MADISON, Wis. - CUNA Mutual Group has completed a study on cutting expenses to increase its competitiveness.
Details of the expense management team's report are unavailable, and no decisions have yet been made on its recommendations, said CUNA Mutual spokesman Dell Dockter.
But big changes are expected, as new CUNA Mutual president Mike Kitchen says he is committed to slashing expenses and increasing efficiency.
Thirty cents of every dollar the Madison, Wis., mutual insurance company takes in goes to paying expenses. Mr. Kitchen says he wants to bring this down to 20 cents within five years.
A recent issue of CUNA Mutual's internal newsletter contained anecdotes showing how high expenses are crimping the company.
One anecdote, attributed John Tessier, account vice president in the western marketing division, relates how high expenses cause Hughes Aircraft Federal Credit Union to choose a competitor for annuities sales.
"Hughes sells $32 million of fixed annuities with Jackson National," the July 3 newsletter read. "Jackson National provides better commissions and higher yields than we do. My Hughes contact tells me, 'If you can match Jackson - we don't ask you to beat them, just match them - we will sell your annuities.
"One of the big reasons we can't match Jackson is because our expenses are higher than theirs."
The article further details how $120 million in expenses are charged to the company's Credit Division's products. About 80% of that goes toward indirect expenses for marketing, systems, legal services, public relations, and other areas; just over $20 million of expenses are attributable to such activities as collecting premiums and paying claims, the article said.
"If we could reduce some of this indirect expense, we could return some of the savings to our policyowners," the newsletter said.