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2012 A N N U A L

R E P O R T

A N N U A L

R E P O R T

A N N U A L

R E P O R T

A N N U A L

R E P O R T

A N N U A L

R E P O R T

A N N U A L

R E P O R T


T H E

N A T I O N A L

Who

C A T H O L I C

is

R I S K

R E T E N T I O N

National

G R O U P ,

I N C .

Catholic?

The Company was conceived in 1985, licensed in 1987, and commenced operations June 30, 1988 in response to commercial insurance market instability which had resulted in limited availability of coverage, limited underwriting capacity, and unjustified premium increases. National Catholic is owned and ultimately managed by its Shareholders. Company policies are therefore established by Shareholders for the benefit of Shareholders. As of 2012 the Company currently has 57 Shareholders consisting of 56 archdioceses and dioceses and one risk pooling trust.

VISION We protect assets of the Catholic Church.

MISSION TNCRRG exists to assist the Catholic Church to be a better steward in the performance of its ministry by identifying risks and providing solutions for the management of these risks.

CORE VALUES • We are solid and dependable and can be relied upon by our shareholders and their bishops and managers to deliver the product we promise. • We continually strive to improve our service level and our value to shareholders. • We select competent and professional leaders and managers who understand the Church perspective and can provide guidance to help with its concerns. • We constantly strive to increase our financial stability and viability by attracting new shareholders and exercising prudent financial management decisions.

Contents President’s Message

2

Financial Information

11

Officers & Directors

28

Shareholder Locations

29


Chairman’s

Letter

Dear Friends,

financial stake in the success of the company – thus we cooperated.

Saint Paul describes communal life in the early church in the Acts of

The process continued with a sharing of knowledge and experience

the Apostles 2: 42-47

among and between members – thus we collaborated. Finally the

“They devoted themselves to the teaching of the apostles and to

benefits of unity became better understood – thus we reached communion.

the communal life, to the breaking of the bread and to the prayers.

It would be unrealistic to think that all shareholders have moved

Awe came upon everyone, and many wonders and signs were

from compliance to full communion. The fullness of our mission can

done through the apostles.

only be realized as we seek the good of the other which strengthens

All who believed were together and had all things in common; they would sell their property and possessions and divide them

our mission and our company. The secret of group success is that in

among all according to each one’s need.

meeting the need of others, we are strengthened as both individual shareholders and as a group.

Every day they devoted themselves to meeting together in the

One clear indicator of solid commitment to the company occurs

temple area and to breaking bread in their homes. They ate their meals

when shareholders provide one of their members to serve on the

with exultation and sincerity of heart,

Board of Directors. Many shareholders have seen the benefit of

praising God and enjoying favor with

allowing and encouraging competent employees to serve on the

all people. And every day the Lord

TNCRRG Board of Directors. As a company, we are most grateful for

added to their number those who

and appreciative of the contributions made so willingly by the eight

were being saved”. 1

dioceses, two archdioceses and the Christian Brothers Risk Pooling Trust, through whom we derive our current board members.

When we read or hear these

As a company owned by the Catholic Church, we continue to

words today, we might tend to think

realize the benefits of remaining strong in unity with all shareholders

that this was a unique situation in history or simply idyllic. Perhaps we might even conclude that it has

who have joined and share our vision, mission and core values. The

no significance to our life in the modern age and simply relegate it to

accompanying pages of this 2012 Annual Report verify this reality. Yes, we have a success story to tell! Now is a wonderful time,

that time in history. However, if we take a closer look at this passage we discover the

not only to tell our story, but also to invite new shareholders to

components of successful group dynamics. The early church faith

participate in TNCRRG. Let interested persons know they can contact

community exemplified group cohesion and strength through

Mr. George Tarulis, Director of Relationship Management directly at

compliance, cooperation, collaboration and communion with each

gtarulis@tncrrg.org or 877-486-2774. Encourage them to make the

other. They had a clear belief in and adherence to the teachings of the

call – they will be glad they did!

apostles, as well as, unity in the “breaking of the bread and to the prayers”. They had a system whereby the needs of all were coopera-

Sincerely,

tively met as they remained united in faith. Their unity in faith gave strength and a sense of purpose to all community members. As we recall the founding of TNCRRG in 1987, and analyze the

Rev. Jay C. Haskin

present company, we can gain insight from the structure of the early

Chairman, The National Catholic Risk Retention Group, Inc.

church. Our company had then, and continues to have now, a

Board of Directors

specific vision, mission and core values. When we joined the company as shareholders we accepted the common mission and purpose in a formal way by signing the Participation Agreement –

1. New American Bible, Revised Edition

thus we complied. As members we purchased stock and have a

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President’s

Message

Further, you should know that TNCRRG’s 2012 year-end

TO OUR SHAREHOLDERS: Often, within the last half dozen years, I have had the difficult

Surplus of $18,701,725 substantially exceeded (by 13.4%) the

task of conveying negative news, with accompanying explanation

projected 2012 year-end Surplus of $16,487,065 contained within

and information regarding why results had been bad and what the

our revised business plan approved by our Vermont regulators

Board and management were doing to resolve issues and “right

(which plan was developed employing factors generated by the

the ship.”

2008 Dynamic Financial Analysis produced by our actuaries at Milliman). Additionally, Surplus has been replenished 93.7% since

I have conveyed news of repetitive clusters of catastrophic

year-end 2008 (when Surplus ended at $9,656,332).

claims or “shock” losses that befell your company; very

When perceived as a “financial scorecard,” at year-end 2012,

challenging investment environments; new and threatening

very positive operational elements include: TNCRRG’s cash

competitive pressures exerted by previously inactive or benign

position and liquidity were excellent, with no uncollectible

market participants; resultant severe depletion of surplus; and significantly increased – and

receivables, all expenses fully accrued (and the vast majority

occasionally oppressive – regulatory

already paid) and absolutely no debt whatsoever; TNCRRG’s

scrutiny. I have in every instance

reserve strength (both case and IBNR/IBNER) is excellent;

“pulled no punches” when it came

TNCRRG posted realized and unrealized investment portfolio

to presenting these daunting

gains that were both substantial; TNCRRG’s expense controls

circumstances.

were functioning very well; TNCRRG’s investment portfolio had been rebalanced in a fashion that significantly reduces operational

Similarly, I have also worked

volatility; the accident year loss ratios for the last four years have

hard to define in detail the myriad

each declined dramatically; and Surplus has been very significantly

strategies employed by your company – via the Remediation Plan

replenished. Rest assured that we will continue to constantly monitor our

– to restore TNCRRG’s financial stability and strength. So, what bad news do I have to convey this year? The answer is: absolutely none! Your company experience in 2012 was

results and will take whatever action is necessary to ensure a strong TNCRRG and a return to long-term profitability for the company. Through operation of the TNCRRG Remediation Plan,

simply excellent “across the board.”

we have already made – and will continue to make as necessary –

Highlights include: 1) TNCRRG generated an Underwriting

revisions to TNCRRG per claim/loss retentions; rates; exposure

Profit of $2,181,955 compared to 2011’s Underwriting Loss of

bases; underwriting protocols; investment portfolio allocations;

($2,254,679); 2) TNCRRG generated an Operating Profit of

reinsurer relationships; and risk control measures. The Board and

$913,863 compared to 2011’s Operating Loss of ($3,133,931); 3) TNCRRG had Comprehensive Operating Income of $2,847,992 compared to 2011’s Comprehensive Operating Loss of

management are confident that the TNCRRG Remediation Plan will ensure consistently profitable and stable operational results over the next few years.

($2,885,300); 4) TNCRRG’s Expense Ratio declined from 2011’s 31% to 27% in 2012; 5) TNCRRG’s Loss Ratio declined from 2011’s 126% to 81% in 2012; 6) TNCRRG’s Surplus increased by 18% – from 2011’s $15,853,733 to $18,701,725; and 7) every shareholder relationship was renewed.

t w o


Meanwhile, TNCRRG operational results for 2012 also reflect

5) VIRTUS results in 2012 were again outstanding and can be

many highly positive accomplishments. These include:

reviewed in detail on pages four (4) and five (5) of this report. National Catholic remains far and away the

1) Four new excess placements with Endurance American Specialty Insurance Co., an A 15 Best rated carrier. This

undisputed leader in the provision of safe environment

program was specifically pursued and effectuated in direct

programs for the Church. We provide a greater variety of

response to concerns expressed by many of our

highly awarded safe environment services, to more

shareholders – and quite a few of our broker partners –

Catholic entities, in more places (nationally and

regarding the difficulty of placing coverage excess of

internationally), than any competitive program – by a very,

TNCRRG, because TNCRRG is not Best rated. This

very wide margin.

problem has been eliminated. The Endurance program

In closing, I want to thank all of our shareholders and other

provides $15M of limits (and on some risks up to $35M

friends for your support, confidence and encouragement –

in limits), of essentially following form coverage that drops

particularly during difficult times. Rest assured that we will always

down over TNCRRG aggregated coverages, is very

do our very best to serve you and our Church.

competitively priced, and will attach directly excess of TNCRRG. 2) Provision of a TNCRRG Legal Defense Practice Workshop – TNCRRG’s highly lauded and exclusive service for the Michael J. Bemi

Church – in Jefferson City, MO. 3) Addition of four new TNCRRG excess policy placements.

President & CEO

4) Achieving fully operational status with our VIRTUS® headquarters office in Tulsa, OK. This undertaking has already had the effect of substantially increasing operational efficiency and improving operational results, as compared to the previous outsourced arrangement for management of the VIRTUS Programs.

t h r e e


VIRTUS

®

Programs

OUR CONCEPT AND METHODOLOGY

• they adhere to a “best practices” standard.

The VIRTUS programs are a platform that provides the foundation,

Through the VIRTUS programs, we are committed and dedicated to the task of constantly providing National Catholic’s

and also, the superstructure, of all the risk control (loss prevention/loss control) initiatives undertaken by National

shareholders, and indeed the broader Church, with the absolute

Catholic on behalf of its shareholders and the Church.

finest, most cost efficient, and effective risk control measures available anywhere.

The word “virtus” derives from the Latin, and means valor, moral strength, excellence, and worth. In ancient times virtus denoted a way of life and manner of behavior that always aspired

VIRTUS PROGRAMS—UPDATE

to the highest, most positive attributes of people, and aspects of

We are pleased to report that 2012 was another very substantive

human interaction. Consequently, and particularly in light of

year in the development, implementation, expansion and

National Catholic’s affiliation with, and mission on behalf of, the

recognition of the VIRTUS programs.

Church, the VIRTUS mark is a very appropriate choice for the

Some of our more noteworthy successes included:

brand of National Catholic’s risk control program.

• At year end, 119 United States’ dioceses and eparchies, one Catholic risk management pool and five other U.S. Catholic

The VIRTUS programs constantly and consistently employ several elements as the cornerstone of its methodology. These are

institutions had implemented, or were in the process of

(summarized):

implementing, one or more of the VIRTUS programs. Additionally, the Antilles Episcopal Conference, which includes 21 dioceses in

• they target both institutional change, and also, individual

the West Indies, continues to implement the program as well as

behavior modification, with appropriate programs/services. • they provide both reactive/responsive and proactive tools,

one parish from the Archdiocese of Santiago de Chile. Currently,

often assembled as “toolkits,” to address the exposure areas

55 of these 119 dioceses and eparchies are implementing our

confronting our insureds.

children’s program, the Touching Safety™ program, for use in their schools and religious education programs.

• they employ multiple modalities (written materials, web

• 1,124 new Protecting God’s Children® program facilitators

training modules, audio tapes, video tapes, DVDs, training

were trained and added to the system in 2012, bringing the

manuals, seminars, etc.), to reach our audience. • they utilize a “Think Tank” development model, including engagement of an Expert Consulting Team that assists with the

total to 11,006 currently active facilitators nationwide. Those facilitators conducted 17,834 awareness sessions in 2012, generating a resultant 111,959 Protecting God’s Children

development and implementation of our programs/services.

awareness sessions since inception. Just under 1,900,000 people

• they are “constructed” and deployed in phases or components (Phase I of the VIRTUS programs deals with child

now have “registered” access to one or more of the VIRTUS

sexual abuse and other inappropriate sexual behavior; Phase II

Online™ system’s subscriber-only training features. • VIRTUS Online continues to refine and enhance its

with violence prevention/mitigation; etc.).

capabilities as a comprehensive risk control platform, a

• they exist as an ongoing process – phases are never “finished,” but rather are continuously refined and updated, and

compendium of information, a significant training resource, and

constantly available.

an immensely successful outreach tool. In 2012, 272 new articles and other training-related components were added to the website.

• all activities are designed to ensure a constant

VIRTUS Online has disseminated 3,042 educational articles,

program/service “pipeline.” • they seek and engage outstanding professional service

training bulletins, interactive scenario questions, poll questions,

providers for program development and training, whom we

and other informational pieces since its launch in July 2002. We

manage synergistically.

transitioned VIRTUS Online to a more stable and secure platform

• they are committed to measurable results and continuous

in 2012, and the transition will allow for a more functional, customizable and easily navigable system.

improvement. —

f o u r


• During 2012, the VIRTUS Online website was visited

• Update PGCA for Adults, creating a version 3.0

3,589,388 times. The website had 9,803,665 page views,

• Update Children and Teen Programs

generated by visitors from 172 countries and every continent

• Enrichment – Critical Conversations, International Priests program, Bullying, Treatment and

except for Antarctica. • One of the most noteworthy events of 2012 was the

Reconciliation, Grooming and the “Compliant Victim”

experience of a senior VIRTUS professionals team to present at

• Use of webinars and other technological capabilities

the Pontifical Gregorian University in Rome as the sole safe

• Stay with the core message! • We attended the Boy Scouts Symposium in Atlanta, Georgia,

environment program participant in the International Symposium for Catholic Bishops and Religious Superiors on the Sexual Abuse of

November 1 and 2, 2012, a closed ‘by invitation only’ event.

Minors entitled, “Towards Healing and Renewal,” held at the

Michael V. Johnson, Director, Youth Protection Boy Scouts of

University from February 6–9, 2012. We led multiple workshops on

America stated, “The goal of the symposium was to bring together

the two topics of Internet Pornography and the Care of Vulnerable

youth-serving nonprofit organizations and leading authorities in the

Adults, as well as a plenary session presentation on the “True Costs

field of child sexual abuse prevention to hear the latest research,

of the Crisis,” each presented in English, Spanish, Italian, and

build relationships, share ideas, and begin to work together to keep

French. It is quite an honor for the VIRTUS programs to be so highly

kids safe.” Through this opportunity, we were able to connect with

regarded and recognized for our educational leadership in

nonprofit organizations, members of the USCCB, as well as

prevention of child sexual abuse and abuse of vulnerable adults.

internationally renowned experts that included Dr. Barbara Bonner

• On August 15 and 16, 2012, we held the Ninth Annual

and Dr. David Finkelhor, who are both experts on the Protecting

Conference for VIRTUS Program Coordinators in Omaha following

God’s Children for Adults DVD. Through correspondence with Dr.

the National Safe Environment and Victim Assistance

Bonner, Dr. Finkelhor, and Dr. Jones (a colleague of Dr. Finkelhor),

Coordinators Conference. The conference was well attended and

we formally engaged each to examine and evaluate our program

provided an opportunity for non VIRTUS coordinators to

materials. We are very interested in knowing whether or not each

participate. Speakers included Paul Ashton, Psy.D., D.Min.,

believes the materials convey information that is accurate; that

Consultant to the VIRTUS Programs; Robert Hugh Farley, M.S.,

reflects the latest research based evidence; and that is conveyed in

Consultant to the VIRTUS Programs in Crimes Against Children;

an easily understood, but also compelling and cohesive manner, so

Very Rev. David T. Fitzgerald, sP, Servant General of the Servants of

as to maximize comprehension.

the Paraclete; Patricia Hudson CSJ, Ed.D., LMHC, Consultant to

With the assistance of the VIRTUS Advisory Council and

the VIRTUS Programs; Deacon Bernie Nojadera, Executive

engagement with outside experts in 2013, we look forward to

Director, USCCB Office of Child and Youth Protection; and

the continued development of new programs as well as the

Colleen Sulsberger, Diocese of Sioux City. We shared new

enhancement of our existent programs and services. With our

programs and updates related to VIRTUS Online, looked at the

ongoing relationships with dioceses and religious institutes, it is

“Good Lives Model,” and had an opportunity to interact and share

vital to continue addressing the issues encompassed within the

thoughts and ideas with each other.

protection of our children and vulnerable adults. Through the

• We established a VIRTUS Advisory Council of eight

implementation of the Protecting God’s Children program and

members and had our first meeting in Chicago, August 30, 2012.

related VIRTUS programs both nationally and internationally,

The purpose of this first meeting was to participate in VIRTUS

Catholic clergy, religious, employees, volunteers, and parishioners

SWOT (Strengths, Weaknesses, Opportunities and Threats)

are making a very real and substantial impact on the safety of our

analyses and 'brainstorming' sessions. We encouraged each

faith communities and the community at large. We never take for

member to share thoughts, feelings, criticisms and

granted and always feel blessed to be a part of the Church’s role as

recommendations in an unfettered manner. The meeting assisted

leaders in the effort to prevent abuse to children and vulnerable

in the prioritization of the following projects for 2013:

adults. God willing, this effort will continue to expand globally.

f i v e


N A T I O N A L

C A T H O L I C

An

Overview

SHAREHOLDER BENEFITS AND SERVICES

audio/video training, DVD’s, Web-based training, and on-site

In addition to providing an efficient and effective mechanism for

training and “train the trainer” programs.

transfer of risk, National Catholic provides other valuable services

COMPANY STRATEGIC ACTION PLAN

to Shareholders.

The Company’s Strategic Action Plan is reviewed and approved

For over twenty years, the Company has sponsored a two-day Winter Meeting, which is open to Shareholders as well as all

annually by the Board. It establishes the following long-term goals for The National Catholic Risk Retention Group, Inc.:

interested diocesan or Church personnel. This meeting involves a

• To provide the Church with innovative risk management

Company business meeting plus several risk management related

solutions.

seminars, which are presented by outside experts. The Winter

• To expand our Shareholder and client base and enhance

Meeting has been a perennial success and a valuable resource for

their satisfaction level.

attendees.

• To ensure financial stability through growth, organizational

Also, each year, in conjunction with the Diocesan Fiscal

efficiency, and cost effectiveness.

Management Conference (DFMC), the Company has sponsored

• To comply with all legal, regulatory, professional and

an Annual Shareholders’ Meeting at which Shareholders elect

ethical standards.

certain Directors and present issues and concerns to Officers,

• To take a leadership role in promoting collaborative

Directors or staff. Additionally, as part of the DFMC, the Company

alliances.

has sponsored an exhibit attended by staff, which is intended to

• To promote risk management policies and practices within

disseminate information and materials describing National

Shareholder and client organizations.

Catholic activities, programs and services. The Company provides litigation planning and management

EXECUTIVE OVERSIGHT

consultation services, legal defense practice workshops, and also,

Company operations are directly supervised on a day-to-day basis

comprehensive loss prevention and loss control services via its

by an employed, full time President and CEO who reports to the

VIRTUS program. The VIRTUS program includes publications,

Board of Directors. The Chairman of the Board presides over

®

s i x


meetings of the Board of Directors, which consists of eleven

FEDERAL INCOME TAXATION

members, each of whom is elected by Shareholders to serve a

The Internal Revenue Service has ruled that the Company is

three-year term. Each current Director represents a Shareholder

exempt from federal income tax as an organization described in

diocese or risk pooling trust.

Section 501(c)(3) of the Internal Revenue Code. The Service has also ruled that the Company is a public charity under Section

STANDING COMMITTEES

509(a)(3) of the Code and not a private foundation.

The Board of Directors has established the following standing committees to review various aspects of Company operations and

CONFIDENTIAL OFFERING MEMORANDUM

to submit appropriate recommendations to the Board.

National Catholic is authorized to issue insurance only to its

• Executive

Shareholders, pursuant to the federal LRRA. Eligible Catholic

• Audit

archdioceses, dioceses, risk pooling trusts, and other Catholic

• Investment

organizations must review the Company’s Confidential Offering

• Nominations

Memorandum and, if eligible for insurance coverage, must

• Stakeholder Relations and Strategic Initiatives

execute a Participation Agreement and purchase stock in the company prior to issuance of insurance coverage.

OUTSIDE PROFESSIONAL SERVICE PROVIDERS

This is neither an offer to sell nor a solicitation of an offer to

Outside professional service providers are utilized when deemed

buy the stock or the insurance issued by National Catholic. Such

to be advantageous and necessary. Outside service providers are

an offer is made only by the Confidential Offering Memorandum,

shown on page 28.

which contains important information concerning the required

OUTSIDE CONSULTANTS

investment and the insurance and should be read carefully. The

Outside consulting expertise is utilized when deemed to be

Memorandum explains various risk factors associated with the

advantageous and necessary, in areas such as strategic planning,

purchase of stock and insurance from the Company, and provides

reinsurance, and computer services.

further information with regard to insurance regulation, terms of participating, federal income taxation and other matters.

STATE REGULATIONS National Catholic is domiciled in the State of Vermont and operates under the regulation of the Department of Financial Regulation of the State of Vermont. As a risk retention group established under the federal Liability Risk Retention Act of 1986 (LRRA), Company business is subject primarily to regulation by the State of Vermont and is subject to only limited oversight in other states in which it is registered.

s e v e n


N A T I O N A L

C A T H O L I C

Program

Summary

The National Catholic Risk

exposures for the Catholic

for participants who may wish

Retention Group, Inc., is a

Church throughout the

to convert from a claims-made

licensed insurance company

Country. Underlying insurance

to an occurrence form.

domiciled in the State of

programs are provided

National Catholic

Vermont, operating as a risk

variously through local

shareholders each maintain

retention group pursuant to the

insurance agents, national

their own anniversary-

federal Liability Risk Retention

brokers, insurers, and self-

expiration date for coverage.

Act of 1986 (LRRA). It was

insurance programs.

incorporated on August 12,

a basic program of $750,000

$1,000,000 Excess Liability.

operations on June 30, 1988.

excess of $250,000 (either

This program follows form

National Catholic now operates

insurance or a self-insured

with the underlying National

in 24 states and is authorized to

retention) Excess Liability

Catholic coverage with the

write liability insurance in all

coverage on either a claims-

exception that it does not

50 states subject to the

made or on an occurrence

automatically include Directors’

requirements of the federal

policy form as determined by

& Officers’ Liability or Sexual

LRRA. National Catholic

the participant, with alternate

Misconduct Limited coverage;

insures a multitude of

retention limits available. The

however, these coverages may

program includes the following

be quoted contingent upon a

coverages: General Liability,

specific underwriting analysis.

Personal Injury, Automobile

2002–2012 ($Millions)

33.6

37.7

Healthcare Services Liability,

XV, Liberty Syndicate 4472

Accrued Capital

Employee Benefits Liability,

rated A (Excellent), Faraday

17.9 15.1

8.9 0.8

0.8

Treaty Cessions Agreement

Initial Capital

15.5

0.8

Liability, School Board Legal

with Munich Re America,

18.0

0.8

ipates in an Excess of Loss

which is rated A+ (Superior)

33.0

0.8

Liability, Directors’ & Officers’ Liability, Counseling Errors &

22.7

0.7

0.8

0.8

0.8

0.8

Contractual Liability,

Syndicate 435 rated A

Employment Practices Liability,

(Excellent), Catlin Syndicate

Diocesan Review Board

2003 rated A (Excellent), Ark

Coverage, and Sexual

Syndicate 4020 rated A

Misconduct. The claims-made

(Excellent) and Axis

format includes an automatic

Reinsurance Company rated A

“mini-tail” provision along

(Excellent) XV in the 2012

with an optional 5-year

edition of Best’s Insurance

Supplemental Extended

Reports.

Reporting Period. Full Prior Acts Coverage, except for

02 03 04 05 06 07 08 09 10 11 12 O P E R A T I N G

National Catholic partic-

Omissions, Limited Professional

27.8

0.7

National Catholic also offers up to $14,000,000 excess of

1987, and began formal

Sources of Capital (Shareholders’ Equity) Initial Capital from Shareholders’ Deposits/Accumulated Other Capital from Company Profits

36.3

National Catholic provides

Sexual Misconduct, is available

Y E A R

e i g h t


Annual Gross Written/Assumed and Net Earned Premiums

Corresponding Annual Change in Shareholders’ Equity

2002–2012 ($Millions)

2002–2012 ($Millions)

Net Earned Premiums

24.3

6.6

5.9 4.7

Gross Written Premiums 20.8

20.2

2.8

2.8

2.5

19.1

18.7 17.1 16.1 16.1 15.9

15.3

(2.4)

(2.9)

(3.3) 11.4 8.5

8.9

9.1

8.9

8.9

9.6

9.6

9.2

10.3

Change in Equity

6.1 4.4 (13.8) (15.0)

02 03 04 05 06 07 08 09 10 11 12 O P E R A T I N G

02 03 04 05 06 07 08 09 10 11 12

Y E A R

O P E R A T I N G

Y E A R

Net Ultimate Projected Losses and ALAE* Ratios AL & GL and Other Liability

Total Net Ultimate Projected Losses and ALAE* AL & GL and Other Liability

2002–2012 (Percent)

2002–2012 ($Millions) 16.6

Percent

187

IBNR Reserves Case Reserves 12.6

148

11.5

142

10.1

127 116

9.0

113 93 78

92

89

9.0

8.5

8.5

8.4

6.6

82 5.1

02 03 04 05 06 07 08 09 10 11 12 O P E R A T I N G

Net Paid

02 03 04 05 06 07 08 09 10 11 12

Y E A R

O P E R A T I N G

n i n e

Y E A R

* Allocated Loss Adjustment Expense


National

Catholic

Services,

LLC

National Catholic Services, LLC

retention groups from insuring

group, would allow TNCRRG to

(NCS) is a 100%, wholly owned

any entity that is not also an

reach out to, and provide risk

subsidiary of The National

owner of the company; i.e., all

management and insurance

Catholic Risk Retention Group,

insureds must be owners and all

assistance to, the overall Church,

Inc. (TNCRRG). NCS is a

owners must be insureds.

thus better enabling the Church

management company which

Furthermore, the LRRA only

to effectively and efficiently

was created both to manage the

allows risk retention group

provide its ministries in our

day-to-day operations of

companies to provide third

society. Accordingly, National

TNCRRG, and also, to enable

party Liability insurance, and

Catholic Services, LLC was

TNCRRG to expand the scope

proscribes the issuance of

established on March 8, 2000.

and nature of its services and

Property or Workers’

products for the Catholic

Compensation coverage,

tax exempt, not for profit, under

Church.

by risk retention groups.

the direction of a Board of

TNCRRG decided to create

Needless to say, the

NCS company operates as a

Governors comprised by

NCS, to address operational

Catholic Church has insurance

members of the TNCRRG Board

constraint issues created for

coverage needs other than simply

and others, and ultimately,

TNCRRG, by provisions of the

Liability. Additionally, TNCRRG

subject to the control of the

federal law that authorizes and

recognized that it was certainly

TNCRRG Board of Directors.

enables TNCRRG and all other

conceivable, and probably likely

NCS manages TNCRRG

risk retention group insurance

at some time, Catholic Church

operations, and also, undertakes

companies. That legislation, the

entities that had no ownership of

initiatives to better serve the risk

federal Liability Risk Retention

TNCRRG, would nonetheless

management needs of the

Act of 1986 (LRRA) prohibits risk

request the services of, or

Catholic Church, so that the

assistance from, TNCRRG.

Church can in turn better

TNCRRG, as a risk retention

address and fulfill the needs of a

group company, inherently

frequently hurting society.

would be unable to provide these expanded services/products, and certainly not to this broader (non-owner) constituency in the Catholic Church. However, the TNCRRG Board of Directors recognized that formation of a subsidiary management company that was not a risk retention

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Report of Independent Auditors

Board of Directors: We have audited the accompanying consolidated financial statements of The National Catholic Risk Retention Group, Inc. and Subsidiaries (the Company) which comprise the consolidated balance sheets as of December 31, 2012 and 2011 and the related consolidated statements of comprehensive income (loss), changes in shareholders’ equity and cash flows for the years then ended and the related notes to the consolidated financial statements.

MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

AUDITOR’S RESPONSIBILITY Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair representation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2012 and 2011 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Burlington, Vermont April 8, 2013 Vermont Firm Registration 092-0000267

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Consolidated Balance Sheets

Assets

At December 31, 2012

Cash and cash equivalents

$

Debt securities, at market value

9,189,809

At December 31, 2011 $

3,886,312

44,593,964

41,611,659

9,986,250

8,578,931

45,029

260,233

397,576

398,863

733,400

617,320

4,337,315

34,463,765

27,449,499

6,179,008

5,078,875

Deferred policy acquisition costs

376,525

312,636

Other assets

526,810

674,795

$ 106,376,056

$ 93,322,518

$

$

Common trust funds, at market value Accounts receivable Accrued investment income Premiums receivable Reinsurance receivable on paid losses Reinsurance recoverable on unpaid losses Prepaid reinsurance premiums

Total Assets Liabilities and Shareholders’ Equity Liabilities Losses and loss adjustment expenses

74,241,770

65,688,860

Unearned premiums

11,915,220

10,341,669

Reinsurance payable

324,563

257,063

Premium taxes payable

375,608

273,576

Unearned ceding commissions

697,901

591,749

Other liabilities

119,269

315,868

87,674,331

77,468,785

1,140

1,140

Class B ($13.33 par value, 90,000 shares authorized, 22,396.65 shares issued and outstanding)

298,622

298,622

Additional paid-in capital – original requirements

484,001

484,001

Additional paid-in capital – policyholder dividends

8,862,640

8,862,640

Accumulated other comprehensive income

3,378,406

1,444,277

Retained earnings

5,676,916

4,763,053

18,701,725

15,853,733

$ 106,376,056

$ 93,322,518

Total Liabilities Shareholders’ Equity Capital stock: Class A ($20 par value, 200 shares authorized, 57 shares issued and outstanding)

Total Shareholders’ Equity Total Liabilities and Shareholders’ Equity See accompanying notes to consolidated financial statements.

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Consolidated Statements of Comprehensive Income (Loss)

Revenues

Year Ended December 31, 2012

Premiums earned

$

10,287,546

Year Ended December 31, 2011 $

9,562,064

Net investment gains

1,689,473

2,245,376

VIRTUS® income earned

1,401,052

472,609

857,045

815,008

14,235,116

13,095,057

8,295,687

12,028,239

Policy acquisition costs

666,949

603,513

Management and professional fees

907,057

949,791

VIRTUS expenses

1,139,030

435,248

General and administrative expenses

2,312,530

2,212,197

13,321,253

16,228,988

Ceding commission income, net of commission expense of $558,063 and $486,708, respectively Total Revenues Expenses Losses and loss adjustment expenses

®

Total Expenses Net Income (Loss)

913,863

(3,133,931)

Other Comprehensive Income Net unrealized holding gains arising during the year Less: reclassification adjustment for realized gains included in net income/loss Other Comprehensive Income Comprehensive Income (Loss)

$

See accompanying notes to consolidated financial statements.

t h i r t e e n

2,440,885

965,954

(506,756)

(717,323)

1,934,129

248,631

2,847,992

$ (2,885,300)


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Consolidated Statements of Changes in Shareholders’ Equity —For Years Ended December 31, 2012 and 2011—

Additional Additional Paid-in Paid-in Accumulated Capital Capital Other CAPITAL STOCK Original Policyholder Comprehensive Class A Class B Requirements Dividends Income

Total Book Retained Shareholders’ Value Earnings Equity Per Share

Balance at January 1, 2011

$ 1,160

$ 298,622

Issuance of 1 share of Class A

20

20

(40)

(40)

Other comprehensive income

248,631

248,631

Net loss

(3,133,931)

(3,133,931)

1,140

298,622

484,001

8,862,640

1,444,277

4,763,053

15,853,733

Other comprehensive income

1,934,129

1,934,129

Net income

913,863

913,863

$ 1,140

$ 298,622

Redemption of 2 shares of Class A*

Balance at December 31, 2011

Balance at December 31, 2012

$ 484,001 $ 8,862,640

$ 484,001 $ 8,862,640

$ 1,195,646 $ 7,896,984 $ 18,739,053

$ 3,378,406 $ 5,676,916 $ 18,701,725

$ 837

$ 708

$ 835

See accompanying notes to consolidated financial statements. * Pursuant to the terms of the participation agreement, consideration for redemption of Class B shares associated with the tendered A shares may not be paid for a period of up to five years from the date of the shareholder’s withdrawal, as further described in Note G.

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Consolidated Statements of Cash Flows

Cash Flows from Operating Activities

Year Ended December 31, 2012

Net income(loss)

$

913,863

Year Ended December 31, 2011 $

(3,133,931)

Add (deduct) items not affecting cash: Net realized gains on sales of investments

(506,756)

(717,323)

274,911

218,163

215,204

(260,233)

1,287

(2,319)

733,400

269,720

3,719,995

(3,097,031)

Reinsurance recoverable on unpaid losses

(7,014,266)

1,364,712

Prepaid reinsurance premiums

(1,100,133)

189,962

Deferred policy acquisition costs

(63,889)

1,079

Other assets

147,985

115,679

Losses and loss adjustment expenses

8,552,910

(2,338,754)

Unearned premiums

1,573,551

17,532

Reinsurance payable

67,500

(344,692)

Premium taxes payable

102,032

(74,486)

Unearned ceding commissions

106,152

(13,378)

(196,599)

245,345

Net amortization of bond premium and discount Changes in assets and liabilities: Receivable from affiliates Accrued investment income Premiums receivable Reinsurance receivable on paid losses

Other liabilities Net Cash Provided by (Used in) Operating Activities

7,527,147

(7,559,955)

(20,128,454)

(12,281,468)

17,904,804

19,127,951

(2,223,650)

6,846,483

Cash Flows from Investing Activities Purchased investments Proceeds from sales and maturities of investments Net Cash (Used in) Provided by Investing Activities Cash Flows from Financing Activities Return of capital

(40)

Proceeds from issuance of capital

20

Net Cash Used in Financing Activities

(20)

Net Change in Cash and Cash Equivalents

5,303,497

(713,492)

Cash and Cash Equivalents, Beginning of Year

3,886,312

4,599,804

9,189,809

$ 3,886,312

Cash and Cash Equivalents, End of Year

$

See accompanying notes to consolidated financial statements.

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Notes to Consolidated Financial Statements —For Years Ended December 31, 2012 and 2011—

NOTE A Organization and Significant Accounting Policies of America (GAAP) as promulgated by the Financial Accounting Standards ORGANIZATION Board Accounting Standards Codification (the guidance). The consolidated The National Catholic Risk Retention Group, Inc. (TNCRRG), a Vermont financial statements include the accounts of TNCRRG and its wholly owned company, operates as a risk retention group under the federal Liability Risk subsidiaries. All inter-company accounts and transactions have been eliminated Retention Act of 1986 (LRRA). TNCRRG has been organized by entities of in the consolidation. Preparation of consolidated financial statements in the Roman Catholic Church to provide liability insurance to qualifying Roman accordance with GAAP requires management to make estimates and Catholic archdioceses, dioceses, religious organizations and risk pooling trusts assumptions that affect the reported amounts of assets and liabilities and comprised of entities associated with the Roman Catholic Church that are disclosure of contingent assets and liabilities at the date of the consolidated listed or are eligible for listing in The Official Catholic Directory published financial statements and the reported amounts of revenues and expenses by P.J. Kenedy & Sons. This coverage is provided on either a claims-made during the reporting period. Actual results could differ from those estimates. basis or an occurrence basis, depending upon the requirements of the insured. All policyholders are also shareholders of TNCRRG. New policyholders are SUBSEQUENT EVENTS required to maintain coverage with TNCRRG for a minimum of three years. TNCRRG has evaluated subsequent events for disclosure and recognition As of December 31, 2012 and 2011, 57 Catholic shareholder entities were through April 8, 2013, the date the consolidated financial statements were insured. In 2012 and 2011, the two largest insureds accounted for 32% and available to be issued. 31%, respectively, of gross written premium. In 2012 and 2011, 76% and 75%, respectively, of gross written premiums came from shareholders located CASH AND CASH EQUIVALENTS in Illinois, New Jersey, New York, Pennsylvania, and Texas; although the For purposes of the statement of cash flows, TNCRRG considers all highly risks covered represent a larger geographical area. liquid debt instruments purchased with an original maturity of three months On March 8, 2000, TNCRRG created a wholly owned subsidiary, National or less to be cash equivalents. At December 31, 2012 and 2011, cash and Catholic Services, LLC (NCS). NCS was formed as a Vermont limited liability cash equivalents consisted of the following: company to provide underwriting, brokerage, claims administration and other management services to TNCRRG. NCS pays certain expenses on behalf of TNCRRG including 2012 2011 all salaries and related benefits. TNCRRG reimburses Wells Fargo Bank operating/sweep account $ 2,107,293 $ 2,246,493 NCS for all expenses paid on TNCRRG’s behalf and these costs are included in general and adminisWells Fargo Advantage Cash Investment trative expenses. Fund Institutional Class 7,082,516 1,639,819 On October 26, 2006, NCS created a wholly Total Cash and owned subsidiary, NCS Risk Services, LLC (Risk Cash Equivalents $ 9,189,809 $ 3,886,312 Services). Risk Services was formed as a Vermont limited liability company to facilitate the sale of TNCRRG’s VIRTUS® products to entities outside the Catholic Church The Federal Deposit Insurance Corporation (FDIC) insures amounts on community. deposit with each financial institution up to limits as prescribed by law. Accounting, financial reporting, regulatory compliance, records retention TNCRRG holds funds with financial institutions in excess of the FDIC insured and other services are performed by JLT Towner, an unaffiliated entity. amount; however, TNCRRG has not experienced any losses in such accounts and management believes it is not exposed to any significant credit risk on cash and cash equivalents.

BASIS OF REPORTING The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States

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Notes to Consolidated Financial Statements

INVESTMENTS Investments held by TNCRRG consist of U.S. Treasury obligations, corporate bonds, municipal bonds, asset and mortgage backed securities, and common trust funds. TNCRRG classifies these investments as available-for-sale. Accordingly, TNCRRG reports debt securities at their estimated market values with unrealized holding gains and losses being reported as accumulated other comprehensive income in shareholders’ equity. Estimated market values are based on the National Association of Insurance Commissioner’s (NAIC) Securities Valuation Manual. In the event that certain market prices are not available, TNCRRG uses the quoted market prices provided to them by their investment custodians in determining estimated market values for those securities. Estimated market values obtained from the NAIC Securities Valuation Manual approximate the quoted market prices provided by investment custodians. Investments held in common trust funds are valued using the net asset value (NAV) at the end of each trading day based on the underlying securities in accordance with the financial services investment companies guidance. Realized gains and losses on sales of common trust funds and debt securities are accounted for using the "highest-in, first-out" method, which minimizes realized gains.

OTHER-THAN-TEMPORARY IMPAIRMENTS (OTTI) An investment is considered impaired when the fair value of the security is less than its cost or amortized cost. When an investment is impaired, TNCRRG must make a determination as to whether the impairment is other-thantemporary. Under the guidance, with respect to an investment in an impaired debt security, OTTI occurs if TNCRRG (a) intends to sell the debt security, (b) it is more likely than not TNCRRG will be required to sell the debt security before its anticipated recovery, or (c) it is probable that TNCRRG will be unable to collect all amounts due to the recovery of the entire cost basis of the security. If TNCRRG intends to sell the debt security, or will more likely than not be required to sell the debt security before the anticipated recovery, a loss in the entire amount of the impairment is reflected in net investment gains in the statement of operations. If it is determined to be probable TNCRRG will be unable to collect all amounts and TNCRRG has no intent to sell the debt security, a credit loss is recognized through net investment gains to the extent that the present value of expected cash flows is less than the amortized cost basis; any difference between fair value and the new amortized cost basis (net of the credit loss) is reflected in other comprehensive income. With respect to an investment in common trust funds, if the decline in

fair value is determined to be other than temporary, a loss for the entire amount of the impairment is reflected in net investment gains in the statement of operations. Upon recognizing an OTTI, the new cost basis of the security is the previous amortized cost or cost basis less the OTTI recognized in net investment gains. The new cost basis is not adjusted for any subsequent recoveries in fair value; however, for debt securities, the difference between the new cost basis and the expected cash flows is accreted to net investment gains over the remaining expected life of the security.

DEFERRED POLICY ACQUISITION COSTS Certain costs incurred in the production of new or renewal business, primarily premium taxes, are deferred and amortized over the terms of the policies to which they relate.

LOSSES AND LOSS ADJUSTMENT EXPENSES The liability for unpaid losses and loss adjustment expenses includes case basis estimates of reported losses, plus amounts for incurred but not reported losses (IBNR) calculated based upon loss projections utilizing certain actuarial assumptions and studies of TNCRRG’s historical loss experience and industry data. In establishing the liability for losses and loss adjustment expenses, TNCRRG utilizes the findings of an independent consulting actuary. However, because projections of future ultimate losses are inherently uncertain due to the random nature of claims occurrences, limited population of insured risks, the nature of the risks insured, uncertainty related to current and perceived social and economic inflation, current and future court and jury attitudes, and many other economic, legal, political and social factors, all having significant effects on ultimate claim costs, actual loss experience may not conform to the assumptions used in determining the estimated amounts for such liability at the balance sheet date. Accordingly, the ultimate liability could be significantly in excess of or less than the amount indicated in the consolidated financial statements. As adjustments to these estimates become necessary, such adjustments are reflected in current operations.

REINSURANCE RECOVERABLE ON UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES Recoverables from the reinsurers pursuant to the reinsurance agreements have been estimated using actuarial assumptions consistent with those used in establishing the liability for losses and loss adjustment expenses described

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Notes to Consolidated Financial Statements

NOTE A Organization and Significant Accounting Policies (continued) above. Management believes that reinsurance recoverable as recorded represents its best estimate of such amounts; however, as changes in the estimated ultimate liability for losses and loss adjustment expenses are determined, the estimated ultimate amount recoverable from the reinsurers will also change. Accordingly, the ultimate recoverable could be significantly in excess of or less than the amount indicated in the consolidated financial statements. As adjustments to these estimates become necessary, such adjustments are reflected in current operations. TNCRRG relies on ceded reinsurance to limit its retained insurance risk as described further in Note B. In entering into reinsurance agreements, management considers a variety of factors including the creditworthiness of reinsurers. In the event that any or all of the reinsuring companies are unable to meet their obligations under existing reinsurance agreements, TNCRRG would be contingently liable for such amounts. In preparing consolidated financial statements, management makes estimates of amounts recoverable from reinsurers which includes consideration of amounts, if any, estimated to be uncollectible by management based on an assessment of factors including the creditworthiness of the reinsurers. Management believes that all reinsurance receivable on paid losses and reinsurance recoverables on case and IBNR reserves recorded at December 31, 2012 and 2011 are fully collectible.

CEDING COMMISSION Commissions on ceded reinsurance are earned over the terms of the underlying policies to which they relate. Commissions relating to the unexpired portion of underlying policies in force at the balance sheet date are recorded as unearned ceding commissions.

Total Plan Net Assets

Present Value of Accumulated Plan Benefits

$ 922,283,816

$ 1,262,827,870

RECOGNITION OF PREMIUM REVENUE July 1, 2012

RETIREMENT PLAN TNCRRG participates in the Christian Brothers Retirement Savings Plan, a 403(b) tax-deferred plan whereby participating employees may contribute to the plan up to the federally determined allowable limit. Additionally, the employer has elected to make a matching contribution up to 2% of the employees’ base salary. Employer contributions are vested immediately. Total discretionary contributions made by TNCRRG amounted to $23,786 and $18,908 in 2012 and 2011, respectively. TNCRRG also participates in a 401(a) defined benefit church plan. The plan name is the Christian Brothers Employee Retirement Plan – Plan #333 which is administered by Christian Brothers Services. The Employee Identification Number of the plan is 36-3895802. Only organizations such as TNCRRG that are listed in The Official Catholic Directory published by P.J. Kenedy & Sons and that have been approved by the plan may participate. The plan provides for pension benefits beginning at normal retirement age (65) based on years of service and compensation. An audit report and actuarial certification is performed on the plan annually. The actuarial valuation for July 1, 2012 changed the mortality assumption from the RP 2000 Combined Healthy Mortality Table to the 2012 IRS Mortality table. There were no assumption changes for July 1, 2011. Since July of 2008, the plan has an underfunded pension liability. Contributions to the plan by TNCRRG are based on 3.5% of total annual base salaries. Total contributions made by TNCRRG amounted to $39,541 and $33,598 in 2012 and 2011, respectively. The table below presents certain financial information about the plan from the most recent audit report and actuarial certification as of July 1, 2012 and July 1, 2011:

$

Total Contributions

Funded Status

48,560,355

65% to 80%

Premiums written and assumed are July 1, 2011 $ 939,124,365 $ 1,126,175,658 $ 39,631,516 65% to 80% earned ratably over the terms of the policies to which they relate. Premiums relating to the unexpired portion of policies in force at the balance OTHER ASSETS sheet date are recorded as unearned premiums. Premiums ceded pursuant Other assets primarily include capitalized underwriting system costs, net of to reinsurance agreements are expensed over the terms of the underlying accumulated depreciation. policies to which they relate and are netted against earned premiums. Ceded premiums relating to the unexpired portion of underlying policies are recorded as prepaid reinsurance premiums.

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Notes to Consolidated Financial Statements

NOTE B Insurance Activity Policies directly written by TNCRRG provide primary coverage of of reinstatements are provided at no additional cost, after which TNCRRG $750,000 for each loss, in excess of a self-insured retention of $250,000 has the option to reinstate coverage for additional premium or risk bearing for most shareholders (shareholders have self-insured retentions ranging the loss on its own. In addition, certain reinsurance agreements include from $250,000 to $2,000,000). General and automobile liability an overall aggregate limit for Terrorism coverage. coverages have no aggregate. Most other coverages provide for a TNCRRG’s reinsurers, related reinsurance balances recoverable and combined aggregate of $750,000 applying to several types of risk for A.M. Best strength ratings at December 31, 2012 are as follows: each shareholder. Total AM Best During 2010, TNCRRG began assuming primary layer coverage for Reinsurers Recoverable Rating one shareholder to the same limits and aggregates as offered on the Munich Reinsurance America, Inc. $ 23,219,000 A+ direct policies. Hannover Rueckversicherung AG 2,160,000 A+ All shareholders are required to purchase primary coverage and have Odyssey American Reinsurance the option of purchasing various layers of excess liability coverage. Excess Corporation 648,000 A layers offered by TNCRRG are generally $4,000,000 excess $1,000,000 Liberty Syndicate 4472 5,030,000 A (or up to $5,000,000 from ground), $5,000,000 excess $5,000,000, Faraday Syndicate 435 1,320,000 A and $5,000,000 excess $10,000,000. Within each excess layer, all coverages, except for general and automobile liability coverages (which Catlin Syndicate 2003 592,000 A have no aggregate limitation) and sexual misconduct liability and nursing Ark Syndicate 4020 880,000 A home professional liability (which have their own separate aggregate AXIS Reinsurance Company 615,000 A limits), generally provide for an aggregate limit equal to the per layer Total $ 34,464,000 gross liability per type of risk for each policy. Certain reinsurance agreements provide for aggregate limits which may expose TNCRRG to additional risk. A reconciliation of direct and assumed to net premiums, on both a For claims in the layer $4,000,000 excess $1,000,000, TNCRRG written and an earned basis are as follows: currently retains 10% of the YEAR ENDED DECEMBER 31, 2012 YEAR ENDED DECEMBER 31, 2011 risks pursuant to a treaty reinsurance agreement with Written Earned Written Earned various reinsurers. Prior to Direct premiums $ 23,842,004 $ 22,300,401 $ 20,425,621 $ 20,009,009 January 1, 2005, TNCRRG Assumed premiums 423,341 391,393 385,003 784,083 retained 20% of this coverage. Reinsurance ceded (13,504,381) (12,404,248) (11,041,066) (11,231,028) Pursuant to treaty reinsurance Net Premiums $ 10,760,964 $ 10,287,546 $ 9,769,558 $ 9,562,064 agreements with various reinsurers, TNCRRG cedes 100% of the risks within the $5,000,000 excess $5,000,000 and $5,000,000 excess $10,000,000 layers. Prior to January 1, 2009, TNCRRG retained 20% of the losses and loss adjustment expenses within these layers. Effective January 1, 2009, the reinsurance agreements covering a portion of the $5,000,000 excess $5,000,000 and $5,000,000 excess $10,000,000 layers, contain provisions for reinstatement of coverage once the loss limit is exhausted. Under these terms, a certain number

—

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Notes to Consolidated Financial Statements

NOTE B Insurance Activity (continued) Components of the liability for unpaid losses and loss adjustment expenses and related reinsurance recoverable are as follows: AT DECEMBER 31, 2012 Gross Liability Case-basis reserves IBNR reserves Total

AT DECEMBER 31, 2011

Reinsurance Recoverable

Gross Liability

Reinsurance Recoverable

10,634,300

$ 20,401,756

$ 10,965,634

51,173,601

23,829,465

45,287,104

16,483,865

$ 74,241,770

$ 34,463,765

$ 65,688,860

$ 27,449,499

$

23,068,169

$

Losses and loss adjustment expense activity for the years ending December 31, 2012 and 2011, is summarized as follows: 2012 Balance as of January 1, (Net of Reinsurance Recoverable of $27,449,499 and $28,814,211)

$

2011

38,239,361

$

39,213,403

Incurred related to: Current year Development of prior years Total Incurred During the Year (Net of Reinsurance Recoveries of $8,133,209 and $14,516,407)

8,414,752

8,961,492

(119,065)

3,066,747

8,295,687

12,028,239

(412,740)

(6,757,043)

(12,589,541)

(6,757,043)

(13,002,281)

Paid related to: Current year Prior years Total Paid During the Year (Net of Reinsurance Recoveries of $1,118,944 and $15,881,119) Balance as of December 31, (Net of Reinsurance Recoverable of $34,463,765 and $27,449,499)

$

39,778,005

The liability for losses and loss adjustment expenses relating to prior years decreased during 2012 due to favorable development on the 2005, 2006, 2008, 2010 and 2011 policy years, which was partially offset by unfavorable development on the 2007 and 2009 policy years. The liability for losses and

$

38,239,361

loss adjustment expenses relating to prior years increased during 2011 primarily as the result of higher-than-anticipated losses on the 2004 through 2007 and 2010 policy years, partially offset by lower-than-anticipated losses on the 2008 and 2009 policy years.

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S U B S I D I A R I E S

Notes to Consolidated Financial Statements

NOTE C Investments TNCRRG’s estimates of fair value for financial assets are based on the framework established in the fair value measurements and disclosures accounting guidance. The framework is based on the inputs used in valuation and requires that observable inputs are used in the valuations when available. The disclosure of fair value estimates in the fair value accounting guidance hierarchy is based on whether the inputs into the valuation are observable. In determining the level of hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect TNCRRG’s significant market assumptions. If the inputs used to measure the assets fall within different levels of the hierarchy, the classification is based on the lowest level of input that is significant to the fair value measurement of the asset. Classification of assets within the hierarchy considers the markets in which the assets are traded and the reliability and transparency of the assumptions used to determine fair value. The hierarchy requires the use of observable market data when available. The levels of the hierarchy are as follows: • Level 1 – Inputs to the valuation methodology are quoted prices for identical assets traded in active markets. • Level 2 – Inputs to the valuation methodology include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable for the asset and market-corroborated inputs. December 31, 2012 U.S. Treasury securities and obligations of U.S. Government and government agencies

• Level 3 – Valuations based on models where significant inputs are not observable. The unobservable inputs reflect TNCRRG’s own assumptions about the inputs that market participants would use. TNCRRG’s fair values for debt securities are obtained from the NAIC or TNCRRG’s custodial bank as described in Note A. These pricing sources use quoted market prices when available (Level 1). When market prices are not available, a pricing service is used to determine an estimate of fair value. The fair value is generally estimated using current market inputs for similar financial instruments with comparable terms and credit quality, commonly referred to as matrix pricing (Level 2). In instances where there is little or no market activity for the same or similar instruments, fair value is estimated using methods, models and assumptions that management believes are relevant to the particular asset. This may include a discounted cash flow analysis or other income based approaches (Level 3). These valuation techniques involve some level of management’s estimation and judgment. Fair values for the common trust funds valued at NAV are, pursuant to the fair value measurement and disclosure guidance, categorized as Level 2. The underlying securities are valued using the market approach or other methods provided by independent pricing service providers. There are no redemption restrictions on the funds. TNCRRG recognizes transfers between levels at the end of the reporting period. The following tables present the levels within the fair value hierarchy at which TNCRRG’s financial assets are measured on a recurring basis:

Level 1 $

16,978,026

Level 2 $

169,655

Level 3 $

Total $

17,147,681

Obligations of states, municipalities and political subdivisions

920,088

920,088

Asset-backed securities

837,794

837,794

Residential mortgage-backed securities

6,106,461

6,106,461

Corporate bonds

19,581,940

19,581,940

Total Debt Securities

$ 16,978,026

$ 27,615,938

$

$ 44,593,964

Common Trust Funds

$

$

$

$

t w e n t y

o n e

9,986,250

9,986,250


T H E

N A T I O N A L

C A T H O L I C

R I S K

R E T E N T I O N

G R O U P ,

I N C .

A N D

S U B S I D I A R I E S

Notes to Consolidated Financial Statements

NOTE C Investments (continued) December 31, 2011

Level 1

U.S. Treasury securities and obligations of U.S. Government and government agencies

$

20,432,225

Level 2 $

Level 3

252,634

$

Total

$

20,684,859

Obligations of states, municipalities and political subdivisions

439,864

439,864

Asset-backed securities

1,620,829

1,620,829

Residential mortgage-backed securities

2,410,761

2,410,761

Commercial mortgage-backed securities

816,472

816,472

Corporate bonds

15,322,959

15,322,959

Other debt securities

315,915

315,915

Total Debt Securities

$ 20,432,225

$ 21,179,434

$

$ 41,611,659

Common Trust Funds

$

$

$

$

8,578,931

8,578,931

The aggregate cost or amortized cost, gross unrealized holding gains and losses, OTTI, and estimated market values for TNCRRG’s financial assets by major security type, are as follows: Cost or Amortized Cost

At December 31, 2012: U.S. Treasury securities and obligations of U.S. Government and government agencies

$

16,116,357

Gross Unrealized Gains $

Gross Unrealized Losses

1,036,604

$

(5,280)

Other-ThanTemporary Impairments $

Estimated Market Value $

17,147,681

Obligations of states, municipalities and political subdivisions

881,154

40,934

(2,000)

920,088

Asset-backed securities

827,953

11,844

(2,003)

837,794

5,974,937

199,834

(61,726)

(6,584)

6,106,461

18,249,753

1,497,464

(6,630)

(158,647)

19,581,940

Totals

$ 42,050,154

$ 2,786,680

$

(77,639)

$ (165,231)

$ 44,593,964

Common Trust Funds

$

$

$ (325,515)

$

$

Residential mortgage-backed securities Corporate bonds

9,316,886

994,879

t w e n t y

t w o

9,986,250


T H E

N A T I O N A L

C A T H O L I C

R I S K

R E T E N T I O N

G R O U P ,

I N C .

A N D

S U B S I D I A R I E S

Notes to Consolidated Financial Statements

Cost or Amortized Cost

At December 31, 2011: U.S. Treasury securities and obligations of U.S. Government and government agencies

$

Gross Unrealized Gains

19,276,106

Obligations of states, municipalities and political subdivisions

$

Gross Unrealized Losses

1,408,753

$

Other-ThanTemporary Impairments

$

401,807

38,057

Asset-backed securities

1,570,906

79,512

(29,589)

Residential mortgage-backed securities

2,505,749

14,153

(101,161)

774,057

42,415

14,767,176

795,551

300,253

15,662

Totals

$ 39,596,054

$ 2,394,103

$

(211,870)

$

Common Trust Funds

$

$

$

(742,999)

$

Commercial mortgage-backed securities Corporate bonds Other debt securities

9,316,886

$

20,684,859

439,864

1,620,829

(7,980)

2,410,761

(81,120)

816,472

(158,648)

5,044

Estimated Market Value

15,322,959

— (166,628) —

315,915 $ 41,611,659 $

8,578,931

The following tables show the market value and gross unrealized losses aggregated by investment category and length of time securities have been in a continuous unrealized loss position: FEWER THAN 12 MONTHS Fair Value

At December 31, 2012: U.S. Treasury securities and obligations of U.S. Government and government agencies

$

Obligations of states, municipalities and political subdivisions

1,937,682

Unrealized Loss

$

Asset-backed securities

12 MONTHS OR GREATER

(5,280)

Fair Value

$

TOTAL

Unrealized Loss

$

Fair Value

$

1,937,682

Unrealized Loss

$

(5,280)

198,000

(2,000)

198,000

(2,000)

901,760

(1,066)

46,413

(937)

948,173

(2,003)

Residential mortgage-backed securities

1,201,788

(5,771)

372,549

(55,955)

1,574,337

(61,726)

Corporate bonds

1,389,367

(1,845)

206,680

(4,785)

1,596,047

(6,630)

Total Debt Securities

$ 5,430,597

$ (13,962)

$

(63,677)

$ 6,254,239

$

Common Trust Funds

$

$

$ 3,152,401

$ (325,515)

$ 3,152,401

$ (325,515)

t w e n t y

823,642

t h r e e

$

(77,639)


T H E

N A T I O N A L

C A T H O L I C

R I S K

R E T E N T I O N

G R O U P ,

I N C .

A N D

S U B S I D I A R I E S

Notes to Consolidated Financial Statements

NOTE C Investments (continued) FEWER THAN 12 MONTHS Fair Value

At December 31, 2011: Asset-backed securities

$

Residential mortgage-backed securities Corporate bonds

12 MONTHS OR GREATER

Unrealized Loss $

Fair Value $

757,371

TOTAL

Unrealized Loss $

(29,589)

Fair Value $

757,371

Unrealized Loss $

(29,589)

447,061

(6,290)

841,307

(94,870)

1,288,368

(101,160)

1,724,344

(35,794)

1,015,214

(45,327)

2,739,558

(81,121)

(42,084)

$ 2,613,892

$ (169,786)

$ 4,785,297

$ (211,870)

$ 3,152,401

$ (742,999)

$ 3,152,401

$ (742,999)

Total Debt Securities

$ 2,171,405

$

Common Trust Funds

$

$

At December 31, 2012 and 2011, the common trust funds were comprised of a MSCI EAFE Screened Index Non-Lending Common Trust Fund (MSCI Fund) and an S&P 500 Screened Index Securities Lending and Non-Lending Common Trust Fund (S&P 500 Fund). All common trust funds are managed by State Street Global Advisors. The investment objective of the MSCI Fund is to approximate the equity market performance of developed markets outside of North America over the long term. The investment objective of the S&P 500 Fund is to approximate the performance of the S&P 500 Index over the long term. At December 31, 2012 and 2011, TNCRRG held investments in common trust funds for which cost exceeded fair value by $325,515 and $742,999, respectively. TNCRRG believes that there will be future recovery of the declines in fair value and has the ability and intent to hold these securities until recovery. As such, TNCRRG does not consider these securities to be other-than-temporarily impaired at December 31, 2012 and 2011. At December 31, 2012 and 2011, approximately 51% and 52%, respectively, of the unrealized gross losses were held with issuers rated

t w e n t y

as investment grade by Moody’s Investors Service. The decline in market value is primarily related to credit risk aversion by investors, as well as the slowing of prepayments in mortgage and asset-backed securities. At this time based upon information currently available, TNCRRG has the ability and it is TNCRRG’s intent to fully recover the principal, which could require TNCRRG to hold these securities until their maturity; therefore, TNCRRG considers the impairment to be temporary. Although TNCRRG does not purchase non-investment grade securities, at December 31, 2012 and 2011, approximately 6% and 5%, respectively, of debt securities held had credit ratings below investment grade. The non-investment grade debt securities were not deemed to be other-thantemporarily impaired because management, in consultation with the investment manager, believes that their market values reflect systemic stress in the credit market rather than fundamental weakness in the issuers. These securities are current with respect to interest and principal payments through year-end, and up to the date of the audit report.

f o u r


T H E

N A T I O N A L

C A T H O L I C

R I S K

R E T E N T I O N

G R O U P ,

I N C .

A N D

S U B S I D I A R I E S

Notes to Consolidated Financial Statements

The following represents the activity for credit losses recognized in net loss on debt securities where an OTTI was identified and a portion of OTTI was included in accumulated other comprehensive income as of December 31:

Major components of net investment gains for the years ended December 31, 2012 and 2011 are summarized as follows: Investment Income Interest income

Cumulative Credit Loss, Beginning of Year

2012

2011

$ 166,628

$ 168,873

Securities sold, paid down or disposed Cumulative Credit Loss, End of Year

(1,397)

(2,245)

$ 165,231

$ 166,628

The amortized cost and estimated market value of debt securities by contractual maturity date at December 31, 2012 are shown below. Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations without penalties. Amortized Cost $

1,698,081 18,208,186

19,266,661

Due after five years through ten years

15,184,431

16,555,786

Due after ten years Subtotal Asset and mortgage-backed securities Totals

156,566

116,625

35,247,264

37,649,709

6,802,890

6,944,255

t w e n t y

1,459,387

(164,439)

1,182,717

1,528,053

Gross realized gains on sales

523,990

735,838

Gross realized losses on sales

(17,234)

(18,515)

Total Net Realized Gains

506,756

717,323

$ 1,689,473

$ 2,245,376

Realized (Losses) Gains on Sale of Available-for-Sale Securities:

Net Investment Gains

$ 42,050,154 $ 44,593,964

—

$

(174,283)

Investment expenses

1,710,637

Due after one year through five years

1,356,695

233,105

Estimated Market Value $

$

2011

305

Total Interest and Dividends

Reductions:

Due in one year or less

Dividends from equity investments

2012

f i v e

—


T H E

N A T I O N A L

C A T H O L I C

R I S K

R E T E N T I O N

G R O U P ,

I N C .

A N D

S U B S I D I A R I E S

Notes to Consolidated Financial Statements

NOTE D VIRTUS® VIRTUS is the brand name that identifies best practice programs designed to help prevent wrong-doing and promote positive behavior within religious organizations. Initially, TNCRRG owned intellectual property rights in and to the VIRTUS program, and its associated products, programs and services. During 2004, TNCRRG assigned such ownership to NCS. Effective September 2011, NCS has assumed responsibility to manage, market, develop, implement, sell and license VIRTUS program products, programs and services (prior to this, in2vate, llc (in2vate) was contracted to perform these duties on behalf of NCS). The previous agreement with in2vate did not include any sale of the intellectual property rights held by TNCRRG or NCS in the VIRTUS program. The managing unit relationship obligated

in2vate to pay royalties to NCS (with respect to the sale or licensure of certain products and services) on a quarterly basis. Income related to the royalties until September 2011 and direct sales since that date amounted to $1,401,052 and $472,609 in 2012 and 2011, respectively. Additionally, NCS paid expenses relating to the VIRTUS program of $1,139,030 and $435,248 for 2012 and 2011, respectively. Sales outside of the Catholic Church community are handled by Risk Services. The amounts have been eliminated in consolidation. Included in accounts receivable on the consolidated balance sheet as of December 31, 2011, is a receivable of $246,352 from in2vate for royalties earned while under the previous agreement. The receivable from in2vate was collected during 2012.

NOTE E Federal Income Taxes TNCRRG is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision for federal income taxes is recorded. Effective August 16, 2010, Risk Services has elected

to be taxed as a corporation on the VIRTUS products sold outside the Catholic Church community. Risk Services has not generated any net income since inception.

NOTE F Contingencies TNCRRG is occasionally involved in litigation related to its operations, which is outside the scope of its normal claims reserving process. There is no litigation active at December 31, 2012 or 2011 and management

is not aware of any pending or threatened cases outstanding at December 31, 2012 or 2011 that would materially impact TNCRRG, or require an accrual for liability.

NOTE G Lease Agreements Office space is leased under a five year operating agreement expiring August 31, 2015. Rent expense under this agreement was $126,048 and $119,332 for the years ended December 31, 2012 and 2011, respectively. Future minimum lease payments under this noncancelable operating lease are $73,411, $75,620 and $51,540 for 2013, 2014 and 2015, respectively. In addition, taxes and operating costs may also be assessed. A second office space was leased during 2011 under a three year operating agreement expiring September 30, 2014. Rent expense under

t w e n t y

this agreement was $19,361 and $5,085 for the years ended December 31, 2012 and 2011, respectively. Future minimum lease payments under this noncancelable operating lease are $21,046, and $16,103 for 2013 and 2014, respectively. In addition, taxes and operating costs may also be assessed.

s i x


T H E

N A T I O N A L

C A T H O L I C

R I S K

R E T E N T I O N

G R O U P ,

I N C .

A N D

S U B S I D I A R I E S

Notes to Consolidated Financial Statements

NOTE H Shareholders’ Equity In accordance with the insurance laws of the State of Vermont, TNCRRG is required to prepare its consolidated financial statements on the basis of GAAP, with the exception of variances prescribed by Vermont laws and regulations or permitted by the Vermont Department of Financial Regulation (the Department). The Vermont captive insurance statutes require that $1,000,000 be maintained in unimpaired shareholders’ equity. For regulatory purposes, shareholders’ equity totaled $18,701,725 and $15,853,733 at December 31, 2012 and 2011, respectively. TNCRRG issues two classes of capital stock, Class A and Class B. Each shareholder owns only one share of Class A stock, which has voting privileges, and the appropriate number of non-voting Class B shares to provide ownership interest in proportion to the amount of capital contributed and the amount of premiums paid by each insured. TNCRRG currently calculates book value per share (as shown on the statement of changes in shareholders’ equity) as total shareholders’ equity less Class A shares at par, divided by the total number of Class B shares outstanding. Additionally, effective on September 1, 2007, each new shareholder is required to contribute the greater of 10% of its first-year premium or the amount necessary to purchase one full Class A and one full Class B share. In certain prior years, policyholder dividends were distributed in the form of additional shares of Class B stock. In shareholders’ equity, for presentation purposes, additional paid-in capital resulting from these policyholder dividend transactions has been separated from other additional paid-in capital. There were no share based dividend distributions during 2012 and 2011. Pursuant to the terms of the participation agreement, a withdrawing shareholder shall, on the effective date of the withdrawal, tender for purchase by TNCRRG the share of Class A stock held by the shareholder. In addition, at the earlier of (a) five years after the effective date of withdrawal, or (b) on the date on which TNCRRG’s actuary certifies that the covered claims of the

t w e n t y

withdrawing shareholder are closed, the withdrawing shareholder shall tender for purchase by TNCRRG the shares of Class B stock held by the shareholder. Any disbursement to the shareholder is subject to approval by the Department. No shareholders withdrew from the program in 2012. During 2011, two shareholders withdrew from the program and tendered their Class A shares to TNCRRG. Also during 2011, one shareholder rejoined the program. The withdrawing shareholders’ Class B shares will remain in shareholders’ equity until the closing date, anticipated during 2016. As a result of the withdrawals, TNCRRG estimated a payable to the withdrawing shareholders of $282,728 at December 31, 2012 and 2011, which represents the value of the Class B shares held by the withdrawing shareholders. As part of regulatory filings, TNCRRG is required to disclose its risk-based capital (RBC) requirements. The NAIC develops the RBC program to enable regulators to take appropriate and timely regulatory actions. RBC is a series of dynamic surplus-related formulas that contain a variety of factors that are applied to financial balances based on a degree of certain risks, such as asset, credit and underwriting risks. At December 31, 2011, TNCRRG’s statutory capital and surplus was at the Company Action Level, which required TNCRRG to file a plan with the insurance commissioner that explained its financial condition and how it proposed to correct its deficiency. A letter explaining the circumstances surrounding the deficiency was filed and approved by the Department on February 23, 2012. At December 31, 2012, TNCRRG is above any action level. There are no differences, other than rounding, between 2012 and 2011 net income (loss) and shareholders’ equity as reported in the NAIC Annual Statement and the corresponding amounts reported herein.

s e v e n


Officers

and

Directors

Rev. Jay C. Haskin Chairman of the Board Corporate Secretary Diocese of Burlington Director since 1987 Michael J. Bemi President and CEO Ex Officio Richard J. McKenna Christian Brothers Services Director since 2010 John M. Scholl Vice President Diocese of Buffalo Director since 2004 John J. Maxwell Treasurer Diocese of Springfield, IL Director since 1998

ROW 2(left to right): Monica L. Adams, Richard J. McKenna, Brian T. Cosgrove. ROW 3(left to right): Rev. Jay C. Haskin, John J. Maxwell. ROW 4(left to right): Joseph F. McEnness, John M. Scholl, Rev. Mr. Jeff P. Trumps.

t w e n t y

STAFF Michael J. Bemi President and CEO Sandra M. Barutha Director of Underwriting Stephen J. Henne Director of Claims Management Patricia L. Neal Director of the VIRTUS Programs George Tarulis Director of Relationship Management

Barbara A. Walsh Archdiocese of Cincinnati Director since 2002

SERVICE PROVIDERS Actuary Milliman, Inc. Auditors Johnson Lambert LLP Captive Manager JLT Towner

Brian T. Cosgrove Diocese of Brooklyn Director since 2003

Investment Consultant Hewitt, EnnisKnupp, Inc.

David S. Stewart Diocese of Pittsburgh Director since 2004

Investment Managers Baird Advisors State Street Global Advisors

Rev. Mr. Jeff P. Trumps Diocese of Lafayette Director since 2006

Corporate Counsel Downs Rachlin & Martin, PLLC

Joseph F. McEnness Archdiocese of Boston Director since 2008

Episcopal Moderator Emeritus Most Rev. Raymond J. Boland, D. D.

Rev. Jon J. Plavcan Diocese of Gary Director since 2001

Monica L. Adams Diocese of Kansas City– St. Joseph Director since 2003

ROW 1(left to right): Michael J. Bemi, David S. Stewart, Rev. Jon J. Plavcan, Barbara A. Walsh.

Episcopal Moderator Most Rev. Mark L. Bartchak Diocese of Altoona – Johnstown

e i g h t

Coverage Counsel Hal O. Carroll, Esq. Brokerage Consultants Willis North America


Shareholder

Locations

ARKANSAS

MAINE

NEW MEXICO

PENNSYLVANIA

Diocese of Little Rock

Diocese of Portland

Diocese of Las Cruces

CALIFORNIA

MASSACHUSETTS

NEW YORK

Diocese of San Jose

Archdiocese of Boston Diocese of Springfield

Diocese of Albany Diocese of Brooklyn Diocese of Buffalo Diocese of Ogdensburg Diocese of Rockville Centre Diocese of Syracuse

Archdiocese of Philadelphia Ukrainian Catholic Archeparchy of Philadelphia Diocese of Allentown Diocese of Altoona-Johnstown Diocese of Erie Diocese of Greensburg Diocese of Harrisburg Diocese of Pittsburgh Diocese of Scranton

COLORADO Archdiocese of Denver

ILLINOIS

MINNESOTA Diocese of Winona

MISSOURI

Christian Brothers Risk Pooling Trust Diocese of Peoria Diocese of Rockford Diocese of Springfield

Diocese of Jefferson City Diocese of Kansas City– St. Joseph

INDIANA

Diocese of Manchester

Archdiocese of Indianapolis Diocese of Evansville Diocese of Gary

IOWA Diocese of Sioux City

LOUISIANA

NEW HAMPSHIRE NEW JERSEY Archdiocese of Newark Diocese of Camden Diocese of Metuchen Diocese of Paterson Diocese of Trenton

NORTH CAROLINA Diocese of Raleigh

OHIO Archdiocese of Cincinnati Diocese of Columbus Diocese of Youngstown

OKLAHOMA Archdiocese of Oklahoma City Diocese of Tulsa

Diocese of Lafayette Diocese of Shreveport

TEXAS Diocese of Austin Diocese of Beaumont Diocese of Brownsville Diocese of Dallas Diocese of El Paso Diocese of Victoria

VERMONT Diocese of Burlington

OREGON

VIRGINIA

Archdiocese of Portland

Diocese of Richmond

WISCONSIN Diocese of Madison

t w e n t y

n i n e


CORPORATE OFFICE 801 Warrenville Road, Suite 175 Lisle, IL 60532-4334 Phone: 630.725.0986 Fax: 630.725.1374 www.nationalcatholic.org www.virtus.org

VIRTUS is a registered trademark of The National Catholic Risk Retention Group, Inc. in the United States. PROTECTING GOD’S CHILDREN is a registered trademark of The National Catholic Risk Retention Group, Inc. © 2012 by The National Catholic Risk Retention Group, Inc. All rights reserved.

Annual Report 2012  

The National Catholic Risk Retention Group 2012 Annual Report

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