Topa Insurance Group, a commercial-auto heavy California-based specialty insurer, has appointed boutique investment bank Dowling Hales as it eyes a potential sale, re-Insurance.com understands.
It is understood that Topa is keeping all options on the table as it examines a number of possible strategic changes.
The carrier is owned by Topa Equities, a family-owned holding company with interests in automobile dealerships, beer and beverage distribution, real estate, property management, consumer finance, as well as insurance.
The insurance division includes Topa and its subsidiary Dorchester, which has a book of business in the US Virgin Islands that was impacted by last year’s hurricanes.
According to figures from AM Best, the A- rated carrier wrote $61.1mn in direct premiums in California last year. That made up over half of its total $115.6mn premium intake in 2017.
The bulk of its business was in the auto liability space. In 2017, it wrote $42.4mn of commercial auto liability and another $17.9mn of private passenger auto liability.
AM Best said the group’s performance had been improving since the end of 2013. However, the rating agency said the trend of refined performance had been interrupted by last year’s wildfires, which scorched swathes California, and the hurricanes that devastated parts of the Caribbean, where the US Virgin Islands are located.
However reinsurance cover limited net cat losses to just $4.5mn, which added 5 points to the group’s 107 percent combined ratio for 2017. That marked a significant deterioration from the the 99.9 percent combined ratio it reported for 2016.
“Also weighing on current year results was a net loss reserve deficiency of about $1.5mn, which was driven by the commercial automobile liability line and, to a much lesser extent, the personal automobile liability line, accompanied by less offsetting net loss reserve releases in other lines,” AM Best said.
“Management reports that a contributor to the adverse loss reserve development was from increased efforts to close older claims and its impact on payment patterns.”
It added that Topa had put in place a number of underwriting actions to improve performance including establishing price floors and not renewing poor performing books.
Topa declined to comment.