A.M. Best Assigns Ratings to JRG Reinsurance Company, Ltd.

OLDWICK, N.J. -- A.M. Best Co. has assigned a financial strength rating (FSR) of A- (Excellent) and an issuer credit rating (ICR) of "a-" to JRG Reinsurance Company, Ltd. (JRG Re) (Hamilton, Bermuda). The outlook for both ratings is stable.

These initial ratings follow the recent formation of JRG Re, its successful capital raising of $250 million and its lead role within Franklin Holdings (Bermuda), Ltd., (Franklin), a privately held Bermuda based parent company that acquired James River Group, Inc. (James River) (Chapel Hill, NC) on December 11, 2007. Franklin is under the management direction of James River's former management. Majority ownership is held by an investor group composed of the D.E. Shaw Group; The Goldman Sachs Group, Inc; Sunlight Capital, a private equity-oriented affiliate of Elliott Associates, L.P. and Lehman Brothers.

As a result of the completed sale of James River to the above investor group, James River's common stock, which prior to the transaction traded on the NASDAQ market under the symbol "JRVR", ceased to trade as of close of market on December 11, 2007 and was delisted. Consequently, since James River is now privately owned, A.M. Best has withdrawn the ICRs of "bbb-" of James River and James River Insurance Group (Chapel Hill, NC).

These initial ratings reflect the business and earnings prospects to be gained from JRG Re's conservative business plan to target working layer reinsurance business for U.S. basedspecialty insurers, including a significant inter-company quota share reinsurance agreement with its two onshore affiliates, James River Insurance Company (JRIC) (Columbus, OH) and Stonewood Insurance Company (Stonewood) (Raleigh, NC). The FSRs of A- (Excellent) and ICRs of "a-" of JRIC and Stonewood are unchanged. JRG Re's management has had a track record of successfully building profitable reinsurance portfolios. According to JRG Re's strategic business plan, affiliated business will comprise the majority of JRG Re's reinsurance portfolio, approximating 70% of JRG Re's total book of business. JRG Re was capitalized with $250 million through a contribution from the aforementioned named investors and borrowings down streamed through the parent holding company.

Partially offsetting these positive rating factors is the execution risk associated with any start-up operation in addition to the challenges presented by the very competitive, prevailing reinsurance market. The potential volatility within JRG Re's portfolio should be somewhat mitigated by its strategy not to be a market for catastrophe-exposed property business, considering the unpredictability inherent with that type of business. The ability of JRG Re to effectively build and retain market acceptance must be proven over time. Accordingly, A.M. Best will closely monitor JRG Re's performance relative to its stated business plan. Any material deviation in terms of earnings, capitalization or risk profile could result in downward pressure on the assigned ratings.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.