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STANDING STRONG

Church Mutual Insurance Company®

2018 Annual Report

Across America, Church Mutual Insurance Company is proving that when organizations join hands with us, they gain a partner of unmatched strength. Our strength empowers them to serve their communities no matter what the unexpected brings. Looking back at 2018, we see just how much we grew together in preparation for—and recovery from—a very challenging year. It’s our experience and financial strength that position us to stand strong with our customers so they can focus on their important missions.

A MESSAGE FROM OUR CEO

2018 stands out for a myriad of reasons. Many events that come to mind had a profound – and sometimes devastating – impact on many of our policyholders. From deep freezes to fires, hurricanes to heavy flooding, weather slammed us with unprecedented challenges and a high volume of claims. These events impacted our bottom line and stretched our teams’ capacity to respond.

At the same time, 2018 was filled with positive highlights. Thanks to our financial strength, we had resources to respond to our policyholders’ devastation, supporting them and guiding them as they rebuilt. In some cases, our employees stood side by side with first responders when devastation struck, helping our policyholders cope with unthinkable loss…

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CEO Letter, 2018 annual report

2018 stands out for a myriad of reasons. Many events that come to mind had a profound – and sometimes devastating – impact on many of our policyholders. From deep freezes to fires, hurricanes to heavy flooding, weather slammed us with unprecedented challenges and a high volume of claims. These events impacted our bottom line and stretched our teams’ capacity to respond.

At the same time, 2018 was filled with positive highlights. Thanks to our financial strength, we had resources to respond to our policyholders’ devastation, supporting them and guiding them as they rebuilt. In some cases, our employees stood side by side with first responders when devastation struck, helping our policyholders cope with unthinkable loss.

While I’m incredibly proud of our response to these catastrophic events, I’m just as proud of our proactive work in 2018 as we continued to focus on preventing claims through our risk consulting and policyholder education. In a first for Church Mutual, we hosted six onsite armed intruder training events around the country, teaching leaders of houses of worship and schools how to recognize the signs of potential violence, and how to respond should a violent event occur.

At the same time, we worked to make our own people and property safer through expanded cyber and physical safety training.

We also expanded the CM Sensor program to alert our policyholders about dangerous dips in temperatures and excess moisture in their facilities. Now in more than 8,000 structures, our sensor program has prevented more than $10 million in potential claims. More importantly, it ensured that our customers could continue to do their important work for their members, students and communities.

New in 2018 was our CM Wildfire Solutions program, designed to protect structures from the devastation of raging fires. Launched as a pilot in California, the successful program helped save several structures, including a Malibu, California-based synagogue with an insured value of more than $8 million.

We also established our Innovation Lab at CM2, with the goal of bringing even more risk prevention products and services forward to protect our customers’ people and property.

And we expanded our expertise into new states and new specialties. CM Regent, our public schools subsidiary, launched in Wisconsin and will soon expand to other states. We also launched our non-profit and human services niche, leveraging our expertise to help a wider variety of organizations such as food banks, shelters and day care centers.

Underlying all this progress was equal progress on running our business more efficiently and effectively to better serve our customers.

Last summer, we introduced CM Select, offering online access to a product created specifically for smaller churches and other religious organizations. These organizations can easily obtain quotes, purchase policies and manage their insurance needs online, simplifying the insurance-buying process.

We also made great strides with our new policy administration system. Our automobile and workers’ compensation lines are already in the new system, and we are just a few months away from moving our multiperil policies into the system as well.

While our business expanded into new markets and niches, we continued to focus on giving back throughout the country. CM CARES, the Church Mutual Insurance Company Foundation, provided financial support to a wide variety of causes and organizations. For the second year in a row, our foundation provided 50 $5,000 scholarships to students in faith-based studies. The foundation also provided generous gifts to institutions that foster diversity and inclusion, as well as organizations that support education, veterans, youth and families, and vibrant communities.

When I reflect upon all our challenges and accomplishments in 2018, what I will remember the most was visiting our customers as they coped with catastrophe. In December, I visited with policyholders in Paradise, California, and that experience really drove home the importance of what we do.

Several of our policyholders’ churches were incinerated in minutes. It’s like nothing I have ever seen – utter devastation. Our policyholders lost more than just their churches – they lost friends, family members and the infrastructure that supported their once-vibrant city. Folks in Paradise will be fighting to build a new normal for decades to come. But - as always - we are standing strong with our policyholders, and we will help them recover, step by step, day by day.

The organizations we serve provide the moral and social fabric for their communities. They nourish the hearts, minds and souls of everyone they touch. Without them, our communities become hollow and cold. Do we sell insurance? Yes. But what we do is so much larger and more significant than a signature on a policy. We are a safety net, a security guard, a teacher and a coach, all rolled into one promise – to protect the greater good.

I remain inspired and humbled by our policyholders. We stand with them and for them, strong in our commitment to support their missions and improve lives.

Richard Poirier - President and CEO

Richard V. Poirier

President and CEO

“I remain inspired and humbled by our policyholders. We stand with them and for them, strong in our commitment to support their missions and improve lives.”

PROTECTING POLICYHOLDERS

For more than 120 years, we’ve been standing strong with those who serve and helping them through whatever catastrophe may come their way. 2018 was no different. Despite unforeseen tragic events, we demonstrated our steadfast commitment to protect organizations from the unexpected and get them back on their feet as quickly as possible. As a policyholder-owned mutual company, Church Mutual exists to serve our policyholders. We will always have their backs.

PREVENTING AND RESPONDING TO ARMED INTRUDERS

Nothing shakes us or those we serve like the possibility of violence. With this in mind, we set out to provide our policyholders with tools and education that could save lives.

With the assistance of our partners at Firestorm and ALICE, we focused on creating resources for preparation, prevention and response planning.

Any issue regarding the safety and protection of our policyholders and those they serve is something we take seriously. We’ve made it our priority to equip our customers with industry-leading tools and protection plans to help minimize the risk of violence and respond effectively when it occurs. Church Mutual is committed to guiding our policyholders with an array of resources including live events, videos, webinars, FAQ sheets, infographics and more.

firestorm-logo alice-training-institute-logo
“I walked away from the training feeling like I had a whole new perspective on what to do.” – Preparing for an Armed Intruder Chicago event attendee
Weathering Natural Disasters

WEATHERING NATURAL DISASTERS WITH PROVEN RESOURCES

2018 proved that the unexpected can happen anywhere, anytime. But, with new and tested preparedness and prevention tools, we demonstrated the kind of responsiveness only a leading insurer can provide.

Wildfires

WILDFIRES

Piloted in California, the newly launched CM Wildfire Solutions™ program provides customers with wildfire prevention advice and fire mitigation services. Services include spraying threatened facilities with fire-retardant gel and 24/7 monitoring services via text-alert to those in danger. We aim to grow this successful program to other states in 2019.

Hurricanes

HURRICANES

With hurricane threats growing and the aftermath lingering, we remain committed to being the strongest partner we can be for policyholders when handling a storm’s impact. We continue to provide proactive communication and responsiveness before, during and after the storm.

Water Damage

WATER DAMAGE

We expanded our successful CM Sensor™ program in 2018 by providing policyholders with new Wi-Fi enabled temperature and moisture sensor kits. The sensor alerts policyholders to dangerous dips in temperature and excessive moisture in their facilities to minimize damage.

OFFERING SAFETY RESOURCES WITH NEW CHURCH MUTUAL NOW MOBILE APP

Guided by our commitment to Protecting the Greater Good, we seek innovative ways to enable our policyholders to retrieve safety resources that help them prepare for routine needs and unexpected events.

Previously piloted and newly launched, Church Mutual Now is our mobile app, which offers proprietary risk control and educational content. The free app is available to customers on the Apple App Store and Google Play.

The app allows policyholders to research trending safety topics, watch videos and webinars, download risk newsletters and more.

church-mutual-now-logo

SUPPORTING COMMUNITIES

By supporting charitable organizations and initiatives across the country, we strengthen communities and connections, which in turn helps them both stand strong in the face of adversity and grow through their shared missions.

CM Cares

CM CARES®, THE CHURCH MUTUAL INSURANCE COMPANY FOUNDATION

In 2018, we continued to empower organizations to fulfill their missions through financial support from CM CARES, the philanthropic foundation of Church Mutual Insurance Company.

CM CARES awarded 50 scholarships totaling $250,000 to support the education of future religious leaders. Every scholarship assisted hardworking students who have the goal of making a difference in the world. Supporting dedicated religious scholars is one of the many ways we strengthen the future of faith-based communities across the nation.

Lifest, one of the nation’s largest Christian rock festivals, celebrated its 20th anniversary in 2018.

We were there as the presenting sponsor to support one of our favorite faith-based family events.

It’s events like this that enrich our communities and offer us a chance to connect with policyholders and foster conversation.

In 2018, CM CARES also sponsored the Creations Festival Northeast to reach youth and families.

We feel strongly about supporting those who have served in our military. To honor them and provide a modern, flexible facility, we donated land to the Northwoods Veterans Post. The donation has enabled the construction of a new post, which is expected to meet the needs of 21,000 veterans from six surrounding counties. The groundbreaking ceremony took place in May of 2018 with many Church Mutual employees attending the event. We’re honored to support a space where veterans can thrive.

As part of CM CARES’ commitment to diversity and inclusion, we sponsored Marquette University’s Mission Week for the second year. In doing so, we enabled Marquette University to host students, faculty and guests for a week of learning, listening and reflection on truth, peacemaking and reconciliation.

Additional organizations receiving support from CM CARES in 2018 include:

  • Special Olympics
  • United Way
  • CESA 6
  • Fellowship of Christian Athletes
  • MKE Fellows
  • Operation Homefront
  • Pennsylvania Public Education Foundation

OUR EMPLOYEES SERVING OUR COMMUNITIES

Our employees appreciate and value supporting causes and organizations where they live and work. Nationwide, our employees receive a full, paid day off to serve others. It’s all about giving our people opportunities to give back in meaningful ways.

In 2018, employees volunteered more than 1,787 hours.

“There’s nothing like giving to the community and seeing the impact you can make in just one day. It’s something everyone should get to experience.” -Jenna Drews

UNITED WAY DONATIONS

Our employees also donated their own money to organizations making a difference, with more than 81 percent of Church Mutual employees contributing to raise $169,300 for the United Way alone.

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%

Participating Employees

$

0

K

Total Donations

A GREAT PLACE TO WORK

At Church Mutual, our goal is to build the best workforce in the business by recruiting strong candidates and retaining our top employees. Extensive training, opportunities for advancement, excellent benefits and education reimbursement — this is how we provide growth opportunities and support our employees and their families.

In 2018, WLI expanded to CM Regent, providing opportunities for its female employees to pave a path toward leadership and career development. The ongoing initiative supports and equips women in personal, professional and leadership growth with various learning sessions, presentations and mentorship programming.

To set us apart from other employers, our IT Scholars Program offers high-performing students interested in the world of IT free college tuition in exchange for a commitment to work for Church Mutual. This program offers a great job with a great mission-driven company to go with the hard-earned diploma.

Church Mutual Awarded

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Scholarships

$

0

K

Total

To Children of Church Mutual Employees

Church Mutual believes in the importance of higher education. In 2018, 16 children of Church Mutual employees received $30,000 in scholarships to pursue undergraduate degrees or vocational/technical school programs.

We continue to strengthen our internship program by developing students’ career skills and offering opportunities in a variety of departments within Church Mutual. These efforts contribute greatly to attracting and retaining bright young talent.

Twenty employees were randomly selected to create the Employee Advisory Council in 2018. The council acts as the conduit for communications between employees and senior leadership about the company’s mission, vision, values and goals. Working directly with President and CEO Richard V. Poirier, the committee shares ideas, discusses challenges and presents opportunities for improvement. Plans are in place to expand the council nationwide.

Becoming the best team and the best place to serve policyholders requires a focus on creating a diverse workforce, using diverse vendors and connecting with a diverse group of customers and their communities.

In 2018, we continued to support MKE Fellows, a program that helps African-American men from Milwaukee complete their college education and enter the workforce.

All employees also took part in diversity training in 2018, demonstrating the value of diversity in our organization and its positive impact on our policyholders. Cultivating a diverse workforce continues to speak to our values and commitment to the communities and policyholders we serve.

MOVING FORWARD

Our commitment to those who serve is unwavering. We appreciate and respect our policyholders’ important work, knowing they make our world a better place.

Our resolve has never been stronger, and it shows as we continue to expand into new markets and evolve to support our policyholders’ needs. For all these reasons, and more, we’re positioned better than ever for growth and success.

MARKETS SERVED

  • Religious organizations of all denominations
  • Schools, including public, private and faith-based institutions
  • Camps and conference centers
  • Senior living facilities
  • Nonprofit and human services

AMONG THE COVERAGES AVAILABLE

  • Property and liability
  • Professional liability
  • Umbrella liability
  • Workers’ compensation
  • Commercial automobile
  • Cybercrime protection
  • International travel
  • And many more

CORPORATE AWARDS AND RECOGNITION

Ward’s 50 Top Performing Property and Casualty Insurers—third straight year and 13th time overall

A.M. Best “A (Excellent)” rating—one of only 70 insurers to hold this rating for 50 years or more. Additional information concerning A.M. Best ratings can be found at ambest.com

BenchmarkPortal™ Center of Excellence—10th consecutive year

Wisconsin 75—Deloitte U.S.’s prestigious list of top private companies in Wisconsin

CM Select® Insurance Company

cm-select-logo

Finding new ways to meet the needs of those who serve others is central to our mission, and that’s why we launched CM Select in 2018. CM Select is the first insurer to offer online access to a product created specifically for smaller churches and other religious organizations. Our goal is to make obtaining quotes, purchasing policies and managing insurance needs online easy. It’s just another way we enable those we serve to spend more time focusing on their missions.

And, as those we serve have come to expect, our service is backed by financial strength they can trust. In its first year, CM Select earned a financial strength rating of "A (Excellent)" from A.M. Best.

As we move forward, we’re focused on expanding the same value we bring to our current policyholders to nonprofits and human service organizations.

“As all sectors of business, including faith-based organizations, move toward a digital-first approach, we’ve taken the opportunity to disrupt the market with CM Select.” -Kurt Brandau, president – CM Select Insurance Company

CM Regent® Insurance Company

cm-regent-logo

CM Regent leverages insurance expertise to meet the unique needs of K–12 school districts, colleges and universities.

2018 marked its expansion into Wisconsin. Sponsorship of the “Ensuring Great Leadership” conference shows it has Wisconsin schools’ and school systems’ best interests at heart.

CM Regent also partnered with the state of Pennsylvania and the Pennsylvania School Boards Association to help sign Act 44 into law. The law contains multiple provisions for school safety and security, and impacts all Pennsylvania school entities as well as state police, the department of education, the commission on crime and delinquency, and the attorney general’s office.

Because of this partnership and CM Regent’s expertise, its Risk Control and Claims representatives were invited to present school safety and security information at the PSBA Safety Conference alongside law enforcement and government officials.

CM Vantagesm Specialty Insurance Company

cm-vantage-logo

CM Vantage completed its second full year of business in 2018, leveraging a highly recognized specialty insurance brand with a coast-to-coast presence. This fast-growing business added team members and enhanced its technology platform, improving its business capabilities.

Gross written premiums in 2018 totaled $50.8 million, a 46 percent increase over 2017.

CM Indemnitysm Insurance Company

CM Group acquired American Sterling Insurance Company, which will be renamed CM Indemnity. The acquisition provides underwriting flexibility for Church Mutual.

New Policy Administration System

CM Unite is a multi-year corporate project tasked with bringing all policy administration into one system. We made a leap forward in 2018 with the addition of auto and workers’ compensation to the new system. This gives Church Mutual the opportunity to develop new products for policyholders and enhance current coverages with new options not previously available.

John (Jay) B. Williams, Chairman of the Board
Director
Associated Banc-Corp
Northwestern Mutual Wealth Management Company
Medical College of Wisconsin

Gregory A. Smith, Vice Chairman of the Board
Executive-in-Residence and Lecturer
University of Wisconsin-Milwaukee
Lubar School of Business

Judith P. Greffin
Retired - Executive Vice President and Chief Investment Officer
Allstate Insurance Company

Allen L. Leverett
Director
WEC Energy Group

Marsha A. Lindsay
Chair and Chief Strategist
Lindsay, Stone & Briggs
Chief Executive Officer
Lindsay Foresight & Stratagem

David F. Pauly
Director
Canal Insurance Company

Richard V. Poirier
President and Chief Executive Officer
Church Mutual Insurance Company

Michael E. Ravn
Chief Executive Officer Emeritus
Church Mutual Insurance Company

Lori A. Weyers
President
Northcentral Technical College

Walter H. White Jr.
Retired - Partner
McGuireWoods London LLP
(Retired from Board December 7, 2018)

Richard V. Poirier, JD
President and Chief Executive Officer

Kevin D. Root, CPA
Executive Vice President -
Operations

Steven C. Rominske, FCAS, CERA, MAAA, AU, CPCU
Senior Vice President -
Chief Actuary and Chief Risk Officer

Angela K. Bailey, SPHR
Vice President - Human Resources

Kurtis L. Brandau, CPCU ARe, ARM, ASLI
Vice President - CM Select

Robert M. Buckley, CPCU, CIC
Vice President -
Corporate Research and Chief Strategy Officer

Edward W. Hancock
Vice President -
Chief Underwriting Officer

Dawn R. Lemke, JD, CPCU
Vice President -
Assistant General Counsel and
Chief Regulatory Officer

Scott M. Names, CPCU
Vice President -
Chief Information Officer and Integration Officer

Alan S. Ogilvie
Vice President - CM Vantage

Richard J. Schaber, CPCU, CRM, CIC
Vice President - Direct Sales

Janet L. Selnes, CIC, CRM, CPCU
Vice President -
Broker Distribution

Michael M. Smith, JD
Vice President - Secretary and
General Counsel

Scott W. Steele
Vice President - Chief Marketing Officer

Jeffrey D. Steffen, CPA
Vice President -
Chief Financial Officer

Herman W. Vandenberg, CPA
Vice President - Treasurer/Corporate Controller

Breigh R. Voigt, CISR
Vice President - Commercial Operations

Robert A. White, CIC, ARM, AAI, ARe
Vice President - CM Regent

Dale J. Brom
Assistant Vice President - Information Technology

Rodney M. Flanders, CPCU, CLU, ARM, CEBS
Assistant Vice President – Learning and Development

Todd D. Griffith, CPCU
Assistant Vice President - Broker Underwriting

Laura E. Huggins
Assistant Vice President - Marketing

Craig S. Huss, CISSP, ISA
Assistant Vice President - IT and Chief Information Security Officer

Dean J. Jarnow
Assistant Vice President - Strategic Resource Management

Peter J. Mahler, CPCU, ARM-E, ARM, AU, AIS
Assistant Vice President - Direct Underwriting

Randall W. Oja, FCAS, MAAA
Assistant Vice President -
Senior Actuary

Guy A. Russ MBA, CPCU, ARM
Assistant Vice President - Risk Control

Joy E. Slogar
Assistant Vice President - Claims

John R. Tribble, MBA, CPCU, CCLA
Assistant Vice President - Chief Diversity Officer

Allan D. Wilcox, AIC, INS, AIM, FCLS
Assistant Vice President - Claims

Sandra M. Woller, CPCU
Assistant Vice President - Chief Compliance Officer

Cynthia M. Brandt, CPCU, AINS, AIS
Assistant Corporate Secretary

STRENGTH IN NUMBERS

$

0

.2M

Direct Premiums Written

$

0

.9M

Policyholders' Surplus

What Your Company Owns

Bonds

$1,205,789,681

Stocks

$208,456,598

Cash

$53,027,903

Real Estate

$12,672,117

Premiums

$179,458,877

Accrued Interest

$9,106,223

Other Assets

$221,226,081

What Its Obligations Are

Losses in Process of Adjustment

$739,658,331

Unearned Premiums

$378,212,348

Taxes Payable

$5,818,800

Expenses Payable

$27,190,823

Other Liabilities

$118,999,530

What your company owns

2018

2017

Bonds*

2018

$1,205,789,681

2017

$1,172,286,806

Stocks (At Market Value)

2018

$208,456,598

2017

$206,798,020

Cash and Short-Term Investments

2018

$53,027,903

2017

$75,302,650

Real Estate Home Office Building

2018

$12,672,117

2017

$13,330,266

Premiums In Course of Collection

2018

$179,458,877

2017

$170,804,594

Accrued Interest, Dividends and Real Estate Income

2018

$9,106,223

2017

$9,060,271

Other Assets

2018

$221,226,081

2017

$167,048,620

Total Assets

2018

$1,889,737,480

2017

$1,814,631,226

*Bonds are generally carried at amortized cost (except bonds with NAIC 3-6 ratings, which are carried at the lower of fair value or amortized cost).

What its Obligations Are

2018

2017

Losses In Process of Adjustment

2018

$739,658,331

2017

$589,850,221

Unearned Premiums**

2018

$378,212,348

2017

$357,235,620

Taxes Payable

2018

$5,818,800

2017

$4,717,229

Expenses Payable

2018

$27,190,823

2017

$33,991,089

Other Liabilities

2018

$118,999,530

2017

$125,147,513

Total Liabilities

2018

$1,269,879,832

2017

$1,110,941,672

** Unearned portion of the premium on all unexpired

Policyholders' Surplus

2018

2017

Guaranty Fund

2018

$1,600,000

2017

$1,600,000

Unassigned Funds for the Protection
of Church Mutual Policyholders

2018

$618,257,648

2017

$702,089,554

Total Security Fund

2018

$619,857,648

2017

$703,689,554

Total Liabilities and
PolicyHolders' Surplus

2018

$1,889,737,480

2017

$1,814,631,226