AM Best has continued its under review with negative implications status for the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Ratings of “bbb+” (Good) for Topa Insurance Company and Dorchester Insurance Company, Ltd., both subsidiaries of Topa Equities, Ltd. The ratings reflect Topa’s very strong balance sheet strength, along with marginal operating performance, limited business profile, and appropriate enterprise risk management.
The ongoing review stems from a recent agreement where a private holding company plans to acquire 100% of Topa’s intermediate holding company, Topa Insurance Group, Inc. This transaction, expected to provide significant financial and operational benefits, could trigger negative rating actions if it does not proceed as planned. In 2023, Topa reported a decline in policyholder surplus due to increased operating losses from underwriting results and adverse loss reserve development, partially mitigated by a capital infusion from Topa Equities, Ltd.
AM Best underscores the potential impact of further reserve weakening on Topa’s balance sheet strength metrics and risk-adjusted capitalization. The ratings will remain under review pending regulatory approvals and a post-transaction assessment by AM Best.
