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SUPREME KNIGHT’S REPORT
122ND ANNUAL SUPREME CONVENTION
(as delivered)
Supreme Knight's Report (print version)
MY BROTHER KNIGHTS:
In the Gospel of Luke, a man described as “a scholar of the law” asks Our Lord what he must do “to inherit eternal life.” Our Lord turns the question back on him by asking what the law says.
Of course, the scholar knows the answer very well: you must love the Lord completely, and love your neighbor as yourself.
But although he knows the answer, he does not understand the answer, because he asks, “Who is my neighbor?”
No one in this room today would ever have to ask this question. I have no doubt that our founder, Father McGivney, spoke often about the parable of the Good Samaritan. His vision, centered on love of God and love of neighbor, has guided us for 122 years.
His vision anticipated by nearly a century this teaching of the Second Vatican Council:
“Today there is an inescapable duty to make ourselves the neighbor of every man, no matter who he is, and come to his aid in a positive way.”
We Knights of Columbus demonstrate this duty of love by serving every day, in hundreds of ways, in thousands of communities.
The phrase “In service to One, in service to all,” sums up our great mission. This year we have set new records for donations to charity and volunteer hours, for membership and insurance.
Today — and every day — we are building a better world. Every charitable program undertaken, every insurance policy issued, every dividend paid, every new council started, every parish assisted, every priest supported, every vocation encouraged, and every new member recruited furthers the great mission of the Order.
THE SERVANT OF GOD, FR. MICHAEL J. MCGIVNEY
The cause for canonization of Fr. McGivney took an important step forward in January, when Fr. Gabriel O’Donnell, postulator of the cause, delivered to the Vatican the results of a second investigation into a reported miracle. This material is being carefully studied by medical experts.
While the Vatican is doing its work, we must remember that we have work to do, too! First and foremost, our prayers are needed. Later this month, we will have launched a new web site devoted exclusively to Fr. McGivney and to promoting his cause.
Father McGivney’s message is universal. We are his spiritual sons and stewards of his legacy.
Last October, when Pope John Paul II granted an audience to our board of directors he said: “In fidelity to the vision of Father McGivney, may you continue to seek new ways of being a leaven of the Gospel in the world and a spiritual force for the renewal of the Church.”
And just two months ago, the Holy Father said, “Now is above all the hour of the lay faithful.” He said that we, the Catholic laity, have a “specific vocation to shape the secular world in accordance with the Gospel,” and “are called to carry forward the Church’s prophetic mission.”
My Brothers, the Holy Father is giving us a challenge: using the vision of Fr. McGivney, shape the secular world; change the culture in which we live; and be a spiritual force for the renewal of the Church.
SERVING OUR FAMILIES
Father McGivney had a pastor’s heart and a penchant for practical action. Under his direction, the Knights of Columbus replaced the practice of passing the hat with a new structure that offered life insurance.
Since that time our insurance in force has grown continuously, and in recent years, our growth has been extraordinary.
On March 24 we reached another milestone: we surpassed the $50 billion mark of insurance in force, and we will pass $53 billion by year end. Our insurance in force has doubled in a single decade! Our net gain over the past year alone amounted to $3.5 billion.
We reached another milestone in 2003: We issued a record $5.2 billion of life insurance, a 16.4 percent increase over last year. A total of 77,200 certificates were sold. The average size of the new certificate issued was more than $67,000, up nearly $10,000 from last year.
In addition to the more than 77,000 life sales, our field force sold 13,535 annuity contracts and 4,000 long-term care insurance contracts.
Our number of life certificates in force has gone up every year since 1970. Last year, we had a gain of more than 25,000 life certificates, bringing the total to 1,541,000. The Order ranks first among all fraternal societies in the number of life certificates sold.
And sales of our long-term care products remained steady. We issued a record 4,090 new contracts.
Total premium income amounted to $780 million. This is $49 million or nearly 7 percent more than in last year. Annuity premiums and deposits collected were $328 million. Long-term care premiums were more than $13 million, an increase of 38 percent.
Regarding premium income on individual life certificates, we reached another all-time high of $766 million.
Life dividends to living members allocated for 2004 amounted to $329 million, for an overall increase of 9 percent. In addition, $13 million of dividends were allocated to holders of certain annuities. The Order continues to use an interest rate factor in its life dividend formula that is among the highest in the industry.
This year we paid $145 million in death benefits. Since our founding, the Order has paid out more than $1.7 billion in death benefits.
To our living members and families, the Order has paid $6.2 billion in maturities, dividends, interest, annuity proceeds and disability waivers.
Once again we have received the highest possible ratings from both the A.M. Best Co. and Standard & Poor’s. We also retained certification for ethical sales practices from the Insurance Marketplace Standards Association.
We are among only six insurers in North America to have achieved all three, and the only fraternal benefit society to do so.
This past year we continued to improve service. Our term insurance premiums were lowered. Electronic communication with our field force was improved, our web site was enhanced, and ongoing agent training was increased.
The key to our success is our focus on families — providing high-quality, low-cost protection. Knights of Columbus Insurance has earned its status as the Order’s greatest fraternal benefit.
INVESTMENT SECURITY AND SUCCESS
Our top-rated insurance program has gone hand in hand with our equally successful investment program.
By far, the single largest component of our general account is our bond portfolio, which at year-end totaled over $9 billion. This well-diversified portfolio provides the major support for our life insurance products.
In the year 2003 alone we made more than $3.4 billion in new bond investments. The average quality rating on these purchases was AA- in keeping with our long tradition of maintaining an investment-grade portfolio.
At year-end, our U.S. and Canadian common stock holdings were $510 million and $40 million respectively.
The Order’s investment in preferred stocks was $223 million. Our Church Loan mortgage program is an expanding part of our assets at $135 million.
Gross investment income exceeded $651 million for a yield of 6.69 percent. And net investment income reached an all-time high of $637 million.
Total cash flow amounted to $2.7 billion, providing our Investment Department with nearly $11 million to invest every working day.
Total income, excluding annuity deposits of $327 million, amounted to more than $1.4 billion. Fortune magazine now ranks us the 875th largest company in the United States.
The sources of our $1.4 billion of revenue included: life insurance premiums — $766 million, or 52.4 percent of the total; investment income — $637 million for 43.6 percent; supplemental contracts and other income — $54 million for 3.7 percent; and per capita income — $4 million for three-tenths of one percent.
Even with the low interest rate environment, the gain from operations this past year, amounting to $403 million, was again the best increase in the history of the Order.
After deducting $337 million in dividends, the gain from operations amounted to $66 million. In October, the Board of Directors decided that, based on this strong financial position, we would continue our existing dividend scale in 2004 even though dividends are increasing faster than gain from operations.
Realized capital gains amounted to $21.3 million, bringing our net gain to more than $87 million.
At year end our assets reached an all-time high of $10.9 billion, ranking us 69th by A.M. Best among 1,700 insurance companies in North America. The gain over last year amounted to $989 million. As of July 1, our assets now exceed $11.5 billion.
The underlying financial strength of any company is reflected in its capital structure. In this regard, The Knights of Columbus is clearly superior. We have a surplus of $1.4 billion and asset valuation reserves of $142 million, bringing our margin of safety to more than $1.5 billion. Our solvency ratio is 115 percent, among the highest in the industry.
In short, we are financially strong, with a record of quality management and sound investment second to none.
SERVING CHURCH AND COMMUNITY – UNITED IN CHARITY
As you’ll hear in a few moments, the past year has been the most successful in our history when it comes to donations to charity. But I don’t have to tell you that even with the $130 million given to charity last year, there are still many needs that go unmet.
You’ve just heard me describe the exceptional quality of our investment program, and while it’s still fresh in your mind, I would like to describe briefly a new effort we’re undertaking by making greater use of our investment expertise.
For many years, Knights of Columbus Charities, Inc. has offered Knights an opportunity to make tax-deductible contributions for a variety of charities. We are now preparing to enhance this program, making it a charitable endowment that will, over the long term, greatly increase the Order’s ability to carry out our charitable goals.
Brother Knights in the United States and Canada will soon have the opportunity to participate in what is sometimes referred to as “planned” or “programmed giving” through tax-deductible donations to Knights of Columbus Charities, Inc. and Knights of Columbus Canada Charities, Inc.
This initiative will combine the triple-A investment management experience of the Supreme Council with a charitable endowment that can grow substantially in the coming years. It will greatly enhance our ability to fund the Order’s charitable programs. Our investment management has decades of experience with charitable assets; its results are proven to be tried and true.
As we commit greater resources in service to the Church and our communities, we invite every brother Knight to participate in this exciting new initiative.
Entitled “United in Charity,” it will guarantee that during the years to come, regardless of the business environment, our essential support of church and community charities will continue.
SERVING CHURCH AND COMMUNITY
KNIGHTS OF CHARITY
At the beatification Mass for Mother Teresa last October — an event telecast around the world thanks to funding from the Order — Pope John Paul II hailed the founder of the Missionaries of Charity as a “tireless benefactor of humanity.”
Mother Teresa personified the renewal of the Church. She showed how the Good News of the Gospel can be brought into every human situation, no matter how desperate. She showed the world that the work of the Good Samaritan can be accomplished every day. And so do we!
The record-breaking results of the 2003 Survey of Fraternal Activity show that our brother Knights are Good Samaritans thousands of times every day. We raised and donated to charity more than $130 million and volunteered more than 61 million hours of service.
Even more impressive are the 10-year totals. From 1994 to 2004, we gave more than $1.1 billion and we volunteered 545 million hours.
Independent Sector estimates that the dollar value of a volunteer hour in 2003 was $17.19.
Using that figure, our 545 million hours of volunteer service was worth $9.3 billion!
In August 2005, thousands of the world’s young people will gather in Cologne, Germany, for the 20th international celebration of World Youth Day with the Holy Father. The Knights of Columbus will again be involved. Begin planning now how your council will support those who wish to take part in World Youth Day.
For more than 30 years our Knights of Columbus Free Throw championship has been a great success. Every year the number of participating councils and young athletes grows.
Now the Supreme Council has partnered with Baden Sports to make special Knights of Columbus basketballs to be used in our competition.
I probably don’t have to tell you that in recent years, soccer has become increasingly popular. During the next fraternal year we will launch a new youth soccer competition, similar to our free-throw championship.
Among our largest youth efforts is Special Olympics. Last year, donations to this and other programs for people with mental retardation totaled more than $15 million.
The partnership we have with Special Olympics goes back to its founding by Eunice Kennedy Shriver and her husband and our brother Knight, Sargent Shriver. Currently, the Supreme Council is providing greater financial support to Special Olympics North America.
During the past 30 years we Knights have raised and donated more than $315 million to aid people with mental and physical disabilities. Another $50 million has been donated to Special Olympics.
We are proud of our work in promoting athletic activity, and we’re equally proud of the work we’ve done to promote academic excellence.
Through several programs we awarded a record $1.5 million in college scholarships. At the state and local council level we awarded more than $5.6 million in scholarships.
In 2003, we reported $112 million in fraternal benefit expenditures. These monies are spent to promote and grow the Order. Included is general support of membership operations, training and promotional efforts, Columbia magazine, our website and other Supreme Council publications.
Approximately 73 percent of all units responded to our fraternal survey last year. The following jurisdictions are to be congratulated for having 100 percent reporting by Jan. 31: British Columbia, District of Columbia, Kansas and Tennessee. An additional 11 jurisdictions were at 100 percent for the final report.
The average per-member charitable contribution was $78. But Brother Knights in British Columbia led the way with an average contribution of nearly $250! Nine other jurisdictions reported average contributions of more than $100.
For the 16th year in a row, Ontario led the Order with the largest total contribution of more than $9.3 million — $300,000 more than last year. Other top givers were: California, Quebec, Illinois, Michigan, Texas, Florida, New Jersey, Minnesota, Missouri and Ohio. Over half of all jurisdictions reported total gifts of $1 million or more.
This is truly remarkable dedication to our principle of charity and we are proud that virtually every dollar raised by a local council stays at the local level.
Father McGivney has been described as having a priestly heart brimming with charity—that heart still beats strongly in his Knights of Columbus.
OFFERING OPPORTUNITIES TO SERVE
This past year 83,415 Catholic men began the experience of a lifetime by joining the Knights of Columbus. What a great record of achievement!
Of our 1,680,472 members, 547,364 are insurance members and 1,133,108 are associate members. Our net gain was 20,275. This is the best net gain in 13 years. Still, our potential for growth is practically unlimited.
In the countries where we are active today, there live nearly 225 million Catholics. We have the potential for much greater growth. Now is the hour to open wider still the doors of our council homes.
This year a record 32 jurisdictions met or exceeded their “Circle of Honor” goals. A total of 68 jurisdictions achieved a gross gain over suspensions and withdrawals. And 55 state councils achieved net gain growth after deducting all losses. Tomorrow afternoon, we will recognize those jurisdictions at our awards ceremony.
As the Holy Father observes in Ecclesia in America: “The parish is a privileged place where the faithful concretely experience the Church.” Father McGivney saw this truth clearly and established the Knights of Columbus as a practical way to help every parish.
Our new council development efforts last year established 198 new councils and re-instituted 11 councils. As of June 30, we had an all-time high of 12,480 active councils. And we reported a total of 2,757 round tables.
We also successfully implemented an Order-wide membership blitz program. We will continue to promote our Blitz program and other initiatives as effective ways to grow membership.
SERVICE TO THE NATION – THE FOURTH DEGREE
For many, the Fourth Degree is the public face of the Order. The honor guard is a public expression of our readiness and our determination to defend our Church, our devotion to its sacraments and our love of country.
As of June 30, Fourth Degree membership stood at 286,630. Last year, 301 exemplifications were reported. The net gain for the year was 7,011. Fifty-five new assemblies were instituted bringing our total to 2,529 assemblies in 115 districts.
Recently, the Knights of Columbus was well represented at the dedication of the National World War II Memorial in Washington, D.C.,. Fourth Degree Knights raised and donated more than $520,000 toward the construction of the memorial. The Knights of Columbus honors veterans of all wars, and the “Serving Those Who Served” program, in which Sir Knights assist hospitalized veterans is a special demonstration of this commitment.
We will forever be proud that fifty years ago, the Order led the successful effort to have the words “under God” added to the Pledge of Allegiance. As you know, over the past year those words have come under attack in federal courts.
When a federal court ruled the words “under God” unconstitutional, we urged the U.S. Supreme Court to take the case. And we provided them with a friend-of-the-court brief in which we pointed out that the words “under God” are completely consistent with the views of the authors of the U.S. Constitution and are fundamental to the American form of government.
We have always believed that our rights come from the almighty, not the government. But it is the government’s duty to protect them!
Thankfully, the Supreme Court did the right thing. For now, at least, school children can continue to recite the Pledge of Allegiance. But I cannot tell you that the battle is over. The atheist who attacked the Pledge has made it clear that he’ll be back.
And, my brother Knights, SO WILL WE!
IN SERVICE TO OUR CHURCH
Our Holy Father has reminded us on many occasions that we are living in a new springtime of the Gospel — a springtime that compels us toward a renewal of the Church and a new evangelization of the culture.
Pope John Paul is leading this renewal, and each of us must join him. In Ecclesia in America he says: “The renewal of the Church will not be possible without the active presence of the laity. Therefore, he continues, the laity are largely responsible for the future of the Church.” And where does the Holy Father suggest that this renewal is to be carried out? Exactly where Knights of Columbus are most active: in our parishes.
That is precisely why our strategy of a parish-based council in every parish is so successful and why it is so important. Father McGivney’s vision for a Knights of Columbus presence in every parish has placed the Knights of Columbus at the center of the Church’s mission today.
My brother Knights, “Now is the hour of the lay faithful.”
Now is the hour of the Knights of Columbus.
No other organization in the Church today can make the impact that we can at every level of the Church. Our size, our presence in so many parishes, our resources, our fidelity to the magisterium, our solidarity with our bishops and priests, and our founder’s continued intercession make the Knights of Columbus essential.
Evangelization of culture takes place every day in every one of the thousands of communities where we live and work — and especially within our councils and our families.
We have already had enormous success, but we have only begun writing this great chapter in our history.
This past year we celebrated the 25th anniversary of Pope John Paul’s pontificate.
On your behalf a check for $2.5 million was presented to the Holy Father on October 9th. It included the annual earnings from our Vicarius Christi Fund, which the Holy Father called a “sign of the solidarity of the Knights of Columbus with the successor of Peter.” Since 1981, the fund has earned for the Holy Father’s personal charities more than $35 million.
It was in that same spirit that the Order funded the historic “Papal Concert for Reconciliation” among Jews, Christians and Muslims at the Vatican on January 17. The program was broadcast live throughout Europe and has aired nearly 100 times on more than 81 stations throughout North America.
During this past year we also provided additional financial assistance to the Vatican. Among those receiving our support were the Pontifical Council for Social Communications; the Pontifical Academy for Life; and the Pontifical Missionary Library.
Last year, at the conclusion of our Supreme Council meeting, some 1,300 Knights and others gathered for our second Knights of Columbus Eucharistic Congress. This was the first major conference to celebrate Pope John Paul’s new encyclical on the Eucharist.
This summer the Holy Father announced that from October 2004 to October 2005 the Church will celebrate the Year of the Eucharist. We embrace this new initiative and at the conclusion of our Supreme Council meeting next year we will host our third Knights of Columbus Eucharistic Congress.
There are many programs we can undertake during the Year of the Eucharist, such as holy hours and corporate Communions. I urge every council to participate in the Year of the Eucharist. As Cardinal Jan Schotte said at our first Eucharistic Congress, “The Eucharist must be at the center of all our activities. We must be a eucharistic community.”
That will be evident this October when our brother Knights in Mexico take part in the International Eucharistic Congress in Guadalajara.
One of the most important ways we support our Church is our support of vocations.
On the 50th anniversary of his ordination as a priest, Pope John Paul II published Gift and Mystery, telling the story of his own priestly vocation. This year, in honor of his 25th anniversary, we provided a special edition of his book to every seminarian in the United States and Canada.
In his book, the Holy Father wrote that his father’s example was, in a way, “my first seminary.”
The powerful role of the family in promoting vocations is a reality in many Knights of Columbus families.
We must continue to pray for vocations. And we must work to create a culture within our families, our parishes and our councils where vocations are encouraged, welcomed and supported.
This past year we released an important new tool for fostering that culture, a new film entitled The Vocation to the Priesthood. This 30-minute award-winning film has been sent to vocations directors in every diocese in the United States and Canada. Many have reported using the film as an important part of their outreach programs.
Our RSVP program is our main initiative for providing financial and moral support to our seminarians. Last year, we provided nearly $2.5 million to 3,974 men.
We also continue to award scholarships to seminarians in the amount of $2,500. We awarded 37 new Father McGivney Scholarships and 15 new Bishop Daily Scholarships, and 80 scholarships were renewed.
An additional $1.6 million was given to seminaries and another $1.8 million was contributed to projects promoting vocations.
And today, I announce another initiative to further our solidarity with our priests.
The Sacred Heart Program for the Sanctification of Priests is an initiative of the Knights of Columbus to support every priest in his call to holiness and service to God’s people.
The centerpiece of this program is the Sacred Heart Holy Hour. This hour of prayer, ideally within the context of Eucharistic exposition, celebrates the mystery of the priesthood as the symbol of Our Lord’s love and enduring presence.
I urge every council to participate, especially on the Feast of the Sacred Heart.
IN SERVICE TO THOSE WHO SERVE
One of the most significant chapters in the Order’s history started here in Texas, when El Paso Council 638, in 1916, started supporting National Guardsmen.
Following their lead, during World War I we undertook our highly regarded K of C Huts program, where we welcomed all servicemen regardless of religion.
In keeping with this tradition, we joined with the Archdiocese for the Military Services, to develop Armed with the Faith, a unique book of Catholic prayers and readings for military personnel. Nearly 200,000 copies have been distributed to troops stationed in Iraq and Afghanistan, and throughout the world. We are now publishing this prayer book in Spanish.
The value of our prayer book cannot be underestimated. Allow me to read from a letter from a U.S. Army chaplain and brother Knight serving in Iraq. He writes,“I just received the new issue of Armed with the Faith…. I shared them with priests from the 1st Cavalry Division nearby. All the priests in the area say they are in demand.
“The book was particularly helpful for soldiers preparing for confessions during Lent…. Many of the priests use it in the Rite of Christian Initiation. Please pass my gratitude to my brother Knights for their continued support.”
The prayer books are just one expression of support. Many councils have reached out to families of those deployed overseas. Recently, I received a letter from the wife of a brother Knight. She wrote:
“I wanted to call your attention to the incredible support your brother Knights have offered the Marines. My husband has deployed twice in the past year and a half to Iraq. His brother Knights have faithfully checked on our family at least once a month to see if we need anything and to remind us of their prayers and support. In addition to the phone calls, the Knights actively seek out my family at Mass, on base and at community functions to say hello and inquire of our well-being. Wherever I am, if a Knight spots us he says hello and reaffirms his support. I feel blessed to have such an awesome network of love, and I wanted you to know of the Knights’ beautiful witness to Christ’s love.”
While so many brother Knights have risen to the task now under way in Iraq and Afghanistan, Knights at home have responded with genuine fraternal support.
Tragically, other brother Knights have given the last full measure of devotion. Please join me in standing while the names of those who have made the ultimate sacrifice are read:
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Marine Corps Major Jay Thomas Aubin, Council 7027
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Air Force Staff Sgt. Gregory Frampton, Council 9153
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Army Chief Warrant Officer Thomas Gibbons, Council 12965
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Army Specialist Jeremy Heines, Council 3411
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Army National Guard Chief Warrant Officer Patrick Kordsmeier, Council 6253
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Army Specialist Jose Perez, former Columbian Squire
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Army Sgt. Christopher Ramirez, former Columbian Squire
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Army Captain Benedict Smith, Council 11480
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Army Specialist James Wolf, Council 2681.
(Please be seated.)
On the second anniversary of the Sept. 11 terrorist attacks, we unveiled a permanent tribute to the 45 brother Knights who were killed that day. The memorial bears the name of each Knight and is currently displayed at our museum in New Haven. The lives of our 45 brothers were taken from us, but their memory never will be.
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