Topa Insurance Receives A- Credit Rating

A.M. Best has affirmed Los Angeles-based Topa Insurance Co.’s credit rating of A- (Excellent) with a stable outlook.

According to the rating agency, the stable rating is based on the consolidated operating performance and financial condition of Topa and its separately rated wholly owned subsidiary Dorchester Insurance Co. Ltd. “The rating reflects the group’s solid capitalization, sustained operating profitability, prudent loss reserving practices and diversified product offerings. These positive rating factors are partially offset by the group’s elevated expense structure, geographic concentration within California and the competitive operating environment. The rating outlook is based upon the expectation for continued operating profitability and the maintenance of capitalization levels that are commensurate with the current rating,” A.M. Best said.

According to the company, the positive rating factors are a result of the group’s sound management practices, such as “taking advantage of market dislocations, moderate underwriting leverage and catastrophe mitigation strategies that insulate earnings and surplus from shock loss volatility.” A.M. Best said Topa has implemented several strategic initiatives in the past several years to improve profitability, including rate adjustments, tightening underwriting guidelines implementing new technology systems, and discontinuing unprofitable agencies and lines of business. The group’s parent, Topa Equities Ltd., also provides financial support through its operating subsidiaries and multiple revenue streams.