CUNA Mutual Group

views updated

CUNA Mutual Group

5910 Mineral Point Road
Madison, Wisconsin 53705
U.S.A.
Telephone: (608) 238-5851
Toll Free: (800) 356-2644
Web site: http://www.cunamutual.com

Private Company
Incorporated: 1935
Employees: 5,000
Total Assets: $2.28 billion (2002)
NAIC: 524113 Direct Life Insurance Carriers; 524114 Direct Health and Medical Insurance Carriers; 524126 Direct Property and Casualty Insurance Carriers; 524128 Other Direct Insurance (except Life, Health, and Medical) Carriers; 524130 Reinsurance Carriers; 525190 Other Insurance Funds

Based in Madison, Wisconsin, CUNA Mutual Group provides financial services to credit unions. The company's industry leadership position is reflected in its massive offering of more than 300 credit-union-specific products. According to CUNA Mutual, its products fall under the categories of investment, insurance, and technology and are offered via a mix of strategic relationships and multiple service channels.

Officially organized under the CUNA Mutual Insurance Society (life, health, and accident insurance), the CUNA Mutual Group consists of CUNA Mutual Life Insurance Company (life insurance, long-term care insurance, and annuities); CUNA Brokerage Services, Inc. (investments and mutual funds); MEMBERS Capital Advisors (investment advice); CUNA Mutual Mortgage Corporation; CMG Mortgage Insurance Company; and CUNA Mutual Insurance Agency, Inc. (insurance and annuity products).

According to the organization, "The confidence and trust credit unions have in CUNA Mutual is reflected in the fact that it protects, with one or more coverages, nearly 95 percent of the 9,500-plus credit unions in the United States." CUNA Mutual belongs to its many policy owners, and the organization provides a variety of insurance and investment products to approximately nine million people.

Formative Years: 1934–58

CUNA Mutual's history dates back to August 10, 1934, when 52 credit union leaders from 21 states and the District of Columbia met in Estes Park, Colorado, and established the Credit Union National Association (CUNA). Prior to this historic event, North America's first credit union had been formed in Quebec, Canada, on January 23, 1901, and the Credit Union National Extension Bureau represented the credit union movement from 1921 to 1935. In addition, President Franklin D. Roosevelt had signed the landmark Federal Credit Union Act in 1934, allowing credit unions to be formed in any state.

The new association held its first meeting on January 27, 1935 in Kansas City, Missouri. Its headquarters were temporarily located in Madison, Wisconsin, where it rented a mansion that had been used for student housing at 142 East Gilman Street. This first location was dubbed Raiffeisen House after the German credit union pioneer Friedrich Wilhelm Raiffeisen. Roy F. Bergengren, a lawyer from Massachusetts, was elected as CUNA's first managing director.

It was not long before two affiliated organizations were established. In 1935, the CUNA Mutual Insurance Society (eventually named CUNA Mutual Group) was created with a $25,000 loan from Edward A. Filene, a Boston department store retailer, philanthropist, and credit union pioneer, to provide members with affordable credit insurance that covered loans in the event of a borrower's death. Its first claim totaled $40. In 1936, the CUNA Supply Cooperative was established to provide advertising materials and supplies to member credit unions.

Filene died in Paris in 1937 before the fruits of his efforts truly blossomed. However, he is widely recognized as the "father" of the credit union movement. In fact, President Franklin Roosevelt dubbed him a "prophet" for his foresight, according to the January 1, 1995 issue of the Capital Times.

In 1939, Madison became CUNA's permanent headquarters. In September of that year, the organization relocated to the Fuller and Johnson Building at 1342 East Washington Avenue. According to the January 3, 1959 issue of the Wisconsin State Journal: "The reasons given for Madison's selection were Wisconsin's position as a leader of progressive legislation, the central location of Madison, the fact that it is the home of the University of Wisconsin, the city's beautiful location on four lakes, and its friendly people."

During the 1940s, CUNA Mutual was forced to contend with the circumstances of World War II. As former CUNA Mutual Insurance Society President and CEO Charles F. Eikel, Jr. explained in The Debt Shall Die with the Debtor: The CUNA Mutual Insurance Society Story, the war "had its effect on the credit union movement just as it did on every segment of democracy. Key staff members, along with millions of credit union members, went to Europe and the Pacific. Other companies issued 'war policies,' limiting or canceling coverage for those in uniform. We did not. Moreover, we devised a plan where a serviceman's coverage could actually increase."

In 1950, CUNA relocated to new headquarters at 1617 Sherman Avenue. U.S. President Truman dedicated the new building by sealing its cornerstone and giving a 30-minute speech that was broadcast nationwide. Built at a cost of $350,000, the new facility was named Filene House. In its March 1954 newsletter, the Madison Chamber of Commerce and Foundation explained that Filene House was "a living memorial to the organization's founder—Edward A. Filene. Thousands of credit union members contributed their dimes and dollars to help finance the modern, two-story structure. It represents their tribute to the Boston businessman who spent so much of his time, efforts, and personal fortune promoting the credit union cause."

In 1956, Charles F. Eikel, Jr. was named president of CUNA Mutual. Born in New Orleans, Eikel joined the Credit Union National Association in 1938 as its southern field representative and later went to work for CUNA Mutual.

In The Debt Shall Die with the Debtor, Eikel noted that during the 1950s, the Credit Union National Association and CUNA Mutual Group became "physically separated" for the first time in the organization's history. While both entities remained headquartered in Filene House, differing organizational opinions and philosophies divided them. Despite this, Eikel explained that "As individuals, we were dedicated to the whole credit union idea—the comprehensive realization of economic security for all men and women through mutual efforts." Subsequently, each organization's leadership was able to make great strides toward resolving differences during the coming two decades.

Explosive Growth: 1959–94

By the late 1950s, CUNA Mutual had developed a more comprehensive offering of insurance coverage for its members. In addition to life savings and loan protection, by 1959 the organization's offerings included individual life, group life, league group life, home protection, family security, and major medical expense insurance. The previous year, total insurance-in-force reached $4.2 billion. With assets of $25 million, CUNA Mutual served more than seven million credit union members and paid out some 48,000 claims worth about $21 million.

Strong growth caused CUNA Mutual to outgrow Filene House. Some of the organization's staff was forced to rent office space off-site. With this in mind, CUNA Mutual broke ground on a new headquarters in May 1959. In September 1960, it relocated to a $1.5 million, three-story building at 5910 Mineral Point Road in Madison. Situated on an 18-acre campus, the new building had 55,000 square feet of floor space for CUNA Mutual's 250 employees. The move freed up space for the Credit Union National Association and CUNA Supply Cooperative to expand in Filene House.

In The Debt Shall Die with the Debtor, Charles Eikel explained: "We had almost outgrown the new building before we moved in, and by 1963, we found it necessary to build an addition which doubled the size of the structure." By the early 1970s, growth prompted CUNA Mutual to double the size of its facility once more.

In addition to moving into its new headquarters in 1960, CUNA Mutual also celebrated its 25th anniversary that year. It marked this milestone by becoming the nation's first life insurance company to have $5 billion of insurance-in-force. In addition, CUMIS Insurance Society, Inc. was formed to offer property and casualty coverage. By this time, CUNA Mutual served credit union members in Central and South America, the Caribbean, Ireland, and the Fiji Islands. Two years later, continued growth overseas led to the formation of a full-time department devoted to CUNA Mutual's international business.

As the 1960s progressed, CUNA Mutual continued to mark further achievements. The company's first billion-dollar year came in 1964, when total coverage amounted to $8.5 billion and assets totaled $53 million. In 1965, a Vietnam Provision pertaining to loan protection and life savings contracts was implemented to benefit veterans. According to The Debt Shall Die with the Debtor, the provision stated: "death and permanent disability claims paid for military personnel in combat zones are treated in the same way as catastrophic loss." In 1966, expansion caused CUNA Mutual to build an office in Pomona, California, to service the western United States, as well as a Canadian office in Burlington, Ontario.

By 1971, CUNA Mutual Insurance Society served roughly 45 countries, including credit unions in Great Britain, Hong Kong, Scotland, Peru, and New Zealand. The organization had actual offices in such far away locations as Tasmania, Bolivia, Trinidad, Ecuador, Antilles, Ireland, and Australia. Expansion plans included African countries like Kenya, as well as Japan and Korea. CUNA Mutual had evolved into North America's 15th largest life insurance company, insuring more than 23,700 of the world's credit unions and recording premium income of $117 million in 1970, with $15.5 billion of insurance-in-force.

Company Perspectives:

Our mission is creating financial security, and our vision is to be the best at serving credit unions and their members.

Growth continued at CUNA Mutual throughout the 1970s. In 1973, Robert L. Curry succeeded Charles F. Eikel, Jr. as CUNA Mutual's CEO. A 1953 University of Wisconsin-Madison Law School graduate, Curry was a senior member of law firm Boardman, Suhr, Curry and Field prior to joining CUNA Mutual. In the February 17, 1986 issue of the Capital Times, Rob Zaleski described Curry as "an astute, cordial, mild-mannered individual who looks the part of a Wall Street businessman, minus the glitter."

By 1974, CUNA Mutual's insurance-in-force reached $22.5 billion and assets totaled $207 million. The Credit Union National Association also continued to prosper, counting 29 million individuals among its membership at 22,950 credit unions. The organization then had $31 billion in assets, $24 billion in loans, and $27.5 billion in savings.

By the end of 1977, CUNA Mutual Group had grown to include the CUNA Mutual Insurance Society, CUNA Mutual Investment Corp., CUMIS Insurance Society Inc., CUDIS Insurance Society Inc., and CMCI Corp., as well as CUNA Services Group, ICU Services Corp., CUNA Supply Corp., CUNADATA Corp., Data Switch Corp., the International Association of Managing Directors, U.S. Central Credit Union, Credit Card Services Inc., CUNA Retirement Savings Fund, and CUNA Retirement Pension Plan. Insurance-in-force exceeded $34 billion that year, a $5 billion hike from 1976. Employees numbered 1,746, approximately 880 of whom were located in Madison.

At this time, CUNA was responsible for representing credit union leagues in all 50 states and some 36 million members at 22,000 U.S. credit unions. In 1978, CUNA CEO Herbert G. Wegner, the youngest top executive in the association's history, resigned after holding his post for seven years. Executive Vice-President of Administration Russell Notar stood in as CEO until a permanent replacement was made.

In June 1980, an exciting development occurred when CUNA Mutual's campus, which had grown to cover 30 acres, effectively became the credit union movement's international headquarters. The campus was appropriately renamed as the World Credit Union Center. In addition to CUNA Mutual's building, two new structures were added. One housed the Credit Union National Association and its affiliates, which relocated operations from Filene House after selling it to Wisconsin Physicians Service. The second structure, named the International Building, was home to an umbrella organization called the World Council of Credit Unions. Founded in 1970, it represented 67 countries and promoted credit unions around the world. The latter facility also housed a historical money museum, an 800-seat cafeteria, and a 175-seat theater. Together, the three buildings—owned by CUNA Mutual—housed some 1,500 employees of 16 different but related organizations. Approximately 1,000 people attended a dedication ceremony for the new campus, including U.S. House of Representatives member Robert Kastenmeier (D-Wis.).

As of 1984, CUNA Mutual had $58.3 billion of insurance-in-force and assets of $884 million. That year, the Credit Union National Association had grown to include 50.4 million members, with $111.5 billion in assets, $101.3 billion in savings, and $72.3 billion in outstanding loans.

A key leadership change unfolded at the Credit Union National Association in 1987 when Chief Operating Officer Ralph Swoboda was named president and CEO, succeeding Jim R. Williams. Swoboda also became the top executive for CUNA Service Group. Prior to joining the association in 1975, he was an attorney in Madison. By this time, the association had annual operating revenues of nearly $20 million. It faced rising competition from other financial service companies that marketed to credit unions, as well as competing trade organizations such as the National Association of Federal Credit Unions.

Important developments also were underway at CUNA Mutual during the late 1980s. Robert L. Curry retired as CUNA Mutual's CEO in October of 1988. During his tenure, the organization grew to a staff of more than 1,900 in Madison and 3,000 worldwide. A former professor named Richard "Doc" Heins succeeded Curry. Like Curry, Heins was a University of Wisconsin-Madison Law School graduate and his association with CUNA Mutual began in 1956. Finally, in May 1988, CUNA Mutual mourned the death of former CEO Charles Eikel, who passed away at the age of 80.

It was also in 1988 that a $14 million, four-story, 143,000-square-foot addition was made to the Credit Union National Association's building. The new structure, which included a 10,000-square-foot training and conference center, was built to house different departments of the association, CUNA Mutual, and the CUNA Mortgage Corp. The expansion corresponded to the overall growth of credit union membership, which had reached 57.1 million in the United States in 1987. From 1982 to 1987, credit union assets had exploded from $98.3 billion to $183.5 billion.

Key Dates:

1934:: Credit union leaders from 21 states and the District of Columbia establish the Credit Union National Association (CUNA).
1935:: Headquarters in Madison, Wisconsin, established; the CUNA Mutual Insurance Society is created.
1936:: The CUNA Supply Cooperative is established to provide advertising materials and supplies to member credit unions.
1958:: CUNA Mutual's insurance-in-force reaches $4.2 billion, and assets total $25 million.
1966:: A CUNA Mutual office is established in Pomona, California, to service the western United States; a Canadian office is opened in Burlington, Ontario.
1977:: Insurance-in-force exceeds $34 billion, and employees number 1,746.
1980:: CUNA Mutual's campus expands and is renamed the World Credit Union Center.
1996:: CUNA Mutual reorganizes into four divisions: Member Services, Lending, International, and Corporate Services.
2002:: Total assets reach $2.28 billion.

By the early 1990s, CUNA's Card Services subsidiary, which provided credit cards and related services to more than three million cardholders at 2,400 credit unions, was achieving healthy growth. Although CUNA had offered credit cards since 1978, volume began to increase significantly in 1984, when credit unions sought new ways to compete against no-interest loans offered by the auto industry.

Focus & Reorganization: 1995 and After

The mid-1990s brought more leadership changes to both CUNA Mutual and the Credit Union National Association. In March 1995, Michael Kitchen succeeded Richard Heins as CUNA Mutual's CEO. While Heins was at CUNA Mutual's helm, the organization's revenues had increased significantly, rising from $930 million in 1988 to $2.1 billion in 1994.

A Canadian native who had served as president and CEO of CUNA Mutual subsidiary CUMIS Canada, Kitchen placed an emphasis on cost cutting when he took office and guided the organization toward a goal of saving $16 million during his first year. In addition, he sought to increase productivity and increase the company's focus. In alignment with Kitchen's vision, the company reorganized in 1996. Without cutting any of CUNA Mutual's 4,700 employees, four new divisions were developed: Member Services, Lending, International, and Corporate Services. The new enterprise structure allowed CUNA Mutual to better concentrate on the delivery of its services.

At the Credit Union National Association, Ralph Swoboda resigned at the end of 1995. Temporarily replaced by Pete Crear, Swoboda was eventually succeeded in July 1996 by Daniel A. Mica, an insurance trade association executive and former Florida congressman.

CUNA Mutual entered the 21st Century on solid financial footing, with record 1999 revenues of $2.9 billion and a surplus of $870 million after all claims had been paid (also a record). The company had ventured into other financial services, including online servicing, brokerage, and lending, and employed 5,100 workers. Of CUNA Mutual's 2,600 employees in Madison, 1,600 were white-collar union workers represented by the Office & Professional Employees International Union Local 39.

Although relations between the union and CUNA Mutual Management had historically been very positive, by this time tension had emerged. In 2002, both sides agreed to a salary freeze, and a total of 122 workers, including 80 in Madison, lost their jobs. By late 2003, some union officials claimed that morale was low at CUNA Mutual, while the organization cited contrary results from employee satisfaction surveys.

Despite friction with its unionized workers and a $9 million capital-investment-related loss, in 2003 CUNA Mutual remained a powerful player in the insurance and financial services industry. With 2002 revenues of $2.3 billion, an increase of 12.5 percent from 2001, the firm had the resources and experience required for success in its second century of operations.