Q3 2023 James River Group Holdings Ltd Earnings Call
Okay.
Good day, and welcome to everyone and welcome everyone to the James River Group.
223 earnings conference call.
And I'd like to turn the call over to Brett Shirreffs, our head of Investor Relations you May begin your conference.
Good morning, everyone.
Welcome to the James River Group third quarter 2023 earnings conference call during.
During the call we will be making forward looking statements. These statements are based on current beliefs intentions expectations and assumptions.
Subject to various risks and uncertainties, which may cause actual results to differ materially.
For a discussion of such risks and uncertainties. Please see the cautionary language regarding forward looking statements in yesterday's earnings release, and the risk factors of our most recent Form 10-K, and other reports and filings we've made with the Securities and Exchange Commission.
We do not undertake any duty to update any forward looking statements.
In addition, during this presentation, we may reference non-GAAP financial measures such as adjusted net operating income underwriting profit tangible equity tangible common equity and adjusted net operating return on tangible common equity.
Please refer to our earnings press release for a reconciliation of these numbers to GAAP, a copy of which can be found on our website at www Dot Jr. VR group Dot com.
Lastly, unless otherwise specified for the reasons described in our earnings press release, all underwriting performance ratios referred to our for our business that is not subject to retroactive reinsurance accounting for loss portfolio transfers.
I'll now turn the call over to Frank Dorazio, Chief Executive Officer of James River Group.
Thank you for that introduction, Brad good morning, everyone and welcome to our third quarter 2023 earnings call.
I'm pleased to be joining you today to provide additional color on our third quarter results, but also sharing some thoughts around market conditions and the strategic priorities that James River continues to focus on.
In addition to reporting our third quarter results. This morning, we're excited to announce the sale of our casualty reinsurance business.
<unk> re to Flemming insurance holdings, a portfolio company of Altamont capital partners. This.
This transaction marks a significant milestone for the organization as it will bring ultimate finality to our exposure from our legacy reinsurance platform.
Having also sold the renewal rights to our individual risk workers' compensation business during the third quarter moving forward James River will be focused on the E&S in fronting market sectors, where we have scale market leadership and strong teams in place to take advantage of market opportunities.
This transaction will provide a clean exit from the reinsurance business eliminate future reserve volatility and frees up capital to focus on our areas of growth.
We also believe the sales simplifies the James River story, while paving the way for more consistent earnings.
Turning to our results the third quarter continued to show the positive momentum, we have as an organization and strong underlying trends in our ongoing businesses.
We again delivered profitable underwriting results in both our E&S and specialty admitted segments, while our investment portfolio continues to perform well with record investment income during the third quarter.
We have seen a modest acceleration of some already positive trends in our E&S business, including renewal rate increases and submission growth clearly a favorable indication of the strength and durability of this market cycle.
While we also continue to execute on portfolio management actions across our business as we remain focused on bottomline profitability.
For the third quarter, we reported adjusted net operating income of $18 3 million or <unk> 48 per share a return on tangible common equity ex Aoc was 13% for the quarter.
Tangible common equity per share of $10 25 as.
As increased nine 3% before dividends through the first nine months of the year as both our underwriting profit and strong investment returns have contributed to this growth.
Our tangible common equity per share excluding OCI was $15 27 at the end of the third quarter and up 11, 2% year to date.
Now, let me provide a little more color on our segment results and market conditions.
As I have stated previously we continue to view the E&S environment is highly attractive competition remains rational across most of our E&S underwriting unit.
<unk> seen renewal rate change trend higher in each sequential quarter, yet this year topping out at 12, 4% in the third quarter.
This increase is the latest of 27 consecutive quarters of positive pricing, bringing the compound renewal rate change to 77, 2% since 2017.
Renewal rate increases remained broad based across our portfolio with most underwriting divisions achieving rate change in the high single or low double digit range through nine months, while rate increases in our excess property division continue to lead the segment.
The remainder of our E&S business, all casualty lines achieved rate increases of nine 1% during the third quarter <unk>.
Consistent both with our experienced during 2022 and another indicator that our non property divisions are producing healthy increases in rate.
Excess property excess casualty and energy all showed meaningful double digit rate increases.
While general casualty rates increased eight 9% during the third quarter.
Our 15 underwriting divisions continue to build on our strong relationships with wholesale distribution.
Submission growth of eight point of 8% during the third quarter was driven by new business submission activity and was our strongest submission growth rate in three years.
Excess casualty and general casualty, both recorded double digit submission growth in the quarter at 14% and 24% respectively with several other units in the high single digits.
Policy count increased 9% during the third quarter again supported by some of our larger underwriting units general casualty policy count increased 25%.
<unk> casualty was up 19% and manufacturers and contractors increased by 12%.
Overall, we continue to be encouraged by pricing and market trends, which suggests that the current attractive market conditions should lead us well into 2024.
Consistent with our actions last quarter, we have deliberately been more cautious on certain classes of commercial auto, particularly food delivery and have made efforts to reduce exposure.
These actions led to a 44% decline in commercial auto gross written premiums representing a $7 million reduction relative to the prior year.
We believe this action is prudent as we look to continue to generate strong profitability across our portfolio.
Our core E&S gross written premium growth was 10, 3% in the third quarter, excluding commercial auto and 10, 8% on a year to date basis. This performance was driven by strong growth in general casualty manufacturers and contractors energy excess property and sports and entertainment throughout the third quarter, we saw.
Year over year growth rates accelerating each month, we closed the quarter with nearly 16% growth in core E&S premium in September which is one of our strongest monthly growth rates during 2023.
Looking across our underwriting divisions and reflecting on the rate improvements. We've achieved throughout 2023, we are confident in our outlook for profitable growth.
Okay.
The E&S segment reported a combined ratio of 88, 4% an underwriting profit of $18 3 million for the third quarter. We did not report any catastrophe losses in the period. However, we did experienced $7 $8 million in adverse prior year development as we made the decision to shore up reserves from older accident years from 2015 to 2018.
In our general casualty line of business, where the industry has seen some adverse emergence trends.
Partially offsetting this strengthening was a reduction to estimated losses in the current accident year based on general rate trends and significant portfolio management actions and improved risk selection as we've exited several loss leading classes over the last few years and have taken other underwriting actions.
As a result of these favorable pricing dynamics as well as our portfolio management actions, we reduced our current accident year losses by $8 million in the quarter to reflect these trends and the impact on year to date results.
Our E&S accident year loss ratio for the first nine months was 65, 8% or 64, 1%, excluding the impact of reinstatement premiums.
This compares to an accident year loss ratio of 65% excluding catastrophes in the prior year period, or a 90 basis point improvement year over year.
Yes.
All in we remain excited about the opportunity set in front of our E&S segment, and we have an exceptional team in place to continue to execute on our growth plans, while maintaining attractive margins.
Turning to specialty admitted as I mentioned earlier during the third quarter, we announced the sale of the renewal rates of our individual risk workers' compensation business to the <unk> group the.
The sale of encompass the full operations, including underwriting loss control and claims.
This business has generated $48 $5 million of gross written premium on a trailing 12 month basis.
This strategic action immediately followed the non renewal of our large, California Workers' compensation program that we discussed last quarter and was a natural next step, allowing our specialty admitted segment to focus on fronting and program business moving forward. We believe there is a strong opportunity for disciplined growth within the space.
As has been the case throughout our history, we will continue to focus on supporting profitable programs with a conservative approach to reinsurance security and collateral.
Segment results for the quarter included 10% growth in fronting and program gross written premium excluding workers' compensation, we saw growth from several new programs initiated during the third quarter and also experienced continued growth from existing programs, which included meaningful rate increases in certain areas.
Specialty admitted underwriting profit in the third quarter was $2 million and the combined ratio came in at 92, 5%.
Lastly, turning to our casualty reinsurance segment results for the quarter continue to reflect the earnings of treaties written in prior years as well as various premium adjustments.
The underwriting loss was $4 2 million and included $4 $7 million of reserve strengthening from business not subject to the LPT.
Is there a development was driven by movement on a few specific treaties primarily from treaty years 2016 to 2019, driven by primary GL exposure.
There were also several treaties that experienced the model a modest level of favorable reserve movements during the quarter as a result of claim settlements and loss experience.
Additionally, we experienced $7 million of reserve strengthening on treaties covered under the LPT, reflecting deterioration from construction and construction defect exposures.
The remaining limit on the retroactive reinsurance that we put in place two years ago is now $38 3 million.
Our third quarter results reflect the continued effort of our dedicated employees to refocus James River around our core competencies, our underwriting franchises remain leaders in their respective specialties and remain well positioned to take advantage of attractive E&S market conditions and fronting market dislocations as I've said before our focus.
This remains on deploying capital, where we can achieve consistent and attractive returns for shareholders.
And with that let me turn the call over to Sarah.
Thank you very much Frank.
Everyone and thanks for joining us today.
First a bit more on the transaction that we just announced.
As Frank mentioned earlier this morning, we executed definitive documentation to sell the business and entity underlying our casualty reinsurance segment to Flemming holdings as Frank mentioned this transaction and the sale of the renewal rights of our individual risk Workers' compensation book, we announced and closed in September.
Our key final pieces of art work. These past few years to streamline the organization focus on our core strengths, where we have significant market advantage.
Thrilled to be at this point, we believe our franchise is well positioned according to its strengths and to drive compelling returns for shareholders and that our colleagues at <unk> are very well positioned to help Fleming grow.
The sale will be a full separation via the stock purchase agreement, we executed with Fleming.
Consideration will consist of $138 million of cash at close at $139 million of a pre closing dividend.
A pre closing dividend does not require regulatory approval, we expect to contribute the transaction proceeds to our existing U S insurance businesses.
The transaction is subject to custom customary closing conditions, including approval by the BMA.
Given the sale at a 25% discount to book.
Which is entirely consistent with runoff entity sale transactions, we expect to have a loss on sale of approximately $93 million or $2 50 per share.
Which we will record next quarter, the fourth quarter as we move the business into discontinued operations.
We expect the transaction to be largely neutral to earnings with a loss of investment return, but elimination of what has been historical underwriting volatility in this segment. Similarly, we expect to be able to meaningfully improve earnings stability owning to a larger contributions from our E&S busy.
Miss.
And less from exposure to the reinsurance business.
Finally, it is expected to be accretive to 2020 for return on tangible common equity excluding OCI by approximately 250 basis points.
We have had preliminary conversations with both our rating agency and regulator and while it's early days those conversations have been positive to be clear given the balance sheet and in particular, our reserves that we are selling.
We do not need to raise capital to effect the full separation.
We are very grateful for the health of our advisers on this transaction city Houghton Tiger and depth of voice and there are many months of thoughtful collaboration to get to today.
Back to the quarter briefly.
For the third quarter, we're reporting adjusted net operating income of <unk> 48 per share compared to <unk> 41 per share in the prior year quarter, an increase of 16% tangible.
Book value per common share was $10 25.
September 30th and has increased seven 7% from the start of the year or nine 3% before dividends.
Excluding the impact of a OCI, our tangible book value per common share has increased 10, 1% from the start of the year or 11, 2% before earnings.
We continue to have solid underwriting performance strong net investment income and consistent growth in our core businesses, we're delivering $18 3 million of adjusted net operating income, including $7 $6 million of underwriting profit and $26 3 million of net investment income on.
Pre tax basis for the quarter.
Our group combined ratio was 96, 2% roughly two point increase over the prior year quarter, mainly driven by a higher expense ratio.
Unfavorable reserve development in our casualty reinsurance segment.
We did not experience any catastrophe losses in the quarter and while higher than the prior year our expense ratio of 27, 6% in the third quarter is consistent with the targets we provided on our fourth quarter call.
Yes.
So with that I would like to turn it back to the operator to open the line for questions.
Thank you.
At this time I would like to remind everyone that in order to ask a question Press Star then the number one on your telephone keypad.
Well pause for just a minute to compile the Q&A roster.
Okay.
Okay.
And our first question comes from the line of Mark Hughes from tourists.
Your line is open.
Yeah.
Yes. Thank you good morning.
Good morning.
A lot of good news.
But ill focus on the adverse in the E&S.
Could you talk a little bit more about what youre seeing there clearly the 15 through 18.
Okay General casualty has been a challenge for lots of folks in the industry as a whole.
What.
What did you see what prompted you to okay.
The.
Thanks, and now and then.
<unk>.
What are your game.
Total year to date are still outstanding for those 15 through 18 accident years.
Sure so listen.
And I agree with you Mark like much of the rest of the industry. We saw some signs of of pressure on our general casualty reserves from the soft market years. So.
During the quarter, we chose to address that we perceived as some signs of weakness in the 2015 to 2018 years that caused us to make some adjustments to reserves and shifts in <unk>, obviously, it's a disappointing development to see but this is an industry dynamic as you mentioned and it's clearly extending the current pricing cycle two or <unk>.
<unk> so <unk>.
Stepping back.
I do take comfort overall based on the persistent strength of the rates that we've achieved now more than 77% cumulatively during the cycle.
With major improvements in underwriting and no signs that this market is letting up and yet you have to take that in concert with the overall conservatism that we've embedded in the last few years. So we believe we've been very conservative in our recent accident year loss picks and at a time when.
We brought a lot more underwriting oversight and discipline into the organization produced substantial rate.
And have made meaningful changes to risk selection and exclusionary language as well as other portfolio management tools and the benefits of those actions gained strength year after year in these market conditions. So.
Like the rest of the industry, we're watching the older softer market excuse me the older soft market accident years, very closely but I look at everything we've done.
And continue to do for several years now in terms of rate improvements in underwriting actions and that certainly gives me a lot of confidence overall.
Did you take any favorable development.
The 19 through 22 accident years too.
As an offset not as an offset but did you recognize any favorable development.
No I don't I don't believe so mark we can go we don't have all the details in front of US there, but I don't believe that we did on any other prior years.
Okay.
On a net net.
Alright, and then just let me understand your question the $8 million is that net absolutely right, yes, yes, the $8 million net debt, but I'm just curious whether there was some.
Adverse in those older years, might've been higher but offset by gains in subsequent years during the harder market conditions.
Nothing that I can think of right now we're happy to go back and look but again the focus was more so on the $8 million.
Yeah, Okay, and then what.
Do you think about general casualty.
So theres still.
Outstanding from 15 through 18 is there kind of a rough number.
Whats left within the.
Areas, where you saw some emergence.
Okay.
Clarke I'm, sorry, we don't have that number right in front of US where we are happy to follow up on those details I apologize.
Yes, Okay, alright very good.
The answers.
Thank you.
The next question comes from the line of Matt Karl <unk> from JMP Securities.
Your line is open.
Hey, Thanks, good morning.
Good morning, I just had a question I just had a question on.
The other comment in the press release about.
The material weakness around some of the accounting for one of the reinsurance transaction.
Just walk us through.
I guess question one is the $10 4 million of net income over statement that for the six months does that is that reflected in the equity and book value numbers, we see at 930 in the press release or that yet to come.
And just yeah.
Practical impact of what it means and how it gets remedied.
Sure Yes, it's in there if you look on page 15 of the press release, you can see that the second quarter is restated so the kept quiet for us in there for the six months.
Temporary fourth net income rates haven't premium is $12 $3 million thats running through there as well.
From a practical perspective.
An error that was found in the very early days of our closed in the third quarter, which we found.
Related to the second quarter and as you may recall, Matt because I know you've been covering us for a while on our specialty casualty treaty at least up until this year when the structure changed it had a significant reinstatement component when we had some large losses that Ian until air trigger certain statements out of the box.
We also had this phenomenon in the third quarter of 2021. So we had three larger losses in the third quarter excuse me in the second and first quarter of this year.
They were all energy.
And that's just the impact of.
Of the timing at which we had booked at premiums.
Okay, Alright, that's helpful and then just maybe.
You might have a little bit Frank you gave some high level comments.
This state of the market and obviously things sound like very good.
Can you dig in a little bit and kind of as we think about your credit specific underwriting divisions.
As the markets continue to evolve.
What have you seen recently in terms of have you seen more opportunity in certain areas and had been pulling back and others or has it been a little more a little more constant over the past several quarters.
Yes, no. It's a good question, Matt So I would say.
Very healthy.
Growth opportunities still persist across.
Much of our E&S platform and we saw that in the third quarter majority of our underwriting divisions continuing to report solid growth nearly all divisions reporting positive renewal rate changes.
I don't think we have any.
<unk> seen any significant change in the opportunity set for the E&S business.
Our core E&S segment, which of course as you know as all of our E&S underwriting divisions with the exception of commercial auto that grew at a double digit clip so at 10, 3%.
Stands at about 11% year to date, now certainly driven by some healthy rate increases new.
New submissions I think I referenced in the script growth for the quarter was up eight 4% over Q3 last year Thats the highest its been.
<unk>.
2023, which is a great indicator for future growth and many of our underwriting divisions are certainly growing at.
Attractive pay certainly greater than rate increases, including contract binding sports and entertainment professional liability energy and then two of our biggest underwriting divisions general casualty, where we see a lot of opportunity and manufacturers and contractors. So.
It's these types of market dynamics, where you get strong rate healthy submission trends that I think suggests that the conditions should.
Continue to be very favorable as we move into next year, but I guess the other side of that.
And I spoke about is commercial auto so.
Listen no surprised you most data points suggest the industry Hasnt made a lot of money in the last five years in commercial auto we continue to purposefully reduced the size of our portfolio by being extremely selective and I would suggest are acutely aware of the impacted of loss cost trend as well as social inflation and we're aggressively pushing rate.
Particularly in.
The sub sectors of the classes that we're most concerned about I mentioned food delivery before and as a result.
These types of portfolio management actions, we decreased our writings in the quarter by 44%.
Compared to the prior year quarter, so that.
Resulted in about a four point drag on our E&S growth rate and I would say that will probably continue to be a trend going forward as relative to our views on.
On commercial auto.
Great I appreciate the color. Thank you.
Sure.
Thank you.
The next question comes from the line of Trey.
<unk> from Barclays.
Your line is open.
Thank you good morning, Congrats on your chair G resale announcements.
Structurally the sale will reduce some overhang I'm wondering if you could walk through why you feel at 0.75 times price to book is fair valuation I get that maybe.
Other runoff deals.
Valuation is in this range, but you do have that <unk> in place and then I'm also kind of thinking about the the.
The $93 million.
Net loss or dilution that you talked about and if I compare that to your tangible common equity.
That was $385 5 million is still sizable.
Yeah, Let me, let me start with some commentary about how we thought about the transaction. So clearly we felt I think the biggest concerns at our investors and other stakeholders in the company had.
A question surrounding.
Our Bermuda reinsurance segment, so, including whether we are going to continue to experience adverse development from prior years, whether we had purchase enough LPTA limit from the legacy market in and frankly weather.
We get to a point, where we need to raise additional capital in the event, we had to take steps to further shore up the entity and so we feel this transaction addresses those risks removes roughly $400 million of volatile reserves on the balance sheet and again without the need to raise capital in.
Yes.
After we took the steps two in the third quarter sell the renewal rates of our workers' comp portfolio.
What we're left with now James River is now roughly $1 billion of well performing E&S carrier recognized as a leader in the sector and one of the.
Few very well regarded fronting companies that's been around for a while with a very deep team.
In a coveted value proposition, but relative to your question I mean, certainly we're valuation sensitive.
As for the discount to the entity and the sales price, we analyze industry transaction of this nature that.
And then if turnover.
Roughly the last 15 years and while this entity is a bit greener in terms of how recently it was writing live business and I think Thats a factor Tracy.
Obviously also solely focused purely on reinsurance. So we felt the discount to book value is still very comfortably in the range of prior transactions, even with some of the.
The scenarios the idiosyncrasies that we just referenced between the LPT limits still there, but the fact that we're not that far removed from being alive underwriting operation.
It is purely Bermuda reinsurance.
And so.
All that in consideration in addition to providing great new home for the.
The entire team of our segment.
And providing a clean and final break.
From the business I think prospectively. The companies is just in a much better position with this transaction simplified and focused on areas, where we've got scale and expertise.
Gary thoughtful Oh, sorry.
Go ahead, yes, I was just going to add a couple more data points to your question if I could.
So obviously the run off actually.
Just to get it valuation for a few more points.
Obviously, not a place where you see a ton of entity level runoff transactions very desperate.
The level of liabilities is also the age of the liability so just to kind of add on to the 75% of book value.
The metric I think second the LPTA in place yes.
Yes, it's certainly helpful to have the LPT in place, but to some degree counterbalanced by as Frank referenced the greatness of the reserves the entities only been around for a couple of quarters at this 0.2nd answer the capital question.
We certainly have our tangible common equity number spot on total shareholders' equity of $562 million in total tangible equity of $530 million, we're offloading over $400 million of loss reserves through the transaction.
Against which we hold a significant amount of capital I think between those two pieces.
Your capital ratios are.
Not too different from from where they are kind of as they net out again those loss reserves against the $93 million discount to book.
So hopefully that helps obviously, we hold a lot of capital against those reserves.
That's very helpful sort of piece that all together I'm wondering if that $93 million loss could squeeze your underwriting capacity to grow.
We do not expect it to our rating agencies.
Ratios are very consistent with where they have been and the idea I think as we said in the.
As I said in my remarks is that we contribute that capital down into the U S entities, but our premium to surplus.
Stayed pretty consistent but more so looking at the loss reserves to equity metric again, it's it's fairly stable so that.
We understood our expectation that that's going to squeeze our growth rate, especially with our remaining businesses being effectively.
More capital light setting the reserves in our casualty reinsurance business I think that's probably the kicker.
Okay and can you share some color on your E&S retention that <unk>, a new casualty reinsurance treaty.
Yes, I can.
Give us some color there so youll recall.
Last year at the mid year point, we we increase our retention on one product line, specifically, our excess casualty treaty.
By 10 percentage points at the mid year.
And it drove.
Higher net to gross retention over the last four quarters, but.
At the mid year 2023 renewal, we undertook a very broad review of our E&S ceded reinsurance structure and.
Looked at a goal of trying to improve our volatility protection.
And maximizing underwriting income well.
Certainly utilizing the strong relationships that we have with our reinsurance partners. So this new structure. The way, we think about it allows us to make changes based on market conditions or reinsurance appetite in and ultimately the performance of the portfolio. So the new Treaty provides.
Water quota share coverage across all casualty lines, including primary participations, so thats different and in doing so it provides us basically with risk sharing across what I'll call. Maybe some of the more volatile elements of the E&S portfolio as well as some of our larger lines such as general casualty in manufacturers and contractors.
And.
Fortunately it gives us a very favorable.
Seating structure and economics relative to.
Oh ceding commissions as well as first dollar protection in areas that we didn't have before.
The other point.
That is worth noting particularly in this quarter is that we expanded our use of excess of loss reinsurance protection, which allowed us to move to that flat rate structure, I think Sarah kind of spoke to it a bit.
Earlier so.
Very notably that means that the reinstatement charges and volatility that have impacted our results in an excess energy.
Go away for business written under the new Treaty structure. So had the losses that we wrote in prior accident years that were <unk>.
<unk> this year have been written under this structure there would be no follow up.
Reinstatement charges.
So overall, we're very pleased with the outcome and we would expect I think the third quarter to be up at a pretty reasonable proxy relative to the net to gross retention.
Going forward.
You mentioned that the ceding commissions were favorable.
So thats relative tier policy acquisition cost is still seeing a nice spread.
Yeah, well I would say.
Despite I think.
<unk>.
The treaties that we place and Theres a number of them that make up this structure I think we had a slight pickup.
Of several basis points.
Got it thank you.
Thanks Tracy.
Okay.
Thank you.
Your next question comes from the line of Brian Meredith from UBS.
Your line is open.
Yes. Thanks, a couple quick ones here for you.
Thank you Sarah I'm just curious.
Given that you had adverse development.
Development in the E&S segment.
I was a little surprised that you took down the loss picks as much as you did this year I mean, it doesn't seem.
And I'm wondering was there a change in kind of reserving philosophy. It James Herbert used to hold fairly high and have that adverse development coming forward, just maybe a little more into kind of the thought process behind.
How those two fit together or if they fit together at all.
Yeah I can at.
At least start here.
I think it's similar.
My earlier comments, we have been very conservative in our recent accident year loss picks at a time when we've just done so much <unk>.
Relative to additional underwriting oversight and discipline in the organization.
A couple of years.
And given that some time to kind of set in and so the benefits of those actions plus all the rate that we've taken.
In these market conditions made us feel comfortable that was an appropriate step to take.
Great. Thanks, and then one other just quick one here.
The internal control weakness is that something that the rating agencies have been discussed with the rating agencies as well I'm just I'm just curious I know you've talked to them about the reinsurance transaction, but just the Rialto absolutely Brian we have a very regular quarterly dialogue with them and we went through all of that a few days ago for sure.
Great.
Got it thank you.
Thank you.
Our next question comes from the line of Meyer Shields from K B W.
Your line is open.
Alright, great. Thank you good morning, and congratulations on the casualty re deal.
I was hoping can you for modeling purposes give us a sense as to the size of your investment portfolio, that's being transferred to Flemming.
Sure the investment portfolio at Jared jewelry is about $550 million Merit.
<unk>.
25% of our overall portfolio.
Give or take okay perfect.
And Frank I think at the comps you mentioned.
Back in commercial auto with in E&S is going to be.
<unk>.
Right.
Ruben Uber stuff that's gone.
Can you give us a sense of how big the current commercial auto reserves.
I don't have that in front of me right now I mean the portfolio itself.
Not that significant but I know that's not your question, it's probably about a $30 million to $35 million.
Portfolio I don't have the reserve numbers in front of me Youre talking about non rideshare the non.
Don.
<unk> portfolio, specifically, yes, exactly yes.
I'm, sorry, I don't have any loss I don't have that in front of me I'm, sorry, I will have to follow up with you on that.
Okay perfect. Thank you so much.
Thanks Mary.
Okay.
Okay.
Thank you again, if you'd like to.
Ask a question. Please press star and then the number one on your telephone keypad.
The next question comes from the line of Casey Alexander from Compass point.
Your line is open.
Two questions one.
The sale of the casualty re business is also moving a lot of people.
Should we expect the expense ratio to develop once the sale is complete.
Sure Casey.
Actually six people six people in Bermuda, So it's a fairly small team.
Thanks.
There is going to be an impact on the expense ratio because more so because of the commission structure and the reinsurance business historically, but as you know that business is running off so I wouldn't expect too much of any impact on the expense ratio going forward.
Okay and then one other question.
Okay.
Is this the.
$7 million development on the casualty re LPT with $38 million remaining.
The way that's been developing over the last several quarters argues that that you may actually be taking losses on that book again by 2025 would that be your expectation at this point in time.
Well Casey we did announce a transaction to sell the balance sheet, we would hope to sell it as per our press release, we'd hope to close that transaction in the next quarter.
After by that contract, we would not have any exposure to that balance sheet to that business starting in the second quarter of 2024, if we're able to close that along that schedule.
Okay. Thank you.
Sure.
Thank you.
No further questions at this time I would now like to turn the call over back to our CEO <unk> Sir.
Thank you I want to thank everyone for their time today and for the questions. We received on the call. We certainly look forward to speaking with you all in 2024 to discuss our fourth quarter and full year results enjoy the rest of your day.
This concludes today's conference call you may now disconnect.
[music].
Okay.