OLDWICK, N.J., February 09, 2023–(BUSINESS WIRE)–AM Best has commented that the Credit Ratings (ratings) of Topa Insurance Company (Calabasas, CA) and its subsidiary, Dorchester Insurance Company, Ltd. (U.S. Virgin Islands) (collectively referred to as Topa) remain unchanged following the announcement that Granada Financial Group, LLC (Granada) has entered into a definitive agreement with Topa Equities, Ltd. (dba Anderson Holdings) to acquire a controlling interest in Topa. Topa Equities, Ltd., which is the parent company of Topa, will retain a minority common equity stake in the business.
Despite the significant financial and operational benefits that Topa is expected to receive from the transaction, AM Best recognizes ongoing concerns with Topa’s recent reserve strengthening actions and the resulting impact on operating performance. Despite recent management initiatives intended to improve results, the outcome of these actions remains undetermined at present and will likely require additional time and conversations with management to determine the impact. Additionally, there remains some risk associated with the execution of the transaction. The ratings will remain under review until the close of the transaction and an assessment by AM Best of the post-transaction details. The transaction also is subject to regulatory approvals.
Topa’s ratings were initially placed under review with negative implications on July 7, 2022. This rating action followed the need for AM Best to have further discussions with company management regarding strategic business initiatives to improve operating performance over the near term, following deterioration in underwriting results in 2021 and in the first quarter of 2022. On Feb. 3, 2023, AM Best maintained the under review with negative implications status pending further discussions with management regarding these ongoing strategic business initiatives. AM Best will continue to monitor the group’s balance sheet strength, operating performance, business profile and enterprise risk management.