Business, Preneed, Regulations

Weekend Edition: SCI receives economic development aid, a difference of opinion in Winnipeg, a preneed ratings downgrade

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It is somewhat unbelievable to me how fast we have moved from Memorial Day to Labor Day, but here we are.  Among the American debate, many schools are opening, the election is soon here, and the one constant is that those in the funeral profession continue to give comfort and guidance to those in need.

Today’s edition brings you three features including plans by Service Corporation International to greatly expand its New Orleans based accounting operations, a funeral home owner and a Manitoba association that have differing opinions on funeral attendance limits, and a new rating from the A.M. Best Company that mentions the impact of COVID-19 on a preneed insurance company.

Service Corporation International (SCI) to add positions in New Orleans area —  This article from explains that North America’s largest funeral and cemetery operator,SCI, has promised to add 115 new finance jobs in their Jefferson Parish offices over the next several years.

The article points out that SCI has employees in the area from their 2013 purchase of Stewart Enterprises and will now plan to place employees in that area that “will provide accounting services for its entire group”.  It continues to say that the 115 positions will bring SCI’s total employment in Jefferson Parish to 245 people.  Louisiana Economic Development states in the article that the jobs will be “at about $47,000 per year.

In return for the promise of these jobs, the Jefferson Parish Economic Development Commission, Louisiana Economic Development, and Greater New Orleans, Inc. will appropriate $200,000 to SCI to go towards the $600,000 cost of converting the offices that will be used for the new finance center.  In addition, the Jefferson Parish Economic Development Commission will give SCI $300,000 over four years if SCI hits its target of hiring the full 115 positions by 2023.

Manitoba DisagreementIn this article from the Winnipeg Free Press you can read about funeral director and funeral home General Manager Mike Vogiatzakis and his displeasure with the restrictions on funeral attendance placed throughout Manitoba.  Vogiatzakis is quoted in the article, “Is the government trying to put funeral homes out of business?  We need to treat businesses fairly.  In my opinion, this is unacceptable and needs to change.”

Vogiatzakis also argues that the Canadian province of Manitoba has eased limits on the size of indoor gatherins in places such as casinos, restaurants, and churches, but that funeral homes are still limited to a maximum of 50 people indoors. . . which includes funeral home staff.  Vogiatzakis also contends that many funeral homes are built for large numbers of people and that is not taken into consideration and states, “They (funeral homes) have large buildings with meeting areas.  Now they are empty, but they still have to pay property taxes.”

Manitoba Chief Public Health Officer Dr. Brent Roussin held a press conference earlier this week where he said he will not be ordering any changes.  He is quoted with this comment, “Right now, given the trajectory of cases, we’re not looking at really loosening any of our restrictions in any area.”

Donna Olson, listed as the vice-president of the Manitoba Funeral Service Association is quoted in the article also, “Our trust in the decisions of the chief provincial public health officer, although difficult on our businesses, must be followed for the good of Manitoba.”

Preneed insurance company downgrade ––  On Monday of this week the A.M. Best Company issued a downgrade on the Long-Term Issuer Credit Ratings of parent company Columbian Financial Group (CFG) and those companies associated under its umbrella.  Here’s what the A.M. Best Company release said:

“AM Best has downgraded the Long-Term Issuer Credit Ratings (Long-Term ICR) to “bbb” from “bbb+” and affirmed the Financial Strength Rating (FSR) of B++ (Good) of Columbian Mutual Life Insurance Company (Binghamton, NY) and Columbian Life Insurance Company (Chicago, IL), collectively referred to as Columbian Financial Group (CFG). The outlook of the FSR has been revised to negative from stable while the outlook of the Long-Term ICR is negative.”

You can read the full press release from A.M. Best here.

A.M. Best goes on to say, ” 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.”

Finally, we find it interesting that A.M. Best also makes this statement, “The Long-Term ICR downgrade reflects the declining trend in CFG’s capitalization over the previous two years, with further unfavorable developments through the second quarter of 2020 due in part to the impact of the COVID-19 pandemic on the company’s financial results.”

To our knowledge here at Funeral Director Daily, that statement about COVID-19 is the first insurance company pandemic related financial impact that has been acknowledged in our profession.

Here is a link to the Columbian Financial Group website.

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One Comment

  1. Since insurance companies are rated based upon the credit worthiness of their assets and many assets have declined in value during this period, it is inevitable that many insurers are going to face declining ratings. The Asset to Liability ratio must be going down on the entire industry which means the Capital Surplus is declining. This is going to be an economic mark on insurers and banks, but not as much as preneed trusts. Preneed insurers also have a shorter time period to recover, since the average time period from contract written to contract maturing is about 7 years. This as opposed to traditional life insurers who have decades to recover.

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