CUNA Mutual Group Shows A Profit For 4th Straight Year

March 25--CUNA Mutual Group posted a fourth straight year of increasing profits in 2012 -- raising net income by nearly 81 percent over 2011 -- despite weather-related losses in its auto and home insurance businesses and another dip in its crop insurance business.

In 2012, CUNA Mutual increased net income to $150 million, up from 2011's profit of $83 million, according to an annual financial report. Profits also were up in 2010 and 2009 -- though by smaller margins -- as part of CUNA Mutual's gradual recovery from recession-related losses of $149 million in 2008.

The company's annual report has become more complicated in recent years as the Madison-based financial services firm has broadened its original mission of insuring credit unions and their members through products such as life insurance, health insurance, fidelity bonds and property/casualty insurance. Since fall 2009, a diversification strategy has added new ventures including crop insurance for farmers and benefit plan management for employees of companies outside the credit union sector.

Last year, the strategy worked well, as gains in its more traditional businesses of lending, direct-to-consumer products such as life insurance and asset accumulation products like retirement/401K plans helped offset drought-related losses in the crop insurance business. The company also saw significant weather-related losses in its auto and home insurance businesses, but strong investment gains helped counter that, contributing heavily to the company's higher net income for 2012.

Policyholder dividends also rose in 2012, to $31 million, up $1 million from 2011, and premium revenue from life and health insurance increased to $1.3 billion from $1.2 billion. Claims on property/casualty insurance fell 2.6 percent to $711 million.

Meanwhile, operating expenses were up to $1.128 billion in 2012, up from $1.092 billion in 2011. And CUNA Mutual paid more in life/health insurance claims last year, or $868 million, compared with $803 million in 2011.

Premium revenue for property/casualty insurance also was slightly down -- from $905 million in 2011 to $899 million.

But total operating revenue at CUNA Mutual grew from $2.5 billion to $2.6 billion in 2012, and its total capital rose strongly from $2.1 billion to $2.5 billion, for a 17 percent increase.

Key factors in the revenue growth, the company said in the report, were:

--An overall improved lending environment.

--Company investment of $40 million in some of its core businesses -- spending money to make money, as it turned out, by adding personnel and new equipment in selected areas.

--Strong annuity sales.

Alastair Shore, executive vice president and chief financial officer at CUNA Mutual, also credited "prudent expense management" for the company's strong 2012 operating results. CUNA Mutual's total cash and investments grew to $11.1 billion in 2012, an increase of $1.2 billion from 2011's cash/investments, for a 12 percent increase.

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