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DUFF & PHELPS: CUMIS INSURANCE SOCIETY, INC. CLAIMS PAYING ABILITY REAFFIRMED AT 'AA'

 CHICAGO, July 23 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has reaffirmed the `AA' (Double-A) claims paying ability of the CUMIS Insurance Society, Inc. (CUMIS). This very high claims paying ability reflects the company's profitable results in a well defined market, conservative level of operating leverage, high quality investment portfolio, and history of favorable loss reserve development. Partially offsetting these positives is the company's heavy concentration in a narrow segment of the property and casualty market, and a recent upward trend in its expense ratio.
 CUMIS is wholly owned by CUNA Mutual Investment Corporation, who in turn is wholly owned by the CUNA Mutual Insurance Society (CUNA Mutual). CUNA Mutual was formed in 1935 by credit union pioneers and is currently the largest insurance organization credit unions and their members around the world. In 1960, CUMIS was chartered to serve the property and casualty needs of credit unions. CUMIS and CUNA Mutual have defined their markets as credit unions and members of credit unions. At year-end 1992, there were 13,050 credit unions in the United States and approximately 64 million credit union members.
 CUMIS' principal line of insurance is fidelity, which accounted for 51.2 percent of total net written premium in 1992. The product is designed for and sold exclusively to credit unions, where CUMIS' share of the market is 98.7 percent. At the end of 1992, CUMIS ranked as the third leading writer of fidelity insurance in the United States. Other major lines of insurance written by CUMIS and their distribution of 1992 net written premium are; Collateral Protection (15.5 percent), Commercial Multi-Peril (12.9 percent), Private Passenger Auto (8.4 percent), and Workers' Compensation (6.9 percent).
 The company has recorded strong financial results in the recent past with the combined ratio ranging from 100.6 to 103.6 percent over the past five years. Loss ratios have steadily improved over the period, declining from 72.2 percent in 1988 to 66.6 percent in 1992. The company has experienced an upward movement in its expense ratio over the same period, peaking in 1991 and declining slightly during 1992.
 CUMIS' operating leverage, as measured by the ratio of net premium written to policyholders' surplus, has improved from 2.86 to 1 at the end of 1987, to a 1.73 to 1 at year-end 1992. CUMIS has historically taken a conservative position in establishing loss reserves. Over the past five years, favorable development of prior accident years' loss reserves have ranged from 4.4 to 19.2 percent of policyholders' surplus.
 CUMIS has a high quality investment portfolio, with 89.1 percent of investments at yearend 1992 in bonds with an average quality of `AA.' Preferred and common equities combined made up 5.1 percent of the portfolio at the end of last year. The remainder of the portfolio is in cash and short-term investments. The company does not invest in commercial mortgages or real estate.
 -0- 7/23/93
 /CONTACT: Timothy A. Bienek of Duff & Phelps Credit Rating Co., 312-368-3192/


CO: CUMIS Insurance Society, Inc. ST: IN: INS SU: RTG

CK -- NY048 -- 5133 07/23/93 12:01 EDT
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Publication:PR Newswire
Date:Jul 23, 1993
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