A.M. Best Affirms Ratings of CUNA Mutual Financial Group, Inc.’s Life Subsidiaries

A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of "a" of CMFG Life Insurance Company (formerly CUNA Mutual Insurance Society) (CMFG Life). A.M. Best also has affirmed the debt rating of "bbb+" on the $85 million 8.50% 20-year surplus note issued by CMFG Life. Additionally, A.M. Best has affirmed the FSR of B++ (Good) and ICR of "bbb+" of MEMBERS Life Insurance Company (MLIC), a subsidiary of CMFG Life. Both companies are subsidiaries of CUNA Mutual Financial Group, Inc. and are domiciled in Waverly, IA. The outlook for all ratings is stable.

The ratings of CMFG Life acknowledge its continued position as the leading provider of life/health insurance products to members and employees of credit unions, its more than adequate risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio (BCAR), consistently positive net operating gains and improved balance sheet on a consolidated basis. CMFG Life continues to maintain a well diversified investment portfolio and has taken initiatives to improve the overall quality of its balance sheet, such as decreasing its equity portion of the investment portfolio over the past two years to reduce market volatility.

Partially offsetting these positive ratings factors are CMFG Life's moderate exposure to structured securities, which account for most of its unrealized investment losses, volatility in statutory earnings performance in some of its core and ancillary lines of business, primarily driven by economic conditions and declining revenue related to its core credit insurance products.

The ratings for MLIC acknowledge its strong risk-adjusted capitalization and status as a wholly owned subsidiary of MFG Life. Offsetting these strengths is MLIC's greatly reduced operating profile along with continued net operating losses, which are related to the amortization of the interest maintenance reserve.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Life/Health Insurers"; "Assessing Country Risk"; "A.M. Best's Ratings & the Treatment of Debt"; and "Rating Members of Insurance Groups." Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.