FSLSO Wire: AM Best Downgrades Columbian Financial and Rockingham

April 18, 2024

AM Best Downgrades: Columbian Awaits Merger, Rockingham Restructures

Columbian Financial Group Downgraded by AM Best, Merger with Constellation Delayed

AM Best has downgraded the Financial Strength Rating to C+ (Marginal) from C++ (Marginal) and the Long-Term Issuer Credit Ratings to “b-” (Marginal) from “b” (Marginal) of Columbian Mutual Life Insurance Company (Columbian) (Binghamton, NY) and Columbian Life Insurance Company (CLIC) (Chicago, IL), collectively referred to as Columbian Financial Group (CFG). Concurrently, AM Best has maintained the under review with negative implications status for these Credit Ratings (ratings). The downgrade reflects CFG's "very weak" balance sheet strength and continued financial pressures.

A planned merger with Constellation Insurance is expected to improve CFG's finances, but the closing date has been pushed back several times. AM Best remains concerned about potential future losses and the outcome of an unclaimed property review by New York State.

AM Best will continue to monitor CFG's situation closely.

Rockingham Insurance Hit with Downgrade, Fights Back with Restructuring

AM Best has downgraded the Financial Strength Rating (FSR) to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “bbb+” (Good) from “a-” (Excellent) of Rockingham Insurance Company and its pooled affiliates: Rockingham Casualty Company and Rockingham Specialty, Inc. The outlook of the FSR has been revised to stable from negative, while the Long-Term ICR is negative.

The downgrade reflects a weakening financial position for Rockingham Group. Despite a strong balance sheet, the company has experienced capital erosion over the past three years due to underwriting losses. These losses stem from factors like weather events, fire damage, and inflation. Rockingham Group has taken steps to address these issues, exiting its underperforming commercial business and implementing stricter underwriting guidelines. However, AM Best remains concerned about the potential for future losses and the group's ability to improve its financial health.