Protection, Strength, Reliability

In these complicated and uncertain times, you can count on Security Mutual to help provide for your financial security. Protecting families and businesses during periods of prosperity, as well as during wars and times of economic uncertainty, has made the name Security Mutual synonymous with reliability. We are entering our 122nd year of operation in 2008 in the strongest financial position in our history, well positioned to continue helping protect our policyholders against life’s uncertainties. Protection, Strength, and Reliability continue to be the hallmarks of our company.

Protection

Security Mutual’s corporate mission is to provide sound and
competitively priced products to help guard against financial
burdens resulting from death, disability, or retirement. We carry out this mission through the development and sale of life and disability insurance and annuity contracts issued to individuals and groups. Our products are key to this mission of protecting and assisting policyholders in a variety of ways:

• Providing funds to family members and survivors in the event of the insured’s death.
• Helping to save for retirement.
• Providing funds to business owners to fund the buyout of deceased co-owners.
• Creating estate plans that incorporate tax planning, accumulation planning and asset replacement.
• Building funds for education.

Strength

Security Mutual’s financial strength is our ability to help provide for your financial security. In 2007, our capital base grew to $125 million, the greatest level in the company’s history. This represents an 8.7 percent increase over 2006. Earnings are the major factor behind our capital growth. In 2007, the company recorded strong after-tax earnings of $7.1 million after paying dividends to participating policyholders of $22 million.

During 2007, both the A.M. Best and Standard & Poor’s rating
agencies reaffirmed their financial strength ratings of Security Mutual. A.M. Best affirmed our “A” (Excellent) Rating and “stable” outlook in June, and Standard & Poor’s affirmed our “A+” (Strong) Rating and assigned a “stable” outlook in August.* According to these rating agencies, our ratings reflect our consistent revenue generation, expense management, growth in our asset base and strong balance sheet. For more information on the company ratings, please visit our ratings page.

Reliability

We are very proud that we have been serving and protecting our policyholders for over 121 years.

Our policyholders continue to count on us for many reasons:

• We take the time to carefully evaluate their needs, and offer products that appropriately suit those needs.
• We provide excellent service, a coordinated effort of our knowledgeable and responsive Field and Home Office associates.
• We are financially strong.
• We are conservative in our management of the company, not taking risks that could jeopardize Security Mutual’s well-being . . . and the values in their policies and contracts.
• Finally, our corporate values . . . Trust, Respect and Integrity . . . serve as the guiding force for what we do.

Financial Highlights

Our capital grew by 8.7 percent to $125 million in 2007. Capital is the most important factor behind the financial strength of a company, and it is monitored very closely by the regulators and rating agencies. In fact, Standard & Poor’s describes our capital as being very strong, and this is reflective of the excellent job our investment and financial professionals have done in protecting and growing the financial foundation of our company.

The Board of Directors acted in November 2007 to maintain our dividend scale for 2008. This action applies to policyholders who have purchased a dividend-paying life insurance policy. The company anticipates that the total dividend payout in 2008 for current policies will be 5.7 percent greater than the 2007 award. The dividend payout in 2008 will mark the 116th consecutive year that Security Mutual has paid dividends to our participating policyholders.**

We are proud to report that our traditional ordinary life insurance sales increased again this year, continuing our record of steady growth year after year in our advanced markets. In these markets, we focus on satisfying the needs for estate preservation, retirement planning, business continuity, income replacement and executive compensation programs. We believe that this growth is a combination of the strength of our portfolio, the uniqueness of the products we offer and our extremely knowledgeable and focused distributors.

In our Worksite and Group lines, sales also remain strong, as did the growth within the credit union market.

Product Portfolio

Security Mutual has a solid portfolio of products and riders to help meet your protection, retirement savings and income needs. Further, we are always looking for ways to improve our products and their performance to even better meet your needs. If your insurance needs have changed, please contact your Security Mutual representative for an updated analysis and for more information on how our products can help you achieve your financial goals and objectives.

Investment Portfolio

Security Mutual’s Investment Portfolio continues to be of high quality, and has excellent liquidity. These points are very important because our investment portfolio supports the reserves we hold that back the policies we issue. The strength and stability of this portfolio provide us with the power to stand the test of time and to protect you over the long term. For this reason, Security Mutual employs the services of a nationally recognized investment management company, BlackRock Financial Management, which manages the company’s bond investment portfolio under the supervision of the company’s senior management.

It is important to note that in a year when sub-prime mortgage investments adversely impacted many other financial services corporations, Security Mutual was not impacted negatively because we had chosen to avoid this type of investment. Even though there was a strong allure to many institutions for higher returns in this asset class, we simply did not view this particular investment class and its potential risk as acceptable, given that we are firmly committed to protecting you for the future.

Security Mutual’s Board of Directors, through its Finance
Committee, interacts directly with BlackRock, our external investment manager. In addition, Security Mutual is proud to have a nationally recognized investment manager—Hugh Johnson, of Johnson, Illington Advisors, LLC—and a nationally recognized economist—Maria Fiorini Ramirez, of Maria Fiorini Ramirez, Inc.—on its Board of Directors. For a listing of all the directors serving on Security Mutual’s board, click here. For a listing of the company’s officers, please click here.

I want to thank you for selecting Security Mutual as your insurance company. We are honored that you have placed your confidence in us, and we are strongly committed to continuing to earn this trust going forward. You may contact us at any time through your local representative, or by calling 1-800-346-7171.

On behalf of Management and the Board of Directors, I thank you for selecting us as your insurance provider and wish you a successful 2008.

Bruce W. Boyea
Chairman, President and Chief Executive Officer

To review Security Mutual's 2007 Financial Charts, please click here.

*Ratings reflect a rating agency’s opinion of a company’s financial strength and ability to meet its obligations to 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. Standard & Poor’s “A+” rating is the fifth highest on a 20-step rating scale.

**The payment of dividends is not guaranteed, and the amount credited, if any, will rise and fall depending on experience relative to investment income, taxes, mortality and expenses.

***Includes Policyholder Dividends.

For further information about Security Mutual’s ratings, please click here.

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

Click here for the print version of the 2008 Letter to Policyholders. (File size 332 KB)