New Crops Business Grows Net At CUNA Mutual
MADISON, Wis. – CUNA Mutual Group reported yesterday net income surged 58% for 2010 to $87 million, despite a struggling economy and flat to negative growth at most credit unions.
The $87 million net, up from $51 million one year earlier, was driven by a source that may surprise many credit unions: crop insurance. As part of a diversification effort by CUNA Mutual, the company completed its acquisition of Amarillo, Texas-based Producers Ag Insurance Group in 2009. Last year proved to be a good year for strong crop yields in most of the country.
Income from those areas helped compensate for what it called “challenges” in other product lines. Primarily known for its bond insurance coverage, CUNA Mutual’s loss ratio on that product was approximately 150% in 2010 ($1.50 in claims for every $1 in premiums). “We know it’s a tough time for credit unions and we are trying to keep our rates down,” said CEO Jeff Post, “despite all the fraud in the system.”
The gain in net income comes despite only a small increase in total operating revenue to $2.5 billion in 2010, up from $2.4 billion in 2009.
A second income driver for CUNA Mutual in 2010, according to Post, has been the run up in the market. “Our asset accumulation business has done very well,” Post told Credit Union Journal, adding that unlike 2009, the company had fewer asset write-downs.