James River Group Holdings, Ltd. has announced it is to sell JRG Reinsurance Company (JRG Re), its third-party casualty reinsurance business, to Fleming Intermediate Holdings, for an estimated $277 million.
The transaction value is inclusive of a $139 million pre closing dividend and a $138 million cash payment from Fleming at close.
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.
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 James River’s Casualty Reinsurance segment, including the remaining assets and liabilities, as well as the staff. In 2022, the segment produced $85.2 million of gross written premiums.
“Today’s announcement represents a key milestone for James River and is strategically significant for both our Company and Fleming,” said Frank D’Orazio, the James River’s Chief Executive Officer.
“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.”
The transaction has been unanimously approved by the Board of Directors of both companies, and it is subject to customary closing conditions. These include receipt of required regulatory approvals. It is expected to close during the first quarter of 2024.
This acquisition will be transformational to Fleming’s growth plan with the addition of complementary infrastructure, a strong balance sheet and capital base, experienced reinsurance professionals, and valuable cedant relationships, the firm stated.
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 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.”
Dan Linden, Head of M&A at Fleming, added: “We were attracted to JRG Re’s diversified lines of business and close alignment of their areas of interest with those of Fleming. We believe Fleming is the ideal acquirer of the business and continuing partner of JRG Re’s current counterparties.
“The JRG Re team will be fully integrated into our business and the Fleming and JRG Re teams will work closely together as a unified organization to capitalize on the significant opportunities Fleming sees in the reinsurance market.”
Citi and Howden Tiger Capital Markets & Advisory acted as financial advisors and Debevoise & Plimpton LLP acted as legal counsel for James River.
