Standing Strong

Bridging Economic Uncertainty Through Capital Strength

2009: A Year of Capital Growth.

Dear Policyholder:

The mission of Security Mutual Life Insurance Company of New York is to help protect you, our policyholders, against life’s uncertainties. For more than 123 years, our life insurance and annuity products have helped policyholders bridge the troubled waters of economic uncertainty. In addition, Security Mutual has paid dividends to our participating life insurance policyholders for 118 consecutive years. We are proud of our history, yet our focus is on the future as we stand ready to serve you—whether you need us today, tomorrow or many years from now.

Because the strength of your insurance company is so important, I would like to share with you some key points about your company and its performance during 2009:

Financial Strength

• Increased Capital. Security Mutual has historically maintained a strong capital position (capital is defined as Statutory Surplus plus our Asset Valuation Reserve), and we are pleased to report that during 2009 we increased our capital by 8.5 percent, resulting in a year-end capital position of $119.2 million. Our capital base is supported by our investments and operating results, including mortality experience, persistency and expense control.
• Conservative Investment Philosophy. Security Mutual continues to maintain conservative investment guidelines and policies with the focus on building a strong balance sheet. We firmly believe that a conservative course is necessary under current economic conditions.
  
  Our asset portfolio is high-quality, well diversified and conservative, with 98.7 percent of our bond portfolio composed of investment-grade bonds.
  
  A portion of our investment portfolio is allocated to commercial mortgages. The quality of our commercial mortgage portfolio is reflected in the fact that during 2009, we had no foreclosures and no delinquencies. However, because we believe the commercial mortgage segment generally is under significant pressure in the current economic environment, we reduced our portfolio holdings during 2009 and incurred no losses in doing so.
  
• 118th Consecutive Year of Paying Dividends.¹ Security Mutual has paid a dividend to eligible participating policyholders every year since 1892. In 2010, total dividends are projected to be approximately $19.5 million.
• Growth of Assets. Assets grew substantially during the year, increasing by $205 million. As we closed 2009, our total assets had grown to $2.4 billion, a 9.2 percent increase over last year.

Ratings²

During 2009, the A.M. Best Company reaffirmed our “A” (Excellent) financial strength rating. A. M. Best has also awarded Security Mutual the “Anniversary BestMark” logo. This logo signifies those elite companies with a longstanding A.M. Best rating of “A” or higher. Security Mutual has maintained its “A” rating since 1967—for 42 years. For more information about Security Mutual’s financial strength ratings—please visit our ratings page.

Products

• Diverse Markets. Security Mutual’s markets are well diversified. We operate in the advanced markets of
  estate planning, retirement planning, and business continuation insurance. We serve these markets with an array of traditional insurance products including universal life, whole life, term life and annuities. Through our Benefits Division, we also offer group and individual voluntary products to credit union members and to participants in employer-sponsored plans.
  
  Security Mutual distributes its products through
  professional distributors who can help you make
  informed choices regarding your insurance needs.
• Strong Products Providing Flexibility You Can Choose. Security Mutual is committed to providing products that will serve particular needs. To address our customers’ concerns about outliving financial resources, this past year we introduced an innovative single premium immediate annuity that not only provides a guaranteed monthly income, but also allows the annuitant/owner to receive, in advance, a portion of future annuity payments. To learn more about how you can guarantee a monthly income for life—yet retain the ability to access cash to meet unexpected needs—contact your individual Security Mutual representative. You may also contact our Marketing Department at 1-800-346-7171. Please click here for an overview of our products and services.

Corporate Management

In keeping with the Company’s long-held conservative management philosophy, our Enterprise Risk Management Team is focused on continually looking for ways to enhance company performance while managing risk. For example, Security Mutual has had only minimal exposure to sub-prime mortgages.

Our Board of Directors brings a great deal of knowledge and experience to the governance of Security Mutual. Please click here to visit our Board of Directors page for information about each of our directors.

This past year provided challenges and opportunities. Bridging economic challenges takes careful planning, both corporately and personally. We thank you for placing your trust in Security Mutual Life. We are committed to continually earning that trust and to generating better value and service for you, our policyholders, as we help protect you against life’s uncertainties.

Bruce W. Boyea
Chairman, President and Chief Executive Officer

2009 Summary (all figures in thousands)
Total Revenue		$ 472,852
Total Gross Payments to Policyholders3		242,362
Net Operating Gain after F.I.T.		4,298
Life Insurance in Force		30,395,147
First-Year Sales
• Individual	$ 36,350
• Group	1,351
• Annuity and    Accumulation Products	153,979
Total		191,680
Assets		2,426,937
Bonds4 (As of 12/31/09) Bond Quality – % of Bond Portfolio Grade 1 – Highest 66.06% Grade 2 – High 32.66% Grade 3 – Medium 1.19% Grade 4, 5, 6 – Low 0.09%

To review Security Mutual's 2009 Financial Charts, please click here.

To view the company's Privacy Notice, please click here.

¹ The payment of dividends is not guaranteed, and the amount credited, if any, will rise and fall depending on experience factors such as investment income, taxes, mortality and expenses.
² A.M. Best rating is current as of the date of publication. Ratings reflect a rating agency’s opinion of a company’s financial strength and ability to meet its obligations to its policyholders. A rating is not a recommendation of a company or any specific policy form. A.M. Best’s “A” rating is the third highest on a 15-step rating scale. For further information about Security Mutual’s ratings, please click here.
³ Includes policyholder dividends.
⁴The National Association of Insurance Commissioners (NAIC) employs a bond-rating system ranging from 1 - 6, with NAIC Classification 1 defined as Highest Quality, NAIC Classification 2 defined as High Quality, and NAIC Classification 3 defined as Medium Quality. Classifications 4 - 6 range from Low Quality to In or Near Default.

Click here for the print version of the 2010 Letter to Policyholders. (File size 332 KB)