James River's Uber run-off “proceeding well” as additional claims close
The run-off of James River’s cancelled book of Uber insurance policies is “proceeding well” with the carrier closing further claims from the account during the second quarter, according to the company’s chairman and CEO.
Discussing James Rivers’ second quarter 2020 results with analysts, chairman and CEO J Adam Abram said the run-off of Uber parent Rasier’s account had progressed further with an additional 15 percent of the claims associated with the cancelled book closed during the three month period.
“That means that we’ve closed approximately 40 percent of the claims that were outstanding at the time we stopped writing the account,” Abram explained on the call.
The executive said the company expects “it will take two to three years to complete the run-off of the book”.
“We’re pleased with the pace and claims are being resolved at cost within our expectations,” Abram added.
Uber’s insurance relationships made headlines last October when James River announced it was giving notice of early cancellation to all of the insurance policies issued to its largest client, Rasier.
The policies, the majority of which were due to expire on 29 February 2020, were instead cancelled at the end of 2019 in response to the poor performance of the Uber account, the insurer explained at the time.
James River revealed a reserve charge of $55mn to $60mn in October last year which was primarily related to the commercial auto book of business in its E&S segment for the 2016 and 2017 underwriting years. The Uber book accounted for the vast majority of its commercial auto business.
The decision to end its insurance relationship with Uber-parent Rasier continues to be reflected in James River’s financials. Notably, the carrier’s E&S book saw its second quarter 2020 net written premium decrease by 35 compared with the prior year period to $126.8mn reflecting the cancellation of the Uber deal.
Indeed, James River’s commercial auto gross written premium decreased by $100.5mn year on year to just $7.1mn in the second quarter of 2020 due to the cancellation.
James River’s chief financial officer, Sarah Doran, said the run-off of what was formerly its largest account “continues to perform within our expectations”.
Come the end of 2020’s first half, Doran said open claims for all years of the account “represented a little bit less that 3 percent of the total reported claims for this account”.
At the end of 2019, Doran had said at that point open claims for all years of the Rasier account represented more than 5 percent of open claims.
“Of our approximately $1.3bn of total group-wide net loss reserves at quarter end, approximately $300mn supports this run-off block of business,” Doran said during the analyst call on Thursday morning.
Back in February, Abram said the company was making “encouraging progress” in settling claims relating to the Uber account. At the time, Abram said James River was “absolutely open” to the purchase of an adverse development cover (ADC) “if the economic terms are reasonable”. There was no further discussion of the mooted ADC on the most recent earnings call.