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Annual fi nancial statements
Gleaner Life Insurance Society Statements of the Society’s Financial Condition
December 31, 2020
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Gleaner Life Insurance Society’s nancial strength continued to prosper and grow in 2020 despite the challenges to continue operations during the COVID-19 pandemic for our independent agents and employees. For the third year in a row, we repeated substantial growth in both our life and annuity new business. We also amended our annuity reinsurance treaty with Heritage Life Insurance Co. to include our annuities with 3.0% guarantees (see page 10 for an explanation of our annuity reinsurance agreement). Total premium increased $6.5 million over 2019 (after adjusting for ceded annuity reinsurance premium). First-year life premium including single is up $1.2 million (53.8%), life premium in total is up $1.3 million (16.3%). First-year annuity premium including single is up $8.2 million (19.9%), annuity premium in total is up $5.2 million (10.4%). Much of our increased premium is due to sales of our indexed universal life and indexed annuity products.
e Society’s balance sheet grew even stronger this year, with a high-quality investment portfolio and a historic member surplus position. e Society’s assets are $1.358 billion as of Dec. 31, 2020, a 6.3% increase from 2019. Our accomplishments also include marked improvement in our RBC ratio of 1,004%, compared to 932% last year. ese successes were reassuring as interest rates declined and continue to remain historically low. Gleaner’s stable nancial foundation supports our members’ nancial and community engagement goals and our future business initiatives.
We experienced a $14.5 million decrease in member bene ts paid compared with the previous year (after adjusting for ceded annuity reinsurance). Annuity and life surrenders decreased $13.7 million and $1.5 million, respectively, while life death bene ts decreased $1.4 million and annuity death bene ts increased $7.9 million.
Gleaner’s investment portfolio continued to perform well in 2020 despite a decline in net investment income from continuing low interest rates. e Society’s diversi ed investment portfolio is built on prudent policies and practices. Gleaner’s conservative philosophy and professional management provide a sound foundation for our investments.
e Society’s bond portfolio is 97.0 percent investment-
grade quality and represents 91 percent of our investments. We have an overall bond portfolio rating of “A” as of Dec. 31, 2020. Mortgage loans, certi cate loans, cash and short-term investments, stocks, real estate and other invested assets (including derivatives purchased to support our indexed solutions) comprise the remaining portions of our investment portfolio.
As of year-end 2020, we have $23.6 million of preferred and common stock holdings. $23.3 million of preferred stock is held as part of the reinsurance arrangement with Heritage. Our common stock holdings include capital stock requirements ($362,100) for our membership in the Federal Home Loan Bank of Indianapolis (FHLBI). Gleaner is a member of FHLBI to enhance our liquidity position and have ready access to reliable, low-cost funds. Our intent is to use our FHLBI membership as liquidity insurance, and we would only ever plan to access funds in an emergency situation.
Also, the Society is proud to report it continues to operate with zero debt!
Gleaner’s 2020 surplus is our highest year-end amount
ever recorded at $124.9 million — an $18.7 million increase from year-end 2019. is is our eighth consecutive year with a surplus increase, and our surplus has increased $44.1 million since 2012. e Society’s surplus ratio remains above the average of 25 leading life insurance companies. We have $110.13 of assets for every $100 of liabilities. (Independent Comparative Report: Standard Analytical Service Inc.).
Our surplus grew as a result of net income of $38.3 million in 2020, compared with net income of $19.5 million in 2019. e increase in 2020 was due to a combination of factors in addition to our annuity reinsurance treaty (see page 10 for a detailed explanation). e Society has had eight consecutive years of positive net income. Some of the factors that have contributed to our net income achievements in recent years are containment of operating expenses, a disciplined approach to setting credited interest rates and appropriate pricing of new nancial solutions in the low interest rate environment. Successful management of our investment portfolio has also resulted in fewer realized losses.
As of December 2020, both of our A.M. Best and KBRA nancial strength rating was a rmed at “A- (Excellent)” with a stable outlook. According to A.M. Best, our current rating is assigned to insurance companies that have an excellent ability to meet their ongoing insurance obligations. A.M. Best is a global full-service credit-rating agency
e Society has never been stronger
than it is today. Our continuing positive results, and our nancial strength improvement is attributed to the Society’s management team, our independent agents, dedicated sta and key relationships with our business partners. And of course our success always lies with YOU, our members and your commitment to nancial security and community service.
e Society recognizes the importance of helping our members achieve nancial security and stability while also supporting our fraternal spirit in the communities in which we live and work. We are focused on maintaining a strong and improving nancial position through all types of economic conditions. e Society has committed to protecting our members and maintaining your trust and con dence as we begin our 127th year as your fraternal bene t society! Gleaner will continue to make responsible decisions in the best interests of our valued members and the Society’s long-term nancial strength.
Kaylene S. Armstrong, FLMI Vice President, Finance, Controller and Treasurer
Todd M. Warner Senior Vice President, Chief Financial and Investment O cer
Audits were conducted as of December 31, 2020 and 2019 by Strohm Ballweg, LLP. Investments Bonds Stocks (preferred and common) Mortgage loans on real estate Real estate, net of depreciation Cash and short-term investments Certi cate loans Derivatives Other invested assets
$1,219,935,913 $1,111,233,646 23,612,100 2,362,100 11,898,687 3,813,616 1,204,803 1,301,607 32,180,753 94,972,067 33,068,366 31,453,537 3,364,630 665,886 15,578,843 14,908,314
Invested Assets 1,340,844,095 1,260,710,773
Accrued investment income & other receivables 16,430,744 16,131,711 Other assets 609,994 719,501
Total Assets $1,357,884,833 $1,277,561,985
LIABILITIES AND SURPLUS Certi cate reserves and contract liabilities $492,647,539 $848,653,964 Accrued expenses and other liabilities 725,209,499 308,204,481 Interest maintenance reserve 7,122,191 8,490,900 Asset valuation reserve 8,044,054 6,014,590
Total Liabilities 1,233,023,283 1,171,363,935
Surplus
Total Liabilities and Surplus 124,861,550 106,198,050
$1,357,884,833 $1,277,561,985
Statements of Operations
INCOME Net premium income: Life Annuities Accident and health Net investment income Other income
Total Income
December 31 2020 2019
$9,676,357 $8,321,081 (349,784,516) (225,752,898) 5,135 17,275 46,625,512 51,238,773 3,564,629 2,065,129 (289,912,883) (164,110,640)
EXPENSES Increase in certi cate reserves (378,272,040) (288,629,792)
Member bene ts Commissions Other operating expenses Refunds to members 60,841,399 104,684,139 3,709,706 3,430,656 15,831,027 13,362,092 885,385 1,158,005
Remittance of investment income on funds withheld account 14,124,160 801,752 Gains released from IMR due to reinsurance (45,357,572) (19,208,341)
Total Expenses (328,237,935) (184,401,489)
Income from Operations 38,325,052 20,290,849
Net realized investment gains (losses) (10,544) (823,684) Net Income $38,314,508 $19,467,165
SURPLUS ACCOUNT Surplus at December 31, previous year $106,198,050 $94,605,173 Net income 38,314,508 19,467,165 Other surplus adjustments (19,651,008) (7,874,288)
