Letter to Policyholders
Planning, Security and Stability for Your Peace of Mind
A Message From The Chairman
Dear Valued Policyholder:
Reaching your financial and long-term security goals takes careful planning, insightful guidance, reliable tools and dependable products. To reach your summit, it also takes a life insurance company that is strong, secure and stable—one that can be relied on to fulfill its financial obligations now and in the future. Security Mutual is committed to helping you attain your financial and protection goals. Our solid 2016 financial results demonstrate consistent growth and financial stability, positioning us to continue providing the peace of mind that comes from knowing you are financially secure for life’s planned and unplanned events.
2016 marked the 130th anniversary of your Company. It also represented the 124th consecutive year the Company paid policyholder dividends.1 And in November 2016, your board of directors voted unanimously to maintain Security Mutual’s current dividend scale for the 2017 calendar year.
During 2016, our financial position was strengthened and our investment portfolio performed well, despite persistently low interest rates. This was a year of growth as a significant number of new policyholders joined the Company. We closed 2016 with $176.5 million in capital, which represents a 35 percent increase over the past five years. This substantial capital increase is supported by consistently strong operating earnings, as evidenced by our net operating gain for 2016 of $8.0 million.
Education, Planning and Tools
Your Security Mutual life insurance representative has the tools that can help you create a financial plan specifically tailored to your unique needs and goals. Here are just a few areas for which we equip our agents with powerful tools and products, all designed to help you achieve financial security and peace of mind. We encourage you to contact your Security Mutual representative to learn more about these and other competitive products and programs and how they can help you.
Retirement Planning. Planning for a secure retirement involves both pre-tax and post-tax financial planning. A portion of this financial planning also includes social security planning, which is a critical component of any retirement strategy. Through your Security Mutual representative, you have access to proprietary tools such as the Security Mutual Life Social Security Evaluator platform. This platform is designed to help you better understand social security and create a customized strategy to help maximize the total social security lifetime benefits available to you. Simply contact your Security Mutual representative to put this powerful tool to work for you.
Lifetime Income Planning. We know that outliving one’s assets is a very real concern for many Americans. Therefore, we have developed innovative educational tools and products that can help you implement a plan guaranteed to pay you a certain amount of money at regular intervals (for example, monthly) for the remainder of your life.
Business Valuation and Continuity. If you are a small-business owner, knowing the value of your business is essential if you are looking to acquire financing, contemplating the sale of your interest, pursuing growth initiatives or planning for the disposition of your business upon death. We can assist in valuing your business.
My Security Mutual®
This year, we were very pleased to add an educational video library to My Security Mutual®, your secure online site for accessing and managing your life insurance policy(s) and annuity contract(s). The new library includes helpful videos on topics ranging from retirement planning and college planning to chronic illness, business succession planning and more. Each month we feature a different video topic, so be sure to check it out. And remember that through My Security Mutual®, you can view your policy values and benefits, review your beneficiary designations, make premium payments and perform customer service requests, all at the click of a button. To access or register, just go here.
The Year 2016 began with major disruptions in the energy markets and declining oil prices, followed by a continuation of divergent U.S. monetary policy and a further weakening of the global economy. All of this contributed to the interest rate volatility that persisted throughout 2016. The year saw the 10-year Treasury note yield move from 2.273 percent at the beginning of the year to 2.446 percent at the end of the year, and also saw a record low of 1.366 percent at mid-year. Our investment portfolio weathered this rollercoaster well because we positioned our holdings with two main strategic goals:
- To maintain the highest level of book income that is both prudent and practical.
- To preserve capital by maintaining a high-quality portfolio positioned to withstand shocks in the market and the economy.
Throughout 2016, in conjunction with BlackRock Financial Management, Inc.,2 (our fixed income portfolio manager), the Company closely monitored the interest rate environment and the changing market and economic conditions in the United States and around the world. These are not simple financial times. However, through our vigilant planning, Security Mutual’s portfolio maintained its financial strength and delivered significant positive results despite the volatility of economic and political events. We continue to look for opportunities to develop unique, disciplined, income-enhancing strategies that help mitigate downside risk, with the potential to create long-term value for our Company and our policyholders.
Personal Privacy, Cybersecurity and Disaster Recovery
We recognize that safeguarding your confidential information is of paramount importance to you. Our personal information privacy and cybersecurity systems and processes, including regular security awareness training for our employees, are constantly evolving to protect customer confidential information against ever-changing cybersecurity threats. Under our Company business continuity plan, we continually test the processes we have in place to protect your confidential information in the event of natural or man-made disasters.
Making A Difference
An important part of Security Mutual’s corporate mission is making a positive difference. We do that in many ways for our policyholders, as well as for people in the communities we serve. Security Mutual has joined the American Cancer Society and several community hospitals in promoting an event entitled “Sock Out Cancer” to provide support to cancer patients and their families for basic financial needs. Your Company also helps support other worthy organizations and causes, including food banks, Boys & Girls Clubs, the Urban League, the United Way and veteran homelessness.
Security Mutual continues to provide sound financial protection to our policyholders in challenging economic times. Your Company’s financially strong 2016 enabled us to maintain our dividend scale and add value for our policyholders as we moved into 2017. We look forward to continue providing peace of mind as we assist you in achieving the financial and protection goals you have set for yourself, your family and your business.
Bruce W. Boyea
Chairman, President and Chief Executive Officer
Security Mutual’s 2016 Financial Charts
Security Mutual Insurance Products
You can download the 2017 Letter to Policyholders here.
To view the Company’s privacy notice, please click here.
1 The payment of dividends is not guaranteed, and the amount credited, if any, will rise and fall depending on experience factors such as investment income, taxes, mortality and expenses.
2 BlackRock Financial Management, Inc., is one of the largest U.S.-based external managers of insurance company general account assets, overseeing $419 billion as of 9/30/2016.
3 Includes Policyholders, Beneficiaries and Annuitants.
4 The National Association of Insurance Commissioners (NAIC) employs a bond-rating system ranging from 1 – 6, with NAIC Classification 1 defined as Highest Quality, NAIC Classification 2 defined as High Quality, and NAIC Classification 3 defined as Medium Quality. Classifications 4 – 6 range from Low Quality to In or Near Default.