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FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 20, 2016 08:25 AM (EDT)
A.M. Best has revised the outlooks to negative from stable 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 revised outlooks reflect Golden’s declining risk-adjusted capital position and enterprise risk management (ERM) concerns. The company’s capital is strained in recent years due to excessive premium growth, which has resulted in elevated underwriting leverage ratios and growth charges. In addition, Golden’s reserves have shown unfavorable development on an accident and a calendar-year basis. This reserves inadequacy may cause further stress on surplus in the coming years.
Concerns also remain with Golden’s risk management practices, as multiple issues have arose over the latest five-year period. In recent years, the company has had to correct prior financial statements following annual audits and regulatory reviews. Additionally, concerns remain with the financial security of Golden’s warranty administrator. The majority of the company’s business flows through their administrator, thus financial instability at that level could cause a disruption in operations.
Mitigating factors includes Golden’s profitable earnings in recent years and the addition of a more reputable captive manager. Golden contracted with Strategic Risk Solutions (SRS) on June 1, 2016, to assume the role of the company’s captive manager. SRS brings experience in financial reporting and ERM, which will be highly valuable to the company going forward.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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