CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JUNE 16, 2008 12:00 AM (EDT)
A.M. Best Co. has revised the outlook to stable from positive and affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of "a-" of Columbia Insurance Group (Columbia) and its members.
The affirmations reflect Columbia's solid risk-adjusted capitalization, favorable operating performance and long-standing market presence. The group's sustained operating profitability has been attributed to management's underwriting discipline, improved pricing, increased use of loss controls as well as insurance to value efforts and improved claim operations. Despite significant storm activity in 2008, primarily in Arkansas and Missouri, the group's non-storm loss experience remains favorable. A.M. Best anticipates continuation of Columbia's favorable operating results due to technology improvements, which have reduced operating costs and enhanced claim operations. Additional factors contributing to Columbia's ongoing future success include its local market expertise, established agency relationships and increased product and geographic diversification.
These strengths are partially offset by Columbia's business concentration in the Midwest, which exposes its earnings to catastrophe losses stemming from the New Madrid fault line as well as wind, hail and tornadoes. The revised outlook reflects continued soft market conditions, potentially increased weather-related losses and execution risks related to the group's revised business plan.
Following Columbia Mutual Insurance Company's (Columbia, MO) announcement to acquire Association Casualty Insurance Company (Association Casualty) (Austin, TX) and Georgia Casualty & Surety Company (Georgia Casualty) (Atlanta, GA) on December 28, 2007, A.M. Best placed the FSR of B+ (Good) and ICR of "bbb-" of Georgia Casualty under review with positive implications due to management's corrective initiatives and Columbia's financial flexibility pending regulatory approval. Association Casualty's FSR of A- (Excellent) and ICR of "a-" were unchanged. Following the close of the transaction on March 31, 2008, a consolidated evaluation of Columbia was performed. As a result, A.M. Best has revised the outlook to stable from negative and affirmed the FSR of A- (Excellent) and ICR of "a-" of Association Casualty. Concurrently, A.M. Best has affirmed the FSR of B+ (Good) and ICR of "bbb-"of Georgia Casualty. These ratings have been removed from under review with positive implications and assigned a stable outlook.
The affirmations and outlook revisions of both companies' reflect the benefits gained through improved underwriting and claim handling as well as increased technology and management support provided by their new ownership. Despite unfavorable operating results in recent years, A.M. Best is encouraged by the aggressive corrective actions initiated by Columbia to restore the long-term operating profitability of these entities.
The FSR of A- (Excellent) and ICRs of "a-" have been affirmed for Columbia Insurance Group and its following property/casualty members:
- Columbia Mutual Insurance Company
- Columbia National Insurance Company
- Citizens Mutual Insurance Company
For Best's Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.