[December 12, 2012]

A.M. Best Affirms Ratings of CMFG Life Insurance Company and Its Subsidiaries

A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of "a" of CMFG Life Insurance Company (CMFG Life). Additionally, A.M. Best has upgraded the FSR to A (Excellent) from B++ (Good) and ICR to "a" from "bbb+" of MEMBERS Life Insurance Company (MLIC), a subsidiary of CMFG Life. A.M. Best also has affirmed the debt rating of "bbb+" on the $85 million, 8.50% 20-year surplus note issued by CMFG Life.

Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and ICRs of "a" for the following property/casualty subsidiaries of CMFG Life: CUMIS Insurance Society, Inc., its wholly owned subsidiary, CUMIS Specialty Insurance Company, Inc., Producers Agriculture Insurance Company and its 100% reinsured affiliate, Producers Lloyds Insurance Company (both of Amarillo, TX) (collectively, all four companies are referred to as CUMIS). The ultimate parent for all the above companies is CUNA Mutual Holding Company. The outlook for all ratings is stable, and all companies are headquartered in Madison, WI, unless otherwise specified.

The rating affirmations reflect CMFG Life's continued position as the leading provider of life/health insurance products to members and employees of credit unions, its more than adequate risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio (BCAR), consistently positive net operating gains and its strategic initiatives to grow ancillary lines of business to improve product and revenue diversification outside its niche credit union marketplace.

Mitigating some of these trengths are CMFG Life's volatility in statutory earnings performance in some of its business lines, its declining premium revenue over the last few years, partly due to strategically exiting non-core lines of business, and continued but reduced, exposure to structured securities and realized losses from investments.

The upgrading of MLIC's ratings acknowledges the new reinsurance agreement between MLIC and CMFG Life. Under the coinsurance arrangement, MLIC will cede 95% of its in-force and 100% of new product sales to CMFG Life.

The ratings for CMFG Life are viewed as well positioned over the near to medium term. Factors that could lead to negative rating actions include deterioration in the company's balance sheet strength and financial flexibility, widened realized and unrealized losses leading to a substantial decrease in capital, measurable declines in premiums in core lines of business without experiencing profitable growth in ancillary lines or a weakened competitive market position in its niche credit union market.

The ratings for CUMIS recognize its supportive level of risk-adjusted capitalization, conservative balance sheet, overall operating profitability and well-established niche position in the credit union and multi-peril crop insurance segments.

Partially offsetting these positive rating factors for CUMIS are the variability in its underwriting and investment results over the last five years, which resulted in fluctuating operating returns as well as pressure caused from general macroeconomic trends.

A.M. Best believes CUMIS is well positioned at its current rating level; however, negative rating actions could occur if a supportive level of risk-adjusted capitalization is not maintained or if results do not continue to stabilize prospectively.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Rating Members of Insurance Groups"; "Risk Management and the Rating Process for Insurance Companies"; "Insurance Holding Company and Debt Ratings"; "Understanding BCAR for Property/Casualty Insurers"; "The Treatment of Terrorism Risk in the Rating Evaluation"; and "Catastrophe Analysis in A.M. Best Ratings." Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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