About Church Mutual

Annual Report

Download our 2008 Annual Report (881KB PDF)

2008 President's Message

It was a tough year for the country in 2008 — the stock market was the worst since 1937.

It was also a difficult year for the property/casualty industry in America and not a good year for profitability at Church Mutual.

But a strong company prepares itself for the volatility in our business and in our economy. We paid our claims and remain stable and strong.

Meanwhile, Church Mutual reached a key growth threshold during the year — institutional accounts totaling more than 100,000 for the first time. The company continues to insure more than twice as many houses of worship and related organizations than any other company with a broader footprint in America’s faith communities than any other property/casualty company has ever had. Customer loyalty remained very strong in a highly competitive market during 2008, as nearly 93% of our customers renewed their coverage.

During 2008, our customers submitted 40,498 claims — far more than the company had previously experienced in our 111 years of operation. This claims frequency was up 12.7% over what customers dealt with during 2007. Property claims volume soared more than 25% and drove the underwriting results of the company during the year.

The stock market meltdown had a very significant impact at Church Mutual as it did in most businesses and other organizations countrywide. But the company’s consistently conservative investment guidelines helped limit the damage. Church Mutual went into 2008 with only 8% of our portfolio invested in common stocks. Even that limited equity exposure resulted in $33 million in realized and unrealized losses. Certain stocks and a small number of bonds had to be written down consistent with conservative financial best practices.

Nonetheless, Church Mutual’s portfolio under management experienced a 0.7% gain during the year. “Positive territory” in investments was certainly not a given in 2008. Together with stock and bond market performance, serious weather patterns throughout the year brought nearly 4,200 natural catastrophe claims to our customers. Winter storms were heavy, and 1,690 tornadoes tore across America. Nearly 2,000 fires and lightning strikes caused losses to our customers as did the serious fallout from Hurricanes Ike and Gustav.

The company issued claims checks totaling $373 million during the year — well up from $293 million in 2007. But property/casualty insurance companies, particularly mutuals where the customers are the owners, exist to pay claims efficiently and with sensitivity to customers who have experienced a loss.

Again in 2008, so many of the claims Church Mutual paid were for losses that could have been prevented. As I did a year ago, let me once again urge each of our customers to appoint a safety committee. Meet once a year and walk around your facility looking for opportunities to alleviate losses.

Last year, nearly 3,900 of our customers suffered water damage at their facilities doing more than $37 million in damage. There were also 2,940 reported thefts and eight fires started by candles.

Our risk management staff visits several thousand of our customers each year, working with you to alleviate potential claims. Being constantly alert to maintenance requirements that may have been put off in the past is always a prudent priority.

Again this year, 85% of customers with a recently closed claim who were surveyed rated the company in the highest levels of customer satisfaction we have seen over the years.

All Church Mutual employees serving our customers know that strong and consistent customer service remains Job One across the organization.

More than 8,100 houses of worship, denominational offices, camps, schools and senior housing facilities chose Church Mutual as their insurance company last year.

Several key changes occurred in our sales distribution system during 2008, including the purchase of books of religious business in Alabama, Kentucky, Tennessee and Eastern Michigan. Thousands of Church Mutual customers in these states who previously dealt with our appointed agents will now be served “directly” by our regional sales representatives. We have worked to ensure a smooth transition, and the company remains fully committed to effectively serving these customers on a direct basis.

In 2008, the company received A.M. Best’s Superior (A+) rating for the 56th consecutive year. The rating, from the industry’s leading rating agency, highlights the long-term stability and financial strength at a time when confidence and trust in financial institutions have never been more important.

Like the industry’s surplus or net worth, Church Mutual’s policyholders’ surplus contracted some during 2008, but at $349.4 million, the company has necessary capital to protect our customers should we experience serious catastrophes in the weeks and months ahead.

Direct written premium was down slightly in 2008. Contributing to this was a reduction in our writings in Florida, where natural catastrophe exposure is greater than anywhere else, and regulators have resisted permitting companies like Church Mutual from charging adequate rates.

The conservative investment and operating philosophy long in place at Church Mutual served the company well during 2008 — a year in which the nation’s economic crisis brought a heavy toll to many businesses and insurance companies.

All Church Mutual employees appreciate the special relationship we have with our customers as a result of our mutuality, where our policyholders are also our owners. We look forward to continuing to stand shoulder to shoulder with you in good economic times as well as in the difficult days we experienced in 2008 and may see for some time to come.

Thank you for giving us the opportunity to work for you.

Gerald Whitburn
Chairman, President and CEO