Recently CU Times reported that CUNA Mutual/CUMIS would be adapting its corporate bond program based on the impact the economy has had on CUNA Mutual/CUMIS bottom line performance. CUNA MUTUAL Article in CU Times
The article quotes Media Relations Senior Manager Rick Uhlmann as saying:
“Because financial condition has an impact on Bond and SIP losses, we have an obligation as a mutual company committed to credit unions to take certain actions and maintain our financial strength for all of our policy owners.”
But what exactly does that mean if you are insured by CUNA Mutual/CUMIS? It could mean that the terms and conditions within the policy will change or renewal premiums could be much higher. But it could also mean that Credit Unions could be declined renewal coverage by CUNA Mutual/CUMIS.
I believe that CUNA Mutual/CUMIS will incorporate a plan to do all three. With the recent downgrades and negative outlook ratings by AM Best and Fitch This is probably a reaction by CUNA Mutual/CUMIS to strengthen a weakened financial position. Furthermore, should CUNA Mutual/CUMIS, continue to decline, many Credit Unions may be in breach of contract as many contracts require that insurance be placed with "A" rated insurance carriers. You'll note that recently the Federal Home Loan Bank of Boston decided to stop buying mortgages that have their primary insurance with CUNA Mutual Group Mortgage Insurance as a result of the Standard and Poor's July 29th downgrade from A to BBB+.
Credit Union's that purchase insurance directly from CUNA MUTUAL/CUMIS should start looking for alternatives today, as the marketplace is tough on financial institutions, and many brokers are unfamiliar with the specific needs of Credit Unions.
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