2011 PRESIDENT’S REPORT

The year 2011 is another banner year for the Knights of Columbus Fraternal Association of the Philippines, Inc. (KCFAPI).  Inspired by its founder, Fr. George J. Willmann, SJ, your Association successfully attained its objectives for the benefit of its members and the benevolent causes it supports.

I am pleased to present to you KCFAPI’s 2011 Operations.

 

ON PROVIDING OPTIMUM FRATERNAL SERVICE

KCFAPI is committed to fulfill the primordial purpose of the Order of the Knights of Columbus: to reach out to more Brother Knights throughout the country and provide them insurance protection benefit together with their immediate families.  Your Association was able to protect a total of 96,116 Brother Knights and family members with regular plans and Council Mortuary Benefit Plan (CMBP), 4.60% higher than the 91,699 covered as of the same period the previous year.  Total Protection Benefits provided amounted to P10.7 Billion, a 5.80% increase from P10.1 Billion in 2010.

Total insurance contribution in 2011 breached the P500.0 Million level, reaching P501.7 Million, 10.14% higher than previous year’s P455.5 Million. Your Association also efficiently managed its operations recording an Operating Expense Ratio of 22.71%.  Hence, Net Revenue before Participation of BC Holders amounted to P71.9 Million, surpassing year-end target by a significant 30.08% and contributing to the 5.86% growth in the total net worth.  KCFAPI’s net worth has now grown to  P702.5 Million, a 5.86% growth from previous year.

A total of 7,708 new lives were covered with regular plans, 8.17% higher than last year’s 7,126.   This resulted to First Year Contribution (FYC) of P127.0 Million, the highest ever attained by your Association in its 53 years in existence.

The CMBP, which offers affordable rates that highlight the social dimension of the plan, posted P1.5 Billion worth of coverage to a total of 716 councils nationwide protecting 28,165 KC members and 12,097 family members.  The 40,262 total enrollees under this plan exceeded target by 3.69% and last year’s record by 7.78%.  CMBP contributed P18.6 Million to FYC as it surpassed the target of P17.8 Million by 4.65%.   

KCFAPI released P78.6 Million worth of death benefits covering 1,206 lives last year, inclusive of CMBP and Fraternal Accidental Death Benefit (FADB).  Your Association also provided maturity claims covering 2,476 lives, inclusive of endowments and return of contributions amounting to P115.8 Million, an increase of 30.57% or P27.1 Million from the previous year.  Total Living and Death Benefits granted to Benefit Certificate Holders in 2011 amounted to P293.0 Million, 16.90% higher than P250.7 Million in 2010.

Providing service to Brother Knights and their families will not be possible without the hardwork and dedication of your Association’s field representatives.  As of December 2011, there are 1,008 active Fraternal Counselors (FC) nationwide, 304 of whom are new recruits.  Last year’s recruitment was better than the previous year’s 282 but 39% lower than target.  To boost recruitment, 20 Team Leaders nationwide were appointed to recruit more FCs.

To recognize outstanding sales force achievers, the Fr. George J. Willmann, SJ Annual Family Service Awards was held in Cebu last March 2012.  Bro. Salvador R. Aspuria, Sr. of the Cordillera Braves won the Area Manager (AM) of the Year award.  Sis. Emma G. Gumapac of Metro Manila Achievers bagged the Fraternal Counselor (FC) of the Year citation.

Your Association also recognizes the distinct performance of members and the children of members.  In 2011, KCFAPI sponsored the Fr. George J. Willmann, SJ Award for Academic Excellence which was awarded to a total of 69 applicants who qualified for the program: 7 from elementary, 6 from high school, 9 from college and 47 for BAR/BOARD passers.  Each one received the Fr. George J. Willmann, SJ Medallion and a certificate of recognition through their respective councils or districts.

The academic award for excellence was conferred to inspire members of the KC community to excel academically and will serve as shining examples in forming a “strong Christian Society”.  With the success of the program, your Association is extending it for the school year 2012-2013.

Together with the Order of the Knights of Columbus and KCFAPI Foundation, the Knights of Columbus Fr. George J. Willmann Charities, Inc., KCFAPI launched the Fathers for Good Philippines.  Bros. Alfredo G. Lallana, Gerardo G. Gamposilao and Rosario O. Derilo were awarded Fathers For Good for Luzon, Visayas and Mindanao, respectively.  They are recognized   Knights   of Columbus   members   who   exemplify  the  inspiring  characteristics,  virtues and role model  qualities of a  good  Catholic  father  through responsible parenting,  all  projecting   a   strong   public   knowledge  of  the mission of the  Order  of  the  Knights of  Columbus  as  a means to attract new members and  providing  inspiration  to  members  to  live  up to the  cardinal  principles of Charity, Unity, Fraternity and Patriotism.


ON BEING A UNIQUE MUTUAL BENEFIT ASSOCIATION

KCFAPI is the only Catholic life insurance entity in the country and in the whole of the Asean region with evangelization as its major core value. 

Providing excellent service to Benefti Certificate Holders and all Brother Knights and their immediate families nationwide has always been your Association’s focus.  Aside from being the only life insurance organization with unprecedented record in fast claim settlement service, KCFAPI is also the only life insurance provider with unfailing increasing participation of BC Holders in Net Revenue.

The increasing availment of protection provided by KCFAPI indicates its ability to respond to the ever changing needs of its members. 

KCFAPI proudly remains in conformance to standards set by the International Organization for Standardization or ISO, a worldwide federation of standards body.   The Certification International Philippines, Inc. (CI), for six years now, has certified KCFAPI as compliant to the strict standards of ISO 9001:2008 for the scope of design, development and provision of mutual benefits.  We are proud to state that KCFAPI holds the distinction of being the only mutual benefit association (MBA) to be ISO certified.

The on-line connectivity project which started in 2010 was in full operation in 2011.  KCFAPI Service Offices in Cabanatuan, Cebu, Iloilo, Cagayan de Oro, Davao and Zamboanga are now linked and have access to real time information from the Home Office in Intramuros, Manila.  This contributed substanitaly to savings in communiction expenses.

In order to strengthen the fraternal camaraderie among its members, the Association launched the KCFAPI Membership Card as a supplemental offering. The KCFAPI Membership Card is a unique insignia that instantly identifies insured members of the Order of the Knights of Columbus and members of their families. In addition to existing benefits being enjoyed, BC Holders, through the KCFAPI Membership Card, will be able to avail of discounts on future KCFAPI promo items as well as on products and services through prospective tie-ups with other business establishments. With the Membership Card’s paperless billing notice facility, BC Holders will also be able to directly support the world-wide green movement.  Furthermore, each cardholder will be able to promote and increase awareness of the life and works of Fr. George J. Willmann, SJ as an inspiration to Brother Knights and the Filipino people.

 

ON GUARANTEEING OUR COMMITMENT TO OUR BC HOLDERS

Amidst the challenges in the economy, your Association remained resilient and focused in achieving its objective of protecting the rights and benefits of BC Holders through sound financial management of its investments. 

Starting from P32,000 in 1958, KCFAPI’s total resources is now P3.6 Billion, a growth of 100,000 times more than its seed capital.  Ninety-four percent (94%) of the total resources comprised the investment portfolio and your Association has always been prudent in making investment decisions.  Majority of the P3.4 Billion investment portfolio is invested in Government Securities and other fixed income securities.  Investment yield of 7.87% translated to a net investment revenue of P215.0 Million and exceeded most of other financial institutions’ and mutual benefit associations’ yield.  KCFAPI’s investments are highly conservative and are in compliance with the prescriptions of the Insurance Commission (IC).

Eighty-three percent (83%) of total liabilities of P2.9 Billion constitute your Association’s legal policy reserves.  KCFAPI has no borrowings whatsoever from any bank or financial institution.  This highlights how strong the balance sheet of your Association.

KCFAPI’s commitment is further demonstrated by the unrelenting effort of your Association to establish a strong financial base.  For 2011, KCFAPI’s recorded Risk Based Capital (RBC) ratio of 212.90%, which is higher than the 150.00% required from Mutual Benefit Associations as prescribed by the IC.

While KCFAPI continues to effectively fulfill its mission to provide benefits to its members and their immediate families, it also recognizes its responsibility to give part of its net revenue to its member-BC Holders.  For the Association’s 2011 results of operation, P33.0 Million will be distributed as participation of BC Holders.  Again, as in the past years, all BC Holders will continue to receive increased participation in the earnings of your Association.  Moreover, a total of P8.7 Million was also provided by KCFAPI as support to the foundations and other religious organizations in carrying out their respective mission including scholarship program for deserving college students and seminarians. 

 

MAJORITY OWNED AND WHOLLY OWNED COMPANIES

Part of your Association’s aspirations are to expand the benefits that KC members enjoy and to extend services to non-members in the belief that while the benefits provided by your Association are exclusive to the members of the Order, KCFAPI still holds the responsibility to serve brother Knights, their family members and non KC members alike.  This aspiration of your Association gave way to the establishment of its four majority owned and wholly owned companies and foundations:  Keys Realty and Development Corporation, Mace Insurance Agency, Inc. , KC Philippines Foundation, Inc. and Knights of Columbus Fr. George J. Willmann Charities, Inc.  Five percent (5%) of the Association’s Excess of Revenues over Expenses is being given in support of our Foundations and various charities.  The wholly owned and majority owned companies:  Keys Realty and Development Corporation and Mace Insurance Agency, Inc. also donate 5% of their net income to the Foundations.  In addition, they declare and pay KCFAPI 50% of their Net Income from the preceding year.

KEYS REALTY AND DEVELOPMENT CORPORATION (KRDC), established on August 18, 1992, is  96% owned subsidiary by KCFAPI which has a total resource of P356.8 Million.  Restating the value of the real estate properties recorded in its book to the current market value, total resources of this company will reach nearly P800 Million.  Keys registered a net income of P15.7 Million as of December 2011 and paid a total dividend of P10.64 Million to KCFAPI during the year.  Properties currently owned by KRDC include KC Buildings in Cagayan de Oro, Davao City and Cabanatuan City; the 4th Floor Athenaeum Building, Cartagena Suites Condominium, and 12th Floor Vernida IV Condominium, all in Makati City.

For 2011, the company acquired Doña Soledad Extension building in Parañaque for P12 Million.  The three-storey building has an area of 800 square meters with a total of 14 units for rent, 6 are for commercial while the rest are for residential use.  For the coming year, KRDC intends to invest P150 Million in additional properties in Baguio, Iloilo and Tagaytay.

A division of KRDC, Holy Trinity and Mortuary Chapel and Crematorium (HTMC) provides a sanctuary for the deceased and the bereaved.  HTMC is in its 28th year of excellently providing memorial care, offering the best facilities both for chapel and outside viewing.  Recently, it has completed the construction of the P30 Million multi-level parking which could provide up to 100 parking slots.  HTMC is also the only funeral home in the south with DENR-approved waste water facility.

MACE INSURANCE AGENCY, INC. (MACE), another company which is 100% KCFAPI-owned, is a non-life insurance agency.  While its resources are just P7.9 Million, it is able to provide unique service to the non-life insurance requirements of the members of the Knights of Columbus and their families.  On November 23, 2011, MACE, in partnership with one of its principals, Philippine British Assurance Company, launched its new product “SUPERCARE”, a Philippine British Hybrid Personal Medical Insurance that is designed to provide policyholders with accident insurance, daily in-hospital and dental coverage through accredited providers nationwide.

Due to its excellent performance in 2011, MACE expects to pay dividend of P600,000 to KCFAPI in 2012, 5.6% higher than the declared and paid dividend in 2011 of P568 Thousand based on its 2010 performance.  In its 32nd year, MACE intends to further boost the performance of the agency in both the revenue and service aspects of its operations.

KC PHILIPPINES FOUNDATION, INC. (KCFPI) is a KCFAPI Foundation which provides scholarships to college and assistance to calamity stricken areas in the country, including livelihood trainings and programs.  For the school year 2010-2011, sixteen (16) scholars have successfully finished their respective collegiate courses including two (2) who graduated with honors.  In addition, the Foundation is very proud to have a graduate scholar, Mr. Sydrick Jose Andrei Deiparine of Mandaue City, Cebu who successfully hurdled the 2011 bar examination.  Atty. Deiparine graduated with a degree in Management Accounting from the University of San Carlos in 2005 then pursued Bachelor of Laws while working to support his studies.

In addition to scholarship grants, the Foundation also provided assistance to the victims of typhoons “Pedring” and “Quiel” which devastated the country in 2011 leaving hundreds of families homeless.

During the devastation of the typhoon “Sendong”, KCFAPI gave P362,500 in financial assistance to the victims of that flash floods that swept across Northern Mindanao shortly before Christmas through CDO Archbishop Antonio Javellana Ledesma, SJ and Iligan Bishop Elenito R. Galido, DD.

KNIGHTS OF COLUMBUS FR. GEORGE J. WILLMANN CHARITIES, INC. (KCFGJWCI).  This 100%  KCFAPI-owned Foundation  provides scholarships to priestly vocation.  During 2011, the two Foundations provided scholarship grants to beneficiaries for the following courses:

 

ON GOOD CORPORATE GOVERNANCE & RISK MANAGEMENT

KCFAPI believes in sincere adherence to the principles and best practices of good corporate governance in the attainment of its corporate goals.  The Board of Trustees, management, officers, staff and sales representatives of KCFAPI faithfully practice accountability, transparency and integrity in service to BC Holders.

Manual on Good Corporate Governance

The operational effectiveness of KCFAPI depends on the commitment to the practice of good governance.  Hence, KCFAPI implemented a relevant Manual on Good Governance in line with KCFAPI’s Articles of Incorporation and By-laws to establish a system and rules of sound corporate governance.  To uphold the impartiality of the Board, its membership includes the presence of two independent trustees, namely Atty. Emiliano R. Deleverio and Bro. Hospicio T. Suralta, Jr.  In compliance to the requirements of the Insurance Commission, KCFAPI regularly submits a Corporate Governance Score Card to attest the integrity and competence of the members of the Board of Trustees in the discharge of their duties.  KCFAPI also ensures complete and timely submission of all reportorial requirements set by the Securities and Exchange Commission and the Bangko Sentral ng Pilipinas.

Code of Ethics

On October 21, 2011 the Board of Trustees approved and adopted the revised KCFAPI Code of Ethics which embodies the standards of integrity, conduct and morality in business dealings of the Association with the public.  On that same date the Code took effect covering all Members of the Board of Trustees, officers, staff, field representatives of KCFAPI and outsourced services.  Wholly owned or majority owned companies of KCFAPI likewise adopted the Revised Code of Ethics as part of their corporate policy. 

Risk Management

In response to the changing global climate that contributed to natural calamities, various preventive measures, such as employee awareness and disaster guidelines, were put in place and maintained as part of KCFAPI Wide Risk Management to ensure continuous operations in the event of a calamity or natural disaster.

 

ON TALENT MANAGEMENT

KCFAPI employees learn and experience holistic development as they exercise their social skills and creativity while combating work related stress by participating in various employee activities being held annually.

Your Association recognizes that igniting the potential of its employees to deliver results requires improved industry knowledge as well as increased management and operational skills. Thus, to strengthen the aptitude and skills of its human resources, KCFAPI engages with Life Office Management Association or LOMA, an international organization known for its reputation as a trusted source for quality employee training and development in the insurance and financial services industry for over 80 years. 

At present, there are already eight (8) employees who have earned Fellow, Life Management Institute (FLMI) designation; four (4) with Associate, Life Management Institute (ALMI); five (5) with Professional, Customer Service (PCS); and five (5) with Associate, Customer Service (ACS).  The FLMI program is a 10-course professional development program that provides an industry-specific business education in the context of the insurance and financial services industry while the ALMI program is a 5 – course program that strengthens employees’ financial acumen and knowledge of the core operational areas and marketing and sales functions that make the insurance business unique. The PCS program includes three advanced-level, in-depth courses focused exclusively on customer service within the insurance and financial services industry while the ACS program provides a course on the foundations of customer service.

To further increase the employees’ auditing skills to help maintain its certification with ISO, KCFAPI invited a DTI representative and Internal Quality Audit Trainer to conduct a two-day workshop to more than 15 employees to serve as a refresher course for experienced auditors and a formal training for new ones. The workshop helped increase the employees’ level of competence and familiarity to audit procedures and equipped them for the actual audit process.

Activities that aim to strengthen the employees’ spiritual and physical well-being were held to promote a balanced quality of work-life. Among these activities is the Annual Retreat which was held in April last year for employees to enjoy the peaceful ambiance at the Capuchin Retreat Center in San Sebastian Lipa City, Batangas while receiving spiritual nourishment through KCFAPI’s Spiritual Director, Msgr. Pedro C. Quitorio III.

KCFAPI employees and their families likewise enjoyed the first ever outdoor Family Day experience at the
Manila Ocean Park, the first marine-themed park in the Philippines.  Another first was the celebration of the Feast day of Blessed John Paul II.  KCFAPI hosted a procession and thanksgiving Eucharistic celebration at the San Agustin Church which was attended not only by KCFAPI employees and Brother Knights but also by the various residents and office workers in Intramuros. The event was held to show the participants’ simple expression of support and devotion to Blessed John Paul II. 

A three-day bowling tournament in honor of Fr. George J. Willmann, SJ was held at the Paeng’s Midtown Bowl and the Annual Christmas Party was held at the Bayleaf Hotel, both events participated in by the employees of KCFAPI group of companies.

 

ON CORPORATE SOCIAL RESPONSIBILITY

In 2011, your Association partnered with the Catholic Bishops’ Conference of the Philippines (CBCP) in support of the Church’s efforts to inculcate the spirit of the Plenary Council in all the faithful throughout the country.  KCFAPI donated P567,520 for the review of implementation of the acts and decrees stated under the Second Plenary Council of the Philippines (PCP-II) in Dioceses.

During the year, KCFAPI also turned over P763,000 income from the CBCP Seed of Hope Fund to its then President, Most Reverend Nereo P. Odchimar, DD during the Annual Plenary Assembly in July 2011.  The P10 Million CBCP Seed of Hope Fund was established in 2008.  This fund is similar to the Corpus Christi Fund of the Knights of Columbus USA where earnings of the Fund are donated to the CBCP for its priority projects.  To date, KCFAPI has donated P2.3 Million to CBCP from the Seed of Hope Fund.

KCFAPI stands firm alongside the Catholic Church in the crusade to defend life.  As a testament of protest to the Reproductive Health (RH) Bill, your Association joined Brother Knights and their families from Luzon in the march from General Luna, Intramuros, Manila to Rajah Sulayman Park in Malate during the KC Luzon Jurisdiction’s Walk for Life.  KCFAPI also supported pro-life publications in the broadsheets and CBCP for Life website.

KCFAPI’s commitment to corporate social responsibility is affirmed by the active participation of its employees to various activities and projects for a social cause.  Highlighting the importance of education, the Association’s Gift Giving Committee, a group of volunteer employees, successfully spearheaded a number of fund drives which allowed them to provide tables and chairs for Brgy 658 Day Care Center in Intramuros, Manila and even extended their reach to selected provinces.  With the help of its Service Office staff, your Association was able to deliver school supplies to selected student beneficiaries in Cebu; Bito-on I Day Care Center in Jaro, Iloilo; Solidarity Against Oppression (SPOSO) in Davao; Bahay Bulilit Day Care Center in Cagayan de Oro City; and Luzville Day Care Center in Zamboanga.  Your Association also brought cheers to students of Brgy 655 and 658 in Intramuros, Manila come December 2011 when gift packs were distributed in time for Noche Buena.  Your Association likewise held outreach projects for the benefit of the students of the Philippine School for the Blind and Deaf.

In its effort to help address unemployment and poverty in the country by providing alternative and sustainable source of livelihood, your Association enhanced its micro-financing project from 2010 and offered micro-loans to support micro and small business of Brother Knights through the SIKAP – Micro-finance Program.  By December 2011, a total of P825,000 loan amount was released to 14 Brother Knights engaged in backyard piggery, food vending, furniture making and other livelihood projects.

 

CAUSE FOR THE BEATIFICATION OF FR. GEORGE J. WILLMANN, SJ

The year 2011 witnessed KCFAPI’s pursuit of a more formal and defined structure to aggressively push the Cause for the Beatification of Fr. George J. Willmann, SJ.  The KCFAPI Board of Trustees approved the formation of the National Executive Committee (NEC) for the Cause of Fr. George J. Willmann, SJ with no less than KCFAPI Chairman and former Chief Justice Hilario G. Davide, Jr. as NEC Chairman, Msgr. Pedro C. Quitorio III as the Vice-Chairman and the three K of C State Deputies as Committee members.

With the NEC’s mission to provide overall, top-level supervision, guidance and coordination to the Working Committees on the Cause, the Committee now is helping to establish a deep and widespread national awareness and appreciation of the life and works of Fr. George J. Willmann, SJ towards its vision of a widespread “fama sanctitatis” where people from all walks of life invoke the intercession of Fr. Willmann in their prayers to our Lord and an eventual submission and progression of the Cause at the Congregation for the Causes of Saints at the Vatican.

Ongoing major plans for the Cause of Fr. Willmann include: 1) the construction of a Fr. George J. Willmann, SJ museum that will house historical artifacts, souvenirs, books and articles, vestments, etc. of Fr. Willmann; plus a chapel in the KC National Headquarters, Intramuros that will provide a solemn place for prayer and adoration and 2) the conception and airing in 2012 of a local radio drama that depicts the life, works, acts, thoughts and actual experiences of Fr. Willmann, particularly in his long-standing mission with the Knights of Columbus.

The NEC likewise is pursuing a drive to further increase the number of Fr. Willmann Fellows in support of the Cause with the formulation of new and more attractive membership schemes for future Fr. Willmann Fellows.  The annual tradition of celebrating the death anniversary of Fr. Willmann was again undertaken jointly by Knights of Columbus Fraternal George J. Willmann Charities, Inc., KCFAPI and the K of C in the Philippines as they successfully sponsored a TV Mass held last September 14, 2011 at the San Agustin Church.

The Knights of Columbus Fr. George J. Willmann Charities, Inc.’s corps of KC Priests, all former scholars of the Foundation, continued to volunteer to write and complete the Fr. Willmann Series on the Sacraments consisting of one pamphlet for each of the seven Sacraments – comprehensively describing the meaning and relevance of each Blessed Sacrament to our Catholic lives.

 

LOOKING FORWARD

Through the guidance and support of the Board of Trustees and the unwavering spirit of management, staff and field representatives in meeting the demands of the ever changing economic and social environment, your Association stood up to the challenges and emerged stronger and more stable than ever in 2011.

The growth of KCFAPI into a group of organizations moving towards specific goals represents the realization of the four cardinal principles of the Order: Charity as the focus of the Foundations, Unity as demonstrated by the entire KC group, Fraternity as reflected in our committed service to our Brothers and their families and Patriotism through our contribution in building a better nation of citizens who are law abiding and concerned with their fellowmen.  As parent to these organizations, KCFAPI vows to continue to live by these principles for the years to come. 

Looking forward, KCFAPI has programs anchored on supporting pro-life activities and the cause for the canonization of Venerable Fr. Michael J. McGivney, founder of the Order of Knights of Columbus.  Your Association seeks to further excel in carrying out its mission of service to the KC family and also to the rest of the Catholic faithful throughout the country.

With more fervor, your Association remains steadfast in spreading the blessings of life in 2012. 

Vivat Jesus!

GUILLERMO N. HERNANDEZ
President

Father of Knights of Columbus in the Philippines

 

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