James River Files Suit Against Fleming for Failing to Close Planned Purchase of JRG Re *Centurion Insurance AFS*

James River Group Holdings Ltd. announced it has filed a complaint against Fleming Intermediate Holdings for its failure to complete the $277 million acquisition of its casualty reinsurance subsidiary JRG Reinsurance Co. – a deal that was first announced on Nov. 8, 2023.

Filed in the Supreme Court, New York County, Commercial Division, James River said the action was brought because Fleming failed to abide by its contractual obligation to complete the acquisition in accordance with the stock purchase agreement (SPA).

“James River has taken all of the contractually required steps to effect a closing, including the receipt of all regulatory approvals. However, just hours prior to the contractually required closing, Fleming claimed that it had no obligation to close and did not attend the scheduled closing call,” James River said in a statement. “Fleming subsequently demanded material economic changes to the agreed-upon transaction terms.”

Fleming is a portfolio company of private equity sponsor Altamont Capital Partners, based in Palo Alto, California. Neither Fleming nor Altamont Capital Partners were available for comment.

In late December 2023, AM Best announced it had downgraded the financial strength rating of JRG Reinsurance Co. to “B++” (Good) from “A-” (Excellent) and its long-term issuer credit ratings to “bbb+” (Good) from “a-” (Excellent), while placing JRG Re’s credit ratings under review with negative implications.

In addition, AM Best revised the outlooks of most of the rated operating subsidiaries of JRG Re’s parent company, James River Group Holdings Ltd., to negative from stable and affirmed its FSR of “A-” (Excellent) and the long-term ICR of “a-” (Excellent). The ratings agency also revised JRG Holdings’ outlook to negative from stable while affirming its long-term ICR of “bbb-” (Good).

These rating actions followed announcements from James River Group Holdings that it: 1) had identified a material weakness in its internal control over financial reporting, 2) it would sell JRG Re, and 3) it will explore strategic business alternatives for the organization.

James River emphasized it will continue to operate and support JRG Re and its cedents as usual.

“The lawsuit makes clear that Fleming’s self-serving complaints are flatly contradicted by the parties’ signed agreement. James River will take all actions necessary to protect its interests, enforce James River’s rights under the SPA and compel Fleming to complete the transaction in accordance with its terms,” James River went on to say in its announcement of the legal action.

“James River is taking immediate action to enforce its rights under the previously agreed upon transaction with Fleming and ensure that Fleming fulfills its obligations to the company. We remain confident in the strength of JRG Re and its team, and we believe that the steps we are taking are in the best interests of James River and its shareholders,” commented Frank D’Orazio, James River’s chief executive officer, in a statement.

Founded in 2007, JRG Re is focused on underwriting property/casualty reinsurance for small-to-medium-sized specialty companies, specialty divisions of larger companies, and regional carriers with defined competitive advantages and consistent results, the company said on its website, noting that its portfolio is heavily weighted toward short-to-intermediate-tail casualty lines. JRG Re targets working layer excess of loss and proportional treaty reinsurance. Currently, the client base consists of insurance companies writing business in the United States.

Bermuda-based James River Group Holdings owns and operates a group of specialty insurance and reinsurance companies in three specialty property/casualty insurance and reinsurance segments: excess and surplus lines, specialty admitted insurance and casualty reinsurance.

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