Fraternal Advantage - July 2007

Pittsburgh Education/Fraternal Seminar Attracts 98 Attendees

The Fraternal Societies of Greater Pittsburgh (FSGP) held its annual seminar this year on May 17 and 18 at the Embassy Suites in Pittsburgh, Pennsylvania. FSGP President George Lopata, Manager of Marketing Services for Greek Catholic Union (GCU), welcomed 98 fraternal officers, society employees and associates to the seminar. Attendees came from five states, representing 32 fraternal benefit societies and related organizations.

The annual FSGP seminar has been conducted by Bruce and Bruce Company, Consulting Actuaries, Lake Bluff, Ill., since 1978. Edward U. DePersis of Bruce and DePersis Company, Pittsburgh, Penn., served as program chairman and moderator. This year’s theme was “Moving Forward.”

Robert Bruce, President of Bruce and Bruce Company, opened the program with a comprehensive industry overview of current regulatory and emerging issues. Various topics included: Principal Based Reserves, conversion to the 2001 CSO Mortality Table and annuity suitability. In his opening remarks, Bruce compared the financial performance of many FSGP fraternals with the ratio growth of the 11 largest fraternals. He observed the FSGP group outperformed the larger fraternals in life insurance issued, increase in premium income and net income. He noted interpretation of these results must be tempered with recognition that a significant improvement in a ratio of change is much more difficult to achieve on a large basis.

David DelBiondo of the Pennsylvania Insurance Department reviewed the Annual Audited Financial Report, along with the role of the Sarbanes Oxley Act. He discussed the impact this will have on fraternal benefit societies. He advised that the Model Audit Rule will be applicable to insurers with premium income of $7,500,000 or more annually. He felt that it makes sense to have some sort of cut-off for smaller insurers on compiling reserves based on Principal Based Reserves.

An economic update, including interest rate trends and review of hybrid securities, was provided by Bill Hornbarger, Chief Fixed Income Strategist, A. G. Edwards. Hornbarger discussed the continuing rating review of hybrids and the possible impact on the industry. Dana Kinion, Esquire, Zack Stamp, Ltd., provided a comprehensive review of annuity taxation, outlining the various annuity areas and tax ramifications.

Bernadette Luketich-Sikaras, Croation Fraternal Union (CFU), President of the CFU Board of Trustees, addressed the society’s fraternal activities. Sikaras offered a presentation of CFU’s strong membership involvement in numerous fraternal activities, such as the dance programs, which promote interest for all ages of membership. She noted that CFU operations differ from many fraternals, relying only on volunteer agents for their growth. Sikaras noted that the society’s secret to success is the strong continued commitment of members to the society’s fraternal objectives.

Asset and liability matching principles were reviewed by Tom Palus, Vice-President UBS Financial Services.

Allison Koppel, National Fraternal Congress of America (NFCA); Director, Membership and Fraternal Services, reviewed services offered by the organization. She outlined the objectives of the Fraternal 100 Section. She stated that the NFCA created the section for fraternals with assets of less than $100 million, so that the smaller fraternals can work together to grow. She also commented on the proposed Fraternal Board Members Section.  (For more information on these two new NFCA Sections, please click on their corresponding links.)

Jerry Alexander of Bruce and Bruce Company, reviewed the various procedures involved in obtaining state approval when filing new product forms. Alexander also discussed annual statement filing changes.

Jim Laick, Marketing Director for Greater Beneficial Union of Pittsburgh (GBU), provided material utilized by the society to generate success in marketing. Laick shared various programs used to recruit members, as well as, agents. He stated that it is necessary to evaluate current products and services; define your market; create a marketing plan and strategy; improve on procedures that already exist; and know your competition. Among the programs he cited was the importance of agent recognition and incentives. He elaborated on a number of the methods used successfully by GBU. He noted an important part of the success in marketing was the support of the home-office team.

Speaking on the subject of the Pension Protection Act of 2006, David Chan, Pension Actuary of Bruce and Bruce Company, detailed important regulatory changes and updates. Chan reviewed new law provisions pertaining to distribution rules, reporting and disclosure requirements, automatic enrollment rules, and more. Chan pointed out that the new regulations now permit organizations to over-fund up to full funding status without penalty.

Chan and Nick DePersis, of Bruce & DePersis, discussed the marketing opportunities of Simplified Employee Pension Plan (SEP) and Savings Incentive Match Plan for Employees (SIMPLE) IRA plans. One of the main features is the relative ease of establishing these plans in the small employer area.

The second day session ended at noon. At the conclusion of the program, FSGP President Lopata thanked the attendees for coming, as well as, Bruce & DePersis for arranging an informative program. He had high praise for the quality and content of the entire seminar.

Copies of some presentations are available by contacting Ed DePersis at Bruce & DePersis, Manor Oak Two, Suite 650, 1910 Cochran Road, Pittsburgh, PA 15220; info@endepersis.com.

The tentative dates for the 2008 FSGP Seminar are May 15 – 16. The seminar is open to all fraternal societies.



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