James River Group, a US specialty insurer focused on the excess and surplus lines market, swung to a net income of $30.2 million in the fourth quarter of 2025, a sharp reversal from a $92.7 million loss a year earlier, as tighter underwriting and cost cuts produced the company's strongest E&S results in three years.
The company posted a combined ratio of 94.1% for the quarter, compared with 155.1% in the prior year period, while adjusted net operating income came in at $16 million, or $0.30 per diluted share.
For the full year, James River recorded a combined ratio of 96.6%. General and administrative expenses fell 9%, and tangible common equity per share rose 34% to $8.94.
The E&S segment, the company's core business, reported a combined ratio of 86.0%, down from 159.8% a year earlier. Net earned premium in the segment reached $140.9 million for the quarter, a 61.5% increase, while underwriting profit of $19.7 million marked the segment's best quarterly results since 2022.
Gross written premium in the E&S segment fell 14.5% for the quarter, however, as the company continued to reduce exposure to larger accounts and pare back risks outside its underwriting appetite. Average premium per policy dropped 10% year over year.
Read more: James River hit by losses in Q4 financials
The pullback comes as the broader US E&S market shows signs of cooling. AM Best data shows premium growth across the segment slowed to 9.7% through the first nine months of 2025, down from 13.5% a year earlier.
The rating agency revised its E&S outlook from positive to stable in November, citing moderating growth and early signs of rate softening. Full-year surplus lines premium across the 15 US stamping office states totaled $90.3 billion, a 7.8% increase from 2024.
The quarter's results included a one-time tax benefit of $14.1 million tied to the company's redomicile from Bermuda to Delaware, completed on November 7, 2025. James River had first announced the move in November 2024 and, on its third-quarter earnings call, projected one-time savings of $10 million to $13 million – a figure the final result exceeded.
Management has said the redomicile will also deliver ongoing quarterly expense savings of $3 million to $6 million. The shift follows Bermuda's introduction of a 15% corporate income tax in January 2025, aligned with OECD global minimum tax rules, which eroded much of the island's longstanding tax advantage for large insurers.
CEO Frank D'Orazio said the E&S results "reflect the tangible momentum" created by the company's strategic actions, and that the year provides "a strong foundation to build upon for 2026."
Net investment income totaled $21 million for the quarter. Some $23.6 million in aggregate limit remains on the adverse development reinsurance contract with Cavello Bay, covering the majority of E&S reserves for accident years 2023 and prior.
