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AM Best Revises Issuer Credit Rating Outlook to Negative for Members of Columbian Financial Group


AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb+” of Columbian Mutual Life Insurance Company (Binghamton, NY) and Columbian Life Insurance Company (Chicago, IL), collectively referred to as Columbian Financial Group (CFG). The outlook of the FSR remains stable.

The ratings reflect CFG’s balance sheet strength, which AM Best categorizes as strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management. CFG focuses on the senior market with family solutions, pre-need, final expense and simplified issue term life insurance products. The group’s operations are conducted on a general agency plan in all 50 states, the District of Columbia and the U.S. Virgin Islands, with its core business focused mainly in small face amount life insurance markets with distribution through home sales, general agents and independent marketing organizations.

The negative Long-Term ICR outlook reflects the significant decline in CFG’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The drivers of this decline stem from a change in the funded status of CFG’s pension plan due to a decline in the market value of pension assets during the fourth quarter of 2018, as well as a net loss for the year. The group saw a further decline in capital during the first quarter of 2019 as the company discovered an accounting error that resulted in the overstatement of its deferred tax asset for year-end 2018, which was adjusted in the current year. AM Best notes that there is the potential for CFG to regain a good portion of these capital declines, although this largely will depend on the status of the interest rate and equity markets at year-end 2019, as well as the contribution from earnings. However, if risk-adjusted capitalization falls further from year-end 2018 results, a negative rating action may occur during the next cycle.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

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