Dear Members and Friends,
In last year’s message, I reported to you that the PRCUA Board of Directors had formed a Corporate Governance Committee to review the method by which the Polish Roman Catholic Union of America is governed and to determine if any changes to this governance should be made.
The Polish Roman Catholic Union of America, as a fraternal benefit company, is subject to the regulations imposed by the National Association of Insurance Commissioners (NAIC). The NAIC is composed of State Insurance Commissioners whose responsibility is to assure the sound management of the respective insurance companies.
Although not presently mandated, but strongly suggested, the NAIC wants to see changes in the top level of management of fraternal benefit societies. Their intended management model is to mirror corporate America by electing directors from the organization’s membership. It would then be the directors’ responsibility to hire the professional executive management team (President, Vice President, Secretary-Treasurer). The intention is to provide professional leadership through the screening of qualified applicants for the various executive positions. It also provides the ability of the Board of Directors to make changes should the executive officers fail in their respective duties and obligations.
As we know, the PRCUA elects its officers and directors every four years at its Quadrennial Convention. Candidates for office may or may not have the necessary educational or life experiences to properly direct the business, financial, and insurance affairs of the organization. Our Constitution allows anyone who has been a member in good standing for five years, without a criminal record, to be eligible for election.
Since the Great Recession of 2007-08, because of the subsequent slow economic recovery, the increasing demands of state regulatory insurance departments, the increased need to focus on financial markets, the changing demographics and overall challenging business climate, many fraternal organizations have failed and thus have been merged. Much of that failure is due to the fact that the directors and officers did not recognize and adjust to these changing conditions.
For that reason, this Corporate Governance Committee was formed.
Questions discussed throughout the year by this Committee and the Board of Directors included:
- Should the PRCUA move away from the traditional form of governance wherein the Executive Officers and Board of Directors are elected every four years by convention delegates at the Quadrennial Convention AND
- Should the PRCUA move to a more formal business form of management by electing Directors and having the Board of Directors screen and qualify candidates for the positions of President, Vice President, and Secretary-Treasurer?
- Should the PRCUA reduce the number of District Directors from 15 to a lesser number, elected-at-large, who are qualified in the insurance and business fields?
- If Directors are elected-at-large, should the PRCUA abolish the 10 governing Districts AND
- Establish a separate Fraternal Governing Board to address the fraternal activities of the organization?
- Should the PRCUA require its elected officials to have a higher education, as well as insurance/finance related work and life experiences instead of the present qualification of being a member for five years and not having a criminal record?
At every board meeting, each of these questions was actively debated.
At the December meeting, the Board of Directors voted to continue the present form of governance wherein the Officers and Directors are elected by convention delegates every four years and to keep the number of Directors or the number of Districts of the PRCUA.
Continuation of this form of governance removes any discussion of a separate Fraternal Governing Board.
The Board of Directors did, however, address higher education, work, and life experience considerations as a requirement of qualification for its elected Officers and Directors.
The additional qualifications for the President, Vice President, Secretary-Treasurer and Director are outlined on page 12 of this issue of the Naród Polski.
These changes should help to improve the quality of candidates that are chosen to manage and direct our organization.
However, in my opinion, the position taken by the NAIC is the correct one: that the Constitution of the PRCUA must be changed to create a form of governance that adapts to the more complex and demanding business regulatory and insurance industry environment.
Activities and Results of this past year of 2017:
Insurance Sales and Product
In last year’s State of the Union message, we indicated to you that our new products – FINAL EXPENSE and SIMPLIFIED ISSUE – were being successfully accepted by our fraternal and independent agents as viable industry issues. We also indicated that efforts to encourage sales through independent agents are working.
Both efforts, new products and independent agents, were highly successful in 2017 in increasing the insurance premium income, increasing new membership to the PRCUA, and increasing the total face amount of new insurance written.
Annualized New Insurance Premium
In 2016: New Insurance premium……………………. $1,041,950
In 2017: New insurance premium……………………. $1,469,557
In 2016: New members………………………………………325
In 2017: New members………………………………………865
New Face Amount of Insurance Written
In 2016: …………………………………………..$11,289,435
In 2017: …………………………………………..$38,679,487
Our Director of Sales, Robert Fattore, after much effort, is successful in engaging the independent agents to represent and sell PRCUA products.
Fraternal and Home Office insurance sales continue on a constant pace but are now exceeded by the growth of sales from the independent agent.
The PRCUA continues to promote and solicit sales from our fraternal agents but the ranks are declining and recruiting new fraternal agents has not been fruitful.One area that is proving to be a success is the recruitment of Fraternal Field Organizers (FFO). The PRCUA now has three FFOs working in the field promoting our organization. It is a part-time paid position requiring a licensed individual to promote our organization in select geographical areas. FFOs are now working in Georgia, Florida and Grand Rapids, Michigan.
The PRCUA is constantly looking for more individuals to represent us and are encouraging you to research this unique opportunity. For more information, please call Bob Fattore at 773-782-2631 or 800-772-8632 ext. 2631. You can also email Bob at email@example.com
The Annuity Rollover Program, initiated in 2016, has been completed. Matured annuity contracts were successfully rolled over into a longer term contract, satisfying regulatory directives. These contracts received a one year above-market rate bonus and then adjusted to the current market rate.
The PRCUA is sensitive to changes in the money and interest rate environment. We are constantly monitoring both our ability to earn a satisfactory return from our asset portfolio and to return a favorable income to our annuity members.
Our operating income for 2017 is reported at $265,580, down from $429,757 that was attained in 2016. Unfortunately, a significant reason for this is the decline of approximately $350,000 in reduced income from our bond and stock investment portfolio. Financial market conditions caused many of our higher-earning bonds to be called away, leaving the PRCUA with excess money to invest at lower interest rates.
Hopefully, 2018 will provide better opportunities for higher investment returns. Other factors affecting our results are the costs related to acquiring new members, i.e. commissions, promotions, new product development etc. Our dividend declared by the Board of Directors will be $152,400. This is approximately the same amount as paid in 2016.
A major event for the PRCUA in 2017 was the sale of vacant land owned by the PRCUA. This property was on Walton Street, adjacent to our headquarters. By a majority vote of the Board of Directors, sale of this property and other net realized capital gains amounted to a net gain of $3,069,256. This profit has been retained and added to our surplus account to provide financial stability for all PRCUA members.
In 2010, this surplus account was at a low point of $3,600,000. It is now- within seven years – back to the level reported in 2007. As can be seen in the financial statements, our surplus is at $11,833,894. This will safely provide a necessary cushion for the PRCUA should another financial crisis occur.
I am proud of the action taken by our Board of Directors in approving this sale. It ensures the financial strength and solvency of our Union.
Our building is 105 years old and has been in need of extensive improvement for a long time. Over the last seven years, the PRCUA has expended over $2,000,000 to make these necessary repairs and upgrades.These include:
- A new main entry. After years of ushering guests and visitors into the building through the back service entrance, we have provided, in cooperation with the Polish Museum of America, a formal entrance on Augusta Boulevard leading into a warm, friendly, and sophisticated lobby and reception area.
- We removed every layer of roofing material down to the roof foundation and replaced it with state-of-the-art roofing material
- We removed the entire crumbling basement sewer system and replaced it with new tiles and sewer materials. Jack hammers were pounding away as we were working in the offices above.
- We had to professionally clean and vacuum the basement to remove the toxic concrete dust that resulted from the repair.
- We remodeled the offices with state-of-the-art work stations, computers, and carpeting throughout.
- We have, thanks to the efforts of Vice President Misia Jaminski, remodeled all of the first and second floor bathrooms, as well as remodeling the first floor Social Hall and hallways.
- We are presently completing the rework of the building façade with cornices, terracotta, and parapet replacement, tuck-pointing and complete chemical washing and cleaning of the building. This responsibility has been under the direction of Secretary-Treasurer Jim Robaczewski.
- We have installed security cameras and other security features both inside and outside of the building to protect our most valuable assets, our employees and visitors. Entrance into our building is secured. Employees have key passes and all visitors must be electronically buzzed in. Once inside the main lobby, they must identify their purpose and sign the visitor register. We have improved the electrical and lighting systems throughout the building as well as overhauling and rebuilding the elevator that services our building.
- Our computer cyber security system is of the highest caliber, thanks to IT Manager Kevin Ryba. We are very aware of the importance of protecting our member information from hackers. We are doing our very best to prevent illegal access to our personal member files. We have engaged a cyber security firm, on an ongoing basis, to attempt to penetrate our system. Although there is no guarantee of our continuing successful defense, I am pleased that all tests and illegal attempts to enter our system have been stopped. We have also purchased Cyber Security Insurance to protect the PRCUA from financial loss caused by any breach of our files.
- We transitioned our general ledger accounting system to a more reliable computerized method by introducing and converting to the Sage Accounting Program to update our data accountability system. Our Accounting and Audit Manager Emily Kurda was in charge of this conversion. Our IT Manager Kevin Ryba was very helpful in assisting with this change over.
- Our member files, formally kept on paper in 189 separate file drawers, have now been scanned into the computer system for better access, safety, and convenience in serving our member needs. This program involved inputting 56,700 member files, each consisting of anywhere from three to six separate pieces of information. Our Member Services Manager Julie Prado guided this massive effort.
- We have established a separate Marketing Department headed by Agnieszka Bastrzyk. Over the last several years, we have improved all of our efforts in the visual, audio, and written media to more properly convey the PRCUA message to members and non-members alike.
- Our Naród Polski publication has been managed very professionally by Executive Editor Lidia Kowalewicz. I am most pleased with the timeliness and quality of the articles, the photo journalism, and the on-time publication and delivery of the newspaper.
- As this message is being written, the Executive Committee of the PRCUA is finalizing an agreement with an administrative systems software vendor that will bring to the PRCUA a modern up-to-date system that will allow our members direct access to their own insurance, annuity, mortgage and personal loan information without needing to talk to a member service representative. In addition this system will modernize the internal flow of member information thereby improving the entire administrative process of the PRCUA.
I am proud to state that we have been able to do all of this and still improve the overall financial strength of our Union.
We call attention to the 2018 Convention to be held on August 10 to 13, 2018 in Dearborn, Michigan. We ask those representative delegates, who will have the responsibility of electing the next governing body of the PRCUA, to closely and carefully review the credentials of all candidates and wisely select those who best represent dedication to the PRCUA and a determination to work toward making the PRCUA the best fraternal organization.
It has been my pleasure to have served as your President throughout these past eight years and I sincerely thank you for this wonderful experience. I hope I have fulfilled the objectives that you had expected when you voted for me in 2010 and 2014.
I am stepping down as your President and, although eligible, I will not seek a third term.
Your Board of Directors, Officers, and employees all thank you for your continued membership in the PRCUA.
God bless you and God bless the POLISH ROMAN CATHOLIC UNION OF AMERICA.
Joseph A. Drobot, Jr.