OUR
JOURNEY
2020 Volume 125, Issue 2 | Annual Report Edition
The 142nd Year of Your Association
Catholic United Financial | Annual Report Edition
OFFICIAL PUBLICATION OF CATHOLIC UNITED FINANCIAL
ANNUAL REPORT | March/April 2020 | Our Catholic Journey
2
Official Publication of
Catholic United Financial
Magazine Staff:
Publisher: Harald E. Borrmann
Editor: Jared Roddy
Staff: Susan Detlefsen
Marketing Director:
Steve Wendorf
Office of the Publication:
Catholic United Financial
3499 Lexington Avenue N.
Arden Hills, MN 55126
Officers:
President:
Harald E. Borrmann, St. Paul, Minn.
Senior Vice President and
Secretary/Treasurer:
Michael M. Ahles, Andover, Minn.
Board of Directors:
Robert Krattenmaker, New
London, Minn.
Renee Brod, New Prague, Minn.
William Lucas, Edina, Minn.
Jean Hart, Cold Spring, Minn.
Marty Seifert, Marshall, Minn.
Jim Wensel, Rice, Minn.
James Gibbons, Lake Elmo, Minn.
Our Catholic Journey
(USPS 093500) (ISSN 21641617)
published bi-monthly by Catholic
United Financial, 3499 Lexington
Avenue N., STE 200, St. Paul, MN
55126-7056. Periodicals postage
paid at St. Paul, MN and additional
mailing oces.
Postmaster:
Send address changes to
Our Catholic Journey/Catholic
United Financial, 3499 Lexington
Avenue N. St. Paul, MN 55126-7055
FELLOWSHIP
President’s Message | Harald E. Borrmann 5
FINANCES
FOUNDATION
Annual Report Edition
CONTENTS
Volunteers Move Mountains | Director of
Member Engagement, Nate Lamusga
6
Catholic United Financial
Annual Report | Senior Vice President
and Secretary/Treasurer, Michael M. Ahles
8
Balance Sheet, Statement of Operations
and Change in Surplus Notices
12
Thank You for Your Support | Foundation
Executive Director, Robert Heuermann
14
On the Cover:
Sam Clyde, 13, of St. Paul, Minn., keeps the ball away
from his younger brothers Michael and Kyle.
OUR
JOURNEY
2020 Volume 125, Issue 3 | Annual Report Edition
The 141st Year of Your Association
Catholic United Financial | Annual Report Edition
OFFICIAL PUBLICATION OF CATHOLIC UNITED FINANCIAL
www.catholicunitedfinancial.org | Catholic United Financial
3
BE THERE
-Harald Borrmann
“
FAITH GIVES US MUCH COMFORT
THAT WE WILL TOGETHER
PERSEVERE.
Of that,
I have
absolutely no doubt.
No maer how this year of 2020 has started out,
we will continue to go forward and
...we are a resilient people, and our common
FOR OUR MEMBERS
in every possible way.
“
Morgan Smith takes a cut with her dad, mom
and two brothers playing the field.
Perham | Minnesota
ANNUAL REPORT | March/April 2020 | Our Catholic Journey
4
Annual Report
FAMILY
Avery and Katarina
Malone
Thief River Falls, | Minnesota
www.catholicunitedfinancial.org | Catholic United Financial
5
Harald Borrmann
President, CEO and Chair of the Board
If there’s something that I can do for you, contact me at
(651) 765-4123, or write to [email protected]
Annual Report
PRESIDENT’S MESSAGE
W
elcome to our 2019 Annual Report. As I write this note, we are in the midst
of dealing with the COVID-19 pandemic and its associated financial turmoil.
Frankly, it is difficult looking back at what was, in most every aspect, a very
successful and rewarding year when right in front of us is a situation very few could
foresee and a situation that will change our country, our economy, our members and our
entire Association in a myriad of ways.
But let’s start with 2019. As Senior Vice President and Secretary/Treasurer Mike Ahles
explains in his very fine report, 2019 was successful in many ways, notably our attainment
of $1 Billion in assets. We must be doing a lot of things right for us to continue to grow
our asset base year after year and in so many wildly different and sometimes challenging
economic environments. Certainly, our Association’s future has been profoundly
impacted — in a totally positive way — by our launch of Conventus Now, LLC. This is the
joint venture with our friends at Catholic Financial Life in Milwaukee, Wis.; Conventus
is developing a state-of-the-art technology platform which will form the bedrock for all
our products and interactions between our members, Sales Representatives and Home
Office staff. This is the first such collaboration in the life insurance industry, and it has
already been recognized by industry expert A. M. Best Company as a breakthrough to
what is possible in our future. Bravo to the teams involved from both Societies in making
this dream a reality.
Last June, I announced my retirement, effective this coming June. As that date approaches, I
am delighted to be working on the transition with Mike Ahles, as he was named last month
to become just our tenth President. Mike is uniquely qualified to be our next leader with a
strong background in both insurance and fraternalism. His hire is a home run for Catholic
United because he is also a man of strong faith. That’s a combination that just can’t be
beat. Handing the gavel over to Mike will be an honor and a pleasure.
Also last month, I had the pleasure of attending the unveiling of the results of this
year’s Annual Catholic Schools Raffle. Once again, we set a new record by helping raise
over $1.3 million. All I can say is “Wow”! That makes just under $10 million raised for
Catholic education since we began the raffle only eleven years ago!
As I mentioned earlier, the COVID-19 pandemic is a life-changer for every American.
But we are a resilient people, and our common faith gives us much comfort that we
will together persevere. Of that, I have absolutely no doubt. No matter how 2020 has
started out, we will continue to go forward and be there for our members in every
possible way. We have a 142-year history of overcoming difficulties and emerging a
stronger Association. That will be the case here as well.
In closing, I want to thank you – our member – for allowing me to serve Catholic United
these past twelve years as one of your Officers. It has been the opportunity of a lifetime
for me, my wife, Mary, and our family. I go forth with gratitude in my heart and the
knowledge that I have been given the chance to be a part of something
that only God could have provided. My sincerest thanks.
Peace.
ANNUAL REPORT | March/April 2020 | Our Catholic Journey
6
A
s a single guy, I worked as a youth
minister at a suburban parish and
lived in Minneapolis with a police
officer and a law student. That’s right,
a youth minister, a lawyer and a police
officer; it’s like the start of a bad joke. We
always had great conversations, each
bringing our own unique perspective in
life. My buddies often had a pessimistic
view of society. And who could blame
them? They often spent their days
studying or directly dealing with the worst
of what humanity had to offer: people
intentionally taking advantage of others,
making poor decisions, or being victims of
unfortunate circumstances. I, on the other
hand, had a very different viewpoint. The
people I was surrounded by were actively
working to become better versions of
themselves, sacrificing their own comfort
for the comfort of others. I count myself
lucky to still be a witness to this same
perspective. Catholic United members
and what we stand for continues to be
counter-cultural, offering what is good and
necessary in the world, rather than being
focused on what we are owed, or what we
can take.
As I begin my tenth year working for
Catholic United, I’ve never been prouder
of what we’ve accomplished, and I’ve
never been more hopeful for what the
future holds.
On these pages, there are some gorgeous
charts and impressive numbers about
how much Catholic United has been
able to raise and contribute to your local
community over the past year. From the
enormously successful Annual Catholic
Schools Raffle that continually raises
more than $1 million each year, to our
MinisTREE program which contributes
to countless hours of service in each
participating parish or school, Catholic
United has made a real difference for
Catholic churches. However, these
numbers don’t tell the whole story, and
if I’m being honest, the numbers don’t
impress me as much as the people who
help make it happen.
Annual Report
FELLOWSHIP
Volunteers
move MOUNTAINS
www.catholicunitedfinancial.org | Catholic United Financial
7
It’s always heartening to speak with our
volunteer leaders. These are the brave few
who step up to hold a leadership position in
one of our councils or volunteer teams. It
takes a special kind of person to volunteer
in this way. It’s a big responsibility and
those who are up to the task are motivated
by their faith and compelled to address
the challenges they see in the Church. We
at Catholic United have the easy part: we
provide the platform and the programs,
then sit back and watch this amazing group
of people move mountains.
Hearing about the good work of our
members, I’ve been inspired to do more
in my own Catholic parish. Maybe you can
relate to that? If you want to get involved
with Catholic United to take advantage of
the platforms and programs available to
your community, contact us at
God bless,
Nate Lamusga
Director of Member Engagement
In 2019, Catholic United and its members provided
for our Catholic communities:
$2,499,650
$157,306
Assistance Grants Raised
$495,889
Matching Grants Raised
$94,838
Annual Catholic Schools Raffle
$149,412
Activity Allowance
$115,160
Assistance Grants Raised
$101,170
Gifts & Donations
$40,229
MinisTREE
$30,330
Grants4Good
$21,036
RMG
$9,105
R.E. new Fund Grants
Matched
$94,838
Matched
Assistance Grants:
$1,502,922
Regional Member Gatherings
Scholarship Awards
$4,000
Matched
ANNUAL REPORT | March/April 2020 | Our Catholic Journey
8
Annual Report
FINANCES
The Times They Are A-Changin’. In past
years I’ve used song references as
themes for my Annual Report financial
update, and as you read in his President’s
Message, Harald Borrmann announced
during 2019 that he will retire mid-2020.
In honor of his tremendous leadership of
our Association, and given his unparalleled
love of Bob Dylan, I felt that this 1964
ballad, from the album with the same title,
was not only an appropriate tribute to
Harald but a perfect way to describe our
Association in 2019. As well, it continues
to be true thus far in 2020 given the
impact of the COVID-19 virus pandemic.
So, what’s been changin’ at Catholic
United? Our Assets!
Assets at All-Time Highs – Investments
Remain Strong
Total assets surpassed $1 billion
on November 11, 2019. It took our
Association 126 years to grow our assets
to $500 million yet only 15 years to
double that milestone. Plus, it’s intriguing
that this new record occurred on Harald’s
birthday! Inquiring minds want to know
if these two noteworthy events are
connected? I’ll leave that to each of you.
What is certain is that our members’
faith and confidence in our Association
created this success by bringing almost
$16 million in life insurance premium and
over $33 million in new annuity premium
to us during the year. Positive changin’
also came via our Medicare Supplement
product which, in its second full year of
sales, brought us 370 new members and
$0.86 million of issued premium in 2019.
Earning our members’ confidence is
critically important to us and is one thing
that has not changed, nor ever will. Our
Association remained strong throughout
2019 due to the exceptional quality of the
investments we purchase to support the
commitments we make to our members
and their families.
As shown in the accompanying chart,
the strength of our assets lies in
our conservative, high-quality bond
portfolio. The largest components of our
investments continue to be bonds of the
2019 Catholic United Financial
ANNUAL REPORT
In Millions of Dollars
$
834
$
870
$
919
$
935
$
970
Assets
201620152014 2017 2018
$
1,001
2019
www.catholicunitedfinancial.org | Catholic United Financial
9
FINANCES
INVESTMENTS
3.3% Bonds, Other
highest quality (45.9%) and high quality
(37.8%) per the ratings from the National
Association of Insurance Commissioners.
As well, an increasing pool of commercial
mortgage loans now comprise 9.3% of
the investment portfolio, providing
broadened diversification, stable cash
flow and solid yields. Another aspect of
our Association’s investment discipline
that will not change is our use of Securian
Asset Management and Wellington
Management Company as professional
asset managers, in accordance with
the Investment Policy established and
monitored by our Board of Directors. We
will continue to draw strength from these
top-notch firms that partner with us in so
many ways.
The formation of Conventus Now is
another example of how we kept changin’
for the future during 2019.
Last year, the Association invested $0.66
million in the formation of Conventus
Now and the initial phase of its multi-year
effort entitled Project Genesis. United
through our faith and fraternal bonds,
our Association and Catholic Financial
Life (CFL) of Milwaukee forged this joint
venture to build technology that will
more efficiently support both Societies in
providing exceptional service to members,
and enable us to compete for new
members, in an increasingly digital world.
We’re thrilled with Conventus Now’s
progress in 2019 and believe that our
shared vision with CFL in building this
technology will be transformational in
our pursuit of our other primary goal
– Growing Membership. This remains
our shared challenge. As shown in the
chart on the following page, Association
membership has continued to slowly
decline for many years to end 2019 at
77,750. Although small, annual losses in
American Fraternal Union membership
were expected since acquiring this society
in 2011, we are changin’ the way we work
37.8%
Bonds,
High Quality
45.9%
Bonds,
Highest Quality
2.7% Cash, Certificate Loans & Real Estate
9.3% Mortgage Loans
0.1% Preferred Stocks
0.9% Equity Mutual Funds
ANNUAL REPORT | March/April 2020 | Our Catholic Journey
10
Annual Report
FINANCES
to grow our membership as it is a terrific way
to use our financial strength.
Financial Strength
Financial strength is derived from our
Association’s total surplus as it supports
paying future benefits to our members and
their families, cushions the impact of market
fluctuations on our investment portfolio
and supports our efforts to build new
services for existing and new members. Total
surplus, which includes the asset valuation
reserve, changed positively by $1.7 million
to reach a record $48.4 million during 2019.
Unfortunately, this growth was mitigated
somewhat by $0.65 million in net realized
capital losses on the Association’s equity
mutual fund portfolio during the year. One
last facet of the changin’ year that was 2019 is
our freeze of the Association’s defined benefit
employee pension plan. This change will, over
time, positively impact employees given the
enhanced contributions to the Association’s
defined contribution 401(k) plan beginning
in 2020 while lessening the impact of the
employee pension liability on total surplus in
our continued era of low interest rates.
The many positive changes of 2019 enabled
our Association’s financial strength to remain
intact. That said and as I prepared this
summary, our world is changing dramatically
as a result of the COVID-19 pandemic.
Membership 2014 - 2019
Ral and Judy DuBois
Brainerd | Minnesota
In 2011, Catholic United Financial absorbed
then 114-year-old American Fraternal Union
of Ely, Minn. Catholic United continues to
administer the remaining AFU policies.
www.catholicunitedfinancial.org | Catholic United Financial
11
Michael M. Ahles
Senior Vice President and Secretary/Treasurer
We’ve enacted our business continuity plans and deployed our employees to work
remotely. We’ve changed our processes to serve and recruit members. We’ve enhanced
our investment monitoring practices. We’ve collaborated with our vendors and our
regulators to keep them informed and confirm their support. Each of these actions
comes with a cost and this cost will negatively impact our financial results in 2020.
It’s just too early to accurately predict the impact given many unknowns. However,
whatever those impacts, our Association will remain financially strong due to the robust
surplus position with which we entered 2020.
Yes, The Times They Are A-Changin’ and these recent changes are challenging.
I look forward to tackling each of them with you.
May God continue to bless our Association and our Members.
Sam & Sarah Clyde
St. Paul | Minnesota
ANNUAL REPORT | March/April 2020 | Our Catholic Journey
12
Annual Report
FINANCES
Statement of Operations 2019 2018
Total Income $73,823,985 $76,425,909
Total Claims & Expenses 73,643,766 75,786,215
Net Gain from Operations 180,219 639,694
Refunds to Members 111,515 113,497
Net Gain after Refunds to Members 68,704 526,197
Net Realized Capital Gain (Loss) (654,799) 76,443
Net Income (Loss) ($586,095) $602,640
Change in Surplus 2019 2018
Surplus, Beginning of Year $40,671,459 $40,621,762
Net Income (Loss) from Operations (586,095) 602,640
Change in Net Unrealized Capital Gain (Loss) 2,337,399 (1,943,161)
Change in Non-admitted Assets (272,716) 441,074
Change in Asset Valuation Reserve (2,552,847) 622,016
Change as a Result of Reinsurance (131,746) (194,831)
Change in Pension Liability 321,014 521,959
Surplus, End of Year $39,786,468 $40,671,459
Balance Sheet 2019 2018
Assets $1,001,195,407 $969,966,667
Liabilities 952,797,046 923,236,162
Asset Valuation Reserve 8,611,893 6,059,046
Surplus 39,786,468 40,671,459
Total Liabilities and Surplus $1,001,195,407 $969,966,667
www.catholicunitedfinancial.org | Catholic United Financial
13
Notice
CALL FOR CANDIDATES
For Board of Directors
Two seats on the Board will be up for election in 2020. Consistent with the 2019 Board
election, voting will be carried out electronically and by mail. To run for the Board, a
member must declare their candidacy in writing to Harald Borrmann by June 1, 2020.
Incumbents Bill Lucas and Jim Wensel have declared they will seek re-election. To
run for a seat on the Board of Directors, you must declare your candidacy by writing to:
Catholic United Financial
President Harald Borrmann
3499 Lexington Ave. N.
Arden Hills, MN 55126
Must be postmarked by June 1, 2020.
Catholic United structures its investments, its products
and its benefits so that no matter what,
we’ll be here to provide a so landing for you.
Sarah Clyde and her
younger brother
Noah
St. Paul | Minnesota
ANNUAL REPORT | March/April 2020 | Our Catholic Journey
14
T
he first three months of 2020 have
presented us with a very different
outlook from what we experienced
in 2019. Your charitable contributions
through the Foundation provided well
over $500,000 in distributions, grants
and awards to build and strengthen our
Catholic Faith. The funds were provided
to parishes, cemeteries, seminarians,
Catholic schools and hundreds of other
Catholic charitable organizations. As
we look forward to the rest of 2020 and
beyond, we need all of the great things
listed above in the quote by Winston
Churchill. But most of all we need hope.
The Catholic United Financial Foundation
remains strong and will continue to
provide for the charitable needs of
our members and donors. Donors
and members like you have provided
donations that support more than $12.5
million in future support from Charitable
Life Insurance policies to provide for
the charities of their choice, including
their home parishes, Catholic schools,
cemeteries, and other organizations such
as Catholic Relief Services, Sharing and
Caring Hands, and many religious orders
and missions.
An additional $31 million has been
entrusted to the Foundation to support
scholarships, cemeteries, parishes,
building projects and hundreds of other
charitable organizations. These donations
are invested in Donor Advised Funds,
Organizational Advised Funds and a
Catholic Focused Mutual Fund portfolio
managed by the Foundation. These Funds
are invested in a strong Catholic focused
manner to provide annual and long-term
support for the organizations chosen by
donors like you.
Our own feeling of hope comes strongest
from the generosity you as donors have
entrusted to our Foundation to give in
support of others. Our primary mission
through Catholic United Financial
Foundation is to be a partner with you in
your Christian generosity. Your selfless
generosity to God and our Church is
evident in the information shared on the
next page.
During 2019, the Foundation provided
through your contributions, along with
distributions from Donor Advised Funds
and proceeds from charitable annuities
and life insurance policies, significant
assistance to strengthen our Catholic
community and our Faith.
Annual Report
FOUNDATION
At this time more
than ever:
“All the great things are simple, and many can
be expressed in a single word: freedom, justice,
honor, duty, mercy, hope.”
- Sir Winston Churchill
HOPE
www.catholicunitedfinancial.org | Catholic United Financial
15
Robert Heuermann
Executive Director
The Foundation can be reached through your local Sales Rep, directly
by calling 1-877-275-7145, or by emailing Bob at [email protected].
FOUNDATION
These gifts from God you selflessly share with others, especially your children, have a
significant impact when you share with them the joy of giving. You are providing hope
and mercy to the members of our Catholic and greater communities who need it now
more than ever.
Even in these challenging times, please consider making a tax-deductible donation to support
the work of the Catholic United Financial Foundation. You can designate your contribution
to support the Msgr. Schuler Seminarian Fund, technology & chastity grants to strengthen
Catholic parishes & schools, or to assist with the Catholic United Response disaster
response program.
Let us show you how to use life insurance, annuities and Donor Advised Funds to increase
the effect of your generosity to your parish, school or the charity of your choice. The
Foundation is here to help you support of our community, vocations, and our Church.
Joining the Foundation to connect your faith, charity and financial planning together is
truly a perfect way to answer God’s call to share His gifts with others.
• Catholic United Financial Councils and Parish Volunteer Teams raised funds to support the
Gather4Good® program providing thousands of personal care kits for the homeless and
needy in our local communities.
• The Catholic United Response program provided support in Minnesota and Wisconsin to
help communities recover from wind and water damage caused by natural disasters.
• Many parish cemetery boards, parishes and building funds invested their funds in the Foundation
to help them maintain our cemeteries and build our parishes and Catholic Schools for our families
for many more generations.
Thank You for Your Contributions to Our Community You and other
volunteers gratefully gave their time and talents in strengthening our Church and aiding
those affected by natural disasters.
• 151 grants were made to Catholic schools receiving $73,950 in technology assistance
• 58 grants were made to parishes and schools receiving $30,460 in support of chastity education
Thank You for Your Contributions to the Church Since 2001, 1,945 grants
totaling more than $1 million have gone to Catholic schools and parishes for technology assis-
tance and teaching the sanctity of our bodies to thousands of our Catholic students
Thank You for Your Contributions to Vocations Since 1998, you have
supported more than 2,000 awards to seminarians who have received almost $770,000
to continue their training to lead our Church.
• 94 Major Seminarians received grants totaling $37,600
• 72 Minor Seminarians received grants totaling $18,000
1-877-871-8313
www.catholicunitedcu.org
The wind is blowing through your hair in your new automobile. Spray is tickling your
face off the bow of your new boat. Wild weather is wailing at your window, but you
smile and sip your coffee as you deposit a check with a snapshot.
We tend not to think about banking except when something
goes wrong. But Catholic United Financial Credit Union
members get to think about all the good things made
possible by their credit union, every day. Join today, and
start putting your money where it works to bring lower
rates and better service to you and your fellow Catholics.
You can finance a miracle.
Adoption Loans at
3499 Lexington Ave. N.
Arden Hills, MN 55126
Incredible rates available
New or
Used!
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on vehicles
* rate subject to change
Ye s .
