Annuities Business FAQ

The following information is provided as a general reference to assist you in answering the most common questions regarding coronavirus (COVID-19) and specific products. It is not intended to be all-inclusive, but it is designed to provide general information on the most frequently asked questions.

Risk Background

The coronavirus (COVID-19) has quickly spread globally. Increased headlines and social media posts about growing COVID-19 infections have many credit unions concerned about their ability to continue critical operations while ensuring employee/member safety. Credit union leadership should remain committed to emergency preparedness and business continuity planning. A pandemic crisis can create confusion and potential panic among employees and even leadership.

For the latest information about symptoms, prevention, treatment and other facts, visit the Centers for Disease Control and Prevention (CDC)(opens in a new window) website, the World Health Organization (WHO)(opens in a new window) website, local, state, and federal governments.

Last updated: Friday, March 20, 2020

Can you share CUNA Mutual Group’s financial security position related to COVID-19 and commitment to the Annuities business?

  • We are closely monitoring all developments concerning the coronavirus (COVID-19) pandemic.
  • We have robust business resiliency plans for a variety of situations including a pandemic, which are routinely practiced and updated.
  • CUNA Mutual Group is financially strong with solid financial strength ratings of ‘A’ from AM Best, ‘A2’ from Moody’s and “A+’ from S&P. Ratings from S&P were upgraded in 2019 from ‘A’ to ‘A+’.
  • CUNA Mutual Group’s reliable earnings stream has reinforced its strong capital position.

Capitalization and Liquidity:

  • CUNA Mutual Group is well capitalized. At December 31, 2019, the Company’s primary operating insurance entities, CMFG Life Insurance Company and CUMIS, had NAIC RBC ratios of 488% and 825%, respectively.
  • NAIC risk-based capital measures reflect significant capital redundancies.
  • Robust liquidity planning ensures that we have adequate resources to address obligations under normal circumstances, as well as under periods of stress.
  • Liquidity management is facilitated through minimum cash balances and liquidity ratios, borrowing capacity from a syndicated credit agreement and membership in the Federal Home Loan Bank of Des Moines system.

Current Economic Environment (low interest rates, volatility, etc.):

  • The Company maintains financial modeling for various shocks, including pandemic and interest rate shocks.
  • ORSA, cash flow testing, ALM stress testing, liquidity stress testing
  • The balance sheet is positioned to withstand these shocks.
  • The Company maintains a disciplined asset-liability management program designed to protect profitability over varying interest rate environments.
  • The Company’s ALM position is monitored with projections of asset and liability cash flows over a wide range of interest rate scenarios reflecting dynamic customer behavior.
  • The investment portfolio is actively managed and well diversified.
  • High-quality, fixed income-centric portfolio reflects nature of company liabilities and supports financial strength.
  • Overall portfolio quality is A rated.
  • ~92% Public and Private Fixed Income, ~7% Alternative Investments (Private Equity), <1% Public Equity.
  • 97% of fixed income securities are Investment Grade, 3% are Below Investment Grade.

Product:

  • Annuities are a core part of our company strategy focusing on helping people achieve financial security.
  • We will continue to price our annuities to current market conditions.
  • Current conditions will have a dampening effect on caps, rates and benefits across the entire annuity industry.
  • Despite market conditions, we don’t currently see anything that will impact our ability to continue to keep caps constant during the CDSC period for Zone and Horizon.
  • It is difficult to project how this environment will impact competitors, but it certainly could lead to changes in product and channel strategies. Several competitors have already closed some of their annuity offerings to new sales.

CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates.
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