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CUNA Mutual looks beyond the recession
MADISON, Wis. (6/15/09)--CUNA Mutual Group said it is maintaining strong operational and capital positions, weathering the recession well, and looking within and beyond credit unions for future diversification opportunities engendered by the current economic downturn. CUNA Mutual has been weathering the recession from an operational standpoint and a capital standpoint, Jim Buchheim, vice president of corporate communications, told News Now. “Operationally, last year was a good year,” Buchheim said. “In 2009, we’re expecting less revenue and lower profit levels, but still a pretty solid year. We feel we’re on pace to meet our 2009 financial goals from an operational perspective.” From a capital standpoint, the company entered the recession with a good capital position and now is taking steps to maintain it, Buchheim said. Capital involves two measures: statutory capital and GAAP (generally accepted accounting principles) capital. CUNA Mutual’s statutory capital was $980 million at the end of 2008--down from $1.035 billion at the end of 2007. The drop is primarily due to losses in the mortgage securities area, Buchheim said. “We feel that by the end of 2009 we can maintain our statutory capital level,” he added. “We’re also pleased to have A.M. Best affirm our ‘A’ level rating, and Fitch Ratings affirmed our ‘A’ (strong) rating.” The company’s GAAP capital experienced more significant declines because of unrealized losses, Buchheim said. “We still have $1 billion in cash to cover operations, and we can hold on to our bonds until maturity,” he explained. “So we feel good about 2009 because our operational results and capital give us a strong financial position.” Although CUNA Mutual has felt the pain of the recession from some losses and needed cost-cutting measures including layoffs, the company sees opportunities created by the recession and wants to be prepared to take advantage of those opportunities, Buchheim said. The company sees avenues to diversify both outside the credit union space and within the credit union space, he added. Within the credit union space, CUNA Mutual is looking to add to its suite of products in areas such as “Member Connect”--a marketing engine in which the company partners with credit unions to sell insurance products to credit union members. The program generates revenues for credit unions. Also, CUNA Mutual has maintained a strong level of financial support to state credit union leagues and the Credit Union National Association in excess of $30 million per year, Buchheim said. “No other competitor provides that level of support to the credit union space as CUNA Mutual does,” he added. “It’s not even close.” Outside the credit union arena, CUNA Mutual hopes to expand in these areas:
* Crop insurance--The company launched this product a few years ago and is continuing to evaluate it; * 401(k)s--The company aims to move beyond servicing credit unions with this product and provide it for small businesses; and * Debt protection--The company successfully provided this product to credit unions, and now is looking beyond the credit union industry. CUNA Mutual began a pilot about a year ago with the farm credit business and is evaluating investing more in this area in the future.
“We remain a financially strong company committed to credit unions and credit union members. We are cautiously optimistic about seeing the end of the recession in 2009. We see opportunities for growth and expansion in reaching our goal to provide more value to credit unions and our credit union policyholders,” Buchheim concluded.
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