AM Best Removes Golden Bear in California from Under Review and Affirms Credit Ratings
AM Best removed from under review with negative implications and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” (Excellent) of Golden Bear Insurance Co. headquartered in Stockton, California.
The outlook assigned to the ratings is stable.
The ratings of Golden Bear were placed under review with negative implications last year.
AM Best said the ratings reflect Golden Bear’s balance sheet strength, which it assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The ratings have been removed from under review with negative implications following the successful execution of capital initiatives communicated in response to the surplus erosion experienced in 2021.
“Significant adverse loss reserve development was reported in 2021, which led to the erosion, primarily related to casualty claims that have been impacted by social inflation, higher-than-expected loss activity and challenging legal environments in certain geographies,” AM Best stated. “In response, management strengthened the reserves and applied more robust underwriting guidelines to curb future development.”
Golden Bear also issued a $15 million surplus note and received an $8 million cash contribution from the holding company, Hall Holdings Inc., in the second quarter to bring the company’s surplus position to over $100 million. In the interim, a $10 million line of credit was issued, which has since been settled using proceeds from the holding company. These actions returned the company’s risk-adjusted capitalization to a very strong level compared with the level reported by the company prior to being placed under review, according to AM Best.
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