OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has downgraded the Long-Term Issuer Credit Ratings (Long-Term ICR) to “bbb” from “bbb+” and affirmed the Financial Strength Rating (FSR) of B++ (Good) 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 has been revised to negative from stable while the outlook of the Long-Term ICR is negative.
These Credit Ratings (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 Long-Term ICR downgrade reflects the declining trend in CFG’s capitalization over the previous two years, with further unfavorable developments through the second quarter of 2020 due in part to the impact of the COVID-19 pandemic on the company’s financial results. Prior year capital declines stem largely from the impact of lower interest rates on the valuation of CFG’s pension plan liability and a deferred income tax adjustment from the implementation of the 2017 Tax Cut and Jobs Act. AM Best notes that while there is potential for CFG’s pension plan to be a further drag on capitalization in 2020, definitive steps were taken to immunize the pension plan liability from further volatility going forward.
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