CUNA Mutual Group reported a net income loss of $149 million for 2008 in unaudited financials released yesterday within its annual report.

The company attributed the setback to investment losses. On Dec. 31 2008, CUNA Mutual had $1.3 billion invested in cash, Treasuries and agency-backed securities, representing 18% of its portfolio. The overall quality of the portfolio remains at a A+ rating level, CUNA Mutual said. The largest junks of securities held are U.S. corporate debt and residential mortgage-backed securities.

Acknowledging that investment looses were the largest contributor to the net loss, CUNA Mutual said, “if the economy continues to worsen, further losses are likely.”

The $149 million 2008 loss comes after a $184 million gain the insurer posted in 2007 and a $186 million gain in 2006. Total assets shrunk by 13% over the 2007-2008 period, from $15.2 billion to $13.2 billion.

“CUNA Mutual, like many insurance companies, has experienced a decline in its GAAP surplus in 2008 due to the credit crisis,” the company said in a statement. “The decline includes unrealized losses, many of which the company believes will ultimately return a higher value than the amount at which they are currently reported.” The company’s surplus declined to $1.2 billion in 2008 from $1.8 billion in 2007.

“Early in 2008, CUNA Mutual adopted revised investment allocation and policy guidelines that systematically reduced our invest risk. The general  account portfolio is well-diversified with below average equity and financial services exposure,” CUNA Mutual said. “In this uncertain time, the company has placed an emphasis on quality and liquidity.”

Although offset by investment losses, the company recorded revenue growth of almost 7% last year and an operating gain of more than $150 million. Total revenues for last year were $2.89 billion vs. $2.81 billion in 2007.