2009 President’s Report

In the face of uncertainties and anxieties brought about by the previous year’s global recession, the Philippine economy generally weathered the challenges of 2009 better than its regional peers. This was mainly due to the country’s minimal exposure to securities issued by troubled global financial institutions and its low dependence on exports. Likewise, its relatively resilient domestic consumption, supported by large remittances from millions of overseas Filipino workers, and a growing business process outsourcing industry were the attributions for the nation’s performance.

For the Knights of Columbus Fraternal Association of the Philippines, Inc. (KCFAPI), 2009 will be remembered as the year your Association demonstrated strength and stability amid complexities of dampened business and consumer confidence. Be it in the busy streets of Metro Manila or in a far flung province in the Philippines, KCFAPI has always been there to epitomize Fr. George J. Willmann’s vision of ensuring the financial stability to Brother Knights in times of crisis.

True to your Association’s commitment to sustain growth through fortified fraternal service after celebrating its 50 years in the industry, KCFAPI took its first step towards the next half century of corporate life strong and proud. I am therefore privileged to present to you KCFAPI’s commendable performance in its 51 years of fraternal service.

Fraternal Service Fulfillment

By the end of the year, KCFAPI attained a record high First Year Contribution of P125 Million or 21.40% higher than the P103 Million in 2008. In the first quarter alone, 873 Brother Knights and family members enrolled for individual insurance coverage, an encouraging feat considering the financial crisis that beset the financial and insurance industry at that time. The Dollar Plan remained to be the popular plan for the KC market. As of end of 2009, a total of 57,147 KC members and their families were insured from 46,633 in the previous year. Face Value of First Year Paid Benefit Certificates registered was P984.9 Million, a 2.66% increase from P959.4 Million from 2008. Out of over 250,000 members of KC nationwide, 9.43% were provided Group Protection Benefit through the Council Mortuary Benefit Plan or CMBP amounting to P1.26 Billion, 13.5% higher than last year’s P1.11 Billion. CMBP contribution totaled P15.6 Million, an 8.42% increase from P14.4 Million in 2008. Benefits availment for the year reached 30.19%. All these give credence to the efforts of your Association’s management and staff with the Fraternal Benefits Group, its marketing arm, at the forefront in delivering quality products and services to our Brother Knights and their families.

There were 1,128 Fraternal Counselors located in different parts of the country and 22 Area Managers, who supervised and motivated the FCs assigned in their respective areas during the year. To fortify its sales force, 8 team leaders and 5 Fraternal Benefits Associates were installed in strategic areas nationwide.

Your Association continuously engaged in various activities directed to expand its reach to Brother Knights. In April 2009, the Fraternal Benefits Group unveiled its theme for the year, to “Deliver Results through Innovative and Vigorous Efforts” and setting the target for its First Year Income Contribution at P110 Million, hence, the acronym “D.R.I.V.E.110”. Various trainings and meetings were held to improve the capability of the Fraternal Counselors in their performance, to increase the level of awareness about KCFAPI’s products and services specially on the level of State Officers, District Deputies and Grand Knights, and to get a better grasp of the needs, wants and expectations of the members and their families being your Association’s patrons.

To further boost the morale of the sales force, Area Managers and Fraternal Counselors who exceeded their targets the previous year were recognized for their commendable performance and awarded a plaque of recognition with cash prize. The event known as the Fr. George J. Willmann Family Service Awards is one of your Association’s major activities every year. The 2009 AM of the Year went to Bro. Conrado S. Dator, Jr. from Southern Luzon Lakers while the FC of the Year went to Bro. Lauro L. Evangelista from Central Luzon Believers. Other exemplary Fraternal Counselors were also awarded in other categories such as the Chairman’s Circle Awards and the Fr. George J. Willmann Knights of the Round Table Award.

BC Holder and KC Market Focused

Because your Association believes that you, our Benefit Certificate Holders, and the KC market are the reasons for its existence, KCFAPI strives to continuously improve its service to satisfy and even exceed expectations.

In 2009, the enhanced KC website (www.kofc.org.ph) was officially launched in partnership with CBCP Media. Selected KCFAPI forms are now available for downloading and latest news and updates regarding your Association and the Order may be viewed from the site. Interviews with key personnel of the Association and the Order may also be viewed anytime with Podcast. Together with the monthly issue of The Cross – the supplement publication of the CBCP Monitor, the website widened KCFAPI’s reach to Brother Knights across the nation and globally.

Fortifying your Association’s fraternal service, the Contribution Notice was enhanced providing pertinent information regarding status of plans and loans. Payment of Benefit Certificate contribution may now be done in the convenience of homes or offices through the internet as the Association’s newest payment facility.

During the year, KCFAPI Head Office in Intramuros, Manila underwent various renovation and enhancement to further improve service to clients and working condition for its employees. Walk-in Benefit Certificate Holders experience a more pleasant and convenient business transaction with the renovation of the BC Holder Relations Ofiice or BRO. The new Fraternal Counselor’s lounge presents a more professional yet comfortable work and rest area for FCs. The enhancement of the third floor Social Hall made it a better venue for trainings, seminars and other functions of your Association. Furthermore, visiting Brother Knights and family members may now be accommodated with the construction of the dormitory at the fourth floor of the KCFAPI Building.

Finance and Investments Management

Your Association registered a net revenue before participation of BC Holders amounting to P65 Million for the year ended December 31, 2009. This translates to a P30 Million distribution to Benefit Certificate Holders representing your Association’s commitment that a BC Holder is to receive an amount higher than what was actually received the previous year.

Total resources accumulated to P3.05 Billion by the end of the year, an increase of 12.67% from last year’s audited figure of P2.71 Billion. Of this amount, 92.68% or P2.83 Billion forms KCFAPI’s investment portfolio which earned an overall yield of 8.09%. Translated into peso amount, this is equivalent to P207.7 Million in investment income despite actual interest rates during the year remaining very low following the 2008 economic mayhem. True to your Association’s conservative profile for investing funds as directed by its Board of Trustees, 43.81% of the said portfolio is in government securities, and 25.48% is in time deposits. A significant percentage of investments made during the year was composed of the $1.1 Million in Republic of the Philippine bonds and P193.3 Million medium-term corporate bonds earning 7.86% net and 8.59% gross average yield, respectively.

To top it all, the 22.17% operating expense ratio is one of the major contributors to the remarkable result of operations. This is an improvement from 2008’s 25.07% resulting from the management’s unyielding efforts to raise productivity level and manage costs effectively.

Association Wide Risk Management

As part of the thrust of KCFAPI, the Association Wide Risk Management or AWRM was established to effectively deal with uncertainty, its associated risks, to capture opportunities and to provide reasonable assurance regarding the achievement of its objectives.

Your Association adapted an expanded approach to manage any possible business hazards and developed a framework to be used as guide in order to develop a documented risk management plan and strategy to mitigate if not eliminate the threats identified in its operations.

Association-Wide Risk Management Framework is the overarching process that encompasses risk identification, risk analysis, risk response planning, risk response implementation and risk response monitoring. The first three critical components were conceptualized by the KCFAPI employees spearheaded by your Association’s Risk Officer. By the end of the year, your Association accomplished setting up several strategies to reduce or control risks.

The last two components, Risk Response Implementation and Risk Response Monitoring, are set to be executed in 2010. Your Association is going to integrate AWRM to its Quality Management System (QMS) to implement it and closely monitor risks that may occur.

Transparency and Good Corporate Governance

In maintaining the highest standard of conduct and morality in our business dealings, in accordance with Christ’s teachings, KCFAPI wrote and adapted a manual on good corporate governance in pursuing its mission with zeal and unwavering enthusiasm to instill moral, social and legal confidence and stewardship in the services it provides. This is a testimony that your Association genuinely adheres to the principles of transparency, consistency and accountability and will remain faithful and steadfast in providing you fortified fraternal service.

In 2009, KCFAPI, as a mutual benefit association together with other Insurance entities operating in the Philippines under the supervision of the Insurance Commission, participated in the preparation of The Corporate Governance Scorecard for Insurance Companies. The scorecard is the first of its kind in the world and has been developed to further measure the levels of compliance with statutory and regulatory requirements.

The Board of Trustees, management, staff and fraternal benefits representatives are dynamically participating in exemplifying the traits envisioned by good corporate governance. While the Trustees have a term of three years, they comply with the regulatory requirements and undergo specialized training on corporate governance. Your Executive Vice President, Sis. Ma. Theresa G. Curia, is currently a Fellow of the Institute of Corporate Directors, an organization working in close partnership with other business, government, and civil society organizations to promote and uphold the practice of good corporate governance. Also as an evident mirror of your Association’s conviction to this ideal leadership practice, two Independent Board of Trustees: Mr. Ramon E. Rodrigo and Mr. Hospicio T. Suralta, were elected to co-navigate the corporate landscape and organization’s philosophies towards continual enlightenment and excellence.

Your Association’s Code of Ethics is coherent with the thrust of Good Corporate Governance in providing assurance to the general membership and the public that transparency and disclosure is in place to abate conflict of interest, dishonesty and misconduct.

Ever firm and committed, KCFAPI will continually come up with fresh outlook and new ways to achieve quality and optimum fraternal service in accordance with the highest codes of probity and professionalism.
Talent Management

Acknowledging that KCFAPI’s management and staff are its most valuable resources in providing optimum service to its Benefit Certificate Holders, your Association ensures that its 67 strong workforce are continually provided with opportunities for empowerment and career development. Strategic Planning Process seminar conducted by the Harry Pound Company was given to all supervisors and officers of KCFAPI Group of Companies.

Consistent to its efforts in promoting continuous learning and career growth, your Association provides LOMA education program for its employees. Life Office Management Association (LOMA) is an international organization based in USA, which provides quality employee training and development especially to those who belong in insurance and financial services industries. As of 2009, your Association has 6 employees designated as Fellow, Life Management Institute (FLMI); 2 Associate, Life Management Institute (ALMI); 5 Professional, Customer Service (PCS); and 5 Associate, Customer Service (ACS).

To maintain a balanced work-life among KCFAPI personnel, various employee activities were organized throughout the year: for spiritual growth, the annual Retreat was held in Carmelite Missionaries Center for Spirituality in Tagaytay City; a special Kiddie Santa Cruzan was last year’s Family Day activity where children of employees got to participate in a mini procession held within KCFAPI vicinity; employees enjoyed recreation and physical work out during the badminton tournament; ballroom dancing was a pleasant after work activity for participants of dance club; gratitude for the blessings received was displayed through generosity – KCFAPI style, as employees distributed food baskets along the streets of Manila as last year’s Gift Giving activity; Board of Trustees, officers, employees from Head Office, Service Offices, field representatives and subsidiaries gathered in Intramuros come December 2009 to celebrate Christmas as a family; and the annual Year-End Toast was attended by Head Office personnel as thanksgiving for all the successes, difficulties and lessons learned in 2009.

KCFAPI is indeed an institution where employees not only find both professional and spiritual growth and development but also a place that they can call home.

Corporate Social Responsibility

Fully aware of KCFAPI’s moral and social responsibility, your Association takes part in various efforts for the good of the Order and the nation.

In 2008 we set up the CBCP Seed of Hope Fund in the amount of P10,000,000.00 wherein earnings from the fund will be donated to the Catholic Bishop’s Conference of the Philippines (CBCP). In 2009, we handed over P777,000.00 to the Most Reverend Angel N. Lagdameo, DD, the president of CBCP. This July 2010 during the annual CBCP Plenary Assemby, we will be giving P809,000.00 to the new President of the CBCP, Most Reverend Nereo P. Odchimar, DD.

During the early part of the year, KCFAPI joined hands with KC Luzon in supporting the Church in its Pro-Life Advocacy against the threats brought about by House Bill 5043, otherwise known as the “Reproductive Health (RH) Bill”. Dubbed as “Walk for Life”, your Association together with representatives from various councils from Luzon Jurisdiction walked the streets of Manila to express their stand against the House Bill.

KCFAPI likewise spearheaded a nationwide drive for VOTERS’ EDUCATION FORUM in close coordination with the COMELEC and the Order of the Knights of Columbus to enlighten the public about the first ever automated national elections. Very recently the Order of the Knights of Columbus and KCFAPI inked a memorandum of agreement with the Parish Pastoral Council for Responsible Voting or PPCRV to ensure a fair, honest, peaceful and credible national elections.

It was also during the year when your Association launched a livelihood and microfinance project dubbed as SICAP (Social Improvement through Community Action Program), a special project of KCFAPI, intended to institute social development that focuses on socio-economically challenged households. Initial beneficiaries of the said project are selected women from Barangay 658 of Intramuros, Manila.

Golden Jubilee Stamp

Starting with a seed capital of only P32,000, your Association proved its financial strength as its resources continued to expand over the years totaling to P3.05 Billion by end of 2009. In commemoration of this, the Golden Jubilee Stamp was launched during its celebration of your Association’s 51 years of providing protection to Brother Knights and families.

ISO Certification

A testimony to the Association’s commitment to continuously improve the quality of products and services for the Benefit Certificate Holders and the entire KC Market, KCFAPI remained certified by the Certification International Philippines, Inc. (CI) as conforming to standards set by the International Organization for Standardization or ISO, a worldwide federation of national standards bodies. KCFAPI’s Quality Management System was assessed as compliant to ISO 9001:2000 for the scope of design, development and provision of mutual benefits. Intending to maintain its Quality Management System and certification from CI, your Association is gearing up in transition to ISO 9001:2008 which will be implemented by 2010. KCFAPI is proud to be the first mutual benefit association to be certified by ISO.

The Outstanding Knights of Columbus Awards

On July 2, 2009 your Association formally launched The Outstanding Knights of Columbus Awards (TOKCA). Dubbed as TOKCA 2009, its aim is to give due recognition to Brother Knights who have excelled in their fields of expertise. This is a reaffirmation that these Knights of Columbus have reached the pinnacle of their career and are now the source of inspiration for our Brother Knights.

TOKCA is one prestigious award where the Screening Committee and the Board of Jurors spent tedious time and effort to arrive at a final decision. Your Association takes pride in having the following composition of TOKCA Board of Jurors:
1. Leaders of the Order of the Knights of Columbus
- SK Alonso L. Tan – KC Luzon Deputy.
- SK Dionisio R. Esteban, Jr. - Visayas Jurisdiction Deputy.
- SK Sofronio R. Cruz - Mindanao Jurisdiction Deputy.
2. KCFAPI Officers
- SK Patrocinio R. Bacay – Chairman of KCFAPI.
- SK Antonio B. Borromeo – President of KCFAPI.
3. Two (2) independent Jurors in the persons of –
- Amb. Henrietta T. de Villa - the National Chairperson of the Parish Pastoral Council for Responsible Voting; and
- Prof. Felipe B. Alfonso - Vice Chairman of the Asian Institute of Management.
Finally, the Chairman for this search is your Association’s Spiritual Director, Msgr. Pedro C. Quitorio III, who is also the CBCP Media Director. Msgr. Quitorio is the editor of CBCPNews, CBCP Monitor and Impact Magazine.

A specially designed bronze statuette of Fr. Willmann will be awarded to the selected Knights on the occasion of the 8th National Convention in Cebu City.
Recipients of this prestigious award are:

WINNER CATEGORY
Leopoldo Felix G. Saquing Academe
Marteliano A. Alcontin Agriculture
Reynaldo B. Odulio Business & Entrepreneurship
Martin C. Ilao Engineering, Science and Technology
Armando C. Velasco Government Service
Resureccion S. Salvilla Journalism & Media
Purisimo S. Buyco Law & Judiciary
Zacarias C. Candelaria Medical & Health Care Services

Subsidiaries and Affiliates

KEYS REALTY AND DEVELOPMENT CORPORATION (KRDC), A 97% owned subsidiary by KCFAPI is a P348 Million company. It houses 3 of 6 KCFAPI service offices in the provinces namely: Cabanatuan, Cagayan de Oro and Davao. It also has the following real estate projects completed and sold: Cartagena II Townhouses, a 30 unit townhouse in Parañaque; and Cartagena Suites Residential Condominium Building, a 4-storey residential condominium in Makati with 56 saleable units. Aside from real estate, Keys Realty has a division to handle its mortuary services under the name Holy Trinity Memorial Chapels and Crematorium (HTMC). The HTMC complex is located along Sucat Road in Parañaque City with a 3-storey building fully air-conditioned chapels, WIFI at selected areas to keep abreast with industry operation and 2 units of state-of-the-art cremation machines. HTMC was the first funeral parlor in the south with a water waste treatment facility installed in compliance to the Department of Environment and Natural Resources requirements. Keys Realty has continually declared and paid substantial cash dividends to KCFAPI.

MACE INSURANCE AGENCY is a 100% owned subsidiary of your Association with total resources amounting to over P8 Million which provides non-life insurance needs of Brother Knights and their families. For 2009, it declared P900,000.00 in cash dividends to KCFAPI considering your Association’s investment in Mace is only P2.0 M.

KC FR. GEORGE J. WILLMANN CHARITIES, INC., one of KCFAPI’s Foundations, provides financial support to various entities and individuals in need. Some of its beneficiaries in 2009 are the Home for the Aged Priests in Borongan, Eastern Samar, John Paul II Seminary in Digos and victims of typhoon Ondoy in Tanay, Rizal. Aligned with the celebration of the Year for Priest, Fr. Willmann Charities also sponsored the annual gathering of KC Priests Scholars Association in its 6th National Annual Fellowship/Retreat in Tiaong, Quezon Province with the theme “KC Priests: Called to Witness the Spirituality of Stewardship.”

Another affiliate, the KNIGHTS OF COLUMBUS PHILIPPINES FOUNDATIONS, INC., together with Gawad Kalinga Foundation, successfully completed its 2nd year housing project in Tungkong, Mangga, San Jose del Monte in Bulacan, a continuation of its first – phase last 2008. Seven (7) additional houses and the Fr. George J. Willmann Chapel were constructed during the year.

By year end, both Foundations supported and continue to support deserving scholars:
Current Scholars (2009-2010) Graduated Scholars
Theology 40 Ordained Priests (Theology) 108
Collegiate 73 Ordained Deacon 5
Licentiate – Local 6 Licentiate – Local 9
Licentiate – Rome 3 Licentiate – Rome 21
Collegiate Scholarship 242
Vocational Scholarship 114
High School 1

Acknowledgment

The outstanding performance of your Association was made possible through the unrelenting support of the Board of Trustees; the commitment and loyalty of management and staff; the dedication of field representatives; and the unwavering trust and confidence of our Benefit Certificate Holders in KCFAPI’s ability to provide protection to the KC family. We sincerely thank all of you.

KCFAPI is grateful for all the blessings and provisions of success it received during the year and inspires us more to give back to God all the glory through works of Charity, Unity, Fraternity and Patriotism. May our Lord Almighty continue to shower us with all His grace and guide us as we traverse the next 50 years of our corporate life.

Vivat Jesus!

ANTONIO B. BORROMEO
President

Father of Knights of Columbus in the Philippines

 

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