Our Financial Strength and Stability
The financial stability of an insurance company is obviously of utmost importance to all policy holders and beneficiaries as well as to shareholders and employees of the Company.
One of the business goals of FDLIC is to achieve good financial results. The Company must continually balance what it can afford to credit regularly on preneed funeral plans (growth rates) and pay all selling and administrative costs, while being able to realize a profit and still remain competitive at the end of the day. A healthy insurance company must be able to earn a steady and consistent profit and retain those profits in Capital & Surplus to support the future growth of the company and to protect the current stakeholders from any unexpected downturns. FDLIC has shown consistent profitability trends over the years and has earned a reputation of being a good steward of the money entrusted to the Company.
In addition to being a healthy and profitable business enterprise, the Company must make wise investments. Since FDLIC specializes in advance funeral funding, it goes without saying that 100% of policies that stay current and in force will ultimately be serviced by the Company in the form of a claim. That is why FDLIC has a conservative long-term investment strategy that matches the liabilities of the company (claims) with the cash flow of investments (bond payments and maturities). This is referred to as our Asset-Liability Matching Strategy. This strategy protected the Company during the investment downturn of 2008 and has been very effective for maximizing returns to the Company while minimizing the overall risks of investment.
Once executive management is comfortable knowing all claims will be covered by the investment cash flows, it is important to monitor credit quality to ensure future payments will be made. FDLIC invests primarily in very high quality (investment grade) corporate and government agency bonds that generate a strong and predictable stream of cash flows. In addition, FDLIC looks to diversify these investments across different market sectors and among different companies so as to avoid any asset concentrations.
FDLIC's financial strength and stability were recognized in 2006 by A.M. Best Company, the largest and longest-established company devoted to issuing in-depth reports and financial ratings about insurance organizations. FDLIC received an A- (Excellent) rating, a rating that is given only to companies that are considered to have an excellent ability to meet obligations to policyholders. FDLIC has since retained an "excellent" rating, and remains committed to a conservative investment approach that safeguards policyholders and ensures that we will be there to meet every obligation at claim time.