American Share Insurance announced a 15 basis point special premium assessment on the credit unions that use the private firm to insure their deposits. The firm said it insures member deposits up to $250,000 at 150 state-chartered credit unions.
The firm announced the special premium will be assessed on all primary insured credit unions of record on Sept. 30, 2010, 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 ratings. 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 comprises 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 Dec. 31 and be billed in Jan. 2011, the insurer said.
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