Other operating expenses	 	 	39,797	 	 	 	31,628	 	
Other expenses	 	 	69	 	 	 	93	 	
Interest expense	 	 	1,704	 	 	 	1,547	 	
Amortization of intangible assets	 	 	149	 	 	 	125	 	
Total expenses	 	 	116,203	 	 	 	89,507	 	
Income before taxes	 	 	10,264	 	 	 	10,188	 	
Income tax expense	 	 	887	 	 	 	1,050	 	
NET INCOME	 	$	9,377	 	 	$	9,138	 	
NET OPERATING INCOME	 	$	11,691	 	 	$	10,468	 	
 	 	 	 	 	 	 	 	 	
EARNINGS PER SHARE	 	 	 	 	 	 	 	 	
Basic	 	$	0.33	 	 	$	0.32	 	
Diluted	 	$	0.32	 	 	$	0.32	 	
 	 	 	 	 	 	 	 	 	
NET OPERATING INCOME PER SHARE	 	 	 	 	 	 	 	 	
Basic	 	$	0.41	 	 	$	0.37	 	
Diluted	 	$	0.40	 	 	$	0.36	 	
 	 	 	 	 	 	 	 	 	
Weighted-average common shares outstanding:	 	 	 	 	 	 	 	 	
Basic	 	 	28,540,350	 	 	 	28,540,350	 	
Diluted	 	 	29,098,309	 	 	 	28,780,681	 	
Cash dividends declared per common share	 	$	0.16	 	 	$	0.00	 	
 	 	 	 	 	 	 	 	 	
Ratios:	 	 	 	 	 	 	 	 	
Loss ratio	 	 	63.7%	 	 	 	63.0%	 	
Expense ratio	 	 	33.8%	 	 	 	35.5%	 	
Combined ratio	 	 	97.5%	 	 	 	98.5%	 	
 
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JRVR Announces First Quarter Results
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May 6, 2015
 
James River Group Holdings, Ltd. and Subsidiaries
Segment Results
 
EXCESS AND SURPLUS LINES
 	 	Three Months Ended
March 31,	 	
 	 	2015	 	 	2014	 	
 	 	($ in thousands)	 	
Gross written premiums	 	$	75,718	 	 	$	61,553	 	
Net written premiums	 	$	62,296	 	 	$	49,374	 	
 	 	 	 	 	 	 	 	 	
Net earned premiums	 	$	59,400	 	 	$	41,983	 	
Losses and loss adjustment expenses	 	 	(35,842	)	 	 	(25,841	)	
Underwriting expenses	 	 	(16,115	)	 	 	(12,415	)	
Underwriting profit (a), (b)	 	$	7,443	 	 	$	3,727	 	
 	 	 	 	 	 	 	 	 	
Ratios:	 	 	 	 	 	 	 	 	
Loss ratio	 	 	60.3%	 	 	 	61.6%	 	
Expense ratio	 	 	27.1%	 	 	 	29.6%	 	
Combined ratio	 	 	87.5%	 	 	 	91.1%	 	
 
(a) See "Reconciliation of Non-GAAP Measures."
(b) Underwriting results include fees of $220,000 and $0 for the three months ended March 31, 2015 and 2014, respectively.
 
SPECIALTY ADMITTED INSURANCE
 	 	Three Months Ended 
March 31,	 	
 	 	2015	 	 	2014	 	
 	 	($ in thousands)	 	
Gross written premiums	 	$	20,926	 	 	$	11,677	 	
Net written premiums	 	$	11,474	 	 	$	8,341	 	
 	 	 	 	 	 	 	 	 	
Net earned premiums	 	$	9,555	 	 	$	5,149	 	
Losses and loss adjustment expenses	 	 	(5,796	)	 	 	(2,837	)	
Underwriting expenses	 	 	(3,914	)	 	 	(2,904	)	
Underwriting loss (a), (b)	 	$	(155	)	 	$	(592	)	
 	 	 	 	 	 	 	 	 	
Ratios:	 	 	 	 	 	 	 	 	
Loss ratio	 	 	60.7%	 	 	 	55.1%	 	
Expense ratio	 	 	41.0%	 	 	 	56.4%	 	
Combined ratio	 	 	101.6%	 	 	 	111.5%	 	
 
(a) See "Reconciliation of Non-GAAP Measures."
(b) Underwriting results include fees of $303,000 and $137,000 for the three months ended March 31, 2015 and 2014, respectively.
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JRVR Announces First Quarter Results
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May 6, 2015
 
CASUALTY REINSURANCE
 	 	Three Months Ended
March 31,	 	
 	 	2015	 	 	2014	 	
 	 	($ in thousands)	 	
Gross written premiums	 	$	34,614	 	 	$	74,011	 	
Net written premiums	 	$	34,889	 	 	$	74,126	 	
 	 	 	 	 	 	 	 	 	
Net earned premiums	 	$	48,056	 	 	$	41,924	 	
Losses and loss adjustment expenses	 	 	(32,846	)	 	 	(27,436	)	
Underwriting expenses	 	 	(15,169	)	 	 	(14,444	)	
Underwriting profit (a)	 	$	41	 	 	$	44	 	
 	 	 	 	 	 	 	 	 	
Ratios:	 	 	 	 	 	 	 	 	
Loss ratio	 	 	68.3%	 	 	 	65.4%	 	
Expense ratio	 	 	31.6%	 	 	 	34.5%	 	
Combined ratio	 	 	99.9%	 	 	 	99.9%	 	
 
(a) See "Reconciliation of Non-GAAP Measures."
 
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JRVR Announces First Quarter Results
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May 6, 2015
 
RECONCILIATION OF NON-GAAP MEASURES
 
The following table reconciles the underwriting profit (loss) by individual operating segment and of the whole Company to consolidated income before taxes. We believe that these measures are useful to investors in evaluating the performance of our Company and its operating segments because our objective is to consistently earn underwriting profits. We evaluate the performance of our operating segments and allocate resources based primarily on underwriting profit (loss) of operating segments. Our definition of underwriting profit (loss) of operating segments and underwriting profit (loss) may not be comparable to that of other companies.
 
 	 	Three Months Ended
March 31,	 	
 	 	2015	 	 	2014	 	
 	 	(in thousands)	 	
Underwriting profit (loss) of the operating segments:	 	 	 	 	 	 	
Excess and Surplus Lines	 	$	7,443	 	 	$	3,727	 	
Specialty Admitted Insurance	 	 	(155	)	 	 	(592	)	
Casualty Reinsurance	 	 	41	 	 	 	44	 	
Total underwriting profit of operating segments	 	 	7,329	 	 	 	3,179	 	
Other operating expenses of the Corporate and Other segment	 	 	(4,379	)	 	 	(1,865	)	
Underwriting profit (a)	 	 	2,950	 	 	 	1,314	 	
Net investment income	 	 	11,986	 	 	 	12,482	 	
Net realized investment losses	 	 	(2,806	)	 	 	(1,921	)	
Other income and expenses	 	 	(13	)	 	 	(15	)	
Interest expense	 	 	(1,704	)	 	 	(1,547	)	
Amortization of intangible assets	 	 	(149	)	 	 	(125	)	
Consolidated income before taxes	 	$	10,264	 	 	$	10,188	 	
 
(a) Included in underwriting results for the three months ended March 31, 2015 and 2014 is net fee income of $523,000 and $137,000, respectively.
 
We define net operating income as net income excluding net realized investment gains and losses, expenses related to due diligence costs for various merger and acquisition activities, costs associated with our initial public offering, severance costs associated with terminated employees, impairment charges on goodwill and intangible assets and gains on extinguishment of debt. We use net operating income as an internal performance measure in the management of our operations because 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. Net operating income should not be viewed as a substitute for net income calculated in accordance with GAAP, and our definition of net operating income may not be comparable to that of other companies.
 
Our income before taxes and net income for the three months ended March 31, 2015 and 2014, respectively, reconciles to our net operating income as follows:
 
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JRVR Announces First Quarter Results
Page 10
May 6, 2015
 
 	 	Three Months Ended
March 31,	 	
 	 	2015	 	 	2014	 	
 	 	Income
Before
Taxes	 	 	Net 
Income	 	 	Income
Before
Taxes	 	 	Net 
Income	 	
 	 	(in thousands)	 	
Income as reported	 	$	10,264	 	 	$	9,377	 	 	$	10,188	 	 	$	9,138	 	
Net realized investment losses	 	 	2,806	 	 	 	2,162	 	 	 	1,921	 	 	 	1,153	 	
Other expenses	 	 	69	 	 	 	45	 	 	 	93	 	 	 	70	 	
Interest expense on leased building the Company is deemed to own for accounting purposes	 	 	165	 	 	 	107	 	 	 	165	 	 	 	107	 	
Net operating income	 	$	13,304	 	 	$	11,691	 	 	$	12,367	 	 	$	10,468	 	
 
We define tangible equity as the sum of shareholders’ equity less goodwill and intangible assets (net of amortization). Our definition of tangible equity may not be comparable to that of other companies, and it should not be viewed as a substitute for shareholders’ equity calculated in accordance with GAAP. We use tangible equity internally to evaluate the strength of our balance sheet and to compare returns relative to this measure. The following table reconciles shareholders’ equity to tangible equity for both March 31, 2015 and December 31, 2014.
 
 	 	March 31,	 	 	December 31,	 	
 	 	2015	 	 	2014	 	
 	 	(in thousands)	 	
 	 	 	 	 	 	 	
Shareholders’ equity	 	$	697,537	 	 	$	687,921	 	
Less: Goodwill and intangible assets	 	 	221,807	 	 	 	221,956	 	
Tangible equity	 	$	475,730	 	 	$	465,965	 	
  
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32 Victoria Street, Milner Place, Hamilton HM 12, Bermuda
Mailing address l P.O. Box 1502, Hamilton HM FX, Bermuda
Tel 441.278.4580 l Fax 441.278.4588