Credit unions that insure their deposits with American Share Insurance will face a premium increase this fall, the private share insurer has announced.
The firm announced the 15 basis point Special Premium will be assessed of all primary insured credit unions of record on September 30, 2010, and based on the total shares reported as of June 30, 2010.
The firm also announced a change in its deposit requirement that could boost the amount some credit unions have to keep with the firm. Currently, ASI insured credit unions face a tiered deposit rate of between 1.0% to 1.3% based on their CAMEL rating. The firm is changing this to a flat 1.3% rate for all primary insured member credit unions.
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"Lower yields on our high-quality government bond portfolio and a hesitant economic recovery have strained our earnings, while weaknesses in a small number of member credit unions have required a more aggressive posture when funding our loss reserves," CEO Dennis Adams reported. "The move to increase the fund's equity ratio through the increased deposit rate will enhance equity sufficiency and satisfy regulatory requirements at the least cost to our members," he added.
"The Board of Directors has closely monitored ASI's earnings, reserves and equity throughout the year, and has arrived at this difficult decision only after long deliberation and consideration of input from the company's actuaries, member credit unions and ASI's Primary Insured Credit Union Advisory Council," Adams added. The ASI Advisory Council is comprised of 18 CEOs from primary insured credit unions in each of ASI's nine states of operations.
ASI said that if regulators agree, the firm's special insurance assessment will be billed on Sept. 30 of this year. The increased deposit, if required, will take effect on December 31 and be billed in January 2011, the insurer said.
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