(Mark
One)
|
||
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
|
|
THE
SECURITIES EXCHANGE ACT OF 1934
|
||
For
the Quarterly Period Ended June 30,
2007
|
||
or
|
||
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
|
|
THE
SECURITIES EXCHANGE ACT OF 1934
|
||
For
the Transition Period from ______________ to
______________
|
Delaware
|
05-0539572
|
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(I.R.S.
Employer
Identification
No.)
|
|
300
Meadowmont Village Circle, Suite 333
Chapel
Hill, North Carolina
|
27517
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
|
(919)
883-4171
|
||
(Registrant’s
Telephone Number, Including Area Code)
|
||
(Former
Name, Former Address and Former Fiscal Year, If Changed Since Last
Report)
|
Large
Accelerated Filer o
|
Accelerated
Filer x
|
Non-Accelerated
Filer o
|
PART
I.
|
FINANCIAL
INFORMATION
|
Page
|
||
Item
1.
|
Financial
Statements:
|
|||
Condensed
Consolidated Balance Sheets
|
1
|
|||
Condensed
Consolidated Income Statements
|
3
|
|||
Condensed
Consolidated Statements of Cash Flows
|
4
|
|||
Notes
to Condensed Consolidated Financial Statements
|
5
|
|||
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
13
|
||
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
30
|
||
Item
4.
|
Controls
and Procedures
|
31
|
||
PART
II.
|
OTHER
INFORMATION
|
|||
Item
1.
|
Legal
Proceedings
|
32
|
||
Item
1A.
|
Risk
Factors
|
32
|
||
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
33
|
||
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
33
|
||
Item
6.
|
Exhibits
|
34
|
||
Signatures
|
36
|
|
(Unaudited)
June
30,
2007
|
December
31,
2006
|
|||||
(in
thousands)
|
|||||||
Assets
|
|||||||
Investments
available-for-sale, at fair value:
|
|||||||
Fixed
maturity securities (amortized cost: 2007 - $522,730; 2006 -
$488,232)
|
$
|
513,411
|
$
|
486,016
|
|||
Equity
securities (cost: 2007 - $23,266; 2006 - $8,536)
|
23,983
|
8,703
|
|||||
Total
investments available-for-sale
|
537,394
|
494,719
|
|||||
Cash
and cash equivalents
|
45,305
|
40,319
|
|||||
Accrued
investment income
|
5,746
|
5,471
|
|||||
Premiums
receivable and agents’ balances
|
32,473
|
34,862
|
|||||
Reinsurance
recoverable on unpaid losses
|
97,144
|
90,495
|
|||||
Reinsurance
recoverable on paid losses
|
4,093
|
7,041
|
|||||
Prepaid
reinsurance premiums
|
22,362
|
31,626
|
|||||
Deferred
policy acquisition costs
|
18,086
|
15,005
|
|||||
Deferred
tax assets
|
18,133
|
13,016
|
|||||
Federal
income taxes receivable
|
587
|
-
|
|||||
Due
from reinsurers
|
2,645
|
-
|
|||||
Other
assets
|
9,555
|
9,167
|
|||||
Total
assets
|
$
|
793,523
|
$
|
741,721
|
(Unaudited)
June
30,
2007
|
December
31,
2006
|
||||||
(in
thousands, except for share data)
|
|||||||
Liabilities
and stockholders’ equity
|
|||||||
Liabilities:
|
|||||||
Reserve
for losses and loss adjustment expenses
|
$
|
350,998
|
$
|
300,294
|
|||
Unearned
premiums
|
133,729
|
131,286
|
|||||
Payables
to reinsurers
|
-
|
5,672
|
|||||
Senior
debt
|
15,000
|
15,000
|
|||||
Junior
subordinated debt
|
43,300
|
43,300
|
|||||
Funds
held
|
8,609
|
15,567
|
|||||
Accrued
expenses
|
12,062
|
11,510
|
|||||
Federal
income taxes payable
|
-
|
613
|
|||||
Other
liabilities
|
4,046
|
4,087
|
|||||
Total
liabilities
|
567,744
|
527,329
|
|||||
Commitments
and contingencies
|
|||||||
Stockholders’
equity:
|
|||||||
Common
Stock - $0.01 par value; 100,000,000 shares authorized;
2007:
15,138,708 shares issued and outstanding; 2006:
15,117,308
shares issued and outstanding
|
151
|
151
|
|||||
Common
stock warrants
|
524
|
524
|
|||||
Additional
paid-in capital
|
176,341
|
175,437
|
|||||
Convertible
preferred stock - $0.01 par value; 5,000,000 shares
authorized
and no shares outstanding
|
-
|
-
|
|||||
177,016
|
176,112
|
||||||
Notes
receivable from employees
|
(535
|
)
|
(535
|
)
|
|||
Retained
earnings
|
54,889
|
40,147
|
|||||
Accumulated
other comprehensive loss
|
(5,591
|
)
|
(1,332
|
)
|
|||
Total
stockholders’ equity
|
225,779
|
214,392
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
793,523
|
$
|
741,721
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
(in
thousands, except for share data)
|
|||||||||||||
Revenues
|
|||||||||||||
Gross
written premiums
|
$
|
79,449
|
$
|
74,634
|
$
|
159,537
|
$
|
142,799
|
|||||
Ceded
written premiums
|
(7,877
|
)
|
(19,810
|
)
|
(24,095
|
)
|
(34,287
|
)
|
|||||
Net
written premiums
|
71,572
|
54,824
|
135,442
|
108,512
|
|||||||||
Change
in net unearned premiums
|
(8,585
|
)
|
(2,222
|
)
|
(12,206
|
)
|
(7,821
|
)
|
|||||
Net
earned premiums
|
62,987
|
52,602
|
123,236
|
100,691
|
|||||||||
Net
investment income
|
5,951
|
4,506
|
11,722
|
8,499
|
|||||||||
Net
realized investment losses
|
(19
|
)
|
(49
|
)
|
(27
|
)
|
(84
|
)
|
|||||
Other
income
|
68
|
46
|
138
|
88
|
|||||||||
Total
revenues
|
68,987
|
57,105
|
135,069
|
109,194
|
|||||||||
Expenses
|
|||||||||||||
Losses
and loss adjustment expenses
|
36,954
|
30,214
|
71,222
|
59,431
|
|||||||||
Other
operating expenses
|
17,659
|
13,384
|
33,568
|
25,409
|
|||||||||
Interest
expense
|
1,298
|
896
|
2,582
|
1,673
|
|||||||||
Total
expenses
|
55,911
|
44,494
|
107,372
|
86,513
|
|||||||||
Income
before taxes
|
13,076
|
12,611
|
27,697
|
22,681
|
|||||||||
Federal
income tax expense
|
3,920
|
4,060
|
8,414
|
7,301
|
|||||||||
Net
income
|
$
|
9,156
|
$
|
8,551
|
$
|
19,283
|
$
|
15,380
|
|||||
Earnings
per share:
|
|||||||||||||
Basic
|
$
|
0.60
|
$
|
0.57
|
$
|
1.27
|
$
|
1.02
|
|||||
Diluted
|
$
|
0.56
|
$
|
0.53
|
$
|
1.19
|
$
|
0.96
|
|||||
Cash
dividends declared per common share
|
$
|
0.15
|
$
|
-
|
$
|
0.30
|
$
|
-
|
Six
Months Ended June 30,
|
|||||||
2007
|
2006
|
||||||
|
(in
thousands)
|
Operating
activities
|
Net
cash provided by operating activities
|
$
|
60,309
|
$
|
72,610
|
|||
Investing
activities
|
|||||||
Securities
available-for-sale:
|
|||||||
Purchases
- fixed maturity securities
|
(102,434
|
)
|
(142,375
|
)
|
|||
Purchases
- equity securities
|
(15,964
|
)
|
-
|
||||
Maturities
and calls - fixed maturity securities
|
23,737
|
14,700
|
|||||
Sales
- fixed maturity securities
|
43,114
|
24,105
|
|||||
Sales
- equity securities
|
1,311
|
-
|
|||||
Net
payable to securities brokers
|
270
|
1,671
|
|||||
Purchases
of property and equipment
|
(560
|
)
|
(195
|
)
|
|||
Investment
in real estate joint venture
|
(620
|
)
|
-
|
||||
Net
cash used in investing activities
|
(51,146
|
)
|
(102,094
|
)
|
|||
Financing
activities
|
|||||||
Proceeds
from issuance of Common Stock
|
219
|
173
|
|||||
Excess
tax benefits from stock option exercises
|
145
|
75
|
|||||
Issuance
of junior subordinated debt
|
-
|
20,000
|
|||||
Issuance
costs
|
-
|
(27
|
)
|
||||
Dividends
paid to common stockholders
|
(4,541
|
)
|
-
|
||||
Net
cash (used in) provided by financing activities
|
(4,177
|
)
|
20,221
|
||||
Change
in cash and cash equivalents
|
4,986
|
(9,263
|
)
|
||||
Cash
and cash equivalents at beginning of period
|
40,319
|
41,029
|
|||||
Cash
and cash equivalents at end of period
|
$
|
45,305
|
$
|
31,766
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
($
in thousands, except for share data)
|
|||||||||||||
Other
operating expenses recognized for stock based
compensation
|
$
|
275
|
$
|
238
|
$
|
540
|
$
|
461
|
|||||
Related
tax benefits of stock based compensation
|
$
|
96
|
$
|
84
|
$
|
189
|
$
|
162
|
|||||
Option
Grant Activity:
|
|||||||||||||
Number
of options granted
|
-
|
45,000
|
17,500
|
45,000
|
|||||||||
Weighted-average
fair value on the date of grant
|
$
|
-
|
$
|
11.71
|
$
|
11.00
|
$
|
11.71
|
|||||
Option
Exercise Activity:
|
|||||||||||||
Cash
received from stock options exercised
|
$
|
25
|
$
|
-
|
$
|
219
|
$
|
173
|
|||||
Shares
of common stock issued in connection with
stock
options exercised
|
2,500
|
-
|
21,400
|
17,255
|
|||||||||
Intrinsic
value of options exercised
|
$
|
56
|
$
|
-
|
$
|
416
|
$
|
217
|
|||||
Income
tax benefit of options exercised
|
$
|
19
|
$
|
-
|
$
|
145
|
$
|
75
|
Weighted-average
expected life
|
7
years
|
|
Expected
stock price volatility
|
35.00%
|
|
Risk-free
interest rate
|
4.67%
|
|
Dividend
yield
|
2.00%
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
(in
thousands, except for share data)
|
|||||||||||||
Net
income - numerator
for basic and diluted
earnings
per share
|
$
|
9,156
|
$
|
8,551
|
$
|
19,283
|
$
|
15,380
|
|||||
Weighted
- average common shares
outstanding
- denominator
for basic
earnings
per share
|
15,137,856
|
15,087,308
|
15,131,149
|
15,081,571
|
|||||||||
Dilutive
potential common shares:
|
|||||||||||||
Options
|
984,639
|
823,822
|
958,308
|
779,293
|
|||||||||
Warrants
|
104,230
|
91,945
|
102,171
|
87,802
|
|||||||||
Weighted
- average common shares and
dilutive
potential common shares outstanding
-
denominator
for diluted earnings per share
|
16,226,725
|
16,003,075
|
16,191,628
|
15,948,666
|
|||||||||
Earnings
per share:
|
|||||||||||||
Basic
|
$
|
0.60
|
$
|
0.57
|
$
|
1.27
|
$
|
1.02
|
|||||
Diluted
|
$
|
0.56
|
$
|
0.53
|
$
|
1.19
|
$
|
0.96
|
Income
tax expense differs from the amounts computed by applying the Federal
statutory income tax rate to income before income taxes primarily
due to
interest income on tax-advantaged state and municipal securities.
The
Company did not have any unrecognized tax benefits at June 30, 2007
or
January 1, 2007, the date FIN 48 was adopted. Tax year 2003 and all
subsequent tax years remain subject to examination by the Internal
Revenue
Service.
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
(in
thousands)
|
|||||||||||||
Net
unrealized losses arising during the period,
before
taxes
|
$
|
(7,477
|
)
|
$
|
(4,078
|
)
|
$
|
(6,580
|
)
|
$
|
(8,593
|
)
|
|
Income
taxes
|
2,617
|
1,426
|
2,303
|
3,007
|
|||||||||
Net
unrealized losses arising during the period,
net
of taxes
|
(4,860
|
)
|
(2,652
|
)
|
(4,277
|
)
|
(5,586
|
)
|
|||||
Less
reclassification adjustment:
|
|||||||||||||
Net
losses realized in net income
|
(19
|
)
|
(49
|
)
|
(27
|
)
|
(84
|
)
|
|||||
Income
taxes
|
6
|
17
|
9
|
29
|
|||||||||
Reclassification
adjustment for losses realized
in
net income
|
(13
|
)
|
(32
|
)
|
(18
|
)
|
(55
|
)
|
|||||
Other
comprehensive loss
|
(4,847
|
)
|
(2,620
|
)
|
(4,259
|
)
|
(5,531
|
)
|
|||||
Net
income
|
9,156
|
8,551
|
19,283
|
15,380
|
|||||||||
Comprehensive
income
|
$
|
4,309
|
$
|
5,931
|
$
|
15,024
|
$
|
9,849
|
Excess
and Surplus Insurance
|
Workers’
Compensation Insurance
|
Corporate
and Other
|
Total
|
||||||||||
(in
thousands)
|
|||||||||||||
Three
Months Ended June 30, 2007
|
|||||||||||||
Gross
written premiums
|
$
|
64,469
|
$
|
14,980
|
$
|
-
|
$
|
79,449
|
|||||
Net
earned premiums
|
48,744
|
14,243
|
-
|
62,987
|
|||||||||
Segment
revenues
|
53,729
|
15,275
|
(17
|
)
|
68,987
|
||||||||
Underwriting
profit of insurance segments
|
11,019
|
225
|
-
|
11,244
|
|||||||||
Net
investment income
|
4,839
|
1,018
|
94
|
5,951
|
|||||||||
Interest
expense
|
-
|
-
|
1,298
|
1,298
|
|||||||||
Segment
assets
|
659,899
|
112,418
|
21,206
|
793,523
|
|||||||||
Three
Months Ended June 30, 2006
|
|||||||||||||
Gross
written premiums
|
$
|
63,788
|
$
|
10,846
|
$
|
-
|
$
|
74,634
|
|||||
Net
earned premiums
|
43,316
|
9,286
|
-
|
52,602
|
|||||||||
Segment
revenues
|
46,754
|
9,972
|
379
|
57,105
|
|||||||||
Underwriting
profit of insurance segments
|
9,760
|
410
|
-
|
10,170
|
|||||||||
Net
investment income
|
3,487
|
674
|
345
|
4,506
|
|||||||||
Interest
expense
|
-
|
-
|
896
|
896
|
|||||||||
Segment
assets
|
558,025
|
83,659
|
30,680
|
672,364
|
Excess
and Surplus Insurance
|
Workers’
Compensation Insurance
|
Corporate
and Other
|
Total
|
||||||||||
(in
thousands)
|
|||||||||||||
Six
Months Ended June 30, 2007
|
|||||||||||||
Gross
written premiums
|
$
|
129,948
|
$
|
29,589
|
$
|
-
|
$
|
159,537
|
|||||
Net
earned premiums
|
96,133
|
27,103
|
-
|
123,236
|
|||||||||
Segment
revenues
|
105,798
|
29,128
|
143
|
135,069
|
|||||||||
Underwriting
profit of insurance segments
|
19,191
|
3,070
|
-
|
22,261
|
|||||||||
Net
investment income
|
9,527
|
1,994
|
201
|
11,722
|
|||||||||
Interest
expense
|
-
|
-
|
2,582
|
2,582
|
|||||||||
Segment
assets
|
659,899
|
112,418
|
21,206
|
793,523
|
|||||||||
Six
Months Ended June 30, 2006
|
|||||||||||||
Gross
written premiums
|
$
|
121,556
|
$
|
21,243
|
$
|
-
|
$
|
142,799
|
|||||
Net
earned premiums
|
82,900
|
17,791
|
-
|
100,691
|
|||||||||
Segment
revenues
|
89,382
|
19,086
|
726
|
109,194
|
|||||||||
Underwriting
profit (loss) of insurance segments
|
17,891
|
(233
|
)
|
-
|
17,658
|
||||||||
Net
investment income
|
6,566
|
1,272
|
661
|
8,499
|
|||||||||
Interest
expense
|
-
|
-
|
1,673
|
1,673
|
|||||||||
Segment
assets
|
558,025
|
83,659
|
30,680
|
672,364
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
(in
thousands)
|
|||||||||||||
Underwriting
profit (loss) of insurance segments:
|
|||||||||||||
Excess
and Surplus Insurance
|
$
|
11,019
|
$
|
9,760
|
$
|
19,191
|
$
|
17,891
|
|||||
Workers’
Compensation Insurance
|
225
|
410
|
3,070
|
(233
|
)
|
||||||||
Total
underwriting profit of insurance segments
|
11,244
|
10,170
|
22,261
|
17,658
|
|||||||||
Other
operating expenses of the Corporate and
Other
segment
|
(2,870
|
)
|
(1,166
|
)
|
(3,815
|
)
|
(1,807
|
)
|
|||||
Underwriting
profit (a)
|
8,374
|
9,004
|
18,446
|
15,851
|
|||||||||
Net
investment income
|
5,951
|
4,506
|
11,722
|
8,499
|
|||||||||
Net
realized investment losses
|
(19
|
)
|
(49
|
)
|
(27
|
)
|
(84
|
)
|
|||||
Other
income
|
68
|
46
|
138
|
88
|
|||||||||
Interest
expense
|
(1,298
|
)
|
(896
|
)
|
(2,582
|
)
|
(1,673
|
)
|
|||||
Consolidated
income before taxes
|
$
|
13,076
|
$
|
12,611
|
$
|
27,697
|
$
|
22,681
|
(a)
|
Other
operating expenses of the Corporate and Other segment for the three
months
and six months ended June 30, 2007 include $2.0 million of legal,
accounting, and investment banking fees associated with the proposed
transaction. (See Note 2)
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
(in
thousands)
|
|||||||||||||
Other
underwriting expenses of the insurance segments
|
$
|
5,033
|
$
|
3,856
|
$
|
10,887
|
$
|
7,563
|
|||||
Amortization
of policy acquisition costs
|
9,756
|
8,362
|
18,866
|
16,039
|
|||||||||
Other
operating expenses of the Corporate and Other segment
|
2,870
|
1,166
|
3,815
|
1,807
|
|||||||||
Total
|
$
|
17,659
|
$
|
13,384
|
$
|
33,568
|
$
|
25,409
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
|
·
|
earn
a profit from underwriting; and
|
·
|
produce
a return on average equity of 15% or
greater.
|
·
|
The
Excess and Surplus Insurance segment offers commercial excess and
surplus
lines liability and property insurance in 48 states and the District
of
Columbia through James River Insurance Company (James River
Insurance);
|
·
|
The
Workers’ Compensation Insurance segment offers workers’ compensation
coverage primarily for the residential construction industry in North
Carolina and, in 2007, Virginia through Stonewood Insurance Company
(Stonewood Insurance); and
|
·
|
The
Corporate and Other segment consists of management and treasury activities
of our holding company and interest expense associated with our
debt.
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||||||||
2007
|
2006
|
%
Change
|
2007
|
2006
|
%
Change
|
||||||||||||||
($
in thousands)
|
|||||||||||||||||||
|
|||||||||||||||||||
Gross
written premiums
|
$
|
79,449
|
$
|
74,634
|
6.5
|
%
|
$
|
159,537
|
$
|
142,799
|
11.7
|
%
|
|||||||
Net
retention (a)
|
90.1
|
%
|
73.5
|
%
|
84.9
|
%
|
76.0
|
%
|
|||||||||||
Net
written premiums
|
$
|
71,572
|
$
|
54,824
|
30.5
|
%
|
$
|
135,442
|
$
|
108,512
|
24.8
|
%
|
|||||||
Net
earned premiums
|
$
|
62,987
|
$
|
52,602
|
19.7
|
%
|
$
|
123,236
|
$
|
100,691
|
22.4
|
%
|
|||||||
Losses
and loss adjustment expenses
|
(36,954
|
)
|
(30,214
|
)
|
22.3
|
%
|
(71,222
|
)
|
(59,431
|
)
|
19.8
|
%
|
|||||||
Other
operating expenses (b)
|
(17,659
|
)
|
(13,384
|
)
|
31.9
|
%
|
(33,568
|
)
|
(25,409
|
)
|
32.1
|
%
|
|||||||
Underwriting
profit (c)
|
8,374
|
9,004
|
(7.0
|
%)
|
18,446
|
15,851
|
16.4
|
%
|
|||||||||||
Net
investment income
|
5,951
|
4,506
|
32.1
|
%
|
11,722
|
8,499
|
37.9
|
%
|
|||||||||||
Net
realized investment losses
|
(19
|
)
|
(49
|
)
|
(61.2
|
%)
|
(27
|
)
|
(84
|
)
|
(67.9
|
%)
|
|||||||
Other
income
|
68
|
46
|
47.8
|
%
|
138
|
88
|
56.8
|
%
|
|||||||||||
Interest
expense
|
(1,298
|
)
|
(896
|
)
|
44.9
|
%
|
(2,582
|
)
|
(1,673
|
)
|
54.3
|
%
|
|||||||
Federal
income tax expense
|
(3,920
|
)
|
(4,060
|
)
|
(3.4
|
%)
|
(8,414
|
)
|
(7,301
|
)
|
15.2
|
%
|
|||||||
Net
income
|
$
|
9,156
|
$
|
8,551
|
7.1
|
%
|
$
|
19,283
|
$
|
15,380
|
25.4
|
%
|
|||||||
Ratios:
|
|||||||||||||||||||
Loss
ratio
|
58.7
|
%
|
57.4
|
%
|
-
|
57.8
|
%
|
59.0
|
%
|
-
|
|||||||||
Expense
ratio (b)
|
28.0
|
%
|
25.4
|
%
|
-
|
27.2
|
%
|
25.2
|
%
|
-
|
|||||||||
Combined
ratio (b)
|
86.7
|
%
|
82.9
|
%
|
-
|
85.0
|
%
|
84.3
|
%
|
-
|
(a) Net
retention is defined as the ratio of net written premiums to gross
written
premiums.
|
(b) Includes
$2.0 million of transaction costs for the quarter and six months
ended
June 30, 2007.
|
(c) See
“Reconciliation of Non-GAAP Measures” for further
detail.
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||||||||
2007
|
2006
|
%
Change
|
2007
|
2006
|
%
Change
|
||||||||||||||
($
in thousands)
|
|||||||||||||||||||
Gross
written premiums:
|
|||||||||||||||||||
Excess
and Surplus Insurance
|
$
|
64,469
|
$
|
63,788
|
1.1
|
%
|
$
|
129,948
|
$
|
121,556
|
6.9
|
%
|
|||||||
Workers’
Compensation Insurance
|
14,980
|
10,846
|
38.1
|
%
|
29,589
|
21,243
|
39.3
|
%
|
|||||||||||
$
|
79,449
|
$
|
74,634
|
6.5
|
%
|
$
|
159,537
|
$
|
142,799
|
11.7
|
%
|
||||||||
Net
written premiums:
|
|||||||||||||||||||
Excess
and Surplus Insurance
|
$
|
57,696
|
$
|
45,368
|
27.2
|
%
|
$
|
107,319
|
$
|
89,944
|
19.3
|
%
|
|||||||
Workers’
Compensation Insurance
|
13,876
|
9,456
|
46.7
|
%
|
28,123
|
18,568
|
51.5
|
%
|
|||||||||||
$
|
71,572
|
$
|
54,824
|
30.5
|
%
|
$
|
135,442
|
$
|
108,512
|
24.8
|
%
|
||||||||
Net
earned premiums:
|
|||||||||||||||||||
Excess
and Surplus Insurance
|
$
|
48,744
|
$
|
43,316
|
12.5
|
%
|
$
|
96,133
|
$
|
82,900
|
16.0
|
%
|
|||||||
Workers’
Compensation Insurance
|
14,243
|
9,286
|
53.4
|
%
|
27,103
|
17,791
|
52.3
|
%
|
|||||||||||
$
|
62,987
|
$
|
52,602
|
19.7
|
%
|
$
|
123,236
|
$
|
100,691
|
22.4
|
%
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Excess
and Surplus Insurance
|
77.4
|
%
|
77.5
|
%
|
80.0
|
%
|
78.4
|
%
|
|||||
Workers’
Compensation Insurance
|
98.4
|
%
|
95.6
|
%
|
88.7
|
%
|
101.3
|
%
|
|||||
Total
|
86.7
|
%
|
82.9
|
%
|
85.0
|
%
|
84.3
|
%
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||||||||
2007
|
2006
|
%
Change
|
2007
|
2006
|
%
Change
|
||||||||||||||
($
in thousands)
|
|||||||||||||||||||
Gross
written premiums
|
$
|
64,469
|
$
|
63,788
|
1.1
|
%
|
$
|
129,948
|
$
|
121,556
|
6.9
|
%
|
|||||||
Net
written premiums
|
$
|
57,696
|
$
|
45,368
|
27.2
|
%
|
$
|
107,319
|
$
|
89,944
|
19.3
|
%
|
|||||||
Net
earned premiums
|
$
|
48,744
|
$
|
43,316
|
12.5
|
%
|
$
|
96,133
|
$
|
82,900
|
16.0
|
%
|
|||||||
Losses
and loss
adjustment
expenses
|
(26,323
|
)
|
(23,945
|
)
|
9.9
|
%
|
(54,226
|
)
|
(46,312
|
)
|
17.1
|
%
|
|||||||
Underwriting
expenses
|
(11,402
|
)
|
(9,611
|
)
|
18.6
|
%
|
(22,716
|
)
|
(18,697
|
)
|
21.5
|
%
|
|||||||
Underwriting
profit (1)
|
$
|
11,019
|
$
|
9,760
|
12.9
|
%
|
$
|
19,191
|
$
|
17,891
|
7.3
|
%
|
|||||||
Ratios:
|
|||||||||||||||||||
Loss
ratio
|
54.0
|
%
|
55.3
|
%
|
-
|
56.4
|
%
|
55.9
|
%
|
-
|
|||||||||
Expense
ratio
|
23.4
|
%
|
22.2
|
%
|
-
|
23.6
|
%
|
22.6
|
%
|
-
|
|||||||||
Combined
ratio
|
77.4
|
%
|
77.5
|
%
|
-
|
80.0
|
%
|
78.4
|
%
|
-
|
(1)
See - “Reconciliation of Non-GAAP
Measures”.
|
Three
Months Ended June 30, 2007
|
Six
Months Ended June 30, 2007
|
||||||||||||||||||
Casualty
Lines
|
Property
Lines
|
Total
|
Casualty
Lines
|
Property
Lines
|
Total
|
||||||||||||||
($
in thousands)
|
|||||||||||||||||||
Net
earned premiums
|
$
|
47,503
|
$
|
1,241
|
$
|
48,744
|
$
|
94,389
|
$
|
1,744
|
$
|
96,133
|
|||||||
Losses
and loss adjustment expenses
|
$
|
24,959
|
$
|
1,364
|
$
|
26,323
|
$
|
51,941
|
$
|
2,285
|
$
|
54,226
|
|||||||
Loss
ratio
|
52.5
|
%
|
109.9
|
%
|
54.0
|
%
|
55.0
|
%
|
131.0
|
%
|
56.4
|
%
|
Three
Months Ended
June 30, 2006
|
Six
Months Ended June 30, 2006
|
||||||||||||||||||
Casualty
Lines
|
Property
Lines
|
Total
|
Casualty
Lines
|
Property
Lines
|
Total
|
||||||||||||||
($
in thousands)
|
|||||||||||||||||||
Net
earned premiums
|
$
|
41,624
|
$
|
1,692
|
$
|
43,316
|
$
|
79,327
|
$
|
3,573
|
$
|
82,900
|
|||||||
Losses
and loss adjustment expenses
|
$
|
23,866
|
$
|
79
|
$
|
23,945
|
$
|
45,175
|
$
|
1,137
|
$
|
46,312
|
|||||||
Loss
ratio
|
57.3
|
%
|
4.7
|
%
|
55.3
|
%
|
56.9
|
%
|
31.8
|
%
|
55.9
|
%
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||||||||
2007
|
2006
|
%
Change
|
2007
|
2006
|
%
Change
|
||||||||||||||
($
in thousands)
|
|||||||||||||||||||
Gross
written premiums
|
$
|
14,980
|
$
|
10,846
|
38.1
|
%
|
$
|
29,589
|
$
|
21,243
|
39.3
|
%
|
|||||||
Net
written premiums
|
$
|
13,876
|
$
|
9,456
|
46.7
|
%
|
$
|
28,123
|
$
|
18,568
|
51.5
|
%
|
|||||||
Net
earned premiums
|
$
|
14,243
|
$
|
9,286
|
53.4
|
%
|
$
|
27,103
|
$
|
17,791
|
52.3
|
%
|
|||||||
Losses
and loss adjustment expenses
|
(10,631
|
)
|
(6,269
|
)
|
69.6
|
%
|
(16,996
|
)
|
(13,119
|
)
|
29.6
|
%
|
|||||||
Underwriting
expenses
|
(3,387
|
)
|
(2,607
|
)
|
29.9
|
%
|
(7,037
|
)
|
(4,905
|
)
|
43.5
|
%
|
|||||||
Underwriting
profit (loss)(1)
|
$
|
225
|
$
|
410
|
(45.1
|
%)
|
$
|
3,070
|
$
|
(233
|
)
|
-
|
|||||||
Ratios:
|
|||||||||||||||||||
Loss
ratio
|
74.6
|
%
|
67.5
|
%
|
-
|
62.7
|
%
|
73.7
|
%
|
-
|
|||||||||
Expense
ratio
|
23.8
|
%
|
28.1
|
%
|
-
|
26.0
|
%
|
27.6
|
%
|
-
|
|||||||||
Combined
ratio
|
98.4
|
%
|
95.6
|
%
|
-
|
88.7
|
%
|
101.3
|
%
|
-
|
(1)
See - “Reconciliation of Non-GAAP
Measures”.
|
Gross
Reserves at June 30, 2007
|
||||||||||
Case
|
IBNR
|
Total
|
||||||||
(in
thousands)
|
||||||||||
Excess
and Surplus Insurance
|
||||||||||
Casualty
Lines
|
$
|
51,159
|
$
|
224,322
|
$
|
275,481
|
||||
Property
Lines
|
18,295
|
14,997
|
33,292
|
|||||||
Workers’
Compensation Insurance
|
17,485
|
24,740
|
42,225
|
|||||||
Total
|
$
|
86,939
|
$
|
264,059
|
$
|
350,998
|
Net
Reserves at June 30, 2007
|
||||||||||
Case
|
IBNR
|
Total
|
||||||||
(in
thousands)
|
||||||||||
Excess
and Surplus Insurance
|
||||||||||
Casualty
Lines
|
$
|
31,065
|
$
|
174,511
|
$
|
205,576
|
||||
Property
Lines
|
4,581
|
5,129
|
9,710
|
|||||||
Workers’
Compensation Insurance
|
17,228
|
21,340
|
38,568
|
|||||||
Total
|
$
|
52,874
|
$
|
200,980
|
$
|
253,854
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Annualized
gross investment yield on:
|
|||||||||||||
Average
cash and invested assets
|
4.4
|
%
|
4.3
|
%
|
4.5
|
%
|
4.3
|
%
|
|||||
Average
fixed maturity securities
|
4.6
|
%
|
4.3
|
%
|
4.6
|
%
|
4.2
|
%
|
|||||
Annualized
tax equivalent yield on:
|
|||||||||||||
Average
fixed maturity securities
|
5.4
|
%
|
4.8
|
%
|
5.4
|
%
|
4.7
|
%
|
June
30, 2007
|
December
31, 2006
|
||||||||||||||||||
Cost
or Amortized Cost
|
Fair
Value
|
%
of
Total
Fair
Value
|
Cost
or Amortized
Cost
|
Fair
Value
|
%
of
Total
Fair
Value
|
||||||||||||||
($
in thousands)
|
|||||||||||||||||||
Fixed
maturity securities:
|
|||||||||||||||||||
State
and municipal
|
$
|
229,285
|
$
|
226,170
|
42.1
|
%
|
$
|
198,627
|
$
|
200,264
|
40.5
|
%
|
|||||||
Mortgage-backed
|
103,921
|
101,688
|
18.9
|
%
|
92,673
|
91,760
|
18.5
|
%
|
|||||||||||
Corporate
|
75,465
|
73,778
|
13.7
|
%
|
88,561
|
86,895
|
17.6
|
%
|
|||||||||||
Asset-backed
|
64,897
|
63,915
|
11.9
|
%
|
59,226
|
58,889
|
11.9
|
%
|
|||||||||||
Obligations
of U.S.
government
corporations
and
agencies
|
25,960
|
25,548
|
4.8
|
%
|
25,954
|
25,568
|
5.2
|
%
|
|||||||||||
U.S.
Treasury securities and
obligations
guaranteed by
the
U.S. Government
|
23,202
|
22,312
|
4.1
|
%
|
23,191
|
22,640
|
4.5
|
%
|
|||||||||||
Total
fixed maturity securities
|
522,730
|
513,411
|
95.5
|
%
|
488,232
|
486,016
|
98.2
|
%
|
|||||||||||
Equity
securities
|
23,266
|
23,983
|
4.5
|
%
|
8,536
|
8,703
|
1.8
|
%
|
|||||||||||
Total
investments
|
$
|
545,996
|
$
|
537,394
|
100.0
|
%
|
$
|
496,768
|
$
|
494,719
|
100.0
|
%
|
June
30, 2007
|
||||||||||
Amortized
Cost
|
Fair
Value
|
%
of
Total
Fair
Value
|
||||||||
($
in thousands)
|
||||||||||
Due
in:
|
||||||||||
One
year or less
|
$
|
26,040
|
$
|
25,808
|
5.0
|
%
|
||||
After
one year through five years
|
81,926
|
80,056
|
15.6
|
%
|
||||||
After
five years through ten years
|
91,733
|
89,675
|
17.5
|
%
|
||||||
After
ten years
|
154,213
|
152,269
|
29.7
|
%
|
||||||
Mortgage-backed
|
103,921
|
101,688
|
19.8
|
%
|
||||||
Asset-backed
|
64,897
|
63,915
|
12.4
|
%
|
||||||
Total
|
$
|
522,730
|
$
|
513,411
|
100.0
|
%
|
Six
Months
Ended June 30,
|
|||||||
2007
|
2006
|
||||||
(in
thousands)
|
|||||||
Cash
and cash equivalents provided by (used in):
|
|||||||
Operating
activities
|
$
|
60,309
|
$
|
72,610
|
|||
Investing
activities
|
(51,146
|
)
|
(102,094
|
)
|
|||
Financing
activities
|
(4,177
|
)
|
20,221
|
||||
Change
in cash and cash equivalents
|
$
|
4,986
|
$
|
(9,263
|
)
|
James
River
Capital
Trust I
|
James
River
Capital
Trust II
|
James
River
Capital
Trust III
|
||||||||
($
in thousands)
|
||||||||||
Issue
date
|
May
26, 2004
|
December
15, 2004
|
June
15, 2006
|
|||||||
Principal
amount of trust preferred securities
|
$
|
7,000
|
$
|
15,000
|
$
|
20,000
|
||||
Principal
amount of junior subordinated debt
|
$
|
7,217
|
$
|
15,464
|
$
|
20,619
|
||||
Maturity
date of junior subordinated debt,
unless
accelerated earlier
|
May
24, 2034
|
December
15, 2034
|
June
15, 2036
|
|||||||
Trust
common stock
|
$
|
217
|
$
|
464
|
$
|
619
|
||||
Interest
rate, per annum
|
Three-Month
LIBOR
plus 4.0%
|
|
Three-Month
LIBOR
plus 3.4%
|
|
Three-Month
LIBOR
plus 3.0%
|
|
||||
Redeemable
at 100% of principal amount at
our
option on or after
|
May
24, 2009
|
December
15, 2009
|
June
15, 2011
|
Line
of Business
|
Company
Retention
|
|
Primary
Casualty
|
Up
to $2.0 million per occurrence
|
|
Excess
Casualty
|
$500,000
per occurrence (1)
|
|
Workers’
Compensation
|
$1.0
million per occurrence and losses above $20.0 million per occurrence
and
above $10.0 million on any one life
|
(1)
|
For
policies with an occurrence limit of $1.0 million or higher, the
excess
casualty treaty is set such that our retention is $500,000. For policies
where we also write an underlying primary casualty policy, the excess
casualty reinsurance reduces our retention to $100,000, which when
added
to our retention on the primary casualty coverage, results in a total
retention of $1.1 million on that risk.
|
Line
of Business
|
Company
Retention
|
|
Primary
Property
|
$1.0
million per risk
|
|
Excess
Property
|
$2.0
million per risk
|
Risk-free
interest rate
|
4.67%
|
Dividend
yield
|
2.00%
|
Expected
stock price volatility
|
35.00%
|
Weighted-average
expected life
|
7
years
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
(in
thousands)
|
|||||||||||||
Underwriting
profit (loss) of the insurance segments:
|
|||||||||||||
Excess
and Surplus Insurance
|
$
|
11,019
|
$
|
9,760
|
$
|
19,191
|
$
|
17,891
|
|||||
Workers’
Compensation Insurance
|
225
|
410
|
3,070
|
(233
|
)
|
||||||||
Total
underwriting profit of insurance segments
|
11,244
|
10,170
|
22,261
|
17,658
|
|||||||||
Other
operating expenses of the Corporate and Other
segment
(a)
|
(2,870
|
)
|
(1,166
|
)
|
(3,815
|
)
|
(1,807
|
)
|
|||||
Underwriting
profit
|
8,374
|
9,004
|
18,446
|
15,851
|
|||||||||
Net
investment income
|
5,951
|
4,506
|
11,722
|
8,499
|
|||||||||
Net
realized investment losses
|
(19
|
)
|
(49
|
)
|
(27
|
)
|
(84
|
)
|
|||||
Other
income
|
68
|
46
|
138
|
88
|
|||||||||
Interest
expense
|
(1,298
|
)
|
(896
|
)
|
(2,582
|
)
|
(1,673
|
)
|
|||||
Consolidated
income before taxes
|
$
|
13,076
|
$
|
12,611
|
$
|
27,697
|
$
|
22,681
|
(a)
|
Includes
$2.0 million of costs incurred in connection with the proposed transaction
for the quarter and six months ended June 30,
2007.
|
Three
Months Ended June 30, 2007
|
Six
Months Ended
June 30, 2007
|
||||||||||||||||||
As
Reported
|
Transaction
Costs
|
As
Adjusted
|
As
Reported
|
Transaction
Costs
|
As
Adjusted
|
||||||||||||||
(in
thousands, except for share data)
|
|||||||||||||||||||
Underwriting
profit
|
$
|
8,374
|
$
|
2,014
|
$
|
10,388
|
$
|
18,446
|
$
|
2,014
|
$
|
20,460
|
|||||||
Income
before taxes
|
$
|
13,076
|
$
|
2,014
|
$
|
15,090
|
$
|
27,697
|
$
|
2,014
|
$
|
29,711
|
|||||||
Federal
income tax expense
|
3,920
|
705
|
4,625
|
8,414
|
705
|
9,119
|
|||||||||||||
Net
income
|
$
|
9,156
|
$
|
1,309
|
$
|
10,465
|
$
|
19,283
|
$
|
1,309
|
$
|
20,592
|
|||||||
Earnings
per share:
|
|||||||||||||||||||
Basic
|
$
|
0.60
|
$
|
0.09
|
$
|
0.69
|
$
|
1.27
|
$
|
0.09
|
$
|
1.36
|
|||||||
Diluted
|
$
|
0.56
|
$
|
0.08
|
$
|
0.64
|
$
|
1.19
|
$
|
0.08
|
$
|
1.27
|
|||||||
Ratios:
|
|||||||||||||||||||
Loss
ratio
|
58.7
|
%
|
-
|
58.7
|
%
|
57.8
|
%
|
-
|
57.8
|
%
|
|||||||||
Expense
ratio
|
28.0
|
%
|
3.2
|
%
|
24.8
|
%
|
27.2
|
%
|
1.6
|
%
|
25.6
|
%
|
|||||||
Combined
ratio
|
86.7
|
%
|
3.2
|
%
|
83.5
|
%
|
85.0
|
%
|
1.6
|
%
|
83.4
|
%
|
·
|
the
occurrence of any event, change or other circumstance that could
give rise
to the termination of the Merger Agreement in which case we may be
obligated to pay (a) a termination fee of approximately $11.5 million
and
(b) an expense reimbursement of up to approximately $3.6
million;
|
·
|
if
the proposed Merger is not completed, the share price of our Common
Stock
may change to the extent that the current market price of our Common
Stock
reflects an assumption that the proposed Merger will be
completed;
|
·
|
the
outcome of any legal proceedings, including the Levy complaint, that
have
been or may be instituted against us and others relating to the Merger
cannot be determined and may have a material adverse effect on our
results
of operations or may prevent or delay the Merger;
|
·
|
failure
to obtain stockholder approval or the failure to satisfy other conditions,
including regulatory approvals, may prevent or delay the closing
of the
Merger;
|
·
|
the
failure of the Merger to be completed for any reason;
|
·
|
the
risk that the Merger disrupts current plans and operations and that
our
management and employees’ attention may be diverted from day-to-day
operations;
|
·
|
the
potential difficulties in employee retention as a result of the
Merger;
|
·
|
the
effect of the announcement of the Merger on our agency and broker
relationships, operating results and business
generally;
|
·
|
the
amount of the costs, fees, expenses and charges related to the Merger,
including the fees for legal, accounting and investment banking services,
is significant and will continue and will adversely affect our results
of
operations; and
|
·
|
the
failure of the Merger to be completed for any reason may result in
unfavorable publicity and/or a negative impression of us in the investment
community.
|
For
|
Withheld
|
||
Matthew
Bronfman
|
12,637,879
|
1,485,764
|
|
John
T. Sinnott
|
14,084,837
|
38,806
|
For
|
Against
|
Abstain
|
Broker
Non-Votes
|
|||
14,123,440
|
134
|
69
|
0
|
Number
|
Exhibit
|
|
2.1
|
Agreement
and Plan of Merger dated as of June 11, 2007 among Franklin Holdings
(Bermuda), Ltd., Franklin Acquisition Corp. and James River Group,
Inc.
(incorporated by reference to the Company’s Current Report on Form 8-K
dated June 12, 2007 (File No. 000-51480)).
|
|
3.1
|
Third
Amended and Restated Certificate of Incorporation (incorporated herein
by
reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated
August 12, 2005 (File No. 000-51480)).
|
|
3.2
|
Form
of Third Amended and Restated By-Laws (incorporated herein by reference
to
Exhibit 3.2 to the Company’s Current Report on Form 8-K dated August 12,
2005 (File No. 000-51480)).
|
|
4.1
|
Specimen
Stock Certificate, representing James River Group, Inc. common stock,
par
value $0.0l per share (incorporated by reference to Exhibit 4.1 to
the
Company’s Registration Statement on Form S-1 (File No.
333-124605)).
|
|
4.2
|
Form
of Warrant relating to Series B Convertible Preferred Stock (incorporated
by reference to Exhibit 4.2 to the Company’s Registration Statement on
Form S-1 (File No. 333-124605)).
|
|
4.3
|
Registration
Rights Agreement dated January 21, 2003, by and among James River
Group,
Inc. and certain stockholders as named therein (incorporated by reference
to Exhibit 4.6 to the Company’s Registration Statement on Form S-1 (File
No. 333-124605)).
|
|
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 Senior
Debentures Due 2034 (incorporated by reference to Exhibit 4.8 to
the
Company’s Registration Statement on Form S-1 (File No.
333-124605)).
|
|
4.5
|
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 (incorporated by reference to Exhibit
4.9
to the Company’s Registration Statement on Form S-1 (File No.
333-124605)).
|
|
4.6
|
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., the Trustees
(as defined therein) and the holders, from time to time, of undivided
beneficial interests in James River Capital Trust I (incorporated
by
reference to Exhibit 4.10 to the Company’s Registration Statement on Form
S-1 (File No. 333-124605)).
|
|
4.7
|
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 (as defined therein)
of
James River Capital Trust I (incorporated by reference to Exhibit
4.11 to
the Company’s Registration Statement on Form S-1 (File No.
333-124605)).
|
|
4.8
|
Indenture
dated 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 (incorporated
by
reference to Exhibit 4.12 to the Company’s Registration Statement on Form
S-1 (File No. 333-124605)).
|
|
4.9
|
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., the Trustees
(as defined therein), the Administrators (as named therein), and
the
holders, from time to time, of undivided beneficial interests in
the James
River Capital Trust II (incorporated by reference to Exhibit 4.13
to the
Company’s Registration Statement on Form S-1 (File No.
333-124605)).
|
|
4.10
|
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 (as defined therein) from time to time of
the
capital securities of James River Capital Trust II (incorporated
by
reference to Exhibit 4.14 to the Company’s Registration Statement on Form
S-1 (File No. 333-124605)).
|
Number
|
Exhibit
|
|
4.11
|
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.**
|
|
4.12
|
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., the Trustees
(as defined therein), the Administrators (as named therein) and the
holders, from time to time, of undivided beneficial interests in
the James
River Capital Trust III.**
|
|
4.13
|
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 (as defined therein) from time to time of
the
capital securities of James River Capital Trust III.**
|
|
11
|
Statement
re computation of per share earnings is included in Note 4 to the
Condensed Consolidated Financial Statements in Item 1, “Financial
Statements”, of this report on Form 10-Q.
|
|
31.1
|
Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certification
of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification
of the Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification
of the Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
**
|
Exhibit
not included pursuant to Item 601 (b)(4)(iii) and (v) of Regulation
S-K.
The Company will provide a copy to the Securities and Exchange Commission
upon request.
|
August
6, 2007
|
/s/
Gregg T. Davis
|
|
Gregg
T. Davis
Executive
Vice President -Finance and
Treasurer
|