A.M. Best Downgrades Issuer Credit Ratings of CUNA Mutual Insurance Society and Its Subsidiaries; Revises Outlook to Negative

OLDWICK, N.J.--(Business Wire)--
A.M. Best Co. has downgraded the issuer credit rating (ICR) to "a" from "a+" and
affirmed the financial strength rating (FSR) of A (Excellent) of CUNA Mutual
Insurance Society (CUNA Mutual) (Madison, WI), the lead parent organization
within the CUNA Mutual Group. Concurrently, A.M. Best has downgraded the ICRs to
"a" from "a+" and affirmed the FSR of A (Excellent) of CUMIS Insurance Society
Group (CUMIS)(Madison, WI) and its members, which are wholly owned
property/casualty subsidiaries of CUNA Mutual. The outlook for these ratings has
been revised to negative from stable. (See below for a detailed listing of the
companies.)

These rating actions reflect CUNA Mutual`s sizeable decline in its consolidated
GAAP and moderate decline in statutory capitalization, its continuing exposure
to potential investment losses from structured securities and other higher risk
assets and the challenges faced by CUNA Mutual due to continued weakness in the
U.S. economy.

The negative outlook on the ratings considers CUNA Mutual`s vulnerability to
both operating and investment risks during 2009, which may further negatively
impact its overall financial flexibility and risk-adjusted capitalization. A.M.
Best notes that while CUNA Mutual`s unrealized investment losses relative to its
consolidated policyholders` funds have improved somewhat in recent months, they
still represent a substantial level of risk to the group`s balance sheet.
Despite CUNA Mutual`s systematic de-risking process across multiple asset
classes, its exposure to securities in non-agency mortgage-backed, asset-backed,
commercial mortgage-backed loans, alternative asset, and privately issued
corporate bonds, remains high and could pose additional financial risks going
forward.

Other areas of concern include the level of inconsistency in statutory by-line
earnings and increasing levels of interest-sensitive annuity reserves as a
percentage of total reserves. The annuity segment will be challenged due to
potential spread compression in changing interest rate markets, while
reinvestment opportunities in the credit markets remain uncertain.

Partially offsetting the above factors are CUNA Mutual`s consolidated positive
statutory and GAAP net operating results, adequate risk-adjusted capitalization
as measured by Best`s Capital Adequacy Ratio and its diverse business profile,
which is supported by several lines of business and distribution channels. The
ratings also acknowledge CUNA Mutual`s long-established position as a leader in
providing financial solutions through its life, health and retirement products
to members and employees of credit unions. Due to the ongoing implementation of
three years of transformation initiatives, CUNA Mutual has improved its overall
operating efficiency in its core target market of credit unions.

The rating actions on CUMIS reflect the aforementioned concerns with its parent,
as well as the weakening of CUMIS` risk-adjusted capital due to a moderate
decline in statutory surplus driven by a significant increase in unrealized
capital losses, other surplus charges in 2008 and continued growth in premium
volumes through expansion initiatives. CUMIS` ratings also recognize
underwriting volatility over the last five years, which resulted in variability
in operating results-although remaining positive-and the execution risk
associated with a number of CUMIS` diversification efforts.

Positive rating factors include CUMIS` sound risk-adjusted capital despite its
weakening in recent years, conservative balance sheet and positive operating
profitability. Favorable prior year loss reserve development over the years
further corroborates the quality of CUMIS` balance sheet. The ratings also
acknowledge the prominent role that CUNA Mutual and its subsidiaries play in
supporting credit unions, their political interests and their ability to compete
with other financial services organizations.

The outlook for CUMIS` ratings reflect the uncertainties surrounding general
macroeconomic conditions and continued volatility in the capital markets that
could result in further realized and unrealized capital losses, which would
negatively impact operating earnings and risk-adjusted capital.

In addition, A.M. Best has downgraded the ICR to "bbb+" from "a-" and the FSR to
B++ (Good) from A- (Excellent) of MEMBERS Life Insurance Company (MEMBERS Life)
(Iowa). The outlook for both ratings is stable.

These rating actions reflect the significant reduction in the company`s
statutory capital and large operating loss recorded in 2008.

The ICRs have been downgraded to "a" from "a+" and the FSR of A (Excellent) has
been affirmed for CUMIS Insurance Society Group and its following members:

* CUMIS Insurance Society, Inc.
* CUMIS Specialty Insurance Company Inc.

For Best`s Ratings, an overview of the rating process and rating methodologies,
please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any
additional methodologies and factors, which may have been considered, can be
found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating
organization dedicated to serving the financial and health care service
industries, including insurance companies, banks, hospitals and health care
system providers. For more information, visit www.ambest.com.

A.M. Best Co.
Analysts:
Robert Stewart-L/H, 908-439-2200, ext. 5232
robert.stewart@ambest.com
Charles Meyer-P/C, 908-439-2200, ext. 5374
charles.meyer@ambest.com
or
Public Relations:
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com

Copyright Business Wire 2009