2013 President's Report

In 2013, the country continued to foster a phenomenal economic growth rate of 7.2% that boosted business and consumer confidence especially in the insurance industry.  The year however, was not without its ups and downs. Political scandals and natural calamities threatened to undermine the economic gains from the past years.  The unprecedented devastation wrought by super typhoon “Yolanda” and other natural calamities that battered the Visayas region in some way shaved off some of these gains by the end of the year.  Yet, despite these adversities, the country continued to show a positive trend in economic growth and a bright future for the industry.

It was also the year the Vatican declared the observance of the “Year of Faith”.  The declaration called for reflection, rediscovery of faith and a renewal  in the Roman Catholic Church.  Heeding to the call, KCFAPI adopted the theme “Proclaiming and Celebrating Faith” which became the Association’s guiding principle in providing its services to our valued stakeholders.

As the Knights of Columbus Fraternal Association of the Philippines, Inc. or KCFAPI continues to reap blessings, it also strives to bring to its Benefit Certificate Holders the best that life can give through excellent services and products.  With the guidance and wisdom of the Board of Trustees, the perseverance of Management and the dedication of the staff, your Association not only has grown to be a stronger and more stable institution but transcended as an instrument in upholding the renewal of faith in God and in the Roman Catholic Church.

It is therefore with great pleasure and honor to present to you how your Association performed for the year 2013.

 

FRATERNAL SERVICE DRIVEN

KCFAPI in its commitment to extend fraternal protection to Brother Knights and their family members have covered 64,195 Brother Knights and family members with regular insurance and Council Mortuary Benefit Plan or CMBP in 2013.  This is higher than the 63,990 recorded in the same period the previous year.

Out of the 311,811 membership nationwide, 20.59% availed of the benefits KCFAPI offered.  Total regular protection provided to members increased by 6.05%, from P11.67 Billion in December 2012 to P12.38 Billion in 2013.   CMBP on the other hand contributed P20.94 Million, which is higher than target of P20.20 Million by 3.69%.  A total of 44,818 lives were covered with CMBP amounting to P1.74 Billion of which 31,082 are KC members while 13,736 are family members.  This makes up 798 councils availing of the Association’s group insurance coverage offered to all eligible Knights of Columbus members and their immediate families with affordable annual rates, highlighting the social dimension of this plan.  

Face Value of First Year Paid Benefit Certificates registered an increase of 2.60% or P31.80 Million, showing that the KC family has been availing of higher protection value that would fit their needs.  This contributed to KCFAPI’s First Year Contribution or FYC amounting to P153.62 Million by the end of December 2013, the highest ever attained by your Association in its 55 years of operations.  This is 3.45% higher than its target of P148.50 Million and exceeded last year’s figure of P138.32 Million by 11.06% or P15.30 Million.

In 2013, KCFAPI launched its newest product, the KC Health Guard Plus, a 5-in-1 plan which is a ten-year term plan insurance coverage with 5 built-in benefits such as: hospital cash reimbursement, intensive care, surgical support, accidental death and disability and money back guarantee benefits.  This health coverage benefit plan is designed for Knights of Columbus members and immediate family members which shields them from the high cost of medical expenses. 

Your Association improved its Renewal Year Contribution posting P422.24 Million, which is higher than target by 1.50% or P6.24 Million, and also higher than last year's renewal contribution by 6.91% or P 27.30 Million. 

KCFAPI released death claims covering 1,424 lives amounting to P94.05 Million and maturity claims covering 2,091 lives equivalent to P142.35 Million.  Total cash loans granted during the year reached P134.95 Million covering 3,232 Benefit Certificate Holders, which is 0.78% higher than the P133.90 Million granted during the same period in 2012.

Hence, total living and death benefits given in 2013 was P350.57 Million.

To be able to cover our Brother Knights with fraternal protection, KCFAPI has over 1,385 active Fraternal Counselors or FCs all over the country.  This is higher than last year’s count of 1,234 FCs.  

In 2013, the best and the finest were awarded the Fr. George J. Willmann, SJ Annual Family Service Awards in the beautiful city of Davao.  Topping the list of the most productive Fraternal Counselor or what we call as the Fraternal Counselor of the Year is two time awardee Bro. Rodante B. Sultan.  He is the son of a former FC who was also an awardee during his time. The other best sales force topping the list is the Area Manager of the Year, Bro. Conrado S. Dator, Jr., a five time AM Awardee.

 

BC HOLDER FOCUSED

Being the first mutual life insurance company in the Philippines to be ISO certified under the scope “Design, Development and Provision of Mutual Benefits”, KCFAPI continues to reinforce its commitment to provide quality service as Certification International (CI) has again certified the Association’s conformance with the requirements of ISO 9001:2008.  KCFAPI has been ISO certified for the seventh straight year, a sign of continuous improvement in quality service.

KCFAPI is also an incorporator of the newly-formed Philippine Chamber of Mutual Benefit Associations where its Executive Vice President is one of the directors.

In our mission to continuously improve the level of BC Holders’ satisfaction, we have positioned our services and programs to exceed Benefit Certificate Holders’ needs and expectations.  In 2013, KCFAPI successfully implemented the wireless Local Area Network technology for its KC- Integrated Benefits System.  This has been cost effective, an improvement on mobility and an enhancement of communication among KCFAPI service offices nationwide.  Today, the six service offices are more than able to provide better service with this on line connectivity.  Your Association also successfully implemented the automation of the text advisory to BC Holders to immediately acknowledge payments received and provide feedback on status of Benefit Certificate loan applications.

As an insurance for Brother Knights by Brother Knights, KCFAPI continues to advocate immediate release of substantial death claim benefits and immediate release of 100% of benefits.

In 2013, KCFAPI awarded 14 Fr. George J. Willmann, SJ Awards for Academic Excellence.  This prestigious award attests to the academic excellence the children of our brother Knights have achieved and we at KCFAPI highly acclaim the efforts and hard work done by the awardees to reach their distinctions.

 

FINANCE AND INVESTMENT

KCFAPI was established in 1958 with a seed capital of only P32,000.  It is now a pillar of financial strength with total assets of P4.2 Billion.
 
Its investment portfolio as of December 31, 2013 amounted to P3.97 Billion, an increase of 8.64% or P315.85 Million from the P3.65 Billion as of December 2012.
Investment revenue of P261.05 Million as of year-end of 2013 is higher than target by 1.61% or P4.15 Million and also 10.23% or P 24.22 Million higher than the recorded investment revenue for the same period last year due to paper gain from mark-to-market values of investment on fair value on profit and loss (FVPL).

Despite very low interest rates, KCFAPI posted an investment yield of 7.09% as of year-end.

To help improve the Association’s performance on investments, the Board of Trustees approved the establishment of a new company during the year.  The Kompass Credit and Financing Corporation (KCFC), the newest member of the KCFAPI Group, will be the arm of the Association in answering the financing needs of Brother Knights and the general public.  Having received its certificate of incorporation from the Securities and Exchange Commission in March 2014, KCFC can now officially extend credit and other loans to families and qualified borrowers. 

Your Association was able to generate excess of revenue over expenses before estimated participation of Benefit Certificate Holders amounting to P60.99 Million which is higher than target by P1.37 Million or 2.28% but lower by P9.41 Million or 13.37% than the previous year.  This was due to favorable variance in Unrealized Gain on Investments as of December 31, 2013 and higher underwriting deductions than 2012 by 12.68% or P72.8 M.

Your Association’s Risk-Based Capital (RBC) ratio of 199% in 2013 is better than the 125% required minimum RBC ratio of mutual benefit associations.  This shows the prudent investment strategy of the Association and its financial strength to weather the current economic scenario.

KCFAPI managed its operations satisfactorily as reflected in its operating expense ratio to total contribution of 20.03% as of year-end 2013, which is better than projection of 22.82% and the previous year’s 20.79%.

 

WHOLLY-OWNED OR MAJORITY OWNED COMPANIES AND FOUNDATIONS

Keys Realty and Development Corporation (KRDC), the real estate arm of KCFAPI.  It was incorporated and registered with the Philippine Securities and Exchange Commission on March 11, 1993 and is primarily engaged in rendering mortuary services and in buying and developing real estate for sale and lease.  In 2013 it recorded a net income of P 9.44 Million.  This is P17.55 Million or 65.02% lower than the net income for the same period last year of P26.99 Million mainly due to the sale of a real estate property in 2012.

In response to the growing need to expand its mortuary operations, KRDC constructed six (6) new top-of-the line chapels in addition to its existing 17 chapels in its Holy Trinity Memorial Chapels (HTMC) in Paranaque City.  HTMC is a premier mortuary chapel and crematory located in the south of Manila. KRDC also invested P21 Million in a very promising real estate property located in General Santos City.

MACE Insurance Agency, Inc., the non-life insurance arm of KCFAPI.  It was organized in May 1980 with an initial capital of P50 Thousand.  It now boasts of total assets of P9.2 Million and recorded a net income of P813.82 Thousand which is 8.52% higher than its target of P749.89 Thousand.  It provides incomparable coverage at the lowest premium rates and with additional benefits at no extra cost.

KC Philippines Foundation, Inc. (KCPFI) continues with its primary focus on providing collegiate scholarships to poor but deserving students.  KCPFI pursues other worthy endeavors that include organizing livelihood programs to enhance income-generating capabilities of selected beneficiaries, helping provide assistance to victims of calamities nationwide, and in previous years, funding housing units for the needy.

Last September 2013, KCPFI secured the Bureau of Internal Revenue’s  approval of its accreditation as a Donee-Institution from the Philippine Council for NGO Certification (PCNC) complemented by KCPFI’s existing accreditation with the DOST. With its new accreditation as Donee-Institution, the Foundation will embark on efforts in 2014 to solicit non-traditional funds from donors other than KCFAPI and its majority-owned companies. This will enable the Foundation to offer more collegiate scholarships to other qualified high school graduates.

In 2013, KCPFI, in partnership with KCFAPI and Keys Realty, released financial assistance totaling P700,000.00 to Yolanda victims in Borongan, Samar; Palo, Leyte; Calbayog, Western Samar; Taytay, Palawan; Bantayan, Cebu; and Jaro, Iloilo. 

Still in line with the policy of providing assistance to  calamity victims in the future, KCPFI has been tapped to be a partner in the “Food Bank – Charity that Evangelizes” project of the Knights of Columbus and KCFAPI.  The project aims to set up and provide a continuous source of Relief Assistance for victims of any future calamities that may occur.

The Knights of Columbus Fr. George J. Willmann Charities, Inc. (KCFGJWCI) serves as the other corporate social responsibility unit of your Association with primary focus on providing religious scholarships for the vocation of selected diocesan priests and seminarians.  It is a proud institution for having supported scholars, who now are playing big roles in the Catholic community like H.E. Luis Antonio G. Cardinal Tagle, DD, Archbishop of Manila; H.E. Most Rev. Rodolfo F. Beltran, DD; H.E. Most Rev. Manolo A. Delos Santos, DD; H.E. Most Rev. David William V. Antonio, DD; and Msgr. Pedro C. Quitorio III, CBCP Media Office Director and KCFAPI Spiritual Director, to name a few.

Among the Rome scholars, two priests graduated in 2013, one as Summa Cum Laude and the other as Magna Cum Laude.  By April 2014, three more current scholars of the Foundation are scheduled to be ordained to the Priesthood.

In pursuit of the Cause for the Beatification of Fr. George J. Willmann, SJ, KCFAPI financed the building of the Fr. George J. Willmann, SJ Memorial Building which houses the Fr. George J. Willmann Museum.  The Museum, which was blessed and opened to the public simultaneously with the inauguration of the building in July 2013, openly welcomes visitors and guests to a tour of its premises in order to acquire a deeper knowledge and understanding of Fr. Willmann and his four decades of dedicated service, leadership and compassion not only for the Order of the Knights of Columbus but for the Filipino people in general.

In December 2013, the Hospitalization Assistance Package (HAP) of the Foundation for KC Priests was launched.  The HAP makes available a maximum amount of P50,000.00 per year  for qualified KC Priest-Scholars to cover personal medical expenses incurred.  To help raise funds for this project, the Foundation‘s Ways and Means Committee organized a Seminar on Tax Updates and Effective Tax Management last September 12, 2013 with Bro. Ruperto P. Somera as Speaker.  The seminar successfully generated substantial funds for the cause of Fr. George J. Willmann, SJ.

To date, following is the summary of the scholars, scholar-graduates of both Foundations:

Current Scholars  (2013-2014)

97

 

Graduated Scholars

607

 

 

 

 

 

Theology

23

 

Ordained Priests (Theology)

128

Collegiate

65

 

Ordained Deacon (Theology)

1

Licentiate – Local

7

 

Waiting for Ordination

16

Licentiate – Rome

2

 

Licentiate – Local

24

 

 

 

Licentiate – Rome

27

 

 

 

Collegiate Scholarship

296

 

 

 

Vocational Scholarship

114

 

 

 

High School

1

 

GOOD CORPORATE GOVERNANCE

It has been a guiding policy of your Association to uphold accountability, transparency and integrity in performing service to our Benefit Certificate Holders.  In line with this, the Board of Trustees, management, officers and employees of KCFAPI have remained committed to the principles and best practices of good corporate governance in attaining its corporate goals and objectives.  Your Association also submitted its report in compliance to corporate governance principles and leading practices to the Insurance Commission (IC).

In compliance to the Bureau of Internal Revenue ruling, KCFAPI has submitted all requirements for the revalidation of its tax-exempt status.  This is also true for both the two Foundations it administers.

Manual on Good Corporate Governance

Operational effectiveness has always been a primordial concern of your Association, thus, the Manual on Good Governance is regularly re-examined to ascertain that the existing management practices are within acceptable norms and standards on corporate governance.  On December 13, 2013, the Board of Trustees approved and adopted a Revised Manual on Corporate Governance which enhanced transparency and accountability in the Association’s operation.

To ensure that decisions of the Board of Trustees are based on fair and balanced considerations, each member elected are highly dedicated members of the Order who possess the professional expertise and experience needed in guiding KCFAPI towards achieving its corporate goals.  They also attended an orientation on good corporate governance. To uphold the impartiality of the Board, two independent trustees, namely Bro. Juan Abraham O. Abando and Atty. Rogelio V. Garcia were installed as members.  Moreover, its Executive Vice President is a Fellow of the Institute of Corporate Directors.

In line with ICs commitment towards the 2015 Asean Compliance to Corporate Governance, KCFAPI is preparing to adopt the required Asean Corporate Governance Scorecard (ACGS).

 

TALENT MANAGEMENT

In response to the call of the Catholic Church to celebrate the Year of Faith and attuned to KCFAPI’s corporate theme, your Association’s employees were provided with spiritual nourishment through monthly catechism were various speakers were invited to help employees appreciate, practice and profess their faith.

Beyond spiritual nourishment, KCFAPI employs other strategies to further promote work-life balance for its employees.  Among these were sports/physical activities like bowling tournament held at the Paeng’s Midtown Bowl Robinson’s Place in Ermita, Manila; participation to Luzon Jurisdiction’s Annual Family Day and Mini Olympics, where more than 800 Brother Knights and Squires from different councils together with their families participated at the Amoranto Sports Complex, Roces Avenue, Quezon City; and involvement in the Annual Tree Planting Activity of the Luzon Jurisdiction dubbed as “Puno Alay Ko Sa Kalikasan Year 6” held at the Sacred Heart Novitiate, Novaliches, Quezon City. 

Employees were likewise given opportunities to take active participation in corporate social responsibility projects of your Association through its Foundations and annual gift-giving activities.  In 2013, several fund-raising projects were undertaken to help calamity victims of earthquake and typhoon through the two Foundations of the Association.  The Gift-Giving Committee similarly made efforts to raise funds in order to provide mattresses, pillows, blankets, clothes, shoes and books to the children of the Tulay ng Kabataan Foundation in Intramuros, Manila.  In addition, KCFAPI employees donated blood in coordination with the Philippine Red Cross.

The year 2013 marked an important event in the existence of KCFAPI as it celebrated its 55th anniversary in September 2013 through a weeklong series of activities organized by your Association’s employees.

Following were the activities during the “KCFAPI Week”  

Sept. 7

Run for a Cause dubbed "KCFAPI Run 5@55"

Sept. 8

Marian Devotion to Our Lady of Guadalupe

Sept. 9

KCFAPI 55th Anniversary Program

Sept. 10

Prisoners Jail Apostolate held at the Manila City Jail

Sept. 11

Free Ultrasound Services for Expectant Mothers

Sept. 12

Seminar on Taxation with Dr. Ruperto Somera

Sept. 13

Fraternal Benefits Day

Sept. 14

TV Mass for Death Anniversary of Fr. George J. Willmann, SJ

Part of the professional development of its employees, KCFAPI continues to engage the Life Office Management Association (LOMA) – an international trade association for the insurance and financial services industry known as a trusted source for industry knowledge, to provide quality employee training and development.  At present, your Association is home to twenty-seven (27) LOMA professionals.

KCFAPI’s commitment towards excellence is expressed through the various activities it holds.  These are aimed toward the continuous improvement of its employees and the Association as a whole.

 

IN SOLIDARITY WITH THE CATHOLIC CHURCH

The theme “Proclaiming and Celebrating Faith” could not have been timelier for KCFAPI.  The destruction caused by typhoon “Yolanda” not only shattered lives but also tested their faith in God and the Church.  Motivated by a genuine concern for our brothers in need and to keep their trust and faith alive, KCFAPI, in coordination with the Catholic Bishops Conference of the Philippines or CBCP, participated in relief efforts to stricken areas.  The employees, for their part, took it upon themselves to instead donate money earmarked for their benefit in favor of the typhoon victims.  Beyond this, KCFAPI also continues to help our brother Knights rebuild their lives and give hope for a brighter future through its products and services.

In 2008, KCFAPI set-up a P10 Million CBCP Seed of Hope Fund, wherein KCFAPI annually donates the earnings of the fund to the CBCP.  To date, your Association had already donated P4.136 M in interest earnings.

In addition, your Association regularly donates P25,000 monthly to “The Word Exposed”, a TV program of His Eminence Luis Antonio G. Cardinal Tagle.

KCFAPI also joined the Knights of Columbus Luzon Jurisdiction in its Walk for Life activity last March 2013 to show support for the anti-Reproductive Health Bill.

 

FOCUSING ON THE FUTURE

As KCFAPI enters the year 2014, the experiences gained in the past year have strengthened our resolve to serve you more, our Brother Knights, through enhanced fraternal services.  The growing patronage of the benefits and services offered by your Association, and its wholly owned corporations, attests the overwhelming trust and confidence our stakeholders espouse and which we highly regard.  For what we are now, as a leading mutual benefit association, we owe it to the confidence and support of the Board of Trustees, the dauntless dedication of the management, staff and field representatives in rendering incomparable service to Brother Knights and their immediate families.

As we move towards the year 2014, sweeping changes in the socio-economic environment call for new roles for KCFAPI not only as a leading mutual benefit association but as a partner of the Order of the Knights of Columbus and the Roman Catholic Church.  On this note, the Association adopted the theme “One In Transcending Challenges as Protectors of God’s Gifts” on the belief that as we continually develop far superior benefits and enhanced fraternal services for our Brother Knights and their families, we inculcate the precepts of Christian living to promote the culture of life and strengthen family bonds. 

Vivat Jesus!

 

Bro. ARSENIO ISIDRO G. YAP
President

Father of Knights of Columbus in the Philippines

 

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