Fleming buys James River reinsurer. Could help deliver casualty ILS ambitions

Fleming Insurance Holdings, a company that has been building out a casualty focused insurance-linked securities (ILS) offering, has agreed to acquire JRG Reinsurance Company, Ltd. (JRG Re), the third-party casualty reinsurance business of James River Group.

James River noted that the sale includes the full insurance entity supporting its casualty reinsurance operation, including the remaining assets and liabilities, plus the staff supporting that business.

The casualty reinsurance segment produced $85.2 million of gross written premiums in 2022 for James River Group.

As we’ve reported before, Fleming Insurance Holdings, which is backed by investor Altamont Capital Partners, has been building out an insurance-linked securities (ILS) platform focused on the emerging casualty ILS space.

Recently, Eric Haller, Chief Executive Officer (CEO) of Fleming, told us that the company had received positive feedback from the investor community as it works towards the launch of the casualty insurance-linked securities (ILS) platform.

Now, Fleming is acquiring a reinsurance underwriting entity, a portfolio of casualty risk and a team that can operate it, providing a platform on top of which it seems likely the firm can scale-up its casualty ILS ambitions considerably.

Frank D’Orazio, James River’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, added, “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.”

James River said that the estimated transaction value of the sale of its casualty reinsurance business is $277 million, inclusive of a $139 million pre closing dividend and a $138 million cash payment from Fleming at close.

James River said it expects to receive 0.75x the book value of JRG Re at closing, which is expected to be during the first quarter of 2024.