James River Group Holdings Ltd .:'s financial strength was downgraded to A- from A by A.M. Best Co. Inc. on Friday, two days after the Bermuda-based insurance company reported a quarterly loss of more than $ 100 million.
In a statement, Oldwick, New Jersey-based Best, said the downgrade reflected a lower rating of the insurer's business. risk management and its rating outlook were negative due to concerns about commercial exposures to auto liability.
“The organization's risk management functions were found to have weaknesses in risk tolerances, unmodeled risks, management controls and risk culture. The current ERM framework and risk assessment must be developed proactively and show the competencies necessary to mitigate any effects on the organization's balance sheet, operating performance or business profile, says the credit rating agency. assessment of the balance sheet in view of the negative loss trend in commercial car lines of a recurring nature.
Notes that James River was able to quickly replenish capital through a share issue, as it announced earlier this week, “long-term impact reduction
On Wednesday, James River reported a loss of $ 1
In a profit and loss account, CEO Frank D'Orazio said: “During the quarter, we continued to experience higher losses than expected in our large commercial car account in runoff. In response, we meaningfully changed our actuarial method, which resulted in a significant strengthening of the reserves. We believe that this overhang has been eliminated. "
Commercial car losses have been a concern for James River for several years. During the third quarter of 2019, the insurance company reported a loss due to a fee of $ 50 million related to its then largest account, Uber Technologies Inc., which was lost halfway during the quarter.
James River did not immediately respond to a request for comment.