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| [June 12, 2018] |
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A.M. Best Withdraws Credit Ratings of Golden Insurance Company, A Risk Retention Group
A.M. Best has downgraded the Financial Strength Rating to C++
(Marginal) from B- (Fair) and the Long-Term Issuer Credit Rating to "b"
from "bb-" of Golden Insurance Company, A Risk Retention Group
(Golden) (Denver, NC). The outlook of these Credit Ratings (ratings) is
negative. Concurrently, A.M. Best has withdrawn the ratings as the
company has requested to no longer participate in A.M. Best's
interactive rating process.
The ratings reflect Golden's balance sheet strength, which A.M. Best
categorizes as weak, as well as its marginal operating performance,
limited business profile and marginal enterprise risk management.
The rating downgrades are driven by the company's adverse reserve
development in the general liability business, which has led to surplus
deterioration in recent years. The surplus declines have placed added
stress on underwriting leverage ratios and risk-adjusted capitalization.
In addition, the company's five-year average pre-tax and total returns
on revenue and equity are negative and compare unfavorably with the
composite. Further, the company has somewhat mitigated the stress on its
balance sheet through revising the quality and quantity of its
reinsurance. Additionally, the company has enacted multiple underwriting
changes in earlier years to prevent these issues from reoccurring.
The underwriting changes to the general liability business appear to
show early favorable results. However, the adverse development from
earlier years has continued to flow into the morerecent years' results,
and has led to significant underwriting and operating losses. The
negative outlooks reflect the continued uncertainty around the prior
year development and the potential for any additional adverse
development. The general liability business results are somewhat
mitigated by a profitable book of warranty business, for which the
company identifies as its core business.
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. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view Guide
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
Action Press Releases.
A.M. Best is the world's oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180612006383/en/
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