A Message From Our Supreme Knight

Dear Brother Knights:

Please excuse me from including my message this month in the bulletin. I think it is important to read the following message from our Supreme Knight, Brother Carl Anderson

YOUR BROTHER AND FIELD AGENT,
Brian J. Olivier, FIC, SKC, MDRT
Knights of Columbus, Supreme Field Agent Representative
(925) 676-7000

BY: CARL A. ANDERSON, SUPREME KNIGHT

Our Commitment to You

Greed is not exactly a recent phenomenon - it's right there on the age-old list of the "seven deadly sins." In any event, it's been very much in evidence lately in the financial markets, which have been in a panic because of the failure of some lenders who specialized in so-called sub-prime mortgages.

If the problem was limited to companies that unwisely provided mortgages to people who couldn't afford them, then those companies would simply either have to change their ways or go out of business. But in practice, their loans are sold to investors. And in the last few years, some investment firms have packaged these risky mortgage loans into extremely complex investment vehicles that offer modestly higher interest rates, but conceal the real risk involved.

Some investors, lured by the higher rates of return, and lulled into complacency by assurances that "cutting edge" financial engineering had minimized the risks involved, allowed a touch of avarice to cloud their judgment. Some of those investors were banks, and some were insurance companies.

The Knights of Columbus insurance program has more than $64 billion of life insurance in force and we are among the Fortune 1000. Like all such companies, we invest the premiums paid by our certificate holders in a variety of investment vehicles. Today we have nearly $14 billion of assets under management. But we have always maintained very high standards for the investments we make, putting our assets only into investment-grade bonds and the highest-quality equities. We do not invest in high risk vehicles such as derivatives and junk bonds, nor do we invest in the types of structured transactions that are currently causing such turmoil in the markets. We stay away from them not because we don't understand them - but because we do understand them - and the risk they entail.

Ours is an insurance program that is designed by brother Knights for brother Knights. And we believe that your best interests are served by a prudent and conservative investment philosophy. When Standard & Poor's renewed our AAA rating again last month, they noted that our approach produces "slightly lower investment yields," but found that overall, we have "consistently generated good investment returns, with low exposure to credit risk." And in a world where "liquidity" is suddenly a major concern in the financial community, S&P declared that we "have very strong liquidity," which "is further enhanced by the high credit quality of [our] investment portfolio."

A few days ago, A.M. Best, which also gave us its top rating again this year, asked us to report our investment in sub-prime mortgages over the past three years. The answer, of course, was zero. Did we have any investments during the same time period in the types of structured bond and loan packages that have sent shock waves through the markets? Once again, we were able to report that we had none at all. Some companies cannot give that answer.

Because we put our members' interests first, and because we earn an excellent return on our investments the hard way - by seeking out the highest-quality investment vehicles - we are able to offer you, our members, a rock-solid foundation on which to build your financial future and protect your family. And we do it while staying well away from any of the seven deadly sins. That is our commitment to you and your family.