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Annual Report

Download our 2007 Annual Report (2.4M PDF)

2007 President's Message

Your insurance company — A+ (Superior) for 55 consecutive years — is substantially stronger than it was a year ago. Interestingly, the key takeaway from Church Mutual's 2007 operations is nearly identical to what it was a year ago.

Church Mutual entered 2006 with a surplus and net worth of $272.5 million. At the close of 2007, the company's surplus was up nearly 43% over the 24 months to $389.4 million — $60.9 million of the increase came in 2007.

It was another record-level performance in the strengthening of Church Mutual's financial footings. Industry surplus — over the two-year period — was up approximately 25%.

Lower-than-normal natural catastrophe activity during 2007 helped drive an excellent year at Church Mutual. California fires represented the largest U.S. catastrophe activity in 2007, and the company had a small volume of losses in the fires.

Church Mutual's underwriting discipline and determination to maintain pricing adequacy in a highly competitive market permitted the company to post an attractive $51.9 million underwriting gain. It was the fifth consecutive underwriting gain for the company. This is accomplished when earned premium is adequate to pay claims and operating expenses without the impact of investment income.

Church Mutual continued to broaden its footprint in the religious insurance market across all 50 states. We insure more than twice as many houses of worship and related institutions than any competitor. We saw 7,350 new houses of worship, senior living facilities, camps, schools and denominational offices select Church Mutual as their insurer during the year. Our account total is approaching 100,000 customers, as we protect property valued at more than $148 billion.

Contributing to Church Mutual's financial success was net investment income of $40.8 million. Investors saw significant volatility in the stock market as 2007 closed, and once again, the company's very conservative investment guidelines served us well. Our portfolio under management reached $960 million at year-end, with only 8.4% of the holdings in equities.

Our common stocks were up 10.88%, almost doubling the Standard & Poor's that increased 5.49% during 2007. Church Mutual's fixed income securities were up 5.9%.

Assets at Church Mutual grew $112.2 million over the year and stand at nearly $1.2 billion.

Net income after taxes was $56.6 million — another record of profitable operations for the company.

Meanwhile, the company continued to experience unusual stability in its claims activities. During 2007, our customers had a total of 35,935 claims — up just 330 from the previous year. We issued claim checks for $293 million during the year.

Note the map on the last two pages of this report, illustrating fire and lightning losses our customers reported throughout 2007. These claims totaled 2,184 in individual losses. Also note the very consistent volume of similar claims in each of the last five years. Over that period, these claims have totaled almost $263 million.

What causes these claims, and has your organization done all it can to prevent them from occurring at your facility? Do you have a risk management committee in place, reviewing steps each year that you can take to reduce potential losses?

Outside doors left open can result in arson fires. Inappropriate attention around candles causes fires each year, as do inappropriately maintained cooking facilities in church kitchens. Overburdened extension cords result in many fires, as do cobbled together electrical systems in older or expanded buildings. Church Mutual's risk management staff nudges our customers daily to enhance their watchfulness to avoid such losses.

The 2005 hurricanes — Katrina, Rita and Wilma — brought Church Mutual more than 2,375 claims. Most of them have been settled, and the reserves established at the end of 2005 have held satisfactorily.

Church Mutual surveys hundreds of our customers each year to monitor satisfaction levels. This year nearly 80% of those surveyed placed their overall satisfaction level with the company in the "Excellent" or "Outstanding" categories. The results were among the highest we have seen. And again this past year, approximately 94% of our customers chose to renew their policies with Church Mutual.

During 2007, the company consolidated its customer telephone contact function into a national service center in Merrill, Wisconsin, near our Home Office. Feedback we have received has been very positive, as training and quality service standards have been tightened consistent with ever-higher expectations from customers who need quick answers to what are often complicated questions. We will continue to raise the bar in our service center.

On the opening pages of this report, you saw photographs of the destruction that occurred in May 2007 as a very strong tornado devastated Greensburg, Kansas, leaving 1,500 people without homes and nine people dead. The community had eight churches — all were destroyed. Church Mutual insured six of the eight congregations.

The storm occurred on a Friday night. By the following Tuesday, we had reached five of the six pastors and handed them checks to facilitate immediate "start-up" activities; on Thursday — four working days after the storm — Church Mutual handed building policy limit checks to each of the pastors. We issued no press releases and avoided television cameras. We are a mutual insurance company, owned by our customers, determined to be there when we are needed most.

I am proud of what our staff did in Greensburg. Protecting America's faith communities is our mission, and we must "walk the talk."

A substantially stronger insurance company to protect your facilities in the future — that's the most important report I can give you this year.

We very much appreciate your loyalty to our organization. Your business is not taken for granted. Everything you see from Church Mutual contains a signature line from us — Listening. Learning. Leading. — it's what we try to do at every desk, every day.

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

Gerald Whitburn
Chairman, President, and CEO