James River Announces Agreement to Sell Casualty Reinsurance Business to Fleming Holdings
November 08 2023 - 7:15AM
James River Group Holdings, Ltd. (“James River” or the “Company”)
(NASDAQ: JRVR) today announced that it has entered into a
definitive agreement to sell JRG Reinsurance Company, Ltd. (“JRG
Re”), its third-party casualty reinsurance business, to Fleming
Intermediate Holdings (“Fleming”). The total estimated transaction
value is $277 million, inclusive of a $139 million pre closing
dividend and a $138 million cash payment from Fleming at close.
Under the terms of the transaction, valued as of September 30,
2023, James River would receive 0.75x the book value of JRG Re at
closing.
The transaction includes the full insurance
entity supporting the Company’s Casualty Reinsurance segment,
including the remaining assets and liabilities, as well as the
staff supporting the business. The segment produced $85.2 million
of gross written premiums in 2022.
Frank D’Orazio, the Company’s Chief Executive
Officer, commented, “Today’s announcement represents a key
milestone for James River and is strategically significant for both
our Company and Fleming. The transaction aligns with James River’s
strategy to focus our resources on core businesses where we have
meaningful scale, including our E&S and fronting businesses. We
are excited about the new partnership with Fleming, which we
believe will be a great new home for the staff of JRG Re.”
Eric Haller, CEO of Fleming, commented,
“Fleming’s acquisition of JRG Re is highly strategic in providing
complementary infrastructure and significant scale that will enable
us to better serve our existing and prospective cedents. We have
tremendous respect for the entire James River organization and look
forward to welcoming the JRG Re team and continuing to be great
partners to all of JRG Re’s existing counterparties following the
close of the transaction.”
Fleming is a portfolio company of Altamont
Capital Partners (“Altamont”), a private equity firm with over $4
billion of capital under management and significant experience
investing in the insurance sector.
The transaction has been unanimously approved by
the Board of Directors of both companies. It is subject to
customary closing conditions including receipt of required
regulatory approvals. It is expected to close during the first
quarter of 2024.
Citi and Howden Tiger Capital Markets &
Advisory acted as financial advisors and Debevoise & Plimpton
LLP acted as legal counsel for James River.
Forward-Looking StatementsThis
press release contains forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995. In
some cases, such forward-looking statements may be identified by
terms such as believe, expect, seek, may, will, should, intend,
project, anticipate, plan, estimate, guidance or similar words.
Forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from those in the
forward-looking statements. Although it is not possible to identify
all of these risks and uncertainties, they include, among others,
the following: the failure to complete the transaction on
anticipated terms and timing, or at all; the failure to satisfy
closing conditions, including receipt of required regulatory
approvals; the inherent uncertainty of estimating reserves and the
possibility that incurred losses may be greater than our loss and
loss adjustment expense reserves; inaccurate estimates and
judgments in our risk management may expose us to greater risks
than intended; downgrades in the financial strength rating of our
regulated insurance subsidiaries impacting our ability to attract
and retain insurance and reinsurance business that our subsidiaries
write, our competitive position, and our financial condition; the
potential loss of key members of our management team or key
employees and our ability to attract and retain personnel; adverse
economic factors resulting in the sale of fewer policies than
expected or an increase in the frequency or severity of claims, or
both; the impact of a persistent high inflationary environment on
our reserves, the values of our investments and investment returns,
and our compensation expenses; exposure to credit risk, interest
rate risk and other market risk in our investment portfolio;
reliance on a select group of brokers and agents for a significant
portion of our business and the impact of our potential failure to
maintain such relationships; reliance on a select group of
customers for a significant portion of our business and the impact
of our potential failure to maintain, or decision to terminate,
such relationships; our ability to obtain reinsurance coverage at
prices and on terms that allow us to transfer risk, adequately
protect our company against financial loss and that supports our
growth plans; losses resulting from reinsurance counterparties
failing to pay us on reinsurance claims, insurance companies with
whom we have a fronting arrangement failing to pay us for claims,
or a former customer with whom we have an indemnification
arrangement failing to perform its reimbursement obligations, and
our potential inability to demand or maintain adequate collateral
to mitigate such risks; inadequacy of premiums we charge to
compensate us for our losses incurred; changes in laws or
government regulation, including tax or insurance law and
regulations; changes in U.S. tax laws and the interpretation of
certain provisions of Public Law No. 115-97, informally titled the
2017 Tax Cuts and Jobs Act (including associated regulations),
which may be retroactive and could have a significant effect on us
including, among other things, by potentially increasing our tax
rate, as well as on our shareholders; in the event we do not
qualify for the insurance company exception to the passive foreign
investment company (“PFIC”) rules and are therefore considered a
PFIC, there could be material adverse tax consequences to an
investor that is subject to U.S. federal income taxation; the
Company or any of its foreign subsidiaries becoming subject to U.S.
federal income taxation; a failure of any of the loss limitations
or exclusions we utilize to shield us from unanticipated financial
losses or legal exposures, or other liabilities; losses from
catastrophic events, such as natural disasters and terrorist acts,
which substantially exceed our expectations and/or exceed the
amount of reinsurance we have purchased to protect us from such
events; potential effects on our business of emerging claim and
coverage issues; the potential impact of internal or external
fraud, operational errors, systems malfunctions or cyber security
incidents; our ability to manage our growth effectively; failure to
maintain effective internal controls in accordance with the
Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”); changes
in our financial condition, regulations or other factors that may
restrict our subsidiaries; ability to pay us dividends; and an
adverse result in any litigation or legal proceedings we are or may
become subject to. Additional information about these risks and
uncertainties, as well as others that may cause actual results to
differ materially from those in the forward-looking statements, is
contained in our filings with the U.S. Securities and Exchange
Commission ("SEC"), including our most recently filed Annual Report
on Form 10-K. These forward-looking statements speak only as of the
date of this release and the Company does not undertake any
obligation to update or revise any forward-looking information to
reflect changes in assumptions, the occurrence of unanticipated
events, or otherwise.
About James River Group Holdings,
Ltd.James River Group Holdings, Ltd. is a Bermuda-based
insurance holding company that owns and operates a group of
specialty insurance and reinsurance companies. The Company operates
in three specialty property-casualty insurance and reinsurance
segments: Excess and Surplus Lines, Specialty Admitted Insurance
and Casualty Reinsurance. Each of the Company’s regulated insurance
subsidiaries are rated “A-” (Excellent) by A.M. Best Company. Visit
James River Group Holdings, Ltd. on the web at
www.jrvrgroup.com.
James River Investor Contact:Brett
ShirreffsSVP, Finance, Investments and Investor Relations(919)
980-0524Investors@jrvrgroup.com
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