2014 year in review - CUNA Mutual

20 14 YE AR IN REVIEW

80 YEARS STRONG

Our Purpose To become the trusted insurance and investment partner, empowering middle-Americans to achieve financial security. 2 4

l et te r to p o l i c y h o l d e r s we h ave p u r p o s e s to r i e s

10

co r p o rate re sp o n si b i l i t y

16

f i n a n cia l h i g h l i g ht s

20

about us

1 2014 YEAR IN REVIEW

To Our Policyholders, At CUNA Mutual Group, we have a clear purpose. We are dedicated to helping millions of people and their families build a better financial future.

We build trusting relationships with credit unions and others to empower these families with insurance and investment products. Our purpose drives what we do, how we do it and the way we measure our results. Throughout this annual report, you will see stories from the people who matter most: our customers. You will see that in 2014, we served these customers in their times of need and made a real difference in their lives. This year marked my first as president and chief executive officer. I’m proud of what our team accomplished this year. Not only did we have a great impact on our customers, we also achieved strong financial performance. Our revenue and earnings are growing, and our capital level is higher than ever. At the same time, we’re making long-term plans and investments that will serve our customers for generations to come.


The future of our company rests with our knowledge of consumers and the credit union movement. Going forward, we will continue making investments in products, technology and data capabilities to help us deliver the products and services that our customers need. Thank you for the trust you place in CUNA Mutual Group. I look forward to the years ahead.

Robert N. Trunzo President & Chief Executive Officer CUNA Mutual Group


HELPING PEOPLE ACHIEVE FINANCIAL SECURITY

4 22001144 Y YE A R I N R REEV VIIEEW W

L E N D I N G & PAY M E N T S EC U R I T Y

Safety Net “There really wasn’t a safety net in our lives; the debt protection was that safety net.“ HELEN AGNEW

120,637 CL AI M S PAI D

CU Community Credit Union — Springfield, MO

I N 20 1 4

Helen never imagined that she would have to relearn how to talk or walk, but after suffering a stroke, this became her reality. It affected every aspect of her life including her family, her ability to work and her personal independence. Helen was responsible, had a great job and financial security, but all of that changed in an instant.

$

Thankfully, Helen protected her auto loans through her credit union and CUNA Mutual Group. She was able to rely on debt protection coverage to make her car payments so she could focus on the things that matter most: healing, paying medical bills and ultimately finding a new job after the stroke. V I S I T W W W.YO U T U B E /C U N A M U T UA LG R O U P 1 FO R H E L E N ’ S V I D EO


Protecting what matters most1

B U S I N E S S P R OT EC T I O N

Reassurance $1.157 billion TOTAL B EN EFITS PAI D I N 20 1 4 2

$ Delivering on the promises made to credit unions and

“They knew it was devastating, and being given that reassurance is something priceless.“ PHYLLIS COCHRAN

Augusta VAH Federal Credit Union — Martinez, GA After Augusta VAH Federal Credit Union’s branch was destroyed by a massive fire, CEO Phyllis Cochran knew that her staff needed to act quickly for their members. With a strong, up-to-date disaster preparedness plan in place, everyone knew what they needed to do to get back to business-as-usual. Although the branch was a complete loss, they were back up and running within hours of the fire because of CUNA Mutual Group. “We were so thankful that the folks from CUNA Mutual make it so easy,” said Phyllis. “To me, there are no other competitors .… When you have a catastrophic loss, I can attest, they are the best.”

their members V I S I T W W W.YO U T U B E /C U N A M U T UA LG R O U P 1 FO R P H Y L L I S ’ S V I D EO


RETIREMENT

Benefit “Employees understood what this plan was, how it was going to benefit them, and what they could expect from it.“ NATHAN GROSSENBACH

Shoreline Credit Union — Manitowoc, WI

96.9 %

Retirement made simple and easy to understand. That’s what Shoreline Credit Union delivered to its employees through CUNA Mutual Group’s retirement solution. “CUNA Mutual Group came in and did almost all of the dirty work for us. It was just tremendous,” said Nathan, accounting manager. The hands-on service was “the most important thing to help the transition go smoothly.” With in-person consultation plus an easy-to-use Benefits for You online portal, employees of the credit union can confidently choose the right investment option to help them achieve financial security. V I S I T W W W.YO U T U B E /C U N A M U T UA LG R O U P 1 FO R N AT H A N ’ S V I D EO


of credit unions in the United States have one or more products with CUNA Mutual Group3

T R U S TAG E

Protect TR US TAG E P R OTEC TS M O R E THAN

15 million

“He would have died for us, to protect us, and we would have done the same for him.“ BELINDA LOCKRIDGE

Honda Credit Union — Piedmont, AL

CR ED IT U N I O N M EM B ER S 4

When you’re grieving the death of a loved one, your insurance company may not be top of mind. “You can’t think like you would normally be able to think at a time like this,” explained Belinda. To her surprise, she was able to settle her claim, “in a matter of minutes.” Within two days, Belinda received her husband’s life insurance policy benefits in her account. “That was one thing I could kind of mark off my list and say, ‘Okay, I don’t need to go back to it.’ Now I can just go handle the next thing.” At CUNA Mutual Group, we protect what matters most and deliver on the promises made to credit union members. V I S I T W W W.YO U T U B E /C U N A M U T UA LG R O U P 1 FO R B E L I N DA’ S V I D EO


W E A LT H M A N AG E M E N T

Collaborating “It’s working with companies that have that same vision that helps us survive and partnering with individuals who can help you get there.“

A S A CO M M IT TED I N D US TRY LE AD ER , CU NA M U T UAL G R O U P CO NTR I B U TED

DAVID YOUNG

Commonwealth Credit Union — Frankfort, KY When Commonwealth Credit Union realized it needed to provide more sophisticated financial solutions to their members — beyond a simple checking

M O R E THAN

$1 million TO D I R EC T ADVO C ACY I N 20 1 4 5

account or auto loan — they turned to CUNA Mutual Group to help them deliver a suite of products and services that would help their members build financial security. “Our biggest goal is to make sure our members are protected and they can meet their financial needs, both now and in the future,” explained Executive Vice President David Young. For nearly 30 years, CUNA Mutual Group has collaborated with credit unions to provide investment, insurance and retirement planning services to members. Commonwealth Credit Union is building deeper member relationships through CUNA Brokerage Services, Inc., CUNA Mutual Group’s broker-dealer, and strengthening their members’ financial future through their working and retirement years. V I S I T W W W.YO U T U B E /C U N A M U T UA LG R O U P 1 FO R DAV I D ’ S V I D EO


$

CORPORATE RESPONSIBILITY At CUNA Mutual Group, corporate responsibility is ingrained in the way we do business. We are committed to doing the right things for our customers, our staff, our communities and our natural environment.


Our employees share this sense of responsibility. In 2014, they volunteered to help people in need and improve the communities where they work and live. By offering their skills, their time and their dollars, they exhibit our corporate values in a very personal and meaningful way.


BY THE NUMBERS H I G H LI G HTS F R O M 20 1 4 6 ,7

Dollars for Doers If a staff member makes a financial contribution and volunteers significant hours to a single nonprofit

$2M

75

D O NATED TO SU P P O RT O U R CO M M U N ITI E S

“DOLLARS FOR DOERS” GRANTS

$500K+

MAD E O N B EHALF O F EM P LOYEE S NATI O NWI D E

R AISED BY S TAFF FO R N O N P R O FITS

organization, the CUNA Mutual Group Foundation will make a

$250 or $125 grant in that employee’s name

7,102

to the nonprofit.

7

ADOPTED SCHOOL RELATIONSHIPS

419

HOLIDAY GIFTS D O NATED TO R E SI D ENTS O F M ENTAL H E ALTH CENTER S


PAID VOLUNTEER HOURS

5,872 lbs

“Best Company” in Madison

OF CLOTHING D O NATED TO G O O DWI LL AN D S T. VI N CENT D E PAU L

For the third year in a row, Madison’s In Business magazine named CUNA Mutual Group one of the area’s “Best Companies to Work For” based on quality of benefits. Of the 27 companies named, CUNA Mutual Group

7,870

had one of the two highest scores in the ranking.8

MEALS

D O NATED TO SECO N D HARVE S T FO O D BAN K

4,320

46

COMMUNITY EVENTS HOSTED H ELP ED SAVE U P TO

MEALS

1,528

D ELIVER ED BY S TAF F VIA M E AL S O N W H EEL S

TH R O U G H S TAF F B LO O D D O NATI O N S

LIVES


601

STAFF VOLUNTEERS FO R U N ITED WAY O F DAN E CO U NT Y ’ S “ DAYS O F CAR I N G”

CUNA Mutual Group Foundation The giving priorities of the CUNA Mutual Group Foundation and CUNA Mutual Group are driven by our employees. They help shape our strategy; oversee grants through the Foundation Board; plan activities through the Employee Philanthropy Team; and gladly donate their time, resources and skills to help their communities.

SUSTAINABILITY 9 In addition to serving our communities through

Reducing greenhouse gas emissions

philanthropy, our Green Team focuses on reducing

5.2 million pounds of greenhouse gas emissions

waste and pollution and increasing efficiency around

were prevented from entering the atmosphere

our campuses. In 2014, CUNA Mutual Group continued

and polluting the environment during our Green

its commitment to sustainability by:

Transit Month initiative.

Adding green space Madison grounds, which produced 802 pounds

Encouraging employees to go green

of fresh fruits, vegetables and herbs to help

CUNA Mutual Group’s office

feed hungry families in our community.

in Madison is designated

40 garden plots were built on the company’s

as a “Bicycle-Friendly

Reducing our carbon footprint

Business” by the League

Replacing 90% of Styrofoam in employee

of American Cyclists; one

cafeterias with compostable packaging.

of only 43 businesses in the state of Wisconsin.


CAPACITY-BUILDING GRANTS In 2014, the CUNA Mutual Group Foundation awarded the following unrestricted grants to nonprofits in the Madison community. Unrestricted grants are special; the nonprofits can use the money not just for specific programs but for building their capacity as organizations.10 We recognize that only giving program-specific grants can unintentionally hamper growth. All of the nonprofits that were awarded capacity-building grants have a solid track record of strong management and leadership and a very disciplined business model. The grants are intended to make a statement that it’s important to support not just programs, but infrastructure and overhead for nonprofits so they can serve more people, families and children.

$1,200,000

$100,000

$100,000

$100,000

$100,000

$100,000

to the Madison

to Domestic Abuse

to Urban League

to YWCA-Madison

to Boys & Girls Club

to Centro Hispano

Metropolitan

Intervention Services

of Greater Madison

of Dane County

School District

“We think this will have an impact on a large number of people in need and will put money to very smart use — not just good use, but smart, as well,” says Steve Goldberg, executive director of the CUNA Mutual Foundation. “These nonprofits understand the process of combining a strong service model with a strong business model, which is similar to how CUNA Mutual Group runs its business.”


Financial Highlights

11

In 2014, CUNA Mutual Group continued to show financial strength. Annual total returns on our company investments were very strong. (in millions) 2014 2013 Total Revenue*

$ 3,070

$ 2,966

GAAP Net Income

$

206

$

162

Statutory Total Adjusted Capital

$ 1,964

$

1,795

*Prior period information has been restated to conform to current period presentation for discontinued operations. Total revenue excludes net realized investment gains and losses.

A.M. BEST COMPANY HAS AFFIRMED THE FINANCIAL STRENGTH OF ...

A

(EXCELLENT) RATING

CMFG Life Insurance Company (CMFG Life) and MEMBERS Life Insurance Company12

A

CUMIS Insurance Society, Inc. and subsidiaries13

(EXCELLENT) RATING

For the latest rating information, access www.ambest.com


FIVE-YEAR PERFORMANCE Unaudited

Total Revenue (in billions)

CMFG Life Insurance Company Risk-Based Capital Ratio

2010 2011 2012 2013 2014

2010 2011 2012 2013 2014

$2.6 $2.6 $2.8 $3.0 $3.1

373% 418% 457% 494% 571%

Net Income (in millions) 2010 2011 2012 2013 2014

Customers can have confidence that CUNA

$90

Mutual Group is financially strong,

$83 $150

backed by a robust investment portfolio, and

$162

positioned to serve future generations. $206

Net Investment Income (in millions)

Assets (in billions) 2010 2011 2012 2013 2014

2010 2011 2012 2013 2014

$15.3 $16.4 $17.3 $17.5 $17.7

Total Surplus (in millions) 2010 2011 2012 2013 2014

$472 $516 $523 $552 $562

Our investment results beat leading industry peer groups including the Morningstar Intermediate Term Bond Index, PIMCO and BlackRock. Investment results also exceeded Morningstar top 10% of all manager returns. Additionally, we took steps to diversify our portfolio and manage risk by offering a highly successful sale of securitized mature private equity and mezzanine investments. The sale was over-subscribed by three times.

$1,810 $2,097 $2,457 $2,370 $2,720


REVENUE BY STRATEGIC BUSINESS UNIT 11.6% Wealth Management (e.g., Brokerage services, annuities, etc.)

43.2% Commercial

Consolidated Statement of Operations* For the years ended December 31, 2014, 2013 and 2012. Amounts in millions/unaudited.

Revenues 30.3% TruStage

Life and health premiums

(e.g., Life, accidental death and dismemberment, auto, home, etc.)

2014 2013 2012 $ 1,363 $ 1,339 $ 1,292

Property and casualty premiums

713

661

578

Net investment income

562

552

523

Other income

432

414

390

3,070

2,966

2,783

894

871

868

Property and casualty insurance loss and loss adjustment expenses

451

419

380

Interest credited to policyholder account balances

129

161

160

25

29

31

1,232

1,213

1,101

102

81

56

2,833

2,774

2,596

—

2

(12)

237

194

175

Total revenues

14.9% Other

Benefits and expenses

(e.g., Fidelity bond, retirement plans, lending and payment security products, etc.)

Life and health insurance claims and benefits

DISTRIBUTION OF INVESTED ASSETS

Policyholder dividends 75.9% Debt Securities at Fair Value

12.1% Mortgage Loans

Operating and other expenses

6.2% Limited Partnerships

Income tax expense

2.3% Cash and Shortterm Investments 1.2%

Other Invested Assets

1.0%

Equity Securities at Fair Value

Total benefits and expenses Equity in unconsolidated affiliates Net gain from continuing operations Realized capital gains (losses), net of tax

0.9% Policy Loans 0.4% Real Estate

Discontinued operations, net of tax Net income

7

4

(8)

(38)

(36)

(17)

$ 206 $ 162 $

*Prior period information has been restated to conform to current period presentation for discontinued operations.


150

Consolidated Balance Sheet* As of December 31, 2014 and 2013. Amounts in millions/unaudited.

.

Assets 2014 2013 Liabilities and Policyholders’ Surplus Debt securities at fair value $ Equity securities at fair value Mortgage loans Real estate, at cost less accumulated depreciation Policy loans Limited partnerships Other invested assets Cash and cash equivalents

9,118 $ 8,333 117 135 1,455 1,378 53 104 751 146 276

$ 17,686

2013

Liabilities Insurance and annuity reserves $ 8,937 $ 8,631 Unearned premiums 437 413 Notes and interest payable 390 243 Dividends payable to policyholders 14 14 Reinsurance payable 74 68 Other liabilities 807 684 Separate account liabilities 3,872 4,632 Liabilities of discontinued operations 435 457

53 103 644 138 318

Total cash and investments 12,020 11,102 Premiums receivable, net 269 251 Reinsurance recoverables 129 123 Deferred policy acquisition costs 417 414 Other assets 475 449 Separate account assets 3,873 4,632 Assets of discontinued operations 503 541 Total assets

2014

Total liabilities

$ 14,966

$ 15,142

Policyholders’ surplus

$ 2,720

$ 2,370

Total liabilities and policyholders’ surplus

$ 17,686

$ 17,512

Financial Footnote

$ 17,512

These results are for CUNA Mutual Holding Company and its subsidiaries, and are derived from consolidated financial statements, which are prepared in accordance with Generally Accepted Accounting Principles.

*Prior period information has been restated to conform to current period presentation for discontinued operations.

To receive a detailed report of the financial statements, including the auditor’s report, write to: CUNA Mutual Group External Reporting-Finance P.O. Box 391 Madison, WI 53701-0391


Or visit www.cunamutual.com to view the audited financial statements on the “About Us” page.

About Us CUNA Mutual Group is committed to doing business the right way — with a clear commitment to our

company values.

These values are simple: Act with Courage

Work with Passion

Maintain Focus

Generate Innovation

We challenge the status

We care deeply about the

We prioritize initiatives and

Our creativity and “can-do”

quo and strive for continuous

work we do; are self-motivated,

align resources for maximum

spirit ensure the continuous

improvement, take intelligent

energized, and dedicated

efficiency; consistently achieve

search for innovative and

risks and carry out the

to exceeding our customers’

sustainable, measurable

best-in-class solutions; and

hard decisions.

expectations.

results; provide high-quality

we transform knowledge into

service; and operate profitably.

new or improved products and services.

Uphold Integrity

Foster Collaboration

Promote Inclusion

We do what’s right, align our

We readily share resources and

We respect all individuals,

actions with intent, deliver

ideas; we invest time and effort

appreciate that each

what is promised, and act

in coaching and mentoring

of us is unique, and

ethically in all of our actions

others; use the knowledge of

foster a workforce that

and interactions.

others to get the job done

connects with our diverse

efficiently and effectively; and

customer base.

succeed through teamwork.


World’s Most Ethical Companies® CUNA Mutual Group was named one of the World’s Most Ethical Companies in 2013 and 2014 by Ethisphere, a respected think tank.14, 15 According to Ethisphere, this designation goes to

Getting strong results matters. But it is even

companies that “not only promote ethical business

more important to get results the right way —

standards and practices internally, they exceed legal

with a clear commitment to ethics and values.

compliance minimums and shape future industry

This recognition from Ethisphere is just one

standards by introducing best practices today.”

indication of how we live up to those standards.

CIO 100 Award Winner for the Zone App TM

CUNA Mutual Group was recognized by International Data Group’s CIO magazine as a 2014 CIO 100 Awards recipient.16 The ZONETM is a tablet application that helps people build for retirement security by creating a zone of risk and reward aligned with the their investment goals.


Leadership BOARD OF DIRECTORS The board of directors of CUNA Mutual Holding Company is elected by the company members, who are the qualifying policyholders of CMFG Life Insurance Company. The board has responsibility for setting strategic direction and providing oversight for CUNA Mutual Group.

Eldon R. Arnold

Robert N. Trunzo

Board Chairman, Governance Committee Chairman, Retired President/CEO, CEFCU Peoria, Illinois

President & CEO, CUNA Mutual Group Madison, Wisconsin

Robert J. Marzec

Joseph J. Gasper

Thomas C. Godlasky

Caren C. Gabriel

Bert J. Hash Jr.

Audit Committee Chairman, Retired Audit Partner, PricewaterhouseCoopers Minneapolis, Minnesota

Investment and Capital Committee Chairman, Retired President & COO, Nationwide Insurance Dublin, Ohio

Board Vice Chairman, Compensation Committee Chairman Retired CEO, Aviva North America West Des Moines, Iowa

President & CEO, Ascend Federal Credit Union Tullahoma, Tennessee

Retired President & CEO, MECU of Baltimore, Inc. Baltimore, Maryland

Angela K. Owens

Randy M. Smith

Janet V. Whitehouse

James W. Zilinski

President & CEO, American Airlines Federal Credit Union Fort Worth, Texas

Retired President & CEO, Randolph-Brooks Federal Credit Union Live Oak, Texas

President, Wentworth Advisory Group Rye, New Hampshire

Retired President, CEO & Chairman, Berkshire Life Insurance Company Pittsfield, Massachusetts


EXECUTIVE

SENIOR

David Marks

Mike Anderson

Michael Defnet

Jason Pisarik

Executive Vice President, Chief Investment Officer

Senior Vice President, Chief Legal Officer

Senior Vice President, Sales & Marketing

Senior Vice President, Chief Accounting Officer

Winning “W” Company

Faye Patzner

Kevin Belgrade

Cedric Ellis

Christopher Roe

CUNA Mutual Group

Vice Presidents

Vice Presidents

Executive Vice President, Senior Vice President, Senior Vice President, Chief Senior Vice President, Chief Administrative Officer Corporate Communications Human Resources Officer Corporate & Legislative Affairs

Jim Power

Jeff Bosco

Tim Graham

Executive Vice President, Commercial

Senior Vice President, Wealth Management

Senior Vice President, Business Finance

Alastair Shore

Michael Briggs

Daniel Kaiser

Executive Vice President, Chief Financial Officer

Senior Vice President, Marketing and Sales Operations

Senior Vice President, Lending & Payment Security

Paul Chong

Thomas Martorana

Senior Vice President, Retirement Plan Services

Senior Vice President, Customer Operations

David Sweitzer

Chris Copeland

Tom Merfeld

Laurie Winger

Senior Vice President, Chief Actuary

Senior Vice President, Chief Market Risk Officer

Senior Vice President, Planning and Business Services

Tim Peterson

was recognized as a 2020 Women on Boards Winning “W” Company

Susan Sachatello

in 2014. Winning

Senior Vice President, TruStage

Companies recognize

Steve Suleski

diversity and have

Senior Vice President, Chief Governance & Compliance Officer

20 percent or more

Senior Vice President, Sales

Senior Vice President, Chief Information Officer


the importance of board

women on their boards of directors.17

Contact Information CUNA MUTUAL GROUP

For the latest news about our company, people

5910 Mineral Point Road

and industry, find us on:

Madison, WI 53705

Twitter: www.twitter.com/cunamutualgroup LinkedIn: www.linkedin.com/company/cuna-mutual-group

800.356.2644

Facebook: www.facebook.com/CUNA.Mutual.Foundation

CUNA Mutual Group was founded in 1935 by credit union

Google+: www.plus.google.com/+cunamutual/posts

pioneers, and our commitment to their vision continues today.

YouTube: www.youtube.com/CUNAMutualGroup1

For more than 80 years, CUNA Mutual Group has worked tirelessly

Socially Speaking Blog: www.cunamutualgroup.blogspot.com

to deliver product and service solutions that meet the unique challenges and needs of our customers. Additional information about CUNA Mutual Group can be found at www.cunamutual.com.

Because a printed report was not produced, significant savings were realized and resources conserved. Anyone viewing the report online can make the choice whether to download and print a copy of this report for personal use.

CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates. TruStage™ Insurance products and programs are made available through TruStage Insurance Agency, LLC and issued by CMFG Life Insurance Company and other leading insurance companies.

Footnotes 1, 2, 3, 4, 5, 6, 9, 11 CUNA Mutual Group Internal Report, 2014 7, 10 CUNA Mutual Group Foundation Internal Report, 2014 8 In Business Magazine, December 2014 12, 13 A.M. Best Company, January 2015

14 15 16 17

Ethisphere, January 2013 Ethisphere, January 2014 CIO Magazine, August 2014 2020 Women on Boards, 2014


P.O. Box 391 5910 Mineral Point Road Madison, WI 53705-0391 800.356.2644 www.cunamutual.com

© CUNA Mutual Group, 2015 All Rights Reserved; CORP-1159091.1-0315-0417