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SAN DIEGO-Golden Eagle Insurance Co. will comply with California Department of Insurance demands that it increase its reserves by $138.5 million.

The company will file a plan with the Insurance Department to increase its reserves through a combination of reinsurance and direct additional reserves, John Maybee, president of the San Diego-based insurer, announced last week.

Mr. Maybee's announcement followed Golden Eagle's unsuccessful attempt to persuade an appeals court to overturn a lower court decision stating Commissioner Chuck Quackenbush has the authority to order the company to boost reserves without holding a hearing (BI, Nov. 25, 1996).

Despite the setback, Golden Eagle was right to have battled the order, Mr. Maybee said in a written statement.