Investment Manager D.E. Shaw Set to Acquire Specialty Insurer James River

June 11, 2007

Global investment manager D. E. Shaw group has organized a Bermuda-based holding company to acquire James River Group, Inc. a North Carolina- based excess and surplus and workers’ compensation insurer, in a transaction with a total equity value of approximately $575 million.

Under the terms of the merger agreement, stockholders of James River will be entitled to receive $34.50 in cash per share. The transaction is expected to be completed in the second half of 2007, subject to receipt of stockholder approval and regulatory approvals, as well as other customary closing conditions.

According to the parties, the transaction is not subject to a financing condition and equity commitments for the full amount of the merger consideration have been received from affiliates of the D. E. Shaw group. James River intends to continue to pay regular quarterly cash dividends until the completion of the transaction.

The board of directors of James River has unanimously approved the merger agreement. A board committee formed to evaluate the transaction with the D. E. Shaw group, and consisting entirely of non-management directors, developed the material terms of the merger agreement.

Under the terms of the merger agreement, James River and the board committee’s financial advisor will solicit superior proposals from third parties during the next 55 calendar days until Aug. 5, 2007. In the event that a superior proposal is received and the merger agreement is terminated during this 55-calendar day period, affiliates of the D. E. Shaw group will receive a termination fee of approximately $7.2 million (approximately 1.25 percent of the equity value of the transaction), inclusive of transaction fees and expenses, according to officials.

In addition, subject to the provisions of the merger agreement, James River may, at any time prior to receipt of stockholder approval, respond to unsolicited proposals.

J. Adam Abram, president and chief executive officer of James River, said he anticipates that a new Bermuda-based reinsurance company will be added to James River after the transaction is completed. “The inclusion of this entity, and the additional capital associated with it, will add to our group’s capabilities as well as our financial strength,” Abram said.

Dick Wright, chairman of the board of James River, noted that the offer is 90 percent above the price at which the firm’s common stock was first offered to the public less than two years ago.

James River Group, Inc. is an insurance holding company that owns specialty property/casualty insurance companies. Each of James River’s two insurance company subsidiaries is rated “A-” (Excellent) by A.M. Best Co. Founded in September 2002, James River wrote its first policy in July 2003 and currently underwrites in two specialty areas: excess and surplus lines in 48 states and the District of Columbia; and workers’ compensation, primarily for the residential construction industry in North Carolina and Virginia.

The D. E. Shaw group is a global investment and technology development firm with more than 1,100 employees; approximately $30 billion in aggregate investment capital; and offices in North America, Europe, and Asia.

Source: James River Group
www.james-river-group.com

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