“I wouldn’t give us a gold star—maybe a blue star—but I think we did very well given the economic conditions we had to deal with,” Lundgren said.
“Going into the year, and especially as the year progressed, we knew we had to make significant expense cuts to the budget—in fact, $1.2 million,” Lundgren said. “We experienced a significant revenue shortfall in comparison to the budget of about $1.3 million.”
He added, “Without question, this period has been the most challenging economic and financial situation in the work life times of all of us gathered here today.”
Even in early 2008, few experts foresaw the depth of the economic crisis, Lundgren said. As late as July, politicians and economists were making statements that proved dramatically wrong:
- “Freddie Mac and Fannie Mae are fundamentally sound…I think they are in good shape going forward.”—Sen. Barney Frank, (D-Massachusetts)
- “I’m not an economist, but I do believe we are growing.”— President George W. Bush
- “I expect there will be some failures…I don’t anticipate any serious problems of that sort among large internationally active banks.”—Ben Bernanke, chair of the Federal Reserve.
Lundgren said it is impossible to forecast when a financial recovery will occur.
Despite the difficult financial times, the Covenant has been able to provide additional benefits to clergy and save churches money, Lundgren said.
Through Bethany Benefit Service, the denomination was able to add a vision benefit to its health plan and raise the group life insurance coverage from $75,000 to $100,000. Enrollment in Bethany Benefit Service, through which the denomination offers insurance, has increased by 10 percent, with 100 new enrollees.
Since 2003, Bethany has kept compounded increases to insurance premiums at less than five percent—far below the average annual hikes of more than 15 percent for other plans.
As a result, Covenant churches have saved more than $5 million per year in health benefit expenses as compared to the rest of the marketplace.
Lundgren also reported that the Covenant pension plan “remains in a financially strong position to pay benefits in both short and long term.”
Payments to retirees and surviving spouses were $6.2 million. Over the past ten years, more than $44.6 million has been distributed.
The plan covers 1,054 active pastors and missionaries and payments are made to 366 retirees and 139 surviving spouses.
Lundgren said Pension Board investments were up 20.2 percent for three-month period between March 2009 to May 2009. As of May 31, 2009, the portfolio was up 6.2 percent from where it was on October 31, 2008.
Lundgren also reported on National Covenant Properties (NCP) and Covenant Trust Company (CTC).
Despite news of challenges for banks and financial institutions around the world, “NCP clearly had an outstanding year,” Lundgren said.
Assets increased 5.5 percent to $295 million. During 2008, $46 million was disbursed to 71 different church projects. He added that unrestricted net assets increased 10 percent to $42 million, or 14 percent of assets. General and administrative expenses remain very low at .5 percent of total assets.
Assets under management at CTC decreased 12 percent to $364 million as a result of distributions and market decline in 2008, Lundgren reported. Still, it wrote $24 million in new business and had distributions of $8 million. Lundgren added that 37 percent of all new business was written to benefit local Covenant churches, camps, and conferences.
