James River
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A cleaned-up combined entity could make for an attractive investment in a few years.
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Cove Street is 14th largest investor in Global Indemnity.
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Sources said that the E&S carriers are now poised to enter due diligence.
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Shares had fallen over 20% since Monday.
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The all-stock indicative proposal values the business at more than 2x the share price.
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James River sued Fleming yesterday to enforce the $277mn sale of its casualty re unit.
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James River is suing Flemming Intermediate while a potential sale of the company is ongoing.
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Fleming has claimed breach of contract and is seeking roughly $78mn in “economic concessions”.
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Parties will be invited to submit bids again later this month.
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The company’s board continues evaluating strategic options, including a full sale.
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The carrier’s sales process is ongoing, and it will provide an update “in due course”.
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Enstar acquired 637,640 shares of James River in Q4 last year valued at nearly $6mn.
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Given a number of complexities, the landing zone on a take-out price is small.
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Earlier in the process, sources linked Sentry Insurance with a bid for the E&S insurer.
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Sources said that the Citi and Ardea-run sale process is being angled to potential strategic buyers in its initial stages.
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The actions follow James River’s recent announcement that it has identified a material weakness in its internal control over financial reporting and will sell JRG Re.
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The suspension of Global Indemnity’s effort to sell its E&S arm is likely specific to the franchise rather than an indicator of a dealmaking slowdown.
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The executive joined the firm in 2019 as senior vice president of program management and has since led the program and fronting business within the specialty admitted insurance segment.
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James River’s potential sale could be an opportunity for an investor looking to tap the E&S market, but reserving noise means making a deal might not be easy.
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Trading at just 0.6x book, the firm is a cheap option for an insurer which is looking to enter E&S, or is underweight in the sector.
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