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American Share Press Release – GAO REPORT ON PRIVATE INSURANCE ISSUED

DUBLIN, OHIO, April 3, 2017: American Share Insurance, the nation’s private share insurer and provider of excess share insurance in 33 states across America, reacts to the GAO’s recent study of its loss reserves and its member credit unions’ compliance with consumer disclosure laws.

On March 29, 2017, the United States Government Accountability Office (GAO) issued its “Report to Congressional Committees – Private Deposit Insurance” (GAO 17-259), concluding its work on two studies associated with private share insurance that were mandated by The FAST Act (HR 22), which was signed into law in December 2015, making FHLB membership available to privately insured credit unions.

The GAO’s two studies – both addressed in this Report— were originally solicited by Congress to: (1) determine the sufficiency of American Share’s loss reserves; and, (2) assess the level of compliance among privately insured credit unions with respect to consumer disclosures as to the nature and extent of private share insurance.

American Share’s President/CEO, Dennis Adams, could not have been more pleased with the results of the GAO’s work and their conclusions. “This 46-page Report was 13 months in the works, involving numerous regulatory authorities, various independent and GAO in-house actuaries, credit unions and others. In conducting their study, the GAO carefully analyzed our financial statements and our independent actuary’s annual reviews of the adequacy of our loss reserves and their triennial determinations as to our overall capital adequacy under various economic scenarios,” Adams noted.

“According to the company’s independent actuary, our loss reserves have been determined to be, ‘…reasonable and consistent with amounts computed based on actuarial standards of practice,’ and that American Share had ‘…a strong ability to cover losses under different economic scenarios,’” Adams added. In the Report, the Ohio Department of Insurance also cited that their recent statutory exam concluded that American Share’s loss reserves “…have been adequate and the company has had a strong ability to cover present and future losses for the credit unions it insures.”

The GAO closed this subject stating, “We believe that the evidence obtained [from these sources] provides a reasonable basis for our findings and conclusions based on our audit objectives.” “This study confirms our safety and soundness,” Adams added.

As for the second study conducted by the GAO to assess the degree of compliance as to consumer disclosures by privately insured credit unions, the results were very encouraging, but some improvements are needed. “We were ecstatic to learn that the 26-year commitment by American Share and state credit union regulators has helped member credit unions comply with the consumer disclosure requirements under FDICIA (1991) and the CFPB’s Regulation I (2011),” Adams stated. Per the Report, the degree of compliance is approaching 100% in certain categories, such as website postings, while other areas need a little more attention according to the GAO.

After paying surprise visits to over one-third of the privately insured credit unions, and reviewing 100% of all known websites of privately insured credit unions, the study group suggested that the CFPB consider issuing guidance to aid these credit unions in: (1) clarifying what constitutes advertising; (2) improving disclosures at drive through windows; and, (3) defining what constitutes “clear and conspicuous” disclosure.

This is the second time in the last 15 years that the GAO has looked into this subject, and this time the compliance levels were notably higher. In their response to the GAO, the CFPB – which regulates consumer disclosures for privately insured credit unions – wrote back to the GAO stating: “To date, the Bureau has not received any consumer complaints related to private deposit insurance. Nor has the Bureau’s extensive consumer risk analysis process identified privately insured credit unions and their related disclosure requirements as consumer-facing activity that poses risk of the sort that would merit supervisory examination or enforcement investigation.”

“The American Share board, management team and our members truly appreciate the thoroughness and professionalism of the GAO study team, and are pleased to see the favorable and constructive comments within this very comprehensive Report,” Adams noted.

American Share is a member-owned share guaranty corporation, licensed by the Ohio Department of Insurance, dual-regulated by the Ohio Departments of Insurance and Commerce. The corporation provides up to $250,000 of share insurance on each and every account of an individual member in insured member credit unions. For more information, call 1.800.521.6342, Ext. 102, or contact Dennis Adams at dadams@AmericanShare.com.