2019 Annual Financial Highlights

  • LCBA’s risk-based capital ratio improved to 662% on December 31, 2019, from 310% on December 31, 2018. This significant increase is due to the growth in surplus experienced as a result of the reinsurance treaty.

  • Overall portfolio investment quality is high, with an average rating of “A” and over 98% of bonds at investment grade. As anticipated, reinvestment rates remained low in 2019, leading to a slight reduction in book yield.

  • General expenses decreased 10% in 2019 as LCBA took additional measures to reduce costs. These measures included reducing the operating budget by approximately $500,000. The part of this reduction that had the most direct effect on members was the decision to publish the Direction electronically instead of printing and mailing as we have in the past.

  • Efforts to expand LCBA's PreNeed and other life insurance markets are underway, with plans to grow into new states in 2020.

Statement of Financial Position

Assets 2019 2018
Bonds $188,402,135 $184,613,111​
Real Estate $1,557,420 $1,589,224
Certificate Loans $1,073,324 $1,089,476
Cash & Cash Equivalents $5,586,020 $1,817,611
EDP Equipment​ $28,951 $16,996
Income Due & accrued​ $2,566,084 $2,519.117
Total Assets​ $199,213,934 $191,645,535
Liabilities & Surplus​ 2019 2018
Certificate Reserves​ $63,057,003 $175,296,243
Deposit-Type Contracts​ $5,273,318 $6,888,374​
Certificate​ Claims $806,898 $1,447,459
Provision for Dividends​ $172,005 $764,479
Advance Premiums​ $280,455 $549,438
Investment Reserves​​ $1,261,843 $1,317,048
Accrued General Expenses​ $292,953 $257,241
Other Liabilities​​ $850,724 $1,471,943
Reinsurance Settlements Payable $117,199,317 -
Unassigned Funds​​​ $10,019,418 $3,653,310
Total Liabilities & Surplus​ $199,213,934 $191,645,535

Summary of Operations

Income 2019 2018
Life Insurance Premiums $(31,078,410) $12,828,401​​
Annuity Premiums​ $(65,458,657) $10,013,676
Accident and Health Premiums​ $175,180 $174,543​
Net Investment Income​ $8,706,241 $8,371,707​
Other Income $3,345,884 $4,113,296​
Total Income $(84,309,762) $35,501,623
Member Benefits​ 2019 2018
Death Benefits​​ $7,493,790 $6,243,727
Life & Annuity Benefits​​ $13,390,641 $19,988,706
Reserve Changes​s $(112,239,241) $1,341,950
Total Member Benefits​​ $(91,354,810) $27,574,383
Operating Expenses​ 2019 2018
Commissions​​ $2,846,933 $3,713,830
General Expenses​​​ $3,583,023 $3,978,542
Taxes $160,056 $174,879​
Other Expenses $347,831 $246,313
Total Operating Expenses​​ $6,777,787 $7,938,685
Total Benefits & Expenses​​​ $(84,577,023) $35,513,068
Net Gain from Operations $267,261 $(11,445)​
Investment Capital Gain (Loss)​ $7,437 -
Dividends Incurred​​ $(165,159) $(762,136)​
Net Income $109,539 $(773,581)
Other Changes in Surplus​ $6,256,569 $70,524
Net Change in Surplus​​ $6,366,108 $(703,057)

Special Financial Update

From the Treasurer, Courtney Hagmaier

With just a quick glance at the financial results for 2019 compared to those of 2018, you can see that big changes have occurred. These changes resulted from a new reinsurance treaty that LCBA signed on the very last day of the year, December 31, 2019. This treaty helps to protect members by sharing the risk with another insurance company while increasing LCBA’s opportunity for future growth.

“Reinsurance” is often described as insurance purchased by an insurance company. One company (such as LCBA) shares (cedes) with another company (the reinsurer) the risk associated with an insurance policy. LCBA’s recent reinsurance transaction will change our size from a financial standpoint but has zero impact on our daily operations for you, our valued members.

Let me provide you with some important facts regarding this transaction:

  1. Under the terms of the contract, LCBA reinsured 80% of certain in-force life insurance, annuity, and special deposit agreements.

    What does this mean? The reinsurer assumes 80% of the risk of each policy ceded (meaning the payout of a death claim or surrender, as well as any associated liabilities.) The reinsurer also gets 80% of the premiums paid on reinsured policies.

  2. Due to the timing of the transaction, LCBA ended the year with a large liability of about $117 million owed to the reinsurer.

    What does this mean? LCBA has already taken care of this liability. In January, our investment advisors sold what ended up being approximately $104 million of bonds held as of December 31, 2019, to pay the initial settlement.

  3. Aside from sharing the risk, LCBA also received a ceding allowance of $6.1 million. This allowance resulted in a gain to surplus as of December 31, 2019. Due to accounting practices, the allowance will be amortized over time.

    What does this mean? Focus your attention on the “unassigned funds” line toward the bottom of the Statement of Financial Position; this represents LCBA’s surplus at the end of the year. Note the balance increased significantly from 2018 to 2019. This surplus provides LCBA and you with an additional cushion of safety and with opportunity. Opportunity to grow. Opportunity to continue providing our members with top-notch service and benefits. Opportunity to better serve our Fraternal purpose.

  4. Upon execution of the treaty, LCBA transferred (ceded) to the reinsurer approximately $123 million in life and annuity premiums associated with the reinsured policies.

    What does this mean? Whle LCBA received close to $27 million in premiums during 2019 (a 6% increase from 2018), subtracting the ceded premiums leaves us with large negative balances on our Summary of Operations. This particular oddity only occurs when recording the initial transaction, so the numbers will appear more normalized in the 2020 statements going forward.

Taking into account all of the above, the first quarter financial statements, which will be published in the summer issue of the Direction magazine, will look significantly different than the quarterly statements you’ve seen recently. However, future statements will be a better reflection of the “new” LCBA as the initial impact of the reinsurance transaction is considered complete. It’s important to note that this reinsurance transaction gives LCBA the opportunity to continue to grow, while boosting the protection of our members by sharing the risk, increasing surplus, and stabilizing LCBA’s financial picture. This enhances your membership for the future.

Life Insurance with a Conscience since 1890®.

That simple belief is what differentiates Loyal Christian Benefit Association (LCBA) from competitors. Yes, we sell insurance: Funeral Pre-Arrangement Funding Products, Traditional Life Insurance Plans, and Tax Deferred Annuities. But what makes LCBA different is we operate under the "common bond" of Christianity and return earnings from the sale of financial service products to our member customers and their communities in the form of member benefits, discount programs and scholarship opportunities.

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Founded in 1890 LCBA is a unique type of organization that provides the financial protection our members need, with the added benefit of helping those in need. We put our earnings back into communities and causes, not pockets.


PO Box 13005 | Erie, PA 16514



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