ANNUAL REPORT 2014 STRONG STABLE SECURE. Southern Farm Bureau Life Insurance Company JACKSON, MISSISSIPPI

Transcription

1 STRONG STABLE SECURE ANNUAL REPORT 2014 Southern Farm Bureau Life Insurance Company JACKSON, MISSISSIPPI

2 OPENING REMARKS There s nothing mighty or imposing about an acorn. It s small and fragile. It has to overcome imposing odds to have a chance at reaching its potential. But if it does somehow manage to avoid being eaten, crushed underfoot, or blown somewhere it can t take root, it can become a towering oak tree, providing comfort and shelter to whatever falls under its protection. We can learn a lot from the acorn. Southern Farm Bureau Life Insurance Company knows about humble beginnings. We know about overcoming tremendous odds. Through economic downturns, natural disasters and paradigm shifts in our day-to-day business brought on by the digital revolution, we have not only survived; we have thrived. We provide comfort and peace of mind to those who depend on us. How do we do these things? It s pretty simple, actually. It s all in our roots. And our roots have always been grounded in service. We re strong because we have agents who are committed to serving our policyholders. We re stable because we have loyal policyholders who are committed to protecting their families. And we re secure because we have leaders who are committed to good stewardship of the resources entrusted to us. Our financial strength equals security and satisfaction for our policyholders. OUR MISSION Our mission is to be the life insurance company of choice for our Farm Bureau Family. Our focus is to provide competitive products and superior customer service to our Farm Bureau policyholders and agents, while observing the highest ethical standards. 2

3 President s Message 4 Board of Directors 5 CEO s Message 6 Senior Vice President of Marketing s Message 7 Financial Overview 8-14 Company Officers 15 Closing 16 3

4 President s Message Each year, the Board and management team offer an annual report on the financial performance and initiatives of Southern Farm Bureau Life Insurance Company. It is my responsibility and honor to state that 2014 was a year marked by extraordinary success. The numbers represented in this report speak for themselves and attest to the achievements of our dedicated Board of Directors, management team, agents and employees. Our success in delivering quality financial and life insurance products to Farm Bureau members demonstrates that Southern Farm Bureau Life is truly Strong, Stable and Secure. As always, the underlying component that drives the success of our Company, in 2014 and for the long term, is our people. They are the common denominator, year after year. The first responsibility of our Board of Directors is to be visionary and approve policies that place the policyholder first. Secondly, the Board carries a major responsibility to guarantee that the right people are in place to ensure that the Company continues to progress. We have committed, caring people who work hard and work smart to serve our policyholders. Our competent Board of Directors takes its job seriously and has guided our Company through We commend the management team and employees in Jackson for their consistent professionalism. As we know, the success of Southern Farm Bureau Life Insurance Company begins with the 3,849 agents in 11 states who meet with Farm Bureau members and policyholders to offer our products and services. Our agents build and nurture relationships with policyholders who trust us to provide a means of protecting their financial security. It is these people our entire Southern Farm Bureau Life family who are to be commended for preserving Southern Farm Bureau Life Insurance as a Strong, Stable and Secure Company. Our Farm Bureau culture and people will continue to make us a leader in the insurance industry and carry our Company into the future.. Larry B. Wooten CHAIRMAN OF THE BOARD AND PRESIDENT, SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY 4

5 BOARD OF DIRECTORS Row 1 L-R: Rich Hillman (AR), Wayne Pryor (VA), Kenneth Dierschke (TX), Larry Wooten (NC), David Winkles (SC), Jim Harper (LA) Row 2 L-R: Randy Veach (AR), Zippy Duvall (GA), Ronald Anderson (LA), Brantley Schirard (FL), Gerald Long (GA), Gordon Metz (VA) Row 3 L-R: David Stubblefield (TX), Scott Whitford (NC), Eddie Melton (KY), Ben Gramling, II (SC), Mark Haney (KY), Randy Knight (MS), John Hoblick (FL), Reggie Magee (MS) The Directors of Southern Farm Bureau Life Insurance Company lead by example, providing the bedrock of our success. Their passionate commitment energizes those around them, their endurance sets the tone for a culture of positivity and perseverance, and their integrity cultivates an atmosphere of trust. We thank them and honor them for truly embodying the word leadership. 5

6 CEO s Message As we reflect on the year 2014, the theme of being a Strong, Stable, and Secure life insurance company resonates throughout the year s accomplishments. Almost 70 years ago, Farm Bureau leaders saw a need for their members to provide them with secure and competitive life insurance products. As a result, Southern Farm Bureau Life Insurance Company was formed and organized to help secure those needs. In order to accomplish this mission, those leaders recognized that it was imperative to develop a financially strong Company that would remain stable throughout the years in order to secure the promises that our field force has made to our policyholders. Those promises include protecting their financial security and providing peace of mind for their loved ones. Our field force is active in their communities, and our policyholders put their trust in them to protect their families hopes and dreams as they provide a plan for their financial security. As evidence, our agents continue to perform at the highest levels in serving our Farm Bureau members, as new sales records were achieved once again during These sales have been accompanied by record levels of persistency, confirming that our agents are emphasizing needs-based sales to our policyholders. Our Company ended the year with $125 billion of life insurance in force, an increase of 4.4% over Assets totaled $12.9 billion and statutory surplus totaled $2.4 billion at December 31, Surplus represents funds set aside to protect our Company and policyholders from unexpected adverse events such as the recent Great Recession. Our risk-based capital ratios are among the strongest in the life insurance industry. A.M. Best recognizes our financial strength in assigning their rating of A+ (Superior), which places us in the top 16% of all rated life insurers. In delivering on our promises to our policyholders, in 2014 we paid: $237 million in death benefits $553 million in living benefits $52 million in policyholder dividends These payments totaled $842 million and embody the realization of our Company s ultimate purpose to protect the financial security of our policyholders. We value the trust our Farm Bureau families place in us. It is imperative that we remain a Strong, Stable, and Secure Company in order to fulfill promises made - whenever those needs arise. Larry E. Favreau, CPA, CLU, FLMI EXECUTIVE VICE PRESIDENT, CHIEF EXECUTIVE OFFICER 6

7 Senior Vice President of Marketing s Message What a remarkable year ! Southern Farm Bureau Life Insurance Company celebrated 2014 as the most productive year in our history. Our field force set a new record with over $70.3 million in paid/in force life premium, surpassing our previous best year in the Company s history in I am so proud of our people and their amazing achievements. This speaks volumes about our people and our organization. I am always amazed by what our field force accomplishes every year. I love the attitude and the enthusiasm of our people who are called into this business and truly understand the love in helping and serving others. Our agents take care of the financial security of the Farm Bureau membership, and our Company fulfills the promises they deliver to our policyholders. Our Company completed 2014 with over $125 billion of life insurance in force throughout our eleven (11) state operation. Our field force does not see challenges and obstacles - they see opportunities to make a difference and to serve. Greatness can be accomplished with the right team sharing a common goal. Having the opportunity to work and represent a strong, stable and secure Company has been the cornerstone of our success. Our culture is our Company s primary strength. It is a unique strength that comes from within our organization s heart - our people. It is special because of the Farm Bureau volunteer leaders, our Board of Directors, our entire sales management team and our dedicated home office staff who support our field force every day. While our Farm Bureau Insurance Companies may have different goals and objectives, we all share one common mission - to serve our membership to the best of our ability. The visionary leadership that exists with our Farm Bureau Companies has been vital to our success. The power of teamwork at its best! We will continue to strive to be the best we can be in providing the promises for tomorrow. Strong, Stable and Secure we are poised to accomplish amazing things in the years to come. We are proud and truly blessed to have the opportunity to serve our policyholders every day. David Hurt, LUTCF SENIOR VICE PRESIDENT, MARKETING 7

8 FINANCIAL HIGHLIGHTS DECEMBER Life Insurance In Force $125,390,529,987 $120,071,179,604 Admitted Assets $12,995,542,044 $12,679,324,746 Total Stockholders Equity $2,436,439,383 $2,327,194,289 Premium Income $803,440,482 $791,369,473 Investment Income $548,972,673 $543,305,919 Added to Retained Earnings $109,245,094 $244,936,669 Benefits Incurred $816,887,305 $814,937,696 8

9 STATUTORY STATEMENTS OF FINANCIAL POSITION DECEMBER 31 ADMITTED ASSETS Bonds at Amortized Cost $9,225,964,254 $8,948,010,652 Preferred Stock at Cost 20,890,583 9,190,000 Common Stock at Market 682,484, ,711,995 Mortgage Loans 1,279,577,984 1,228,466,404 Real Estate at Cost less Depreciation 11,259,894 10,546,950 Partnership Interests 675,716, ,951,579 Cash & Short-term Investments 79,167, ,258,223 Policy Loans 509,242, ,529,279 Deferred Income Taxes 99,907,989 92,954,244 Premiums Deferred & Uncollected 230,456, ,298,080 Accrued Investment Income 113,609, ,302,324 Other Assets 49,560,836 61,077,227 Separate Account Assets 17,703,950 18,027,789 TOTAL ASSETS $12,995,542,044 $12,679,324,746 These summary financial statements are derived from the Company s audited financial statements, which are prepared in conformity with statutory insurance accounting principles prescribed or permitted by the Insurance Department, State of Mississippi. 9

10 STATUTORY STATEMENTS OF FINANCIAL POSITION DECEMBER 31 LIABILITIES Policy Reserves $9,192,244,205 $8,990,558,258 Policy and Contract Claims 33,642,998 38,128,964 Advanced Premiums and Funds on Deposit 15,572,849 10,690,900 Accrued Policy Dividends 53,174,199 50,950,496 Dividends Left on Deposit 266,126, ,883,675 Pension Plan Administration Funds 594,705, ,311,155 Taxes Other Than Federal Income Tax 7,687,924 6,783,449 Commissions & Due to Affiliates 15,583,185 15,278,363 Other Liabilities 115,844, ,645,541 Asset Valuation Reserve 246,816, ,871,867 Separate Account Liabilities 17,703,950 18,027,789 TOTAL LIABILITIES $10,559,102,661 $10,352,130,457 STOCKHOLDERS Par Value; Authorized 20,000 Shares; Issued and Outstanding 15,000 Shares Common Stock $1,500,000 $1,500,000 Paid-in Capital in Excess of Par 400, ,000 Retained Earnings 2,434,539,383 2,325,294,289 TOTAL STOCKHOLDERS EQUITY $2,436,439,383 $2,327,194,289 TOTAL LIABILITIES & STOCKHOLDERS EQUITY $12,995,542,044 $12,679,324,746 10

11 STATUTORY STATEMENTS OF OPERATIONS DECEMBER 31 REVENUE Life Premiums $680,263,685 $650,660,159 Annuity Premiums 108,716, ,904,322 Accident & Health Premiums 14,460,346 20,804,992 Supplementary Contracts 23,685,256 14,726,885 Investment Income 548,972, ,305,919 Other Revenue 2,098,221 2,085,528 TOTAL REVENUE $1,378,196,632 $1,351,487,805 CONTINUED 11

12 STATUTORY STATEMENTS OF OPERATIONS DECEMBER 31 POLICY BENEFITS & EXPENSES Death Benefits $212,113,322 $207,287,427 Accident & Health Benefits 10,766,668 14,214,762 Surrender & Other Life Benefits 140,123, ,383,731 Annuity Benefits 344,581, ,205,369 Amounts added to Policy Reserves held for Policyholders 179,890, ,727,392 Interest on Policy and Contract Funds 38,535,745 38,249,279 Payments on Supplementary Contracts 19,043,646 18,029,713 Commissions 71,012,336 68,388,276 General Insurance Expenses 155,525, ,181,915 Taxes, Licenses, Fees 23,353,703 23,103,613 TOTAL POLICY BENEFITS & EXPENSES $1,194,946,193 $1,179,771,477 Net Gain from Operations before Dividends and Federal Income Tax $183,250,439 $171,716,328 Dividends to Policyholders 51,723,151 49,567,415 Net Gain from Operations Before Federal Income Tax $131,527,288 $122,148,913 Federal Income Tax 28,975,000 27,400,000 NET GAIN FROM OPERATIONS $102,552,288 $94,748,913 12

13 STATUTORY STATEMENTS OF STOCKHOLDERS EQUITY DECEMBER Common Stock $1,500,000 $1,500,000 Paid-in Capital in Excess of Par 400, ,000 TOTAL COMMON STOCK $1,900,000 $1,900,000 RETAINED EARNINGS Balance at Beginning of Year $2,325,294,289 $2,080,357,620 Net Gain from Operations 102,552,288 94,748,913 Realized & Unrealized Capital Gains, Net 30,955,422 92,898,963 Decrease/(Increase) in Asset Valuation Reserve (9,944,467) 12,116,526 Dividends to Stockholders (95,850) (98,550) Other (14,222,299) 45,270,817 TOTAL RETAINED EARNINGS $2,434,539,383 $2,325,294,289 TOTAL STOCKHOLDERS EQUITY $2,436,439,383 $2,327,194,289 13

14 USES OF INCOME DECEMBER Added to Policyholder Reserves $0.13 $0.12 Policyholders Dividends Death Benefits Surrender & Other Living Benefits FOR BENEFIT OF POLICYHOLDERS $0.72 $0.72 Commissions $0.05 $0.05 General Expenses Licenses & Taxes Net Gain - Added To Retained Earnings OTHER USES $0.28 $ of every dollar earned goes directly to policyholder benefits. 14

15 COMPANY OFFICERS Larry Favreau Executive Vice President, Chief Executive Officer H. Lusby Brown Senior Vice President, Chief Investment Officer Rick Fielding Senior Vice President, Chief Actuary and Risk Officer David Hurt Senior Vice President, Marketing Randy Johns Senior Vice President, Policy Administration and Assistant Secretary Joe Purvis Senior Vice President, General Counsel and Secretary Robert Ward Senior Vice President, Chief Financial Officer Charlie Allen Vice President, Chief Technology Officer Nancy Baker Vice President, Claims Danny Collins Vice President, Underwriting and New Business David Duddleston Vice President, Medical Director Phil Hogue Vice President, Realty Investments Shelia Hudson Vice President, Internal Auditing Ken Johnston Vice President, Marketing Services Perry McGaugh Vice President, Legal David Simmonds Vice President, Controller Billy Sims Vice President, Human Resources EJ Trosclair Vice President, Agency Diane Boyette Vice President, Chief Compliance Officer 15

16 CLOSING REMARKS What is the most straightforward explanation you could give of what we do at Southern Farm Bureau Life Insurance Company? What is it that we do? What is our essence? What are we, as a Company, about? Simply put, we are in the business of securing the financial future of our member families. Our policyholders depend on our knowledgeable guidance and outstanding service. And often their greatest need for financial stability comes during a profoundly difficult time in their families lives. We are given the opportunity to offer assistance with sincerity and integrity. It s what we ve done since 1946, and it s what we pledge to do for many years to come. Our longevity gives us strength. Our community ties provide stability. Our track record of providing support to families from one generation to the next offers security for them and for our Company. Yesterday s success and today s diligence will bring tomorrow s financial security for us and for our policyholders.. 16

17 SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY 1401 LIVINGSTON LANE/JACKSON, MISSISSIPPI