James River Group Holdings, Inc. reported a profitable second quarter in its core excess and surplus lines (E&S) segment, but the underwriting ratios moved in opposite directions.
The loss ratio improved to 65.4% from 66.4% a year earlier. The expense ratio widened from 25.3% to 27.4%, and the combined ratio rose to 92.8% from 91.7%. The carrier spent more on underwriting in a quarter when it wrote less premium.
E&S gross written premium fell 17% to $250.2 million from $300.4 million in the second quarter of 2025. Net written premium declined 11% to $147.7 million. Chief executive officer Frank D'Orazio said the company sees growth in submissions and quotes but remains committed to disciplined capital deployment rather than volume.
D'Orazio framed the company's priorities as "cautious risk selection, expense management, and operating efficiency." The gap between rising submission activity and falling premium reflects that posture directly.
The widening has a direct mechanical cause. E&S underwriting expenses rose 5.1% to $37.6 million, while net earned premium fell 2.9% to $137.3 million. When a carrier spends more to underwrite while earning less premium, the expense ratio moves against it.
Against that backdrop, the E&S loss ratio at 65.4% is the sharper result to watch. E&S casualty loss-cost trends are running in the double digits in 2026, according to Risk Placement Services, which means rate adequacy requires active management. The broader E&S market is telling two stories: property premium is falling even as transaction volumes rise, while casualty lines continue to harden.
One underwriting development warrants separate attention. James River exhausted the $7.5 million remaining under its adverse development cover with Cavello Bay, the E&S Top Up ADC, in the second quarter. With that limit consumed, the company no longer holds that specific reinsurance buffer for older accident years. James River said it continues to observe lower frequency and incurred losses in more recent accident years, following significant portfolio changes made during that time.
On the specialty admitted insurance segment, the retreat is now largely complete. Gross written premium fell 76% to $18.7 million from $77.6 million a year earlier, as James River deliberately reduced its fronting book. Net written premium in specialty admitted dropped 92% to $0.7 million.
The company framed the pullback as a reallocation toward more attractive E&S opportunities. Premium retention across the combined group rose to 55% from 47% in the prior year quarter as the low-retention fronting business shrank. The fronting model cedes most written premium to third parties, so its decline lifted the retention rate mechanically.
The specialty admitted contraction has a practical implication for insurance brokers. James River is concentrating its capacity and appetite in core E&S casualty and specialty lines rather than fronting arrangements. Brokers who relied on the carrier for fronted business should expect continued volume reduction in that segment.
Net investment income of $20.3 million was essentially flat against $20.5 million a year earlier. The fixed income portfolio continued to benefit from higher-yielding structured securities added in the second half of 2025.
James River's Q1 2026 results, where a single large E&S claim triggered reinstatement premiums that pushed the combined ratio above 100%, give context to the recovery visible in the second quarter.
General and administrative expenses fell 7% in the quarter and 9% for the first half of 2026 versus the same periods a year earlier. Reductions were concentrated in the specialty admitted and corporate segments. For brokers placing E&S casualty and specialty business, the results confirm James River intends to compete on selection quality rather than volume.
