James River Group’s outlook downgraded by AM Greatest amid discovery of fabric weak spot

AM Greatest has up to date its outlook on a number of subsidiaries of James River Group, revising it to adverse from steady, whereas the monetary energy score (FSR) of A- (Wonderful) and the long-term issuer credit score rankings (Lengthy-Time period ICR) of “a-” (Wonderful) for many of those subsidiaries have been affirmed. Moreover, the Lengthy-Time period ICR of “bbb-” (Good) for JRG Holdings has additionally been affirmed with a revised adverse outlook.

Concurrently, JRG Reinsurance (JRG Re) additionally skilled a downgrade in its FSR to B++ (Good) from A- (Wonderful) and its Lengthy-Time period ICR to “bbb+” (Good) from “a-” (Wonderful). JRG Re’s credit score rankings have additionally been positioned below evaluation with adverse implications.

The affirmed FSR of A- (Wonderful) and the Lengthy-Time period ICRs of “a-” (Wonderful) with adverse outlooks apply to the next JRG Holdings subsidiaries:

• James River Insurance coverage Firm
• James River Casualty Firm
• Falls Lake Nationwide Insurance coverage Firm
• Stonewood Insurance coverage Firm
• Falls Lake Hearth and Casualty Firm
• Carolina Re, Ltd.

The subsidiaries of JRG Holdings, positioned in Pembroke, Bermuda, Richmond, VA, and Raleigh, NC, are acknowledged for his or her robust stability sheet, satisfactory working efficiency, impartial enterprise profile, and marginal enterprise threat administration (ERM).

These score changes comply with latest bulletins by JRG Holdings concerning materials weak spot in its inner management over monetary reporting and plans to promote JRG Re. Moreover, the corporate is exploring strategic enterprise alternate options, together with a possible sale, merger, or different strategic motion. The adverse outlook displays the uncertainty these bulletins convey to the group, in addition to the dangers related to executing these initiatives.

The downgraded rankings of JRG Re are additionally influenced by AM Greatest’s notion of the corporate’s lowered integral function in JRG Holdings’ strategic, operational, and monetary plans. This attitude is supported by JRG Holdings’ determination to halt underwriting enterprise in JRG Re in 2023 following working losses over a number of quarters.

Moreover, JRG Holdings has entered right into a definitive settlement to promote JRG Re to Fleming Intermediate Holdings LLC at 0.75 instances the guide worth of JRG Re at closing. The transaction’s closure is anticipated within the first quarter of 2024, pending regulatory approvals.

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