James River outlook revised to negative: A.M. Best
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A.M. Best Co. Inc. on Wednesday revised Pembroke, Bermuda-based James River Group Holdings Ltd.’s outlook to negative from stable and downgraded the financial strength rating of JRG Reinsurance Co. Ltd. to B++ from A-.
In a statement, Best said it had revised the outlooks to negative from stable and affirmed the financial strength rating of A- of most of the rated operating subsidiaries of James River Group Holdings Ltd.
The rating actions follow JRG Holdings’ recent announcements that it has identified a material weakness in its internal control over financial reporting, it will sell JRG Re and explore strategic business alternatives for the organization, including a potential sale or merger, Oldwick, New Jersey-based Best said.
“The negative outlook reflects the uncertainty that these announcements will have on the organization, whilst also reflecting the execution risk associated with some of these initiatives,” Best said.
The ratings of JRG Holdings’ subsidiaries reflect their balance sheet strength, which Best assesses as “very strong,” the ratings agency said.
The rating downgrade of JRG Re reflects the fact that the company is less integral to JRG Holdings’ strategic, operational and financial objectives, Best said.
JRG Holdings recently said it would sell JRG Re, its third-party casualty reinsurance unit, to Fleming Insurance Holdings for an estimated $277 million and earlier this year said it had suspended underwriting business in JRG Re following operating losses over several quarters. JRG Re has also been placed under review with negative implications, Best said.
Best affirmed the financial strength rating of A- and revised the outlooks to negative for James River Insurance Co., James River Casualty Co., Falls Lake National Insurance Co., Stonewood Insurance Co., Falls Lake Fire and Casualty Co. and Carolina Re Ltd.
