What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-03-01 compared with 2021-02-26 · 405 added, 377 removed, 2000 unchanged (28% of the section changed)

12 unchanged sentences

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Also, projections of any

evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has conducted an assessment, including testing, of the effectiveness of our internal control over financial reporting as of December 31, 2021.

8 unchanged sentences

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

60 unchanged sentences

as Joint Book Runners and Joint Lead Arrangers, Bank of Montreal and SunTrust Bank as Co-Syndication Agents, and the lender parties thereto (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on November 12, 2019, Commission File No.

10.2 First Amendment to Second Amended and Restated Credit Agreement, dated as of February 18, 2022, by and among James River Group Holdings, Ltd., JRG Reinsurance Company Ltd., KeyBank National Association as Administrative Agent and the lenders party thereto

10.3 Continuing Guaranty of Payment, dated as of June 5, 2013, by James River Group, Inc., as Guarantor, pursuant to Credit Agreement, dated as of June 5, 2013, among James River Group Holdings, Ltd.

8 unchanged sentences

and JRG Reinsurance Company Ltd., as the borrowers, and BMO Harris Bank, N.A., as the lender (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on November 12, 2019, Commission File No.

10.7 Second Amendment to Credit Agreement dated as of February 18, 2022 by and among James River Group Holdings, Ltd.

and JRG Reinsurance Company Ltd.

as the borrowers, and BMO Harris Bank N.A., as the lender

10.8 Pledge and Security Agreement, dated as of August 2, 2017, by and between JRG Reinsurance Company Ltd., and BMO Harris Bank N.A.

13 unchanged sentences

333-199958, filed with the Commission on November 24, 2014)*

Number Description

10.13 James River Group Holdings, Ltd.

38 unchanged sentences

(incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on November 2, 2020, Commission File No.

10.23 Amended and Restated Employment Agreement, effective August 5, 2019, by and between James River Group Holdings, Ltd.

and Robert P.

Myron (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed on November 7, 2019)*

10.25 Separation and Release Agreement, dated as of August 2, 2021, by and among Robert P.

Myron, James River Group Holdings, Ltd., and its subsidiary, James River Group, Inc.

(incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on August 4, 2021, Commission File No.

10.26 Employment Agreement, dated December 19, 2016, by and among James River Group Holdings, Ltd., James River Group, Inc., and Sarah C.

5 unchanged sentences

and Richard Schmitzer (incorporated by reference to Exhibit 10.22 to Annual Report on Form 10-K filed on March 1, 2018, Commission File No.

Number Description

10.29 James River Management Company, Inc.

6 unchanged sentences

and Daniel Heinlein (incorporated by reference to Exhibit 10.31 to the Annual Report on Form 10-K filed on February 27, 2019, Commission File No.

10.30 Registration Rights Agreement, dated as of December 17, 2014, by and among (1) James River Group Holdings, Ltd.;

Shaw CH-SP Franklin, L.L.C., a Delaware limited liability company, D.

Shaw CF-SP Franklin, L.L.C., a Delaware limited liability company, and D.

Shaw Oculus Portfolios, L.L.C., a Delaware limited liability company;

and (b) The Goldman Sachs Group, Inc., a Delaware corporation, and Goldman Sachs JRVR Investors Offshore, L.P., a Cayman Islands exempted limited partnership and (3) the persons identified as “Management Investors” on the signature pages thereto (incorporated by reference to Exhibit 10.25 to the Annual Report on Form 10-K filed on March 12, 2015, Commission File No.

10.32 Loss Portfolio Transfer Reinsurance Agreement dated September 27, 2021 between James River Insurance Company and James River Casualty Company and Aleka Insurance, Inc.

(incorporated by reference to Exhibit 10.1 on the Current Report on Form 8-K filed on September 30, 2021, Commission File No.

10.33 Trust Agreement dated September 27, 2021 among James River Insurance Company and James River Casualty Company, Aleka Insurance, Inc., and Wells Fargo Bank, N.A.

(incorporated by reference to Exhibit 10.2 on the Current Report on Form 8-K filed on September 30, 2021, Commission File No.

10.34 I nvestment Agreement, dated Febr uary 24, 2022, by an d b etwee n James River Group Holdings, Ltd.

and GPC Partners Investments (Thames ) LP (incorporated by ref erence to Exhibit 10.1 on the Current Report on Form 8-K filed on February 28, 2022;

Commission File No.

10.35 Loss Portfolio Transfer Retrocession Agreement entered into on February 23, 2022 by and between JRG Reinsurance Company Ltd.

and Fortitude Reinsurance Company Ltd.

(incorporated by reference to Exhibit 10.2 on the Current Report on Form 8-K filed on February 28, 2022;

Commission File No.

Number Description

19 unchanged sentences

JAMES RIVER GROUP HOLDINGS, LTD.

February 26, 2021

March 1, 2022

Chief Executive Officer and Director

1 unchanged sentence

NAME TITLE DATE

D'Orazio Chief Executive Officer and Director February 26, 2021

D'Orazio Chief Executive Officer and Director March 1, 2022

D'Orazio (Principal Executive Officer)

Doran Chief Financial Officer February 26, 2021

Doran Chief Financial Officer March 1, 2022

Doran (Principal Financial Officer)

/s/ Michael E.

Crow Principal Accounting Officer February 26, 2021

Adam Abram Director, Non-Executive Chairman of the Board February 26, 2021

/s/ Janet Cowell Director February 26, 2021

/s/ Christopher L.

Harris Director February 26, 2021

Christopher L.

Masters Director February 26, 2021

Crow Principal Accounting Officer March 1, 2022

Adam Abram Director, Non-Executive Chairman of the Board March 1, 2022

/s/ Thomas L.

Brown Director March 1, 2022

/s/ Janet Cowell Director March 1, 2022

/s/ Kirstin Gould Director March 1, 2022

Kirstin Gould

Masters Director March 1, 2022

/s/ Michael T.

Oakes Director February 26, 2021

Oakes Director March 1, 2022

/s/ Patricia H.

Roberts Director February 26, 2021

Director February 26, 2021

/s/ Sundar Srinivasan Director February 26, 2021

Roberts Director March 1, 2022

Director March 1, 2022

/s/ Sundar Srinivasan Director March 1, 2022

Sundar Srinivasan

2 unchanged sentences

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting

17 unchanged sentences

We have audited the accompanying consolidated balance sheets of James River Group Holdings, Ltd.

and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of income and comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and the financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of (loss) income and comprehensive (loss) income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and the financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2021, expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 1, 2022, expressed an unqualified opinion thereon.

Basis for Opinion

22 unchanged sentences

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the process to estimate the IBNR reserves, including, among others, the review and approval processes that management has in place for the methods and assumptions used in estimating the IBNR reserves.

To test the IBNR reserves, our procedures included, among others, the involvement of actuarial specialists to assist with the evaluation and comparison of the Company’s selection and weighting of actuarial methods used in their analysis with those methods used in prior periods and those used in the industry.

Additionally, to evaluate the significant assumptions in the variables used by management in the actuarial methods, we compared the significant variables, including the initial expected loss ratio and the incurred and paid loss development factors, to factors historically used and current industry benchmarks.

Additionally, we performed sensitivity analyses on the variables key to management’s best estimate of IBNR reserves to determine the effect of reasonable changes in those assumptions on projected IBNR.

To test the IBNR reserves, our procedures included, among others, the involvement of actuarial specialists to assist with the evaluation of the Company’s selection and weighting of actuarial methods used in their analysis and a comparison of those methods used in prior periods and those used in the industry.

We also independently calculated a range of reasonable reserve estimates and performed independent projections for certain lines of business.

Our independent ranges consider the sensitivity of the reserve projections to reasonable fluctuations in assumptions of key variables to determine the effect of reasonable changes in those assumptions on projected IBNR.

We compared the range of reasonable reserve estimates to management’s recorded best estimate and performed a review of the historical results of the development of the estimate.

/s/ Ernst & Young LLP

1 unchanged sentence

Charlotte, North Carolina

February 26, 2021

March 1, 2022

JAMES RIVER GROUP HOLDINGS, LTD.

7 unchanged sentences

and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of income and comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2020, and related notes and financial statement schedules listed in the Index at Item 15(a) and our report dated February 26, 2021 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of income and comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2021, and related notes and financial statement schedules listed in the Index at Item 15(a) and our report dated March 1, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

16 unchanged sentences

Charlotte, North Carolina

February 26, 2021

March 1, 2022

JAMES RIVER GROUP HOLDINGS, LTD.

11 unchanged sentences

108,410 88,975

Bank loan participations (2020:

at fair value;

held-for-investment, at amortized cost, net of allowance) 147,604 260,864

Bank loan participations, at fair value 156,043 147,604

Short-term investments 136,563 130,289

29 unchanged sentences

Deferred tax liabilities, net — 1,105

Income taxes payable — 1,483

Other liabilities 89,911 51,213

11 unchanged sentences

Additional paid-in capital 862,040 664,476

Retained earnings 49,227 89,586

Retained (deficit) earnings ( 166,663 ) 49,227

Accumulated other comprehensive income 29,978 81,899

4 unchanged sentences

AND SUBSIDIARIES

Consolidated Statements of Income and Comprehensive Income

Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income

Year Ended December 31,

7 unchanged sentences

Net investment income 56,865 73,368 75,652

Net realized and unrealized losses on investments ( 16,030 ) ( 2,919 ) ( 5,479 )

Net realized and unrealized gains (losses) on investments 15,564 ( 16,030 ) ( 2,919 )

Other income 4,857 4,545 10,646

6 unchanged sentences

Total expenses 968,914 656,752 855,258

Income before income taxes 11,937 51,867 70,838

Income tax expense (benefit):

(Loss) income before income taxes ( 196,034 ) 11,937 51,867

Income tax (benefit) expense:

Current ( 2,835 ) 11,534 18,453

1 unchanged sentence

( 23,235 ) 7,113 13,528

Net income $ 4,824 $ 38,339 $ 63,830

Other comprehensive income (losses):

Net unrealized gains (losses), net of taxes of $ 6,874 in 2020, $ 3,358 in 2019, and $( 444 ) in 2018

Net (loss) income $ ( 172,799 ) $ 4,824 $ 38,339

Other comprehensive (losses) income:

Net unrealized (losses) gains, net of taxes of $( 7,135 ) in 2021, $ 6,874 in 2020, and $ 3,358 in 2019

( 51,921 ) 50,785 46,942

Total comprehensive income $ 55,609 $ 85,281 $ 41,627

Total comprehensive (loss) income $ ( 224,720 ) $ 55,609 $ 85,281

Per share data:

Basic earnings per share $ 0.16 $ 1.27 $ 2.14

Diluted earnings per share $ 0.16 $ 1.25 $ 2.11

Basic (loss) earnings per share $ ( 4.94 ) $ 0.16 $ 1.27

Diluted (loss) earnings per share $ ( 4.94 ) $ 0.16 $ 1.25

Dividend declared per share $ 1.20 $ 1.20 $ 1.20

9 unchanged sentences

Shares Additional

Capital Retained

Capital Retained (Deficit)

Earnings Accumulated

5 unchanged sentences

Net income — — — — 38,339 — 38,339

Other comprehensive loss — — — — — ( 22,203 ) ( 22,203 )

Other comprehensive income — — — — — 46,942 46,942

Dividends — — — — ( 36,786 ) — ( 36,786 )

5 unchanged sentences

— — — 7,178 — — 7,178

Cumulative effect of adoption of ASU No.

2016-01, net of taxes — — — — 4,682 ( 4,682 ) —

Cumulative effect of adoption of ASU No.

2018-02 — — — — ( 711 ) 711 —

Adoption of ASU No.

2016-02, derecognition of build-to-suit lease (see Note 6) — — — — 8,280 — 8,280

Balances at December 31, 2019 30,424,391 $ 6 $ — $ 657,875 $ 89,586 $ 31,114 $ 778,581

8 unchanged sentences

— — — 7,625 — — 7,625

Adoption of ASU No.

2016-02, derecognition of build-to-suit lease (see Note 6) — — — — 8,280 — 8,280

Cumulative effect of fair value option election (see Note 2) — — — — ( 7,827 ) — ( 7,827 )

Cumulative effect of adoption of ASU No.

2016-13 (see Note 1) — — — — ( 265 ) — ( 265 )

Balances at December 31, 2020 30,649,261 $ 6 $ — $ 664,476 $ 49,227 $ 81,899 $ 795,608

Net income — — — 4,824 — 4,824

Other comprehensive income — — — — 50,785 50,785

Net loss — — — — ( 172,799 ) — ( 172,799 )

Other comprehensive loss — — — — — ( 51,921 ) ( 51,921 )

Dividends — — — — ( 43,091 ) — ( 43,091 )

Issuance of common shares 6,497,500 1 — 192,106 — — 192,107

Exercise of stock options

4 unchanged sentences

— — — 6,658 — — 6,658

Cumulative effect of fair value option election (see Note 1) — — — ( 7,827 ) — ( 7,827 )

Cumulative effect of adoption of ASU No.

2016-13 (see Note 1) — — — ( 265 ) — ( 265 )

Balances at December 31, 2021 37,373,066 $ 7 $ — $ 862,040 $ ( 166,663 ) $ 29,978 $ 725,362

7 unchanged sentences

Operating activities

Net income $ 4,824 $ 38,339 $ 63,830

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income $ ( 172,799 ) $ 4,824 $ 38,339

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Deferred policy acquisition costs ( 75,236 ) ( 76,525 ) ( 91,449 )

Amortization of policy acquisition costs 69,663 75,578 83,893

Net realized and unrealized losses on investments 16,030 2,919 5,479

Impairment of intangible assets — — 200

Net realized and unrealized (gains) losses on investments ( 15,564 ) 16,030 2,919

Distributions from equity method investments 2,434 3,162 2,834

Income from equity method investments ( 918 ) ( 3,208 ) ( 4,598 )

Trading securities purchases, sales, and maturities, net — — 3,804

Deferred U.S.

13 unchanged sentences

Investing activities

Securities available-for-sale:

Purchases – fixed maturity securities ( 573,482 ) ( 450,793 ) ( 418,011 )

Sales – fixed maturity securities 37,674 121,245 95,793

Maturities and calls – fixed maturity securities 240,322 128,809 129,139

Purchases – equity securities ( 16,713 ) ( 4,975 ) ( 7,507 )

Sales – equity securities 6,838 8,656 5,578

Fixed maturity securities:

Purchases ( 362,537 ) ( 573,482 ) ( 450,793 )

Sales 135,913 37,674 121,245

Maturities and calls 296,170 240,322 128,809

Equity Securities:

Purchases ( 21,845 ) ( 16,713 ) ( 4,975 )

Sales 7,227 6,838 8,656

Bank loan participations:

5 unchanged sentences

Return of capital 1,758 353 1,877

Redemptions 16,292 10,998 —

Repayments and redemptions 3,760 16,292 10,998

Securities receivable or payable, net 1,627 ( 1,777 ) 5,404

Short-term investments, net ( 6,274 ) 26,636 ( 74,959 )

Other ( 549 ) ( 519 ) ( 1,326 )

Net cash used in investing activities ( 175,991 ) ( 263,359 ) ( 266,772 )

Purchases of property and equipment ( 6,303 ) ( 549 ) ( 519 )

Net cash provided by (used in) investing activities 35,823 ( 175,991 ) ( 263,359 )

Financing activities

2 unchanged sentences

Dividends paid ( 43,236 ) ( 37,051 ) ( 36,720 )

Issuances of common shares - public offering 192,107 — —

Issuances of common shares under equity incentive plans 1,877 2,580 8,286

1 unchanged sentence

Other financing activities — — ( 711 )

Net cash provided by (used in) financing activities 65,925 7,956 ( 14,294 )

Net cash provided by financing activities 147,671 65,925 7,956

Change in cash, cash equivalents, and restricted cash equivalents ( 730,052 ) ( 383,896 ) 1,233,619

2 unchanged sentences

Supplemental information

federal income taxes paid, net $ 17,236 $ 18,719 $ 8,174

federal income taxes (refunded) paid, net $ ( 3,932 ) $ 17,236 $ 18,719

Interest paid $ 9,927 $ 11,305 $ 12,354

5 unchanged sentences

Change in restricted cash equivalents $ ( 757,915 ) $ ( 339,244 ) $ 1,199,164

(a) Cash used in operating activities for the year ended December 31, 2020 primarily reflects $ 339.2 million of restricted cash equivalents returned to a former insured, per the terms of a collateral trust (see Amounts Recoverable from an Indemnifying Party in the Liquidity and Capital Resources discussion of Management's Discussion and Analysis of Financial Condition and Results of Operations).

Excluding the reduction in the collateral funds, cash provided by operating activities was $ 65.4 million for the year ended December 31, 2020.

(a) Cash (used in) provided by operating activities for the years ended December 31, 2021, 2020, and 2019 primarily reflects the activity in restricted cash equivalents above.

As permitted under the agreements establishing the Indemnity Trust and the LPT Trust, we have withdrawn collateral from the Indemnity Trust and the LPT Trust to fund the Loss Fund Trust as required under the Administrative Services Agreement.

Amounts on deposit in the Loss Fund Trust are included in restricted cash equivalents on the Company's consolidated balance sheets.

Management’s Discussion and Analysis of Financial Condition and Results of Operations – Amounts Recoverable from an Indemnifying Party and Reinsurer on Legacy Commercial Auto Book ”.

Excluding the restricted cash activity above, cash (used in) provided by operating activities was $( 155.6 ) million, $ 65.4 million, and $ 289.9 million for the years ended December 31, 2021, 2020, and 2019, respectively.

The cash used in operating activities (excluding restricted cash equivalents) in 2021 was largely driven by the $ 317.6 million of reinsurance premium paid in September 2021 to effect the LPT transaction.

See accompanying notes.

17 unchanged sentences

• Falls Lake National Insurance Company (“Falls Lake National”) is an Ohio domiciled insurance company which wholly owns Stonewood Insurance Company (“Stonewood Insurance”), a North Carolina domiciled company, and Falls Lake Fire and Casualty Company, a California domiciled company.

Falls Lake National primarily write specialty admitted fronting and program business and individual risk workers' compensation insurance.

Falls Lake National primarily writes specialty admitted fronting and program business and individual risk workers' compensation insurance.

• JRG Reinsurance Company Ltd.

31 unchanged sentences

Changes in the allowance for credit losses are recognized in earnings and included in n et realized and unrealized gains (losses) on investments .

Unrealized losses that are not credit-related will continue to be recognized in other comprehensive income.

Unrealized losses that are not credit-related continue to be recognized in other comprehensive income.

The Company considers the extent to which fair value is below amortized cost in determining whether a credit-related loss exists.

3 unchanged sentences

Management may conclude that a qualitative analysis is sufficient to support its conclusion that the present value of the expected cash flows equals or exceeds a security’s amortized cost.

Effective January 1, 2018, with the adoption of ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10):

Recognition and Measurement of Financial Assets and Financial Liabilities , equity securities (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) are measured at fair value with changes in fair value recognized in net realized and unrealized gains or losses.

Prior to the adoption of ASU 2016-01, changes in the fair value of equity securities were recognized net of taxes as a component of accumulated other comprehensive income.

Bank Loan Participations

16 unchanged sentences

Equity interests in various limited liability companies (“LLCs”) and limited partnerships are accounted for under the equity method, as the Company has determined that the equity method best reflects its economic interest in the underlying equity investment.

Short-Term Investments

Short-term investments are carried at amortized cost, which approximates fair value.

Short-term investments have maturities greater than three months but less than one year at the date of purchase.

James River Group Holdings, LTD.

2 unchanged sentences

Years ended December 31, 2021, 2020, and 2019

Short-Term Investments

Short-term investments are carried at amortized cost, which approximates fair value.

Short-term investments have maturities greater than three months but less than one year at the date of purchase.

Cash Equivalents

25 unchanged sentences

The allowance for credit losses was $ 16.7 million and $ 8.3 million at December 31, 2021 and 2020, respectively.

Bad debt expense was $ 3.3 million for the year ended December 31, 2020, $ 2.5 million for the year ended December 31, 2019, and $ 1.5 million for the year ended December 31, 2018.

Receivables written off against the allowance for credit losses totaled $ 660,000 for the year ended December 31, 2020, $ 812,000 for the year ended December 31, 2019, and $ 313,000 for the year ended December 31, 2018.

Credit loss expense was $ 9.4 million for the year ended December 31, 2021 ($ 7.1 million of which will be deducted from amounts due to our reinsurers), $ 3.3 million for the year ended December 31, 2020, and $ 2.5 million for the year ended December 31, 2019.

Receivables written off against the allowance for credit losses totaled $ 1.1 million for the year ended December 31, 2021, $ 660,000 for the year ended December 31, 2020, and $ 812,000 for the year ended December 31, 2019.

Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

3 unchanged sentences

Amortization of such policy acquisition costs is charged to expense in proportion to premium earned over the estimated policy life.

To the extent that

To the extent that unearned premiums on existing policies are not adequate to cover projected related costs and expenses, deferred policy acquisition costs are charged to earnings.

The Company considers anticipated investment income in determining whether a premium deficiency exists.

James River Group Holdings, LTD.

2 unchanged sentences

Years ended December 31, 2021, 2020, and 2019

unearned premiums on existing policies are not adequate to cover projected related costs and expenses, deferred policy acquisition costs are charged to earnings.

The Company considers anticipated investment income in determining whether a premium deficiency exists.

Reinsurance and Adjustable Features of Insurance and Reinsurance Contracts

5 unchanged sentences

The Company also considers the expected impact of current and future expected economic conditions and adjusts estimates if needed based on an evaluation of these factors.

The allowance for credit losses on reinsurance recoverables at December 31, 2020 was $ 335,000 .

The allowance for credit losses on reinsurance recoverables at December 31, 2021 and 2020 was $ 631,000 and $ 335,000 , respectively.

Other amounts payable to insurance companies and reinsurers or receivable from insurance companies and reinsurers are netted where the right of offset exists.

16 unchanged sentences

Deferred tax assets are reduced by a valuation allowance only when management believes it is more likely than not that some, or all, of the deferred tax assets will not be realized.

Effective January 1, 2018, the Company adopted ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.

This update was issued as a result of the enactment of Public Law No.

115-97, informally titled the Tax Cuts and Jobs Act (the "Tax Act"), on December 22, 2017.

The ASU allows for the option to reclassify the stranded tax effects resulting from the implementation of the Tax Act out of accumulated other comprehensive income and into retained earnings.

The reclassification resulted in a $ 711,000 decrease to the Company's retained earnings with a corresponding increase to accumulated other comprehensive income in the first quarter of 2018.

Goodwill is tested annually for impairment in the fourth quarter of each calendar year, or more frequently if events or changes in circumstances indicate that the carrying amount of the Company’s reporting units, including goodwill, may exceed

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2020, 2019, and 2018

their fair values.

The Company determined that no valuation allowance was necessary at December 31, 2021 or 2020.

The Company first assesses qualitative factors in determining whether it is necessary to perform the quantitative goodwill impairment test.

5 unchanged sentences

To determine the amount of any goodwill impairment, the implied fair value of reporting unit goodwill is compared to the carrying amount of that goodwill.

The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination is determined.

The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2021, 2020, and 2019

combination is determined.

That is, the fair value of a reporting unit is assigned to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination.

27 unchanged sentences

An internal actuary reviews these results and (after applying appropriate professional judgment and other actuarial techniques that are considered necessary) presents recommendations to the Company’s management.

Management uses this information and its judgment to make decisions on the

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2020, 2019, and 2018

final recorded reserve for losses and loss adjustment expenses.

Management uses this information and its judgment to make decisions on the final recorded reserve for losses and loss adjustment expenses.

Management believes that the use of judgment is necessary to arrive at a best estimate for the reserve for losses and loss adjustment expenses given the long-tailed nature of the business generally written by the Company and the limited operating experience of the Casualty Reinsurance segment, the fronting and program business in the Specialty Admitted Insurance segment, and the commercial auto business in the Excess and Surplus Lines segment.

2 unchanged sentences

Management estimates reserves for incurred but not reported claims for these catastrophes using judgment based on an assessment of the Company’s property insurance exposures where the catastrophes occur and the Company’s progress in settling claims.

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2021, 2020, and 2019

Although management believes that the reserve for losses and loss adjustment expenses is reasonable, it is possible that the Company’s actual incurred losses and loss adjustment expenses will not develop in a manner consistent with the assumptions inherent in the determination of these reserves.

8 unchanged sentences

As the share based compensation expense is incurred, a corresponding increase to additional paid-in capital in shareholders’ equity is recognized.

Share based compensation expense is reflected in “other operating expenses” in the accompanying consolidated statements of income and comprehensive income.

Share based compensation expense is reflected in “other operating expenses” in the accompanying consolidated statements of (loss) income and comprehensive (loss) income.

Variable Interest Entities

7 unchanged sentences

The Company’s investments related to these VIEs totaled $ 26.9 million and $ 30.1 million as of December 31, 2021 and 2020, respectively, representing the Company’s maximum exposure to loss.

Earnings Per Share

Basic earnings per share excludes dilution and is computed by dividing net income by the weighted-average number of common shares outstanding for the period.

Diluted earnings per share reflects the dilution that could occur if securities or other contracts to issue common shares or common share equivalents were exercised or converted into common shares as calculated using the treasury stock method.

(Loss) Earnings Per Share

Basic (loss) earnings per share excludes dilution and is computed by dividing net (loss) income by the weighted-average number of common shares outstanding for the period.

Diluted (loss) earnings per share reflects the dilution that could occur if securities or other contracts to issue common shares or common share equivalents were exercised or converted into common shares as calculated using the treasury stock method.

When inclusion of common share equivalents increases the earnings per share or reduces the loss per share, the effect on earnings is anti-dilutive, and the diluted net earnings or net loss per share is computed excluding these common share equivalents.

3 unchanged sentences

Years ended December 31, 2021, 2020, and 2019

The following represents a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations contained in the consolidated financial statements.

The following represents a reconciliation of the numerator and denominator of the basic and diluted (loss) earnings per share computations contained in the consolidated financial statements.

Net (Loss) Income

(Numerator) Weighted-Average

Common Shares

(Denominator) Earnings

(Denominator) (Loss) Earnings

(in thousands, except per share data)

12 unchanged sentences

Common share equivalents relate to our outstanding equity awards (stock options and RSUs).

For the year ended December 31, 2020, all common share equivalents are dilutive.

For the years ended December 31, 2019 and 2018, common share equivalents of 9,735 shares and 180,329 shares, respectively, are excluded from the calculations of diluted earnings per share as their effects are anti-dilutive.

For the year ended December 31, 2021, common share equivalents of 175,360 were excluded from the calculation of diluted loss per share as their effects were anti-dilutive.

For the year ended December 31, 2020, all common share equivalents were dilutive.

For the year ended December 31, 2019, 9,735 shares were excluded from the calculation of diluted earnings per share as their effects were anti-dilutive.

Adopted Accounting Standards

On January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , using the modified retrospective approach, by which a cumulative-effect adjustment was made to retained earnings as of the date of adoption.

This update requires financial assets measured at amortized cost, such as bank loan participations held for investment, to be presented at the net amount expected to be collected by means of an allowance for credit losses that is reflected in net income.

Credit losses relating to available-for-sale debt securities are recorded through an allowance for credit losses, with the amount of the allowance limited to the amount by which fair value is below amortized cost.

In connection with the adoption of this ASU, the Company elected the fair value option in accounting for bank loan participations effective January 1, 2020.

The targeted transition relief offered by ASU 2019-05, Financial Instruments - Credit Losses (Topic 326):

Targeted Transition Relief was applied to elect the fair value option to account for bank loan participations already held at the January 1, 2020 date of adoption.

Under the fair value option, bank loan participations are measured at fair value, 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 adoption on January 1, 2020, the Company reduced the carrying value of its bank loan portfolio to fair value through an $ 8.4 million adjustment with a $ 7.8 million (net of tax) cumulative effect adjustment to reduce retained earnings.

Upon adoption of this ASU, the Company established an allowance for credit losses on reinsurance balances through a $ 265,000 (net of tax) cumulative effect adjustment to retained earnings.

Because we purchase reinsurance from financially strong reinsurers or we have collateral securing the recoverables, the effect of adoption was not material to our financial position.

There were no new accounting standards adopted in 2021 that materially impacted the Company's financial statements .

Prospective Accounting Standards

There are no prospective accounting standards which are expected to have a material impact on our financial statements subsequent to December 31, 2021.

James River Group Holdings, LTD.

27 unchanged sentences

97,489 2,360 ( 1 ) 99,848

Redeemable preferred stock

2,025 9 — 2,034

Total fixed maturity securities, available-for-sale $ 1,690,890 $ 94,056 $ ( 1,304 ) $ 1,783,642

42 unchanged sentences

Changes in the allowance for credit losses are recognized in earnings and included in net realized and unrealized gains (losses) on investments.

Unrealized losses that are not credit-related will continue to be recognized in other comprehensive income.

Unrealized losses that are not credit-related continue to be recognized in other comprehensive income.

The Company considers the extent to which fair value is below amortized cost in determining whether a credit-related loss exists.

3 unchanged sentences

Management may conclude that a qualitative analysis is sufficient to support its conclusion that the present value of expected cash flows equals or exceeds a security's amortized cost.

As a result of this review, management concluded that there were no credit-related impairments of fixed maturities at December 31, 2020.

As a result of this review, management concluded that there were no credit-related impairments of fixed maturities at December 31, 2021 or 2020.

Management does not intend to sell the 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.

Management concluded that none of the fixed maturity securities with an unrealized loss at December 31, 2019 and 2018 experienced an other-than-temporary impairment.

Management concluded that none of the fixed maturity securities with an unrealized loss at December 31, 2019 experienced an other-than-temporary impairment.

James River Group Holdings, LTD.

9 unchanged sentences

At December 31, 2021, the Company's bank loan portfolio had an aggregate unpaid principal balance of $ 159.0 million and an aggregate fair value of $ 156.0 million.

Investment income on bank loan participations included in net investment income was $ 12.2 million during the year ended December 31, 2020.

Net realized and unrealized gains (losses) on investments includes gains of $ 1.3 million related to changes in unrealized gains and losses on bank loan participations for the year ended December 31, 2020.

Management concluded that $ 8.3 million of unrealized losses were due to credit-related impairments for the year ended December 31, 2020.

Investment income on bank loan participations included in net investment income was $ 10.6 million and $ 12.2 million during the years ended December 31, 2021 and 2020, respectively.

Net realized and unrealized gains (losses) on investments includes gains of $ 6.7 million and $ 1.3 million related to changes in unrealized gains and losses on bank loan participations for the years ended December 31, 2021 and 2020, respectively.

Management concluded that no ne of the unrealized losses were due to credit-related impairments for the year ended December 31, 2021.

For the year ended December 31, 2020, management concluded that $ 8.3 million of unrealized losses were due to credit-related impairments.

Losses due to credit-related impairments were determined based upon consultations and advice from the Company's specialized investment manager and consideration of any adverse situations that could affect the borrower's ability to repay, the estimated value of underlying collateral, and other relevant factors.

2 unchanged sentences

At December 31, 2019 , the impaired loans had a carrying value of $ 6.9 million, unpaid principal of $ 14.3 million, and an allowance for credit losses of $ 7.2 million , $ 5.1 million of which related to two loans from one issuer that was experiencing liquidity concerns resulting from revenue declines and poor growth prospects in its most profitable segment.

Management concluded that none of the loans in the Company's bank loan portfolio were impaired at December 31, 2018.

Bank loan participations generally have a credit rating that is below investment grade (i.e.

5 unchanged sentences

Interest income on bank loan participations is accrued on the unpaid principal balance, and discounts and premiums on bank loan participations are amortized to income using the interest method.

Generally, the accrual interest on a bank loan participation is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest.

Generally, the accrual of interest on a bank loan participation is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest.

A bank loan participation may remain on accrual status if it is in the process of collection and is either guaranteed or well secured.

2 unchanged sentences

There were no bank loans on nonaccrual status at December 31, 2021 or 2020.

The average recorded investment in impaired bank loans was $ 3.5 million and $ 2.6 million during the years ended December 31, 2019 and 2018, respectively, and investment income of $ 293,000 and $ 125,000 , was recognized during the time that the loans were impaired.

The Company recorded losses of $ 8.9 million and $ 858,000 during the years ended December 31, 2019 and 2018, respectively, for changes in the fair value of impaired bank loans.

The average recorded investment in impaired bank loans was $ 3.5 million during the year ended December 31, 2019 and investment income of $ 293,000 was recognized during the time that the loans were impaired.

The Company recorded losses of $ 8.9 million during the year ended December 31, 2019 for changes in the fair value of impaired bank loans.

At December 31, 2019 , unamortized discounts on bank loan participations were $ 2.4 million, and unamortized premiums were $ 4,000 .

15 unchanged sentences

Net investment income $ 56,865 $ 73,368 $ 75,652

The Company’s net realized and unrealized losses and gains on investments are summarized as follows:

The Company’s net realized and unrealized gains and losses on investments are summarized as follows:

Year Ended December 31,

19 unchanged sentences

Changes in fair values of short-term investments and other 80 ( 80 ) —

( 5 ) 20 ( 6 )

Total $ 15,564 $ ( 16,030 ) $ ( 2,919 )

3 unchanged sentences

Years ended December 31, 2021, 2020, and 2019

The following table summarizes the change in the Company’s available-for-sale gross unrealized gains or losses by investment type:

Year Ended December 31,

2020 2019 2018

(in thousands)

Change in gross unrealized gains (losses):

Fixed maturity securities $ 57,659 $ 50,300 $ ( 22,643 )

Total $ 57,659 $ 50,300 $ ( 22,643 )

The change in the Company’s available-for-sale fixed maturity gross unrealized net gains was $( 59.1 ) million, $ 57.7 million, and $ 50.3 million for the years ended December 31, 2021, 2020, and 2019, respectively.

The Company invests selectively in private debt and equity opportunities.

3 unchanged sentences

2021 2020 2021 2020 2019

(in thousands) (in thousands)

(in thousands)

Renewable energy LLCs (a)

Excess and Surplus Lines $ 24,211 $ — $ ( 625 ) $ — $ —

Corporate & Other 2,709 30,145 ( 812 ) 2,016 2,181

26,920 30,145 ( 1,437 ) 2,016 2,181

Renewable energy notes receivable ( b)

Excess and Surplus Lines 2,329 — 417 — —

Corporate & Other 2,911 — 522 5,630 1,313

5,240 — 939 5,630 1,313

Limited partnerships (c)

Excess and Surplus Lines 13,098 4,096 1,417 272 2,090

Corporate & Other 2,150 7,807 938 920 327

15,248 11,903 2,355 1,192 2,417

Bank holding companies (d)

Excess and Surplus Lines 4,500 — 200 — —

Corporate & Other — 4,500 143 343 343

4,500 4,500 343 343 343

Total other invested assets

(a) The Company’s Corporate and Other segment owns equity interests ranging from 2.6 % to 32.6 % in various LLCs whose principal objective is capital appreciation and income generation from owning and operating renewable energy production facilities (wind and solar).

The LLCs are managed by an entity for which two of our recent former directors serve as officers, and the Company’s Non-Executive Chairman has invested in certain of these LLCs.

Excess and Surplus Lines 44,138 4,096 1,409 272 2,090

Corporate & Other 7,770 42,452 791 8,909 4,164

$ 51,908 $ 46,548 $ 2,200 $ 9,181 $ 6,254

(a) The Company’s Excess and Surplus Lines and Corporate and Other segments own equity interests ranging from 2.6 % to 32.6 % in various LLCs whose principal objective is capital appreciation and income generation from owning and operating renewable energy production facilities (wind and solar).

The LLCs are managed by an entity for which two of our former directors serve as officers, and the Company’s Non-Executive Chairman has invested in certain of these LLCs.

The equity method is used to account for the Company’s LLC investments.

2 unchanged sentences

Expenses for the LLCs are not significant and are comprised of administrative and interest expenses.

The Company received cash distributions from these investments totaling $ 3.1 million and $ 757,000 for the years ended December 31, 2020 and 2019, respectively.

(b) The Company's Corporate and Other segment has invested in notes receivable for renewable energy projects.

At December 31, 2019, the Company held one $ 8.8 million note issued by an entity for which two of our recent former directors serve as officers .

During the current year ended December 31, 2020, the Company received the total principal balance of $ 8.8 million plus a $ 5.3 million gain at maturity.

Interest on the note was fixed at 15 %.

Income on the note was $ 5.6 million, $ 1.3 million, and $ 1.3 million for the years ended December 31, 2020, 2019, and 2018, respectively.

(c) The Company owns investments in limited partnerships that invest in concentrated portfolios including publicly-traded small cap equities, loans of middle market private equity sponsored companies, equity tranches of collateralized loan obligations ("CLOs"), and tranches of distressed home loans.

Income from the partnerships is recognized under the equity method of accounting.

The Company’s Corporate and Other segment held investments in limited partnerships with a carrying value of $ 7.8 million and $ 3.4 million at December 31, 2020 and 2019, and recognized investment income of $ 1.3 million, $ 327,000 , and $ 70,000 for the years ended December 31, 2020, 2019 and 2018, respectively.

The Company’s Excess and Surplus Lines segment holds investments in limited partnerships of $ 4.1 million and $ 13.3 million at December 31, 2020 and 2019, respectively.

Investment losses of $ 69,000 were recognized on these investments for the year ended December 31, 2020.

Investment income of $ 2.1 million and $ 496,000 were recognized on these investments for the years ended December 31, 2019 and 2018, respectively.

At December 31, 2020, the Company’s Excess and Surplus Lines segment has outstanding commitments to invest another $ 3.7 million in these limited partnerships and $ 5.0 million to a newly acquired limited partnership, which will request funding starting in 2021.

(d) The Company's Corporate and Other segment holds $ 4.5 million of subordinated notes issued by a bank holding company for which the Company’s Non-Executive Chairman was previously the Lead Independent Director and an investor and for which one of the Company’s directors was an investor and is currently a lender (the "Bank Holding Company").

During the year ended December 31, 2021, the Company transferred $ 26.3 million of its investments in the LLCs from the Corporate and Other segment to the Excess and Surplus Lines segment.

The Company received cash distributions from these investments totaling $ 1.8 million and $ 3.1 million for the years ended December 31, 2021 and 2020, respectively.

(b) The Company's Excess and Surplus Lines and Corporate and Other segments have invested in notes receivable for renewable energy projects.

At December 31, 2021, the Company held two notes issued by an entity for which two of our former directors serve as officers .

Interest on the notes, which mature in 2025, is fixed at 12 %.

During the year ended December 31, 2021, the Company received principal repayments of $ 1.7 million and $ 2.1 million on the notes receivable in the Company's Excess and Surplus Lines segment and Corporate and Other segment, respectively.

During the year ended December 31, 2020 , the Company received the total principal balance of $ 8.8 million plus a $ 5.3 million gain at maturity on an earlier note receivable for renewable energy projects.

Interest on that note was fixed at 15 %.

James River Group Holdings, LTD.

2 unchanged sentences

Years ended December 31, 2021, 2020, and 2019

the notes, which mature in 2023, is fixed at 7.6 % per annum.

Interest income on the notes was $ 343,000 in each of the years ended December 31, 2020, 2019 and 2018.

At December 31, 2020 and 2019, the Company held an investment in a collateralized loan obligation (CLO) where one of the underlying loans was issued by the Bank Holding Company.

The investment, with a carrying value of $ 520,000 and $ 3.2 million at December 31, 2020 and 2019, is classified as an available-for-sale fixed maturity.

(c) The Company owns investments in limited partnerships that invest in concentrated portfolios including publicly-traded small cap equities, loans of middle market private equity sponsored companies, private equity general partnership interests, commercial mortgage-backed securities, and tranches of distressed home loans.

Income from the partnerships is recognized under the equity method of accounting.

During the year ended December 31, 2021, the Company transferred $ 5.1 million of its investments in the limited partnerships from the Corporate and Other segment to the Excess and Surplus Lines segment.

At December 31, 2021, the Company’s Excess and Surplus Lines segment has outstanding commitments to invest another $ 5.3 million in these limited partnerships.

(d) The Company's Excess and Surplus Lines segment holds $ 4.5 million of subordinated notes issued by a bank holding company for which the Company’s Non-Executive Chairman was previously the Lead Independent Director and an investor and for which one of the Company’s directors is also an investor (the "Bank Holding Company").

During the year ended December 31, 2021, the Company transferred ownership of the subordinated notes from the Corporate and Other segment to the Excess and Surplus Lines segment.

Interest on the notes, which mature in 2023, is fixed at 7.6 % per annum.

At December 31, 2020, the Company held an investment in a collateralized loan obligation (CLO) where one of the underlying loans was issued by the Bank Holding Company.

The investment, with a carrying value of $ 520,000 at December 31, 2020, was classified as an available-for-sale fixed maturity.

During the year ended December 31, 2021, the Company received the final principal repayment for the investment.

The Company maintains fixed maturity securities, short-term investments, accrued investment income, and cash and cash equivalents amounting to $ 478.4 million at December 31, 2021 in trust accounts or on deposit as collateral for outstanding letters of credit issued as security to third-party reinsureds on reinsurance assumed by JRG Re.

At December 31, 2021 and 2020, cash and investments with a fair value of $ 54.9 million and $ 46.9 million, respectively, were on deposit with state insurance departments to satisfy regulatory requirements.

At December 31, 2020, the Company held no investments in securitizations of alternative-A mortgages or sub-prime mortgages.

Deferred Policy Acquisition Costs

22 unchanged sentences

Intangible assets for broker relationships that have specific lives and are subject to amortization were also reviewed for impairment.

In the Specialty Admitted Insurance segment, Falls Lake General Insurance Company was merged into Falls Lake National in the fourth quarter of 2018.

In connection with this merger, Falls Lake General Insurance Company surrendered its licenses to the various state insurance departments and reduced the carrying value of its intangible asset for "State Licenses" to $ 0 .

This caused a $ 200,000 impairment in 2018 in the Specialty Admitted Insurance segment.

There were no impairments recognized in 2021, 2020, or 2019.

64 unchanged sentences

The Company has entered into operating leases for office space in Bermuda, North Carolina, Virginia, Arizona, and Georgia.

Following the adoption of ASU 2016-02, Leases (Topic 842) , effective January 1, 2019, the present value of future lease payments for the Company’s leases with terms greater than 12 months are included on the consolidated balance sheet as lease liabilities and right-of-use lease assets.

Following the adoption of ASU 2016-02, Leases (Topic 842) , effective January 1, 2019, the present value of future lease payments for the Company’s leases with terms greater than 12 months are included on the consolidated balance sheets as lease liabilities and right-of-use lease assets.

For leases with terms of 12 months or less, lease payments are recognized in other operating expenses on a straight-line basis over the lease term.

Total expected lease payments are based on the lease payments specified in the contract and the stated term, including any options to extend or terminate that the Company is reasonably certain to exercise.

2 unchanged sentences

The lease liability is then adjusted for any prepaid rent, lease incentives received or capitalized initial direct costs to determine the lease asset, which represents the Company's right to use the underlying asset for the lease term.

Lease liabilities and right-of-use assets are included in other liabilities and other assets , respectively, on the Company's consolidated balance sheet.

Lease liabilities and right-of-use assets are included in other liabilities and other assets , respectively, on the Company's consolidated balance sheets.

James River Group Holdings, LTD.

4 unchanged sentences

The Company also recorded right-of-use assets of $ 17.2 million and lease liabilities of $ 17.8 million at adoption of the new standard associated with the Company's operating leases.

At December 31, 2020 and 2019, lease liabilities and right-of-use assets associated with the Company's operating leases were $ 14.9 million and $ 14.0 million, and $ 18.2 million and $ 17.2 million, respectively.

At December 31, 2021, lease liabilities and right-of-use assets associated with the Company's operating leases were $ 12.8 million and $ 11.7 million, respectively ($ 14.9 million and $ 14.0 million at December 31, 2020, respectively).

The weighted-average discount rate and weighted average remaining lease term for operating leases was 4.1 % and 3.6 years, respectively, as of December 31, 2021.

The table below summarizes maturities of the Company’s operating lease liabilities as of December 31, 2020, which reconciles to total lease liabilities included in other liabilities on the Company’s consolidated balance sheet:

The table below summarizes maturities of the Company’s operating lease liabilities as of December 31, 2021, which reconciles to total lease liabilities included in other liabilities on the Company’s consolidated balance sheets:

Years ending December 31, (in thousands)

7 unchanged sentences

Rental expense is recognized on a straight line basis over the lease term and includes amortization of the right-of-use lease asset and imputed interest on the lease liability.

Operating lease costs are included in other operating expenses in the Company's consolidated statements of income and comprehensive income.

Operating lease costs are included in other operating expenses in the Company's consolidated statements of (loss) income and comprehensive (loss) income.

Reserve for Losses and Loss Adjustment Expenses

6 unchanged sentences

For the Excess and Surplus Lines and Specialty Admitted Insurance segments, the internal actuaries perform a study on each of these parameters annually and make recommendations for the initial expected loss ratios, the incurred and paid loss development factors and the weighting of the five actuarial methods by accident year and line of business.

Members of management’s Reserve Committee review and approve the parameter review actuarial recommendations, and these approved parameters are used in the reserve estimation process for the next four quarters at which time a new parameter study is performed.

For the Casualty Reinsurance segment, periodic assessments are made on a contract by contract basis with the goal of keeping the initial expected loss ratios and the incurred and paid loss development factors as constant as possible until sufficient evidence presents itself to support adjustments.

Method weights are generally less rigid for the Casualty

Members of management’s Reserve Committee review and approve the parameter review actuarial recommendations, and absent any developments requiring an earlier review, these approved parameters are used in the reserve estimation process for the next four quarters at which time a new parameter study is performed.

For the Casualty Reinsurance segment, periodic assessments are made on a contract by contract basis.

Method weights are generally less rigid for the Casualty Reinsurance

James River Group Holdings, LTD.

2 unchanged sentences

Years ended December 31, 2021, 2020, and 2019

Reinsurance segment given the heterogeneous nature of the various contracts, and the potential for significant changes in mix of business within individual treaties.

segment given the heterogeneous nature of the various contracts, and the potential for significant changes in mix of business within individual treaties.

Different reserving methods are appropriate in different situations, and the Company’s internal actuaries use their judgment and experience to determine the weighting of the methods to use for each accident year and each line of business and, for our Casualty Reinsurance segment, on a contract by contract basis.

1 unchanged sentence

As a result, the Company relies heavily on the initial expected loss ratio in estimating reserves for the current accident year.

The Company generally sets the initial expected loss ratio for the current accident year consistent with the internal actuaries’ pricing assumptions.

The Company generally sets the initial expected loss ratio for the current accident year consistent with the internal actuaries’ pricing assumptions adjusted upward where warranted based on management's judgment in order to produce the best estimate.

We believe that this is a reasonable and appropriate reserving assumption for the current accident year since our pricing assumptions are actuarially driven and since the Company expects to make an acceptable return on the new business written.

1 unchanged sentence

Conversely, sufficient incurred and paid loss development data is available for the oldest accident years, so more weight is given to this development data and less weight is given to the initial expected loss ratio.

The following table provides a reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses, net of reinsurance, to the gross amounts reported in the condensed consolidated balance sheets.

Reinsurance recoverables on unpaid losses and loss adjustment expenses are presented gross of a $ 335,000 allowance for credit losses on reinsurance balances at December 31, 2020.

Reinsurance recoverables on unpaid losses and loss adjustment expenses are presented gross of an allowance for credit losses on reinsurance balances of $ 631,000 and $ 335,000 at December 31, 2021 and 2020, respectively.

Year Ended December 31,

11 unchanged sentences

Total loss and loss adjustment expense payments 522,747 469,945 488,729

Loss reserves ceded in LPT Transaction 256,452 — —

Reserve for losses and loss adjustment expenses net of reinsurance recoverables at end of period

6 unchanged sentences

This adverse reserve development included $ 190.7 million of adverse development in the Excess and Surplus Lines segment, including $ 200.1 million of adverse development in the commercial auto line of business that was primarily related to the 2019 and prior accident years with Rasier LLC and its affiliates (collectively, “Rasier”) .

Rasier's business was new, complex, and rapidly changing, and the Company's underwriting assumptions and the related pricing of this risk did not keep pace with the insured's escalating loss trends.

As a result of changes in the risk, unsatisfactory underwriting profits from the Rasier business, and a desire to refocus on the Company’s growing E&S core (non-commercial auto) lines of business where the Company has experienced many years of profitable underwriting results, on October 8, 2019, the Company delivered a notice of early cancellation to Rasier, effective December 31, 2019.

The adverse development for commercial auto was partially offset by $ 32.0 million of favorable development in other Excess and Surplus Lines underwriting divisions that was primarily related to the 2018 and 2019 accident years.

The Company also experienced $ 5.0 million of favorable development on prior accident years in the Specialty Admitted Insurance segment, as losses on our workers’ compensation business written prior to 2019 continued to develop more favorably than we had

The adverse development for commercial auto was partially offset by $ 9.4 million of favorable development in other Excess and Surplus Lines underwriting divisions.

Favorable reserve development in the Specialty Admitted Insurance segment was $ 2.5 million as losses on our workers’ compensation business written prior to 2020 continued to develop more favorably than we had anticipated.

The Casualty Reinsurance segment experienced $ 137.6 million of adverse development on prior underwriting years.

Actual reported and paid losses in the Casualty Reinsurance segment significantly exceeded expectations in 2021, particularly in the fourth quarter of 2021, causing us to refine some of the assumptions used to determine our best estimate of ultimate losses for this segment.

Specifically, we responded to this highly

James River Group Holdings, LTD.

2 unchanged sentences

Years ended December 31, 2021, 2020, and 2019

elevated loss emergence by making significant adjustments to our assumed tail factors, other development factors, initial expected loss ratios, and weights given to various actuarial methods.

In particular, we gave significantly more weight to incurred loss development methods and Bornhuetter – Ferguson incurred loss development methods than had been done previously.

These actuarial refinements resulted in material deterioration in ultimate loss selections for underwriting years 2014 through 2018.

The adverse development was concentrated in four treaties, three of which were general liability and one which was professional liability.

Of the $ 137.6 million of adverse development recognized in 2021, $ 113.4 million was concentrated in these four treaties.

The foregoing reconciliation shows that $ 92.2 million of adverse development was experienced in 2020 on the reserve for losses and loss adjustment expenses held at December 31, 2019.

This adverse reserve development included $ 59.4 million of adverse development in the Excess and Surplus Lines segment including $ 91.4 million of adverse development in the commercial auto line of business that was primarily related to the 2018 and prior accident years with Rasier.

The Casualty Reinsurance segment experienced $ 37.8 million of adverse development on prior accident years primarily in accident years 2014 through 2018.

6 unchanged sentences

This adverse development was mainly in the general liability and commercial auto lines of business.

The foregoing reconciliation shows that $ 17.7 million of adverse development was experienced in 2018 on the reserve for losses and loss adjustment expenses held at December 31, 2017.

This adverse reserve development included $ 15.0 million of adverse development in the Excess and Surplus Lines segment, including $ 20.7 million of adverse development in the commercial auto line of business that was primarily related to the 2016 contract year with Rasier.

The adverse development for commercial auto was partially offset by $ 5.7 million of favorable development in other Excess and Surplus Lines underwriting divisions primarily from favorable development in the Excess Property underwriting division related to the 2017 hurricanes.

Favorable reserve development in the Specialty Admitted Insurance segment was $ 5.6 million and primarily came from accident years 2014 through 2016, as loss emergence on our workers’ compensation business written prior to 2016 continued to develop more favorably than we had anticipated.

In addition, $ 8.2 million of adverse development occurred in the Casualty Reinsurance segment, with a majority of this adverse development coming from accident years at least four years old and treaties the Company has since non-renewed.

The following tables present incurred and paid losses and loss adjustment expenses, net of reinsurance as of December 31, 2021 for:

14 unchanged sentences

Total $ 1,514,706

Cumulative paid losses and loss adjustment expenses, net of reinsurance (in thousands)

James River Group Holdings, LTD.

2 unchanged sentences

Years ended December 31, 2021, 2020, and 2019

Cumulative paid losses and loss adjustment expenses, net of reinsurance (in thousands)

Accident Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

21 unchanged sentences

2019 262,306 240,773 339,771

2020 19,133 10,899

Total $ 1,300,339

8 unchanged sentences

2019 44,225 107,182 192,982

2020 628 2,854

Total $ 975,030

Total outstanding losses and loss adjustment expenses, net of reinsurance before Rasier LPT $ 325,309

Reinsurance recoverable for Rasier LPT $ 256,452

Total outstanding losses and loss adjustment expenses, net of reinsurance $ 68,857

41 unchanged sentences

2019 18,832 19,020 19,991

2020 25,433 28,131

Total $ 160,022

12 unchanged sentences

2019 4,358 5,125 9,958

2020 5,375 15,678

Total $ 87,250

15 unchanged sentences

Total $ 1,312,871

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2021, 2020, and 2019

Cumulative paid losses and loss adjustment expenses, net of reinsurance (in thousands)

12 unchanged sentences

Total outstanding losses and loss adjustment expenses, net of reinsurance $ 424,994

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2020, 2019, and 2018

The reconciliation of the net incurred and paid claims development tables to the reserve for losses and loss adjustment expenses in the consolidated balance sheet at December 31, 2021 is as follows (in thousands):

7 unchanged sentences

Gross reserve for losses and loss adjustment expenses $ 2,748,473

The following is unaudited supplementary information about average annual percentage payouts of incurred claims by age, net of reinsurance, for the Excess and Surplus Lines segment and the Specialty Admitted Insurance segments as of December 31, 2020.

The following is unaudited supplementary information about average annual percentage payouts of incurred claims by age, net of reinsurance, as of December 31, 2021.

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

13 unchanged sentences

In addition, multiple claims are often aggregated by the ceding company before being reported to the Company.

We do not use claim frequency information in the Casualty Reinsurance segment in the determination of loss reserves or for other internal purposes.

Based on these considerations, the Company does not believe providing claims frequency information is practicable as it relates to the Casualty Reinsurance segment.

The table below provides information on IBNR liabilities and claims frequency for:

(1) the Excess and Surplus Lines segment split between commercial auto and all non commercial auto, and (2) the Specialty Admitted Insurance segment split between individual risk workers’ compensation and fronting and programs:

We do not use claim frequency information in the Casualty Reinsurance segment in the determination of loss

James River Group Holdings, LTD.

2 unchanged sentences

Years ended December 31, 2021, 2020, and 2019

reserves or for other internal purposes.

Based on these considerations, the Company does not believe providing claims frequency information is practicable as it relates to the Casualty Reinsurance segment.

The table below provides information on IBNR liabilities and claims frequency for:

Excess and Surplus Lines — Excluding Commercial Auto

26 unchanged sentences

2020 10,899 3,442 594

2021 21,154 14,481 699

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2021, 2020, and 2019

Specialty Admitted - Individual Risk Workers’ Compensation

13 unchanged sentences

2021 14,519 2,845 1,238

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2020, 2019, and 2018

Specialty Admitted — Fronting and Programs

11 unchanged sentences

2020 28,131 5,843 8,680

2021 39,999 22,373 8,253

The table below provides information on IBNR liabilities for the Casualty Reinsurance segment:

14 unchanged sentences

In addition, management does not believe that the Company is exposed to environmental liability claims other than those which it has specifically underwritten and priced as an environmental exposure.

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2021, 2020, and 2019

The Company remains liable to policyholders if its reinsurers are unable to meet their contractual obligations under applicable reinsurance agreements.

6 unchanged sentences

All material reinsurance recoverables are from companies with A.M.

Best Company ratings of “A-” (Excellent) or better, or are collateralized with letters of credit or by a trust agreement.

Best Company ratings of “A-” (Excellent) or better, or are collateralized by the reinsurer for our benefit through letters of credit or trust agreements, or represent recoverables from a state residual market for automobile insurance.

At December 31, 2021, reinsurance recoverables on unpaid losses from the Company’s three largest reinsurers were $ 325.0 million, $ 256.5 million, and $ 125.4 million, representing 52.4 % of the total balance.

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2020, 2019, and 2018

At December 31, 2021, prepaid reinsurance premiums ceded to three reinsurers totaled $ 80.7 million, $ 43.2 million, and $ 19.8 million, representing 49.3 % of the total balance.

23 unchanged sentences

At December 31, 2021, the Company had $ 34.3 million of letters of credit issued under the secured facility.

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2021, 2020, and 2019

• A $ 212.5 million unsecured revolving facility to meet the working capital needs of the Company.

All unpaid principal on the revolver is due at maturity.

Interest accrues quarterly and is payable in arrears at LIBOR plus a margin which at December 31, 2020 was 1.500 %, which is subject to change according to terms in the credit agreement.

At December 31, 2020 and 2019, the Company had a drawn balance of $ 185.8 million and $ 133.3 million, respectively, outstanding on the unsecured revolver.

The $ 52.5 million of additional borrowings in 2020 were used to support our growth and for general corporate purposes.

Interest accrues quarterly and is payable in arrears at LIBOR plus a margin ( 1.625 % at December 31, 2021), which is subject to change according to terms in the credit agreement.

At December 31, 2021 and 2020, the Company had a drawn balance of $ 185.8 million outstanding on the unsecured revolver.

In 2020, we borrowed an additional $ 52.5 million to support our growth and for general corporate purposes.

James River Group Holdings, Ltd.

5 unchanged sentences

On August 2, 2017, the Company and its wholly-owned subsidiary, JRG Re, together as borrowers, entered into a credit agreement (the "2017 Facility") that provides the Company with a revolving line of credit of up to $ 100.0 million, which may be used for loans and letters of credit made or issued, at the borrowers' option, on a secured or unsecured basis.

The loans and

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2020, 2019, and 2018

letters of credit made or issued under the revolving line of credit may be used to finance the Borrowers’ general corporate purposes.

The loans and letters of credit made or issued under the revolving line of credit may be used to finance the Borrowers’ general corporate purposes.

On November 8, 2019, the Company entered into a First Amendment to Credit Agreement which, among other things, lowered the applicable interest rate and modified certain negative covenants to be less restrictive.

Obligations under the 2017 Facility carry a variable rate of interest subject to terms in the credit agreement and will mature 30 days after notice of termination from the lender.

Obligations under the 2017 Facility carry a variable rate of interest subject to terms in the credit agreement (LIBOR plus a margin of 1.625 % at December 31, 2021) and will mature 30 days after notice of termination from the lender.

Interest accrues quarterly and is payable in arrears at variable rates which are subject to change according to terms in the credit agreement.

14 unchanged sentences

holding company's common stock or its subsidiaries' capital stock or to issue shares of its subsidiaries' capital stock.

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2021, 2020, and 2019

Interest payable is included in “accrued expenses” in the accompanying consolidated balance sheets.

8 unchanged sentences

The Company purchased all of the outstanding common stock of the Trusts, and the investment in the Trusts is included in “other assets” in the accompanying consolidated balance sheets.

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2020, 2019, and 2018

The following table summarizes the nature and terms of the Junior Subordinated Debt and Trust Preferred Securities:

The following table summarizes the nature and terms of the junior subordinated debt and trust preferred securities outstanding at December 31, 2021 (including the Company’s repurchases of a portion of these trust preferred securities):

Trust I James River

17 unchanged sentences

Trust common stock $ 217 $ 464 $ 619 $ 1,670 $ 928

Interest rate, per annum Three-Month LIBOR plus 4.0% Three-Month LIBOR plus 3.4% Three-Month LIBOR plus 3.0% Three-Month LIBOR plus 3.1% Three-Month LIBOR plus 4.0%

Interest rate, per annum Three-Month LIBOR plus 4.0 %

Three-Month LIBOR plus 3.4 %

Three-Month LIBOR plus 3.0 %

Three-Month LIBOR plus 3.1 %

Three-Month LIBOR plus 4.0 %

All of the Junior Subordinated Debt is currently redeemable at 100.0 % of the unpaid principal amount at the Company’s option.

5 unchanged sentences

Capital Stock

The Company’s authorized share capital consists of 200,000,000 common shares, par value $ 0.0002 per share ( 30,649,261 shares issued and outstanding at December 31, 2020) and 20,000,000 undesignated preferred shares, par value $ 0.00125 per share ( no shares issued or outstanding).

Share activity in 2019 and 2020 includes issuances from stock option exercises and RSU vesting, increasing the number of common shares outstanding from 29,988,460 at December 31, 2018 to 30,424,391 at December 31, 2019 and 30,649,261 at December 31, 2020.

The Company has 4,321,150 common shares reserved for future issuance upon exercise or vesting of equity awards, as applicable.

The Company’s authorized share capital consists of 200,000,000 common shares, par value $ 0.0002 per share ( 37,373,066 shares issued and outstanding at December 31, 2021) and 20,000,000 undesignated preferred shares, par value $ 0.00125 per share ( no shares issued or outstanding at December 31, 2021).

On May 10, 2021, the Company closed the offering and public sale (the “Offering”) of an aggregate of 6,497,500 of the Company’s common shares at a public offering price of $ 31.00 per share.

The Company received net proceeds (before expenses) from the Offering of $ 192.1 million, which were used for general corporate purposes.

The common shares were offered and sold pursuant to an underwriting agreement entered into by the Company, Barclays Capital, Inc., and Keefe, Bruyette & Woods, Inc., as representatives of the several underwriters named therein.

James River Group Holdings, LTD.

2 unchanged sentences

Years ended December 31, 2021, 2020, and 2019

The Company also issued 226,305 common shares in 2021 related to outstanding equity incentive plan awards.

Of the new shares issued, 93,446 were related to employee stock option exercises and 132,859 were related to vesting of restricted share units (“RSUs”).

As a result of the Offering and the issuances related to equity incentive plan awards, the total common shares outstanding increased from 30,649,261 at December 31, 2020 to 37,373,066 at December 31, 2021.

In 2020, the Company issued 224,870 shares related to outstanding equity incentive plan awards, increasing the number of common shares outstanding from 30,424,391 at December 31, 2019 to 30,649,261 at December 31, 2020.

Of the new shares issued, 113,346 were related to employee stock option exercises and 111,524 were related to vesting of restricted share units (“RSUs”).

The Company has 4,321,150 common shares reserved for future issuance upon exercise or vesting of equity awards, as applicable.

The Board of Directors declared the following cash dividends in 2021, 2020, and 2019:

10 unchanged sentences

July 28, 2020 $ 0.30 September 14, 2020 September 30, 2020 $ 9,292

November 5, 2019 $ 0.30 December 16, 2019 December 31, 2019 $ 9,229

October 27, 2020 $ 0.30 December 14, 2020 December 31, 2020 $ 9,305

Total $ 1.20 $ 37,137

February 20, 2019 $ 0.30 March 11, 2019 March 29, 2019 $ 9,146

May 1, 2018 $ 0.30 June 11, 2018 June 29, 2018 $ 9,066

August 1, 2018 $ 0.30 September 10, 2018 September 28, 2018 $ 9,081

April 30, 2019 $ 0.30 June 10, 2019 June 28, 2019 $ 9,205

July 30, 2019 $ 0.30 September 16, 2019 September 30, 2019 $ 9,231

November 5, 2019 $ 0.30 December 16, 2019 December 31, 2019 $ 9,229

9 unchanged sentences

The maximum number of shares available for issuance under the 2014 LTIP is 4,171,150 , and at December 31, 2021, 1,326,456 shares are available for grant.

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2021, 2020, and 2019

Non-employee directors of the Company are eligible to receive non-qualified stock options, share appreciation rights, performance shares, restricted shares, RSUs, and other awards under the 2014 Director Plan.

4 unchanged sentences

Generally, awards issued under the 2014 LTIP and 2014 Director Plan vest immediately in the event that an award recipient is terminated without Cause (as defined), and in the case of the 2014 LTIP for Good Reason (as defined), at any time following a Change in Control (as defined in the applicable plans).

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2020, 2019, and 2018

The following table summarizes the option activity:

10 unchanged sentences

Exercisable, end of year 287,974 $ 35.26 463,324 $ 32.25 590,340 $ 29.34

All of the outstanding options vest over three years and have a contractual life of seven years from the original date of grant.

All of the outstanding options vested over three years and have a contractual life of seven years from the original date of grant.

All of the outstanding options have an exercise price equal to the fair value of the underlying shares at the date of grant.

1 unchanged sentence

The total intrinsic value of options exercised during 2021, 2020 and 2019 was $ 1.3 million, $ 3.8 million and $ 8.2 million, respectively.

The aggregate intrinsic value of options outstanding at December 31, 2020, 2019 and 2018 was $ 7.8 million, $ 7.1 million and $ 9.4 million, respectively.

The aggregate intrinsic value of options exercisable at December 31, 2020, 2019 and 2018 was $ 7.8 million, $ 7.1 million and $ 8.5 million, respectively.

The aggregate intrinsic value of options outstanding at December 31, 2021, 2020 and 2019 was $ 0 , $ 7.8 million and $ 7.1 million, respectively.

The aggregate intrinsic value of options exercisable at December 31, 2021, 2020 and 2019 was $ 0 , $ 7.8 million and $ 7.1 million, respectively.

The fair value used for calculating intrinsic values was $ 28.81 , $ 49.15 and $ 41.21 at December 31, 2021, 2020 and 2019, respectively.

2 unchanged sentences

The value of the options granted was estimated at the date of grant using the Black-Scholes-Merton option pricing model.

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2021, 2020, and 2019

The following table summarizes RSU activity:

9 unchanged sentences

Unvested, end of year 292,135 $ 45.89 399,856 $ 43.59 340,368 $ 41.50

The vesting period of RSUs granted to employees range from one to five years and vest ratably over the respective vesting period, with the majority vesting in three years .

The vesting period of RSUs granted to employees have ranged from one to five years and vest ratably over the respective vesting period, with the majority vesting in three years .

All RSUs granted to date to non-employee directors had a one year vesting period.

3 unchanged sentences

The fair value of the RSUs granted is based on the market price of the underlying shares.

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2020, 2019, and 2018

Compensation Expense

23 unchanged sentences

income tax authorities for the tax years ending before January 1, 2017.

Financial results for 2018 reflect the changes in loss reserve discounting required by the 2017 Tax Act.

During 2018, the IRS published factors that allowed the Company to adjust its current and deferred tax liabilities based on the provisions of the Tax Act.

1 unchanged sentence

The initial impact of the proposed regulations in 2018 was an increase to our deferred tax asset for the additional discount as of December 31, 2017 of $ 8.8 million offset by an increase to our deferred tax liability of $ 8.8 million representing the 8 year transition provision required by the Tax Act.

During 2018, $ 1.1 million of this transition provision was recognized in our current provision and adjusted out of our deferred tax liability.

During 2018, $ 1.1 million of this transition provision was recognized in our current

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2021, 2020, and 2019

provision and adjusted out of our deferred tax liability.

The regulations were finalized in 2019, and the remaining reserve adjustment at December 31, 2019 based on these final regulations is $ 5.7 million to be recognized over the next six years at $ 950,000 per year.

There were other provisions of the Tax Act for which the Company finalized its estimates during 2018, and the impact of these was immaterial.

The expected income tax provision computed from pre-tax income at the weighted-average tax rate has been calculated as the sum of the pre-tax income in each jurisdiction multiplied by that jurisdiction’s applicable Federal statutory tax rate.

Federal statutory tax rates of 0% and 21% have been used in 2021, 2020 and 2019 for Bermuda and the U.S., respectively.

income before Federal income taxes was $ 25.1 million, $ 70.7 million, and $ 37.5 million for the years ending December 31, 2020, 2019, and 2018, respectively.

(loss) income before Federal income taxes was $( 89.3 ) million, $ 25.1 million, and $ 70.7 million for the years ending December 31, 2021, 2020, and 2019, respectively.

The Tax Act base-erosion and anti-abuse tax (“BEAT”) provisions impose a minimum tax on applicable taxpayers that make certain payments to related foreign persons.

7 unchanged sentences

income using the weighted-average tax rate as well as a reconciliation to total tax expense is as follows:

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2020, 2019, and 2018

Year Ended December 31,

1 unchanged sentence

(in thousands)

Federal income tax expense at applicable statutory rates $ 5,272 $ 14,843 $ 7,875

Federal income tax (benefit) expense at applicable statutory rates $ ( 18,750 ) $ 5,272 $ 14,843

Tax-exempt investment income ( 278 ) ( 260 ) ( 230 )

1 unchanged sentence

Excess tax benefits on share based compensation ( 208 ) ( 679 ) ( 1,099 )

Effect of tax rate reduction on deferred tax liability — — 220

Provision to return and amended tax returns ( 3,945 ) — —

Base Erosion and Anti-Abuse Tax — 2,843 —

Other 233 17 99

Federal income tax expense $ 6,910 $ 13,306 $ 7,094

state income tax expense (benefit) 203 222 ( 86 )

Total income tax expense $ 7,113 $ 13,528 $ 7,008

Federal income tax (benefit) expense $ ( 23,246 ) $ 6,910 $ 13,306

state income tax expense 11 203 222

Total income tax (benefit) expense $ ( 23,235 ) $ 7,113 $ 13,528

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2021, 2020, and 2019

The significant components of net deferred tax assets (liabilities) at the corporate income tax rate of 21% for the years ended December 31, 2021 and 2020 are summarized as follows:

5 unchanged sentences

Share based compensation 1,541 1,427

Allowance for doubtful accounts 2,130 1,188

Allowance for credit losses 2,516 2,130

Property and equipment 144 213

Net operating loss carryforward 15,221 —

Other 7,053 4,810

7 unchanged sentences

Total deferred tax liabilities 31,340 36,011

Net deferred tax (liabilities) assets $ ( 1,105 ) $ 664

Net deferred tax assets (liabilities) $ 26,430 $ ( 1,105 )

Deferred income taxes have not been accrued with respect to certain undistributed earnings of foreign subsidiaries.

4 unchanged sentences

unremitted earnings has been made.

The company is considered a mixed company for net operating loss carryforward rules.

A 20-year carryforward without an annual income limitation is applicable for insurance companies.

The carryforward period for non-insurance companies is unlimited but limited to 80% of the current year taxable income.

The Company had no reserve for future tax contingencies or liabilities (“unrecognized tax benefits”) at December 31, 2021 or 2020.

2 unchanged sentences

The rates of tax are established based on the nature of the risk, unless reduced by an applicable U.S.

For the years ended December 31, 2020, 2019, and 2018, the Company paid $ 468,000 , $ 586,000 , and $ 823,000 , respectively, of federal

For the years ended December 31, 2021, 2020, and 2019, the Company paid $ 338,000 , $ 468,000 , and $ 586,000 , respectively, of federal excise taxes on its intercompany reinsurance transactions.

The Company also paid excise taxes of $ 1.5 million, $ 1.2 million, and $ 1.5 million for the years ended December 31, 2021, 2020, and 2019, respectively, on written premiums assumed from third-party insurers with respect to risks located in the U.S.

These excise taxes are reflected as “other operating expenses” in the Company’s consolidated income statements.

James River Group Holdings, LTD.

2 unchanged sentences

Years ended December 31, 2021, 2020, and 2019

excise taxes on its intercompany reinsurance transactions.

The Company also paid excise taxes of $ 1.2 million, $ 1.5 million, and $ 2.1 million for the years ended December 31, 2020, 2019, and 2018, respectively, on written premiums assumed from third-party insurers with respect to risks located in the U.S.

These excise taxes are reflected as “other operating expenses” in the Company’s consolidated income statements.

Other Operating Expenses and Other Expenses

7 unchanged sentences

Total $ 164,692 $ 165,498 $ 170,908

Other expenses consist of the following:

Year Ended December 31,

2020 2019 2018

(in thousands)

Employee severance $ 1,967 $ 1,055 $ 1,386

Income on leased building the Company was previously deemed to own for accounting purposes

Legal and professional services related to secondary share offerings — — 337

Other 171 — —

Impairment of intangible asset — — 200

Total $ 2,138 $ 1,055 $ 1,300

Other expenses of $ 2.6 million for the year ended December 31, 2021 primarily consist of legal and other professional fees related to the Company’s May 2021 common share offering, certain legal and professional consulting fees related to various strategic initiatives, and employee severance costs.

Other expenses of $ 2.1 million and $ 1.1 million for the years ended December 31, 2020 and 2019, respectively, primarily consist of employee severance costs.

Employee Benefits

5 unchanged sentences

Commitments and Contingent Liabilities

The Company is involved in legal proceedings, including commercial matters and litigation regarding insurance claims arising in the ordinary course of its operations.

The Company believes that the ultimate resolution of these matters will not materially impact its financial position, cash flows, or results of operations.

The Company is involved in various legal proceedings, including commercial matters and litigation regarding insurance claims arising in the ordinary course of business as well as an alleged class action lawsuit.

In addition, the Company is involved from time to time in legal actions which seek extra-contractual damages, punitive damages or penalties, including claims alleging bad faith in the handling of insurance claims.

The Company believes that the outcome of such matters, individually and in the aggregate, is not reasonably likely to have a material adverse effect on its consolidated financial position, results of operations or cash flows.

On July 9, 2021 a purported class action lawsuit was filed in the U.S.

District Court, Eastern District of Virginia (the "Court") by Employees' Retirement Fund of the City of Fort Worth against James River Group Holdings, Ltd.

and certain of its present and former officers (together, "Defendants").

On September 22, 2021, the Court entered an order appointing Employees' Retirement Fund of the City of Fort Worth and the City of Miami General Employees' and Sanitation Employees' Retirement Trust as co-lead plaintiffs (together, "Plaintiffs").

Plaintiffs' consolidated amended complaint was filed on November 19, 2021 (the "Amended Complaint"), which asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of a putative class of persons and entities that purchased the Company's stock between February 22, 2019 and October 25, 2021.

The Amended Complaint alleges that Defendants failed to make appropriate disclosures concerning the adequacy of reserves for policies that covered Rasier LLC, a subsidiary of Uber Technologies, Inc., and seeks unspecified damages, costs, attorneys’ fees and such other relief as the court may deem proper.

The Defendants filed a motion to dismiss on January 18, 2022.

Plaintiffs' response to the motion to dismiss is due to be filed on March 4, 2022.

For a description of the potential future impacts of COVID-19 on the Company, see the “The global coronavirus outbreak could harm business and results of operations of the Company” risk factor in Part I—Item IA in this Annual Report.

The Company’s reinsurance subsidiary, JRG Re, entered into three letter of credit facilities with banks as security to third-party reinsureds on reinsurance assumed by JRG Re.

5 unchanged sentences

The total amount deposited in the trust accounts for the benefit of third-party reinsureds was $ 382.4 million at December 31, 2021.

The Company previously issued a set of insurance contracts to Rasier under which the Company pays losses and loss adjustment expenses on the contracts.

The Company has indemnity agreements with Rasier (non-insurance entities) and is contractually entitled to receive reimbursement for a significant portion of the losses and loss adjustment expenses paid on behalf of Rasier and other expenses incurred by the Company.

Rasier is required to collateralize all amounts currently due to the Company and to provide additional collateral sufficient to cover the amounts that may be recoverable under the indemnity

James River Group Holdings, LTD.

2 unchanged sentences

Years ended December 31, 2021, 2020, and 2019

agreements, including, among other things, case loss and loss adjustment expense reserves, IBNR loss and loss adjustment expense reserves, extra contractual obligations and excess of policy limits liabilities.

The collateral is provided through a collateral trust arrangement established in favor of the Company by a captive insurance company affiliate of Rasier.

As permitted under our indemnification agreements with Rasier and the associated trust agreement, we have withdrawn the collateral posted to the trust account.

At December 31, 2020, the Company held collateral funds of $ 859.9 million.

The funds withdrawn from the trust account, currently invested in short term U.S.

Treasury securities and included in restricted cash equivalents on the Company's consolidated balance sheet, will be used to reimburse the Company for the losses and loss adjustment expenses paid on behalf of Rasier and other related expenses incurred by the Company to the extent not paid as required under the indemnity agreements.

The Company has ongoing exposure to estimated losses and expenses on these contracts growing at a faster pace than growth in our collateral balances.

In addition, we have credit exposure if our estimates of future losses and loss adjustment expenses and other amounts recoverable, which are the basis for establishing collateral balances, are lower than actual amounts paid or payable.

Amounts Recoverable from an Indemnifying Party and Reinsurer on Legacy Commercial Auto Book

James River previously issued a set of commercial auto insurance contracts to Rasier (the “Rasier Commercial Auto Policies”) 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.

On September 27, 2021, James River entered into a loss portfolio transfer reinsurance agreement (the “LPT Agreement”) 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.

Under the terms of the LPT Agreement, effective as of July 1, 2021, James River ceded to Aleka approximately $ 345.1 million of commercial auto liabilities relating to Rasier Commercial Auto Policies written in the years 2013-2019, which amount constituted the reinsurance premium.

Each of Rasier and Aleka are required to post collateral under the Indemnity Agreements and the LPT Agreement, respectively:

• Pursuant to the Indemnity Agreements, Rasier is required to post collateral for the amounts that are recoverable or may be recoverable under the indemnity agreements, including, among other things, case loss and loss adjustment expense reserves, IBNR loss and loss adjustment expense reserves, extra contractual obligations and excess policy limits liabilities.

The collateral is provided through a collateral trust arrangement (the “Indemnity Trust”) in favor of James River by Aleka.

In connection with the execution of the LPT Agreement, James River returned $ 691.3 million to the Indemnity Trust, representing the remaining balance of the amount withdrawn in October 2019, as was permitted under the indemnification agreements with Rasier and the associated trust agreement.

At December 31, 2021, the balance in the Indemnity Trust was $ 584.6 million, and, together with the balance of the Loss Fund Trust (as defined below) attributable to the Indemnity Agreements as described below, the total balance of collateral securing Rasier’s obligations under the Indemnity Agreements was $ 653.7 million.

• Pursuant to the LPT Agreement, Aleka is required to post collateral equal to 102 % of James River's estimate of Aleka's obligations under the LPT Agreement, calculated in accordance with statutory accounting principles.

The collateral is provided through a collateral trust arrangement (the “LPT Trust”) established in favor of James River by Aleka.

At December 31, 2021, the balance in the LPT Trust was $ 251.7 million, and, together with the balance of the Loss Fund Trust (as defined below) attributable to the LPT Agreement as described below, the total balance of collateral securing Aleka’s obligations under the LPT Agreement was $ 279.9 million.

At December 31, 2021, the total reinsurance recoverables under the LPT Agreement was $ 272.3 million (including $ 256.5 million of unpaid recoverables and $ 15.9 million of paid recoverables).

In connection with the execution of the LPT Agreement, James River and Aleka entered into an administrative services agreement (the “Administrative Services Agreement”) with a third party claims administrator (the “Administrator”) pursuant to which the Administrator handles the claims on the Rasier Commercial Auto Policies for the remaining life of those claims.

The claims paid by the Administrator are reimbursable by James River, and pursuant to the Administrative Services Agreement, James River established a loss fund trust account for the benefit of the Administrator (the “Loss Fund Trust”) to collateralize its claims payment reimbursement obligations.

James River funds the Loss Fund Trust using funds withdrawn from the Indemnity Trust, funds withdrawn from the LPT Trust, and its own funds, in each case in an amount equal to the pro rata portion of the required Loss Fund Trust balance attributable to the Indemnity Agreements, the LPT Agreement and James River’s existing third party reinsurance agreements, respectively.

At December 31, 2021, the balance in the Loss Fund Trust was $ 102.0 million, including $ 69.2 million representing collateral supporting Rasier’s obligations under the Indemnity Agreements and $ 28.2 million representing collateral supporting Aleka’s obligations under the LPT Agreement.

Funds posted to the Loss Fund Trust are classified as restricted cash equivalents on the Company's balance sheet.

While the LPT Agreement 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 LPT Agreement if the estimated losses and expenses of the Rasier Commercial Auto Policies grow at a faster pace than the growth in our collateral balances.

In addition, we have credit exposure if our estimates of future losses and loss adjustment expenses and other amounts recoverable under the Indemnity Agreements and the LPT Agreement, which are the basis for establishing the collateral balances, are lower than actual amounts paid or payable.

The amount of our credit exposure in any of these instances could be material.

To mitigate these risks, we closely and frequently monitor our exposure compared to our collateral held, and we request additional collateral when our analysis indicates that we have uncollateralized exposure.

Other Comprehensive Income (Loss)

The following table summarizes the components of other comprehensive income (loss):

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2021, 2020, and 2019

Other Comprehensive (Loss) Income

The following table summarizes the components of other comprehensive (loss) income:

Year Ended December 31,

1 unchanged sentence

(in thousands)

Unrealized gains (losses) arising during the period, before U.S.

Unrealized (losses) gains arising during the period, before U.S.

income taxes $ ( 54,132 ) $ 58,704 $ 51,381

income taxes 6,189 ( 6,967 ) ( 3,510 )

Unrealized gains (losses) arising during the period, net of U.S.

Unrealized (losses) gains arising during the period, net of U.S.

income taxes ( 47,943 ) 51,737 47,871

Less reclassification adjustment:

Net realized investment gains (losses) 1,045 1,081 ( 554 )

Net realized investment gains 4,924 1,045 1,081

income taxes ( 946 ) ( 93 ) ( 152 )

Reclassification adjustment for investment gains (losses) realized in net income 952 929 ( 515 )

Other comprehensive income (loss) $ 50,785 $ 46,942 $ ( 22,203 )

In addition to the net realized investment gains (losses) of $ 1.0 million, $ 1.1 million, and $( 554,000 ) on available-for-sale fixed maturity securities for the years ended December 31, 2020, 2019, and 2018, the Company recognized net realized and unrealized investment gains (losses) in the respective years of $( 15.4 ) million, $( 10.1 ) million, and $ 1.1 million on its investments in bank loan participations and $( 1.7 ) million, $ 6.0 million, and $( 6.0 ) million on its investments in equity securities.

Reclassification adjustment for investment gains realized in net income 3,978 952 929

Other comprehensive (loss) income $ ( 51,921 ) $ 50,785 $ 46,942

In addition to the net realized investment gains of $ 4.9 million, $ 1.0 million, and $ 1.1 million on available-for-sale fixed maturity securities for the years ended December 31, 2021, 2020, and 2019, the Company recognized net realized and unrealized investment gains (losses) in the respective years of $ 5.8 million, $( 15.4 ) million, and $( 10.1 ) million on its investments in bank loan participations and $ 4.8 million, $( 1.7 ) million, and $ 6.0 million on its investments in equity securities.

Segment Information

8 unchanged sentences

Segment profit (loss) for each reportable segment is measured by underwriting profit (loss), which is generally defined as net earned premiums less losses and loss adjustment expenses and other operating expenses of the operating segments.

Gross fee income of the Excess and Surplus Lines segment and Specialty Admitted Insurance

Gross fee income of the Excess and Surplus Lines segment and Specialty Admitted Insurance segment is included in the respective segment’s underwriting (loss) profit.

Gross fee income of $ 4.5 million ($ 0.0 million from the Excess and Surplus Lines segment and $ 4.5 million from the Specialty Admitted Insurance segment), $ 3.4 million ($ 1.6 million from the Excess and Surplus Lines segment and $ 1.8 million from the Specialty Admitted Insurance segment) and $ 9.5 million ($ 9.1 million from the Excess and Surplus Lines segment and $ 421,000 from the Specialty Admitted Insurance segment) was included in other income and in underwriting (loss) profit for the years ended December 31, 2021, 2020 and 2019, respectively.

Segment results are reported prior to the effects of the intercompany reinsurance agreements between the Company’s insurance and reinsurance subsidiaries.

All gross written premiums and net earned premiums for all periods presented were generated from policies issued to U.S.

based insureds.

James River Group Holdings, LTD.

2 unchanged sentences

Years ended December 31, 2021, 2020, and 2019

segment is included in the respective segment’s underwriting profit (loss).

Gross fee income of $ 3.4 million ($ 1.6 million from the Excess and Surplus Lines segment and $ 1.8 million from the Specialty Admitted Insurance segment), $ 9.5 million ($ 9.1 million from the Excess and Surplus Lines segment and $ 421,000 from the Specialty Admitted Insurance segment) and $ 13.9 million (all from the Excess and Surplus Lines segment) was included in other income and in underwriting profit for the years ended December 31, 2020, 2019 and 2018, respectively.

Segment results are reported prior to the effects of the intercompany reinsurance agreements between the Company’s insurance subsidiaries.

All gross written premiums and net earned premiums for all periods presented were generated from policies issued to U.S.

based insureds.

Surplus Lines Specialty

9 unchanged sentences

Interest expense — — — 8,922 8,922

Underwriting profit (loss) of operating segments

9,752 4,185 ( 18,364 ) — ( 4,427 )

Underwriting (loss) profit of operating segments ( 121,478 ) 9,667 ( 117,526 ) — ( 229,337 )

Segment goodwill 181,831 — — — 181,831

17 unchanged sentences

Interest expense — — — 10,596 10,596

Underwriting profit of operating segments 42,834 6,972 5,103 — 54,909

Underwriting profit (loss) of operating segments 19,157 5,913 ( 7,161 ) — 17,909

Segment goodwill 181,831 — — — 181,831

14 unchanged sentences

Other operating expenses of the Corporate and Other segment ( 27,609 ) ( 29,418 ) ( 27,664 )

Underwriting (loss) profit ( 33,845 ) ( 9,755 ) 28,006

Underwriting loss ( 256,946 ) ( 33,845 ) ( 9,755 )

Net investment income 56,865 73,368 75,652

Net realized and unrealized losses on investments ( 16,030 ) ( 2,919 ) ( 5,479 )

Net realized and unrealized gains (losses) on investments 15,564 ( 16,030 ) ( 2,919 )

Other income 353 1,153 1,137

2 unchanged sentences

Amortization of intangible assets ( 363 ) ( 538 ) ( 597 )

Income before income taxes $ 11,937 $ 51,867 $ 70,838

(Loss) income before income taxes $ ( 196,034 ) $ 11,937 $ 51,867

The Company currently has 15 underwriting divisions, including 13 in the Excess and Surplus Lines segment, one in the Specialty Admitted Insurance segment, and one in the Casualty Reinsurance segment.

7 unchanged sentences

Manufacturers and Contractors 139,720 122,880 105,096

Energy 51,109 45,442 33,942

Excess Property 47,241 37,332 31,606

Energy 46,216 51,109 45,442

Life Sciences 35,935 35,163 24,462

85 unchanged sentences

99,384 464 — 99,848

Redeemable preferred stock — 2,034 — 2,034

Total fixed maturity securities, available-for-sale $ 99,384 $ 1,684,258 $ — $ 1,783,642

3 unchanged sentences

Total equity securities $ 15,793 $ 72,510 $ 672 $ 88,975

Bank loan participations $ — $ 147,296 $ 308 $ 147,604

Short-term investments $ — $ 130,289 $ — $ 130,289

12 unchanged sentences

Purchases — 1,417 —

Maturities and calls ( 17 ) ( 452 )

Sales ( 426 ) — —

Maturities, calls and paydowns ( 379 ) ( 17 ) —

Amortization of discount — 2 —

3 unchanged sentences

Ending balance $ 102 $ 980 $ 43

The Company held one available-for-sale fixed maturity security and one equity security at December 31, 2018 for which the fair value was determined using significant unobservable inputs (Level 3).

A market approach using prices in trades of comparable securities was utilized to determine a fair value of $ 4.4 million for the securities at December 31, 2018.

During 2019, the Company was able to obtain a quoted price from a pricing vendor for the available-for-sale fixed maturity security, and the security was transferred to Level 2.

The Company held one equity security at December 31, 2021 for which the fair value was determined using significant unobservable inputs (Level 3).

A market approach using prices in trades of comparable securities was utilized to determine a fair value for the equity security of $ 43,000 at December 31, 2019.

The fair value of $ 102,000 for the equity security was based on expected proceeds from its sale.

During 2021, one equity security was transferred from Level 2 to Level 3 as the security was no longer actively traded.

This security was exchanged for an equity security that is publicly traded and it was transferred from Level 3 to Level 1.

The Company held one bank loan participation and two equity securities at December 31, 2020 and one equity security at December 31, 2019 for which the fair value was determined using significant unobservable inputs (Level 3).

A market approach using prices in trades of comparable securities was utilized to determine a fair value of $ 980,000 at December 31, 2020 and $ 43,000 at December 31, 2019.

During 2019, one equity security was transferred from Level 1 to Level 3 as the security was no longer actively traded.

The Company was subsequently able to obtain a quoted price from a pricing vendor for the equity security and it was transferred from Level 3 to Level 2.

At December 31, 2020, the Company held one bank loan participation and two equity securities for which the fair value was determined using significant unobservable inputs (Level 3).

A market approach using prices in trades of comparable securities was utilized to determine a fair value of $ 980,000 .

During 2020, the Company was able to obtain a quoted price from a vendor for two bank loan participations and one equity security and transferred them to Level 2.

3 unchanged sentences

The Company recognizes transfers between levels at the beginning of the reporting period.

In connection with the adoption of ASU 2016-13, the Company elected the fair value option in accounting for bank loan participations effective January 1, 2020.

Prior to the election, bank loan participations were classified as held-for-investment and carried at amortized cost net of any allowance for credit losses.

Prior to January 1, 2020, the Company measured certain bank loan participations at fair value on a non-recurring basis as part of the Company's impairment evaluation when loans were determined by management to be impaired.

Bank loan participations held-for-investment that were determined to be impaired were written down to their fair value at December 31, 2019 as shown below:

Fair Value Measurements Using

Quoted Prices

Identical Assets

Level 1 Significant

Level 2 Significant

Level 3 Total

(in thousands)

December 31, 2019

Bank loan participations held-for-investment $ — $ — $ 6,949 $ 6,949

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2020, 2019, and 2018

In the determination of the fair value for bank loan participations and certain high yield bonds, the Company’s investment manager endeavors to obtain data from multiple external pricing sources.

6 unchanged sentences

There were no investments for which external sources were unavailable to determine fair value as of December 31, 2021 and 2020.

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2021, 2020, and 2019

The carrying values and fair values of financial instruments are summarized below:

17 unchanged sentences

In addition, state regulators may permit statutory accounting practices that differ from prescribed practices.

Statutory accounting practices prescribed or permitted by regulatory authorities for the Company’s

Statutory accounting practices prescribed or permitted by regulatory authorities for the Company’s insurance subsidiaries differ from U.S.

The principal differences between SAP and GAAP as they relate to the financial statements of the Company’s insurance subsidiaries are (a) policy acquisition costs are expensed as incurred under SAP, whereas they are deferred and amortized under GAAP, (b) certain assets are not admitted for purposes of determining surplus under SAP, (c) the classification and carrying amounts of investments in certain securities are different under SAP and GAAP, and (d) the criteria for providing asset valuation allowances and the methodologies used to determine the amount thereof are different under SAP and GAAP.

James River Group Holdings, LTD.

2 unchanged sentences

Years ended December 31, 2021, 2020, and 2019

insurance subsidiaries differ from U.S.

Combined net income, statutory capital and surplus and minimum required statutory capital and surplus, as determined in accordance with statutory accounting practices, for the U.S.

14 unchanged sentences

$ 615.2 million).

The insurers had combined statutory net income of $ 20.8 million for 2020, $ 53.2 million for 2019, and $ 86.5 million for 2018.

The insurers had combined statutory net (loss) income of $( 141.5 ) million for 2021, $ 20.8 million for 2020, and $ 53.2 million for 2019.

The combined ECR for the year ended December 31, 2020 was $ 419.7 million.

18 unchanged sentences

subsidiaries have been and will be indefinitely reinvested in U.S.

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2020, 2019, and 2018

The Bermuda Insurance Act of 1978 prohibits an insurer from declaring or paying a dividend if it is in breach of its minimum solvency margin, its enhanced capital requirement, or its minimum liquidity ratio, or if the declaration or payment of such dividend would cause such a breach.

2 unchanged sentences

However, this dividend amount is subject to annual enhanced solvency requirement calculations.

As of December 31, 2020, JRG Holdings had consolidated retained earnings of $ 49.2 million, all of which was available for the payment of dividends to shareholders.

James River Group Holdings, LTD.

and Subsidiaries

Notes to Consolidated Financial Statements

Years ended December 31, 2021, 2020, and 2019

Other Related Party Transactions

2 unchanged sentences

Operating costs under the lease were $ 2.1 million, $ 1.9 million, and $ 2.1 million for the years ended December 31, 2021, 2020, and 2019, respectively.

The Chief Executive Officer of the Company previously owned a plane that the Company periodically leased.

Total fees paid by the Company for the use of this plane were $ 123,000 in 2018 ( no ne in 2019 or 2020).

Upon retiring effective July 31, 2021, the Company’s former President and Chief Operating Officer entered into a consulting agreement with the Company to provide consulting services as requested by the Company’s Chief Executive Officer during the period August 1, 2021 through December 31, 2021.

The Company incurred expenses of $ 146,000 in 2021 as compensation for rendering these consulting services.

Subsequent Events

1 unchanged sentence

The dividend is payable on March 31, 2022 to shareholders of record on March 14, 2022 .

On February 17, 2021, the Board of Directors granted awards under the 2014 LTIP and the 2014 Director Plan to the Company’s employees and directors.

RSUs for 138,936 shares were awarded with a fair value on the date of grant of $ 50.24 per share.

The RSUs vest over one to three year periods, depending on the award.

On January 14, 2021, the Company's Corporate and Other and Excess and Surplus Lines segments invested $ 5.0 million and $ 4.0 million, respectively, in notes receivable for renewable energy projects.

The notes, issued by an entity for which two of our recent former directors serve as officers, pay interest at 12 % per annum and mature in 2025 .

On February 21, 2022, the Board of Directors approved awards under the 2014 LTIP and the 2014 Director Plan to the Company’s employees and directors with an aggregate fair value of $ 11.0 million and a grant date of March 2, 2022.

On February 23, 2022, one of the Company’s primary operating subsidiaries, JRG Reinsurance Company Ltd., entered into a loss portfolio transfer retrocession agreement (the “Retrocession Agreement”) with Fortitude Reinsurance Company Ltd.

(“FRL”) under which FRL will reinsure the majority of the reserves in the Company’s Casualty Reinsurance segment.

Under the terms of the transaction, at closing, JRG Re will (a) cede to FRL all existing and future claims for losses arising under certain casualty reinsurance agreements with underlying insurance companies with treaty inception dates ranging from 2011 to 2020 (the “Subject Business”), in each case net of third-party reinsurance and other recoveries, up to an aggregate limit of $ 400.0 million;

(b) continue to manage and retain the benefit of other third-party reinsurance on the Subject Business;

(c) pay FRL a reinsurance premium of $ 335.0 million, $ 310.0 million of which JRG Re will credit to a notional funds withheld account (the “Funds Withheld Account”) and $ 25.0 million of which JRG Re will pay in cash to FRL;

and (d) pay FRL a 2 % per annum crediting rate on the Funds Withheld Account balance on a quarterly basis.

The total premium, initial Funds Withheld Account credit, and aggregate limit will be adjusted for claims paid from October 1, 2021 to the closing date.

An after-tax loss of $ 6.8 million will be recognized as adverse loss and loss adjustment reserve development in the Casualty Reinsurance segment associated with the Retrocession Agreement during the first quarter of 2022.

The Retrocession Agreement will close upon receipt of required regulatory approvals by FRL and satisfaction of other customary closing conditions.

On February 24, 2022, we entered into an Investment Agreement with GPC Partners Investments (Thames) LP, an affiliate of Gallatin Point Capital LLC, relating to the issuance and sale of 150,000 7 % Series A Perpetual Cumulative Convertible Preferred Shares, par value $ 0.00125 per share, for an aggregate purchase price of $ 150.0 million, or $ 1,000 per share, in a private placement.

The closing of the transaction is expected to occur on March 1, 2022.

In connection with the offering, the Company's Board of Directors approved the appointment of Matthew Botein, a co-founder of Gallatin Point Capital LLC, to serve as a member of the Board, effective following receipt of any necessary regulatory approvals.

Botein will have Board observer status until applicable regulatory approvals are obtained.

JAMES RIVER GROUP HOLDINGS, LTD.

43 unchanged sentences

Additional paid-in capital 862,040 664,476

Retained earnings 49,227 89,586

Retained (deficit) earnings ( 166,663 ) 49,227

Accumulated other comprehensive income 29,978 81,899

5 unchanged sentences

Condensed Financial Information of Registrant

Statements of Income and Comprehensive Income (Parent Company)

Statements of (Loss) Income and Comprehensive (Loss) Income (Parent Company)

Year Ended December 31,

8 unchanged sentences

Loss before equity in net income of subsidiaries ( 17,594 ) ( 21,149 ) ( 19,253 )

Equity in net income of subsidiaries 25,973 57,592 82,999

Net income $ 4,824 $ 38,339 $ 63,830

Other comprehensive income (loss):

Equity in other comprehensive earnings (losses) of subsidiaries 50,785 46,942 ( 22,203 )

Total comprehensive income $ 55,609 $ 85,281 $ 41,627

Equity in net (loss) income of subsidiaries ( 155,205 ) 25,973 57,592

Net (loss) income $ ( 172,799 ) $ 4,824 $ 38,339

Other comprehensive (loss) income:

Equity in other comprehensive (losses) earnings of subsidiaries ( 51,921 ) 50,785 46,942

Total comprehensive (loss) income $ ( 224,720 ) $ 55,609 $ 85,281

See accompanying notes.

7 unchanged sentences

Operating activities

Net income $ 4,824 $ 38,339 $ 63,830

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Net (loss) income $ ( 172,799 ) $ 4,824 $ 38,339

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:

Provision for depreciation and amortization 216 216 182

2 unchanged sentences

Changes in operating assets and liabilities ( 2,364 ) 6,433 ( 2,782 )

Net cash (used in) provided by operating activities ( 6,875 ) ( 6,675 ) 70,581

Net cash provided by (used in) operating activities 49,915 ( 6,875 ) ( 6,675 )

Investing activities

8 unchanged sentences

Debt issue costs paid — — ( 711 )

Issuances of common shares - public offering 192,107 — —

Issuances of common shares under equity incentive plans 1,877 2,580 8,286

Common share repurchases ( 3,077 ) ( 3,604 ) ( 2,899 )

Net cash provided by (used in) financing activities 5,925 7,956 ( 73,190 )

Net cash (used in) provided by financing activities ( 50,329 ) 5,925 7,956

Change in cash and cash equivalents ( 414 ) ( 950 ) 1,281