AM Best has placed under review with developing implications the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Ratings of “bb+” (Fair) of Columbian Mutual Life Insurance Company (Columbian) (Binghamton, NY) and Columbian Life Insurance Company (Chicago, IL), collectively referred to as Columbian Financial Group (CFG).
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 under review with developing implications Credit Rating (rating) action reflects the recent announcement by Columbian that its board of directors has approved a strategic transaction with Constellation Insurance Holdings, Inc. (Constellation) that includes the sponsored demutualization of Columbian to a stock company with the issuance of all newly issued stock to Constellation. Constellation is an insurance holding company backed by two large Canadian institutional investors primarily engaged in the management of pension plans, Caisse de Dépôt et Placement du Québec and Ontario Teachers’ Pension Plan Board. The transaction provides for Constellation to invest up to $100 million to fund cash payments to eligible policyholders and significantly strengthen the capitalization of Columbian.
AM Best notes that despite the likely positive impact on capital from the planned transaction with Constellation, regulatory and policyholder approvals are still needed, with an anticipated closing date sometime during the first half of 2022. In the interim, further negative rating actions on CFG are possible if its risk-adjusted capitalization continues to decline prior to close of the transaction. AM Best will continue to monitor the group’s capitalization and operating performance over the near term, given the impact that the ongoing COVID-19 pandemic has had on 2020 and early 2021 results.
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