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TORONTO – Everything starts and ends with excellence for CUNA Mutual Group President/CEO Mike Kitchen. “If you can’t do it with excellence, then don’t do it. There’s no point in trying to be mediocre. It’s pretty hard to motivate staff to be mediocre,” said Kitchen during a Credit Union Times interview in Toronto, the site of CUNA Mutual’s recent Discovery Conference. CUNA Mutual Group looks a lot different than it did just five years ago – a big reason for that is the business moves of Kitchen who took over the top spot in 1995. Prior to that, Kitchen led CUNA Mutual’s CUMIS Group of Canada for three years. Kitchen’s moves prove he isn’t just talking when he speaks of delivering excellent products and services. Kitchen has even pulled CUNA Mutual out of the manufacturing of some of its long-standing products because those products could be delivered better or more cost-effectively by partnering with other firms. He did this with Liberty Mutual for home and auto insurance and with Humana for group health. “You have to decide what you can do really, really well and the things you can’t do really well, and figure out where your skills are,” said Kitchen. Known best for being the dominating provider of the fidelity bond, today’s new look CUNA Mutual Group is much more diverse, billing itself as the leading financial services provider for credit unions. “We want to do a lot of things to help credit unions. Our struggle is to help people understand all that we can do to help them,” said Kitchen. Kitchen admitted that probably not even his own staff is aware of all that CUNA Mutual offers. It’s a long list of products, ranging from insurance and retirement products for CUs, to online lending and mutual fund products for credit union members. With its end-user offerings, most delivered through its MEMBERS Financial Network, some credit unions may be fearful that CUNA Mutual will start marketing directly to their members, said Kitchen. The answer to that question is a simple and resounding “no,” stressed Kitchen. CUNA Mutual does want to touch the credit union member; there’s no question about that, said Kitchen, however it wants to do so through credit unions in a co-branding environment. “Our partnership relationship (with credit unions) is pretty intense, very broad in nature. People can get a bit nervous about the relationship, but we’re probably the only people who definitely won’t take advantage of credit unions. We have no market without credit unions. I’m not trying to build our brand, we want to co-brand and jointly have a brand that overtime will be recognized broadly in the population,” said Kitchen. CUNA Mutual has re-branded all of its end-user products with MEMBERS some place in the name. “The idea behind MEMBERS Financial Network is the co-branding concept. Credit unions can attach their name and create a brand identification. If we keep co-branding, people see more and more of the MEMBERS Financial name.” Kitchen said CUNA Mutual has products and services that today’s financial-savvy members want and demand from their CU – mutual funds, online brokerage services, insurance products and other core personal financial services. These offerings are a key part of one of Kitchen’s most important current goals – helping CUs become the primary financial institutions for members. New ground This $9 billion company with 5,000 employees has the financial and personnel girth to do a lot of things for the industry, said Kitchen, and at times it may look like it’s aggressively getting into other’s business. Case in point. Recently CUNA Mutual began offering an investment product for corporate CUs known as CUNA Mutual Group Notes. Kitchen said CUNA Mutual is doing so to try and help corporates retain some of the $50 billion or so being invested outside the network in agencies, corporate debt and other investments. “We’ve had a lot of credit unions asking us to help them invest their funds. We’ve said that’s not our role. But a lot of money is going outside the corporate network. We have expertise in this area and by using that expertise if we can add a better return to the credit union system, we’re helping corporates get a better marketshare,” said Kitchen. The idea is that CUNA Mutual will provide investments that are more attractive than agencies, corporate debt and other investments corporates typically go outside the network to purchase. If corporates can increase the yield in their portfolios, they can offer better yield to their natural person CUs, said Kitchen. Kitchen said getting into this new line of business wasn’t too difficult as the company already had the investment expertise through its investment subsidiary – MEMBERS Capital Advisors (formerly CIMCO). MEMBERS Capital Advisors is now managing about $9 billion in assets: $5 billion in insurance company accounts, and $4 billion in mutual fund and variable annuity accounts. The MEMBERS Capital Appreciation and MEMBERS Balanced funds were recognized by Mutual Funds magazine as “Best In Class” for their respective investment objectives at the close of 2000. At press time, seven corporates were signed up for CUNA Mutual Group Notes with others on the way, but some corporates said they look for U.S. Central for these products, not CUNA Mutual. “We thought we could be helpful to the corporate network. A number of them think it’s a very good product,” said Kitchen. “The point was that there’s significant money going outside of the corporate system. We want to help them keep some of that within the system,” he said. Thinking global CUNA Mutual has become a global operation. It serves credit unions in Australia, Canada, Great Britain, Korea, Puerto Rico, Thailand and the Caribbean region through its subsidiary companies and other relationships. The company is also looking to enter what Kitchen described as one of the biggest untapped markets in the world – China. Kitchen and other CUNA Mutual execs recently visited China to talk to officials about how CMG’s services could help China with consumer lending and insurance. Kitchen thinks China is ready to explode as a global economic powerhouse. “They’re going to be a significant player. There are a lot of changes happening at the political level. These rural cooperatives have been operating all throughout China during the communist regime. They’re now regulated by the People’s Bank of China,” said Kitchen. In his opinion, the country seems to be attracted to the United States culture and way of life and is moving more in that direction every day. “Over the last few years we’ve been having discussions about getting together. Recently they’ve said they’d like to get more into consumer lending, and one of the things they’re looking at is if we could help them do it and tie in our insurance products. We’ve pretty much agreed that we’d spend a few months working jointly together to see if there’s some practical way to help them and they could help us,” said Kitchen. CUNA Mutual has had a representative office in China for about five years. In order to get licensed for financial services, an organization has to have an office in China for three years before applying. Kitchen said it’s a tricky country to deal with. China’s cooperatives are tightly integrated with the government and the People’s Bank of China and the China Agricultural Bank. “The cooperatives want to do things with us. The reason I went over there was to show senior-level interest. As the country evolves, consumer lending will become a big, big deal,” said Kitchen. With a population of 1.275 billion and roughly 40,000 credit cooperatives, the business potential in China is obviously huge for CUNA Mutual. China’s credit cooperatives were started in the 1950′s, mostly rural cooperatives for farming villages. The bigger market may be the growing urban cooperatives, which tend to be larger than the rural cooperatives. Kitchen said the government would likely be involved in any deal with CUNA Mutual. CUNA Mutual is a $9 billion company, but Kitchen is most proud of the revenue side of the balance sheet. Revenue has been rising steadily since Kitchen took over. In 1997 the company had about $2.5 billion in revenue, last year it was right at $3.0 billion. “That’s the meaningful statistic,” said Kitchen. CUNA Mutual is working hard to inform credit unions about all that it now does, and clear up any confusion about its branding and offerings. The company also has to deal with the often incorrect usage of its name, with people using CUNA and CUNA Mutual interchangeably. But make no mistake about it, said Kitchen, there won’t be any trade association business emerging from CUNA Mutual. “We’re not a trade association. We support the trade association. We don’t have the skill or desire to be a trade association. It’s a challenge to run what we already have, let alone get into a whole new field,” said Kitchen. Kitchen says he’s just one of many leaders within CUNA Mutual. “We’re not a top-down organization. We believe in the power of one, the importance of the individual, combining that with teamwork. We’re fortunate to have so much talent in the organization.” [email protected]

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