There is an explanation for Fitch Ratings' recent negative outlook rating of two of CUNA Mutual Group Inc.'s subsidiaries and then its withdrawal of that rating, the Madison, Wis.-based company said.
Fitch said it has affirmed the 'A' Insurer Financial Strength ratings of CUNA Mutual Insurance Society and its wholly owned property casualty subsidiary CUMIS Insurance Society Inc. Fitch said the rating outlook is negative, according to a Dec. 4 Fitch press release. At the same time, it withdrew the rating. The ratings of 50% owned affiliate, CMG Mortgage Insurance Co., are not affected by these actions.
"At the same time Fitch affirmed our rating, they also withdrew our rating. Earlier this year, we informed Fitch we would utilize a single ratings agency -A.M. Best," said CUNA Mutual Vice President of Public Relations and Communications Jim Buchheim."With our relationship with Fitch ending, Fitch's standard process is to issue a final rating and then withdraw that rating."
CUNA Mutual's investment losses are driven primarily by exposure to structured securities, mainly residential mortgage backed and asset backed bonds, which remain under pressure due to the economy, according to Fitch.
Operating earnings fell in 2009 with a $52 million operating gain through Sept. 30, compared with an operating gain of $106.6 million in the prior-year period. Although Fitch believed property casualty earnings would remain under pressure through the first half of 2010, it also said the company has taken the steps necessary to decrease future losses.
