James River Group Holdings Ltd. has agreed to sell subsidiary JRG Reinsurance Co. Ltd. to Altamont Capital Partners portfolio company Fleming Intermediate Holdings. It values the deal at an estimated $277 million, or 0.75 times the book value of JRG Re.
The pending sale was announced the day after James River reported it swung to a third-quarter net income available to common shareholders of $16.9 million from a loss of $7.2 million a year earlier. It had a third-quarter net realized gain on investments of $362,000, compared with a loss of $7.75 million.
The casualty reinsurance segment swung to a $4.2 million underwriting loss from a $3 million underwriting profit.
Fleming Chief Executive Officer Eric Haller said in a statement the pending acquisition is “highly strategic” due to complementary infrastructure and significant scale.
The JRG transaction includes the full insurance entity supporting the company’s casualty reinsurance segment, including remaining assets and liabilities, James River said in a statement.
JRG employees are expected to transition to Fleming. The deal calls for a $139 million pre-closing dividend and a $138 million cash payment from Fleming at close.
James River Group CEO Frank D’Orazio said in a statement his company is focusing its resources on businesses where it has “meaningful scale, including our E&S and fronting businesses.”
During the third quarter, Amynta Group agreed to acquire individual risk workers’ compensation renewal rights and associated operations from James River Group subsidiaries.
James River, in its earnings statement, said while it didn’t sell any insurance company entities as part of the Amynta transaction, it booked a $2.2 million gain on the transaction and wrote off $2.5 million of intangible assets related to a trade name.
“Due to a short-term fronting arrangement, and likely audit premiums in this line of business, the company expects to have some premium in this line for the next few quarters,” it said.
Earlier, subsidiary Falls Lake Fire and Casualty Co. said it is exiting homeowners in California.
Underwriting entities of James River Group Holdings Ltd. currently have a Best’s Financial Strength Rating of A- (Excellent).