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James River subsidiaries in deal with State National Insurance

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Frank D'Orazio, chief executive officer of James River Group Holdings Ltd (File photograph)

Bermudian-based James River Group Holdings Ltd has announced that two of its principal operating subsidiaries entered into a combined loss portfolio transfer and adverse development cover reinsurance agreement with State National Insurance Company Inc.

Under the terms of the agreement, State National will provide $160 million of adverse development reinsurance coverage for James River’s Excess and Surplus Lines segment casualty portfolio for accident years 2010-2023 (both years inclusive), subject to a 15 per cent co-participation by the company.

The reinsurance structure has no coverage sub-limits but does exclude exposure to the company’s former large commercial auto insured, with the vast majority of that exposure already subject to a previously executed loss portfolio transfer.

James River will retain claims management.

State National is rated “A” (Excellent) by AM Best.

Frank D’Orazio, chief executive of James River, said: “We are pleased to have successfully completed a significant legacy reinsurance transaction with a highly rated carrier that is consistent with the company's track record of derisking the organisation while bolstering the balance sheet and providing improved certainty to our stakeholders.”

The reinsurance agreement was executed on July 2, and is effective from January 1, 2024.

During the third quarter of 2024, James River said, it will recognise a $52.2 million reduction in pre-tax income for the excess consideration paid over reserves ceded in connection with the agreement.

Once the transaction is recognised, should the company experience adverse development on the subject business (as early as the January 1, 2024 effective date), it would be subject to the reinsurance agreement.

The agreement also includes a profit commission to James River for 50 per cent of any favourable development on the business ceded to State National below 104.5 per cent of carried reserves, capped at $87 million.

The transaction closed upon signing. James River was represented by Howden Re and Mayer Brown LLP.

• James River has appointed Christine LaSala to its board of directors as an independent, non-executive member.

With her appointment, the board has increased its size from seven to eight directors.

Ms LaSala was appointed to the compensation and human capital committee and the nominating and corporate governance committee.

Chairman Ollie L. Sherman Jr said: “We are fortunate to be adding an independent director with Christine’s wealth of experience to the board as we continue to carefully evaluate opportunities as part of our strategic review.”

The company said Ms LaSala has more than 45 years of management, client leadership and financial experience in the insurance industry in underwriting and insurance broking roles. At present she serves as a director of Sedgwick, the provider of claims management, loss adjusting and technology-enabled risk, benefit and business solutions.

Ollie Sherman, chairman of the board of directors of James River Group Holdings Ltd (File photograph)
Christine LaSala, independent, non-executive member of the board, James River (File photograph)

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Published July 10, 2024 at 12:13 pm (Updated July 10, 2024 at 6:56 pm)

James River subsidiaries in deal with State National Insurance

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