James River agrees loss portfolio transfer

Troubled insurer James River Group has secured $160 million of adverse development reinsurance coverage as part of a loss portfolio transfer agreement, the company said today. 

The property and casualty insurer said the agreement with Markel subsidiary State National Insurance Company provided the coverage for its Excess and Surplus Lines segment casualty portfolio for accident years 2010-2023 (both years inclusive), subject to a 15% co-participation by the company. 

James River said the reinsurance structure has no coverage sublimits 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 LPT. James River will retain claims management. State National is rated “A” (Excellent) by AM Best.

James River chief executive officer Frank D’Orazio 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 de-risking the organisation while bolstering the balance sheet and providing improved certainty to our stakeholders.”

During the third quarter of 2024, James River 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 company said. "The agreement also includes a profit commission to James River for 50% of any favorable development on the business ceded to State National below 104.5% of carried reserves, capped at $87.0 million."

James River was rocked last year by a revelation that it had overstated its earnings for the second quarter by $7.8 million and its premiums for the second quarter by $9.4 million, sparking a strategic review by the board and the sale of its casualty reinsurance subsidiary. 

James River also announced it had appointed veteran broker and insurance company director Christine LaSala as an independent non-executive director, bringing the number of directors to eight.  

“I am thrilled to welcome Christine to our Board,” said Frank D’Orazio, the Company’s Chief Executive Officer. “She has deep knowledge of the specialty property and casualty insurance industry and extremely valuable corporate governance expertise.” 

Chairman Ollie L. Sherman, Jr., added, “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.”

LaSala has over 45 years of management, client leadership and financial experience in the insurance industry in underwriting and insurance broking roles. She currently serves as a director of Sedgwick, a leading provider of claims management, loss adjusting and technology-enabled risk, benefit and business solutions. 

She has also been a director of Beazley and was chair of Willis Towers Watson North America in 2016. Prior to joining Willis in early 2014, she served for 10 years as the President and CEO of the WTC Captive Insurance Company, a US government-funded, not-for-profit corporation providing liability insurance to the City of New York and over 100 private contractors. 

Previously LaSala worked at broker Johnson & Higgins, where she was the firm’s only woman partner and, among other roles, served as President of Johnson & Higgins New York, providing broking advice and consultation to many of the firm’s largest clients.

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