James River Group Holdings, Inc. 10-K

Item 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer ("CFO"), as appropriate, to allow timely decisions regarding required disclosure. In connection with the preparation of this Annual Report on Form 10-K, our management carried out an evaluation, under the supervision and with the participation of our CEO and CFO, as of December 31, 2023, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2023. Remediated Material Weakness As previously disclosed, the Company became aware that the unaudited consolidated financial statements for the six months ended June 30, 2023 contained material misstatements related to unrecorded reinstatement premium as more fully described in Note 1 to the condensed consolidated financial statements of the 10-Q/A filed with the SEC on November 14, 2023. Management of the Company concluded that because the controls to evaluate the accounting and disclosure of the reinstatement premium did not operate effectively, and resulted in the failure to detect the misstatement, the deficiencies were a material weakness in the Company's internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Remedial Actions Implementation To remediate the material weakness in the Company’s internal control over financial reporting, during the fourth quarter of fiscal year 2023, the Company implemented a remediation plan that included: (i) additional review procedures within our 105 TABLE OF CONTENTS accounting department, (ii) additional training of accounting personnel and (iii) enhancing our existing process and internal control documentation and financial statement preparation process, specifically including updates to accounting policies for reinstatement premium, to ensure completion of financial reporting and proper accounting in accordance with U.S. GAAP. The implementation of these procedures and controls have remediated the material weakness as of December 31, 2023. Management’s Annual Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that: pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. 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. Management has conducted an assessment, including testing, of the effectiveness of our internal control over financial reporting as of December 31, 2023. In making its assessment of internal control over financial reporting, management used the criteria in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, the Company’s management has concluded that, as of December 31, 2023, the Company’s internal control over financial reporting was effective. Ernst & Young LLP, the independent registered public accounting firm that audited the Consolidated Financial Statements of the Company included in this Annual Report, has audited the effectiveness of internal control over financial reporting as of December 31, 2023. Their attestation report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, is included with our financial statements. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our quarter ended December 31, 2023, except for the implementation of the remediation steps described above, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The effectiveness of any system of controls and procedures is subject to certain limitations, and, as a result, there can be no assurance that our controls and procedures will detect all errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be attained. Item 9B. OTHER INFORMATION None. Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 106 TABLE OF CONTENTS PART III Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by Item 10 may be incorporated by reference to the definitive James River Group Holdings, Ltd. Proxy Statement, or alternatively, disclosed in an amendment to this Annual Report on Form 10-K, in either case to be filed with the SEC not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. Item 11. EXECUTIVE COMPENSATION The information required by Item 11 may be incorporated by reference to the definitive James River Group Holdings, Ltd. Proxy Statement, or alternatively, disclosed in an amendment to this Annual Report on Form 10-K, in either case to be filed with the SEC not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by Item 12 may be incorporated by reference to the definitive James River Group Holdings, Ltd. Proxy Statement, or alternatively, disclosed in an amendment to this Annual Report on Form 10-K, in either case to be filed with the SEC not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by Item 13 may be incorporated by reference to the definitive James River Group Holdings, Ltd. Proxy Statement, or alternatively, disclosed in an amendment to this Annual Report on Form 10-K, in either case to be filed with the SEC not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by Item 14 may be incorporated by reference to the definitive James River Group Holdings, Ltd. Proxy Statement, or alternatively, disclosed in an amendment to this Annual Report on Form 10-K, in either case to be filed with the SEC not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. PART IV Item 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES (a) (1) and (2) Financial Statements and Financial Statement Schedules. See “Index to Financial Statements and Schedules” on Page F-1. 107 TABLE OF CONTENTS (3) Exhibits Exhibit Number Description 2.1 Stock Purchase Agreement dated November 8, 2023 by and among James River Group Holdings, Ltd. and Fleming Intermediate Holdings LLC (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed on November 9, 2023, Commission File No. 001-36777) + 3.1 Certificate of Incorporation of James River Group Holdings, Ltd. (incorporated by reference to Exhibit 3.1 of the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 7, 2014) 3.2 Certificate of Incorporation on Change of Name (incorporated by reference to Exhibit 3.2 of the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 7, 2014) 3.3 Memorandum of Association of James River Group Holdings, Ltd. (incorporated by reference to Exhibit 3.3 of the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 7, 2014) 3.4 Certificate of Deposit of Memorandum of Increase of Share Capital, dated December 24, 2007 (incorporated by reference to Exhibit 3.4 of the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 7, 2014) 3.5 Certificate of Deposit of Memorandum of Increase of Share Capital, dated October 7, 2009 (incorporated by reference to Exhibit 3.5 of the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 7, 2014) 3.6 Fourth Amended and Restated Bye-Laws of James River Group Holdings, Ltd. (incorporated by reference to Exhibit 3.6 to the Annual Report on Form 10-K filed on February 28, 2023, Commission File No. 001-36777) 4.1 Form of Certificate of Common Shares (incorporated by reference to Exhibit 4.1 of Amendment No. 3 to the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on December 9, 2014) 4.2 Certificate of Designations of 7% Series A Perpetual Cumulative Convertible Preferred Shares of James River Group Holdings, Ltd. dated March 1, 2022 (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed on May 10, 2022; Commission File No. 001-36777) 4.3 Indenture, dated as of May 26, 2004, by and between James River Group, Inc. and Wilmington Trust Company, as Trustee, relating to Floating Rate Senior Debentures Due 2034+ 4.4 Indenture, dated as of May 26, 2004, by and between James River Group, Inc. and Wilmington Trust Company, as Trustee, relating to Floating Rate Junior Subordinated Debentures Due 2034+ 4.5 Amended and Restated Declaration of Trust of James River Capital Trust I, dated as of May 26, 2004, by and among James River Group, Inc., as Sponsor, Wilmington Trust Company, as Institutional Trustee and Delaware Trustee, the Regular Trustees (as defined therein), and the holders, from time to time, of undivided beneficial interests in James River Capital Trust I+ 4.6 Preferred Securities Guarantee Agreement, dated as of May 26, 2004, by James River Group, Inc., as Guarantor, and Wilmington Trust Company, as Preferred Guarantee Trustee, for the benefit of the holders of James River Capital Trust I+ 4.7 Indenture, dated as of December 15, 2004, by and between James River Group, Inc. and Wilmington Trust Company, as Trustee, relating to Floating Rate Junior Subordinated Deferrable Interest Debentures Due 2034+ 4.8 Amended and Restated Declaration of Trust of James River Capital Trust II, dated as of December 15, 2004, by and among James River Group, Inc., as Sponsor, Wilmington Trust Company, as Institutional Trustee and Delaware Trustee, the Administrators (as defined therein), and the holders, from time to time, of undivided beneficial interests in the James River Capital Trust II+ 4.9 Guarantee Agreement, dated as of December 15, 2004, by James River Group, Inc., as Guarantor, and Wilmington Trust Company, as Guarantee Trustee, for the benefit of the holders, from time to time, of the capital securities of James River Capital Trust II+ 4.10 Indenture, dated June 15, 2006, by and between James River Group, Inc. and Wilmington Trust Company, as Trustee, relating to Floating Rate Junior Subordinated Deferrable Interest Debentures Due 2036+ 4.11 Amended and Restated Declaration of Trust of James River Capital Trust III, dated as of June 15, 2006, by and among James River Group, Inc., as Sponsor, Wilmington Trust Company, as Institutional Trustee and Delaware Trustee, the Administrators (as defined therein) and the holders, from time to time, of undivided beneficial interests in the James River Capital Trust III+ 4.12 Guarantee Agreement, dated as of June 15, 2006, by James River Group, Inc., as Guarantor, and Wilmington Trust Company, as Guarantee Trustee, for the benefit of the holders, from time to time, of the capital securities of James River Capital Trust III+ 108 TABLE OF CONTENTS Exhibit Number Description 4.13 Indenture, dated December 11, 2007, by and between James River Group, Inc. and Wilmington Trust Company, as Trustee, relating to Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures Due 2037+ 4.14 Amended and Restated Declaration of Trust, dated December 11, 2007, by and among James River Group, Inc., as Sponsor, Wilmington Trust Company, as Institutional Trustee and Delaware Trustee and the Administrators (as defined therein) and the holders, from time to time, of undivided beneficial interests in James River Capital Trust IV+ 4.15 Guarantee Agreement, dated as of December 11, 2007, by James River Group, Inc., as Guarantor, and Wilmington Trust Company, as Guarantee Trustee, for the benefit of the holders, from time to time, of the capital securities of James River Capital Trust IV+ 4.16 Indenture, dated as of January 10, 2008, among James River Group Holdings, Ltd. and Wilmington Trust Company, as Trustee relating to Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures Due 2038+ 4.17 Amended and Restated Declaration of Trust, dated as of January 10, 2008, by and among James River Group Holdings, Ltd., as Sponsor, Wilmington Trust Company, as Institutional Trustee and Delaware Trustee and the Administrators (as defined therein) for the benefit of the holders, from time to time, of undivided beneficial interest in Franklin Holdings II (Bermuda) Capital Trust I+ 4.18 Guarantee Agreement, dated as of January 10, 2008, by and among James River Group Holdings, Ltd., as Guarantor, and Wilmington Trust Company, as Guarantee Trustee, for the benefit of the holders, from time to time, of the capital securities of Franklin Holdings II (Bermuda) Capital Trust I+ 4.19 Description of Registrant’s Securities Registered under Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.18 to the Annual Report on Form 10-K filed on February 28, 2023, Commission File No. 001-36777) 10.1 Third Amended and Restated Credit Agreement, dated as of July 7, 2023, by and among James River Group Holdings, Ltd., JRG Reinsurance Company, Ltd., KeyBank National Association, as Administrative Agent and Letter of Credit Issuer, KeyBank National Association and Truist Securities, Inc. as Joint Book Runners and Joint Lead Arrangers, Truist Bank as Syndication Agent, and the lender parties thereto (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on July 12, 2023, Commission File No. 001-36777) 10.2 Consent Agreement dated November 8, 2023 to the Third Amended and Restated Credit Agreement dated as of July 7, 2023 by and among James River Group Holdings, Ltd. and JRG Reinsurance Company Ltd., as borrowers, KeyBank National Association (“KeyBank”) as Administrative Agent and Letter of Credit Issuer, KeyBank and Truist Securities, Inc. as Joint Book Runners and Joint Lead Arrangers, Truist Bank as Syndication Agent, and the lender parties thereto (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on November 9, 2023, Commission File No. 001-36777) 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. and JRG Reinsurance Company Ltd., KeyBank National Association, as Administrative Agent and as Letter of Credit Issuer, and certain Lender parties (incorporated by reference to Exhibit 10.2 of the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 7, 2014) 10.4 Continuing Guaranty of Payment, dated as of December 15, 2015, by James River Group Holdings UK Limited, pursuant to Credit Agreement, dated as of June 5, 2013, among James River Group Holdings, Ltd. and JRG Reinsurance Company Ltd., KeyBank National Association, as Administrative Agent and as Letter of Credit Issuer, and certain Lender parties (incorporated by reference to Exhibit 10.5 to the Annual Report on Form 10-K filed on March 10, 2016, Commission File No. 001-36777) 10.5 Credit Agreement, dated as of August 2, 2017, among James River Group Holdings, Ltd., JRG Reinsurance Company Ltd. and BMO Harris Bank N.A. (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on August 3, 2017, Commission File No. 001-36777) 10.6 First Amendment to Credit Agreement dated as of November 8, 2019 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 (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on November 12, 2019, Commission File No. 001-36777) 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 (incorporated by reference to Exhibit 10.7 of the Annual Report on Form 10-K filed on March 1, 2022, Commission File No. 001-36777) 109 TABLE OF CONTENTS Exhibit Number Description 10.8 Third Amendment to Credit Agreement dated as of January 27, 2023 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 (incorporated by reference to Exhibit 10.9 of the Annual Report on Form 10-K filed on February 28, 2023, Commission File No. 001-36777) 10.9 Consent Agreement dated November 8, 2023 to the Credit Agreement dated as of August 2, 2017, as amended, by and among James River Group Holdings, Ltd. and JRG Reinsurance Company Ltd., as 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 9, 2023, Commission File No. 001-36777) 10.10 Pledge and Security Agreement, dated as of August 2, 2017, by and between JRG Reinsurance Company Ltd., and BMO Harris Bank N.A. (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on August 3, 2017, Commission File No. 001-36777) 10.11 Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.7 of Amendment No. 1 to the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 24, 2014) 10.12 Amended and Restated James River Group Holdings, Ltd. Equity Incentive Plan (incorporated by reference to Exhibit 10.8 of the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 7, 2014)* 10.13 Form of Stock Option Agreement (Amended and Restated James River Group Holdings, Ltd. Equity Incentive Plan) (incorporated by reference to Exhibit 10.9 of the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 7, 2014)* 10.14 First Amendment to the Amended and Restated James River Group Holdings, Ltd. Equity Incentive Plan (incorporated by reference to Exhibit 10.10 of Amendment No. 1 to the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 24, 2014)* 10.15 James River Group Holdings, Ltd. 2014 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.11 of Amendment No. 1 to the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 24, 2014)* 10.16 Amendment to the James River Group Holdings, Ltd. 2014 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on May 3, 2017, Commission File No. 001-36777)* 10.17 Second Amendment to the James River Group Holdings, Ltd. 2014 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on October 26, 2022, Commission File No. 001-36777)* 10.18 Form of Nonqualified Share Option Agreement (James River Group Holdings, Ltd. 2014 Long-Term Incentive Plan) (incorporated by reference to Exhibit 10.12 of Amendment No. 1 to the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 24, 2014)* 10.19 Form of Restricted Share Award Agreement (James River Group Holdings, Ltd. 2014 Long-Term Incentive Plan) (incorporated by reference to Exhibit 10.13 of Amendment No. 1 to the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 24, 2014)* 10.20 Form of Restricted Share Unit Award Agreement (James River Group Holdings, Ltd. 2014 Long-Term Incentive Plan) (incorporated by reference to Exhibit 10.14 of Amendment No. 3 to the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on December 9, 2014)* 10.21 Form of Performance Restricted Share Unit Agreement (James River Group Holdings, Ltd. 2014 Long-Term Incentive Plan) (incorporated by reference to Exhibit 10.21 to the Annual Report on Form 10-K filed on February 28, 2023, Commission File No. 001-36777) 10.22 Form of Service-Based Restricted Share Unit Agreement (James River Group Holdings, Ltd. 2014 Long-Term Incentive Plan) (incorporated by reference to Exhibit 10.22 to the Annual Report on Form 10-K filed on February 28, 2023, Commission File No. 001-36777) 10.23 James River Group Holdings, Ltd. Short-Term Incentive Plan (incorporated by reference to Exhibit 10.23 to the Annual Report on Form 10-K filed on February 28, 2023, Commission File No. 001-36777) 10.24 James River Group Holdings, Ltd. 2014 Non-Employee Director Incentive Plan (incorporated by reference to Exhibit 10.15 of Amendment No. 1 to the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 24, 2014)* 10.25 Amendment to the 2014 Non-Employee Director Incentive Plan (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on May 1, 2019, Commission File No. 001-36777)* 10.26 Form of Restricted Share Award Agreement (James River Group Holdings, Ltd. 2014 Non-Employee Director Incentive Plan) (incorporated by reference to Exhibit 10.16 of Amendment No. 1 to the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 24, 2014)* 110 TABLE OF CONTENTS Exhibit Number Description 10.27 Form of Restricted Share Unit Award Agreement (James River Group Holdings, Ltd., 2014 Non-Employee Director Incentive Plan) (incorporated by reference to Exhibit 10.17 of Amendment No. 3 to the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on December 9, 2014)* 10.28 James River Management Company, Inc. Leadership Recognition Program (incorporated by reference to Exhibit 10.18 of Amendment No. 1 to the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 24, 2014)* 10.29 Employment Agreement, dated October 28, 2020, by and among Frank N. D’Orazio, James River Group Holdings, Ltd., and its subsidiary, James River Group, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on November 2, 2020, Commission File No. 001-36777) * 10.30 First Amendment to Employment Agreement dated October 28, 2020, by and among Frank N. D’Orazio, James River Group Holdings, Ltd., and its subsidiary James River Group, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 8, 2023, Commission File No. 001-36777) * 10.31 Employment Agreement, dated December 19, 2016, by and among James River Group Holdings, Ltd., James River Group, Inc., and Sarah C. Doran (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on December 22, 2016, Commission File No. 001-36777)* 10.32 Amendment to Employment Agreement dated December 19, 2016, between Sarah C. Doran and James River Group Holdings, Ltd., and its subsidiary, James River Group, Inc. (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on November 8, 2018, Commission File No. 001-36777)* 10.33 Amended and Restated Employment Agreement, dated January 15, 2018, by and among James River Group, Inc., certain subsidiaries of James River Group, Inc. 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. 001-36777)* 10.34 James River Management Company, Inc. Leadership Recognition Program Award Letter, dated September 30, 2011 to Richard Schmitzer (incorporated by reference to Exhibit 10.22 of Amendment No. 1 to the Registration Statement on Form S-1, Registration No. 333-199958, filed with the Commission on November 24, 2014)* 10.35 Separation and Release Agreement, dated December 26, 2023, by and among James River Group, Inc., certain subsidiaries of James River Group, Inc. and Terry McCafferty * 10.36 Amended and Restated Employment Agreement, dated June 7, 2023, by and among James River Group, Inc., certain subsidiaries of James River Group, Inc. and Terry McCafferty (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on June 8, 2023, Commission File No. 001-36777) * 10.37 Employment Agreement, dated April 5, 2018, by and among JRG Reinsurance Company, Ltd. 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. 001-36777)* 10.38 Investment Agreement, dated February 24, 2022, by and between James River Group Holdings, Ltd. and GPC Partners Investments (Thames) LP (incorporated by reference to Exhibit 10.1 on the Current Report on Form 8-K filed on February 28, 2022; Commission File No. 001-36777) 10.39 Amendment No. 1 to Investment Agreement, dated March 1, 2022, by and between James River Group Holdings, Ltd. and GPC Partners Investments (Thames) LP (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed on May 10, 2022; Commission File No. 001-36777) 10.40 Registration Rights Agreement, dated March 1, 2022, by and between James River Group Holdings, Ltd. and GPC Partners Investments (Thames) LP (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q filed on May 10, 2022; Commission File No. 001-36777) 10.41 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. 001-36777) 10.42 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. 001-36777) 10.43 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. 001-36777) 111 TABLE OF CONTENTS Exhibit Number Description 21.1 List of subsidiaries of James River Group Holdings, Ltd. 23.1 Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm 31.1 Principal Executive Officer Certification pursuant to Rule 13a-14(a)/15d-14(a) 31.2 Principal Financial Officer Certification pursuant to Rule 13a-14(a)/15d-14(a) 32.1 Principal Executive Officer and Principal Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1 James River Group Holdings, Ltd. Executive Officer Incentive Compensation Recovery Policy 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document in Exhibit 101. * Denotes a management contract or compensatory plan or arrangement. + Exhibit not filed with the Securities and Exchange Commission pursuant to Item 601(b)(4)(iii) of Regulation S-K. The Company will furnish a copy to the SEC upon request. Item 16. FORM 10-K SUMMARY Not applicable. 112 TABLE OF CONTENTS SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. JAMES RIVER GROUP HOLDINGS, LTD. By: /s/ Frank N. D’Orazio February 29, 2024 Frank N. D’Orazio Chief Executive Officer and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. NAME TITLE DATE /s/ Frank N. D’Orazio Chief Executive Officer and Director February 29, 2024 Frank N. D'Orazio (Principal Executive Officer) /s/ Sarah C. Doran Chief Financial Officer February 29, 2024 Sarah C. Doran (Principal Financial Officer) /s/ Michael E. Crow Principal Accounting Officer February 29, 2024 Michael E. Crow /s/ Ollie L. Sherman, Jr. Director, Non-Executive Chairman of the Board February 29, 2024 Ollie L. Sherman, Jr. /s/ Matthew B. Botein Director February 29, 2024 Matthew B. Botein /s/ Thomas L. Brown Director February 29, 2024 Thomas L. Brown /s/ Kirstin M. Gould Director February 29, 2024 Kirstin M. Gould /s/ Dennis J. Langwell Director February 29, 2024 Dennis J. Langwell /s/ Peter B. Migliorato Director February 29, 2024 Peter B. Migliorato /s/ Patricia H. Roberts Director February 29, 2024 Patricia H. Roberts 113 TABLE OF CONTENTS JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND SCHEDULES Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 2 Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting 4 Consolidated Balance Sheets as of December 31, 2023 and 2022 5 Consolidated Statements of Income (Loss) and Comprehensive (Loss) Income for the Years Ended December 31, 2023, 2022 and 2021 7 Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2023, 2022 and 2021 8 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021 9 Notes to Consolidated Financial Statements for the Years Ended December 31, 2023, 2022 and 2021 10 Schedule I Summary of Investments 59 Schedule II Condensed Financial Information of Registrant 60 Schedule III Supplementary Insurance Information 64 Schedule IV Reinsurance 65 Schedule V Valuation and Qualifying Accounts 66 Schedule VI Supplementary Information Concerning Property Casualty Insurance Operations 67 F-1 TABLE OF CONTENTS JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of James River Group Holdings, Ltd. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of James River Group Holdings, Ltd. and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of (loss) income and comprehensive loss, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, 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, 2023, 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 29, 2024, expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates. F-2 TABLE OF CONTENTS Valuation of reserves for losses and loss adjustment expenses Description of the Matter At December 31, 2023, the Company’s reserve for losses and loss adjustment expenses balance was $3.0 billion, $441.7 million of which is reported within liabilities held for sale. As described in Notes 1 and 8 of the consolidated financial statements, reserves for losses and loss adjustment expenses reflect the estimated ultimate cost of all incurred unpaid claims including estimates of claims incurred but not reported and loss adjustment expenses as of the balance sheet date. The estimate of ultimate losses and loss adjustment expenses relies on key judgments, including the weighting of actuarial methods by line of business and accident year. Actuarial assumptions include initial expected loss ratios, and incurred and paid loss development factors. The Company's Reserve Committee utilizes the actuarial results, in addition to other information, in determining management's best estimate of recorded reserves. The subjectivity and uncertainty of estimating the reserve for losses and loss adjustment expenses is caused by various factors including the uncertainty of future frequency and severity of claims, economic and social trends including inflation and litigation, changes in the business and exposure mix, as well as changes in operations. As such, performing audit procedures to evaluate the reserve for losses and loss adjustment expenses required a high degree of auditor judgment and an increased extent of effort, including the involvement of our actuarial specialists. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls related to the valuation of the reserve for losses and loss adjustment expenses. This included testing controls that management has in place over the inputs, methods and assumptions used in estimating the reserve. To test the reserve for losses and loss adjustment expenses, we evaluated the actuarial methods and assumptions used by the Company with the assistance of our actuarial specialists as well as other judgments made by management in determining their best estimate of recorded reserves. We compared the Company’s prior year assumptions of expected development of ultimate loss to actual losses incurred during the current year to identify potential management bias in the determination of the reserve for losses and loss adjustment expenses. We independently projected reserves for selected lines of business using actual historical data and loss development patterns, as well as industry data and other benchmarks where applicable, and compared management’s recorded reserves to these independent estimates. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2003. Charlotte, North Carolina February 29, 2024 F-3 TABLE OF CONTENTS JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of James River Group Holdings, Ltd. Opinion on Internal Control Over Financial Reporting We have audited James River Group Holdings, Ltd. and subsidiaries’ internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, James River Group Holdings, Ltd. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, 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, 2023 and 2022, the related consolidated statements of (loss) income and comprehensive loss, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedules listed in the Index at Item 15(a) and our report dated February 29, 2024 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 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. /s/ Ernst & Young LLP Charlotte, North Carolina February 29, 2024 F-4 TABLE OF CONTENTS JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2023 2022 (in thousands) Assets Invested assets: Fixed maturity securities, available-for-sale, at fair value (amortized cost: 2023 – $ 1,405,136 ; 2022 – $ 1,282,367 ) $ 1,324,476 $ 1,171,303 Equity securities, at fair value (cost: 2023 – $ 114,107 ; 2022 – $ 113,180 ) 119,945 115,155 Bank loan participations, at fair value 156,169 54,281 Short-term investments 72,137 95,351 Other invested assets 33,134 27,447 Total invested assets 1,705,861 1,463,537 Cash and cash equivalents 274,298 159,200 Restricted cash equivalents 72,449 103,215 Accrued investment income 12,106 9,768 Premiums receivable and agents’ balances, net 249,490 239,944 Reinsurance recoverable on unpaid losses, net 1,358,474 1,259,617 Reinsurance recoverable on paid losses 157,991 114,242 Prepaid reinsurance premiums 293,108 269,442 Deferred policy acquisition costs 31,497 32,837 Intangible assets, net 32,813 35,676 Goodwill 181,831 181,831 Deferred tax assets, net 48,297 48,844 Income taxes receivable 224 — Other assets 115,418 73,123 Assets held-for-sale (Note 2 - discontinued operations) $ 783,393 $ 1,145,799 Total assets $ 5,317,250 $ 5,137,075 See accompanying notes. F-5 TABLE OF CONTENTS JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2023 2022 (in thousands, except share amounts) Liabilities and shareholders’ equity Liabilities: Reserve for losses and loss adjustment expenses $ 2,606,107 $ 2,340,963 Unearned premiums 587,899 578,196 Payables to reinsurers 158,670 123,121 Funds held 65,235 97,360 Deferred reinsurance gain 20,733 15,742 Senior debt 222,300 222,300 Junior subordinated debt 104,055 104,055 Accrued expenses 56,722 56,881 Income taxes payable — 13,900 Other liabilities 174,513 134,604 Liabilities held-for-sale (Note 2 - discontinued operations) 641,497 751,289 Total liabilities 4,637,731 4,438,411 Commitments and contingent liabilities Series A redeemable preferred shares – 2023 and 2022: $ 0.00125 par value; 20,000,000 shares authorized; 150,000 shares issued and outstanding 144,898 144,898 Shareholders’ equity: Common Shares – 2023 and 2022: $ 0.0002 par value; 200,000,000 shares authorized; 37,641,563 and 37,470,237 shares issued and outstanding, respectively 7 7 Additional paid-in capital 876,240 868,858 Retained deficit ( 277,905 ) ( 152,055 ) Accumulated other comprehensive loss ( 63,721 ) ( 163,044 ) Total shareholders’ equity 534,621 553,766 Total liabilities, Series A redeemable preferred shares, and shareholders’ equity $ 5,317,250 $ 5,137,075 See accompanying notes. F-6 TABLE OF CONTENTS JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES Consolidated Statements of (Loss) Income and Comprehensive Loss Year Ended December 31, 2023 2022 2021 (in thousands, except share amounts) Revenues: Gross written premiums $ 1,508,660 $ 1,411,372 $ 1,325,218 Ceded written premiums ( 814,759 ) ( 745,926 ) ( 740,033 ) Net written premiums 693,901 665,446 585,185 Change in net unearned premiums 14,104 ( 35,712 ) ( 23,814 ) Net earned premiums 708,005 629,734 561,371 Net investment income 84,046 43,188 31,989 Net realized and unrealized gains (losses) on investments 10,441 ( 15,720 ) 10,818 Other income 9,517 4,312 4,857 Total revenues 812,009 661,514 609,035 Expenses: Losses and loss adjustment expenses 500,157 440,642 572,174 Other operating expenses 193,656 152,570 133,121 Other expenses 3,792 795 2,585 Interest expense 24,627 13,872 8,922 Amortization of intangible assets 363 363 363 Impairment of intangible assets 2,500 — — Total expenses 725,095 608,242 717,165 Income (loss) from continuing operations before income taxes 86,914 53,272 ( 108,130 ) Income tax expense (benefit) on continuing operations: Current 31,677 13,787 ( 2,835 ) Deferred ( 5,972 ) 4,627 ( 20,400 ) 25,705 18,414 ( 23,235 ) Net income (loss) from continuing operations 61,209 34,858 ( 84,895 ) Discontinued operations (Note 2): Loss from discontinued operations ( 88,493 ) ( 3,885 ) ( 87,904 ) Loss on held for sale classification of discontinued operations ( 80,400 ) — — Total loss from discontinued operations ( 168,893 ) ( 3,885 ) ( 87,904 ) Net (loss) income ( 107,684 ) 30,973 ( 172,799 ) Dividends on Series A preferred shares ( 10,500 ) ( 8,750 ) — Net (loss) income available to common shareholders $ ( 118,184 ) $ 22,223 $ ( 172,799 ) Other comprehensive income (loss): Net unrealized gains (losses), net of taxes of $ 6,384 in 2023, $( 27,041 ) in 2022, and $( 7,135 ) in 2021 99,323 ( 193,022 ) ( 51,921 ) Total comprehensive loss $ ( 8,361 ) $ ( 162,049 ) $ ( 224,720 ) Net income (loss) per common share: Basic Continuing operations $ 1.35 $ 0.70 $ ( 2.43 ) Discontinued operations $ ( 4.49 ) $ ( 0.11 ) $ ( 2.51 ) $ ( 3.14 ) $ 0.59 $ ( 4.94 ) Diluted Continuing operations $ 1.34 $ 0.69 $ ( 2.43 ) Discontinued operations $ ( 4.47 ) $ ( 0.10 ) $ ( 2.51 ) $ ( 3.13 ) $ 0.59 $ ( 4.94 ) Dividend declared per common share $ 0.20 $ 0.20 $ 1.20 Weighted-average common shares outstanding: Basic 37,618,660 37,442,856 34,956,957 Diluted 37,810,440 37,650,969 34,956,957 See accompanying notes. F-7 TABLE OF CONTENTS JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES Consolidated Statements of Changes in Shareholders’ Equity Number of Common Shares Outstanding Common Shares (Par) Additional Paid-in Capital Retained (Deficit) Earnings Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity (in thousands, except share amounts) Balances at December 31, 2020 30,649,261 $ 6 $ 664,476 $ 49,227 $ 81,899 $ 795,608 Net loss — — — ( 172,799 ) — ( 172,799 ) Other comprehensive loss — — — — ( 51,921 ) ( 51,921 ) Issuance of common shares 6,497,500 1 192,106 — — 192,107 Exercise of stock options 93,446 — 1,671 — — 1,671 Vesting of RSUs 132,859 — ( 2,871 ) — — ( 2,871 ) Compensation expense under share incentive plans — — 6,658 — — 6,658 Dividends on common shares — — — ( 43,091 ) — ( 43,091 ) Balances at December 31, 2021 37,373,066 $ 7 $ 862,040 $ ( 166,663 ) $ 29,978 $ 725,362 Net income — — — 30,973 — 30,973 Other comprehensive loss — — — — ( 193,022 ) ( 193,022 ) Vesting of RSUs 97,171 — ( 1,304 ) — — ( 1,304 ) Compensation expense under share incentive plans — — 8,122 — — 8,122 Dividends on Series A preferred shares — — — ( 8,750 ) — ( 8,750 ) Dividends on common shares — — — ( 7,615 ) — ( 7,615 ) Balances at December 31, 2022 37,470,237 $ 7 $ 868,858 $ ( 152,055 ) $ ( 163,044 ) $ 553,766 Net loss — — — ( 107,684 ) — ( 107,684 ) Other comprehensive income — — — — 99,323 99,323 Vesting of RSUs 171,326 — ( 1,734 ) — — ( 1,734 ) Compensation expense under share incentive plans — — 9,116 — — 9,116 Dividends on Series A preferred shares — — — ( 10,500 ) — ( 10,500 ) Dividends on common shares — — — ( 7,666 ) — ( 7,666 ) Balances at December 31, 2023 37,641,563 $ 7 $ 876,240 $ ( 277,905 ) $ ( 63,721 ) $ 534,621 See accompanying notes. F-8 TABLE OF CONTENTS JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES Consolidated Statements of Cash Flows Year Ended December 31, 2023 2022 2021 (in thousands) Operating activities Net (loss) income $ ( 107,684 ) $ 30,973 $ ( 172,799 ) Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Deferred policy acquisition costs ( 73,333 ) ( 79,648 ) ( 75,236 ) Amortization of policy acquisition costs 96,453 88,571 69,663 Net realized and unrealized losses (gains) on investments 43,251 28,318 ( 15,564 ) Impairment of intangible assets 2,500 — — Distributions from equity method investments 43 4,364 2,434 Income from equity method investments ( 4,881 ) ( 2,458 ) ( 918 ) Loss on held-for sale classification of discontinued operations 80,400 — — Deferred U.S. federal income tax benefit ( 5,972 ) 4,627 ( 20,400 ) Provision for depreciation and amortization ( 475 ) 1,048 4,715 Share based compensation expense 9,116 8,122 6,658 Excess tax benefits from equity incentive plan transactions 449 530 ( 208 ) Change in operating assets and liabilities: Reserve for losses and loss adjustment expenses 278,778 20,522 556,393 Unearned premiums ( 70,894 ) ( 51,536 ) 97,181 Premiums receivable and agents’ balances 22,594 53,442 ( 46,865 ) Reinsurance balances ( 66,274 ) 96,310 ( 601,632 ) Funds held ( 107,922 ) ( 60,900 ) ( 762,560 ) Payable to insurance companies 2,129 ( 2,770 ) 2,286 Other ( 10,325 ) 83,219 43,306 Net cash provided by (used in) operating activities (a) 87,953 222,734 ( 913,546 ) Investing activities Fixed maturity securities: Purchases ( 197,360 ) ( 709,576 ) ( 362,537 ) Sales 34,537 206,872 135,913 Maturities and calls 139,867 174,725 296,170 Equity Securities: Purchases ( 11,869 ) ( 38,801 ) ( 21,845 ) Sales 12,625 17,214 7,227 Bank loan participations: Purchases ( 72,580 ) ( 89,450 ) ( 126,369 ) Sales 52,016 52,042 65,291 Maturities 27,605 22,417 59,799 Other invested assets: Purchases ( 13,775 ) ( 150 ) ( 12,394 ) Return of capital 2,793 20,170 1,758 Repayments and redemptions 10,133 2,535 3,760 Securities receivable or payable, net 3,499 ( 6,684 ) 1,627 Short-term investments, net 35,675 28,751 ( 6,274 ) Purchases of property and equipment ( 6,434 ) ( 8,219 ) ( 6,303 ) Net cash provided by (used in) investing activities 16,732 ( 328,154 ) 35,823 Financing activities Senior debt repayments — ( 40,000 ) — Issuance of Series A preferred shares (Note 12) — 144,898 — Issuances of common shares - public offering — — 192,107 Issuances of common shares under equity incentive plans — — 1,877 Payroll taxes withheld and remitted on net settlement of RSUs ( 1,734 ) ( 1,304 ) ( 3,077 ) Dividends on Series A preferred shares ( 10,500 ) ( 6,125 ) — Dividends on common shares ( 7,746 ) ( 7,798 ) ( 43,236 ) Payment of debt issuance costs ( 1,135 ) — — Net cash (used in) provided by financing activities ( 21,115 ) 89,671 147,671 Change in cash, cash equivalents, and restricted cash equivalents (b) 83,570 ( 15,749 ) ( 730,052 ) Cash, cash equivalents, and restricted cash equivalents at beginning of year 276,379 292,128 1,022,180 Cash, cash equivalents, and restricted cash equivalents at end of year $ 359,949 $ 276,379 $ 292,128 JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES Consolidated Statements of Cash Flows Year Ended December 31, 2023 2022 2021 (in thousands) Supplemental information U.S. federal income taxes paid (refunded), net $ 45,330 $ ( 3,470 ) $ ( 3,932 ) Interest paid $ 30,697 $ 17,425 $ 9,927 Restricted cash equivalents at beginning of year $ 103,215 $ 102,005 $ 859,920 Restricted cash equivalents at end of year 72,449 103,215 102,005 Change in restricted cash equivalents $ ( 30,766 ) $ 1,210 $ ( 757,915 ) (a) Cash provided by (used in) operating activities for the years ended December 31, 2023, 2022, and 2021 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. See “Item 7. 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 provided by (used in) operating activities was $ 118.7 million, $ 221.5 million, and $( 155.6 ) million for the years ended December 31, 2023, 2022, and 2021, respectively. The cash used in operating activities (excluding restricted cash equivalents) in 2021 was largely driven by $ 317.6 million paid to effect a loss portfolio transfer reinsurance transaction. (b) includes change in cash and cash equivalents classified as held-for-sale (See Note 2). See accompanying notes. F-9 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 1. Accounting Policies Organization James River Group Holdings, Ltd. (referred to as “JRG Holdings” or, with its subsidiaries, the “Company”) is an exempted holding company registered in Bermuda, organized for the purpose of acquiring and managing insurance entities. The Company owns five insurance companies based in the United States (“U.S.”) focused on specialty insurance niches as described below: • James River Group Holdings UK Limited (“James River UK”) is an insurance holding company formed in 2015 in the United Kingdom (“U.K.”). The Company contributed James River Group, Inc. (“James River Group”), a U.S. insurance holding company, to James River UK in 2015. • James River Group is a Delaware domiciled insurance holding company formed in 2002, which owns all of the Company’s U.S.-based subsidiaries, either directly or indirectly through one of its wholly-owned U.S. subsidiaries. James River Group oversees the Company’s U.S. insurance operations and maintains all of the outstanding debt in the U.S. • James River Insurance Company (“James River Insurance”) is an Ohio domiciled excess and surplus lines insurance company that, with its wholly-owned insurance subsidiary, James River Casualty Company, is authorized to write business in every state and the District of Columbia. • 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 writes specialty admitted fronting and program business and individual risk workers' compensation insurance. The Company also owns JRG Reinsurance Company Ltd. (“JRG Re”), a Bermuda domiciled reinsurer, which comprises the remaining operations of the former Casualty Reinsurance segment, and which, prior to the suspension of its underwriting activities in 2023, primarily provided non-catastrophe casualty reinsurance to U.S. third parties and, through December 31, 2017, to the Company’s U.S.-based insurance subsidiaries. On November 8, 2023, the Company entered into an agreement to sell JRG Re. The sale is expected to close in the first quarter of 2024 and will result in the Company’s disposition of its casualty reinsurance business and related assets. See Held-for-Sale and Discontinued Operations below and Note 2 for additional disclosure. Basis of Presentation and Principles of Consolidation The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), which vary in some respects from statutory accounting practices (“SAP”) which are prescribed or permitted by the various state insurance departments in the U.S. or by insurance regulators in Bermuda. The accompanying consolidated financial statements include the accounts and operations of the Company and its subsidiaries. Intercompany transactions and balances have been eliminated. Held-for-Sale and Discontinued Operations The results of operations of a component of the Company are reported in discontinued operations when certain criteria are met as of the date of disposal, or earlier if classified as held-for-sale. The Company has determined that the definitive agreement to sell JRG Re meets the criteria for JRG Re to be classified as held for sale and that the sale represents a strategic shift that will have a major effect on the Company's operations. Accordingly, the results of JRG Re's operations have been presented as discontinued operations, and the assets and liabilities of JRG Re have been classified as held-for-sale and segregated for all periods presented in this Annual Report on Form 10-K. See Note 2 for additional disclosure. Estimates and Assumptions Preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. Those estimates are inherently subject to change, and actual results may ultimately differ from those estimates. F-10 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 Fixed Maturity and Equity Securities Fixed maturity securities classified as “available-for-sale” are carried at fair value, and unrealized gains and losses on such securities, net of any deferred taxes, are reported as a separate component of accumulated other comprehensive income. The Company does not have any securities classified as “held-to-maturity” or “trading”. Fair value generally represents quoted market value prices for securities traded in the public marketplace or prices analytically determined using bid or closing prices for securities not traded in the public marketplace. Premiums and discounts on mortgage-backed securities and asset-backed securities are amortized or accrued using the constant yield method which considers anticipated prepayments at the date of purchase. To the extent that the estimated lives of such securities change as a result of changes in estimated prepayment rates, the adjustments are included in net investment income using the retrospective method. Realized investment gains or losses are determined on a specific identification basis. Interest income is recognized as earned, and dividend income is recognized on the ex-dividend date. The Company reviews its available-for-sale fixed maturities to determine whether any unrealized losses are due to credit-related factors. An allowance for credit losses is established for any credit-related impairments, limited to the amount by which fair value is below amortized cost. 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 are 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. The Company also considers the credit quality rating of the security, with a special emphasis on securities downgraded below investment grade. A comparison is made between the present value of expected future cash flows for a security and its amortized cost. If the present value of future expected cash flows is less than amortized cost, a credit loss is presumed to exist and an allowance for credit losses is established. 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. Bank Loan Participations Bank loan participations are managed by a specialized outside investment manager. The Company has elected the fair value option to account for bank loan participations. 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 Consolidated Statements of (Loss) Income and Comprehensive Loss as net realized and unrealized gains (losses) on investments. Losses due to credit-related impairments on bank loan participations are 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. Interest income is accrued on the unpaid principal balance. Discounts and premiums are amortized to income using the interest method. 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. Interest received on nonaccrual loans generally is reported as investment income. There were no bank loans on nonaccrual status at December 31, 2023 or 2022. Generally, bank loan participations are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt. Other Invested Assets Other invested assets at December 31, 2023 and 2022 include the Company’s interests in private debt and equity investments. The investments are primarily focused in renewable energy, limited partnerships, and bank holding companies. 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. F-11 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 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 The Company considers highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Restricted Cash Equivalents The Company considers highly liquid investments with maturities of three months or less at the date of purchase that are segregated for a specific use to be restricted cash equivalents. Certain restricted cash equivalents invested in funds with floating net asset values are measured at fair value with changes in fair value recognized in net income. Direct Written Premiums Direct written premiums are earned on a pro rata basis over the terms of the policies, generally 12 months. The portion of premiums written applicable to the unexpired terms of the policies in force is recorded as unearned premiums. Policies are accounted for on an individual basis, with no aggregation by counterparty. Premiums Receivable and Agents’ Balances, Net Premiums receivable and agents’ balances are carried at face value net of any allowance for credit losses. The allowance for credit losses represents the current estimate of expected credit losses based on the Company’s assessment of the collectability of receivables that are past due, historical collection percentages, and consideration of current economic conditions and expectations of future conditions that could affect ultimate collections. Receivables greater than 90 days past due were $ 11.5 million and $ 9.4 million at December 31, 2023 and 2022, respectively. The allowance for credit losses was $ 17.9 million and $ 16.2 million at December 31, 2023 and 2022, respectively. Credit loss expense was $ 2.8 million for the year ended December 31, 2023, $ 1.1 million for the year ended December 31, 2022, and $ 9.4 million for the year ended December 31, 2021 ($ 7.1 million of which was deducted from amounts due to our reinsurers). Receivables written off against the allowance for credit losses totaled $ 1.2 million for the year ended December 31, 2023, $ 1.5 million for the year ended December 31, 2022, and $ 1.1 million for the year ended December 31, 2021. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Deferred Policy Acquisition Costs Costs which are incrementally or directly related to the successful acquisition of new or renewal insurance business are deferred. These deferred costs are primarily commissions to agents, premium taxes, and the portion of underwriting fixed compensation and payroll related fringe benefits directly related to an insurance contract that has been acquired, net of ceding commissions related to reinsurance ceded. Amortization of such policy acquisition costs is charged to expense in proportion to premium earned over the estimated policy life. 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. Reinsurance and Adjustable Features of Insurance and Reinsurance Contracts Certain premiums and losses are ceded to other insurance companies under various excess of loss and quota-share reinsurance contracts. The Company enters into ceded reinsurance contracts to limit its exposure to large losses, to limit exposure on new lines of insurance written by the Company, and to provide additional capacity for growth. Premiums, commissions, and losses and loss adjustment expenses on reinsured business are accounted for on a basis consistent with that used in accounting for the original policies issued and the terms of the reinsurance contracts. Reinsurance recoverables and prepaid reinsurance premiums are reported as assets. The Company uses a provision matrix to calculate the allowance for credit losses on reinsurance recoverables by applying impairment rates based on historical loss data to similarly rated reinsurance companies based on the expected duration of the receivables. 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, 2023 and 2022 was $ 660,000 and $ 580,000 , respectively. Other amounts payable to reinsurers or receivable from reinsurers are netted where the right of offset exists. The Company receives ceding commissions in connection with certain ceded reinsurance. The ceding commissions are recorded as a reduction of other operating expenses. F-12 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 Certain reinsurance contracts include provisions that adjust premiums or acquisition expenses based upon the loss experience under the contracts. Premiums written and earned, as well as related acquisition expenses are recorded based upon the projected loss experience under the contracts. The Company’s Specialty Admitted Insurance segment writes insurance under specialty admitted fronting and program arrangements. The fronting and program arrangements may contain contractual provisions that adjust acquisition expenses based upon loss experience under the contracts. The specialty admitted fronting and program arrangements are significantly reinsured. These reinsurance contracts may also contain provisions that adjust premiums or acquisition expenses based upon the loss experience under the contracts. Premiums written and earned, as well as related acquisition expenses, are recorded based upon the projected loss experience under the contracts. Other Income Other income is principally comprised of fee income earned on policies for which the Company has no exposure to underwriting risk. Fee income of $ 5.3 million, $ 3.8 million, and $ 4.5 million is included in other income for the years ended December 31, 2023, 2022, and 2021, respectively. Fees are earned on a pro rata basis over the service period of the underlying business. Policies are accounted for on an individual basis, with no aggregation by counterparty. Income Taxes Deferred tax assets and deferred tax liabilities are provided for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective U.S. tax basis. Deferred tax assets and liabilities are measured using enacted U.S. corporate tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. 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. The Company determined that no valuation allowance was necessary at December 31, 2023 or 2022. Goodwill 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 their fair values. The Company first assesses qualitative factors in determining whether it is necessary to perform the quantitative goodwill impairment test. If management determines that it is more likely than not that the fair value of a reporting unit is less than the carrying value based on qualitative factors then they will perform the quantitative goodwill impairment test. For the quantitative goodwill impairment testing, the fair value of the reporting units is determined using a combination of a market approach and an income approach which projects the future cash flows produced by the reporting units and discounts those cash flows to their present value. The projection of future cash flows is necessarily dependent upon assumptions on the future levels of income as well as business trends, prospects, market, and economic conditions. The results of the two approaches are weighted to determine the fair value of each reporting unit. When the fair value is less than the carrying value of the net assets of the reporting unit, including goodwill, an impairment loss is charged to operations. 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. 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. The excess of the fair value of a reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. Intangible Assets, Net Intangible assets are initially recognized and measured at fair value. Specifically identified intangible assets with indefinite lives include trademarks and state insurance licenses and authorities. Other specifically identified intangible assets with lives ranging from 7.0 to 27.5 years represent relationships with brokers. These intangible assets are amortized on a straight-line basis over their estimated useful lives. Intangible assets with indefinite useful lives are reviewed for impairment at least annually. In evaluating whether there has been impairment to the intangible asset, management determines the fair value of the intangible asset and compares the resulting fair value to the carrying value of the intangible asset. If the carrying value exceeds the fair value, the intangible asset is written down to fair value, and the impairment is reported through earnings. The Company evaluates intangible assets with definite lives for impairment when impairment indicators are noted. F-13 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 Impairment of Long-Lived Assets Long-lived assets with finite lives are tested for impairment whenever recognized events or changes in circumstances indicate the carrying value of these assets may not be recoverable. If indicators of impairment are present, fair value is calculated using estimated future cash flows expected to be generated from the use of those assets. In the fourth quarter of 2023, the Company determined that the sustained decrease in the share price of the Company’s common stock was an indication of impairment, and accordingly, the Company performed impairment testing on its goodwill and other intangible assets using a December 31, 2023 valuation date. As a result of this testing, the Company concluded that no impairment of the intangible assets had occurred. An impairment loss is recognized only if the carrying amount of a long-lived asset or asset group is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset or asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group. That assessment is based on the carrying amount of the asset or asset group at the date it is tested for recoverability. An impairment loss is measured as the amount by which the carrying amount of a long-lived asset or asset group exceeds its fair value. Property and Equipment, Net Property and equipment, which is included in “other assets” in the accompanying consolidated balance sheets, is reported at cost less accumulated depreciation and is depreciated principally on a straight-line basis over the estimated useful lives of the depreciable assets, generally three years to ten years . Reserve for Losses and Loss Adjustment Expenses The reserve for losses and loss adjustment expenses represents the estimated ultimate cost of all reported and unreported losses and loss adjustment expenses incurred and unpaid at the balance sheet date. The Company does not discount this reserve. The process of estimating the reserve for losses and loss adjustment expenses requires a high degree of judgment and is subject to a number of variables. The reserve for losses and loss adjustment expenses is estimated using individual case-basis valuations and statistical analyses. Those estimates are subject to the effects of trends in loss severity and frequency. The Company utilizes various actuarially-accepted reserving methodologies in determining expected outcomes for its reserves. These methodologies utilize various inputs, including management’s initial expected loss ratio (the ratio of losses and loss adjustment expenses incurred to net earned premiums), expected reporting patterns and payment patterns for losses and loss adjustment expenses (based on insurance industry data and the Company’s own experience), and the Company’s actual paid and reported losses and loss adjustment expenses. 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 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 fronting and program business in the Specialty Admitted Insurance segment and the commercial auto business in the Excess and Surplus Lines segment. Judgment is also required to make actuarial adjustments, if needed, for changes in claims processing and case reserving that could cause current reported loss and paid loss development patterns to deviate from historical patterns. The Company believes that the insurance that it writes is subject to above-average variation in reserve estimates. The Excess and Surplus Lines market is subject to high policyholder turnover and changes in underlying mix of exposures. This turnover and change in underlying mix of exposures can cause actuarial estimates based on prior experience to be less reliable than estimates for more stable, admitted books of business. Catastrophes of significant magnitude, including hurricanes and earthquakes, involve complex coverage issues. In estimating the reserve for losses and loss adjustment expenses for these catastrophes, management uses case reserve estimates based on information obtained from site inspections by the Company’s adjustors and the terms of coverage provided in the policies. 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. 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. Specifically, the Company’s actual ultimate loss ratio could differ from management’s initial expected loss ratio and/or the Company’s actual reporting patterns for losses could differ from the expected reporting patterns. Accordingly, the ultimate settlement of losses and the related loss adjustment expenses may vary significantly from the estimates included in the Company’s consolidated financial statements. These estimates are reviewed F-14 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 continually by management and are adjusted as necessary as experience develops or new information becomes known; such adjustments are included in current operations. Share Based Compensation The Company expenses the fair value of share equity awards over the vesting period of the award on a straight-line basis. Compensation cost for performance restricted share units (“PRSU”) is based upon the probable outcome of performance conditions. The Black-Scholes-Merton option pricing model is used to value the options granted (see Note 14). Forfeitures of share-based awards are recognized as they occur. 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 (loss) income and comprehensive loss. Variable Interest Entities Entities that do not have sufficient equity at risk to allow the entity to finance its activities without additional financial support or in which the equity investors, as a group, do not have the characteristic of a controlling financial interest are referred to as variable interest entities (“VIE”). A VIE is consolidated by the variable interest holder that is determined to have the controlling financial interest (primary beneficiary) as a result of having both the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. The Company determines whether it is the primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE’s capital structure, contractual terms, nature of the VIE’s operations and purpose, and the Company’s relative exposure to the related risks of the VIE on the date it becomes initially involved in the VIE. The Company reassesses its VIE determination with respect to an entity on an ongoing basis. The Company holds interests in VIEs through certain equity method investments included in “other invested assets” in the accompanying consolidated balance sheets. The Company has determined that it should not consolidate any of the VIEs as it is not the primary beneficiary in any of the relationships. Although the investments resulted in the Company holding variable interests in the entities, they did not empower the Company to direct the activities that most significantly impact the economic performance of the entities. The Company’s investments related to these VIEs totaled $ 8.4 million and $ 9.2 million as of December 31, 2023 and 2022, respectively, representing the Company’s maximum exposure to loss. Earnings (Loss) Per Share Basic earnings (loss) per share excludes dilution and is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the dilution that could occur if securities or other contracts to issue common shares were exercised or vested using the treasury stock method or converted into common shares under the if-converted method. When inclusion of potential common shares 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 potential common shares. F-15 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 The following represents a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per common share computations contained in the consolidated financial statements. Year Ended December 31, 2023 2022 2021 (in thousands, except share and per share amounts) Net income (loss) from continuing operations $ 61,209 $ 34,858 $ ( 84,895 ) Less: Dividends on Series A preferred shares ( 10,500 ) ( 8,750 ) — Income (loss) from continuing operations available to common shareholders $ 50,709 $ 26,108 $ ( 84,895 ) Loss from discontinued operations ( 168,893 ) ( 3,885 ) ( 87,904 ) Net (loss) income available to common shareholders $ ( 118,184 ) $ 22,223 $ ( 172,799 ) Weighted average common shares outstanding: Basic 37,618,660 37,442,856 34,956,957 Dilutive potential common shares 191,780 208,113 — Diluted 37,810,440 37,650,969 34,956,957 Net income (loss) per common share: Basic Continuing operations $ 1.35 $ 0.70 $ ( 2.43 ) Discontinued operations $ ( 4.49 ) $ ( 0.11 ) $ ( 2.51 ) $ ( 3.14 ) $ 0.59 $ ( 4.94 ) Diluted Continuing operations $ 1.34 $ 0.69 $ ( 2.43 ) Discontinued operations $ ( 4.47 ) $ ( 0.10 ) $ ( 2.51 ) $ ( 3.13 ) $ 0.59 $ ( 4.94 ) For the years ended December 31, 2023, 2022, and 2021, potential common shares of 5,722,915 , 4,728,461 , and 95,219 , respectively, were excluded from the calculation of diluted earnings (loss) per common share as their effects were anti-dilutive. Adopted Accounting Standards No accounting standards were adopted during the year ended December 31, 2023 that had a material impact on our 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, 2023 . 2. Discontinued Operations On November 8, 2023, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Fleming Intermediate Holdings LLC, a Cayman Islands limited liability company (the “Buyer”). Pursuant to the Stock Purchase Agreement, and on the terms and subject to the conditions therein, the Buyer agreed to purchase from the Company all of the common shares of JRG Re (the “Transaction”). JRG Re comprises the remaining operations of the former Casualty Reinsurance segment, and the Transaction, which is expected to close in the first quarter of 2024, will result in the Company’s disposition of its casualty reinsurance business and related assets. Total consideration to the Company for the sale of JRG Re includes (A) $ 277 million (the “Purchase Price”), which is comprised of (i) $ 138 million payable by the Buyer to the Company on the closing date in cash, subject to final closing adjustments based on changes in JRG Re’s adjusted net worth between March 31, 2023 and the closing date, and (ii) a $ 139 million dividend or return of capital or surplus by JRG Re to the Company prior to the closing date, which dividend or return of capital or surplus is subject to the availability of unencumbered assets on the closing date, and (B) $ 2.5 million to be F-16 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 paid by the Buyer to the Company in the event that certain conditions outlined in the Stock Purchase Agreement are met on the date that is nine months following the closing date. The Purchase Price is subject to adjustment based on changes in JRG Re’s adjusted net worth between March 31, 2023 and the closing date. The Company has determined that the sale of JRG Re meets the criteria to be classified as held for sale and that the sale represents a strategic shift that will have a major effect on our operations. Accordingly, the results of JRG Re's operations have been presented as discontinued operations, and the assets and liabilities of JRG Re have been classified as held for sale and segregated for all periods presented in this Annual Report on Form 10-K. The $ 139 million pre-closing dividend includes the forgiveness of $ 133.2 million owed from JRGH to JRG Re and $ 5.8 million to be paid in cash to JRGH. In the fourth quarter of 2023, after giving effect to the pre-closing dividend, we recorded an estimated loss on sale of $ 80.4 million to write down the carrying value of JRG Re to its estimated fair value based upon the estimated sales price of the transaction less costs to sell and other adjustments in accordance with the Stock Purchase Agreement. The $ 5.8 million cash portion of the pre-closing dividend is included in other liabilities presented below. The Company also recognized losses of $ 53.2 million for the year ended December 31, 2023 associated with JRG Re's fixed maturity securities as the Company no longer has the intent or ability to hold securities in an unrealized loss position until a recovery of their fair value could occur. The losses are included in net realized and unrealized (losses) gains on investments in the operating results presented below. JRG Re's assets and liabilities held for sale were comprised of the following: December 31, 2023 2022 (in thousands) Assets Invested assets: Fixed maturity securities, at fair value $ 532,242 $ 612,114 Equity securities, at fair value 2,779 3,472 Bank loan participations, at fair value — 100,710 Short-term investments — 12,461 Total invested assets 535,021 728,757 Cash and cash equivalents 13,202 13,964 Accrued investment income 3,589 4,650 Premiums receivable and agents’ balances, net 68,441 100,581 Reinsurance recoverable on unpaid and paid losses, net 234,615 260,496 Prepaid reinsurance premiums — 4,723 Deferred policy acquisition costs 4,986 26,766 Write down of JRG Re to fair value less cost to sell ( 80,400 ) — Other assets 3,939 5,862 Assets held for sale $ 783,393 $ 1,145,799 Liabilities Reserve for losses and loss adjustment expenses $ 441,666 $ 428,032 Unearned premiums 17,223 97,820 Funds held 137,796 213,593 Deferred reinsurance gain 33,167 4,349 Accrued expenses 1,955 2,685 Other liabilities 9,690 4,810 Liabilities held for sale $ 641,497 $ 751,289 F-17 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 The operating results of JRG Re reported in discontinued operations were as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Revenues: Gross written premiums $ 17,357 $ 85,208 $ 182,081 Ceded written premiums 2,178 ( 2,175 ) ( 22,886 ) Net written premiums 19,535 83,033 159,195 Change in net unearned premiums 75,874 53,394 ( 24,972 ) Net earned premiums 95,409 136,427 134,223 Net investment income 23,038 27,923 24,876 Net realized and unrealized (losses) gains on investments ( 53,693 ) ( 12,598 ) 4,746 Other income — 430 — Total revenues 64,754 152,182 163,845 Expenses: Losses and loss adjustment expenses 120,294 104,172 220,178 Other operating expenses 27,983 42,987 31,571 Other expenses 1,402 5,202 — Interest expense 3,568 3,706 — Total expenses 153,247 156,067 251,749 Loss from discontinued operations ( 88,493 ) ( 3,885 ) ( 87,904 ) Loss on held for sale classification of discontinued operations ( 80,400 ) — — Total loss from discontinued operations ( 168,893 ) ( 3,885 ) ( 87,904 ) Cash flows from discontinued operations included in the consolidated statements of cash flows were as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Net cash used in operating activities of discontinued operations $ ( 115,907 ) $ ( 25,122 ) $ ( 21,241 ) Net cash provided by investing activities of discontinued operations 115,145 8,497 27,680 Net cash (used in) provided by discontinued operations $ ( 762 ) $ ( 16,625 ) $ 6,439 Interest paid by discontinued operations $ 3,951 $ 2,578 $ — JRG Re Commitments and Contingent Liabilities JRG Re has entered into three letter of credit facilities with banks as security to third-party reinsureds on reinsurance assumed by JRG Re. JRG Re has established custodial accounts to secure these letters of credit. Under a $ 75.0 million facility, $ 4.7 million of letters of credit were issued through December 31, 2023 which were secured by deposits of $ 3.2 million. Under the 2013 Facility, $ 42.7 million of letters of credit were issued through December 31, 2023 which were secured by deposits of $ 51.1 million. Under the 2017 Facility (as defined in Note 10), $ 25.5 million of letters of credit were issued through December 31, 2023 which were secured by deposits of $ 35.6 million. JRG Re has also established trust accounts to secure its obligations to selected reinsureds. The total amount deposited in the trust accounts for the benefit of third-party reinsureds was $ 444.8 million at December 31, 2023. Casualty Re Loss Portfolio Transfer On February 23, 2022, JRG Re entered into a loss portfolio transfer retrocession agreement (the “Casualty Re LPT”) with Fortitude Reinsurance Company Ltd. (“FRL”) under which FRL reinsures the majority of JRG Re's reserves. Under the terms of the transaction, which closed on March 31, 2022 (the “Retrocession Closing Date”), JRG Re (a) ceded to FRL all existing F-18 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 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) continues to manage and retain the benefit of other third-party reinsurance on the Subject Business; (c) paid FRL a reinsurance premium of $ 335.0 million, $ 310.0 million of which JRG Re credited to a notional funds withheld account (the “Funds Withheld Account”) and $ 25.0 million of which was paid in cash to FRL; and (d) pays 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 were adjusted for claims paid from October 1, 2021 to the Retrocession Closing Date. JRG Re incurred $ 6.8 million of net adverse reserve development in the three months ended March 31, 2022 associated with the Casualty Re LPT. At December 31, 2023, the balance of the Funds Withheld Account was $ 137.8 million and reinsurance recoverables from FRL under the Casualty Re LPT were $ 221.7 million. Retroactive Reinsurance Accounting The Company periodically reevaluates the remaining reserves subject to the Casualty Re LPT. For the years ended December 31, 2023 and 2022, due to adverse paid and reported loss trends, JRG Re recognized adverse prior year development of $ 52.9 million and $ 6.1 million, respectively, on the reserves subject to the Casualty Re LPT, resulting in corresponding additional amounts ceded under the loss portfolio transfer. The Casualty Re LPT is in a gain position as the cumulative amounts ceded under the loss portfolio transfer exceeds the consideration paid, requiring the application of retroactive reinsurance accounting under GAAP. Under retroactive reinsurance accounting, gains are deferred and recognized in earnings in proportion to actual paid recoveries under the loss portfolio transfer using the recovery method. Over the life of the contract, we would expect no economic impact to JRG Re as long as any additional losses are within the limit of the loss portfolio transfer and the counterparty performs under the contract. In periods where JRG Re recognizes a change in the estimate of the reserves subject to the loss portfolio transfer that increases or decreases the amounts ceded under the loss portfolio transfer, the proportion of actual paid recoveries to total ceded losses is affected and the change in deferred gain is recognized in earnings as if the revised estimate of ceded losses was available at the effective date of the loss portfolio transfer. The effect of the deferred retroactive reinsurance benefit is recorded in losses and loss adjustment expenses for the discontinued operations of JRG Re and reported within loss from discontinued operations on the Consolidated Statements of (Loss) Income and Comprehensive Loss. For the years ended December 31, 2023 and 2022, retroactive reinsurance benefits totaling $ 24.0 million and $ 1.7 million, respectively, were recorded in losses and loss adjustment expenses using the recovery method. As of December 31, 2023 and 2022, the cumulative amounts ceded under the Casualty Re LPT was $ 393.9 million and $ 341.1 million, respectively. The total deferred retroactive reinsurance gain of $ 33.2 million at December 31, 2023 and $ 4.4 million at December 31, 2022 under the loss portfolio transfer is presented within the liabilities held for sale of JRG Re on the Company's Consolidated Balance Sheets. The Company has $ 6.1 million of aggregate limit remaining under the Casualty Re LPT at December 31, 2023. Bermuda Statutory Matters Under the Bermuda Insurance Act 1978 and related regulations, an insurer must maintain minimum statutory capital and surplus at the greater of a minimum solvency margin (“MSM”) and the Enhanced Capital Requirement (“ECR”), which is the higher of the MSM and capital calculated by the Bermuda Solvency Capital Requirement (“BSCR”) model or an approved internal model. The estimated minimum statutory solvency margin required at December 31, 2023 for JRG Re was approximately $ 31.1 million. Actual statutory capital and surplus at December 31, 2023 was $ 361.3 million. The statutory net loss was $ 36.1 million for the year ended December 31, 2023. The ECR for the year ended December 31, 2022 was $ 106.4 million. The BSCR models for the year ended December 31, 2023 will not be filed with the Bermuda Monetary Authority until April 30, 2024. The Company believes that the minimum statutory capital and surplus requirements will be met. Under the Bermuda Insurance Act 1978, an insurer must maintain a minimum liquidity ratio in which the value of its relevant assets is not less than 75.0 % of the amount of its relevant liabilities for general business. Relevant assets include cash and cash equivalents, fixed maturities, quoted alternative investments, accrued interest income, premiums receivable, losses recoverable from reinsurers, and funds withheld. The relevant liabilities include total insurance provisions and other liabilities less deferred income taxes and letters of credit, guarantees and other instruments. As of December 31, 2023, the minimum liquidity ratio requirements were met. Dividend Restrictions 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. An insurer can declare or pay dividends without prior regulatory approval up to 25% F-19 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 of the total statutory capital and surplus (as shown on its previous financial year's statutory balance sheet). The maximum combined amount of dividends and return of capital that can be paid without prior regulatory approval from JRG Re at December 31, 2023 is calculated to be approximately $ 90.3 million. However, this dividend amount is subject to annual enhanced solvency requirement calculations. All necessary approvals have been obtained by JRG Re to facilitate the $ 139 million pre-closing dividend pursuant to the SPA covering the sale of JRG Re. 3. Investments The Company’s available-for-sale fixed maturity securities are summarized as follows: Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (in thousands) December 31, 2023 Fixed maturity securities: State and municipal $ 273,462 $ 1,834 $ ( 26,459 ) $ 248,837 Residential mortgage-backed 336,064 1,243 ( 19,379 ) 317,928 Corporate 530,408 4,167 ( 28,847 ) 505,728 Commercial mortgage and asset-backed 235,302 78 ( 12,527 ) 222,853 U.S. Treasury securities and obligations guaranteed by the U.S. government 29,900 8 ( 778 ) 29,130 Total fixed maturity securities, available-for-sale $ 1,405,136 $ 7,330 $ ( 87,990 ) $ 1,324,476 December 31, 2022 Fixed maturity securities: State and municipal $ 263,543 $ 712 $ ( 35,001 ) $ 229,254 Residential mortgage-backed 295,655 715 ( 21,795 ) 274,575 Corporate 457,043 1,401 ( 38,399 ) 420,045 Commercial mortgage and asset-backed 235,907 75 ( 17,594 ) 218,388 U.S. Treasury securities and obligations guaranteed by the U.S. government 30,219 6 ( 1,184 ) 29,041 Total fixed maturity securities, available-for-sale $ 1,282,367 $ 2,909 $ ( 113,973 ) $ 1,171,303 The amortized cost and fair value of available-for-sale investments in fixed maturity securities at December 31, 2023 are summarized, by contractual maturity, as follows: Cost or Amortized Cost Fair Value (in thousands) One year or less $ 42,123 $ 41,699 After one year through five years 349,510 341,971 After five years through ten years 265,836 243,960 After ten years 176,301 156,065 Residential mortgage-backed 336,064 317,928 Commercial mortgage and asset-backed 235,302 222,853 Total $ 1,405,136 $ 1,324,476 Actual maturities may differ for some securities because borrowers have the right to call or prepay obligations with or without penalties. F-20 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 The following table shows the Company’s gross unrealized losses and fair value for available-for-sale securities aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position: Less Than 12 Months 12 Months or More Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses (in thousands) December 31, 2023 Fixed maturity securities: State and municipal $ 30,196 $ ( 287 ) $ 168,517 $ ( 26,172 ) $ 198,713 $ ( 26,459 ) Residential mortgage-backed 68,497 ( 1,256 ) 145,954 ( 18,123 ) 214,451 ( 19,379 ) Corporate 55,970 ( 532 ) 290,308 ( 28,315 ) 346,278 ( 28,847 ) Commercial mortgage and asset-backed 24,048 ( 151 ) 182,295 ( 12,376 ) 206,343 ( 12,527 ) U.S. Treasury securities and obligations guaranteed by the U.S. government 7,961 ( 71 ) 19,889 ( 707 ) 27,850 ( 778 ) Total fixed maturity securities, available-for-sale $ 186,672 $ ( 2,297 ) $ 806,963 $ ( 85,693 ) $ 993,635 $ ( 87,990 ) December 31, 2022 Fixed maturity securities: State and municipal $ 175,041 $ ( 23,207 ) $ 37,752 $ ( 11,794 ) $ 212,793 $ ( 35,001 ) Residential mortgage-backed 160,720 ( 12,310 ) 44,140 ( 9,485 ) 204,860 ( 21,795 ) Corporate 261,369 ( 21,649 ) 76,974 ( 16,750 ) 338,343 ( 38,399 ) Commercial mortgage and asset-backed 133,119 ( 9,146 ) 76,196 ( 8,448 ) 209,315 ( 17,594 ) U.S. Treasury securities and obligations guaranteed by the U.S. government 23,498 ( 673 ) 4,973 ( 511 ) 28,471 ( 1,184 ) Total fixed maturity securities, available-for-sale $ 753,747 $ ( 66,985 ) $ 240,035 $ ( 46,988 ) $ 993,782 $ ( 113,973 ) At December 31, 2023, the Company held fixed maturity securities of 441 issuers that were in an unrealized loss position with a total fair value of $ 993.6 million and gross unrealized losses of $ 88.0 million. None of the fixed maturity securities with unrealized losses has ever missed, or been delinquent on, a scheduled principal or interest payment. At December 31, 2023, 99.9 % of the Company’s fixed maturity security portfolio was rated “BBB-” or better (“investment grade”) by Standard & Poor’s or received an equivalent rating from another nationally recognized rating agency. Fixed maturity securities with ratings below investment grade by Standard & Poor's or another nationally recognized rating agency at December 31, 2023 had a fair value of $ 1.3 million. The Company periodically reviews its available-for-sale fixed maturities to determine whether any unrealized losses exist that are due to credit-related factors. An allowance for credit losses is established for any credit-related impairments, limited to the amount by which fair value is below amortized cost. 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 are 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. The Company also considers the credit quality rating of the security, with a special emphasis on securities downgraded below investment grade. A comparison is made between the present value of expected future cash flows for a security and its amortized cost. If the present value of future expected cash flows is less than amortized cost, a credit loss is presumed to exist and an allowance for credit losses is established. 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, 2023, 2022, or 2021. 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. The Company elected the fair value option to account for bank loan participations. 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 F-21 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 our income statement as net realized and unrealized gains (losses) on investments. Applying the fair value option to the bank loan portfolio increases volatility in the Company's financial statements, but management believes it is less subjective and less burdensome to implement and maintain than ASU 2016-13, which would have otherwise been required. At December 31, 2023, the Company's bank loan portfolio had an aggregate unpaid principal balance of $ 164.3 million and an aggregate fair value of $ 156.2 million. Investment income on bank loan participations included in net investment income was $ 12.0 million, $ 4.3 million, $ 3.5 million during the years ended December 31, 2023, 2022, and 2021 respectively. Net realized and unrealized gains (losses) on investments includes gains of $ 9.0 million, losses of $ 5.4 million, and gains of $ 2.3 million related to changes in unrealized gains and losses on bank loan participations for the years ended December 31, 2023, 2022, and 2021, respectively. Management concluded that $ 946,000 and $ 592,000 of the unrealized losses were due to credit-related impairments for the years ended December 31, 2023 and 2022. Management concluded that none of the unrealized losses were due to credit-related impairments for the year ended December 31, 2021 . 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. Bank loan participations generally have a credit rating that is below investment grade (i.e. below “BBB-” for Standard & Poor’s) at the date of purchase. These bank loans are primarily senior, secured floating-rate debt rated “BB”, “B”, or “CCC” by Standard & Poor’s or an equivalent rating from another nationally recognized rating agency. These bank loans include assignments of, and participations in, performing and non-performing senior corporate debt generally acquired through primary bank syndications and in secondary markets. Bank loans consist of, but are not limited to, term loans, the funded and unfunded portions of revolving credit loans, and other similar loans and investments. Management believed that it was probable at the time that these loans were acquired that the Company would be able to collect all contractually required payments receivable. 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 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. Generally, bank loan participations are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt. Interest received on nonaccrual loans generally is reported as investment income. There were no bank loans on nonaccrual status at December 31, 2023 or 2022. Major categories of the Company’s net investment income are summarized as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Fixed maturity securities $ 49,793 $ 28,131 $ 23,311 Bank loan participations 11,984 4,256 3,515 Equity securities 6,548 5,479 4,880 Other invested assets 5,049 3,408 2,200 Cash, cash equivalents, restricted cash equivalents, and short-term investments 13,703 4,170 246 Gross investment income 87,077 45,444 34,152 Investment expense ( 3,031 ) ( 2,256 ) ( 2,163 ) Net investment income $ 84,046 $ 43,188 $ 31,989 F-22 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 The Company’s net realized and unrealized gains and losses on investments are summarized as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Fixed maturity securities: Gross realized gains $ — $ 1,534 $ 4,560 Gross realized losses ( 339 ) ( 291 ) ( 53 ) ( 339 ) 1,243 4,507 Equity securities: Gross realized gains 1,845 1,248 175 Gross realized losses ( 320 ) ( 685 ) ( 374 ) Changes in fair values of equity securities 3,722 ( 11,685 ) 4,501 5,247 ( 11,122 ) 4,302 Bank loan participations: Gross realized gains 306 63 156 Gross realized losses ( 3,806 ) ( 428 ) ( 465 ) Changes in fair values of bank loan participations 9,049 ( 5,381 ) 2,317 5,549 ( 5,746 ) 2,008 Short-term investments and other: Gross realized gains 2 1 71 Gross realized losses ( 18 ) ( 96 ) ( 150 ) Changes in fair values of short-term investments and other — — 80 ( 16 ) ( 95 ) 1 Total $ 10,441 $ ( 15,720 ) $ 10,818 The change in the Company’s available-for-sale fixed maturity gross unrealized net losses was $ 30.4 million for the year ended December 31, 2023. The change in the Company's available-for-sale fixed maturity gross unrealized net (losses) gains was $( 131.4 ) million and $( 34.2 ) million for the years ended December 31, 2022 and 2021, respectively. F-23 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 The Company invests selectively in private debt and equity opportunities. These investments, which together comprise the Company’s other invested assets, are primarily focused in renewable energy, limited partnerships, and bank holding companies. Carrying Value Investment Income December 31, Year Ended December 31, 2023 2022 2023 2022 2021 (in thousands) Renewable energy LLCs (a) Excess and Surplus Lines $ 8,382 $ 9,159 $ 2,375 $ 3,366 $ ( 625 ) Corporate & Other — — 524 435 ( 812 ) 8,382 9,159 2,899 3,801 ( 1,437 ) Renewable energy notes receivable ( b) Excess and Surplus Lines 608 1,202 108 270 417 Corporate & Other 761 1,503 136 337 522 1,369 2,705 244 607 939 Limited partnerships (c) Excess and Surplus Lines 11,914 10,019 1,566 ( 805 ) 1,417 Corporate & Other 664 1,064 — ( 538 ) 938 12,578 11,083 1,566 ( 1,343 ) 2,355 Private Debt (d) Excess and Surplus Lines 10,805 4,500 340 343 200 Corporate & Other — — — — 143 10,805 4,500 340 343 343 Total other invested assets Excess and Surplus Lines 31,709 24,880 4,389 3,174 1,409 Corporate & Other 1,425 2,567 660 234 791 $ 33,134 $ 27,447 $ 5,049 $ 3,408 $ 2,200 (a) The Company’s Excess and Surplus Lines segment owns equity interests ranging from 2.5 % to 4.9 % in various LLCs whose principal objective is capital appreciation and income generation from owning and operating renewable energy production facilities (wind and solar). The Company’s former Non-Executive Chairman invested in certain of these LLCs. The equity method is used to account for the Company’s LLC investments. Income for the LLCs primarily reflects adjustments to the carrying values of investments in renewable energy projects to their determined fair values. The fair value adjustments are included in revenues for the LLCs. Expenses for the LLCs are not significant and are comprised of administrative and interest expenses. During the fourth quarter of 2022, the underlying projects in two of our LLCs were sold at the manager's discretion.The Company received proceeds of $ 20.2 million, comprised of $ 17.2 million in the Excess and Surplus Lines segment and $ 3.0 million in the Corporate and Other segment. During the year ended December 31, 2023, the Company received additional proceeds from the sales of $ 3.1 million in the Excess and Surplus Lines segment and $ 524,000 in the Corporate and Other segment. The Company could receive additional contingent payments in the future according to terms of the transaction. The Company received cash distributions from all renewable energy investments totaling $ 3.7 million and $ 21.6 million for the years ended December 31, 2023 and 2022, respectively. (b) The Company's Excess and Surplus Lines and Corporate and Other segments have invested in two notes receivable for renewable energy projects. Interest on the notes, which mature in 2025, is fixed at 12 %. During the year ended December 31, 2023 , the Company received principal repayments of $ 593,000 and $ 742,000 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, 2022 , the Company received principal repayments of $ 1.1 million and $ 1.4 million on the notes receivable in the Company's Excess and Surplus Lines segment and Corporate and Other segment, respectively. F-24 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 (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, specialty private credit, and tranches of distressed home loans. Income from the partnerships is recognized under the equity method of accounting. During the year ended December 31, 2022, the Company recognized an impairment loss of $ 538,000 on one limited partnership in the Corporate & Other segment. At December 31, 2023, the Company’s Excess and Surplus Lines segment has outstanding commitments to invest another $ 6.3 million in these limited partnerships. (d) The Company's Excess and Surplus Lines segment holds two notes receivable for structured private specialty credit. Interest on the notes, which mature in 2031, is fixed at 4.25 % and 5.25 %. At December 31, 2023, the Company's Excess and Surplus Lines segment has outstanding commitments to invest another $ 5.9 million in these notes. Previously, the Company's Excess and Surplus Lines segment held $ 4.5 million of subordinated notes issued by a bank holding company for which the former Non-Executive Chairman of the Company was previously the Lead Independent Director. The notes matured on August 12, 2023. Interest on the notes was fixed at 7.6 % per annum. At December 31, 2023 and 2022, cash and investments with a fair value of $ 72.4 million and $ 61.0 million, respectively, were on deposit with state insurance departments to satisfy regulatory requirements. 4. Deferred Policy Acquisition Costs An analysis of deferred policy acquisition costs is as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Balance at beginning of period $ 32,837 $ 21,399 $ 22,792 Policy acquisition costs deferred: Commissions 47,665 38,190 18,800 Underwriting and other issue expenses 23,628 23,057 21,693 71,293 61,247 40,493 Amortization of policy acquisition costs ( 72,633 ) ( 49,809 ) ( 41,886 ) Net change ( 1,340 ) 11,438 ( 1,393 ) Balance at end of period $ 31,497 $ 32,837 $ 21,399 5. Goodwill and Intangible Assets On December 11, 2007, the Company completed an acquisition of James River Group by acquiring 100 % of the outstanding shares of James River Group common stock, referred to herein as the “Merger”. The transaction was accounted for under the purchase method of accounting, and goodwill and intangible assets were recognized by the Company as a result of the transaction. All of the Company’s goodwill is an asset of the Excess and Surplus Lines segment. The Company’s annual testing performed in the fourth quarter of 2023, 2022 and 2021 indicated that no impairment of goodwill had occurred. The carrying amount of goodwill at December 31, 2023 and 2022 was $ 181.8 million. Accumulated goodwill impairment losses were $ 99.6 million at December 31, 2023 and 2022. The most recent goodwill impairment losses occurred in 2010. Specifically identifiable intangible assets were acquired in the Merger. In September, 2023, the Company sold the renewal rights to the Individual Risk Workers’ Compensation (“IRWC”) business in the Specialty Admitted Insurance segment. Upon closing of the transaction, the Company recognized an impairment charge of $ 2.5 million related to the trademark intangible asset associated with the IRWC business. During the fourth quarters of 2023, 2022 and 2021, the indefinite-lived intangible assets for trademarks and insurance licenses and authorities were tested for impairment. Intangible assets for broker relationships that have specific lives and are subject to amortization were also reviewed for impairment. There were no additional impairments recognized in 2023, 2022, or 2021. F-25 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 The gross carrying amounts and accumulated amortization for each major specifically identifiable intangible asset class were as follows: December 31, 2023 2022 Life (Years) Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization (in thousands) Trademarks Indefinite $ 19,700 $ — $ 22,200 $ — Insurance licenses and authorities Indefinite 8,964 — 8,964 — Identifiable intangibles not subject to amortization 28,664 — 31,164 — Broker relationships 24.6 11,611 7,462 11,611 7,099 Identifiable intangible assets subject to amortization 11,611 7,462 11,611 7,099 $ 40,275 $ 7,462 $ 42,775 $ 7,099 Future estimated amortization of specifically identifiable intangible assets as of December 31, 2023 is as follows ( in thousands) : 2024 $ 363 2025 363 2026 363 2027 363 2028 363 Thereafter 2,334 Total $ 4,149 The table below summarizes the changes in the net carrying values of intangible assets by segment for the year ended December 31, 2023: December 31, 2022 December 31, 2023 Net Carrying Value Amortization Impairment Losses Net Carrying Value (in thousands) Excess and Surplus Lines Trademarks $ 19,700 $ — $ — $ 19,700 Insurance licenses and authorities 4,900 — — 4,900 Broker relationships 4,511 ( 363 ) — 4,148 29,111 ( 363 ) — 28,748 Specialty Admitted Insurance Trademarks 2,500 — ( 2,500 ) — Insurance licenses and authorities 4,065 — — 4,065 6,565 — ( 2,500 ) 4,065 Total identifiable intangible assets $ 35,676 $ ( 363 ) $ ( 2,500 ) $ 32,813 F-26 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 The table below summarizes the changes in the net carrying values of intangible assets by segment for the year ended December 31, 2022: December 31, 2021 December 31, 2022 Net Carrying Value Amortization Impairment Losses Net Carrying Value (in thousands) Excess and Surplus Lines Trademarks $ 19,700 $ — $ — $ 19,700 Insurance licenses and authorities 4,900 — — 4,900 Broker relationships 4,874 ( 363 ) — 4,511 29,474 ( 363 ) — 29,111 Specialty Admitted Insurance Trademarks 2,500 — — 2,500 Insurance licenses and authorities 4,065 — — 4,065 6,565 — — 6,565 Total identifiable intangible assets $ 36,039 $ ( 363 ) $ — $ 35,676 Amortization of intangible assets was $ 363,000 for the Excess and Surplus Lines segment and $ 0 for the Specialty Admitted Insurance segment for the year ended December 31, 2021. 6. Property and Equipment, Net Property and equipment, net of accumulated depreciation, is included in "other assets" on the consolidated balance sheets and consists of the following: December 31, 2023 2022 (in thousands) Electronic data processing hardware and software $ 19,693 $ 2,894 Furniture and equipment 2,136 2,132 Property and equipment, cost basis 21,829 5,026 Accumulated depreciation ( 4,834 ) ( 3,679 ) Property and equipment, net $ 16,995 $ 1,347 7. Leases The Company has entered into operating leases for office space in Bermuda, North Carolina, Virginia, Arizona, and Georgia. 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. The Company elected the practical expedient to account for lease components and any associated non-lease components as a single lease component, and therefore allocates all of the expected lease payments to the lease component. The lease liability, which represents the Company’s obligation to make lease payments arising from the lease, is calculated based on the present value of expected lease payments over the remaining lease term, discounted using the Company’s collateralized incremental borrowing rate at the commencement date. 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 sheets. F-27 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 At December 31, 2023, lease liabilities and right-of-use assets associated with the Company's operating leases were $ 8.0 million and $ 7.8 million, respectively ($ 9.0 million and $ 8.1 million at December 31, 2022, respectively). The weighted-average discount rate and weighted average remaining lease term for operating leases was 4.8 % and 3.3 years, respectively, as of December 31, 2023. The table below summarizes maturities of the Company’s operating lease liabilities as of December 31, 2023, which reconciles to total lease liabilities included in other liabilities on the Company’s consolidated balance sheets: Years ending December 31, (in thousands) 2024 $ 3,102 2025 3,047 2026 1,069 2027 783 2028 515 Thereafter 158 Total lease payments 8,674 Less imputed interest ( 637 ) Total operating lease liabilities $ 8,037 Operating lease liabilities include $ 4.3 million associated with office space in a building that is owned by a partnership in which the Company has a minority interest. Operating lease costs were $ 4.6 million, $ 4.6 million, and $ 4.7 million for the years ended December 31, 2023 , 2022, and 2021, respectively. Operating lease costs are primarily comprised of rental expense for operating leases. 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 (loss) income and comprehensive loss. 8. Reserve for Losses and Loss Adjustment Expenses In establishing the reserve for losses and loss adjustment expenses, the Company’s internal actuaries estimate an initial expected ultimate loss ratio for each of our lines of business by accident year. Input from the Company’s underwriting and claims departments, including premium pricing assumptions and historical experience, are considered by the Company’s internal actuaries in estimating the initial expected loss ratios. The Company’s internal actuaries generally utilize five primary actuarial methods in their estimation process for the reserve for losses and loss adjustment expenses. These primary methods are supplemented by additional actuarial methods as the Chief Actuary considers appropriate. For example, these supplemental methods can include frequency and severity methods that utilize claim count data to estimate ultimate losses and loss adjustment expenses. These methods utilize, to varying degrees, the initial expected loss ratio, detailed statistical analysis of past claims reporting and payment patterns, claims frequency and severity, paid loss experience, industry loss experience, and changes in market conditions and claims handling practices, policy forms, exclusions, and exposures. In applying these methods to develop an estimate of the reserve for losses and loss adjustment expenses, our internal actuaries use judgment to determine three key parameters for each accident year and line of business: the initial expected loss ratios, the incurred and paid loss development factors and the weighting of the actuarial methods to be used for each accident year and line of business. For the Excess and Surplus Lines segment, the internal actuaries perform a study on each of these parameters at least annually and make recommendations for the initial expected loss ratios, the incurred and paid loss development factors and the weighting of the actuarial methods by accident year and line of business. 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 Specialty Admitted Insurance segment, expected loss ratios, loss development factors, and loss cost trends are reviewed and updated at least annually. 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. For example, the current accident year has very little incurred and paid loss development data on which to base reserve projections. As a result, the Company relies heavily on the initial expected loss ratio in estimating reserves for the current accident year. The F-28 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 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. If actual loss emergence is better than our initial expected loss ratio assumptions, we will experience favorable development and if it is worse than our initial expected loss ratio assumptions, we will experience adverse development. 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 consolidated balance sheets. Reinsurance recoverables on unpaid losses and loss adjustment expenses are presented gross of an allowance for credit losses on reinsurance balances of $ 660,000 , $ 580,000 , and $ 607,000 at December 31, 2023, 2022, and 2021, respectively. Year Ended December 31, 2023 2022 2021 (in thousands) Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period $ 1,080,766 $ 974,221 $ 1,078,248 Add: Incurred losses and loss adjustment expenses net of reinsurance: Current year 463,530 429,260 383,964 Prior years - retroactive reinsurance 4,991 15,742 — Prior years - excluding retroactive reinsurance 31,636 ( 4,360 ) 188,210 Total incurred losses and loss and adjustment expenses 500,157 440,642 572,174 Deduct: Loss and loss adjustment expense payments net of reinsurance: Current year 32,410 33,720 32,923 Prior years 296,549 284,635 386,826 Total loss and loss adjustment expense payments 328,959 318,355 419,749 Deduct: Change in deferred reinsurance gain - retroactive reinsurance 4,991 15,742 — Deduct: Loss reserves ceded in loss portfolio transfer — — 256,452 Reserve for losses and loss adjustment expenses net of reinsurance recoverables at end of period 1,246,973 1,080,766 974,221 Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period 1,359,134 1,260,197 1,336,058 Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period $ 2,606,107 $ 2,340,963 $ 2,310,279 The foregoing reconciliation shows that $ 31.6 million of net adverse development was experienced in 2023 on the reserve for losses and loss adjustment expenses held at December 31, 2022 (excluding adverse prior year development on the commercial auto loss portfolio transfer subject to retroactive reinsurance accounting - see Loss Portfolio Transfer below). This net adverse reserve development included $ 32.6 million of net adverse development in the Excess and Surplus Lines segment, with adverse development in accident years 2020 and prior exceeding favorable development on accident years 2022 and 2021, and $ 972,000 of net favorable development in the Specialty Admitted Insurance segment. The foregoing reconciliation shows that $ 4.4 million of net favorable development was experienced in 2022 on the reserve for losses and loss adjustment expenses held at December 31, 2021 (excluding adverse prior year development on the commercial auto loss portfolio transfer subject to retroactive reinsurance accounting - see Loss Portfolio Transfer below). This net favorable reserve development included $ 210,000 of net favorable development in the Excess and Surplus Lines segment and $ 4.2 million of net favorable development in the Specialty Admitted Insurance segment. The Company also experienced $ 5.0 million of net catastrophe losses in the current accident year in 2022 related to Hurricane Ian. The foregoing reconciliation shows that $ 188.2 million of net adverse development was experienced in 2021 on the reserve for losses and loss adjustment expenses held at December 31, 2020. This net adverse reserve development included $ 190.7 million of net adverse development in the Excess and Surplus Lines segment including $ 200.1 million of net adverse F-29 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 development in the commercial auto line of business that was primarily related to the 2019 and prior accident years with Rasier. The adverse development for commercial auto was partially offset by $ 9.4 million of net favorable development in the Core E&S underwriting divisions. The Company also experienced $ 2.5 million of net favorable development on prior accident years in the Specialty Admitted Insurance segment, as losses on our workers’ compensation business written prior to 2020 continued to develop more favorably than we had anticipated. The Company also experienced $ 5.0 million of net catastrophe losses in the current accident year in 2021 related to Hurricane Ida. Loss Portfolio Transfers Loss portfolio transfers are a form of reinsurance utilized by the Company to transfer losses and loss adjustment expenses and associated risk of adverse development on covered subject business, as defined in the respective agreements, to an assuming reinsurer in exchange for a reinsurance premium. Loss portfolio transfers can bring economic finality on the subject risks when they no longer meet the Company's appetite or are no longer aligned with the Company's risk management guidelines. Commercial Auto Loss Portfolio Transfer On September 27, 2021, James River Insurance Company and James River Casualty Company (together, “James River”) entered into a loss portfolio transfer transaction (the “Commercial Auto LPT”) with Aleka Insurance, Inc. (“Aleka”), a captive insurance company affiliate of Rasier LLC, to reinsure substantially all of the Excess and Surplus Lines segment's legacy portfolio of commercial auto policies previously issued to Rasier LLC and its affiliates (collectively, “Rasier”) for which James River is not otherwise indemnified by Rasier. Under the terms of the transaction, effective as of July 1, 2021, James River ceded to Aleka approximately $ 345.1 million of commercial auto liabilities relating to Rasier policies written in the years 2013-2019, which amount constituted the reinsurance premium. The reinsurance coverage is structured to be fully collateralized, is not subject to an aggregate limit, and is subject to certain exclusions. A pre-tax loss of $ 29.6 million was recognized as adverse loss and loss adjustment reserve development in the Excess and Surplus Lines segment for the third quarter of 2021 associated with the loss portfolio transfer. Retroactive Reinsurance Accounting The Company periodically reevaluates the remaining reserves subject to the Commercial Auto LPT, and when recognized adverse prior year development on the subject business causes the cumulative amounts ceded under the loss portfolio transfer to exceed the consideration paid, the loss portfolio transfer moves into a gain position subject to retroactive reinsurance accounting under GAAP. Gains are deferred under retroactive reinsurance accounting and recognized in earnings in proportion to actual paid recoveries under the loss portfolio transfer using the recovery method. While the deferral of gains can introduce volatility in our results in the short-term, over the life of the contract, we would expect no economic impact to the Company as long as the counterparty performs under the contract. The impact of retroactive reinsurance accounting is not indicative of our current and ongoing operations. For the years ended December 31, 2023 and 2022, due to adverse paid and reported loss trends on the legacy Rasier business, the Company recognized adverse prior year development of $ 64.4 million and $ 46.7 million, respectively, on the net reserves subject to the Commercial Auto LPT, resulting in corresponding additional amounts ceded under the Commercial Auto LPT. As a result, the cumulative amounts ceded under the Commercial Auto LPT exceed the consideration paid, moving the Commercial Auto LPT into a gain position. The Company has applied retroactive reinsurance accounting to the loss portfolio transfer. Retroactive reinsurance benefits of $ 59.4 million and $ 31.0 million, respectively, were recorded in losses and loss adjustment expenses on the Consolidated Statements of (Loss) Income and Comprehensive Loss for the years ended December 31, 2023 and 2022 using the recovery method. The cumulative amounts ceded under the loss portfolio transfer were $ 456.2 million and $ 391.8 million as of December 31, 2023 and 2022, respectively. The deferred retroactive reinsurance gain related to the Commercial Auto LPT separately presented on the Company's Consolidated Balance Sheets was $ 20.7 million and $ 15.7 million at December 31, 2023 and 2022, respectively. F-30 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 The following tables present incurred and paid losses and loss adjustment expenses, net of reinsurance as of December 31, 2023 for: (1) the Excess and Surplus Lines segment split between all excess and surplus lines business excluding commercial auto, and separately, commercial auto, and (2) the Specialty Admitted Insurance segment split between individual risk workers’ compensation and fronting and programs. The information provided herein about incurred and paid accident year claims development for the years ended December 31, 2022 and prior is presented as “unaudited” supplementary information. Excess and Surplus Lines — Excluding Commercial Auto Incurred losses and loss adjustment expenses, net of reinsurance (in thousands) Accident Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014 $ 114,942 $ 104,092 $ 90,267 $ 82,232 $ 84,074 $ 88,904 $ 90,191 $ 90,944 $ 91,391 $ 94,877 2015 126,443 113,417 104,847 102,434 103,688 110,466 114,398 116,085 118,599 2016 138,507 125,093 126,050 126,971 125,097 132,235 135,491 141,242 2017 144,349 131,897 132,136 124,265 128,674 134,272 147,196 2018 167,004 158,458 146,633 150,687 151,563 167,237 2019 214,653 194,759 189,671 188,061 204,844 2020 239,897 211,732 207,210 231,658 2021 304,435 286,343 274,120 2022 340,436 293,402 2023 369,255 Total $ 2,042,430 Cumulative paid losses and loss adjustment expenses, net of reinsurance (in thousands) Accident Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014 $ 3,412 $ 16,969 $ 28,212 $ 43,891 $ 58,774 $ 71,549 $ 76,523 $ 79,980 $ 85,433 $ 89,769 2015 4,048 17,164 34,801 55,911 73,455 87,344 94,494 103,138 110,860 2016 5,180 22,852 46,045 70,105 90,166 102,072 116,059 126,916 2017 5,290 22,956 42,764 64,924 81,303 102,866 120,229 2018 6,000 26,160 50,679 76,494 105,538 124,903 2019 8,235 31,346 62,227 103,836 136,289 2020 8,642 34,561 73,106 117,892 2021 11,693 55,070 100,649 2022 12,713 51,537 2023 10,927 Total $ 989,971 All outstanding losses and loss adjustment expenses prior to 2014, net of reinsurance ( 76 claims outstanding) $ 11,111 Total outstanding losses and loss adjustment expenses, net of reinsurance $ 1,063,570 F-31 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 Excess and Surplus Lines — Commercial Auto Incurred losses and loss adjustment expenses, net of reinsurance (in thousands) Accident Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014 $ 20,487 $ 14,071 $ 17,233 $ 18,953 $ 19,779 $ 18,303 $ 19,196 $ 20,013 $ 20,222 $ 20,121 2015 30,109 33,113 35,149 36,139 36,636 37,839 38,046 37,915 37,950 2016 74,340 109,286 126,791 147,122 157,712 164,399 164,046 165,744 2017 207,355 208,743 272,421 319,472 355,713 366,636 376,251 2018 255,881 230,220 283,408 349,067 371,637 389,244 2019 262,306 240,773 339,771 365,279 408,340 2020 19,133 10,899 12,324 19,009 2021 21,154 16,565 17,319 2022 26,126 19,921 2023 18,181 Total $ 1,472,080 Cumulative paid losses and loss adjustment expenses, net of reinsurance (in thousands) Accident Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014 $ 6,166 $ 8,645 $ 12,679 $ 16,359 $ 18,678 $ 17,745 $ 18,301 $ 19,163 $ 20,070 $ 20,077 2015 8,356 15,234 24,282 31,592 34,819 35,983 36,710 37,462 37,725 2016 18,295 54,054 89,381 125,108 141,545 152,030 158,819 162,219 2017 41,467 107,377 192,961 252,169 309,860 344,235 364,501 2018 45,136 119,099 184,686 257,346 329,009 368,865 2019 44,225 107,182 192,982 285,725 358,920 2020 628 2,854 7,304 14,151 2021 2,810 4,313 10,325 2022 1,897 5,365 2023 2,066 Total $ 1,344,214 Total outstanding losses and loss adjustment expenses, net of reinsurance before Rasier LPT $ 127,866 Reinsurance recoverable for Rasier LPT $ 78,065 Total outstanding losses and loss adjustment expenses, net of reinsurance $ 49,801 F-32 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 Specialty Admitted — Individual Risk Workers’ Compensation Incurred losses and loss adjustment expenses, net of reinsurance (in thousands) Accident Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014 $ 16,638 $ 16,652 $ 14,620 $ 13,890 $ 12,704 $ 12,704 $ 12,573 $ 12,685 $ 12,553 $ 12,424 2015 20,938 21,274 19,741 18,376 17,626 16,492 16,468 16,409 16,096 2016 21,678 20,299 18,050 15,800 14,050 13,069 12,790 12,510 2017 24,869 22,071 19,779 18,810 16,606 15,487 15,360 2018 16,432 16,288 16,038 14,200 12,139 11,829 2019 20,253 21,056 20,631 18,129 17,624 2020 20,137 22,240 19,389 18,934 2021 14,519 14,713 12,668 2022 14,507 11,828 2023 21,095 $ 150,368 Cumulative paid losses and loss adjustment expenses, net of reinsurance (in thousands) Accident Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014 $ 4,633 $ 10,648 $ 12,041 $ 12,236 $ 12,282 $ 12,282 $ 12,276 $ 12,287 $ 12,306 $ 12,308 2015 6,604 13,285 15,118 15,889 15,901 16,068 16,069 16,071 16,071 2016 4,664 10,227 12,135 12,432 12,481 12,483 12,483 12,483 2017 6,546 12,782 14,285 15,195 15,210 15,236 15,279 2018 4,497 9,034 11,412 11,746 11,765 11,752 2019 5,473 13,776 16,254 16,909 17,154 2020 7,394 14,668 16,665 17,206 2021 5,874 10,780 11,679 2022 5,943 9,732 2023 6,126 Total $ 129,790 All outstanding losses and loss adjustment expenses prior to 2014, net of reinsurance ( 6 claims outstanding) $ 341 Outstanding losses and loss adjustment expenses assumed from involuntary workers’ compensation pools $ 3,701 Total outstanding losses and loss adjustment expenses, net of reinsurance $ 24,620 F-33 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 Specialty Admitted — Fronting and Programs Incurred losses and loss adjustment expenses, net of reinsurance (in thousands) Accident Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014 $ 3,460 $ 3,468 $ 3,818 $ 3,425 $ 3,228 $ 3,083 $ 3,081 $ 3,068 $ 3,061 $ 2,939 2015 7,136 9,632 9,358 8,974 8,384 8,444 8,436 8,279 8,195 2016 11,542 15,670 14,682 15,522 14,468 15,090 14,304 13,289 2017 21,229 24,271 25,201 24,728 25,097 24,893 23,128 2018 21,758 20,677 19,822 20,158 19,268 19,193 2019 18,832 19,020 19,991 18,956 18,777 2020 25,433 28,131 31,555 34,705 2021 39,999 44,857 47,505 2022 47,262 51,101 2023 53,635 Total $ 272,467 Cumulative paid losses and loss adjustment expenses, net of reinsurance (in thousands) Accident Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014 $ 883 $ 1,687 $ 2,369 $ 2,728 $ 2,854 $ 2,916 $ 2,917 $ 2,926 $ 2,939 $ 2,941 2015 2,058 4,666 6,165 6,919 7,329 7,654 7,728 7,824 8,007 2016 1,894 5,123 6,888 10,732 10,896 11,711 12,142 12,321 2017 1,223 6,682 13,065 15,854 18,219 20,655 20,770 2018 885 4,972 10,495 12,631 14,059 15,424 2019 4,358 5,125 9,958 13,007 14,914 2020 5,375 15,678 20,903 26,523 2021 8,347 18,106 27,156 2022 13,018 23,284 2023 13,145 Total $ 164,485 All outstanding losses and loss adjustment expenses, net of reinsurance $ 107,982 Outstanding losses and loss adjustment expenses, assumed from involuntary pools $ 1,000 Total outstanding losses and loss adjustment expenses, net of reinsurance $ 108,982 F-34 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 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, 2023 is as follows (in thousands): E&S – excluding commercial auto $ 1,063,570 E&S – commercial auto 49,801 Specialty Admitted – individual risk workers’ compensation 24,620 Specialty Admitted – fronting and programs 108,982 Net reserve for losses and loss adjustment expenses 1,246,973 Reinsurance recoverables on unpaid losses (gross of $ 660,000 allowance for credit losses on reinsurance recoverables) 1,359,134 Gross reserve for losses and loss adjustment expenses $ 2,606,107 The following is unaudited supplementary information about average annual percentage payouts of incurred claims by age, net of reinsurance, as of December 31, 2023. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 E&S – excluding commercial auto 3.7 % 12.7 % 15.1 % 17.4 % 14.8 % 12.0 % 8.2 % 6.2 % 6.1 % 3.8 % E&S – commercial auto 13.8 % 15.7 % 23.0 % 21.7 % 13.6 % 4.8 % 3.5 % 2.8 % 1.1 % 0.0 % Specialty Admitted – individual risk workers’ compensation 28.5 % 32.5 % 14.8 % 8.1 % 6.4 % 3.3 % 1.9 % 1.0 % 1.0 % 0.8 % Specialty Admitted – fronting and programs 18.7 % 21.4 % 20.7 % 13.3 % 7.6 % 5.4 % 4.5 % 3.5 % 2.3 % 2.1 % In determining the cumulative number of reported claims, the Company measures claim counts by individual claimant for individual risk workers’ compensation policies in the Specialty Admitted Insurance segment. In the Excess and Surplus Lines insurance segment and for fronting and programs in the Specialty Admitted Insurance segment, the Company measures claim counts by claim event. The claim counts include all claims reported, even if the Company does not establish a liability for the claim (i.e. reserve for losses and loss adjustment expenses). 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: Excess and Surplus Lines — Excluding Commercial Auto Accident Year Incurred Losses and Loss Adj Expenses IBNR Cumulative # of Reported Claims ($ in thousands) 2014 $ 94,877 $ 1,888 2,278 2015 118,599 3,198 2,706 2016 141,242 4,198 3,285 2017 147,196 9,122 3,322 2018 167,237 19,021 4,728 2019 204,844 30,925 6,143 2020 231,658 63,022 5,590 2021 274,120 123,776 4,803 2022 293,402 198,836 4,185 2023 369,255 337,417 2,712 F-35 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 Excess and Surplus Lines — Commercial Auto Accident Year Incurred Losses and Loss Adj Expenses IBNR before Rasier LPT IBNR net of Rasier LPT Cumulative # of Reported Claims ($ in thousands) 2014 $ 20,121 $ 44 $ 20 7,764 2015 37,950 225 143 41,771 2016 165,744 1,032 106 89,117 2017 376,251 4,679 176 134,150 2018 389,244 8,474 157 97,342 2019 408,340 13,992 317 71,492 2020 19,009 1,212 1,212 633 2021 17,319 4,364 4,364 785 2022 19,921 11,871 11,871 501 2023 18,181 14,452 14,452 263 Specialty Admitted - Individual Risk Workers’ Compensation Accident Year Incurred Losses and Loss Adj Expenses IBNR Cumulative # of Reported Claims ($ in thousands) 2014 $ 12,424 $ 26 851 2015 16,096 25 975 2016 12,510 26 835 2017 15,360 54 1,093 2018 11,829 32 1,238 2019 17,624 338 1,555 2020 18,934 808 1,381 2021 12,668 298 1,301 2022 11,828 759 1,046 2023 21,095 3,017 860 F-36 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021  Specialty Admitted — Fronting and Programs Accident Year Incurred Losses and Loss Adj Expenses IBNR Cumulative # of Reported Claims ($ in thousands) 2014 $ 2,939 $ — 858 2015 8,195 50 1,363 2016 13,289 290 2,823 2017 23,128 1,043 6,805 2018 19,193 1,365 7,407 2019 18,777 1,806 8,154 2020 34,705 3,178 9,039 2021 47,505 10,971 10,622 2022 51,101 16,914 9,745 2023 53,635 27,444 8,035 The Company has not provided insurance coverage that could reasonably be expected to produce material levels of asbestos claims activity. 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. 9. Reinsurance The Company remains liable to policyholders if its reinsurers are unable to meet their contractual obligations under applicable reinsurance agreements. To minimize exposure to significant losses from reinsurance insolvencies, the Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk. The Company’s reinsurance contracts generally require reinsurers that are not authorized as reinsurers under U.S. state insurance regulations or that experience rating downgrades from rating agencies below specified levels to fund their share of the Company’s ceded outstanding losses and loss adjustment expense reserves, typically through the use of irrevocable and unconditional letters of credit. In fronting arrangements, which the Company conducts through its Specialty Admitted Insurance segment, the Company is subject to credit risk with regard to insurance companies who act as reinsurers for the Company in such arrangements. The Company customarily requires a collateral trust arrangement to secure the obligations of the insurance entity for whom it is fronting. At December 31, 2023, the Company had reinsurance recoverables on unpaid losses of $ 1,358.5 million and reinsurance recoverables on paid losses of $ 158.0 million. All material reinsurance recoverables are from companies with A.M. 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, 2023, reinsurance recoverables on unpaid losses from the Company’s three largest reinsurers were $ 366.1 million, $ 162.1 million, and $ 78.1 million, representing 44.6 % of the total balance. At December 31, 2023, prepaid reinsurance premiums ceded to the three reinsurers with the largest amount of prepaid reinsurance premiums totaled $ 51.2 million, $ 25.0 million, and $ 24.1 million, representing 34.2 % of the total balance. F-37 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 Premiums written, premiums earned, and losses and loss adjustment expenses incurred are summarized as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Written premiums: Direct $ 1,506,668 $ 1,408,524 $ 1,322,034 Assumed 1,992 2,848 3,184 Ceded ( 814,759 ) ( 745,926 ) ( 740,033 ) Net $ 693,901 $ 665,446 $ 585,185 Earned premiums: Direct $ 1,496,708 $ 1,378,619 $ 1,255,875 Assumed 2,250 3,032 3,198 Ceded ( 790,953 ) ( 751,917 ) ( 697,702 ) Net $ 708,005 $ 629,734 $ 561,371 Losses and loss adjustment expenses: Direct $ 1,204,532 $ 937,393 $ 1,117,673 Assumed 2,032 1,344 2,325 Ceded ( 706,407 ) ( 498,095 ) ( 547,824 ) Net $ 500,157 $ 440,642 $ 572,174 10. Senior Debt The Company has a $ 315.0 million senior revolving credit facility (as amended or amended and restated, the "2013 Facility”). The 2013 Facility is comprised of the following at December 31, 2023: • A $ 102.5 million secured revolving facility utilized by JRG Re to issue letters of credit for the benefit of third-party reinsureds. This portion of our credit facility is secured by our investment securities. At December 31, 2023, the Company had $ 42.7 million of letters of credit issued under the secured facility. • 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, currently at 1-month SOFR (the Company, per the terms of the credit agreement, can elect between one, three, or six month interest periods) plus a 0.1 % SOFR index adjustment and a SOFR margin ( 1.75 % at December 31, 2023), which is subject to change according to terms in the credit agreement. At December 31, 2023 and 2022, the Company had a drawn balance of $ 185.8 million outstanding on the unsecured revolver. James River Group Holdings, Ltd. and JRG Re are borrowers on the 2013 Facility. The 2013 Facility has been amended from time to time since its inception in 2013. On November 8, 2019, the Company entered into a Second Amended and Restated Credit Agreement for the 2013 Facility which, among other things, extended the maturity date of the 2013 Facility until November 8, 2024, increased the amount available under the unsecured revolving credit facility to $ 212.5 million, lowered the applicable interest rate and letter of credit fees, and modified certain negative covenants to be less restrictive. On July 7, 2023, the Company entered into a Third Amended and Restated Credit Agreement for its $ 315.0 million senior revolving credit facility which, among other things, extended the maturity date of such facility until July 7, 2026 and increased the applicable interest rate and letter of credit fees. A subsidiary of the bank holding company for which the former Non-Executive Chairman of the Company was previously Lead Independent Director is one of the lenders for the 2013 Facility, with a $ 50.0 million commitment allocation on the total $ 315.0 million 2013 Facility. The 2013 Facility contains certain financial and other covenants (including minimum net worth, maximum ratio of total adjusted debt outstanding to total capitalization, and financial strength ratings) with which the Company was in compliance at December 31, 2023, with the exception of a default of the financial strength rating covenant due to the downgrade of JRG Re by A.M. Best on December 20, 2023 from “A-” (Excellent) to “B++” (good). The financial strength rating covenant requires F-38 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 that each of our regulated insurance subsidiaries maintain an A.M. Best rating not lower than “A- ” (Excellent). Our lenders have waived this default through March 1, 2025, and in any event, we expect it to be cured upon the closing of the sale of JRG Re, at which time we expect JRG Re to be removed as a borrower under the 2017 Facility. 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 letters of credit made or issued under the revolving line of credit may be used to finance the Borrowers’ general corporate purposes. The 2017 Facility has been amended from time to time since its inception in 2017. 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 which is currently at 1-month SOFR (the Company, per the terms of the credit agreement, can elect between one, two, three, or six month interest periods) plus a 0.1 % SOFR index adjustment and a SOFR margin ( 1.50 % at December 31, 2023) 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. At December 31, 2023, unsecured loans of $ 21.5 million and secured letters of credit totaling $ 25.5 million were outstanding under the facility. The Company repaid $ 40.0 million of loans in 2022. In order to secure borrowings and letters of credit made or issued under the secured portion of the 2017 Facility, JRG Re entered into a pledge and security agreement on August 2, 2017 with the lender, pursuant to which JRG Re pledged certain investment securities. In the event the Company elects to pledge investment securities as collateral for the secured portion of the revolving credit facility, the Company will enter into a similar pledge and security agreement. An affiliate of the lender under the 2017 Facility was an underwriter in the December 2014 initial public offering of the Company’s common shares and a joint lead book-running manager in the Company’s May 2021 public offering of the Company’s common shares. The 2017 Facility contains certain financial and other covenants with which we are in compliance at December 31, 2023, with the exception of a default of the financial strength rating covenant due to the downgrade of JRG Re by A.M. Best on December 20, 2023 from “A-” (Excellent) to “B++” (good). The financial strength rating covenant requires that each of our regulated insurance subsidiaries maintain an A.M. Best rating not lower than “A-” (Excellent). Our lenders have waived this default through March 1, 2025, and in any event, we expect it to be cured upon the closing of the sale of JRG Re, at which time we expect JRG Re to be removed as a borrower under the 2017 Facility. On May 26, 2004, James River Group issued $ 15.0 million of unsecured, floating rate senior debentures (the “Senior Debt”), due April 29, 2034 unless accelerated earlier, through an indenture. The Senior Debt is not redeemable by the holder and is not subject to sinking fund requirements. Interest accrues quarterly and is payable in arrears at a per annum rate of the three-month SOFR on the Determination Date (as defined in the indenture) plus a spread adjustment of 0.26 % and a margin of 3.85 %. The Senior Debt is redeemable prior to its stated maturity in whole or in part, at the option of James River Group. The terms of the indenture generally provide that so long as the Senior Debt is outstanding, neither James River Group nor any of its subsidiaries may: • assume or permit to exist any indebtedness that is secured by any encumbrance on the capital stock of James River Group or any of its subsidiaries which is senior to the Senior Debt; or • issue, sell, transfer or otherwise dispose of any shares of, securities convertible into, or warrants, rights or options to subscribe for or purchase shares of, capital stock of any subsidiary. The terms of the Senior Debt contain certain covenants, with which the Company was in compliance at December 31, 2023, and which, among other things, restrict our ability to assume senior indebtedness secured by our U.S. holding company's common stock or its subsidiaries' capital stock or to issue shares of its subsidiaries' capital stock. Interest payable is included in “accrued expenses” in the accompanying consolidated balance sheets. 11. Junior Subordinated Debt The Company issued trust preferred securities (“Trust Preferred Securities”) through James River Capital Trust I, James River Capital Trust II, James River Capital Trust III, James River Capital Trust IV, and Franklin Holdings II (Bermuda) Capital Trust I, (each, a “Trust”; collectively, the “Trusts”). These Delaware statutory trusts are sponsored and wholly-owned by the Company. Each Trust was created solely for the purpose of issuing the Trust Preferred Securities. F-39 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 Each Trust used proceeds from the sale of its Trust Preferred Securities to purchase the Company’s floating rate junior subordinated debentures (the “Junior Subordinated Debt”) issued to the Trust under an indenture (each, an “Indenture”; collectively, the “Indentures”). The Junior Subordinated Debt is the sole asset of each Trust, and the Trust Preferred Securities are the sole liabilities of each Trust. 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.   The following table summarizes the nature and terms of the junior subordinated debt and trust preferred securities outstanding at December 31, 2023 (including the Company’s repurchases of a portion of these trust preferred securities): James River Capital Trust I James River Capital Trust II James River Capital Trust III James River Capital Trust IV Franklin Holdings II (Bermuda) Capital Trust I ($ in thousands) Issue date May 26, 2004 December 15, 2004 June 15, 2006 December 11, 2007 January 10, 2008 Principal amount of Trust Preferred Securities $ 7,000 $ 15,000 $ 20,000 $ 54,000 $ 30,000 Principal amount of Junior Subordinated Debt $ 7,217 $ 15,464 $ 20,619 $ 55,670 $ 30,928 Carrying amount of Junior Subordinated Debt net of repurchases $ 7,217 $ 15,464 $ 20,619 $ 44,827 $ 15,928 Maturity date of Junior Subordinated Debt, unless accelerated earlier May 24, 2034 December 15, 2034 June 15, 2036 December 15, 2037 March 15, 2038 Trust common stock $ 217 $ 464 $ 619 $ 1,670 $ 928 Interest rate, per annum Three-Month SOFR plus 4.3 % Three-Month SOFR plus 3.7 % Three-Month SOFR plus 3.3 % Three-Month SOFR plus 3.4 % Three-Month SOFR plus 4.3 % All of the Junior Subordinated Debt is currently redeemable at 100.0 % of the unpaid principal amount at the Company’s option. Interest on the Trust Preferred Securities and interest paid to the Trusts on the Junior Subordinated Debt is payable quarterly in arrears at a per annum rate as described in the table above. The Company has the right to defer interest payments on the Junior Subordinated Debt for up to five years without triggering an event of default. The Trust Preferred Securities are subject to mandatory redemption in a like amount (a) upon repayment of all of the Junior Subordinated Debt on the stated maturity date, (b) contemporaneously with the optional prepayment of all of the Junior Subordinated Debt in conjunction with a special event (as defined), and (c) five years or more after the issue date, contemporaneously with the optional prepayment, in whole or in part, of the Junior Subordinated Debt. The Indentures contain certain covenants which the Company is in compliance with as of December 31, 2023. Interest payable is included in “accrued expenses” on the accompanying consolidated balance sheets. 12. Series A Preferred Shares On February 24, 2022, we entered into an Investment Agreement with GPC Partners Investments (Thames) LP (“GPC Partners”), 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 (the “Series A Preferred Shares”), for an aggregate purchase price of $ 150.0 million, or $ 1,000 per share, in a private placement. The transaction closed on March 1, 2022 (the “Series A Closing Date”). The Series A Preferred Shares rank senior to our common shares with respect to dividend rights and rights on the distribution of assets on any liquidation, dissolution or winding up of the affairs of the Company, upon which the holders of Series A Preferred Shares would receive the greater of the $ 1,000 liquidation preference per share (the “Liquidation Preference”) plus accrued and unpaid dividends, or the amount they would have received if they had converted all of their Series A Preferred Shares to common shares immediately before such liquidation, dissolution or winding up. F-40 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 Holders of the Series A Preferred Shares are entitled to a dividend at the initial rate of 7 % of the Liquidation Preference per annum, paid in cash, in-kind in common shares or in Series A Preferred Shares, at the Company's election. On the five-year anniversary of the Series A Closing Date, and each five-year anniversary thereafter, the dividend rate will reset to a rate equal to the five-year U.S. treasury rate plus 5.2 %. Dividends accrue and are payable quarterly. For the years ended December 31, 2023 and 2022, cash dividends of $ 10.5 million and $ 8.8 million were declared, respectively, of which $ 2.6 million was payable at December 31 of both years. The Series A Preferred Shares are convertible at the option of the holders thereof at any time into common shares at an initial conversion price of $ 26.5950 , making the Series A Preferred Shares initially convertible into 5,640,158 common shares. The conversion price is subject to customary anti-dilution adjustments, including cash dividends on the common shares above specified levels, as well as certain adjustments in case of net adverse reserve developments in excess of a threshold over a period of time. The measurement period for the adverse reserve development anti-dilution adjustment commenced with the quarter beginning January 1, 2022 and ends with the quarter ending December 31, 2025. As of December 31, 2023, net adverse reserve development exceeded the threshold. If net adverse reserve development exceeds the threshold at the conclusion of the measurement period (or upon a mandatory or optional conversion, if earlier), the conversion price will be adjusted pursuant to the Certificate of Designations and the adjusted conversion price will become effective after the filing of the Company's financial statements for the period ending December 31, 2025 (or immediately after the close of business on the date of the public filing of the Company's financial statements for the most recent quarterly period preceding a mandatory or optional conversion, if earlier). None of the other triggers that would result in additional adjustments to the conversion price have been met at December 31, 2023. The Certificate of Designations setting forth the terms of the Series A Preferred Shares limits our ability to pay dividends to our common shareholders. If we pay cash dividends of more than $ 0.05 per common share per quarter, without the consent of at least the majority of the Series A Preferred Shares then outstanding, we will be required to reduce the conversion price of the Series A Preferred Shares. Additionally, the payment of cash dividends in excess of $ 0.10 per common share per quarter is not permitted if the dividends on the Series A Preferred Shares for that quarter are not paid in cash, unless the Company’s U.S.-based insurance subsidiaries and direct Bermuda-based insurance subsidiary satisfy certain capital requirements. Share dividends payable on the common shares to our shareholders also trigger a reduction of the conversion price applicable to the Series A Preferred Shares. At any time on or after the two year anniversary of the Series A Closing Date, if the volume-weighted average price (“VWAP”) per Common Share is greater than 130 % of the then-applicable conversion price for at least twenty (20) consecutive trading days, the Company will be able to elect to convert (a “Mandatory Conversion”) all of the outstanding Series A Preferred Shares into common shares. In the case of a Mandatory Conversion, each Series A Preferred Share then outstanding will be converted into (i) the number of common shares equal to the quotient of (A) the sum of the Liquidation Preference and the accrued and unpaid dividends with respect to such Series A Preferred Share to be converted divided by (B) the conversion price of such share in effect as of the date of the Mandatory Conversion plus (ii) cash in lieu of fractional shares. Upon any Mandatory Conversion on or before the five-year anniversary of the Series A Closing Date, all dividends that would have accrued from the date of the Mandatory Conversion to the later of the five-year anniversary of the Series A Closing Date or the last day of the eighth quarter following the date of the Mandatory Conversion, the last eight quarters of which will be discounted to present value using a discount rate of 3.5 % per annum, and will be immediately payable in common shares, valued at the average of the daily VWAP of the Company’s common shares during the five (5) trading days immediately preceding the Mandatory Conversion. The holders of the Series A Preferred Shares may require the Company to repurchase their shares upon the occurrence of certain change of control events. Upon the occurrence of a Fundamental Change (as defined in the Certificate of Designations designating the Series A Preferred Shares), each holder of outstanding Series A Preferred Shares will be permitted to, at its election, (i) effective as of immediately prior to the Fundamental Change, convert all or a portion of its Series A Preferred Shares into common shares, or (ii) require the Company to repurchase any or all of such holder’s Series A Preferred Shares at a purchase price per Series A Preferred Share equal to the Liquidation Preference of such Series A Preferred Share plus accrued and unpaid dividends plus, if the Fundamental Change repurchase occurs prior to the five-year anniversary of the Series A Closing Date, all dividends that would have accrued up to such five-year anniversary, but that have not been paid. The repurchase price will be payable in cash. F-41 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 Because the Company may be required to repurchase all or a portion of the Series A Preferred Shares at the option of the holder upon the occurrence of certain change of control events, the Series A Preferred Shares have been classified as mezzanine equity in the Company's consolidated balance sheets and are recognized at fair value of $ 150.0 million (the proceeds on the date of issuance) less issuance costs of $ 5.1 million, resulting in a carrying value of $ 144.9 million. Under the terms of the Investment Agreement, GPC Partners has the right to designate one member of the Board (the “Series A Designee”). GPC Partners has designated Matthew Botein as the Series A Designee and, accordingly, the Board approved the appointment of Mr. Botein to serve as a Class I director with a term expiring at the 2024 annual meeting of the Company’s shareholders. 13. Shareholders' Equity The Company has 200,000,000 common shares authorized with $ 0.0002 par value per share. The following table presents a rollforward of changes in common shares issued and outstanding. Year Ended December 31, 2023 2022 Issued and outstanding common shares, beginning of year 37,470,237 37,373,066 Vesting of RSU awards 171,326 97,171 Issued and outstanding common shares, end of year 37,641,563 37,470,237 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. The Company has 5,132,650 common shares reserved for future issuance upon exercise or vesting of equity awards, as applicable, and 5,971,184 common shares reserved for issuance upon conversion of the Series A Preferred Shares. F-42 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 The Board of Directors declared the following cash dividends on common shares in 2023, 2022, and 2021: Date of Declaration Dividend per Common Share Payable to Shareholders of Record on Payment Date Total Amount (thousands) 2023 February 16, 2023 $ 0.05 March 13, 2023 March 31, 2023 $ 1,922 April 27, 2023 $ 0.05 June 12, 2023 June 30, 2023 $ 1,921 July 27, 2023 $ 0.05 September 11, 2023 September 29, 2023 $ 1,922 October 26, 2023 $ 0.05 December 11, 2023 December 29, 2023 $ 1,919 Total $ 0.20 $ 7,684 2022 February 16, 2022 $ 0.05 March 14, 2022 March 31, 2022 $ 1,908 April 28, 2022 $ 0.05 June 13, 2022 June 30, 2022 $ 1,908 July 26, 2022 $ 0.05 September 12, 2022 September 30, 2022 $ 1,908 October 25, 2022 $ 0.05 December 12, 2022 December 30, 2022 $ 1,908 Total $ 0.20 $ 7,632 2021 February 24, 2021 $ 0.30 March 15, 2021 March 31, 2021 $ 9,345 April 27, 2021 $ 0.30 June 14, 2021 June 30, 2021 $ 11,291 July 27, 2021 $ 0.30 September 13, 2021 September 30, 2021 $ 11,282 October 26, 2021 $ 0.30 December 13, 2021 December 31, 2021 $ 11,292 Total $ 1.20 $ 43,210 Included in the dividends are $ 159,000 , $ 141,000 and $ 404,000 of dividend equivalents on RSUs, of which $ 255,000 , $ 335,000 and $ 518,000 were payable as of December 31, 2023, 2022, and 2021, respectively. 14. Equity Awards Equity Incentive Plans The Company’s shareholders have approved various equity incentive plans, including the 2014 Long Term Incentive Plan (“2014 LTIP”) and the 2014 Non-Employee Director Incentive Plan (“2014 Director Plan”) (collectively, the “Plans”). All awards issued under the Plans are issued at the discretion of the Board of Directors. Employees are eligible to receive non-qualified stock options, incentive stock options, share appreciation rights, performance shares, restricted shares, RSUs, and other awards under the 2014 LTIP. The 2014 LTIP was amended on October 25, 2022, increasing the number of shares available for issuance under the 2014 LTIP by 811,500 shares. Following the amendment, the maximum number of shares available for issuance under the 2014 LTIP is 4,982,650 , and at December 31, 2023, 1,521,880 shares are available for grant. On July 26, 2022, the Board of Directors of the Company approved a new long-term incentive plan (the “LTI Plan”) under the 2014 LTIP. The LTI Plan is designed to align compensation of designated senior officers of the Company with Company performance and shareholder interests over the long-term. Awards under the LTI Plan are made in the form of performance restricted share units (a “PRSU”) and service based restricted share units (RSUs). Initial awards were granted in the first quarter of 2023. Each PRSU will represent a contingent right to receive one Company common share based upon the level of achievement of certain performance metrics during the performance period, with payout for achievement of threshold, target and maximum performance levels to be set at 50 %, 100 % and 200 % of the target number of PRSUs, respectively. The initial PRSU awards have a performance period of January 1, 2023 through December 31, 2025. 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. The maximum number of shares available for issuance under the 2014 Director Plan is 150,000 , and at December 31, 2023, 66,999 shares are available for grant. F-43 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 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). Options The following table summarizes the option activity: Year Ended December 31, 2023 2022 2021 Shares Weighted- Average Exercise Price Shares Weighted- Average Exercise Price Shares Weighted- Average Exercise Price Outstanding: Beginning of year 287,974 $ 35.26 287,974 $ 35.26 463,324 $ 32.25 Granted — $ — — $ — — $ — Exercised — $ — — $ — ( 126,798 ) $ 22.26 Lapsed ( 164,548 ) $ 32.07 — $ — — $ — Forfeited ( 49,036 ) $ 35.50 — $ — ( 48,552 ) $ 40.42 End of year 74,390 $ 42.17 287,974 $ 35.26 287,974 $ 35.26 Exercisable, end of year 74,390 $ 42.17 287,974 $ 35.26 287,974 $ 35.26 All of the outstanding options are fully vested (vesting period of three years from date of grant) 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. The intrinsic value of each option is determined based on the difference between the fair value of the underlying share and the exercise price of the underlying option. The total intrinsic value of options exercised during 2023, 2022 and 2021 was $ 0 , $ 0 and $ 1.3 million, respectively. The aggregate intrinsic value of options outstanding and options exercisable was $ 0 at December 31, 2023, 2022 and 2021. The fair value used for calculating intrinsic values was $ 9.24 , $ 20.91 and $ 28.81 at December 31, 2023, 2022 and 2021, respectively. The weighted-average remaining contractual life of the options outstanding and exercisable at December 31, 2023 is 0.1 years. There were no options granted in 2023, 2022, or 2021. The value of the options granted was estimated at the date of grant using the Black-Scholes-Merton option pricing model. RSUs The following table summarizes RSU activity: Year Ended December 31, 2023 2022 2021 Shares Weighted- Average Grant Date Fair Value Shares Weighted- Average Grant Date Fair Value Shares Weighted- Average Grant Date Fair Value Unvested, beginning of year 665,458 $ 25.98 292,135 $ 45.89 399,856 $ 43.59 Granted 388,517 $ 24.13 560,680 $ 20.61 161,971 $ 47.82 Vested ( 250,793 ) $ 30.99 ( 147,530 ) $ 45.16 ( 194,157 ) $ 42.74 Forfeited ( 51,928 ) $ 24.08 ( 39,827 ) $ 25.41 ( 75,535 ) $ 45.98 Unvested, end of year 751,254 $ 23.48 665,458 $ 25.98 292,135 $ 45.89 Outstanding RSUs granted to employees generally vest ratably over a three year vesting period. RSUs granted to non-employee directors generally have a one year vesting period. The total fair value of shares vested in 2023, 2022 and 2021 was $ 5.6 million, $ 3.8 million and $ 9.1 million, respectively. The holders of RSUs are entitled to dividend equivalents. The dividend equivalents are settled in cash at the same time that the underlying RSUs vest and are subject to the same risk of F-44 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 forfeiture as the underlying shares. The fair value of the RSUs granted is based on the market price of the underlying shares at the date of grant. The RSUs granted in 2023 include 91,818 PRSU awards. Compensation Expense Share based compensation expense is recognized on a straight-line basis over the vesting period. Compensation cost for PRSUs is based upon the probable outcome of performance conditions. The amount of expense and related tax benefit is summarized below: Year Ended December 31, 2023 2022 2021 (in thousands) Share based compensation expense $ 9,116 $ 8,122 $ 6,658 U.S. tax benefit on share based compensation expense $ 1,690 $ 1,526 $ 1,206 At December 31, 2023, the Company had $ 10.2 million of unrecognized share based compensation expense expected to be charged to earnings over a weighted-average period of 1.7 years. 15. Income Taxes Currently, James River Group Holdings, Ltd. and its Bermuda-based subsidiary, JRG Re, are not subject to income or capital tax. The Companies have obtained from the Bermuda Minister of Finance an assurance that, in the event Bermuda enacts legislation imposing tax, the imposition of any such tax shall not be applicable to the Company until March 31, 2035 (the “EUTP Act”). Effective for tax years beginning on or after January 1, 2025, Bermuda has introduced the Corporate Income Tax Act 2023 ("CIT Act") where a Bermuda Constituent Entity group (BCE) that is part of an “in scope Multi-National Enterprise group” (MNE) will be subject to a 15% corporate income tax. The CIT Act will supersede the assurance received from the Bermuda Minister of Finance under the EUTP Act. A MNE group with a limited international footprint is not an in scope MNE, thus not subject to CIT. The limited international footprint exception is a year-by-year test and expires after tax year 2029. James River Group Holdings, Ltd. is expected to meet the criteria of the limited international footprint exception, and as such is not expected to be subject to tax under the CIT act. Distributions from the Company’s U.S. subsidiaries to its U.K. intermediate holding company, James River UK, are generally subject to a 5 % dividend withholding tax. No distributions occurred in 2023, 2022 or 2021. The Company’s U.S. subsidiaries are subject to federal, state and local corporate income taxes, and other taxes applicable to U.S. corporations. The Company’s U.S.-domiciled subsidiaries file a consolidated U.S. federal income tax return. The Company’s U.S.-based subsidiaries are generally no longer subject to income tax examination by U.S. income tax authorities for the tax years ending before January 1, 2020. 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. The Tax Act has specific transition provisions associated with reserve discounting. 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. The regulations were finalized in 2019, and the remaining reserve adjustment at December 31, 2019 based on these final regulations was $ 5.7 million to be recognized over the six years 2020 - 2025 at $ 950,000 per year. 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 2023, 2022 and 2021 for Bermuda and the U.S., respectively. The U.S. income (loss) before Federal income taxes was $ 119.9 million, $ 85.9 million, and $( 89.3 ) million for the years ending December 31, 2023, 2022, and 2021, 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. BEAT subjects the modified taxable income of an applicable taxpayer to a specified tax rate (10% in 2023). Modified taxable income is generally calculated by adding back certain payments to related foreign persons to regular taxable income. A reconciliation of the difference F-45 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 between the Company’s Federal income tax provision on U.S. income and the expected Federal tax provision on U.S. income using the weighted-average tax rate as well as a reconciliation to total tax expense is as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Federal income tax expense (benefit) at applicable statutory rates $ 25,175 $ 18,041 $ ( 18,750 ) Tax-exempt investment income ( 230 ) ( 225 ) ( 278 ) Dividends received deduction ( 386 ) ( 315 ) ( 298 ) Excess tax expense (benefits) on share based compensation 449 530 ( 208 ) Provision to return and amended tax returns ( 211 ) 124 ( 3,945 ) Excess §162(m) compensation 522 210 210 Other ( 14 ) 49 23 Federal income tax expense (benefit) $ 25,305 $ 18,414 $ ( 23,246 ) U.S. state income tax expense 400 — 11 Total income tax expense (benefit) $ 25,705 $ 18,414 $ ( 23,235 ) The significant components of net deferred tax assets at the corporate income tax rate of 21% for the years ended December 31, 2023 and 2022 are summarized as follows: December 31, 2023 2022 (in thousands) Deferred tax assets: Accrued compensation expenses $ 3,302 $ 3,539 Reserve for losses and loss adjustment expenses 27,260 20,706 Unearned premiums 12,484 13,034 Share based compensation 1,692 1,842 Allowance for credit losses 3,240 2,549 Net unrealized losses 16,613 24,066 Other 4,836 3,991 Total deferred tax assets 69,427 69,727 Deferred tax liabilities: Intangible assets 6,733 7,281 Deferred policy acquisition costs 6,614 6,896 Equity method investments 3,470 3,327 Other 4,313 3,379 Total deferred tax liabilities 21,130 20,883 Net deferred tax assets $ 48,297 $ 48,844 Deferred income taxes have not been accrued with respect to certain undistributed earnings of foreign subsidiaries. If the earnings were to be distributed, as dividends or otherwise, such amounts may be subject to withholding taxation in the jurisdiction of the paying entity. The Company asserts that U.S. unremitted earnings as of December 31, 2023 will be permanently reinvested in the U.S. and, accordingly, no provision for withholding taxes arising in respect to U.S. 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. At December 31, 2023, the Company has no net operating loss carryforwards. F-46 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 The Company had no reserve for future tax contingencies or liabilities (“unrecognized tax benefits”) at December 31, 2023 or 2022. The U.S. imposes a 1 % excise tax on reinsurance premiums paid to non-U.S. reinsurers with respect to risks located in the U.S. The rates of tax are established based on the nature of the risk, unless reduced by an applicable U.S. tax treaty. For the years ended December 31, 2023, 2022, and 2021, the Company paid $ 0 , $ 0 , and $ 338,000 , respectively, of federal excise taxes on its intercompany reinsurance transactions. The Company also paid excise taxes of $ 194,000 , $ 842,000 , and $ 1.5 million for the years ended December 31, 2023, 2022, and 2021, 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 Statements of (Loss) Income and Comprehensive Loss. 16. Other Operating Expenses and Other Expenses Other operating expenses consist of the following: Year Ended December 31, 2023 2022 2021 (in thousands) Amortization of policy acquisition costs $ 72,633 $ 49,809 $ 41,886 Other underwriting expenses of the insurance segments 87,083 71,501 63,626 Other operating expenses of the Corporate and Other segment 33,940 31,260 27,609 Total $ 193,656 $ 152,570 $ 133,121 Other expenses of $ 3.8 million, $ 795,000 , and $ 2.6 million for the years ended December 31, 2023, 2022, and 2021, respectively, primarily consist of certain nonoperating expenses including legal fees related to a class action lawsuit, legal and other professional fees related to the Company's May 2021 common share offering, legal and other professional fees and other expenses related to various strategic initiatives including loss portfolio transfers accounted for as retroactive reinsurance, and employee severance costs. 17. Employee Benefits The Company and its subsidiaries offer savings plans (the “Savings Plans”) which qualify under Section 401(k) of the U.S. Internal Revenue Code. Participants may contribute certain percentages of their pre-tax salary to the Savings Plans subject to statutory limitations. The Company and its subsidiaries match employee contributions at various rates up to a maximum contribution of 6.0 % of the participant’s earnings subject to certain statutory limits. For the years ended December 31, 2023, 2022, and 2021, the expense associated with the Savings Plans totaled $ 4.1 million, $ 3.5 million, and $ 3.4 million, respectively. 18. Commitments and Contingent Liabilities The Company is involved in various legal proceedings, including commercial matters and litigation regarding insurance claims which arise 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 the Company's 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 “First Amended Complaint”). The Defendants filed a motion to dismiss the First Amended Complaint on January 18, 2022, Plaintiffs’ opposition thereto was filed on March 4, 2022, and the Defendants’ reply to the Plaintiffs’ opposition was filed on April 4, 2022. On August 25, 2022, Plaintiffs filed a motion for leave to file a second amended class action complaint (the “Second Amended Complaint”). On September 8 , 2022, the Defendants consented to the Plaintiffs’ motion to file the Second Amended Complaint, and filed a motion to dismiss the Second Amended Complaint on October 24, 2022 (the “Second MTD”). The Plaintiffs’ opposition to the Second MTD was filed on November 7, 2022, and the Defendant’s reply to the Plaintiffs’ opposition was filed on November 14, 2022. On August 28, 2023, the Court denied the Second MTD. F-47 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 The Second Amended Complaint 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, 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. We engaged in mediation in the fourth quarter of 2023 and on December 7, 2023, in connection with the mediation, we reached an agreement in principle to settle the action. On December 22, 2023, the parties submitted the stipulation of settlement to the Court for approval. The settlement provides for a full release of all defendants in connection with the allegations made and a settlement payment to the class of $ 30 million, inclusive of all Plaintiffs’ attorneys fees and expenses and settlement costs, all of which will be paid by the Company’s insurance carriers. On January 26, 2024 the Court issued an order granting preliminary approval of the settlement and scheduled a final settlement hearing for May 24, 2024. On November 13, 2023, a purported class action lawsuit was filed in the U.S. District Court, Southern District of New York, on behalf of Paul Glantz against James River Group Holdings, Ltd. and certain of its officers, asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Mr. Glantz alleges that he purchased James River common stock between August 7, 2023 and November 7, 2023, inclusive, that the Company failed to disclose that it lacked effective internal controls regarding the recognition of reinstatement premiums for reinsurance and as a result the Company overstated its net income, and that, as a result, Mr. Glantz suffered unspecified damages. On January 12, 2024, both Mr. Glantz and Madhav Ghimire, another individual shareholder, filed an application with the Court for appointment as Lead Plaintiff, and on January 26, 2024 Mr. Glantz filed a notice of non-opposition to Mr. Ghimire's competing motion for appointment as Lead Plaintiff. The court's appointment of Lead Plaintiff is pending. The Company believes that the claims are without merit and intends to vigorously defend this lawsuit. 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 the Commercial Auto LPT with Aleka to reinsure substantially all of the Rasier Commercial Auto Policies for which James River is not otherwise indemnified by Rasier under the Indemnity Agreements. Under the terms of the Commercial Auto LPT, 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. For the years ended December 31, 2023 and 2022, due to adverse paid and reported loss trends on the legacy Rasier business, the Company recognized adverse prior year development of $ 64.4 million and $ 46.7 million, respectively, on the reserves subject to the Commercial Auto LPT, bringing the cumulative amount ceded under the Commercial Auto LPT to $ 456.2 million at December 31, 2023. Each of Rasier and Aleka are required to post collateral under the Indemnity Agreements and the Commercial Auto LPT: • Pursuant to the Indemnity Agreements, Rasier is required to post collateral equal to 102 % of James River's estimate of 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 Commercial Auto LPT, 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, 2023, the balance in the Indemnity Trust was $ 138.4 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 $ 183.6 million. • Pursuant to the Commercial Auto LPT, Aleka is required to post collateral equal to 102 % of James River's estimate of Aleka's obligations under the Commercial Auto LPT, calculated in accordance with standard actuarial principles and based on reserves recorded in the Company's statutory financial statements. The collateral is provided through a collateral trust arrangement (the “LPT Trust”) established in favor of James River by Aleka. At December 31, 2023, the balance in the LPT Trust was $ 63.7 million, and, together with the balance of the Loss Fund Trust (as defined below) attributable to the Commercial Auto LPT as described below, the total balance of collateral securing Aleka’s obligations under the Commercial F-48 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 Auto LPT was $ 83.8 million. At December 31, 2023, the total reinsurance recoverables under the Commercial Auto LPT was $ 84.5 million (including $ 78.1 million of unpaid recoverables and $ 6.4 million of paid recoverables). In connection with the execution of the Commercial Auto LPT, 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 Commercial Auto LPT and James River’s existing third party reinsurance agreements, respectively. At December 31, 2023, the balance in the Loss Fund Trust was $ 72.4 million, including $ 45.2 million representing collateral supporting Rasier’s obligations under the Indemnity Agreements and $ 20.0 million representing collateral supporting Aleka’s obligations under the Commercial Auto LPT. Funds posted to the Loss Fund Trust are classified as restricted cash equivalents on the Company's balance sheet. While the Commercial Auto LPT brings economic finality to substantially all of the Rasier Commercial Auto Policies, the Company has credit exposure to Rasier and Aleka under the Indemnity Agreements and the Commercial Auto LPT if the estimated losses and expenses of the Rasier Commercial Auto Policies grow at a faster pace than the growth in our collateral balances. In addition, the Company has credit exposure if its estimates of future losses and loss adjustment expenses and other amounts recoverable under the Indemnity Agreements and the Commercial Auto LPT, which are the basis for establishing the collateral balances, are lower than actual amounts paid or payable. The amount of credit exposure in any of these instances could be material. To mitigate these risks, the Company closely and frequently monitors exposure compared to collateral held, and requests additional collateral in accordance with the terms of the Commercial Auto LPT and Indemnity Agreements when its analysis indicates that the Company has uncollateralized exposure. 19. Other Comprehensive Income (Loss) The following table summarizes the components of other comprehensive income (loss): Year Ended December 31, 2023 2022 2021 (in thousands) Unrealized gains (losses) arising during the period, before U.S. income taxes $ 105,368 $ ( 219,788 ) $ ( 54,132 ) U.S. income taxes ( 6,313 ) 26,780 6,189 Unrealized gains (losses) arising during the period, net of U.S. income taxes 99,055 ( 193,008 ) ( 47,943 ) Less reclassification adjustment: Net realized investment (losses) gains ( 339 ) 275 4,924 U.S. income taxes 71 ( 261 ) ( 946 ) Reclassification adjustment for investment (losses) gains realized in net income ( 268 ) 14 3,978 Other comprehensive income (loss) $ 99,323 $ ( 193,022 ) $ ( 51,921 ) In addition to the net realized investment (losses) gains of $( 339,000 ), $ 275,000 , and $ 4.9 million on available-for-sale fixed maturity securities for the years ended December 31, 2023, 2022, and 2021, the Company recognized net realized and unrealized investment gains (losses) in the respective years of $ 5.5 million, $( 5.7 ) million, and $ 2.0 million on its investments in bank loan participations and $ 5.2 million, $( 11.1 ) million, and $ 4.3 million on its investments in equity securities. F-49 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 20. Segment Information The Company's continuing operations are comprised of three reportable segments, two of which are separately managed business units and the third (“Corporate and Other”) includes the Company’s remaining operations. The Excess and Surplus Lines segment primarily offers commercial excess and surplus lines liability and excess property insurance products. The Specialty Admitted Insurance segment offers specialty admitted fronting and program business and workers’ compensation insurance coverage. The Corporate and Other segment consists of certain management and treasury activities of James River Group, James River UK, and JRG Holdings as well as interest expense associated with senior debt and Junior Subordinated Debt, and investment income. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Prior to entering into a definitive agreement to sell JRG Re on November 8, 2023, JRG Re was considered a reportable segment (the “Casualty Reinsurance” segment). After entering into the agreement to sell JRG Re, the Company no longer considers Casualty Reinsurance to be a reportable segment, but instead it is reported as discontinued operations. The segment information below excludes discontinued operations for all periods presented. Segment revenues for each reportable segment consist of net earned premiums, net investment income, and realized and unrealized (losses) gains on investments. Segment profit (loss) is measured by underwriting profit (loss), which is generally defined as net earned premiums and gross fee income (in specific instances when the Company is not retaining insurance risk) in “other income” in the Consolidated Statements of (Loss) Income and Comprehensive Loss less loss and loss adjustment expenses on business not subject to retroactive reinsurance accounting for loss portfolio transfers (see Loss Portfolio Transfer in Note 8 - Reserve for Losses and Loss Adjustment Expenses ) and other operating expenses of the operating segments. Gross fee income of $ 5.3 million, $ 3.8 million, and $ 4.5 million from the Specialty Admitted Insurance segment for the years ended December 31, 2023, 2022, and 2021, respectively, was included in other income and in underwriting profit (loss). Segment results are reported prior to the effects of intercompany pooling agreements and intercompany reinsurance agreements. All gross written premiums and net earned premiums for all periods presented were generated from policies issued to U.S. based insureds. Excess and Surplus Lines Specialty Admitted Insurance Corporate and Other Total (in thousands) As of and for the Year Ended December 31, 2023 Gross written premiums $ 1,007,351 $ 501,309 $ — $ 1,508,660 Net earned premiums 609,566 98,439 — 708,005 Segment revenues 690,388 119,777 1,844 812,009 Net investment income 69,325 13,568 1,153 84,046 Interest expense — — 24,627 24,627 Underwriting profit of operating segments 54,347 4,077 — 58,424 Segment goodwill 181,831 — — 181,831 Segment assets 3,083,798 1,387,020 63,039 4,533,857 As of and for the Year Ended December 31, 2022 Gross written premiums $ 921,164 $ 490,208 $ — $ 1,411,372 Net earned premiums 555,597 74,137 — 629,734 Segment revenues 570,087 81,593 9,834 661,514 Net investment income 28,664 5,068 9,456 43,188 Interest expense — — 13,872 13,872 Underwriting profit of operating segments 83,051 4,234 — 87,285 Segment goodwill 181,831 — — 181,831 Segment assets 2,627,956 1,277,988 85,332 3,991,276 F-50 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 As of and for the Year Ended December 31, 2021 Gross written premiums $ 833,657 $ 491,561 $ — $ 1,325,218 Net earned premiums 486,000 75,371 — 561,371 Segment revenues 508,829 83,855 16,351 609,035 Net investment income 13,811 3,044 15,134 31,989 Interest expense — — 8,922 8,922 Underwriting (loss) profit of operating segments ( 121,478 ) 9,667 — ( 111,811 ) Segment goodwill 181,831 — — 181,831 Segment assets 1,997,192 1,062,125 647,700 3,707,017 The following table reconciles the underwriting profit (loss) of operating segments by individual segment to consolidated income (loss) from continuing operations before income taxes: Year Ended December 31, 2023 2022 2021 (in thousands) Underwriting profit (loss) of the operating segments: Excess and Surplus Lines $ 54,347 $ 83,051 $ ( 121,478 ) Specialty Admitted Insurance 4,077 4,234 9,667 Total underwriting profit (loss) of operating segments 58,424 87,285 ( 111,811 ) Other operating expenses of the Corporate and Other segment ( 33,940 ) ( 31,260 ) ( 27,609 ) Underwriting profit (loss) 24,484 56,025 ( 139,420 ) Losses and loss adjustment expenses - retroactive reinsurance ( 4,991 ) ( 15,742 ) — Net investment income 84,046 43,188 31,989 Net realized and unrealized gains (losses) on investments 10,441 ( 15,720 ) 10,818 Other income 4,216 551 353 Other expenses ( 3,792 ) ( 795 ) ( 2,585 ) Interest expense ( 24,627 ) ( 13,872 ) ( 8,922 ) Amortization of intangible assets ( 363 ) ( 363 ) ( 363 ) Impairment of intangible assets ( 2,500 ) — — Income (loss) from continuing operations before income taxes $ 86,914 $ 53,272 $ ( 108,130 ) The Company currently has 15 underwriting divisions, including 14 in the Excess and Surplus Lines segment, and one in the Specialty Admitted Insurance segment. Each underwriting division focuses on a specific industry group or coverage. F-51 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 Gross written premiums by segment and underwriting division are presented below: Year Ended December 31, 2023 2022 2021 (in thousands) Excess Casualty $ 339,870 $ 310,383 $ 285,082 General Casualty 202,861 173,574 140,608 Manufacturers and Contractors 180,074 156,645 139,720 Excess Property 64,574 52,104 47,241 Energy 51,593 42,290 46,216 Small Business 38,561 36,930 32,593 Allied Health 30,904 34,156 35,192 Commercial Auto 29,379 37,974 34,630 Life Sciences 27,595 32,277 35,935 Sports and Entertainment 17,826 13,934 9,442 Environmental 13,832 20,676 17,050 Professional Liability 9,264 8,936 8,104 Medical Professionals 955 1,285 1,844 Management Liability 63 — — Total Excess and Surplus Lines segment 1,007,351 921,164 833,657 Specialty Admitted Insurance segment 501,309 490,208 491,561 Total $ 1,508,660 $ 1,411,372 $ 1,325,218 The Company does business with three brokers that generated $ 324.7 million, $ 246.4 million and $ 145.2 million of gross written premiums for the Excess and Surplus Lines segment for the year ended December 31, 2023, representing 21.5 %, 16.3 % and 9.6 % of consolidated gross written premiums and 32.2 %, 24.5 % and 14.4 % of the Excess and Surplus Lines segment’s gross written premiums, respectively. The Company has agency contracts with various branches within the aforementioned brokers. No other broker generated 10.0% or more of the gross written premiums for the Excess and Surplus Lines segment for the year ended December 31, 2023. No individual insured generated 10.0% or more of the gross written premiums for the Excess and Surplus Lines segment for the year ended December 31, 2023. The Specialty Admitted Insurance segment accepts applications for insurance from a variety of sources, including independent retail agents, program administrators and managing general agents (“MGAs”). The Company does business with two agencies that generated $ 163.1 million and $ 96.5 million of gross written premiums for the Specialty Admitted Insurance segment for the year ended December 31, 2023, representing 10.8 % and 6.4 % of consolidated gross written premiums and 32.5 % and 19.2 % of the Specialty Admitted Insurance segment’s gross written premiums, respectively. No other agency generated 10.0% or more of the gross written premiums for the Specialty Admitted Insurance segment for the year ended December 31, 2023. 21. Fair Value Measurements Three levels of inputs are used to measure fair value of financial instruments: (1) Level 1: quoted price (unadjusted) in active markets for identical assets, (2) Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument, and (3) Level 3: inputs to the valuation methodology are unobservable for the asset or liability. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair values of fixed maturity securities, equity securities, and bank loan participations have been determined using fair value prices provided by the Company's investment accounting services provider or investment managers, who utilize internationally recognized independent pricing services. The prices provided by the independent pricing services are generally based on observable market data in active markets ( e.g. broker quotes and prices observed for comparable securities). Values for U.S. Treasury and publicly-traded equity securities are generally based on Level 1 inputs which use the market approach valuation technique. The values for all other fixed maturity securities (including state and municipal securities and obligations F-52 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 of U.S. government corporations and agencies) and bank loan participations generally incorporate significant Level 2 inputs, and in some cases, Level 3 inputs, using the market approach and income approach valuation techniques. There have been no changes in the Company’s use of valuation techniques since December 31, 2021. The Company reviews fair value prices provided by its outside investment accounting service provider or investment managers for reasonableness by comparing the fair values provided by the managers to those provided by its investment custodian. The Company also reviews and monitors changes in unrealized gains and losses. The Company has not historically adjusted security prices. The Company obtains an understanding of the methods, models and inputs used by the investment managers and independent pricing services, and controls are in place to validate that prices provided represent fair values. The Company’s control process includes, but is not limited to, initial and ongoing evaluation of the methodologies used, a review of specific securities and an assessment for proper classification within the fair value hierarchy, and obtaining and reviewing internal control reports for the investment manager that obtains fair values from independent pricing services. Assets measured at fair value on a recurring basis as of December 31, 2023 are summarized below: Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets Level 1 Significant Other Observable Inputs Level 2 Significant Unobservable Inputs Level 3 Total (in thousands) Fixed maturity securities, available-for-sale: State and municipal $ — $ 248,837 $ — $ 248,837 Residential mortgage-backed — 317,928 — 317,928 Corporate — 505,728 — 505,728 Commercial mortgage and asset-backed — 222,853 — 222,853 U.S. Treasury securities and obligations guaranteed by the U.S. government 29,130 — — 29,130 Total fixed maturity securities, available-for-sale $ 29,130 $ 1,295,346 $ — $ 1,324,476 Equity securities: Preferred stock $ — $ 69,310 $ — $ 69,310 Common stock 48,370 2,254 11 50,635 Total equity securities $ 48,370 $ 71,564 $ 11 $ 119,945 Bank loan participations $ — $ 156,169 $ — $ 156,169 Short-term investments $ — $ 72,137 $ — $ 72,137 F-53 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 Assets measured at fair value on a recurring basis as of December 31, 2022 are summarized below: Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets Level 1 Significant Other Observable Inputs Level 2 Significant Unobservable Inputs Level 3 Total (in thousands) Fixed maturity securities, available-for-sale: State and municipal $ — $ 229,254 $ — $ 229,254 Residential mortgage-backed — 274,575 — 274,575 Corporate — 420,045 — 420,045 Commercial mortgage and asset-backed — 218,388 — 218,388 U.S. Treasury securities and obligations guaranteed by the U.S. government 28,721 320 — 29,041 Total fixed maturity securities, available-for-sale $ 28,721 $ 1,142,582 $ — $ 1,171,303 Equity securities: Preferred stock $ — $ 67,374 $ — $ 67,374 Common stock 45,232 2,542 7 47,781 Total equity securities $ 45,232 $ 69,916 $ 7 $ 115,155 Bank loan participations $ — $ 54,281 $ — $ 54,281 Short-term investments $ — $ 95,351 $ — $ 95,351 A reconciliation of the beginning and ending balances of available-for-sale fixed maturity securities, equity securities, and bank loan participations measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is shown below: Year Ended December 31, 2023 2022 2021 (in thousands) Beginning balance $ 7 $ 39 $ 362 Transfers in to Level 3 — — 3 Transfers out of Level 3 — — ( 3 ) Purchases — — — Sales — ( 35 ) ( 156 ) Maturities, calls and paydowns — — ( 143 ) Amortization of discount — — — Total gains or losses (realized/unrealized): Included in earnings 4 3 ( 24 ) Included in other comprehensive income — — — Ending balance $ 11 $ 7 $ 39 The Company held one equity security at December 31, 2023 for which the fair value was determined using significant unobservable inputs (Level 3). The fair value of $ 11,000 for the equity security was obtained from our asset manager and was derived from an internal model. The Company held one equity security at December 31, 2022 for which the fair value was determined using significant unobservable inputs (Level 3). The fair value of $ 7,000 for the equity security was obtained from our asset manager and was derived from an internal model. The Company held one equity security at December 31, 2021 for which the fair value was determined using significant unobservable inputs (Level 3). The fair value of $ 39,000 for the equity security was based on expected proceeds from its sale. F-54 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 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 was publicly traded and it was transferred from Level 3 to Level 1. Transfers out of Level 3 occur when the Company is able to obtain reliable prices from pricing vendors for which the Company was previously unable to obtain reliable prices. Transfers in to Level 3 occur when the Company is unable to obtain reliable prices for securities from pricing vendors and instead must use broker price quotes. There were no transfers between Level 1 and Level 2 during 2023, 2022 or 2021. The Company recognizes transfers between levels at the beginning of the reporting period. 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. External pricing sources may include brokers, dealers and price data vendors that provide a composite price based on prices from multiple dealers. Such external pricing sources typically provide valuations for normal institutional size trading units of such securities using methods based on market transactions for comparable securities, and various relationships between securities, as generally recognized by institutional dealers. For investments in which the investment manager determines that only one external pricing source is appropriate or if only one external price is available, the relevant investment is generally recorded at fair value based on such price. Investments for which external sources are not available or are determined by the investment manager not to be representative of fair value are recorded at fair value as determined by the Company, with input from its investment managers and valuation specialists as considered necessary. In determining the fair value of such investments, the Company considers one or more of the following factors: type of security held, convertibility or exchangeability of the security, redeemability of the security (including the timing of redemptions), application of industry accepted valuation models, recent trading activity, liquidity, estimates of liquidation value, purchase cost, and prices received for securities with similar terms of the same issuer or similar issuers. There were no investments for which external sources were unavailable to determine fair value as of December 31, 2023 and 2022. The carrying values and fair values of financial instruments are summarized below: December 31, 2023 2022 Carrying Value Fair Value Carrying Value Fair Value (in thousands) Assets Fixed maturity securities, available-for-sale $ 1,324,476 $ 1,324,476 $ 1,171,303 $ 1,171,303 Equity securities 119,945 119,945 115,155 115,155 Bank loan participations 156,169 156,169 54,281 54,281 Cash and cash equivalents 274,298 274,298 159,200 159,200 Restricted cash equivalents 72,449 72,449 103,215 103,215 Short-term investments 72,137 72,137 95,351 95,351 Other invested assets – notes receivable 12,174 11,702 7,205 7,703 Liabilities Senior debt 222,300 233,408 222,300 226,063 Junior subordinated debt 104,055 138,264 104,055 127,149 The fair values of fixed maturity securities, equity securities, and bank loan participations have been determined using quoted market prices for securities traded in the public market or prices using bid or closing prices for securities not traded in the public marketplace. The fair values of cash and cash equivalents and short-term investments approximate their carrying values due to their short-term maturity. The fair values of other invested assets-notes receivable, senior debt, and junior subordinated debt at December 31, 2023 and 2022 were determined by calculating the present value of expected future cash flows under the terms of the note agreements or debt agreements, as applicable, discounted at an estimated market rate of interest at December 31, 2023 and 2022, respectively. The Company also utilized an internally developed valuation model based on the spread of a comparable market index to determine the fair value of certain other invested assets-notes receivable at December 31, 2023. F-55 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 The fair values of senior debt and junior subordinated debt at December 31, 2023 and 2022 were determined using inputs to the valuation methodology that are unobservable (Level 3). 22. Statutory Matters U.S. U.S. state insurance laws and regulations prescribe accounting practices for determining statutory net income and capital and surplus for insurance companies. 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 insurance subsidiaries differ from U.S. GAAP. 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. 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. insurance subsidiaries as of December 31, 2023, 2022, and 2021 and for the years then ended are summarized as follows: 2023 2022 2021 (in thousands) Statutory net income (loss) $ 90,469 $ 42,565 $ ( 3,847 ) Statutory capital and surplus 615,427 493,303 325,368 Minimum required statutory capital and surplus 220,449 165,809 111,031 Risk-Based Capital (“RBC”) requirements promulgated by the National Association of Insurance Commissioners require property-casualty insurers to maintain minimum capitalization levels determined based on formulas incorporating various business risks of the insurance subsidiaries. As of December 31, 2023, the insurance subsidiaries’ adjusted capital and surplus exceeds their authorized control level RBC. 23. Dividend Restrictions U.S. The insurance statutes of the U.S.-based insurance subsidiaries’ states of domicile limit the amount of dividends that they may pay annually without first obtaining regulatory approval. Generally, the limitations are based on the greater of statutory net income for the preceding year or 10.0 % of statutory surplus at the end of the preceding year. The maximum amount of dividends available to James River Group from its U.S. insurance subsidiaries during 2024 without regulatory approval is $ 107.1 million. However, U.S. insurance regulators have broad powers to prevent the reduction of statutory surplus to inadequate levels and could refuse to permit the payment of dividends. Distributions from the Company’s U.S.-based subsidiaries to its U.K. intermediate holding company, James River UK, are generally subject to a 5 % dividend withholding tax. The payment of any dividends by the Company’s U.S.-based subsidiaries directly to a Bermuda-based entity is subject to U.S. taxes at a 30.0 % tax rate. JRG Holdings has determined that earnings of its U.S. subsidiaries have been and will be indefinitely reinvested in U.S. operations. 24. Other Related Party Transactions The Company leases a commercial office building which houses the Company’s Richmond, Virginia operations under the terms of a non-cancelable lease from an entity with which it is affiliated. The term of the lease, which has been amended from time to time, runs through 2026. Operating costs under the lease were $ 2.1 million for each of the years ended December 31, 2023, 2022, and 2021, respectively. 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. F-56 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 25. Subsequent Events On February 15, 2024, the Board of Directors declared a cash dividend of $ 0.05 per common share. The dividend is payable on March 29, 2024 to shareholders of record on March 11, 2024 . On February 15, 2024, the Board of Directors declared a quarterly dividend on the Series A Preferred Shares. The dividend of $ 2.6 million will be payable in cash on April 1, 2024 to shareholders of record on March 15, 2024 . On February 15, 2024, 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 $ 9.4 million and a grant date of March 1, 2024. The 2013 Facility and 2017 Facility contain certain financial and other covenants with which we are in compliance at December 31, 2023, with the exception of a default of the financial strength rating covenant due to the downgrade of JRG Re by A.M. Best on December 20, 2023 from “A-” (Excellent) to “B++” (good). The financial strength rating covenant requires that each of our regulated insurance subsidiaries maintain an A.M. Best rating not lower than “A-” (Excellent). On February 26, 2024, our lenders waived this default through March 1, 2025, which, in any event, we expect to be cured upon the closing of the sale of JRG Re, at which time we expect JRG Re to be removed as a borrower under the 2013 Facility and 2017 Facility. On February 26, 2024, JRGH received $ 5.8 million from JRG Re representing the cash portion of the pre-closing dividend pursuant to the Stock Purchase Agreement covering the sale of JRG Re. See Note 2 - Discontinued Operations. 26. Unaudited Selected Quarterly Financial Data The following is a summary of the unaudited quarterly results of operations: 2023 Quarter 2023 First Second Third Fourth Year (in thousands except per share data) Gross written premiums $ 353,454 $ 423,050 $ 342,851 $ 389,305 $ 1,508,660 Total revenues 188,804 194,782 210,319 218,104 812,009 Underwriting profit 7,314 1,878 11,827 3,465 24,484 Income from continuing operations 5,302 12,129 23,722 20,056 61,209 Income (loss) from discontinued operations 1,704 3,785 ( 4,171 ) ( 170,211 ) ( 168,893 ) Net income (loss) 7,006 15,914 19,551 ( 150,155 ) ( 107,684 ) Net income (loss) available to common shareholders 4,381 13,289 16,926 ( 152,780 ) ( 118,184 ) Comprehensive income (loss) 37,908 ( 543 ) ( 20,675 ) ( 25,051 ) ( 8,361 ) Net income (loss) per common share: Basic Continuing operations $ 0.07 $ 0.25 $ 0.56 $ 0.46 $ 1.35 Discontinued operations $ 0.05 $ 0.10 $ ( 0.11 ) $ ( 4.52 ) $ ( 4.49 ) $ 0.12 $ 0.35 $ 0.45 $ ( 4.06 ) $ ( 3.14 ) Diluted Continuing operations $ 0.07 $ 0.25 $ 0.55 $ 0.46 $ 1.34 Discontinued operations $ 0.05 $ 0.10 $ ( 0.10 ) $ ( 3.89 ) $ ( 4.47 ) $ 0.12 $ 0.35 $ 0.45 $ ( 3.43 ) $ ( 3.13 ) F-57 TABLE OF CONTENTS James River Group Holdings, Ltd. and Subsidiaries Notes to Consolidated Financial Statements Years ended December 31, 2023, 2022, and 2021 2022 Quarter 2022 First Second Third Fourth Year (in thousands except per share data) Gross written premiums $ 329,992 $ 391,602 $ 328,174 $ 361,604 $ 1,411,372 Total revenues 157,625 154,856 162,228 186,805 661,514 Underwriting profit 13,792 14,698 8,240 19,295 56,025 Income (loss) from continuing operations 13,939 7,219 ( 12,161 ) 25,861 34,858 (Loss) income from discontinued operations ( 3,734 ) 445 7,540 ( 8,136 ) ( 3,885 ) Net income (loss) 10,205 7,664 ( 4,621 ) 17,725 30,973 Net income (loss) available to common shareholders 9,330 5,039 ( 7,246 ) 15,100 22,223 Comprehensive (loss) income ( 75,766 ) ( 50,936 ) ( 65,277 ) 29,930 ( 162,049 ) Net income (loss) per common share: Basic Continuing operations $ 0.35 $ 0.12 $ ( 0.39 ) $ 0.62 $ 0.70 Discontinued operations $ ( 0.10 ) $ 0.01 $ 0.20 $ ( 0.22 ) $ ( 0.11 ) $ 0.25 $ 0.13 $ ( 0.19 ) $ 0.40 $ 0.59 Diluted Continuing operations $ 0.35 $ 0.12 $ ( 0.39 ) $ 0.60 $ 0.69 Discontinued operations $ ( 0.10 ) $ 0.01 $ 0.20 $ ( 0.20 ) $ ( 0.10 ) $ 0.25 $ 0.13 $ ( 0.19 ) $ 0.40 $ 0.59 F-58 TABLE OF CONTENTS SCHEDULE I JAMES RIVER GROUP HOLDINGS, LTD. Summary of Investments—Other than Investments in Related Parties Type of Investment Cost or Amortized Cost Fair Value Amount at which shown on Balance Sheet (1) (in thousands) Fixed maturity securities, available-for-sale: State and municipal $ 273,462 $ 248,837 $ 248,837 Residential mortgage-backed 336,064 317,928 317,928 Corporate 530,408 505,728 505,728 Commercial mortgage and asset-backed 235,302 222,853 222,853 U.S. Treasury securities and obligations guaranteed by the U.S. government 29,900 29,130 29,130 Total fixed maturity securities, available-for-sale 1,405,136 1,324,476 1,324,476 Equity securities: Preferred Stock 64,989 69,310 69,310 Common Stock 49,118 50,635 50,635 Total equity securities 114,107 119,945 119,945 Bank loan participations 160,460 156,169 156,169 Short-term investments 72,137 72,137 72,137 Other invested assets 23,383 Total invested assets $ 1,696,110 (1) Differences between the amounts in this column and the amounts in the consolidated balance sheet are due to this schedule excluding investments in related parties. F-59 TABLE OF CONTENTS SCHEDULE II JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES Condensed Financial Information of Registrant Balance Sheets (Parent Company) December 31, 2023 2022 (in thousands) Assets Cash and cash equivalents $ 1,961 $ 277 Investment in subsidiaries (1) 894,848 1,007,874 Due from subsidiaries 166 41 Other assets 52,013 5,255 Total assets $ 948,988 $ 1,013,447 Liabilities and shareholders’ equity Liabilities: Accrued expenses $ 3,971 $ 1,538 Senior debt 207,300 207,300 Junior subordinated debt 15,928 15,928 Due to subsidiaries — 87,061 Other liabilities 42,270 2,956 Total liabilities 269,469 314,783 Commitments and contingent liabilities Series A redeemable preferred shares 144,898 144,898 Shareholders’ equity: Class A common shares 7 7 Additional paid-in capital 876,240 868,858 Retained deficit ( 277,905 ) ( 152,055 ) Accumulated other comprehensive (loss) income ( 63,721 ) ( 163,044 ) Total shareholders’ equity 534,621 553,766 Total liabilities, Series A redeemable preferred shares, and shareholders’ equity $ 948,988 $ 1,013,447 See accompanying notes. F-60 TABLE OF CONTENTS SCHEDULE II JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES Condensed Financial Information of Registrant Statements of (Loss) Income and Comprehensive Loss (Parent Company) Year Ended December 31, 2023 2022 2021 (in thousands) Revenues: Other income $ 88 $ 55 $ 39 Total revenues 88 55 39 Expenses: Other operating expenses 14,689 12,890 11,632 Other expenses 4,049 747 469 Interest expense 15,685 8,579 5,532 Total expenses 34,423 22,216 17,633 Loss before equity in net income of subsidiaries ( 34,335 ) ( 22,161 ) ( 17,594 ) Equity in net (loss) income of subsidiaries (1) ( 73,349 ) 53,134 ( 155,205 ) Net (loss) income $ ( 107,684 ) $ 30,973 $ ( 172,799 ) Other comprehensive income (loss): Equity in other comprehensive earnings (losses) of subsidiaries 99,323 ( 193,022 ) ( 51,921 ) Total comprehensive loss $ ( 8,361 ) $ ( 162,049 ) $ ( 224,720 ) (1) Includes amounts for JRG Re which is classified as held for sale on our Consolidated Balance Sheets. Operating results of JRG Re are included in discontinued operations in our Consolidated Statements of (Loss) Income and Comprehensive Loss. See Note 2 - Discontinued Operations. See accompanying notes. F-61 TABLE OF CONTENTS SCHEDULE II JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES Condensed Financial Information of Registrant Statements of Cash Flows (Parent Company) Year Ended December 31, 2023 2022 2021 (in thousands) Operating activities Net (loss) income $ ( 107,684 ) $ 30,973 $ ( 172,799 ) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Provision for depreciation and amortization 345 216 216 Share based compensation expense 9,116 8,122 6,658 Equity in undistributed earnings of subsidiaries 73,349 ( 53,134 ) 218,204 Changes in operating assets and liabilities 47,673 68,272 ( 2,364 ) Net cash provided by operating activities 22,799 54,449 49,915 Investing activities Net cash provided by investing activities — — — Financing activities Senior debt repayments — ( 40,000 ) — Subsidiary note repayments — — ( 70,000 ) Contribution to subsidiary — ( 144,000 ) ( 128,000 ) Payment of debt issuance costs ( 1,135 ) — — Issuance of Series A preferred shares — 144,898 — Issuances of common shares - public offering — — 192,107 Issuances of common shares under equity incentive plans — — 1,877 Payroll taxes withheld and remitted on net settlement of RSUs ( 1,734 ) ( 1,304 ) ( 3,077 ) Dividends on Series A preferred shares ( 10,500 ) ( 6,125 ) — Dividends on common shares ( 7,746 ) ( 7,798 ) ( 43,236 ) Net cash used in financing activities ( 21,115 ) ( 54,329 ) ( 50,329 ) Change in cash and cash equivalents 1,684 120 ( 414 ) Cash and cash equivalents at beginning of period 277 157 571 Cash and cash equivalents at end of period $ 1,961 $ 277 $ 157 Supplemental information Interest paid $ 16,949 $ 9,342 $ 5,954 See accompanying notes. F-62 TABLE OF CONTENTS SCHEDULE II JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES Condensed Financial Information of Registrant Notes to Condensed Financial Statements 1. Accounting Policies Organization James River Group Holdings, Ltd. (the “Company”) is an exempted holding company registered in Bermuda, organized for the purpose of acquiring and managing insurance and reinsurance entities. Basis of Presentation The accompanying condensed financial statements have been prepared using the equity method. Under the equity method, the investment in consolidated subsidiaries is stated at cost plus equity in undistributed earnings of consolidated subsidiaries since the date of acquisition. These condensed financial statements should be read in conjunction with the Company’s consolidated financial statements. Estimates and Assumptions Preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Those estimates are inherently subject to change, and actual results may ultimately differ from those estimates. Adopted Accounting Standards No accounting standards were adopted during the year ended December 31, 2023 that had a material impact on our financial statements. F-63 TABLE OF CONTENTS SCHEDULE III JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES Supplementary Insurance Information (in thousands) Deferred Policy Acquisition Costs Reserve for Losses and Loss Adjustment Expenses Unearned Premiums Net Earned Premiums Net Investment Income Losses and Loss Adjustment Expenses Amortization of Policy Acquisition Costs Other Operating Expenses Net Written Premiums December 31, 2023 Excess and Surplus Lines $ 30,625 $ 1,769,788 $ 428,570 $ 609,566 $ 69,325 $ 425,035 $ 75,890 $ 135,175 $ 589,551 Specialty Admitted 872 836,319 159,329 98,439 13,568 75,122 ( 3,257 ) 24,541 104,350 Corporate and Other — — — — 1,153 — — 33,940 — Total $ 31,497 $ 2,606,107 $ 587,899 $ 708,005 $ 84,046 $ 500,157 $ 72,633 $ 193,656 $ 693,901 December 31, 2022 Excess and Surplus Lines $ 36,917 $ 1,585,861 $ 405,139 $ 555,597 $ 28,664 $ 382,094 $ 59,457 $ 106,194 $ 589,056 Specialty Admitted ( 4,080 ) 755,102 173,057 74,137 5,068 58,548 ( 9,648 ) 15,116 76,390 Corporate and Other — — — — 9,456 — — 31,260 — Total $ 32,837 $ 2,340,963 $ 578,196 $ 629,734 $ 43,188 $ 440,642 $ 49,809 $ 152,570 $ 665,446 December 31, 2021 Excess and Surplus Lines $ 26,297 $ 1,623,635 $ 382,479 $ 486,000 $ 13,811 $ 516,299 $ 50,281 $ 91,179 $ 501,250 Specialty Admitted ( 4,898 ) 686,643 165,998 75,371 3,044 55,875 ( 8,395 ) 14,333 83,935 Corporate and Other — — — — 15,134 — — 27,609 — Total $ 21,399 $ 2,310,278 $ 548,477 $ 561,371 $ 31,989 $ 572,174 $ 41,886 $ 133,121 $ 585,185 F-64 TABLE OF CONTENTS SCHEDULE IV JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES Reinsurance Direct Amount Ceded to Other Companies Assumed from Other Companies Net Amount Percentage of Amount Assumed to Net (in thousands) Year Ended December 31, 2023 Excess and Surplus Lines Written Premiums $ 1,007,351 $ 417,800 $ — $ 589,551 — Specialty Admitted Written Premiums 499,317 396,959 1,992 104,350 1.9 % Total Written Premiums $ 1,506,668 $ 814,759 $ 1,992 $ 693,901 0.3 % Year Ended December 31, 2022 Excess and Surplus Lines Written Premiums $ 921,164 $ 332,108 $ — $ 589,056 — Specialty Admitted Written Premiums 487,360 413,818 2,848 76,390 3.7 % Total Written Premiums $ 1,408,524 $ 745,926 $ 2,848 $ 665,446 0.4 % Year Ended December 31, 2021 Excess and Surplus Lines Written Premiums $ 833,657 $ 332,407 $ — $ 501,250 — Specialty Admitted Written Premiums 488,377 407,626 3,184 83,935 3.8 % Total Written Premiums $ 1,322,034 $ 740,033 $ 3,184 $ 585,185 0.5 % F-65 TABLE OF CONTENTS SCHEDULE V JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES Valuation and Qualifying Accounts Balance at Beginning of Period Additions Amounts Charged to Expense Deductions Amounts Written Off or Disposals Balance at End of Period (in thousands) Year Ended December 31, 2023 Allowance for Credit Losses on Premiums Receivable and Agents' Balances $ 16,248 $ 2,826 $ ( 1,158 ) $ 17,916 Allowance for Credit Losses on Reinsurance Balances 580 80 — 660 Total $ 16,828 $ 2,906 $ ( 1,158 ) $ 18,576 Year Ended December 31, 2022 Allowance for Credit Losses on Premiums Receivable and Agents' Balances $ 16,680 $ 1,051 $ ( 1,483 ) $ 16,248 Allowance for Credit Losses on Reinsurance Balances 607 ( 27 ) — 580 Total $ 17,287 $ 1,024 $ ( 1,483 ) $ 16,828 Year Ended December 31, 2021 Allowance for Credit Losses on Premiums Receivable and Agents' Balances $ 8,317 $ 9,426 $ ( 1,063 ) $ 16,680 Allowance for Credit Losses on Reinsurance Balances 331 276 — 607 Total $ 8,648 $ 9,702 $ ( 1,063 ) $ 17,287 F-66 TABLE OF CONTENTS SCHEDULE VI JAMES RIVER GROUP HOLDINGS, LTD. AND SUBSIDIARIES Supplementary Information Concerning Property Casualty Insurance Operations Year Ended December 31, 2023 2022 2021 (in thousands) Deferred policy acquisition costs $ 31,497 $ 32,837 $ 21,399 Reserve for losses and loss adjustment expenses 2,606,107 2,340,963 2,310,279 Unearned premiums 587,899 578,196 548,477 Net earned premiums 708,005 629,734 561,371 Net investment income 84,046 43,188 31,989 Losses and loss adjustment expenses incurred: Current year 463,530 429,260 383,964 Prior years - retroactive reinsurance 4,991 15,742 — Prior years - excluding retroactive reinsurance 31,636 ( 4,360 ) 188,210 Total losses and loss adjustment expenses incurred 500,157 440,642 572,174 Amortization of policy acquisition costs 72,633 49,809 41,886 Paid losses and loss adjustment expenses, net of reinsurance 328,959 318,355 419,749 Net written premiums 693,901 665,446 585,185 F-67