JRG Reinsurance Company Ltd. (JRG Re), a primary operating subsidiary of James River Group Holdings, Ltd., has entered into a $335 million loss portfolio transfer retrocession agreement with Fortitude Reinsurance Company Ltd.
Under the terms of the agreement, Fortitude Re will reinsure the majority of the reserves from the firm’s casualty reinsurance business. In total, JRG Re is set to cede approximately $335 million of liabilities for certain business written in the years 2011-2020, subject to an aggregate limit of $400 million.
In relation to the loss portfolio transfer, James River Group expects to recognise an after-tax loss of approximately $6.8 million during the first quarter of 2022. Adjusting for this expense, the transaction will provide the company with $65 million of net limit above held reserves for the business being transferred.
The insurer explains that this retro agreement will occur upon receipt of required regulatory approvals by Fortitude Re and satisfaction of other customary closing conditions.
Alongside the loss portfolio transfer, James River Group has also entered into an Investment Agreement with an affiliate of Gallant Point Capital LLC, related to the issuance of $150 million of Convertible Preferred Shares, with closing expected on March 1st, 2022.
Accordingly, the company’s Board of Directors approved the appointment of Matthew Botein, the co-founder of Gallatin Point, to serve as a member of the Board, effective following receipt of any necessary regulatory approvals.
Frank D’Orazio, the company’s Chief Executive Officer (CEO), commented: “With these significant reserving actions and legacy transactions behind us, and with the support of Gallatin Point fortifying our capital base, we believe we have unburdened the organization’s earnings potential, which should allow it to produce attractive future returns for shareholders.”
