Knights of Columbus
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Transcript of Knights of Columbus
Knights of ColumbusINVESTMENT REVIEW 2012
Our Commitment to You
“We do not invest in high risk vehicles such as derivatives and junk bonds, nor do we invest in the types of structured transactions that are currently causing such turmoil in the markets. We stay away from them not because we don't understand them - but because we do understand them - and the risk they entail.”
Carl Anderson, Supreme Knight
WHAT WE DO:
The Investment Department focuses on the purchase of:
• Investment grade corporates, across all market sectors
• Investment grade mortgage securities issued by agencies and mortgage companies
• In addition, we focus on asset allocation and assist in the development of new products
WHAT WE DON’T DO:
• Invest in junk bonds
• Invest in derivatives
• Invest in highly speculative or highly structured Wall Street driven transactions
• Our focus is on investing in high quality securities
All investment managers for the Order are prohibited from investing in companies engaged in any of the following activities:
Embryonic Stem Cell Research
Human Cloning
Pornography
Abortifacient
Contraception
For Profit Health Care
1992 2002 2012
$3,126 $7,691
$14,399
$2,267 $5,003
$951$4,076
$9,958
$19,402
Average Annual Growth Rates: 1 Year 10 Years 20
YearsLife & Other 6.8% 6.5% 7.9%Annuities 10.1% 8.2% 8.7% Total 7.6% 6.9% 8.1%
GROWTH OF ASSETS
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DIVERSIFICATION OF ASSETSYEAR-END 2012
Bonds86.6%
Common Stocks2.4%Real
Estate1.2%All Other
Assets6.7%
Preferred Stocks3.1%
Total Assets: $19,401 (MM)
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86.6%
Agenda:• Investment Process• 2012 Activities• Diversification & Quality• Securities Lending
$16.8Billion
BONDS
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BOOK VALUE
% PORT YIELD QUALITY
U.S.
MUNICIPALITY $ 1,394.4 9.8% 4.64% AA-
CORPORATES $ 7,695.9 54.2% 4.98% A-
MTG. BACKED SECS. $ 2,447.4 17.2% 5.20% AA+
GOVT. & AGENCY $ 873.5 6.1% 4.74% AAA
COMM. MTG. BACKED SECS. $ 1,457.6 10.2% 4.92% AA+
ASSET BACKED SECS. $ 354.2 2.5% 4.35% A+
$ 14,223.4 100.0% 4.94% A+
CANADA
CORPORATES $ 1,460.0 57.4% 4.50% A
COMM. MTG. BACKED SECS. $ 190.8 7.5% 5.22% AAA
MTG. BACKED SECS. $ 164.3 6.5% 4.62% AAA
GOVT. & AGENCY $ 690.5 27.1% 4.23% AA+
ASSET BACKED SECS. $ 39.4 1.5% 3.04% AAA
$ 2,545.2 100.0% 4.47% AA-
GRAND TOTAL $ 16,768.7 4.87% A+
SUMMARY OF 2012 BOND HOLDINGS*
(Dollars in Millions)*No foreign exchange adjustment
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3.09%
PREFERRED EQUITY
Agenda:• Top holdings• Diversification• Returns
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$599.7Million
2.39%
COMMON STOCKS*
Agenda:• Management Platform• Results
* Includes SSGA Canadian Account
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$464.1Million
1.24%
REAL ESTATE
$241.5Million
Agenda:• ChurchLoan Program• Real Estate Funds
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2008 2009 2010 2011 2012$0
$150
$300
$450
$600
$750
$900
$1,050
$814.0 $831.6 $880.8 $925.6 $957.5
GROSS INVESTMENT INCOME*
* INCLUDES INTEREST MAINTENANCE RESERVE (IMR) (Dollars in Millions)
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ANNUALIZED GROWTH OF NET INVESTMENT INCOMEFIVE YEARS ENDING 2012
K OF C PEERS*0.00%
2.00%
4.00%
6.00%
3.89%
0.87%
* Peer group: Massachusetts Mutual, New York Life, Northwestern Mutual, State Farm and TIAA . USAA was excluded as their results, +11.32% for the five year period, is an outlier which skewed the peer numbers.
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GROSS INVESTMENT YIELD*
2008 2009 2010 2011 20120.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
5.75% 5.57% 5.35% 5.22% 5.09%
* Gross Investment Yield = Gross Investment Income/Average Assets
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TOTAL CAPITAL AND SURPLUS*
1992 2002 2012
$595.2
$1,441.6
$2,110.3
Annualized Growth:
1 Year 10 Year 20 Year
Total Surplus 0.10% 0.46% 2.55%* Includes Surplus, AVR and IMR (Dollars in Millions)
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KNIGHTS OF COLUMBUSACHIEVES HIGHEST RATINGS IN 2012:
A.M. Best A++ (Superior) A.M. Best said that “The ratings of the Order reflect its strong fraternal and Insurance presence within the Catholic communities in the United States and Canada, its superior risk-adjusted capitalization as measured by Best’s Capital adequacy Ratio and the Order’s consistently positive operating results.” A.M. Best also declared that the Knights of Columbus “has a strong affinity with its large membership base through its charitable programs and competitive portfolio of life insurance and annuity products.”
There is no more highly rated life insurer in North America.
Fees: No up front sales charge or annual feeAccess: 1) Annual free withdrawals (10% of account balance
per year)2) Medical Withdrawal Option (FPA Contract)3) Guaranteed income for life (with annuitization)4) At death…
► avoids costs and delays of probate ► privacy protected, no public record ► reduces challenge potential
Rate: 1) Competitive with CDs2) Tax-deferred, so compounds at higher rate while
reinvesting (grows at full pre-tax rate)
3) Minimum interest rate guarantee, credited daily (worth more every single day*)
Safety: Principal & Interest 100% guaranteed by the Knights of Columbus
(will never go down in accumulation value*) ► Financial strength of the Knights of Columbus
* - reducing surrender charges may apply
The benefits of a Knights of Columbus retirement annuity:
Key Questions• What is your planned retirement date?• What part of your retirement funds
should be in more conservative types of investments?
• Do you currently have any monies that should be ‘rolled over’?
• Do you qualify for a ROTH IRA with income tax free growth?
• Is tax deferral important to you?• When does your next CD mature?
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