AM Best placed under review with negative implications the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Golden Bear Insurance Co. in Stockton, Calif.
The ratings of Golden Bear were placed under review with negative implications reflecting surplus erosion observed in 2021, which management has communicated remedial action plans in response of, according to the ratings agency.
“Through the first nine months of 2021, the company recorded roughly $12 million in adverse loss reserve development, primarily related to casualty claims that have been impacted unfavorably by social inflation factors, as well as higher-than-expected loss activity in certain programs and geographies,” AM Best stated. “The unfavorable development is the primary driver for volatility leading to an 8.2% ($6 million) decline in surplus during the year.”
According to AM Best, management outlined plans to replenish capital losses in the near term, which are expected to strengthen the company’s risk-adjusted capitalization and overall balance sheet strength. The ratings will remain under review until management executes those actions, and AM Best evaluates the impact on Golden Bear.
AM Best last year upgraded the carrier’s Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating to “a” from “a-,” noting as reasons for the move Golden Bear’s balance sheet strength, its strong operating performance, neutral business profile and appropriate enterprise risk management.
Golden Bear writes personal and busines lines of insurance, including commercial property, primary property, excess casualty and cannabis property/casualty. The company also offers lawyer liability and testing labs liability.
Golden Bear is an admitted insurer in California, and it writes insurance on a non-admitted surplus lines basis through brokers in 50 states.
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