A first: ASI to assess a premium

DUBLIN, Ohio (12/30/09)--For the first time, private share insurer American Share Insurance Corp. will charge its client credit unions a special premium assessment of 15 basis points, citing some losses at a few member credit unions.

"ASI has never before had to charge a premium or special assessment of this nature, but this past year has been difficult for all financial services providers, including ASI and its member credit unions," said ASI CEO Dennis Adams.

The premium affects all credit unions that have primary share insurance with ASI. ASI primary insurance covers each member's account up to $250,000. The premium is deemed necessary because of losses developing, or incurred, in a small number of primary insured member credit unions, ASI said in a statement.

"We regret assessing such a charge at this time, but additions to our reserve for losses late in the year have forced us to assess the premium to restore the ASI guarantee fund's equity ratio to above our minimum level of 1.30%," Adams said.

"Record low interest rates and significant guaranty loss provision expense this year have adversely affected ASI's current earnings, causing our year-end 2009 equity ratio to fall below 1.30% for the first time in over 20 years," he added.

ASI serves roughly 157 credit unions in Ohio, Indiana, Illinois, Idaho, Nevada, California, Texas, Alabama and Maryland. ASI is headquartered in Dublin, Ohio.

The National Credit Union Administration this year approved a premium assessment of 0.15% for insured shares on federally insured credit unions to boost the National Credit Union Share Insurance Fund.

The Federal Deposit Insurance Corp. also is requiring its institutions to prepay their premium assessments to boost the Deposit Insurance Fund.

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