OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has removed from under review with negative implications and affirmed the Financial Strength Rating of B- (Fair) and the Long-Term Issuer Credit Rating of “bb-” of Golden Insurance Company, A Risk Retention Group (Golden) (Incline Village, NV). The outlook assigned to these Credit Ratings (ratings) is negative.
The ratings were placed under review with negative implications on Dec. 20, 2016, due to a change in the company’s premium earning pattern prescribed by the Nevada Department of Insurance. The change resulted in increased reserve levels and reductions in policyholders’ surplus. In order to gain an adequate understanding of the company’s unearned premium reserve equity and risk-adjusted capitalization, the analytical team concluded that a review of the 2016 year-end actuarial report was needed.
The review of the 2016 actuarial report resulted in a determination that the risk-adjusted capitalization remained supportive of the current rating level. However, concerns remained regarding elevated underwriting losses and expenses, stemming from general liability claims in 2016, and how the new premium earnings pattern would affect future operating results. The negative outlooks reflect the continued uncertainty regarding the company’s loss reserve adequacy and future operating profitability.
These negative rating factors are mitigated by the company’s profitability through the first quarter of 2017. Additionally, the company has contracted a reputable captive manager and other support staff in recent years to improve their risk management and financial reporting processes.
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