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STRENGTH FOR TODAY... AND TOMORROW
Modern Woodmen of America
BOARD OF DIRECTORSStart with a solid base, build on your core strength and add
flexibility. Sounds like a great exercise mantra, right? It also describes Modern Woodmen of America’s work in 2018.
With core values of service to others and flexibility to adapt in an ever-changing world, our members, field representatives, home office employees and fraternal volunteers accomplished great feats. Their efforts helped ensure the future health of our organization. Highlights include:
• Offering new whole life insurance products and upgrading technology to better serve member families.
• Gathering with member delegates to elect officers at our quadrennial National Convention.
• Helping the homeless across America through member chapters and youth service clubs.
Since it was founded in 1883, Modern Woodmen has continually positioned the organization and its members for a bright future. We’ll continue to do so in 2019 and beyond, challenging ourselves to embrace change and evaluate opportunities for continued growth – while maintaining focus on our mission to improve quality of life for our members and their communities.
It’s my honor to share this annual report with you.
W. Kenny Massey / President and CEO
OUR MISSION To improve the quality of life for our members.
OUR VISION Modern Woodmen of America will grow nationwide through members helping members create a better tomorrow for themselves, their families and others.
OUR CREED There is a destiny that makes us brothers; None goes his way alone; All that we send into the lives of others Comes back into our own. - Edwin Markham circa 1939
From left:
Director James E. Temperley / Bonita Springs, Florida
Director David B. Emrick / Davenport, Iowa
Director Brett M. Van / Coal Valley, Illinois
President and CEO W. Kenny Massey / LeClaire, Iowa
Director Lori A. Newberg / Lenexa, Kansas
Director Joseph A. Sztapka / Sioux Falls, South Dakota
Director Lester L. Bohnert / East Moline, Illinois
National Secretary Jerald J. Lyphout / East Moline, Illinois
Director Sam H. Kupresin
Bettendorf, Iowaappointed 2019
272018 ANNUAL REPORT26 Strength for Today ... and Tomorrow. / Modern Woodmen of America
2018 ANNUAL REPORT // President’s Message Board of Directors // 2018 ANNUAL REPORT
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Members take homelessness to heart
When disaster strikes
Make An Impact
Homelessness exists throughout our country, in all of our towns
Fraternal Aid and volunteer efforts help communities in need
Volunteer, socialize and learn!
According to the National Alliance to End Homelessness, the problem affects:
• Almost 200,000 people in families.• More than 30,000 unaccompanied
youths.• Nearly 50,000 veterans.In 2018, Modern Woodmen members
helped make a difference for those in their communities without permanent homes. Through the Take Homelessness to Heart campaign, Modern Woodmen chapters and clubs held 815 local events, 581 service projects and 23 fundraisers, and donated $690,429 to raise awareness and help meet local needs.
Disaster can strike at any time, and the damage left in its wake can be unpredictable – and unimaginable.
Modern Woodmen’s Fraternal Aid Fund helps ease financial burdens caused by disasters such as fires, floods, storms or serious health problems. Through the benefit, affected members can apply for financial assistance to cover their life insurance premiums for a limited time.
Several devastating hurricanes, fires and floods crashed through the United States in 2018, affecting countless members. Faced with the challenge of rebuilding, many members, field representatives and employees stepped in to help by volunteering, raising funds and collecting donated items.
Learn, socialize and volunteer. Modern Woodmen chapters, Summit chapters and youth service clubs make it easy – and fun! Activities provide a wide variety of meaningful and memorable hands-on experiences throughout the year. Get involved to make an impact in your own life and in your com-munity. Ask your Modern Woodmen representative how you can get involved as a leader, serve on your local chapter board, or simply volunteer for an upcoming service project.
MEMBER ACTIVITIESSocial, educational and volunteer events in 2018
*Includes total dollars raised by member chapter and youth clubs partnering with community groups.
to community projects and individuals in need.
MATCHING FUND PROGRAM
3,998 fundraising events
$52.8 million* contributed
Courses on financial literacy, exercise & nutrition, & more reached
YOUTH EDUCATIONAL PROGRAMS
511,613 children
820 active clubs nationwide
YOUTH SERVICE CLUBS
62,129 participants
285 active
chapters
SUMMIT CHAPTERS
age 55+ participated47,672 members
2,495 active
chapters
CHAPTERS618,503 attendees
at social, educational & volunteer events for member families
SERVICE PROJECTS/VOLUNTEER ACTIVITIES
10,171 hands-on events
470,656 volunteer hours
$2.23 million reimbursed for projects in members’ communities
In central North Carolina, 25 Modern Woodmen financial representatives and members drove to Laurinburg, North Carolina, to clean up damage left by Hurricane Florence. Fraternal chapters in the region came together to donate $10,000 to help rebuild roofing and floors in damaged areas.
292018 ANNUAL REPORTStrength for Today ... and Tomorrow. / Modern Woodmen of America28
2018 ANNUAL REPORT // Member Activities
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Member students earn awardsThe Class of 2018 made a big impact in high school through dedicated volunteering and
academic achievement. Because of their hard work, Modern Woodmen rewarded 120 member students with $255,000 in Make An Impact Scholarships.
Each student received between $1,000 and $10,000 to help them pursue their dreams in college. The future is bright because of these driven, community-focused young members.
Modern Woodmen will award $351,000 in new scholarships to help the Class of 2019 pay for college.
New fraternal benefit aims to meet local needsModern Woodmen’s newest fraternal member benefit,
the Do-Good Grant, launched in 2018. Up to 500 grants are awarded for approved projects each
year, to help members complete service projects to support causes they care about. Grant recipients receive a $100 prepaid card to purchase supplies, a project guide, T-shirts and other resources to make the event a success.
This benefit is perfect for members who are interested in fraternalism but not currently active in their local Modern Woodmen chapter.
See how two Do-Good Grant recipients rallied their communities on Page 12.
Have you visited the Final Wishes page at member. modernwoodmen.org?
Here’s what you’ll find: An interactive, educational resource that can provide some peace of mind.
You can begin by answering questions about the location of important documents, recording your family history and considering your personal end-of-life and funeral preferences. Or, start by reading articles on what to expect when dealing with the loss of a loved one.
The topic of final wishes can be uncomfortable, but by making plans early, you help those closest to you at a difficult time. The benefit is appropriate for adult members in any life stage, and you choose how to save your responses: in your browser, as fillable PDFs or printed at home.
Hear how the benefit surprised member Sue Young on Page 4.
Life insurance products • Whole life insurance • Universal life insurance • Term life insurance
Annuity products • Fixed annuities • Immediate annuities • Variable annuities1
Investment products1
• Mutual funds • Retirement plans – Traditional IRA, Roth IRA, SEP-IRA, SIMPLE IRA, 401(k), 403(b) TSA • College savings plans – 529 college savings plans,
Coverdell education savings accounts, UGMA/UTMA accounts
• Brokerage services – stocks, bonds, ETFs, UITs • Investment advisory services – Adviser-managed and
third-party managed accounts, financial planning services
Insurance products2
• Dental and vision insurance • Disability income insurance • Group employee benefits • Group voluntary benefits • Impaired risk life insurance • International life and health insurance • Long-term care insurance • Health insurance • Medicare supplement insurance • Medicare Advantage and prescription drug plans
1 Securities offered through MWA Financial Services, Inc., a wholly owned subsidiary of Modern Woodmen of America. Member: FINRA, SIPC. Investment Advisory Services offered through MWA Financial Services, Inc., a Registered Investment Adviser.
Individual agents may not be licensed to sell all products. 2 Not issued by Modern Woodmen of America. Brokered insurance products
available through MWAGIA, Inc., a Modern Woodmen subsidiary. Product availability varies by state.
MEMBER BENEFITSFor all life stages
Make An Impact Scholarships further college dreams
Do-Good Grant helps members make an impact
Final Wishes makes planning a priority Interactive online benefit helps members feel prepared
Member benefits for all life stages – learn more at modernwoodmen.org.
ProductsModern Woodmen offers financial products to help you meet a wide range of needs.
NEWBORN BENEFIT$45,000 of life insurance
issued for infants in poor health
ORPHAN BENEFIT$62,100 in financial support
for 22 orphans
100 PERCENT MODERN WOODMEN FAMILY BENEFIT
15,307 childrenreceived books for birthdays
MAKE AN IMPACT SCHOLARSHIPS$433,765 awardedto 193 member students
ACCELERATED BENEFITS$35,790 in premiums
& interest paidfor terminally ill members
FINAL WISHES2,066 members
accessed website (see Page 30)
MEMBER DISCOUNTSExclusive savingson health screenings, gym memberships, park passes, event tickets and more
FRATERNAL AID FUND$140,825 total in premiums paid
for members who were victims of medical, fire or natural disasters
312018 ANNUAL REPORT30 Strength for Today ... and Tomorrow. / Modern Woodmen of America
2018 ANNUAL REPORT // Member Benefits
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n National membership: 753,245 membersn Part of: 2,495 adult chapters, 285 Summit
chapters (for members age 55+), 820 youth service clubs
n Total fraternal expenditures: $19.9 million
Fraternal expenditures fund family-oriented member benefits and
programs, including:
• Disaster-relief assistance.
• College scholarships.
• Social, educational and volunteer service events.
• Educational programs for schools and youth groups
… and more.Fraternal expenditures for the year reflect strong usage of benefits and
programs by members.
Life insurance in force shows consistent growth and increased
protection for members.
Modern Woodmen’s increasing asset base is a strength.
AT MODERN WOODMEN, MEMBERS ALWAYS COME FIRST. Here’s what we accomplished together in 2018.
Bonds
Certificate loans, cash and other
Mortgage loans and real estate
Common stocks
FINANCIAL SUMMARY FRATERNAL SUMMARY
HELPING MEMBERS TODAY AND IN THE FUTURE
Keeping promises for 136 years
2018 FINANCIAL HIGHLIGHTS
n Total life insurance owned by members: $40.75 billion
n Payments and benefits made to members (includes death benefits, annuity
payments and surrender benefits): $1.07 billion
n Dividends paid on life insurance and annuity certificates: $7.4 million
n Life insurance, annuity and other certificate reserves: $12.7 billion
n Total assets: $16.48 billion
n Surplus: $1.88 billion
n Solvency ratio: 112.87 percent For every $100 of liabilities (promises
made to members), Modern Woodmen
has $112.87 of assets. The industry
average solvency ratio is 106.18
percent. (Source: Standard
Analytical Service, Inc., 2018)
Heidi Passalacqua lost her mother and two husbands before age 30. Life insurance helped her move on financially. “You can’t put a monetary value on a life,” she says. “But being a widow without life insurance – there’s no way. It’s a necessity to survive.”
Thanks to Modern Woodmen, more teachers at DaVinci Academy are saving for retirement. “Our representative is helping people understand the why and how,” says Fred Donaldson, the school’s administrator. “He’s helping all of us be a lot more informed about our financial future and how to best prepare for it.”
Shirley Paden’s top financial concern is making sure her money lasts. Her representative helped her turn a portion of her retirement savings into a guaranteed stream of income she won’t outlive. “Now if I want to do something, I can just do it,” she says. “It feels more comfortable, knowing I don’t have to pinch pennies.”
Every member of the Grill family is protected by life insurance, thanks in part to Modern Woodmen’s Newborn Benefit. Joshua and Zachary were born at just 23 weeks. The member benefit allowed their parents to purchase (and later increase) coverage for the twins at standard rates, regardless of their health.
Member story
Member storyMember story
Member story
Fraternal expenditures
Quality Investments
Growth in assets Life insurance in forceDollars in millions
As of 12/31/2018, approximately 99.6 percent of bonds were of high or medium quality.
Dollars in billions Dollars in billions
84%
5%
4%
7%
2018 ANNUAL REPORT 3332 Strength for Today ... and Tomorrow. / Modern Woodmen of America
2018 ANNUAL REPORT // Financial Message Financial Highlights // 2018 ANNUAL REPORT
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FINANCIAL STATEMENTSModern Woodmen of America – Year ended Dec. 31, 2018 (dollars in thousands) unaudited
2018 2017
Operating activities
Premium and annuity considerations $ 963,260 $1,001,543
Net investment income 600,363 565,136
Misc income 12,349 8,031
Total cash provided by operations 1,575,972 1,574,710
Benefit and loss-related payments 1,061,737 997,902
Commissions and other expenses paid 202,523 208,073
Net transfers to separate accounts 114,583 94,117
Dividends paid 7,415 7,380
Total cash used in operations 1,386,258 1,307,472
Net cash provided by operating activities 189,714 267,238
Investing activities
Proceeds from investments sold:
Bonds 1,356,058 1,304,276
Stocks 150,116 218,285
Mortgage loans 56,084 49,297
Real estate 3,282 0
Other invested assets 78,340 80,912
Miscellaneous proceeds 3,956 84,170
Total investment proceeds 1,647,836 1,736,940
Cash applied, cost of investments acquired:
Bonds 1,699,890 1,638,508
Stocks 77,179 154,778
Mortgage loans 64,120 106,910
Real estate 389 763
Other invested assets 121,260 69,892
Miscellaneous applications 37,706 9,782
Total investment applications 2,000,544 1,980,633
Net decrease in certificateholders’ loans (4,268) (7,278)
Net cash used in investing activities (348,440) (236,415)
Other cash provided by financing activities and other miscellaneous sources 131,138 83,912
Increase (decrease) in cash and short-term investments (27,588) 114,735
Cash and short-term investments at beginning of year 296,316 181,581
Cash and short-term investments at end of year $268,728 $296,316
2018 2017
Assets
Bonds $13,141,262 $12,789,706
Stocks 734,337 873,635
Mortgage loans 589,432 581,122
Real estate 19,255 23,111
Cash 268,729 296,316
Certificateholders’ loans 152,721 157,102
Securities lending reinvested collateral 353,066 320,360
Other invested assets 412,653 375,821
Total cash and invested assets 15,671,455 15,417,173
Investment income due and accrued 128,982 130,574
Electronic data processing equipment 5,306 2,951
Other assets 4,151 2,402
Separate account assets 666,036 613,164
Total admitted assets $16,475,930 $16,166,264
2018 2017
Income
Premiums:
Life and annuity $960,950 $999,607
Other 2,210 2,036
Investment income, net of expenses 599,895 568,378
Amortization of interest maintenance reserve 16,053 16,186
Other income 12,350 8,031
Total income 1,591,458 1,594,238
Benefits and expenses
Benefits:
Life and annuity 1,053,735 1,016,383
Other 11,830 12,079
Increase in aggregate reserves 149,748 231,496
Employees’ and fieldworkers’ benefit plans 7,362 6,150
Commissions 56,702 65,461
General insurance expenses 123,528 116,574
Insurance, taxes, licenses and fees 6,788 7,129
Fraternal, charitable and benevolent expenses 19,900 20,610
Net transfers to separate accounts 112,778 87,492
Total benefits and expenses 1,542,371 1,563,374
Net gain from operations before dividends/net realized capital gains 49,087 30,864
Dividends to certificateholders 7,415 7,380
Net gain from operations before net realized capital gains 41,672 23,484
Net realized capital gains 68,211 65,409
Net income $109,883 $88,893
2018 2017
Appropriated
Balance at beginning of year $279,271 $278,233
Transfer from unassigned funds (667) 1,038
Balance at end of year 278,604 279,271
Unassigned
Balance at beginning of year 1,541,017 1,354,549
Net income 109,883 88,893
Net unrealized capital gains (losses) (127,597) 136,578
Change in asset valuation reserve 39,115 (26,177)
Change in nonadmitted assets (11,064) (2,980)
Transfer to appropriated surplus 667 (1,038)
Other changes, net 48,304 (8,808)
Balance at end of year 1,600,325 1,541,017
Total surplus $1,878,929 $1,820,288
Statements of Cash Flows
Balance Sheets
Statements of Operations
Statements of Surplus
2018 2017
Liabilities and surplus
Aggregate reserves:
Life and annuity $12,730,643 $12,557,261
Accident and health 1,991 2,118
Certificate and contract claims 41,531 45,784
Other certificateholders’ funds 3,437 3,312
Dividends payable to certificateholders 7,300 7,300
Accrued commissions, general expenses and taxes (8,250) (6,347)
Payable for securities lending 353,066 320,360
Other liabilities 464,062 413,153
Liability for benefits for employees 63,481 59,243
Interest maintenance reserve 36,649 54,457
Asset valuation reserve 237,055 276,171
Separate account liabilities 666,036 613,164
Total liabilities 14,597,001 14,345,976
Appropriated surplus 278,604 279,271
Unappropriated surplus 1,600,325 1,541,017
Total surplus 1,878,929 1,820,288
Total liabilities and surplus $16,475,930 $16,166,264
352018 ANNUAL REPORT34 Strength for Today ... and Tomorrow. / Modern Woodmen of America
2018 ANNUAL REPORT // Financial Statements
