InsuranceNewsNet Magazine July 2010 : Page 44
Secrets of Our Success Guardian Life Insurance Co. “It’s Always the People” W By Steven A. Morelli, Senior Editor hen the history of the past few years is replayed, it will probably prominently feature the image of congressional com- mittees grilling unrepentant CEOs who are more adept at passing blame than fixing problems. Indeed, historians are unlikely to speak kindly of the captains of industry or of industry itself, including the insurance sector. That’s why talking to Dennis Manning, president and CEO of the Guardian Life Insurance Co., is so refreshing. He is as up-front and approachable as is his company, which turns 150 this year. Leave the highly polished Masters of the Universe to the multina- tional behemoths. At the New York-based mutual, they prefer the gruff, hard- working honesty of a coach who knows the game from playing and learning season after season. Ask Manning about the toughest period his company ever Dennis Manning, President and CEO of Guardian Life Insurance Co. faced and he won’t say 2008-09, when many other companies were looking insolvency in the eye. And he won’t point to the many other challenges the company met in its century and a half, such as: The Civil War: Soon after the company was formed in 1860, the United States was split by war. The young carrier, then called Germania and serving mostly the large German population in the United States, not only survived but thrived in that period, even though many German New Yorkers went to war. Germania grew from providing $900,000 of life insurance in 1860 to $14.7 million in 1865, the last year of thewar.The company’s sales force had grown 10 times to 138 by then. It also expanded into many other cities, including San Francisco long before the West was “won”. The Panic of 1873: In a chain of events that sounds familiar today, the financial panic of 1873was triggered by the failure of a bank- ing firm, Jay Cooke in Philadelphia. Although the turmoil is known as a panic, it was actually 44 InsuranceNewsNet Magazine July 2010 an economic depression that lasted about six years, until 1879 in the United States but far longer in Europe. Just as in 2008, companies’ liquidity was severely challenged—of 129 life insurance companies operating in 1870, only 55 remained by 1882. From the start, Germania had conservative business practices, that helped insulate the company, but it still had to slash expenses and limit agencies to Germania-only agents. To remain competitive, the company also introduced the tontine option on its whole life and endowment plans. This allowed the policy to be owned by several people who paid into the tontine and received annual dividends. Following the default or death of an investor, the shares were reallocated until one investor remained. By the early 1890s, the soon-to-be-contro- versial tontine became Germania’s top-selling policy. Armstrong Commission of 1905: Another event that might seem familiar to today’s readers was an investigation into the practices of the life insurance industry following press reports of reckless selling practices,misconduct and excessive salaries, among other abuses. Germania’s president and chief actuary testified for two days before the panel. Their testi- mony showed that the company’s executives earned half the salary of other officers at the leading l The Germania executives discusse put its money in conservative inves bonds and mortgages rather than i also revealed that New York regula ment of the company has been de to the attainment of a strong financ than to the acquisition of any great a new business, and its condition to the result of wise, intelligent and c tive administration.” Although Ge one of the few companies not to be r the commission, laws passed
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