MADISON, Wis. -- The two-fold goal of CUNA Mutual Group's asset management program is pretty direct: grow assets and improve margin.
Coming off a strong 2006 that saw CUNA Mutual's investment management program net income at $30 million, and the managed account topping the $1 billion mark, asset management is on track to fit right in, said David Marks, president of MEMBERS Capital Advisors and chief investment officer of CUNA Mutual Group.
To bolster the program's entry, Marks hired two Wall Street experts to manage asset liability overall portfolio duration in the derivatives area, beef up investing in structured products across the derivative line and help create equity-related products on the liability side.
"Certainly, in the investment organization, we have a sense of urgency," Marks said. "Things continue to move in a positive rein. Excitement is very high."
Kurt Lin, managing director of quantitative strategies, came to CUNA Mutual a year ago from Citi Asset Management where he managed $9 billion in high grade assets. Prior to that, he managed $90 billion at Traveler's Insurance and ran the derivatives desk at Smith Barney. Marks said Lin "brings a skill set to CUNA Mutual that we sorely needed but never had." Lin said among other roles, he will be responsible for increasing the yield of CUNA Mutual's general account and overseeing the derivatives segment. Lin will also work with the international portfolio.
"Where credit unions are directly affected is through our insurance realm," Lin explained. "My role would be to hedge that exposure."
Stu Rossmiller was also hired a little over a year ago as director of research in the fixed income area at CUNA Mutual. His nearly 20-year career experience includes following telecom, media and technology as well as gaming and leisure companies. At CUNA Mutual, his role will be to "minimize risk and maximize value." That could mean at any given moment, he might be looking at a household name like AT&T or even a very small bank loan that just got a leveraged buyout. Companies from Fortune 100 to Dow Jones 30 rankings will receive Rossmiller's analysis. The former executive at Barclays and Merrill Lynch and one of the players involved in Time's buyout of Warner Brothers, Rossmiller said he can't help thinking like an investment banker.
"I'll think 'is this company going to go private,'" he said, adding that for some companies, it can be the "equivalent of having credit cards and taking them up to the max."
"That's what happens when you have a leveraged buyout--that's bad," Rossmiller said.
Both Lin and Rossmiller's roles will overlap in the derivative areas. Marks emphasized that CUNA Mutual is developing their expertise for the company's own general account. He is optimistic that long term, NCUA may allow some of these newer offerings on a wider scale for credit unions. Credit derivatives, for instance, will have more of a presence at CUNA Mutual. And, corporate credit unions need not look over their shoulders.
"We're not trying to compete with corporates, we're trying to manage their assets in a more professional way," Marks said. "This is very new for us and new for credit unions. We're trying to help them understand."