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AB investment funds beat benchmarks; trustees approve insurance increases

WASHINGTON (BP)–The majority of investment funds of the Southern Baptist Convention’s Annuity Board “met or beat their respective investment standards during the first half of this year,” board President O.S. Hawkins told trustees during their July 29-30 meeting in Washington, D.C.

In trustee action, increases in the board’s insurance premiums were approved as healthcare costs continue to post steep increases.

Addressing volatile conditions in the nation’s economy, Hawkins said, “While the investment markets have suffered through the worst first-half year since the 1973-74 bear market, our investment approach and disciplines have remained true to form and we continue to provide our customers with the highest standards of investment practices in the industry today. …

“In the midst of significant difficulties in the financial markets, the majority of AB Funds Trust investment funds met or beat their respective investment standards during the first half of this year,” Hawkins said.

“Our multi-manager, multi-asset, multi-style approach to investment management,” he said, “provides significant diversification which helps to mitigate investment risk for our participants.”

Board treasurer and chief financial officer Jeffrey P. Billinger reported total assets were $6.5 billion at June 30, 2002, compared to $7.4 billion at June 30, 2001. Net operating expenses were favorable to the budget for the first six months of 2002, reflecting a commitment to operate as efficiently as possible. Payments to relief recipients were up for the quarter, resulting from the trustee-approved increase in relief benefits from $75 per person to $200 for single relief recipients and $265 for married recipients.

In healthcare, trustees approved a Jan. 1, 2003, rate increase for participants in the Board’s Personal Security Program and Employer Security Program medical plans including Medicare supplement plans. Participants in the Personal Security Program will receive a 35.1 percent increase while smaller groups in the Employer Security Program will receive a 12-month rate increase of 31.4 percent. Insurance marketing personnel will communicate specific increases to larger groups in the Employer Security Program.

Participants in the Medicare Supplement plans also will receive increases, 9.5 percent in the Seniors Plan and 28.5 percent in the Seniors Plus Plan.

There will be no rate change for dental and life insurance products as well as no rate increase in long-term disability plans.

“While we understand the hardship that these rate increases may impose on our participants, we want to stress that the Annuity Board has never canceled coverage for a participant except for failure to pay premiums,” Douglas D. Day, executive officer for benefit services, explained. “Additionally, these rate increases are comparable to industry standards. Larger organizations that have far greater buying power than we do are facing comparable rate increases.”

Day also noted to trustees, “The Annuity Board, like all other companies, has to deal with the rising healthcare cost and the changing healthcare market. The funding for the Annuity Board’s indemnity medical plans comes directly from monthly payments for coverage received from participants or their employers.” The Annuity Board determines the rates for its medical plans by analyzing the past 12 months of claims along with estimated medical costs increases for the future. The rates for the medical plans are then set at a level to cover the expected claims and expenses. The Annuity Board receives no Cooperative Program funds for the life and medical programs. Participants have complete portability within the medical plans should they move from one employer to another within the Southern Baptist Convention.

Hawkins told trustees, “We continue to diligently search for affordable solutions to the current healthcare crisis. Our staff, along with our consultants, are reviewing plan designs and benefit structures to see how we can assist our participants in securing the medical coverage they need to protect their families.”

Hawkins called for a three-prong approach to the current insurance crisis. He told trustees, “First, the Annuity Board needs to take responsibility to thoroughly research and provide medical programs that meet the needs of our participants while being ever vigilant to the cost impact on our participants. Second, our participants need to take responsibility for their own wellness. Over one-half of the past year’s claims were related to situations that could have been prevented. Studies show that the majority of ministers are overweight or obese and do not exercise. The Annuity Board staff is engaged in a wellness initiative that emphasizes regular exercise and weight loss. Finally, local churches need to take responsibility to provide adequate benefits for their ministers and staff apart from their salaries when possible. Life, medical and disability coverage not only protects the minister and his family but also protects the church.” The Annuity Board provides resources to assist churches in planning financial support for their ministers and staff.

John R. Jones, chief operating officer of the Annuity Board, reported on operations of the Dallas-based board through the first half of the year. He provided updates related to the development of enhanced services that have been made available to participants and employers. “More detailed transaction-oriented information is now available, including graphic representations which have been added to the website allowing participants to access pie charts displaying their retirement account asset allocation,” Jones said.

Jones also reported on a competitiveness study performed by William Mercer consultants comparing the Annuity Board’s services to other financial services providers. The study highlighted several distinctives of the Annuity Board including its “high touch” personal service, church plan expertise, competitive investment returns over the last two years, and its highly competitive annuity conversion rate.

The trustees’ relief committee considered 62 relief requests. They approved 21 two-year monthly grants, 1 three-month monthly grant, 1 three-month expense grant, 1 four-month expense grant and 4 two-year expense grants. Thirty-seven individuals were declined for being outside guidelines. As a result of expanded guidelines, approved by trustees at the February 2002 meeting, 550 recipients were added to the Financial Assistance roll between March 1 and July 18, 2002.

“We are pleased to be able to increase our assistance to these servants of our Lord,” Hawkins said. “We are committed to their continued support.”

Trustees welcomed six new trustees elected during the SBC annual meeting in St. Louis: Gregory A. Bibb of Kentucky, Barry N. Devine of Maryland/Delaware, M. Truman Fallaw of South Carolina, Kenneth R. Howe of Missouri, Glenn M. Rogers of Nevada and Robert L. Sorrell of Tennessee.

The trustees’ next meeting will be Nov. 4-5 in Dallas.

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  • Curtis D. Sharp