Verhovayak Lapja, 1952 (35. évfolyam, 1-12. szám)
1952 / Verhovay Journal
Verhovay Journal VOL. XXXV. MARCH 19, 1952 51 NO. 3 THE 65TH ANNUAL REPORT 1951 IN REVIEW For the Verhovay Fraternal Insurance Association, 1951 proved to be a remarkable year. The Association enjoyed its best year since 1946, this in a Convention Year when usually business slows down. The statistics reveal that such key factors as insurance in force, membership, assets and average size cf membership certificate climbed to new levels. The last four years have been devoted to laying the groundwork for an even better and stronger organization, and, because of this program, the sixty thousand members of the society can rightfully feel assured of the safety of their financial future with us. This program has produced a fine character of the" society which has in itself attracted many new members. It is the intent of us all to continue reflecting the fine character of the society so as to provide even more amiable future relationships. LIFE INSURANCE — New and Previous Business The total life insurance in force in this society on December 31, 1951 was $46,611,957 on 60,220 membership certificates for an average face a mount of $774. These figures represent net increases of $1,052,121 in total insurance and 292 in number of members. NEW INSURANCE Securing new members is the most vital part of our business and the association’s field program did much to further the ajms and objectives of the organization and to carry our services to many new members. A total of $2,907,500 insuring 2,859 members, averaging $1,017, was placed by the full-time field men and the branch managers. It was the largest volume of business since 1946, and the average face amount was an association record because it marked the first time that our branch managers pioduced new business with the average face amount over $1,000. This remarkable achievement can be attributed to the better-trained, insurance-wise men, especially the full-time representatives. Insurance in the amount of $298,320 was reinstated. PREVIOUS BUSINESS Termination from all sources—death, cash surrenders, lapses, etc. were 82,131,033 as compared with $2,224,963 a year ago, a slight decrease in rate as well as volume. INCOME AND ITS DISTRIBUTION A BRIEF SUMMARY OF THE ASSOCIATION S OPERATIONS DURING 1951 program was necessitated by the lower rates of interest safely earned since the inflationary spirals which began during the second World War. As a result of our reserve strengthening program, those members who hold certificates with guaranteed interest rates of 4% and 3y2% do not have to concern themselves with the lower rate of interest that can safely be earned by our fraternal benefit society in the investment market. The difference between what the society actually earned and the guaranteed rate is set aside from surplus funds, and this setting aside is what is known as the program of reserve strengthening. The completion of this program in record time is good evidence of the financial strength of the Association and it is a step many insurance societies and companies may not be able to complete for years to come. MEMBERSHIP CERTIFICATE DIVIDENDS Dividends are a return of unused monthly dues from three principal factors—fewer deaths than indicated by the mortality table used, interest earned above the rate assumed, and savings from the provision made in the monthly dues for expenses. No dividends were paid to holders of membership certificates dated prior to January 1, 1949. The inadequate sum provided for expenses in the monthly dues of these certificates, resulting chiefly from the inflationary spirals of today, and lower rates of interest that can safely be earned have offset the savings in mortality that is experienced on these certificates, and, as a result the monthly dues, which the members of these certificates pay, do not produce any unused monthly dues, consequently no dividend can be paid. However, the bolder of membership certificates dated from January 1, 1949 received dividends when their certificates reached their second anniversary' and after at least 24, monthly dues were paid. Dividends totalled $4,781.06. These dividends were the return of unused monthly dues inasmuch as the monthly dues these certificate holders pay are up on a basis which assumes a guaranteed rate of interest at 21/i, % and it also provides an adequate sum for expenses; these factors plus the savings in mortality allow the return of the unused portion of such monthly dues in the form of dividends. Thj dividend scale effective last year, on these American Men 2 V2 % certificates, issued from January 1, 1949, will be continued for 1952. Dividends usually differ from the previous year even though the same scale is continued. The changes, plus or minus, result from the changing relationship of the dividend factors from year to year. DEATH RATE Income Net Monthly Dues from Members Net Earnings on Investments Deposits to Trust Fund and Other Income Total This Income Was Distributed As Follows: Paid to beneficiaries and members: Death Benefits, including Accidental Death Benefits $ 396,906.92 Monthly Dues Waived—Death of Payor 18.43 Sickness and Accident Benefits 149,684.85 Permanent Disability Benefits 2,200.00 Matured Endowments 36,000.00 Surrender Values 92,749.71 Dividends 4,751.06 Total of above . $ 682,340.97 $1,543,132.43 360,804.51 32,789.53 $1,936,726.47 Payments from Trust Fund 25,150.58 Set Aside for Beneficiaries and Members 683,446.32 Operating expenses, including service to members and obtaining new business 389,236.07 Donations from General Expense Fund 3,440.76 Net Loss on Securities, Asset Adjustments in Securities and Depreciation of Home Office Building and Machinery 19,118.55 Net Accrued Expenses 8,438.84 Added to Surplus Fund 125,554.38 Total $1,936,726.47 BENEFITS Benefits paid during the year amounted to $584,810.20. Death benefits of $396;906.92, including $5,500 additional accidental death benefits, were the largest portion of these benefits. Sickness and accident benefits of $149,684.85 were next. Permanent disability benefits amounted to $2,200 while matured endowments were paid totalling $36,000. One payor claim of dues waived amounted to $18.43 Total benefits paid since February 21, 1886 total $14,354,469.36. MEMBERSHIP CERTIFICATE RESERVES Benefits credited are additions made to reserves calculated for each membership certificate and are regulated by law. The Association is required annually to make these additions to membership certificate reserves so as to carry out its contractual promises to members and beneficiaries. In addition the Association in 1951 completed its program of reserve strengthening. This The death rate for 1951 was slightly lower than for 1950. The causes of death continue its upward trend in the proportion of deaths from diseases which attack older people, especially diseases of the heart, blood vessels and kidneys. Cancer was a very heavy contributor to the causes of death. Of the 509 adult deaths 20 were attributable to accidents, 3 homicide cases, 4 suicide cases and 2 to military deaths—members killed in action in Korea. Of the 32 juvenile deaths only 1 was caused by accident—asphyxiation by drowning The ratio percentage of actual ta expected mortality was 51.77%, compared with 51.78% for 1950. x COST OF OPERATIONS Operating expenses-—representing primarily compensation to Verhovay personnel (officers, employees, field workers) for service to members, and inc-luding the cost of rent, supplies, equipment, taxes, licenses and fees, insurance, district sessions, national convention, and other minor disbursements— amounted to $3S9,236.07, an increase in rate of approximately 4% over a year ago. 1951 was a convention year and the cost of the district sessions and the national convention helped increase our operating expenses by $46,530.05. Also a factor in the increased costs was the amounts paid to field workers for Letter services provided to members. The inflationary spiral contributed in the form of increased salaries and higher costs for practically all types of services and equipment. INTEREST EARNINGS The rate of interest earned during 1951, before deduction of all investment expenses, amounted to 3.31%, while the rate of interest earned after deducting all investment expenses amounted to 3.04%. This rate of interest earned is comparable equally with the interest earnings experiences of other1 fraternal benefit societies and insurance companies. The Association prefers to make investments in the best quality offerings on the market, even at the expense of slightly higher interest earnings, in order to safeguard the primary interests of the members at all times. HOW .OUR ASSETS ARE INVESTED The investments of our Association are distributed as follows: Bonds $11,210,442.07; Stocks $34,569.42; Mortgage Loans $323,860.17; Real Estate $133,527.30; Loans on Membership Certificates $543,710.56; Cash in Banks $261,238.45; Other Assets $10,421.29. Total ledger assets amount to $12,517,769.26, while the totql admitted assets, calculated in accordance with (be requirements of the various state insurance departments,, amount to $12,645,221.05. (Continued on page 2) ✓
