Meta Financial Expects Up to $3.2 Million in Pre-Tax Charges Against Q2 Results After Student-Loan Insurer Faces Insolvency

Meta Financial Group (CASH) late Wednesday said it expects to record up to $3.2 million in pre-tax charges against its Q2 financial results after the company insuring $189.1 million of floating-rate student loans purchased by Meta was in the process of being declared insolvent by state regulators in South Dakota.

The South Dakota Division of Insurance earlier Wednesday filed a petition declaring ReliaMax Surety Co insolvent, and is expected, after a hearing scheduled later this month or in early July and following separate court actions, to take control of ReliaMax and appoint a liquidator to dispose of its remaining assets.

In prepared remarks, Meta said it expects to eventually recover most of its unearned premiums with ReliaMax although it said the exact timing of those payments or their size was unclear at this time. But Meta also said it was adjusting the allowance for loan losses on its student loan portfolios for the current fiscal Q2 ending June 30, which will result in between $2.8 million to $3.2 million in pre-tax charges in addition to a reduction in its consolidated pre-tax fiscal Q2 net income.

Separately, Meta late Wednesday said it has signed an agreement extending its partnership with with Global Cash Card through 2022 and will begin to support its Wisely by ADP paycard providing instant pay, digital wallet and other financial management tools.