Net Reserve for Losses and LAE				Case Reserves				IBNR Reserves				Total Reserves
				(in thousands)
Excess and Surplus Insurance Casualty Lines				$	12,196			$	95,022			$	107,218
Excess and Surplus Insurance Property Lines					9,466				7,148				16,614
Workers' Compensation Insurance					8,465				11,030				19,495
Total				$	30,127			$	113,200			$	143,327

We have not provided insurance coverage that could reasonably be expected to produce material levels of asbestos claims activity. In addition, we believe we are not exposed to any environmental liability claims other than those which we have specifically underwritten and priced as an environmental exposure. Any asbestos or environmental exposure on policies issued by Fidelity Excess and Surplus Insurance Company (Fidelity) prior to June 30, 2003, the date that we acquired that company, are subject to a reinsurance agreement and a trust agreement with American Empire Insurance Company (American Empire) (see ‘‘—Reinsurance’’).

Other operating expenses for the three months ended March 31, 2006 totaled $12.0 million, up 111% from other operating expenses incurred during the three months ended March 31, 2005 of $5.7 million. Other operating expenses for the three months ended March 31, 2006 consisted of commissions (net of reinsurance ceding commissions earned) and other underwriting expenses (net of deferred policy acquisition costs) of $3.7 million, amortization of deferred policy acquisition costs of $7.7 million and other costs of $641,000. Other operating expenses for the three months ended March 31, 2005 consisted of commissions and other underwriting expenses (net of deferred policy acquisition costs) of $1.6 million, amortization of deferred policy acquisition costs of $3.7 million and other costs of $398,000. Reinsurance ceding commissions earned were $2.9 million and $3.5 million, respectively, for the three months ended March 31, 2006 and 2005, with $1.9 million of these commissions in 2005 coming from our quota share reinsurance contract. A portion of the costs of acquiring insurance business, principally commissions and certain policy underwriting and issuance costs, which vary with and are primarily related to the production of insurance business, is deferred. For the three months ended March 31, 2006, $9.1 million of costs were deferred, $6.2 million of which related to commissions and $2.9 million of which related to other acquisition expenses. For the three months ended March 31, 2005, $5.0 million of costs were deferred, $2.8 million of which related to commissions and $2.2 million of which related to other acquisition expenses. Deferred policy acquisition costs are charged to other operating expenses in proportion to premiums earned over the estimated policy term, generally 12 months.

The expense ratio, which is the ratio, expressed as a percentage, of other operating expenses to net earned premiums, was 25.0% for three months ended March 31, 2006 compared to 22.9% for the three months ended March 31, 2005. The expense ratio for the three months ended March 31, 2006 was affected by the $223,000 we recognized as compensation expense associated with expensing stock options due to the adoption of FASB Statement 123(R) effective January 1, 2006 (see ‘‘—New Accounting Standards’’). In addition, the quota share treaty in effect in the first quarter of 2005 reduced the earned premiums in that quarter by $7.6 million and reduced other operating expenses by $1.9 million, which reduced the expense ratio for that quarter by 0.6%.

Interest expense totaled $777,000 for the three months ended March 31, 2006 and $588,000 for the three months ended March 31, 2005, an increase of 32.1%. Interest expense relates to the $15.0 million of senior notes and $22.7 million of junior subordinated notes that we issued in May and December 2004, respectively. Interest on these notes accrues at floating rates, and the increase in interest expense reflects increases in interest rates over the past 12 months.

Income tax expense for the three months ended March 31, 2006 and 2005 differs from the amount computed by applying the Federal statutory income tax rate to the loss before income taxes primarily due to interest on tax-advantaged state and municipal securities. The effective tax rate is 32.2% for the three months ended March 31, 2006 and 33.5% for the three months ended March 31, 2005. The lower effective tax rate in 2006 reflects an increase in interest income on tax-advantaged state and municipal securities over the prior year first quarter.

19

Table of Contents

Results by Business Segment

We are organized into three reportable segments which are separately managed business units:

	•	The Excess and Surplus Insurance segment offers commercial excess and surplus lines liability and property products through James River Insurance;

	•	The Workers' Compensation Insurance segment offers workers' compensation insurance coverages through Stonewood Insurance; and

	•	The Corporate and Other segment consists of certain management and treasury activities of our holding company and interest expense associated with our debt.

There is an intercompany reinsurance pooling agreement in place between James River Insurance and Stonewood Insurance to best employ our capital at the regulatory level. We report all segment information in this ‘‘Management's Discussion and Analysis of Financial Condition and Results of Operations’’ prior to the effects of the intercompany reinsurance pooling agreement because we evaluate the operating performance of our reportable segments on a pre-pooling basis.

Excess and Surplus Insurance

Results for the Excess and Surplus Insurance segment are as follows:

				Three Months Ended March 31,
				2006				2005				Change
				($ in thousands)
Gross written premiums				$	57,768			$	41,769				38.3	%
Net written premiums				$	44,576			$	26,902				65.7	%
Net earned premiums				$	39,584			$	20,832				90.0	%
Losses and LAE					22,367				11,317				97.6	%
Underwriting expenses					9,086				3,873				135	%
Underwriting profit (1)					8,131				5,642				44.1	%
Net investment income					3,079				1,346				129	%
Realized investment losses					(35	)			—				—
Income before taxes				$	11,175			$	6,988				59.9	%
Ratios:
Loss ratio					56.5	%			54.3	%			—
Expense ratio					23.0	%			18.6	%			—
Combined ratio					79.5	%			72.9	%			—

(1)	See ‘‘—Reconciliation of Non-GAAP Measure.’’

Underwriting results by major line of business within the Excess and Surplus Insurance segment are as follows:

				Three Months Ended March 31, 2006												Three Months Ended March 31, 2005
				Casualty Lines				Property Lines				Total				Casualty Lines				Property Lines				Total
				($ in thousands)
Net earned premiums				$	37,702			$	1,882			$	39,584			$	19,675			$	1,157			$	20,832
Losses and LAE				$	21,309			$	1,058			$	22,367			$	12,390			$	(1,073	)		$	11,317
Loss ratio					56.5	%			56.2	%			56.5	%			63.0	%			(92.7	)%			54.3	%

Gross written premiums for the three months ended March 31, 2006 increased 38.3% to $57.8 million from $41.8 million for the three months ended March 31, 2005. The increase in gross written

20

---

Table of Contents

premiums in the three months ended March 31, 2006 is driven by an increase in the number of brokers submitting insurance business to James River Insurance from 158 for the three months ended March 31, 2005 to 199 for the three months ended March 31, 2006. In addition, the growing book of business in the Excess and Surplus Insurance segment created increased opportunities for renewal premiums. Gross written premiums for the three months ended March 31, 2006 included $23.4 million of renewal premiums compared to $11.9 million of renewal premiums for the three months ended March 31, 2005.

The written premium ceding ratio for the Excess and Surplus Insurance segment was 22.8% and 35.6%, respectively, for the three months ended March 31, 2006 and 2005. The higher written premium ceding ratio for the three months ended March 31, 2005 was driven by the impact of the quota share reinsurance contract that was effective January 1, 2005 and was not renewed for 2006. Ceded written premiums related to this quota share treaty for the three months ended March 31, 2005 totaled $7.6 million.

The loss ratio for the Excess and Surplus Insurance segment was 56.5% and 54.3%, respectively, for the three months ended March 31, 2006 and 2005. The loss ratio for the three months ended March 31, 2006 and 2005 was affected by $2.1 million and $2.0 million, respectively, of favorable loss and LAE reserve development on prior accident years. For the three months ended March 31, 2006, this favorable development included $1.5 million of favorable development in the James River Insurance casualty line primarily related to the 2004 accident year and $626,000 of favorable development in property lines, primarily related to the 2005 accident year. The favorable development for the three months ended March 31, 2005 included $1.7 million on property lines related to the 2004 accident year.

The expense ratio for the Excess and Surplus Insurance segment increased from 18.6% for the three months ended March 31, 2005 to 23.0% for the three months ended March 31, 2006. The expense ratio for the three months ended March 31, 2005 benefited from the ceding commission that James River Insurance received on the quota share reinsurance contract, which totaled $1.9 million for the three months ended March 31, 2005. The quota share treaty also impacted the expense ratio by reducing net earned premiums by $7.6 million for the three months ended March 31, 2005.

21

---

Table of Contents

Workers' Compensation Insurance

Results for the Workers' Compensation Insurance segment are as follows:

				Three Months Ended March 31,
				2006				2005				Percentage Change
				($ in thousands)
Gross written premiums				$	10,397			$	5,251				98.0	%
Net written premiums				$	9,112			$	4,088				123	%
Net earned premiums				$	8,505			$	4,000				113	%
Losses and LAE					6,850				2,077				230	%
Underwriting expenses					2,298				1,422				61.6	%
Underwriting (loss) profit (1)					(643	)			501				—
Net investment income					598				247				142	%
Other income					11				5				120	%
(Loss) income before taxes				$	(34	)		$	753				—
Ratios:
Loss ratio					80.5	%			51.9	%			—
Expense ratio					27.0	%			35.6	%			—
Combined ratio					107.6	%			87.5	%			—

(1)	See ‘‘—Reconciliation of Non-GAAP Measure.’’

Gross written premiums for the three months ended March 31, 2006 increased 98.0% to $10.4 million from $5.3 million for the three months ended March 31, 2005. Gross written premiums for Stonewood Insurance for the three months ended March 31, 2006 included $588,000 of assumed premiums from our allocation of the involuntary workers’ compensation pool for North Carolina. Growth in the agency network also contributed to the increase in gross written premiums. At March 31, 2006, there were 139 agents in the Workers' Compensation Insurance segment network compared to 116 at March 31, 2005. Stonewood Insurance wrote its first insurance policy effective January 1, 2004, and gross written premiums for the three months ended March 31, 2005 included $453,000 of renewal premium. There was a larger book of business to generate renewal premiums in the three months ended March 31, 2006, and gross written premiums for that quarter included $2.1 million of renewal premium. The growth in net written premiums and net earned premiums for the three months ended March 31, 2006 over the three months ended March 31, 2005 is primarily attributable to the growth in gross written premiums over the past 12 months.

The impact of Stonewood Insurance’s allocation of the involuntary workers’ compensation pool for North Carolina on loss before taxes was to increase the loss by $553,000 for the three months ended March 31, 2006.

The loss ratio for the Workers' Compensation Insurance segment was 80.5% for the three months ended March 31, 2006, compared to 51.9% for the three months ended March 31, 2005. The loss ratio for the Workers’ Compensation Insurance segment for the three months ended March 31, 2006 was significantly affected by high loss activity in the quarter. In addition, the loss ratio on Stonewood Insurance’s allocation of the North Carolina involuntary workers’ compensation pool’s results was 143.0% for the three months ended March 31, 2006. The loss ratio for the Workers’ Compensation Insurance segment for the three months ended March 31, 2006 was also affected by $563,000 of adverse reserve development on prior accident years, consisting of $786,000 of adverse development on business allocated from the North Carolina involuntary workers’ compensation pool partially offset by $223,000 of favorable reserve development on direct business written by Stonewood Insurance. The loss ratio for the three months ended March 31, 2005 benefited from $296,000 of favorable reserve development experienced in that quarter related to the 2004 accident year.

22

---

Table of Contents

The expense ratio for the Workers’ Compensation Insurance segment improved to 27.0% for three months ended March 31, 2006 from 35.6% for the three months ended March 31, 2005. The expense ratio for the Workers’ Compensation Insurance segment in the three months ended March 31, 2005 was affected by the costs required to establish the infrastructure to handle a high volume of insurance activity during the first quarter of workers’ compensation insurance operations.

Corporate and Other

Results for the Corporate and Other segment are as follows:

				Three Months Ended March 31,
				2006				2005
				(in thousands)
Net investment income				$	316			$	152
Realized investment losses					—				(25	)
Other income					31				40
Other operating expenses					(641	)			(398	)
Interest expense					(777	)			(588	)
Loss before taxes				$	(1,071	)		$	(819	)

Net investment income for the Corporate and Other segment increased from $152,000 for the three months ended March 31, 2005 to $316,000 for the three months ended March 31, 2006. In the third quarter of 2005, we retained a portion of the proceeds from our initial public offering at the holding company. At March 31, 2006, cash and invested assets at our holding company totaled $31.7 million, compared to $16.1 million at March 31, 2005.

Other operating expenses of the Corporate and Other segment were $641,000 for the three months ended March 31, 2006 and $398,000 for the three months ended March 31, 2005. Other operating expenses for the three months ended March 31, 2006 included $223,000 that we recognized as compensation expense associated with expensing stock options in connection with the adoption of FASB Statement 123(R) effective January 1, 2006 (see — ‘‘New Accounting Standards’’). Other operating expenses for the Corporate and Other segment include personnel costs associated with the holding company employees, directors' fees, professional fees and various other corporate expenses. A majority of these costs are reimbursed by our subsidiaries. The amount of the reimbursement is included primarily as underwriting expenses in the results of our Excess and Surplus Insurance and Workers' Compensation Insurance segments. The amounts of other operating expenses of the Corporate and Other segment represent the expenses of the holding company that were not reimbursed by our subsidiaries.

Interest expense totaled $777,000 and $588,000 for the three months ended March 31, 2006 and 2005, respectively. Interest expense related to $15.0 million of senior notes and $22.7 million of junior subordinated notes that were issued in May and December 2004. Interest on these notes accrues at floating rates, and the increase in interest expense reflects increases in interest rates over the past 12 months.

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Funds    

We are organized as a holding company with all of our operations being conducted by our wholly-owned insurance company subsidiaries. Accordingly, our holding company receives cash through loans from banks, issuance of equity and debt securities (including our initial public offering in August 2005), corporate service fees or dividends received from our insurance subsidiaries, payments from our subsidiaries pursuant to our consolidated tax allocation agreement and other transactions. We receive corporate service fees from our subsidiaries to reimburse us for most of the other operating expenses that we incur. Reimbursement of expenses through the corporate service

23

---

Table of Contents

fees is based on the budgeted costs that we expect to incur with no mark up above our expected costs. We file a consolidated federal income tax return with our subsidiaries, and under our corporate tax allocation agreement, each participant gets a tax charge or tax refund for the amount that the participant would have paid or received if it had filed on a separate return basis with the Internal Revenue Service. We may use the proceeds from these sources to contribute to the capital of our insurance subsidiaries in order to support premium growth, to repurchase our common stock, to retire our outstanding indebtedness, to pay interest, dividends and taxes and for other business purposes.

The payment to us of dividends by our subsidiaries is limited by statute. In general, these restrictions require that dividends be paid out of earned surplus and limit the aggregate amount of dividends or other distributions that our subsidiaries may declare or pay within any 12 month period without advance regulatory approval. In Ohio, the domiciliary state of James River Insurance, this limitation is the greater of the statutory net income for the preceding calendar year or 10% of the statutory surplus at the end of the preceding calendar year. In North Carolina, the domiciliary state of Stonewood Insurance, this limitation is the lesser of the statutory net income for the preceding calendar year or 10% of the statutory surplus at the end of the preceding calendar year. In addition, insurance regulators have broad powers to prevent reduction of statutory surplus to inadequate levels and could refuse to permit the payment of dividends of the maximum amounts calculated under any applicable formula. The maximum amount of dividends available to us from our insurance subsidiaries during 2006 without regulatory approval is $14.5 million.

At March 31, 2006, cash and invested assets at our holding company totaled $31.7 million. To the extent that our insurance subsidiaries require capital in 2006 above the amount available at the holding company, we would anticipate issuing trust preferred securities or other debt at our holding company.

Cash Flows

Our sources of operating funds consist primarily of written premiums, investment income and proceeds from offerings of our debt and equity securities. We use operating cash flows primarily to pay operating expenses, losses and LAE and income taxes.

A summary of our cash flows is as follows:

				Three Months Ended March 31,
				2006				2005
				(in thousands)
Cash and cash equivalents provided by (used in):
Operating activities				$	46,036			$	27,659
Investing activities					(38,352	)			(30,993	)
Financing activities					248				—
Change in cash and cash equivalents				$	7,932			$	(3,334	)

Net cash provided by operating activities for the three months ended March 31, 2006 totaled $46.0 million compared to cash provided by operating activities of $27.7 million for the three months ended March 31, 2005. Cash provided by operating activities in both periods is primarily attributable to cash received on written premiums exceeding cash disbursed for operating expenses and losses and LAE. The increase in net cash provided by operating activities reflects the significant growth in our premium cash receipts in the three months ended March 31, 2006 compared to the three months ended March 31, 2005.

Cash from financing transactions during the three months ended March 31, 2006 of $248,000 was attributable to $173,000 of proceeds from the exercise of employee stock options and $75,000 of income tax benefits we received on stock options exercised. There were no financing activities during the three months ended March 31, 2005.

Senior Notes and Junior Subordinated Notes

In May 2004, we issued $15.0 million of senior notes due April 29, 2034, with net proceeds to us of $14.5 million. The senior notes are not redeemable by the holder or subject to sinking fund

24

---

Table of Contents

requirements. Interest accrues quarterly and is payable in arrears at a floating rate per annum equal to three-month LIBOR plus 3.85%. The senior notes are redeemable prior to their stated maturity at our option in whole or in part, on or after May 15, 2009. The terms of the indenture for the senior notes contain certain covenants which, among other things, restrict our assuming senior indebtedness secured by our Common Stock or our subsidiaries’ capital stock or issuing shares of our subsidiaries’ capital stock. We are in compliance with all covenants in the indenture at March 31, 2006.

In May and December of 2004, we sold trust preferred securities through two Delaware statutory business trusts sponsored and wholly-owned by us. Each trust used the net proceeds from the sale of its trust preferred securities to purchase our floating rate junior subordinated notes.

The following table summarizes the nature and terms of the junior subordinated notes and trust preferred securities outstanding at March 31, 2006:

				James River Capital Trust I				James River Capital Trust II
				($ in thousands)
Issue date				May 26, 2004				December 15, 2004
Principal amount of trust preferred securities				$	7,000			$	15,000
Principal amount of junior subordinated notes				$	7,217			$	15,464
Maturity date of junior subordinated notes, unless accelerated earlier				May 24, 2034				December 15, 2034
Trust common stock				$	217			$	464
Interest rate, per annum				Three-Month LIBOR plus 4.0%				Three-Month LIBOR plus 3.4%
Redeemable at 100% of principal amount at our option on or after				May 24, 2009				December 15, 2009

We have provided a full, irrevocable and unconditional guarantee of payment of the obligations of each of the trusts under the trust preferred securities. The indentures for the junior subordinated notes contain certain organizational covenants with which we are in compliance as of March 31, 2006.

At March 31, 2006, the ratio of total debt outstanding to total capitalization (defined as total debt outstanding plus total stockholders' equity) was 17.3%. We use capital to support our premium growth and having debt as part of our capital structure allows us to generate higher earnings per share and book value per share results than we could by using entirely equity capital to support our premium growth. Our target debt to total capitalization ratio is 35.0% or less.

Initial Public Offering

On May 3, 2005, we filed a registration statement on Form S-1 with the Securities Exchange Commission for an initial public offering of Common Stock. Our registration statement was declared effective on August 8, 2005. On August 9, 2005, we effected a ten-for-one split of our Common Stock to shareholders of record on that date. Immediately prior to the closing of the initial public offering on August 12, 2005, all of our outstanding Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, including shares representing accrued but unpaid dividends, were converted into 9,956,413 shares of Common Stock. In addition, we amended and restated our certificate of incorporation to increase the number of authorized shares of Common Stock to 100,000,000 and decrease the number of authorized shares of preferred stock to 5,000,000. Gross proceeds from the sale of 4,444,000 shares of Common Stock, at an initial public offering price per share of $18.00, totaled $80.0 million. Costs associated with the initial public offering included $5.6 million of underwriting costs and $995,000 of other issuance costs.

On August 26, 2005, the underwriters of the initial public offering exercised their over-allotment option in which an additional 666,600 shares of Common Stock were issued and sold at the $18.00 initial public offering price per share. Gross proceeds from this transaction were $12.0 million and underwriting costs were $840,000.

25

---

Table of Contents

Return on Equity

One of the key financial measures that we use to evaluate our operating performance is return on equity. We calculate return on equity by dividing annualized net income by average stockholders' equity for the period. Our overall financial goal is to produce a return on equity of at least 15.0% over the long-term. Our return on average equity for the three months ended March 31, 2006, using annualized net income for that period as the numerator, was 15.3%, down from 22.5% for the three months ended March 31, 2005. The decline in our return on average equity reflects the significant growth in our average equity resulting primarily from our initial public offering in August 2005 (see ‘‘—Initial Public Offering’’). Interim results are not necessarily indicative of results of operations for the full year.

Cash and Invested Assets

Our cash and invested assets consist of fixed maturity securities and cash and cash equivalents. Our fixed maturity securities are classified as available-for-sale and are carried at fair value with unrealized gains and losses on these securities reported, net of tax, as a separate component of accumulated other comprehensive income (loss). The average duration of our fixed maturity security portfolio at March 31, 2006 is approximately 4.2 years.

The amortized cost and fair value of our investments in fixed maturity securities were as follows:

				March 31, 2006												December 31, 2005
				Amortized Cost				Fair Value				% of Total Fair Value				Amortized Cost				Fair Value				% of Total Fair Value
				($ in thousands)
Corporate				$	98,925			$	95,978				25.0	%		$	97,807			$	95,899				28.3	%
U.S. treasury securities and obligations of U.S. government agencies					49,695				48,091				12.5	%			46,868				45,929				13.5	%
State and municipal					113,775				111,645				29.1	%			99,047				98,161				28.9	%
Mortgage-backed					81,845				79,991				20.8	%			65,319				64,424				19.0	%
Asset-backed					49,305				48,236				12.6	%			35,595				35,099				10.3	%
Total				$	393,545			$	383,941				100.0	%		$	344,636			$	339,512				100.0	%

The amortized cost and fair value of our investments in fixed maturity securities summarized by contractual maturity were as follows:

				March 31, 2006
				Amortized Cost				Fair Value				% of Total Fair Value
				($ in thousands)
Due in:
One year or less				$	12,580			$	12,471				3.2	%
After one year through five years					92,108				89,444				23.3	%
After five years through ten years					74,536				72,111				18.8	%
After ten years					83,171				81,688				21.3	%
Mortgage-backed					81,845				79,991				20.8	%
Asset-backed					49,305				48,236				12.6	%
Total				$	393,545			$	383,941				100.0	%

At March 31, 2006, our fixed maturity security portfolio had an unrealized loss of $9.6 million, representing 2.4% of the amortized cost of the portfolio. The majority of the unrealized losses on fixed maturity securities at March 31, 2006 are interest rate related. All but two of the fixed maturity securities in our portfolio at March 31, 2006 were rated investment grade by Standard & Poor’s. In addition, all but one security in our portfolio had a fair value that was greater than 92% of its amortized cost, and that security had an unrealized loss of $61,000 at March 31, 2006. None of the fixed maturity securities with unrealized losses has ever missed, or been delinquent on, a scheduled

26

---

Table of Contents

principal or interest payment. At March 31, 2006, 97.2% of our fixed maturity security portfolio was rated ‘‘A−’’ or better by Standard & Poor's or received an equivalent rating from another nationally recognized rating agency. We have concluded that none of the available-for-sale securities with unrealized losses at March 31, 2006 has experienced an other-than-temporary impairment. In determining that securities with unrealized losses at March 31, 2006 had not experienced an other-than-temporary impairment, we considered our intent and ability to hold the securities for a sufficient time to allow for a recovery in value.

Our cash and cash equivalents were $49.0 million at March 31, 2006. The percentage of our cash and invested assets in cash and cash equivalents was 11.3% at March 31, 2006 compared to 10.8% at December 31, 2005. At March 31, 2006, cash and invested assets per share was $28.69 compared to $25.25 at December 31, 2005.

Deferred Policy Acquisition Costs

A portion of the costs of acquiring insurance business, principally commissions and certain policy underwriting and issuance costs which vary with and are primarily related to the production of insurance business, are deferred. Deferred policy acquisition costs totaled $15.3 million or 16.0% of unearned premiums (net of reinsurance) at March 31, 2006. Deferred policy acquisition costs totaled $13.9 million or 15.5% of unearned premiums (net of reinsurance) at December 31, 2005.

Reinsurance

We enter into reinsurance contracts to limit our exposure to potential losses arising from large risks and to provide additional capacity for growth. Our reinsurance is contracted under excess of loss and quota-share reinsurance contracts. In quota share reinsurance, the reinsurer agrees to assume a specified percentage of the ceding company's losses arising out of a defined class of business in exchange for a corresponding percentage of premium. In excess of loss reinsurance, the reinsurer agrees to assume all or a portion of the ceding company's losses in excess of a specified amount. In excess of loss reinsurance, the premium payable to the reinsurer is negotiated by the parties based on their assessment of the amount of risk being ceded to the reinsurer because the reinsurer does not share proportionately in the ceding company's losses.

The following is a summary of our casualty reinsurance in place at March 31, 2006:

Line of Business

Company Policy Limit

Reinsurance Coverage

Company Retention

Primary Casualty

Up to $5.0 million per occurrence

$4.0 million excess of $1.0 million

$1.0 million per occurrence

Excess Casualty

Up to $8.0 million per occurrence

Variable quota share (1)

$500,000 per occurrence

Worker’s Compensation

Unlimited (benefits prescribed by statute)

$19.25 million in excess of $750,000 per occurrence with a maximum of $9.25 million on any one injured worker

$750,000 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 quota share percentage is set such that our retention is $1.0 million. For all excess casualty policy limits in excess of $5.0 million, we purchase facultative reinsurance. For policies where we also write the underlying primary casualty limit, the quota share reduces our retention to $100,000 which results in a $1.1 million retention for James River Insurance on that risk.

Our excess of loss property reinsurance treaties renewed on July 1, 2005, and our catastrophe reinsurance program renewed on June 1, 2005. For 2006, all property reinsurance renews on June 1.

27

---

Table of Contents

The following table is a summary of our property reinsurance in place as of March 31, 2006:

Line of Business

Company Per Risk Limit

Reinsurance Program

Company Retention

Primary Property

Generally up to $15.0 million per risk (1)

$14.0 million excess of $1.0 million (2)

$1.0 million per risk

Excess Property

Generally up to $15.0 million per risk (1)

$14.0 million excess of $1.0 million (2)

July 1, 2005 through October 31, 2005, $1.0 million per risk;

85% quota share (3)

November 1, 2005 through May 31, 2006, 15% of the first $5.0 million per risk

(1)	We purchase facultative reinsurance for per risk limits in excess of $15.0 million.

(2)

Primary Property and Excess Property share the same reinsurance treaty for coverage of $10.0 million excess of $5.0 million. The $10.0 million excess of $5.0 million has maximum coverage for a single event of $20.0 million and maximum coverage for the life of the treaty of $20.0 million. For Primary Property, the reinsurance treaty for $4.0 million excess of $1.0 million has maximum coverage for a single event of $8.0 million and maximum coverage for the life of the treaty of $16.0 million. For Excess Property, the reinsurance treaty for $4.0 million excess of $1.0 million has maximum coverage for a single event of $9.0 million and maximum coverage for the life of the treaty of $12.0 million.

(3)	The 85% quota share reinsurance treaty on Excess Property started November 1, 2005 and ends on May 31, 2006. The purchase of this coverage coincided with our resuming writing Excess Property coverage after a temporary suspension.

We have a property reinsurance treaty that covers our per occurrence exposure to terrorism as provided under the Terrorism Risk Insurance Act of 2002. The treaty covers $13.0 million in excess of $2.0 million per risk.

Reinsurance contracts do not relieve us from our obligations to policyholders. Failure of a reinsurer to honor its obligations could result in losses to us, and therefore, we establish allowances for amounts considered uncollectible. At March 31, 2006, there was no allowance for uncollectible reinsurance. James River Insurance and Stonewood Insurance generally target reinsurers with A.M. Best financial strength ratings of ‘‘A’’ (Excellent) or better for liability coverages and ‘‘A−’’ (Excellent) or better for property coverages.

At March 31, 2006, we had reinsurance recoverables on unpaid losses of $106.0 million and reinsurance recoverables on paid losses of $5.4 million. Included in reinsurance recoverables on unpaid losses at March 31, 2006 are $30.5 million of recoverables related to Hurricane Katrina losses and $14.7 million related to Hurricane Wilma losses. All but $2.0 million of our total recoverables at March 31, 2006 are from reinsurers rated ‘‘A’’ or better by A.M. Best or are collateralized with letters of credit or by a trust agreement with American Empire.

We use catastrophe modeling software to analyze the risk of severe losses from hurricanes and earthquakes and to individually review each property insurance policy to determine its impact on the risk of our overall portfolio. We model our portfolio of insurance policies in force each month and track our accumulations of exposed values geographically to manage our concentration in any one area. We measure exposure to these catastrophe losses in terms of probable maximum loss (PML), which is an estimate of the highest amount we would expect to pay in any one catastrophe event over a specified time. We manage this potential loss by purchasing catastrophe reinsurance coverage. Effective June 1, 2004, we purchased catastrophe reinsurance coverage of $5.0 million per event in excess of our $2.0 million per event retention. Effective June 1, 2005, we increased our catastrophe reinsurance coverage to $36.0 million per event in excess of our $2.0 million per event retention. Our catastrophe reinsurance coverage in place effective June 1, 2005 had one reinstatement in the event that we exhausted the $36.0 million of coverage. We ceded $2.7 million of reinstatement premium to

28

---

Table of Contents

our catastrophe reinsurers in 2005 and an additional $140,000 of reinstatement premium in the first quarter of 2006. At March 31, 2006, losses from Hurricane Katrina exceeded our catastrophe reinsurance coverage limit for a single event. Additionally, we have ceded some losses from Hurricane Wilma to our catastrophe reinsurance coverage. Effective November 1, 2005, we purchased additional catastrophe reinsurance coverage which provides an additional $6.5 million of coverage through May 31, 2006. Beginning in the fourth quarter of 2005, we are reducing our exposure to hurricane losses by not writing new or renewal primary property insurance with wind coverage within 100 miles of the Southeast and Gulf coasts of the United States or within 30 miles of the Northeast coast of the United States. We are reducing the concentration of exposed limits in any 50 mile area to $50.0 million or less. These actions have significantly reduced our modeled probable maximum catastrophe loss from its peak level. At our June 1, 2006 property reinsurance renewal, we intend to purchase more reinsurance relative to our estimated exposure than in the prior year.

At the time of our acquisition of Fidelity in June 2003, Fidelity had a reinsurance agreement with its parent, American Empire. Under this reinsurance agreement, Fidelity ceded all of its liabilities on all insurance business it wrote or assumed through June 30, 2003 to American Empire. American Empire and Fidelity also entered into a trust agreement under which American Empire established a trust account with Fidelity as the beneficiary. Under the trust agreement, American Empire must maintain assets with a current fair value greater than or equal to the ultimate net aggregate losses recoverable under the reinsurance agreement. Cessions under the reinsurance agreement are net of third party reinsurance. At March 31, 2006, reinsurance recoverables from American Empire were $2.6 million. These recoverables are secured by trust assets of $4.1 million. Reinsurance recoverables from third party reinsurers associated with the business that Fidelity wrote before we acquired it were $4.2 million at March 31, 2006. In the event that the third party reinsurers default on their obligations, the recoverables would become subject to our reinsurance agreement with American Empire and, accordingly, American Empire will indemnify us for any such uncollectible third party reinsurance recoverables. As additional security, Great American Insurance Company (Great American), an affiliate of American Empire, has irrevocably and unconditionally guaranteed the performance by American Empire of all of its obligations under the reinsurance agreement and trust agreement. Great American and American Empire have financial strength ratings of ‘‘A’’ (Excellent) from A.M. Best. We remain liable for the liabilities ceded under the reinsurance agreement in the event that the trust assets are insufficient to cover the ultimate net aggregate losses recoverable under the reinsurance agreement and American Empire and Great American default on their respective obligations.

We entered into a quota share reinsurance contract effective January 1, 2005 that transferred a portion of the risk related to certain property/casualty business written by James River Insurance in 2005 to reinsurers in exchange for a portion of our direct written premiums on that business. Under terms of the agreement, James River Insurance ceded a portion of its other liability occurrence and primary property business which includes business written by the General Casualty, Manufacturers and Contractors and Primary Property divisions. This quota share treaty was not renewed for 2006. James River Insurance received a ceding commission equal to 25% of ceded earned premium and paid a reinsurer margin equal to 4.5% of ceded earned premium under this quota share reinsurance contract. The reinsurers do not receive a margin when they are in a loss position on the contract. The ceding commission cannot be reduced, but under certain circumstances, based on underwriting results, James River Insurance is entitled to an additional profit contingent commission up to an amount equal to all of the reinsurers’ profits above the margin. James River Insurance maintains a funds-held account which is credited interest at a fixed rate of 3.75% annually. The funds-held account balance is recorded as a liability on our consolidated balance sheet, and at March 31, 2006, the balance of the account was $19.2 million. The funds-held account balance represents the excess of ceded earned premium and interest credited over ceded paid losses and LAE, the Company’s ceding commission and the reinsurers’ margin. Assets supporting the funds-held liability are not segregated or restricted. The quota share reinsurance contract has a loss ratio cap of 115%, which means that we cannot cede any losses in excess of a 115% loss ratio to the reinsurer. For the three months ended March 31, 2005, ceded earned premiums related to this quota share treaty were $7.6 million, ceded loss and LAE were $5.3 million and our reinsurance ceding

29

---

Table of Contents

commission was $1.9 million. For the three months ended March 31, 2006, there were no ceded earned premiums related to this quota share contract, ceded losses and LAE were $679,000 and our reinsurance ceding commission was ($190,000), representing interest credited on the funds-held account balance.

Ratings

James River Insurance and Stonewood Insurance each have a financial strength rating of ‘‘A−’’ (Excellent) from A.M. Best. A.M. Best assigns 16 ratings to insurance companies, which currently range from ‘‘A++’’ (Superior) to ‘‘F’’ (In Liquidation). ‘‘A−’’ (Excellent) is the fourth highest rating issued by A.M. Best. The ‘‘A−’’ (Excellent) rating is assigned to insurers that have, in A.M. Best's opinion, an excellent ability to meet their ongoing obligations to policyholders. This rating is intended to provide an independent opinion of an insurer's ability to meet its obligation to policyholders and is not an evaluation directed at investors.

The financial strength ratings assigned by A.M. Best have an impact on the ability of the insurance companies to attract and retain agents and brokers and on the risk profiles of the submissions for insurance that the insurance companies receive. The ‘‘A−’’ (Excellent) ratings obtained by James River Insurance and Stonewood Insurance are consistent with the companies' business plans and allow the companies to actively pursue relationships with the agents and brokers identified in their marketing plans.

Reconciliation of Non-GAAP Measure

Underwriting profit (loss) of insurance segments is defined as net earned premiums less losses and LAE and other operating expenses of our two insurance segments, the Excess and Surplus Insurance segment and the Workers' Compensation Insurance segment. Our definition of underwriting profit (loss) may not be comparable to the definition of underwriting profit (loss) for other companies. We evaluate the performance of our insurance segments and allocate resources based primarily on underwriting profit (loss) of insurance segments. We believe that this is a useful measure for investors in evaluating the performance of our insurance segments because our objective is to consistently earn underwriting profits.

The following table reconciles the underwriting profit (loss) of insurance segments by individual segment to consolidated income before taxes:

				Three Months Ended March 31,
				2006				2005
				(in thousands)
Underwriting profit (loss) of insurance segments:
Excess and Surplus Insurance				$	8,131			$	5,642
Workers’ Compensation Insurance					(643	)			501
Total underwriting profit of insurance segments					7,488				6,143
Net investment income					3,993				1,745
Realized investment losses					(35	)			(25	)
Other income					42				45
Other operating expenses of the Corporate and Other segment					(641	)			(398	)
Interest expense					(777	)			(588	)
Consolidated income before taxes				$	10,070			$	6,922

NEW ACCOUNTING STANDARDS

On December 16, 2004, the Financial Accounting Standards Board (FASB) issued Statement No. 123 (revised 2004), Share-Based Payment (Statement 123(R)), which is a revision of Statement No. 123, Accounting for Stock-Based Compensation. Statement 123(R) supersedes Accounting Principles Board

30

---

Table of Contents

Opinion No. 25, Accounting for Stock Issued to Employees (APB Opinion No. 25) and amends FASB Statement No. 95, Statement of Cash Flows. We adopted Statement 123(R) using the modified prospective method on January 1, 2006.

Prior to May 3, 2005 (the date that we filed the Form S-1 with the Securities and Exchange Commission), we used the minimum value method to calculate the pro forma disclosures required by Statement 123. We continue to account for the portion of awards granted prior to May 3, 2005 and not modified, cancelled or repurchased subsequent to that date using the provisions of APB Opinion No. 25 and its related interpretive guidance.

Prior to adopting Statement 123(R) on January 1, 2006, we accounted for stock option grants using the intrinsic value method prescribed in APB Opinion No. 25. Because all options granted prior to January 1, 2006 were for a fixed number of shares with an exercise price equal to the fair value of the shares at the date of grant, we recognized no compensation expense for these stock options. When we adopted Statement 123(R), we began recognizing the expense associated with awards issued on or after May 3, 2005 and for awards modified, repurchased or cancelled on or after that date in the income statement over the award’s vesting period using the modified prospective method. As a result of adopting Statement 123(R) on January 1, 2006, our income before income taxes and net income for the three month ended March 31, 2006 are $223,000 and $145,000 lower, respectively, than if we had continued to account for share-based compensation under APB Opinion No. 25. Reported basic and diluted earnings per share for the three months ended March 31, 2006 would have each increased by $0.01 if we had not adopted Statement 123(R). The adoption of Statement 123(R) did not have a material effect on our statement of cash flows.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Critical accounting estimates are defined as those estimates that are both important to the portrayal of our financial condition and results of operations and require us to exercise significant judgment. We use significant judgment concerning future results and developments in applying these critical accounting estimates and in preparing our consolidated financial statements. These judgments and estimates affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of material contingent assets and liabilities.

We evaluate our estimates regularly using information that we believe to be relevant. These reviews include evaluating the adequacy of reserves for losses and LAE, evaluating the investment portfolio for other-than-temporary declines in estimated fair value and analyzing the recoverability of deferred tax assets. Actual results may differ materially from the estimates and assumptions used in preparing the consolidated financial statements.

Readers are urged to review ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates’’ and Note 1 to the audited consolidated financial statements contained in our Form 10-K for the fiscal year ended December 31, 2005 on file with the Securities and Exchange Commission for a more complete description of our critical accounting policies and estimates.

With our adoption of Statement 123(R) on January 1, 2006, estimating the compensation expense associated with share-based awards has become a critical accounting estimate. The assumptions used for the option awards vary depending on the date of grant. The following table summarizes the assumptions used to estimate the fair value of the Company’s shared-based awards:

				Awards Issued After May 3, 2005				Awards Issued Prior to May 3, 2005
Expected term				7 years				7 years
Expected stock price volatility				35.00%				0.00%
Range of risk-free interest rates				4.08%–4.34%				3.07%–4.04%
Dividend yield				0.00%				0.00%

For all awards, the expected term is based on the midpoint between the vesting period and the contractual term of the award. Prior to the adoption of Statement 123(R), stock price volatility was

31

---

Table of Contents

estimated at 0% pursuant to the minimum value method since the Company was not publicly traded. The use of 0% volatility is specifically prohibited by Statement 123(R). Accordingly, stock price volatility for awards issued after May 3, 2005 was estimated based on stock price volatility data for similar property/casualty companies in the period following their respective initial public offerings. The risk-free interest rate assumption is based on the 7-year U.S. Treasury rate at the date of grant. The Company does not anticipate paying dividends in the near future. As of March 31, 2006, there was $3.0 million of estimated unrecognized compensation costs expected to be charged to earnings over a weighted-average period of 3.4 years.

OUTLOOK FOR 2006

For 2006, we anticipate achieving an annual return on average equity of at least 15% and writing at a combined ratio of between 80% and 90%. We also expect growth in gross written premiums of between 20% and 30% for 2006.

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains ‘‘forward-looking’’ statements within the meaning of the Securities Litigation Reform Act of 1995, including among others those concerning: our business and growth strategies; the basis for our reserve estimates; our exposure to environmental liability claims; the adequacy of our reserves; our target debt to total capitalization ratio and our return on equity goal; the resolution of litigation; and our belief that our reinsurance recoverables are collectible. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include such factors as: effects of increased competition; effects of the cyclical nature of our business; effects of developments in the financial or capital markets; changes in availability, cost or quality of reinsurance; losses of key personnel or the inability to recruit qualified personnel; payment of claims by reinsurers on time or at all; effects of severe weather conditions and other catastrophes; effects of war or terrorism; changes in relationships with agencies, brokers and agents; changes in rating agency policies or practices; declines in financial ratings; changes in regulations or laws applicable to our insurance subsidiaries; changes in legal theories of liability under our insurance policies; accuracy of assumptions underlying our reserves for losses and LAE and our catastrophe model; actual losses incurred by policyholders as a result of hurricanes and risks described in our filings with the Securities and Exchange Commission, including our Form 10-K for the fiscal year ended December 31, 2005.

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.

Market risk is the potential economic loss principally arising from adverse changes in the fair value of financial instruments. The major components of market risk affecting us are credit risk and interest rate risk. Our market risks at March 31, 2006 have not materially changed from those identified in our Form 10-K for the fiscal year ended December 31, 2005.

Credit Risk

Credit risk is the potential economic loss principally arising from adverse changes in the financial condition of a specific debt issuer or a reinsurer.

We address the risk associated with debt issuers by investing in fixed maturity securities that are investment grade, which are those securities rated ‘‘BBB−’’ or higher by Standard & Poor's. We monitor the financial condition of all of the issuers of fixed maturity securities in our portfolio. Our outside investment managers assist us in this process. We utilize a ratings changes report, a security watch list and a schedule of securities in unrealized loss positions as part of this process. If a security is rated ‘‘BBB−’’ or higher by Standard & Poor's at the time that we purchase it and then is downgraded below ‘‘BBB−’’ while we hold it, we evaluate the security for impairment, and after discussing the security with our investment advisors, make a decision to either dispose of the security or continue to hold it. Finally, we employ stringent diversification rules that limit our credit exposure to any single issuer or business sector.

32

---

Table of Contents

We address the risk associated with reinsurers by generally targeting reinsurers with A.M. Best financial strength ratings of ‘‘A’’ (Excellent) or better for liability coverages and ‘‘A−’’ (Excellent) or better for property coverages. In an effort to minimize our exposure to the insolvency of our reinsurers, our security committee, consisting of our Chief Financial Officer and our corporate actuary, evaluates the acceptability and reviews the financial condition of each reinsurer annually. In addition, our security committee continually monitors rating downgrades involving any of our reinsurers. At March 31 2006, all but $2.0 million of our reinsurance recoverables are either from companies with A.M. Best ratings of ‘‘A’’ (Excellent) or better, or are collateralized by a letter of credit or by a trust agreement with American Empire.

Interest Rate Risk

Interest rate risk is the risk that we may incur economic losses due to adverse changes in interest rates. The primary market risk to the investment portfolio is interest rate risk associated with investments in fixed maturity securities. Fluctuations in interest rates have a direct impact on the market valuation of these securities. We manage our exposure to interest rate risk through an asset/liability matching process. In the management of this risk, the characteristics of duration, credit and variability of cash flows are critical elements. These risks are assessed regularly and balanced within the context of our liability and capital position. Our outside investment managers assist us in this process. We also have interest rate risk relating to our senior notes and junior subordinated notes, since interest on these notes accrues at a floating rate.

Item 4.	Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation as of the end of the period covered by this report, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of that date. Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

33

---

Table of Contents

PART II — OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.

	(b)	Use of Proceeds from Initial Public Offering

On May 3, 2005, we filed a registration statement on Form S-1 with the Securities Exchange Commission for an initial public offering of Common Stock. The offering was made through an underwriting syndicate led by book-running manager Keefe, Bruyette & Woods, Inc., and co-managers Bear, Stearns & Co., Inc., Friedman, Billings, Ramsey & Co., Inc. and Wachovia Capital Markets, LLC. Our registration statement was declared effective on August 8, 2005. On August 9, 2005, we effected a ten-for-one split of our Common Stock to shareholders of record on that date. Immediately prior to the closing of the initial public offering on August 12, 2005, all of our outstanding Series A Convertible Preferred stock and Series B Convertible Preferred Stock, including shares representing accrued but unpaid dividends, were converted into 9,956,413 shares of Common Stock. In addition, on that date we amended and restated our certificate of incorporation to increase the number of authorized shares of Common Stock to 100,000,000 and decrease the number of authorized shares of preferred stock to 5,000,000. Gross proceeds from the sale of 4,444,000 shares of Common Stock, at an initial public offering price per share of $18.00, totaled $80.0 million. Costs associated with the initial public offering included $5.6 million of underwriting costs and $995,000 of other issuance costs, resulting in net proceeds from the sale of $73.4 million.

On August 26, 2005, the underwriters of the initial public offering exercised their over-allotment option in which an additional 666,600 shares of Common Stock were issued and sold at the $18.00 initial public offering price per share. Gross proceeds from this transaction were $12.0 million and underwriting costs were $840,000, resulting in net proceeds from the sale of $11.2 million.

We contributed $60.5 million of the proceeds from the offering to our insurance subsidiaries. We intend to use the remaining proceeds for general corporate purposes, which may include potential acquisitions of companies in the specialty insurance business or additional contributions to our insurance subsidiaries.

34

---

Table of Contents

Item 6.	Exhibits.

Exhibit No.				Description of Exhibit
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)).

35

---

Table of Contents

Exhibit No.				Description of Exhibit
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)).
10.1				Summary of offer letter by and between James River Group, Inc. and Gregg T. Davis.*
31.1				Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2				Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32				Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Denotes compensatory plan or arrangement for Company officer or director.

36

---

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

James River Group, Inc.

May 11, 2006

/s/   Gregg T. Davis                                 Gregg T. Davis Executive Vice President – Finance

37

---