New York State Department of Financial Services Superintendent Adrienne Harris has requested court permission to take control of Columbian Mutual Life Insurance Co.
According to a report from AM Best, Harris' office filed a petition in New York Supreme Court in Broome County to place the company into rehabilitation, as per an announcement by its parent, Columbian Financial Group, on its website. The notice to policyholders indicated that the move was prompted by "the company's financial condition."
“Rehabilitation is a legal proceeding overseen by the court to protect policyholders by preserving a company’s assets,” the notice said. “As the company’s rehabilitator, the superintendent is directed to take possession of the business and affairs of the company, and if possible, rehabilitate the company so it can return to the market as a solvent insurer."
Regulators confirmed the petition in an email, attributing it to the company's "troubled financial condition."
Once the court signs an order placing Columbian Mutual into rehabilitation, the rehabilitator will review the company’s financial condition and, if possible, develop a plan to restore its financial health, a department spokesperson said.
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Last month, Columbian Mutual Life Insurance Co. announced plans to lay off 26% of its workforce in New York, starting in early September, according to a notice filed with the state’s Department of Labor.
The layoffs will affect 70 of 269 employees, most of them at company headquarters in Vestal/Binghamton. In Syracuse, six of 38 employees will lose their jobs.
Management also recently confirmed that a planned merger with Constellation Insurance Holdings Inc. will not proceed. This was noted by AM Best when it downgraded Columbian Financial Group’s Financial Strength Rating to C (Weak) from C+ (Marginal) and the Long-Term Issuer Credit Ratings to “ccc” (Weak) from “b-” (Marginal).
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