State regulators with the Division of Financial Reulation said last week they have approved an application from American Share Insurance of Dublin, Ohio, to offer private deposit insurance to the state's 11 state- chartered credit unions. Six of those credit unions are already covered by CU Insurance Corp.
The action by state regulators here follows approvals by officials in Michigan and New Jersey last month to allow ASI to provide excess share insurance, coverage for accounts over $100,000, to credit unions in those states.
As part of the introduction of ASI into Maryland, tiny CU Insurance Corp. will close down its business over the next two years and distribute its excess funds to a newly created non-profitable foundation.
Joseph Rooney, assistant commissioner for financial institutions, told The Credit Union Journal, that a new law passed in May approving an alternative private insurer to CUIC will require the wind down of CUIC and the distribution of about $3 million to the CUIC Foundation, which will help fund credit union-related activities, after sufficent funds are distributed to the surviving CUIC credit unions to obtain insurance coverage elsewhere. CUIC currently provides coverage for just five of the Maryland's 11 charters, but one is in the process of converting to federal insurance.
The demise of CUIC will leave ASI as the sole surviving private deposit insurer for CUs from a group that once numbered more than two dozen.
