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[W. Kenny Massey | President and CEO
Our CreedThere is a destiny that makes us brothers; None goes his way alone;All that we send into the lives of others. Comes back into our own.
Edwin Markham circa 1939
Our VisionModern Woodmen of America will grow nationwide through members helping members create a better tomorrow for themselves, their families and others.
Our MissionTo improve the quality of lifefor our members.
Board of Directors
Lori A. Newberg | Director, Lenexa, Kansas
William D. Keltner | Director, Jackson, Tennessee
David B. Emrick | Director, Davenport, Iowa
Robert C. Pollex | Director, Perrysburg, Ohio
W. Kenny Massey | President, LeClaire, Iowa
Gary L. Medd* | Director, Davenport, Iowa
Jerald J. Lyphout | National Secretary, East Moline, Illinois
Albert T. Hurst Jr.* | Director, Little Rock, Arkansas
Darcy G. Callas | Director, Moline, Illinois
From left to right
Maybe it’s because I have young grandsons, but lately
I’ve thought a lot about the story of The Three Little Pigs.
(No, the boys are not especially messy!)
In the story, the first little pig built a house of straw, and the
second built a house of sticks. Both met their demise when
the wolf came to the door and easily blew their houses
down. The third used bricks and built a stable foundation
for his future. He outsmarted the wolf and lived happily
ever after.
That fable shares a lot of truths. A stable foundation can
withstand tumultuous times. And a steady, guiding hand
keeps the focus on the long term. I’m happy to share
Modern Woodmen of America’s 2016 annual report and
showcase the work done to build on Modern Woodmen’s
strong foundation for long-term success.
Joseph P. Sztapka Sioux Falls, South Dakota
Appointed 2017
James E. Temperley Bonita Springs, Florida
Appointed 2017
2016
Stability – the foundation of tomorrow
Annual Report*Concluded term Dec. 31, 2016
Kenny and Tammy Massey and their grandsons, Will, Michael, J.J. and C.K.
24 25
Social, educational and volunteer events in 2016
Matching Fund Program
From Memorial Day to Sept. 11, 2016, Modern Woodmen
members across the country held events to thank the first
responders, military members, veterans and other heroes
who serve and protect our towns.
Through Modern Woodmen’s Be an Everyday Hero project,
89 chapters, Summit chapters and youth service clubs
held 273 service projects and Matching Fund events to
honor these heroes and all they do for their communities.
More than 2,000 firefighters, police officers, medical
personnel, military members, veterans and others were
recognized throughout the year.
Created to observe the 15th anniversary of 9/11, the
project also made an impact in Modern Woodmen’s home
office community, the Quad Cities. Modern Woodmen’s
home office hosted a 9/11 memorial exhibit, and
employees planned a patriotic march of heroes on Sept.
11, funded the purchase of a local K-9 officer and raised
more than
$7,000 to support future heroes through a career
exploration program.
Make an ImpactFun and fulfillment through member chapters
Volunteer, socialize and learn with Modern
Woodmen! Through our Make An Impact
initiative, chapters, Summit chapters and
youth service clubs are offering a wider variety
of meaningful (and fun!) experiences for
members of all ages. Join us for one activity, or
all of them! And ask your local chapter leader
or financial representative how you can get
involved with a chapter or its chapter board
– great, easy ways to give back to local causes
and volunteer projects in your community.
Let’s make an impact!
Matching Fund ProgramEvents supporting members’ communities top $32* million
Modern Woodmen members donate more
than just dollars through our Matching
Fund Program. With their chapters,
Summit chapters and youth service clubs,
members help identify local organizations
and individuals in need – and they’re active
in raising money to meet those needs.
Members volunteer to plan, run or support
fundraisers such as bake sales, barbeques, silent
auctions or spaghetti dinners. To make an even
Member activities
Local heroes honored with Be an Everyday Hero project
26 2016 Annual Report
Chapters
at social, educational and volunteer events for member families.
2,466 active
chapters age 55+ participated.
Summit Chapters
283 active chapters
Project recognized the 15th anniversary of 9/11
54,216 members
273 service projects and fundraisers
2,000 heroes recognized
More than
$357,000raised nationally
Service Projects/Volunteer Activities
{ }
9,094 hands-on events
Youth Service Clubs782 active clubs nationwide
87,419 participants
562,388 volunteer hours
members’ communities$1.98 MILLION
805,575 attendees
Youth Educational ProgramsCourses on financial literacy, exercise and nutrition, and more reached
1.3 million children.
$32.2* million contributed
to community projects and individuals
in need.
3,441 fundraising events
Modern Woodmen’s Matching Fund Program
matches money raised through qualifying events,
up to $2,500 annually for each chapter and $500
for each youth service club.
* Includes total dollars raised by member chapters and youth clubs partnering with community groups.
BIGGER IMPACT, Nearly
27
Final Wishes benefitFree tool to help you share your wishes with loved ones
It can be hard to know where to start when it comes to end-of-life
planning. Now, you can start at modernwoodmen.org.
The Final Wishes benefit is available to members as an online
tool, giving you free access to a wealth of information. The website
also helps you complete several personal planning documents.
Save them to your computer for future reference and share them
with your loved ones to communicate your end-of-life wishes.
Final Wishes contains helpful resources, such as:
Relevant to today’s members of all life stages
Member benefits
100 Percent Modern Woodmen Family Benefit
12,829 children
received books for birthdays.
Children and adolescents
Single adults
Families
50 and older
Kobi Finley, Ormond Beach, Fla., likes the fraternal “giving back” side of Modern Woodmen. Each year, her daughters receive birthday books through the 100 Percent Modern Woodmen Family Benefit. “It’s a nice gesture,” Kobi says. “You just don’t expect financial companies to care that much.”
Accelerated Benefits
in premiums and interest paid for terminally ill members.
$62,897
College Scholarship Program
$448,625 awarded to 258 member students.
Final Wishes(see sidebar)
1,593 members planned their final wishes.
Fraternal Aid Fund
$137,904 in premiums paid for members who were victims of medical, fire or natural disasters.
Documents for end-of-life financial and funeral planning.
Information on choosing an executor and the executor’s role.
Advice on talking about final wishes and sharing plans with others.
Tools to help loved ones make notifications and financial decisions after your death.
Make An Impact ScholarshipsNew college scholarship program promotes community impact
Modern Woodmen introduced a brand-new college scholarship program
in fall 2016. With more emphasis on community involvement, the new
program supports our Make An Impact fraternal initiative and rewards
member students for their volunteer activities.
Two types of scholarships allow members to choose the path
that’s right for them. The new program also features an increased number
of scholarships and higher yearly scholarship amounts.
28 2016 Annual Report Modern Woodmen of America | Stability – the foundation of tomorrow 29
Member benefits for all life stages — learn more at modernwoodmen.org.
Member Discounts
Special savings on gym memberships, park passes, health screenings and more.
Orphan Benefit
$75,900in financial support for 26 orphans.
Newborn Benefit
$35,000 of life insurance issued
for infants in poor health.
Promises are important to you, our members, and to Modern Woodmen. Since 1883, we’ve been committed to serving members like you, your families and your communities. Here’s a recap of what we accomplished together in 2016.
OperationsLife insurance in force: $38.9 billionThe total amount of life insurance owned by members to protect their families.
Assets: $15.4 billion 4.4 percent increase from 2015 (See a breakdown of our investments on Page 35.)
Life insurance, annuity and other certificate reserves: $12 billionFunds held to guarantee future benefits to members.
Payments and benefits to members: $871 millionIncludes death benefits, annuity payments and surrender benefits.
Dividend payments: $7.2 millionRefunded to life insurance and annuity certificates.
Surplus and special reserves: $1.6 billionTo provide additional safety for members – and funds for future growth.
Solvency ratio: 111.86 percentFor every $100 of liabilities (promises made to members), Modern Woodmen has $111.86 of assets. The industry average solvency ratio is 105.95.*
Brian Boozer’s parents bought life insurance for their son when he was just 1 day old. “I always thought it was wise of them,” Brian says. Now grown with a child of his own, the member from Gadsden, Alabama, turned to Modern Woodmen to protect his young family for the future.
MEMBER STORY
Members nationwide: Nearly 764,000
2,466 adult chapters 283 Summit chapters (for members age 55+)
782 youth service clubs
Part of:
Total fraternal expenditures: $21.7 millionFor family-oriented member activities, benefits and programs, such as disaster relief assistance, college scholarships, social, educational and volunteer service programs, and educational programs for schools and youth groups.
{
Walt Willet makes an impact with his Modern Woodmen youth service club. Members of the club like to have fun while helping others in their Indianapolis community. The kids have participated in food drives, helped clean up the neighborhood and shown support for the local fire department.
Fraternalism
MEMBER STORY
Angel Ford’s Cheraw, South Carolina, community was shocked by the sudden death of her husband, Terrance. I was like, ‘Oh my God. How am I going to take care of three kids by myself?’” remembers Angel. Then she discovered the protection Terrance left in the form of Modern Woodmen life insurance. The death benefit helped her family stay in their home and go on with life.
MEMBER STORY
Life insurance products • Whole life insurance• Universal life insurance• Term life insurance
Annuity products • Fixed annuities• Immediate annuities• Variable annuities1
Investment products1
• Mutual funds• Retirement plans – Traditional IRA, Roth IRA,
SEP-IRA, SIMPLE IRA, 401(k), 403(b) TSA• College savings plans – 529 college savings plans,
Coverdell education savings accounts, UGMA/UTMA accounts
• Brokerage services
Insurance products2
• Dental and vision insurance• Disability income insurance• Group employee benefits• Group voluntary benefits• Impaired risk life insurance• International life and health insurance• Long-term care insurance• Health insurance• Medicare supplement insurance• Medicare Advantage and prescription drug plans
Banking products3
• Checking accounts• Savings accounts• Certificates of deposit• First mortgage home loans (new purchases
and refinancing included)• Home equity loans• Visa® credit cards and gift cards• Health savings accounts
1 Securities offered through MWA Financial Services Inc., a wholly owned subsidiary of Modern Woodmen of America. Member: FINRA, SIPC.
Individual agents may not be licensed to sell all products. 2 Not issued by Modern Woodmen of America. Brokered insurance products available through MWAGIA Inc., a Modern Woodmen subsidiary. Product availability varies by state.3 Modern Woodmen Bank is a marketing name for MWABank, a wholly owned subsidiary of Modern Woodmen of America. Annuities, insurance, retirement plans, mutual funds and other securities are not insured by the FDIC or any other federal government agency, are not obligations or deposits for MWABank, and are not guaranteed by MWABank. These products involve risk, including the possible loss of principal invested. MWABank is an Equal Housing Lender.
ProductsModern Woodmen can help you meet a wide range of needs through a wide range of financial products.
our mission is to improve quality of life
for our members.
Building on a strong foundation
financially and fraternallyProtecting members
- W. Kenny Massey, Modern Woodmen of America president and CEO
[*Source: Standard Analytical Service, Inc., 2016
We do everything with them in mind.”
“Financially and fraternally, [
30 2016 Annual Report Modern Woodmen of America | Stability – the foundation of tomorrow 31
STATEMENT OF OPERATIONS
Income:
Premiums and other considerations:
Life and annuities
Other
Investment income, net of expenses
Amortization of interest maintenance reserve
Other income
Total income
Benefits and expenses:
Benefits:
Life and annuities
Other
Increase in certificate reserves
Employees’ and fieldworkers’ benefit plans
Commissions
General insurance expenses
Insurance, taxes, licenses and fees
Fraternal expenses
Net transfers to or (from) Separate Accounts
Total benefits and expenses
Net gain from operations before dividends to
certificateholders and net realized capital gains
Dividends to certificateholders
Net gain from operations before net
realized capital gains
Net realized capital gains
Net income
2016
$1,041,105
1,965
570,158
12,566
7,901
1,633,695
860,789
10,327
473,037
5,572
62,979
134,216
7,013
21,673
45,585
1,621,191
12,504
7,228
5,276
22,969
$28,245
STATEMENT OF CASH FLOWS
Cash from operations:
Premium and annuity considerations
Investment income, net
Other income
Total cash received from operations
Benefit and loss related payments
Commissions and other expenses paid
Net transfers to or (from) Separate Accounts
Dividends paid to certificateholders
Total cash paid from operations
Net cash from operations
Cash used in investments:
Proceeds from investments sold or matured:
Bonds
Stocks
Mortgage loans
Real estate
Other invested assets
Miscellaneous proceeds
Total investment proceeds
Cash applied, cost of investments acquired:
Bonds
Stocks
Mortgage loans
Real estate
Other invested assets
Miscellaneous applications
Total investment applications
Net increase in certificate loans and liens
Net cash used in investments
Other cash provided by (used in) financingactivities and other miscellaneous sources
Increase (decrease) in cash and short-term investments
Cash and short-term investments,beginning of year
Cash and short-term investments, end of year
2016
$1,042,874
566,911
7,901
1,617,686
865,939
223,095
48,524
9,028
1,146,586
471,100
1,213,997
102,667
61,950
50
47,440
71,145
1,497,249
1,682,510
91,183
95,758
403
66,647
0
1,936,501
(7,084)
(432,168)
16,263
55,195
126,386
$181,581
Modern Woodmen of America – Year ended Dec. 31, 2016 (dollars in thousands) unaudited
STATEMENT OF SURPLUS
Appropriated:
Balance at beginning of year
Transfer (to) from unassigned surplus
Balance at end of year
Unassigned:
Balance at beginning of year
Net income from operations
Net unrealized capital gains
Change in asset valuation reserve
Change in nonadmitted assets
Transfer (to) from appropriated surplus
Other changes, net
Balance at end of year
Total surplus
2016
$278,776
(543)
278,233
1,312,475
28,245
33,263
(10,408)
4,412
543
(13,981)
1,354,549
$1,632,782
2015
$277,015
1,761
278,776
1,202,031
50,291
(28,580)
55,900
(9,526)
(1,761)
44,120
1,312,475
$1,591,251
2015
$1,056,454
559,090
9,993
1,625,537
810,947
204,078
60,769
14,794
1,090,588
534,949
1,140,996
147,080
44,823
0
59,899
6,045
1,398,843
1,763,765
89,502
39,967
28
51,955
0
1,945,217
(5,095)
(541,279)
32,698
26,368
100,018
$126,386
2015
$1,054,369
4,068
565,383
11,287
9,994
1,645,101
824,622
12,105
489,947
5,524
63,428
117,560
7,380
19,200
58,125
1,597,891
47,210
9,294
37,916
12,375
$50,291
2016
$12,297,018
2,275
32,952
3,373
7,300
121
394,530
240,029
56,066
48,593
249,994
436,268
13,768,519
278,233
1,354,549
1,632,782
15,401,301
BALANCE SHEETS
Assets
Investments:
Bonds
Common stocks
Mortgage loans
Real estate and home office property
Cash and short-term investments
Certificateholders’ loans
Securities lending reinvested collateral
Other invested assets
Total investments
Investment income due and accrued
Electronic data processing equipment
Other assets
Separate account assets
Total assets
Financial statements
2016
$12,422,902
788,086
523,244
24,407
181,581
164,478
394,530
332,218
14,831,446
128,614
2,178
2,795
436,268
15,401,301
Liabilities and Surplus
Liabilities:
Aggregate reserves for certificates and contracts:
Life and annuity
Accident and health
Certificate and contract claims
Other certificateholders’ funds
Dividends payable to certificateholders
Accrued commissions, general expenses and taxes
Payable for securities lending collateral
Other liabilities
Liability for employees’ and fieldworkers’ benefits
Interest maintenance reserve
Asset valuation reserve
Separate account liabilities
Total liabilities
Surplus:
Appropriated
Unassigned
Total surplus
Total liabilities and surplus
2015
$11,941,085
745,126
489,386
26,014
126,386
171,210
465,676
295,220
14,260,103
128,731
2,992
2,720
359,968
$14,754,514
2015
$11,787,522
2,536
36,885
3,540
9,100
3,671
465,676
165,789
53,032
35,958
239,586
359,968
13,163,263
278,776
1,312,475
1,591,251
$14,754,514
32 2016 Annual Report Modern Woodmen of America | Stability – the foundation of tomorrow 33
2016 Financial Highlights
Modern Woodmen’s increasing asset base is a strength.
2012 2013 2014 2015 2016
$15.5
$15.0
$14.5
$14.0
$13.5
$13.0
$12.5
$12.0
$11.5
$11.0
$10.5
$10.0
$9.5
$9.0
$12.39
$14.75
$15.40
$13.40
$14.13
Growth in AssetsDollars in billions
Fraternal expenditures for the year reflect strong usage of benefits and programs by members.
2012 2013 2014 2015 2016
$19.20
$21.67
$19.83$20.04
$19.03
$21.5
$21.0
$20.5
$20.0
$19.5
$19.0
$18.5
$18.0
$17.5
$17.0
$16.5
$16.0
$15.5
$15.0
$14.5
$14.0
$13.5
Fraternal ExpendituresDollars in millions
$39
$38
$37
$36
$35
$34
$33
$32
$31
2012 2013 2014 2015 2016
$37.27
$38.92
$38.07
$36.32
$35.53
Life insurance in force shows consistent growth and increased protection for members.
Life Insurance in ForceDollars in billions
Quality Investments Assets are invested primarily in high-quality, low-risk investments. As of Dec. 31, 2016,
approximately 99.3 percent of bonds were of high or medium quality.
Bonds
Certificate Loans, Cash and Other Assets
Mortgage Loans and Real Estate
Common Stocks
84%
7%5%
4%
34 2016 Annual Report Modern Woodmen of America | Stability – the foundation of tomorrow 35