Golden Eagle Pulls Out of Homeowners Market in California

San Diego-based Golden Eagle Insurance announced in September that it would cease offering new policies for homeowners and dwelling fire in California. The company also sells insurance in neighboring Arizona, but this move does not impact that state.

“When Golden Eagle was purchased by Liberty Mutual, [homeowners] was continued as a line of business,” said Golden Eagle President Frank Kotarba. “What we noticed over the last year or two was deterioration in the overall book of business as well as the profitability.

“First of all, it was a monoline strategy. It didn’t have the accompanying auto with it and we decided last year not to pursue private passenger auto because of the start-up costs, as well as the fact that you need to have significant critical mass to be successful in that line. When you couple the fact it was not profitable, not getting adequate rates from the state in that line, and the fact that a majority of our agency plan is focused on commercial business with us, we decided to entirely focus on the commercial lines market.”

Once it was realized this line of insurance was not profitable for Golden Eagle—accounting for less than 10 percent of its book—the company submitted a withdrawal notice that was sent to the state on Aug. 31.

As part of the transition, the company entered into a deal with First American Specialty Insurance Co. to offer and service Golden Eagle policy renewals for most accounts, with the effective date of Nov. 15, 2001, and thereafter. First American Specialty Insurance is licensed in California, Arizona and Nevada and is owned by First American Title Co.

“First American is doing an excellent job in working with the agents and forming relationships with them,” Kotarba noted. “I’ve had phone calls from some of our largest agents and they understood and support this, and are pleased we have a carrier to pick up the business in a smooth fashion.”

As a result of the move, some positions will be eliminated over a one-year period at Golden Eagle. Those impacted—approximately 40 employees—will be eligible to apply for other positions with the company, receive severance benefits, or continue with the company at a future date as positions open. The company has also noted that it will offer outplacement opportunities.

“We had a meeting with the employees the day of the announcement,” Kotarba said. “The primary function they will serve is servicing the existing book run-off.”

The policies involved are all GEI homeowners and dwelling fire (except for HO4 policies) effective Nov. 15. HO4 (renters) will be non-renewed by GEI since First American is not a market for HO4. Non-renewal notices are being sent prior to the policy expiration date. GEI will continue servicing all current homeowner and dwelling fire policies up until their expiration date.

As for the coming year, Kotarba sees good things for the company. “We’re very positive on the outlook for the organization,” he said. “With the OneBeacon partnership, it is going to provide for us additional penetration. We see growth in commercial property and casualty this year.”

Liberty Mutual, which counts Golden Eagle among its subsidiaries, recently formed a partnership with OneBeacon in which it acquired OneBeacon’s property/casualty business, along with its staff and operations in 42 states and the District of Columbia. As a part of that agreement, OneBeacon’s $1.5-billion book of personal and commercial accounts, along with approximately 2,600 of the employees in those areas, are to be added to Liberty Mutual’s Regional Agency Markets business unit.

Golden Eagle was established in 1997 as a part of Liberty Mutual’s Regional Agency Markets, a group of regional property and casualty companies that offer their products and services exclusively through independent agents and brokers.

Topics California Homeowners Property Casualty