AM Best has revised the outlook for James River Group Holdings Ltd and most of its subsidiaries and has downgraded the credit ratings of JRG Reinsurance Company.

The ratings agency has revised the outlook for JRG Holdings to negative from stable and affirmed the long-term issuer credit ratings of “bbb-” (Good).

AM Best has revised the outlooks of most of the rated operating subsidiaries of JRG Holdings to negative from stable and affirmed the financial strength rating (FSR) of “A-” (Excellent) and the long-term ICR of “a-” (Excellent). This includes the following subsidiaries: James River Insurance Company, James River Casualty Company, Falls Lake National Insurance Company, Stonewood Insurance Company, Falls Lake Fire and Casualty Company and Carolina Re Ltd. AM Best said the ratings reflect their “very strong” balance sheet strength, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management (ERM).

AM Best also has downgraded JRG Reinsurance Company’s FSR to “B++” (Good) from “A-” (Excellent) and long-term ICR to “bbb+” (Good) from “a-” (Excellent), as well as placing JRG Re’s credit ratings under review with negative implications. AM Best said the ratings reflect the “very strong” balance sheet strength, as well as its marginal operating performance, limited business profile and marginal ERM. The rating downgrade reflects AM Best’s view that the company is less integral to JRG Holdings’ strategic, operational and financial objectives.

These rating actions follow JRG Holdings’ recent announcements that it has identified a material weakness in its internal control over financial reporting, it will sell JRG Re and it will explore strategic business alternatives for the organization. AM Best said the negative outlook reflects the uncertainty that these announcements will have on the organization as well as the execution risk associated with some of these initiatives.