WASHINGTON-CUNA Mutual Group is projecting it will report 2009 net income of approximately $50 million. That's a return to the black for a company that reported a loss in 2008.
While final, audited figures will not be available until Spring, CUNA Mutual President Jeff Post told Credit Union Journal the huge spreads in the bond market of 2008 narrowed considerably in 2009 to all-time lows, meaning the company did not have to report the unrealized losses it showed one year earlier and also boosting performance on its own holdings. Losses on mortgage-backed securities held by the company have been relatively negligible, Post said, adding that while many focus on the income statement, equally important is that assets are up $1.2 billion year over year.
CUNA Mutual has largely escaped losses and exposure resulting from the corporate CU meltdown. The company did not insure U.S. Central, and it provided coverage to WesCorp only against fraudulant activity. While there has been litigation in the WesCorp failure, the credit unions that were originally plaintiffs in that action have been replaced by NCUA. Post said 17 of the 21 corporates CUNA Mutual had been providing bond coverage to have renewed with the company; the other four have sought coverage elsewhere.
CUNA Mutual's operating gain for 2009 is expected to be approximately $80 million after taxes, according to Post. That sale of its Canadian subsidiary also boosted its net. The company also continues to write down some investments, and to record other unrealized losses.
Post, who built a significant investments operation within CUNA Mutual after taking over as CEO, said CUNA Mutual currently holds "zero equities" and that it remains "very concerned" about the market.
