James River sues Fleming to force through reinsurer sale
James River Group (JRP) is taking legal action against Fleming Intermediate Holdings to force it to complete its acquisition of JRG Reinsurance.
Under the deal announced in November 2023, Fleming was to purchase its third-party casualty reinsurer for $277 million, consisting of a $139 million pre-closing dividend and a $138 million cash payment. Now, James River has commenced litigation, filing a complaint with the New York County Supreme Court’s Commercial Division for specific performance – requiring Fleming to close the transaction.
A statement from the company said the action was in response “to the refusal of Fleming to complete the fully negotiated transaction.”
“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. Fleming subsequently demanded material economic changes to the agreed-upon transaction terms,” it reads.
“Fleming’s self-serving complaints are flatly contradicted by the parties’ signed agreement,” the statement goes on to say, and states that 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”.
Frank D’Orazio, the James River chief executive officer, said: “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.”
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. Its parent company is registered in Bermuda.
James River has had a difficult time of late. Last month, it reported a net loss of $152.8 million for the most recent quarter, and in January it dissolved its Bermuda-based subsidiary, Carolina Re. In December 2023, AM Best lowered the financial strength rating (FSR) of JRG Reinsurance Company from A- to B++ and placed its credit ratings under review with negative ratings.
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