TNCRRG: The Ownership Difference
By Michael J. Bemi, President & CEO, TNCRRG

Occasionally I run across marketing pieces or print media advertisements touting the “privileges of ownership.” In some instances, I find the content within these ads to be reasonable and compelling. In other cases, it strikes me as “sales fluff” with little or no substance. Ironically, I myself have used similar “ownership” arguments and analogies to describe the benefits that can be derived as a shareholder of The National Catholic Risk Retention Group, Inc. (TNCRRG). So, one might ask, are these suggested benefits real and demonstrable, or are they simply marketing “fluff” from yet another insurance company?

I believe many solid arguments can be made that TNCRRG has indeed produced substantial and significant benefits for its insured shareholders—benefits that go far beyond the mere provision of good insurance. These benefits derive from several circumstances, including: (1) the fact that TNCRRG’s Board and management recognize their fiduciary duties as stewards of the patrimony of the Church; (2) the fact that TNCRRG is 100 percent owned by and exclusively devoted to satisfying the needs of Roman Catholic organizations; and (3) the fact that the TNCRRG Board and its management perceive their roles on behalf of the Church as a ministry of risk management and insurance, ultimately designed to assist TNCRRG shareholder entities with the accomplishment of their spiritual ministries.

So what does the TNCRRG “track record” display in this regard? Does it support the existence of the circumstances just enumerated and the related contention of the benefits of ownership? Please consider the following and decide for yourself. In its very brief 16-year history, TNCRRG has:

  • Demonstrated leadership in the creation and provision of insurance coverage elements needed to properly cover Church ministries. Some examples (now widely adopted by other insurers) include: Teaching and Research Laboratory Pollution Coverage; Chemical and Agricultural Drift Pollution Coverage; Fungal Pathogen Coverage; Limited Professional Health Care Services Coverage; Diocesan Review Board Coverage; and Sexual Misconduct Limited Coverage (which no one was underwriting when TNCRRG first offered its full policy limits for this exposure).
  • Through its VIRTUS® programs, TNCRRG has again demonstrated leadership on behalf of the Church—in this case, in the prevention of child sexual abuse and in other risk control related areas. TNCRRG’s Protecting God’s Children® program has established itself as the “gold standard” in the Church’s efforts to eliminate the scourge of child sexual abuse. More dioceses—by a huge margin—are actively engaged in the Protecting God’s Children program, than in any similar program. No major industry insurer has any comparable risk control program.
  • TNCRRG developed and has presented its “Legal Defense Practice Workshops” to dozens of dioceses around the country. Representatives of the USCCB Office of General Counsel participate in this free series of workshops, and have complimented TNCRRG for its leadership on behalf of the Church in developing this very useful learning platform. Attendees, including many who are not TNCRRG shareholders, regularly and consistently evaluate the program as “excellent” and “highly valuable.” No major industry insurer has developed and offered any comparable claims management program.
  • TNCRRG has, for over 10 years, provided Litigation Planning and Management Program development and implementation assistance to its shareholders—free of charge.
  • TNCRRG has hosted, organized and presented 13 consecutive annual Winter Meetings, which are open to anyone in the Church, and which always incorporate several workshop presentations by recognized experts on insurance and risk management topics of critical importance in the Church.
  • TNCRRG has already returned $6,654,947 of originally contributed capital to its shareholders, through stock repurchases.
  • TNCRRG has already declared $9,436,676 of stock and cash dividends to its shareholders.

All in all, not a bad track record for a still relatively “fledgling” Church insurer. If you are not already a TNCRRG shareholder, why not investigate the “ownership difference” today? You won’t be disappointed. Call us toll-free at 877-486-2774 or visit our websites at and

From the Office of the President

Enclosed is our mid-year unaudited financial report reflecting TNCRRG results through June 30, 2004, and comparatively year-over-year. I am indeed grateful that I am able to immediately highlight for you the very significant improvement in TNCRRG results from 2003 to 2004. More specifically, you will note that we produced a $608,156 operating profit through six months of our fiscal year, compared to an $849,925 operating loss for this same period last year. So what has changed? Let me analyze that for you now.

To begin, one significant development benefiting our company was the reduction in losses and loss adjustment expenses year-over-year. This may be surprising in light of the recent and persistent crisis in the Church. However, the actual number of sexual misconduct incident and claim reports to TNCRRG has continued to decline substantially in 2004, from its peak in 2002. Further, it is a fact that the majority of these reports will never generate a loss to TNCRRG. The reason is that they relate to activities/victimization that pre-dates the existence of TNCRRG, and therefore occurred prior to the applicable retroactive dates of our claims-made coverage for sexual misconduct. In any event, we experienced a $304,905 improvement in loss results for the period, year-over-year.

An additional highly significant factor in our improved results is the dramatic increase ($1,334,922 or 48.7 percent) in our underwriting income. This increase was produced by several concurrent circumstances. These are:

  • Our 8 percent rate increase in 2004;
  • Our addition of a new shareholder, the Diocese of Erie, Pennsylvania, on May 1, 2004;
  • Our considerable success in writing new excess coverage layer placement business so far in 2004;
  • Premiums that TNCRRG earned in the first half of 2004, that were generated by the addition of two new shareholders (the Archdiocese of Denver and the Archdiocese of Philadelphia) in the second half of 2003; and finally,
  • Our major reduction in reinsurance expenses, itself a function of our reinsurance program restructuring effective January 1, 2004.

Another positively contributing factor to the improvement in our results was our ability to “hold the line” on overall non-loss expenses, even in light of consistent, and in some cases sizable, increases in the costs of goods, services, and supplies that we require to undertake our operations, and also, in the impact of operational costs over which we have little or no control (e.g., premium taxes and regulatory fees).

On a slightly negative note, our net investment income was somewhat reduced year-over-year, resulting in $30,473 (4.5 percent) less investment income generated by TNCRRG through June 30, 2004, than through June 30, 2003. This was not the result of any alteration in our investment philosophy, our investment strategies, or our investment managers/adviser. The outcome was primarily the effect of reduced interest rates available in the market and slight increases in asset management and trustee costs.

Nevertheless, our ability to substantially grow underwriting revenue year-over-year, while controlling G & A expenses, combined with the major “lift” provided by reduced loss experience, all contributed to our operating profit of $608,156, which represents a $1,458,081 improvement in results year-over-year.

In closing, while I am very happy to report these results, I also need to remind you that by far the single most important element “driving” TNCRRG results, is loss experience. Certainly we can significantly and positively affect that experience through our risk control efforts with our extremely successful VIRTUS® programs, but much of these results is simply random and beyond our control. That is why we are always thankful when we experience improvement in our loss results. Looking “down the road,” if we continue to have favorable loss results in 2004, TNCRRG should be able to generate a sizable operating profit.




Michael J. Bemi, President and CEO
The National Catholic Risk Retention Group, Inc.

Balance Sheet

Six Months Ended

Six Months Ended


June 30,2004

June 30,2003







Cash and investments



Accrued interest/Investment income



Premiums receivable



Reinsurance recoverable on paid losses



Reinsurance recoverable on unpaid losses



Prepaid reinsurance premiums



Other assets




















Loss and loss adjustment reserves



Unearned premiums



Reinsurance balances payable



Premium taxes payable



Unearned ceding commissions



Other liabilities















Capital stock:



  Class A



  Class B



Additional paid-in capital - cash



Additional paid-in capital - policyholder dividend



Unrealized gain (loss) on investment



Retained earnings



Net Operating Income/(Loss)



















Income Statement

Six Months Ended

Six Months Ended


June 30,2004

June 30, 2003







Underwriting income

$ 4,078,544

$ 2,743,622

Net investment income



Net realized gains (losses) on sales of investments



Ceding commission income







$ 5,182,943

$ 3,895,978







Losses and loss adjustment expenses

$ 3,340,180

$ 3,645,085

Premium taxes



VIRTUS® expenses



Management and regulatory fees



Professional fees



Salary and fringe benefits expense



Travel expenses



Other expenses







$ 4,574,787

$ 4,745,903





$ 608,156

$ (849,925)




Plan Now to Attend National Catholic’s 2005 Winter Meeting

January 30 to February 1, 2005, Scottsdale, Arizona

Our 2005 Winter Meeting will be January 30 to February 1, at the Renaissance Scottsdale Resort in Scottsdale, Arizona. More information about the 2005 Winter Meeting will be sent out later this summer to shareholders and other friends.

As we have consistently done in the past, we plan on providing timely and highly relevant workshops, presented by expert practitioners. We will also host our first annual golf tournament for meeting attendees.

Detailed information about the meeting and related social events will also be available on our company website over the next few months. Keep an eye on our calendar of events at:

Plus, by September 24, you’ll be able to download both conference and hotel registration information. To make your reservation, please print all the pages, then complete the two attached forms and return them by mail or fax—each according to its respective instructions. And, please check our online calendar often for the latest meeting information.

For additional details about the hotel and the Scottsdale area, visit the Renaissance Scottsdale Resort website at:

VIRTUS® Programs Help Broaden the Safe Environment Net

More and more dioceses continue to implement the Protecting God’s Children® program for adults, with 80 dioceses currently using the program. Meanwhile, dioceses are now beginning to implement the new Protecting God’s Children program for parents and guardians, as well as the Touching Safety program, our new school-based curriculum that teaches child sex abuse prevention to children. Both of the new programs are based on the Church’s longstanding and well-documented position that parents are the primary educators of their children, especially on critical issues related to love, marriage, human sexuality, and appropriate boundaries in all human relationships—the latter being the primary focus of the two new programs.

While the new Touching Safety program and the program for parents and guardians are being launched, development continues on the Bullying Prevention program, along with an array of other services and activities designed to support our program users.

National Conference for VIRTUS Program Coordinators

To help facilitate the nationwide learning experience regarding safe environment programs, National Catholic Services, LLC, will host our First Annual Conference for VIRTUS Program Coordinators on September 16 and 17, 2004, at the Embassy Suites Hotel, Downtown Lakefront in Chicago, just two blocks from the popular Navy Pier. This conference is a convenient way for program coordinators to discuss common problems and solutions, learn the latest news regarding additions and modifications to the program, and to both preview and provide feedback on some of our new programs that are under development. Three of the highlighted presentations from the conference include:

  • Child Sexual Predators: Protecting God’s Children Online

How easy is it for a child molester to meet a child over the Internet? What is the profile of a typical Internet sexual predator? And, what can parents and others do to protect children from these people? The answers may surprise you. Law enforcement agencies from across the country—including the federal government—call on Robert Hugh Farley for his advice and expertise in how to identify online sexual predators, stop the abuse, and protect children who have access to this high-risk environment. Bob’s presentation is an eye-opening experience, and participants will have ample opportunities to ask questions.

  • Providing a Culture of Support and Healing

While response and prevention programs are a vital first step in the battle to rid the faith community of child sexual abuse, an equally necessary and longer-term commitment is required in the area of support and healing—both of victims and others who are directly affected, and extending to everyone throughout the faith community. Sharon Doty, Paul Ashton, and Dr. Michael Bland bring their combined wealth of experience—as both lifelong Catholics and as professionals with specific expertise in working with victims—to this discussion on support and healing of the faith community.

  • Overview and Commentary on the USCCB Audit Process

With the second round of USCCB audits now under way, dioceses are busy evaluating their safe environment programs and looking for ways to improve their individual programs—both in terms of benefits to the faith community and efficiency for the diocese. Sheila Horan, Deputy Executive Director of the USCCB Office of Child and Youth Protection,will discuss the audit process and take questions from participants about the bishops’ long-term vision for safe environment programs.

Other conference topics will include:

  • A presentation on how to maximize the use and value of the VIRTUS Online™ system.
  • A comprehensive demonstration of the new Touching Safety program—our school-based curriculum to prevent child sexual abuse, and of the Protecting God’s Children program for parents and guardians.
  • An overview of the state of the VIRTUS programs and our vision for further developing this risk control structure as a support for more and more of National Catholic’s offerings.

For more information on the Conference, call us toll-free at 1-888-847-8870 or send an email message to

Final Work on the Bullying Prevention Program

In addition to the conference, development is now in high gear on the Bullying Prevention program. The Bullying Prevention program will provide Catholic schools, religious education programs, and parents with information, resources, and training to help prevent bullying and other violent behaviors in schools and other group settings. The program will include awareness information for educators and others who interact with students, as well as continuing education (monthly training bulletins) via VIRTUS Online.

Schools will be provided with a planning process to help administrators and parents work together to develop a protocol for creating and maintaining safe school environments for students. Plus, educators will be provided with a curriculum to both teach and empower the silent majority of students to become an active and caring majority—in helping to thwart not only bullying, but also the kinds of precursory behaviors that lead to bullying and to other forms of violence.

Our lead expert consultant for the Bullying Prevention program is Philip J. Lazarus, Ph.D. Dr. Lazarus is no stranger to the VIRTUS programs, having authored several articles for our websites and conducted presentations for some dioceses. Dr. Lazarus serves as chairperson of the National Emergency Assistance Team (NEAT) of the National Association of School Psychologists.

The VIRTUS Bullying Prevention program is currently under development with an anticipated availability date of February 2005—in time for implementation during the spring semester of the current school year. For details on the Bullying Prevention program or any of the VIRTUS programs, send an email message to

National Catholic Report

Copyright © 2004 by The National Catholic Risk Retention Group, Inc. (National Catholic), P.O. Box 3197, Lisle, IL 60532, 1-630-725-0986. All rights reserved. National Catholic Report is published two times per year, in the late summer and in the Christmas season, and is now available only online at Photocopying or transferring this document in whole or in part is a violation of federal copyright law and is strictly prohibited without the express written consent of National Catholic. National Catholic provides neither spiritual solutions to individual problems nor legal advice to its clients. Readers should seek the advice of a spiritual director or attorney regarding individual questions or legal advice. 08/04


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