Best’s News & Research Service - April 15, 2016 03:42 PM (EDT)
A.M. Best Revises Outlook to Stable for Columbia Mutual Insurance Company and Its Affiliates
- April 15, 2016 03:42 PM (EDT)
Oldwick //BestWire// - A.M. Best has revised the outlooks to stable from negative and affirmed the financial strength rating of A- (Excellent) and the issuer credit ratings of “a-” of the members of Columbia Insurance Group (Columbia Group): Columbia Mutual Insurance Company, Columbia National Insurance Company, Association Casualty Insurance Company, Georgia Casualty & Surety Company and Citizens Mutual Insurance Company. All companies are headquartered in Columbia, MO.
The outlook revisions to stable are based on Columbia Group’s recent trend of improved operating performance and risk-adjusted capitalization in recent years. These improvements are primarily due to corrective actions implemented by management, which included more sophisticated underwriting and pricing tools, runoff of unfavorable lines of business and more focused agency management strategies that are all driven toward improving profitability. Columbia Group has produced more favorable combined ratios and surplus growth in each of the past three years.
The affirmation of the ratings is based on Columbia Group’s solid risk-adjusted capitalization, conservative operating strategy and long-standing market presence. Columbia Group’s risk-adjusted capitalization is derived from its moderate underwriting leverage, adequate balance sheet liquidity and moderately favorable loss development. In addition, the 100-year net probable maximum loss (PML) from a hurricane has been reduced to a level that is less than 10% of policyholder surplus. Partially offsetting these positive factors is the group’s geographic and product concentrations. This was evident in 2011 and 2012 when significant underwriting losses were reported due to unprecedented wind, hail and tornado losses. However, management has partially mitigated these exposures by reducing its property exposures, maintaining comprehensive reinsurance and more conservative risk management strategies.
In future rating cycles, the ratings and outlooks could benefit from continued improvement in operating performance and greater risk-adjusted capitalization. However, the ratings and outlooks may come under negative pressure if operating results deteriorate beyond expectations, causing a decline in capitalization.
This press release relates to rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page.
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