MADISON, Wis. – CUNA Mutual Group, which reported a $148.9 million loss for 2008 earlier this month, had its issuer credit rating downgraded a notch yesterday by insurance rating agency A.M. Best Co.
Best affirmed the financial strength rating of A for CUNA Mutual, as well as its wholly owned CUMIS Insurance Society Group subsidiary.
In addition, Best said the outlook for these ratings has bene revised downward to negative, from stable.
"These ratings," said Best, "reflect CUNA Mutual’s sizeable decline in its consolidated GAAP and moderate decline in statutory capitalization, its continuing exposure to potential investment losses from structured securities and other higher risk assets and the challenges faced by CUNA Mutual due to continued weakness in the U.S. economy."
CUNA Mutual’s combined statutory Total Adjusted Capital declined 11% in 2008 to $1.1 billion.
The negative outlook reflects CUNA Mutual’s vulnerability to both operating and investment risks in 2009. Best said while the credit union insurer’s unrealized investment losses relative to policyholders’ funds have improved in recent months, "they still represent a substantial level of risk to the group’s balance sheet."
Jim Buchheim, chief spokesman for CUNA Mutual, said yesterday because the credit union insurer does not issue public or private debt and has limited borrowing, the Best rating move should have little impact.
"Since late in 2007, CUNA Mutual has been taking steps to maintain its financial strength in the midst of this economic crisis. We're pleased to continue to earn strong, independent insurance ratings in these difficult times," Buchheim, told The Credit Union Journal of Best’s second highest rating.
The move by Best comes a week after Fitch Ratings downgraded the Insurer Financial Strength ratings for both CUNA Mutual and CUMIS to ‘A’ from ‘AA’.
Insurer Financial Strength and its wholly owned property casualty subsidiary, CUMIS Insurance Society, to ‘A’ from ‘AA-‘
