AM Best Information Services

JANUARY 27, 2016 02:33 PM (EST)

A.M. Best Affirms Ratings of Subsidiaries of CUNA Mutual Holding Company

 Keith Behrmann
Financial Analyst – L/H
(908) 439-2200, ext. 5733

Adrienne Tortoriello
Senior Financial Analyst – P/C
(908) 439-2200, ext. 5088

Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


OLDWICK - JANUARY 27, 2016 02:33 PM (EST)
A.M. Best has affirmed the financial strength ratings of A (Excellent) and the issuer credit ratings (ICR) of “a” of CMFG Life Insurance Company (CMFG Life), the lead life and annuity insurance writer, and MEMBERS Life Insurance Company (Members Life), a life/annuity subsidiary, as well as CUMIS Insurance Society, Inc. (CUMIS), the lead property/casualty writer, and CUMIS Specialty Insurance Company, Inc. (CUMIS Specialty), a property/casualty subsidiary. Concurrently, A.M. Best has affirmed the ICR of “bbb” of CUNA Mutual Financial Group, Inc., an intermediate holding company within the group. Additionally, A.M. Best has affirmed the issue rating of “bbb+” on the $85 million, 8.5% surplus notes issued by CMFG Life due 2030. The outlook for all ratings is stable. The ultimate parent for all companies is CUNA Mutual Holding Company. All operating companies are domiciled in Waverly, IA, but are headquartered in Madison, WI.

The ratings of CMFG Life reflect its position as the leading provider of insurance and financial services products in the credit union marketplace. Additionally, growth in its TruStage brand products has added diversification to sales and earnings and has offset the premium losses from recent non-life business divestitures. Capitalization has been steadily increasing, benefiting from favorable consolidated earnings and management initiatives to reduce earnings volatility, improve capital efficiency and better align the management of business segments. Partially offsetting these positive rating factors are the increased concentration of the business profile due to ongoing divestitures of non-core business units, volatility in statutory earnings performance by line of business and an elevated risk tolerance within the investment portfolio relative to the U.S. life insurance industry.

CMFG Life’s ratings are extended to Members Life due to its strategic importance to the group, as a well as its operational integration as CMFG Life assumes 100% of Members Life’s liabilities through a reinsurance agreement.

Positive rating action for CMFG Life and Members Life could occur following increased penetration within the credit union marketplace, along with improving trends in premiums, earnings and operating returns. Negative rating action could occur if CMFG Life’s competitive market position in its niche credit union market weakens, unfavorable operating trends emerge due to declining sales, spread compression or mortality experience, or there is a material decline in capitalization due to net losses or investment impairments.

The ratings for CUMIS and CUMIS Specialty reflect their favorable level of risk-adjusted capitalization, overall operating profitability and leadership position within the credit union segment. These factors are partially offset by the execution risk associated with growing its personal lines business and pressure from general macroeconomic trends and varying market conditions in several products lines.

Positive rating action for CUMIS and CUMIS Specialty is unlikely in the near term. Factors that could result in negative rating action include unfavorable underwriting results, operating earnings below expectations or a supportive level of risk-adjusted capitalization is not maintained.

This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page.

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