Specialty insurer James River Group (NASDAQ:JRVR) is having a terrible day on Wednesday, with the stock down by 22% as of 11:30 a.m. EDT. The company didn't issue a bad earnings release or anything like that -- instead, the reason for the slide was the company's decision to drop its largest customer: Uber (NYSE:UBER).
Specifically, James River has decided to end its relationship with Rasier LLC, which is Uber's commercial auto insurance business and James River's largest account. Uber works with Farmers Insurance, Progressive, and Allstate as well, and James River provides insurance for Uber drivers in 20 states, Puerto Rico, and Washington, D.C. Uber says that it will replace James River with another insurer in these markets, but it's not clear what company that will be.
James River announced that it has delivered a notice of early cancellation of all policies issued to Rasier. Policies will be canceled on Dec. 31, earlier than the February 29, 2020, expiration date that applied to most of the policies in question. The company also announced losses related to its commercial auto business within its Excess and Surplus Lines (a.k.a "specialty insurance") segment, which includes the Rasier policies.
The reasons for James River's decision certainly make sense. According to Chairman and CEO J. Adam Abram, the Rasier account hasn't been as profitable as expected. However, the fact remains that this was a huge part of James River's business, so it's not a surprise that investors aren't thrilled with the news.