2007 President's Report



SK ANTONIO B. BORROMEO

Favorable economic conditions fueled by a strong peso and stable interest rates; resilient agriculture sector and exports; election-related spending; and, increase in government investment in infrastructure drove the country's Gross Domestic Product to impressive growth rates compared to previous year. Likewise, growing remittances from overseas workers boosted Gross National Product to substantial improvements over 2006.

Under such positive economic environment, I am proud to report that your Association performed commendably in 2007. The year was in many ways a testimony of the commitment of Knights of Columbus Fraternal Association of the Philippines, Incorporated (KCFAPI) to provide optimum fraternal benefits to all brother knights and their families. I am deeply honored to share with you the performance highlights and achievements of our Association during the year.


TRACING OUR ROOTS


Before the establishment of the Knights of Columbus in 1882, Fr. Michael J. McGivney, our Founder, saw the sufferings and pain of a family that suffered the untimely loss of the only breadwinner of a family. The widow needs at that time all the help she can get. Fr. McGivney saw that the only relevant answer to this continuing dilemma was for Catholic men to band together to help one another. That small idea started the spark that saw the beginning of a flame that started KC.

The early Knights vow to help one another in time of untimely demise of a breadwinner. They promised to look after the welfare of the widow and their orphaned children. This was later institutionalized into an insurance program that has survived over 125 years.

When the first Council was established in the Philippines in 1905, the insurance program was not given by the Supreme Council for reasons like Philippines being too far out or too insular, and unknown mortality experience. In fact, the Supreme Council did not give Philippines a real Council status but only as a sub-council attached to the State Deputy of California.

The appointment of Rev. Fr. George J. Willmann as Philippines Deputy after the Second World War marked the start of insurance coverage in the Philippines. When Fr. Willmann established KCFAPI in 1958 with 64 Knights and Councils contributing seed capital of P500 each or a total of P32,000. After 53 years, Filipino Knights started to enjoy insurance coverage. And today, KCFAPI is a strong pillar of financial strength that has a total of P2.37 Billion in resources and has already paid death and living benefits amounting to over a billion pesos since inception.


FRATERNAL SERVICE FULFILLMENT


Total Fraternal Benefits Claims & Surrenders recognized and paid during the year amounted to P146.6 Million from P150 Million last year. A total of P77.6 Million Benefit Certificate Loans were extended to 2,894 Benefit Certificate holders from P68.3 Million or 2,947 the previous year.

Total Protection Benefits under ordinary and group plans provided to Brother Knights climbed to P8.17 Billion from P7.91 Billion the previous year. 25,736 brother knights and family members were provided P907.3 Million worth of Group Protection Benefits via the Council Mortuary Benefit Plan from 24,668 brother knights or P866.7 Million Group Protection Benefits.

Your Association posted P81.3 Million First Year Contribution Income from new regular protection Benefit Certificates (BC) issued during the year which was 17.13% higher from last year’s P69.3 Million. The dollar denominated plans and Special Plan for Elderly Knights (SPEK) BCs continued to be the most sought after regular protection plans. New Benefit Certificates issued on the US Dollar Supreme Plan generated the largest amounts of first year contributions with P31.6 Million or 38.9% of the total First Year Contribution Income for the year.

Three of the Gold Series Plans were successfully launched last November: the KC Capital Accumulator Plan, KC Assurance Plan and KC Retire Plus Plan to highlight the preparations for the Golden Jubilee. Two-Hundred Forty Nine (249) applications for these plans were received in a span of one month as of year-end. The 500K Gold Series Club was established with the members of the Board of the KC Group as pioneer members of this club. This is a way of showing that the Board believes in the second-to-none benefits made available only for KC membership and that they lead patronage of the Gold Series Plans offered in the advent of transition from KCFAPI’s Golden Year into another 50 years.

Eight hundred sixteen (816) active Fraternal Counselors are now serving the needs of brother knights and families of 2,021 councils nationwide.


BENEFIT CERTIFICATE HOLDER FOCUSED


The Association maintained its being 9001:2000 ISO certified after the first Surveillance Audit conducted last July 2007 solidifying its commitment to continue raising its standards of performance and improving its systems to achieve continuous growth and stability and meet applicable regulatory requirements.

The installation of the OR Wizard in the service offices was successfully piloted in the Cebu Service Office in line with our thrust to provide quality service to our Benefits Certificate Holders through faster and more accurate receipting.

It was also during this year that the BC Holder Opinion and Complaint Report Forms were instituted to help your Association know more about the needs and concerns of the Benefits Certificate Holders to allow us to serve them better.


BRINGING KCFAPI CLOSER TO KC MEMBERS & FAMILIES


In view of your Association’s drive to deliver competent and quality service to all our brother knights and families, we continually work for a better relationship with the leaders of the Order and made closer ties and working relationship with the Church which in turn helped us reach out to our valued Benefit Certificate Holders and the public all over the country through the assistance of Radio Veritas and the Catholic Bishop’s Conference of the Philippines. The participation of KCFAPI during the K of C National Convention in Cagayan de Oro City highlighted our commitment to reach out to our brothers specially those in Mindanao.

Processing of the Member Information Sheet (MIS), a form used to enroll a brother knight to a free Fraternal Accidental Death Benefit (FADB) amounting to P10,000, was improved. As of December 2007, 32,788 KC members are already covered with FADB.


TALENT MANAGEMENT


Employee development and welfare continues to be your Association’s driving force in managing its 71-strong human asset.

To empower them with knowledge and skills, product orientation course, 5S (Sort, Systematize, Sweep, Sanitize & Self-Discipline) of Good Housekeeping and LOMA insurance educational courses were offered to employees in the head office and in the service offices. An in-house Economic Briefing by Dr. Emilio T. Antonio of the University of Asia and the Pacific was also conducted for the officers of the KCFAPI Group of Companies and some area managers. The event provided insights on business interests and macroeconomic indicators that proved helpful in crafting strategic plans for 2008. WIFI internet access was also made available to equip employees and area managers with immediate information, research and communication.

Employees took active involvement in the preparation and presentations for the launching of the Gold Series Plans to develop their appreciation of the new products and to hone the skills of our homegrown talents. This activity further fortified their support in the Association’s goal to provide optimum fraternal service to our brother knights and families.

Employee rewards programs that recognize good performance and contribution to the Association were continuously implemented. This was further enhanced with awarding Perfect Attendance to employees for distinguished performance in terms of punctuality and attendance which your Association considers vital in achieving operational efficiency. As part of its corporate social responsibility initiatives, the board of trustees also approved the Employee Housing Loan Program, which is the newest addition to the existing array of employee benefits. Various employee activities and health awareness lectures were conducted to promote work-life balance, health and camaraderie not only among KCFAPI employees but with those of the subsidiaries, as well.

As enriching the mind and body is not enough, your Association encourages spiritual development and community service of its employees. A work week of a KCFAPI employee always starts with the Holy Eucharist celebrated by Msgr. Pedro Quitorio III, KCFAPI’s Spiritual Director or by visiting KC Priest-Scholars. Daily prayers, annual retreat, Lenten activities and weekly prayer meetings are actively participated by the personnel. “Eh, KC Pasko!”, an outreach program organized by employees and in collaboration with Fr. Asis Bajao of San Agustin Church, was held last December at KCFAPI’s Social Hall to benefit children of indigenous families in Intramuros. The children were treated with a puppet show about the nativity, prizes for games were given and each child went home carrying a Noche Buena gift bag. The event became a family affair as employees brought along with them their children to interact with the Intramuros children.


FINANCE & INVESTMENTS MANAGEMENT


Despite the downtrend of interest rates and the strengthening of the peso to the dollar, our revenues before participation of Benefit Certificate Holders for 2007 reached P51 Million. Fifty percent (50%) of that or P25.5 Million will be enjoyed by the Benefit Certificate Holders as their share to the net operations of the Association.

Total resources of the Association reached P2.37 Billion where 91% is invested in safe portfolio. Thirty-seven percent (37%) is in time deposit, 36% in government securities, 12% in subsidiaries and another 12% in BC Loans. Keys Realty & Development Corporation, one of the subsidiaries, has done well with the net income breaching the P11 Million mark. Meanwhile, Anchor Savings Bank has successfully been sold in the latter part of 2007 with proceeds received in the subsequent year. Mace Insurance Agency, Inc. for its part made net income of P202,000.

Investment yield in 2007 is 7.6% from an investment portfolio of P2.1 Billion which increased from P2.0 Billion in 2006. Our operating expense ratio of 22.13% which is better than last year’s 22.94%.


GOOD CORPORATE GOVERNANCE & ENTERPRISE-WIDE RISK MANAGEMENT


Your Association is composed of nine Board of Trustees who met regularly every month during the year. These gentlemen attended the required seminar on Good Corporate Governance conducted by an Insurance Commission’s accredited institutions. Various board committees were also formed to handle corporate matters within their area of expertise. Independent directors are also elected to the Board memberships not only for KCFAPI but for the subsidiaries as well. For KCFAPI, our independent directors SK Pedro M. Rodriguez, Jr. and SK Guillermo N. Hernandez. These independent directors also head important committees enabling the Association to have appropriate actions on matters brought to their table.

A team of Corporate Auditors directly reporting functionally to Audit Committee of the Board is maintained by your Association. And as an attestation of your Association’s commitment to corporate governance, your Association’s Executive Vice President Sis. Ma. Theresa G. Curia was designated as Fellow, Institute of Corporate Directors (FICD).

Your Association continues to faithfully comply with all the requirements of regulatory agencies such as the Insurance Commission – the government agency which supervises insurance operations in the Philippines and annually renews KCFAPI’s Certificate of Authority. The Association also complies with the requirements of the Bureau of Internal Revenue, Bangko Sentral ng Pilipinas, Securities and Exchange Commission Department of Environment and Natural Resources, and Local Government Units.


CORPORATE SOCIAL RESPONSIBILITY


The KNIGHTS OF COLUMBUS PHILIPPINES FOUNDATION, INC. supported thirty (30) collegiate and one (1) vocational scholars from Luzon, Visayas and Mindanao areas. Twenty eight (28) of them received full tuition fee assistance and book allowance while three (3) scholars received P10,000 financial assistance per semester. Moreover, the Supreme Council in Connecticut, U.S.A. also supports thirty-six (36) collegiate scholars with semestral financial assistance. One of our scholars who successfully graduated from the University of the Philippines-Diliman, Ms. Mary Anne Jelli E. Gaza, won the Palanca award for Literature and another, Ms. Mind Shoiba P. Tecson, was awarded academic honors during her school’s Capping and Badge Investiture ceremony.

For the year 2007, the Foundation produced eleven (11) graduates and eight (8) of whom passed their respective Board Exams with one (1) scholar landing on 2nd place bringing the total number of graduated to 217 for collegiate and 114 for vocational. A donation of P100,000.00 was channeled through the Luzon Jurisdiction for the relief and assistance of victims of typhoon “Reming” in Albay and another P25,000 was donated to the National Shrine of Our Lady of Lourdes for the repair of their Parish center.

The support of the KC FR. GEORGE J. WILLMANN CHARITIES, INC. enabled thirty-one (31) diocesan-seminarians from various seminaries nationwide to undertake theological studies by providing full scholarship assistance and book allowances. Also, nine (9) KC Council Chaplains pursued their Licentiate/Doctorate degree locally and in Rome. For the year 2007 we were blessed to have two (2) newly-ordained priests and six (6) seminarians who finished their Theological Studies and are now engaged in various programs of their dioceses prior to their ordination to deaconate. The 5th Gathering of KC Priest-scholars was successfully held last April concurrently with KC Tri-state Convention in Cagayan de Oro City with a total of thirty-six (36) KC Priest-Scholars attending.


THE GOLDEN JUBILEE


The year-long celebration of your Association’s Golden Jubilee was officially launched September 2007 at KCFAPI Head Office, Intramuros. During the event, the official logo of the celebration was unveiled. The Golden Jubilee Logo illustrates heart-shaped hands as a symbol of love and KCFAPI’s offer to help the Brother Knight fulfill his hopes and dreams for his family. The KC Family is represented by “50” with the father in a prayerful mode and the mother (in top view perspective) embracing her children; and the Circles dominate the logo as they represent totality. In its effort to achieve its mission and objectives of growth and stability, KCFAPI’s contribution spans to benefit the KC Family, the Order, and the Nation in its corporate social responsibility programs.

Also during the event, KCFAPI theme song entitled “The Hands of Love” was first heard. Rev. Fr. Carlo Magno Marcelo, from the Archdiocese of Manila Music Ministry and composer of the 2005 Jubilee Song, composed our KCFAPI song that reflects the family spirit and service orientation of our Association.

The occasion served to kick off the numerous activities dubbed Big 8 for 2008 to memorably commemorate the Association’s 50 years of fraternal service.


LOOKING FORWARD


For almost 50 years, your Association has been a reliable instrument in protecting the financial future of KC families. To celebrate these successful years of fraternal service, the Board of Trustees and Management laid out the Big 8 activities to highlight the beginnings and milestones of KCFAPI, to strengthen our relationship with our stakeholders and promote awareness of your Association to all members, the Order and the general public as well.

The Official Launching held September 2007 unwrapped the Big 8 for 2008. Jubilee Updates will be released through various media such as monthly issue of The Cross –Supplement Section of the CBCP Monitor, KC website, souvenir program, newsletters and supplement feature in major newspapers to emphasize your Association’s momentous achievements. The KCFAPI Coffee Table book and videography, a documentation that highlights the Association’s history and milestones as testimony to the fulfillment of its mission and objectives, will be launched to the public towards the end of the year-long celebration.

Your Association will actively participate in KC Family Day, an annual event organized by the Order participated by brother knights members and their families through games and sports activities. KC-ing Galing, an all–male chorale competition scheduled on April-May 2008, was also organized by your Association for all interested brother knights and immediate families. By working in close coordination with the State Offices through these activities, we intend to strengthen the ties between the Order and the Association.

The Fraternal Service Convention of field representatives will be held to ensure that optimum service continues to be provided to our brother knights and families. The event aims to improve and develop persuasion and servicing skills of our dynamic and dedicated field representatives. We have prepared a spectacular BC Holder Bonanza to express our gratitude for the continuous support and confidence from our valued patrons, where prizes will be raffled to Benefit Certificate Holders with Golden Certificates.

The year-long celebration will culminate with the Grand Jubilee Ball which will be held in September 13, 2008 to personally recognize and honor individuals whose invaluable contributions have transformed the dream of Rev. Fr. George J. Willmann, SJ and 64 founding brother knights and councils into an institution of success ready and able to continue fulfilling its mission.

With the next 50 years unfolding beginning with these eight activities, your Association is more confident to face the challenges in the coming years. Armed with renewed strength, a blend of experienced and new talents, and innovations to be implemented, we now look forward to Unveiling Breakthroughs in Celebrating 50 Years of Fraternal Service in 2008.

Father of Knights of Columbus in the Philippines

 

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