LAS VEGAS – The chief executive at American Share Insurance sought to calm growing concerns about his private deposit insurer amid the growing financial problems at the state’s credit unions, especially last month’s failure of Cumorah CU, the privately insured credit union for the Mormon Church.
"We’re working hard with these credit unions," said Dennis Adams, of the growing problems in Nevada, where his company not only insures deposits at Cumorah, but at the state’s largest and third-largest credit unions, Silver State Schools CU and Clark County CU.
Adams assured that ASI, which is regulated by the state insurance commission in Ohio and is monitored by credit union regulators in more than two dozen states, has adequate reserves to cover potential losses. He said ASI’s reserve ratio is 1.42 (dollars reserved per $1,000 of insured deposits), higher than the 1.30 NCUA just reached for the National CU Share Insurance Fund after a $1.1 billion special assessment on federally insured credit unions. In addition, he noted his company’s ability to add reserves through a special assessment, if necessary.
The concerns about private insurance are being aired among credit unions amid growing problems in Nevada, where ASI’s main exposure lies. ASI-insured credit unions in California, Ohio and other states have also reported losses in recent days, but on a much smaller scale.
Las Vegas-based Cumorah is one of three credit unions once over $100 million each to have failed in recent weeks, along with Clearstar Financial CU and Community One FCU. In recent days, the state’s 10 largest credit unions have all reported red ink.
Credit union executives expressed confidence in ASI, the last survivor of what was once a national network of more than two dozen private insurers for credit unions.
"We’re not worried about ASI," said Wayne Tew, president of Clark County CU, which reported a $20.3 million loss for the first three quarters. He said he continues to favor the private deposit insurer because of its ability to work closely with its smaller credit union base, and also because of the fact privately insured credit unions will not bear the cost of NCUSIF’s corporate credit union bailout, which would have cost the $580 million credit union at least $850,000 this year, and similar amounts in future years.
Private deposit insurance was a popular option for state chartered credit unions until the failure of the Rhode Island Share and Indemnity Corp. in 1991, which caused a state banking panic and prompted the wind-up of almost all the other private insurers. Now, ASI is the only private insurer left and it provides primary coverage for state charters in more than a dozen states and excess coverage in as many as 30 states.
