CUNA Mutual and CUMIS Draw Fitch Downgrade
The rating outlook was also downgraded from stable to negative.
The downgrades were the result of Fitch's concern over CUNA Mutual's above-average exposure to residential mortgage-backed securities and asset-backed securities. Both areas have experienced significant credit deterioration in 2008 and year-to-date in 2009.
CUNA Mutual reported a $148.9 million net loss in 2008 compared to $183.6 million of net income in 2007, which reflects deterioration in its investment portfolio along with lower earnings in its asset accumulation and commercial products. Fitch announced that is expects investment market conditions to continue to adversely impact CUNA Mutual's earnings during 2009.
"CUNA Mutual is not immune to market events, but even in the current economic environment we remain financially strong," said Jeff Holley, CUNA Mutual's chief financial officer. "Our ability to pay claims has not been impeded and we remain well capitalized-even in these difficult economic times."
The A rating is the sixth highest rating of 19 categories of ratings Fitch issues.
Fitch also placed CMG MI, which is 50% owned by CUNA Mutual and 50% owned by PMI Mortgage Insurance Company, on a rating watch negative.