James River to exit reinsurance with JRG Re sale to hone core business

Bermuda-based James River Group has agreed to sell its third-party casualty reinsurance business to Fleming Intermediate Holdings for $277 million.

The company said the sale of JRG Reinsurance Company was driven by its strategic plan to focus on its core E&S and fronting businesses.

The sale consists of a $139 million pre closing dividend and a $138 million cash payment from Fleming at close. The sale means James River will receive 75% of the book value of JRG Re at closing.

James River said: “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, said: “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, said:  “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 organisation 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, a private equity firm with over $4 billion of capital under management and significant experience investing in the insurance sector. Its parent company is registered in Bermuda.

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.