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2016 Annual Financial Highlights

  • In 2016, LCBA developed and launched a new life insurance product line, sold via an experienced network of denominational agencies in four states. The new business strain on the nearly $4 million in premium from that product line resulted in a surplus reduction of $1.6 million. As mentioned in President Tuttle’s article, the loss was anticipated due to the up-front costs associated with most life insurance sales and is considered an investment in the growth and future of the Association.
  • While LCBA’s risk-based capital remained consistent year-over-year, the reduction in surplus led to the drop in riskbased capital ratio from 444% at December 31, 2015 to 324% at December 31, 2016.
  • Premium income is up 11% from the prior year, due predominately to sales of the new life product line. Management continues to develop the PreNeed market and seek opportunities for expansion. Medicare Supplement premiums also increased significantly from the prior year but remain a small percentage of overall premiums.
  • LCBA’s portfolio investment quality remains high with an average rating of "A+" and 97% of bonds at investment grade. As anticipated, reinvestment rates remained low in 2016, leading to a slight reduction in book yield.
  • Commissions increased significantly in 2016, by nearly $950,000, over 85% of which is attributable to the new product line and the rest due to the mix of other business that was sold during the year.
  • General Expenses were up in 2016 due primarily to the costs associated with the new product line, which began development in the first quarter of the year. Additionally, LCBA completed its five year Pennsylvania state insurance department examination in 2016, which cost the Association approximately $230,000 and resulted in a clean examination report. Net expenses were up approximately 12% from the prior year and were 4% over budget, mostly due to the un-budgeted costs of the new product line and also due to the high cost of the exam.
​Statement of Financial Position ​ ​
December 31, 2016 & 2015
 Assets 2016 201​5
Bonds 179,117,935​​ 173,746,210​​
Common & Preferred Stock - 133,313
Real estate 1,578,081 1,608,733
Certificate loans 1,058,189 1,058,184
Cash & cash equivalents 849,844 695,819
Short term investments​ 530,782​ 3,323,984​
EDP equipment​ 22,100 37,788
Income due & accrued​ 2,216,443​ 2,300,285​
Total Assets​ $185,373,374 $182,904,316
​    ​ 
 Liabilities & Surplus​
Certificate reserves​ 170,484,498 166,812,781
Deposit-type contracts​ 6,576,470​ 6,468,103​
Certificate​ claims 727,606 535,769
Provision for dividends​ 787,948​ 751,830​
Advance premiums​ 484,041​ 195,843​
Investment reserves​ 1,848,595 2,154,632
Accrued General Expenses​ 231,664 204,486
Other liabilities​ 691,728 634,230
Unassigned funds​ 3,540,824 5,146,642
Total Liabilities & Surplus $185,373,374 ​ $182,904,316 ​
​Summary of Operations ​ ​
Years ended December 31, 2016 & 2015​
Income​ 2016 2015​
Life Insurance premiums 11,103,436 7,224,125
Annuity premiums​ 8,255,358 10,087,807​
Accident and Health Premiums​ 60,625​ 21,425​
Net Investment income​ 8,438,045​ 8,435,795​
Other income​ 683,770​ 393,772​
Total Income​ $28,541,234​ $26,162,924​
Member Benefits
Death benefits​ 5,375,078 4,921,206​
Life & annuity benefits​ 14,771,469​ 13,853,591​
Reserve changes​ 2,632,614​ 2,632,614​
Total Member Benefits​ $22,779,161 $21,407,411
Operating Expenses​
Commissions​ 1,616,128 673,585
General expenses​ 3,925,200​ 3,408,677​
Taxes​ 174,879 150,845
Total Operating Expenses​ 5,716,207 4,233,107
Total Benefits & Expenses​ $28,495,368​ $25,640,518​
Net Gain from Operations 45,866 522,406
Investment capital gain (loss)​ (8,087) (28,624)
Dividends Incurred​ (787,622)​ (744,142)​
Net Income​ $(749,843) $(250,360)
Other Changes in Surplus​ (855,975) 47,855
Net Changes in Surplus​ $(1,605,818) $(202,505)