The Mutual Benefit Life Insurance Company

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The Mutual Benefit Life Insurance Company

520 Broad Street
Newark, New Jersey 07102
U.S.A.
(201) 481-8000
Fax: (201) 268-4316

Mutual Company
Incorporated: 1845
Employees: 3,100
Assets: $11.60 billion

The Mutual Benefit Life Insurance Company focuses on providing individual life insurance. The company has responded to changing lifestyles and needs by expanding its product lines to include group life and health insurance, pensions, corporate-owned life insurance, and asset-management services. Throughout its history, Mutual Benefit Life has maintained its commitment to its policyholders, who are also its shareholders. The company has withstood pressure to issue forms of insurance that were not favorable for policyholders, and it has implemented several innovative insurance practices which later became standard in the insurance industry. As a mutual company, Mutual Benefit Life is controlled by its policyholders. It is also one of only a handful of insurance companies licensed in all 50 states and the District of Columbia.

When Mutual Benefit Life was founded in 1845, few people had heard of life insurance. Only about 5,000 Americans owned life insurance policies. Robert Livingston Patterson, however, understood that life insurance was necessary to help families who lost a wage earner. A New York-based importer and exporter, Patterson went to England to gather more knowledge about insurance. Back in the United States, he persuaded a group of men to join him in the development of a new company. They chose the name Mutual Benefit because it aptly depicted their primary purpose.

The founders met their first complication when they approached the New York state legislature, which had just granted a charter to another insurance company and was unwilling to grant an additional charter to Mutual Benefit Life. Undaunted, Patterson and his 11 associates received their charter in New Jersey on January 31, 1845, becoming the first life insurance company in New Jersey and the fourth in the United States.

According to some accounts, the fledgling company first operated out of a founder’s grocery store. The first official company address, however, was 295 Broad Street in Newark, New Jersey, with another office on Wall Street in New York City. The company’s first prospectus stated that all funds, or capital, would derive from premiums paid by policyholders, and all policyholders would become shareholders of Mutual Benefit Life. The company also promised to pay all claims within three months after proof of death and to buy back policies from owners who wished to sell for any reason. These pledges were innovative concepts at the time, but later became common throughout the insurance industry.

In July 1845 the first Mutual Benefit Life field agent, in Norwich, Connecticut, was appointed to extend the company’s reach. Soon after, agents were appointed in Ohio, the District of Columbia, Massachusetts, and as far south as Georgia. The company launched an aggressive promotional campaign and held public meetings to educate people about the value of life insurance.

In December 1845 Mutual Benefit Life paid its first claim. By the end of the first year of operation, the company had issued 936 policies, with total premiums of more than $88,000. The company had issued 13 policies that insure slaves as a form of property insurance for the slave owners. Policies insuring women numbered 39 and carried an additional $15 premium, which was later dropped. At that time, insurance for women was unusual because, as childbearers, women were bad risks. In 1845 the company had developed its first group life insurance policy, insuring four key officers of a whaling firm.

In 1847 Walt Whitman became a Mutual Benefit Life policyholder, for only one year. The company insured many other notables, including U.S. presidents Grover S. Cleveland, William McKinley, William Howard Taft, and Warren G. Harding. President Grover Cleveland had been named after the grandfather of Lewis C. Grover, one of Mutual Benefit Life’s founders and its second president.

By 1848 the company had 138 agents in 21 states and the District of Columbia. Also in 1848, the company’s original 20-year charter was extended indefinitely by the New Jersey legislature, and the Newark staff, consisting of president Patterson, secretary Benjamin C. Miller, and three other employees, moved to Newark’s Market Street.

The company enjoyed brisk business during its first decade, but during its second ten years experienced a significant decline in the number of new policies. Energetic promotion reversed the trend; in fact, the company’s assets tripled in the 1850s, and the 1860 annual report boasted that Mutual Benefit Life had a higher asset to liability ratio than any other insurance company in the nation.

In 1862 Lewis C. Grover became Mutual Benefit Life’s president and the company moved into a new building on Clinton and Broad Streets in Newark. During the Civil War, many policyholders were unable to deliver their premium payments to the company. Company mathematician Amzi Dodd spearheaded an effort to help families recover policies which otherwise would have been canceled. Because Dodd had worked in Virginia and had a great affinity for southerners, he was appointed to handle the southern policies and to arrange payment of claims, even on policies which had lapsed due to non-payment. Dodd also traveled to the South to seek out owners of lapsed policies and offer reinstatement in appropriate cases. The Civil War had boosted sales of life insurance policies, but also wiped out many southern agencies.

In 1871 and 1872, typhoid pneumonia swept across the country, increasing mortality and the company’s losses. In 1873 a financial depression and widespread mistrust of life insurance—fueled by the many fly-by-night operations that had sprung up in the under-regulated industry—brought down many life insurance firms. Mutual Benefit Life, however, prevailed and emerged from the 1870s as the nation’s third-largest life insurance company.

During the last two decades of the 19th century, the company maintained its strong position under the leadership of Amzi Dodd, elected president in 1882. Dodd often sat at his desk in stockinged feet, and wrote personal notes of condolence to most beneficiaries of deceased policyholders. Under his guidance, business increased annually, and by 1890 the company’s assets totaled more than $69 million.

In 1902 Dodd turned over the company’s leadership to Frederick Frelinghuysen who saw Mutual Benefit Life through the strenuous Armstrong Committee investigation of 1905. During a period of scandals within the insurance industry, the New York state legislature probed into the financial and business aspects of insurance companies during a series of 57 hearings. The investigation ended with new insurance legislation, whose requirements Mutual Benefit Life already met. Later in 1905 the company moved to a new seven-story building on Broad Street in Newark. In 1909 the company instituted a policy to encourage the hiring of women. The first woman employee had been hired in 1862, but the new policy opened the door for many others. The company had separate dining rooms for women, men clerks, and men officers.

In 1912 eight Mutual Benefit Life policyholders died aboard the Titanic; two years later two more policyholders were killed when the Lusitania sank after being torpedoed by a German submarine. During World War I, 556 Mutual Benefit Life policyholders were killed. The influenza epidemic of 1918 also took a great toll, resulting in 1,489 death claims, totaling almost $5 million. Despite losses, the company was able to pay its scheduled dividends.

In 1924 John R. Hardin, a company director since 1905, was elected president. Three years later Mutual Benefit Life moved to Newark’s Broadway and Second Avenue.

Vice president Edward E. Rhodes developed the company’s first disability insurance plan in 1929. A few months later, when the stock market plummeted, Mutual Benefit Life faced multiple policy surrenders, and claims due to suicides. Sales increased the following year, but fluctuated for more than a decade after the crash. To spur sales, the company implemented a retirement income bond and also a policy that combined life insurance with a guaranteed annuity income. In addition, the company took the opportunity to stress the value of life insurance as a source of immediate funds during times of great need.

By 1933, when several banks were in serious trouble, many policyholders could not pay their premiums because fund transfers were interrupted. After a New Jersey banking holiday on March 3, 1933, Mutual Benefit Life and other insurance companies were placed under special emergency restrictions set by the state legislature. According to the restrictions, applicants had to show hardship or extreme need before a loan against a policy or policy surrender valued at more than $100 could be approved. The restrictions ended within a year, and Mutual Benefit Life emerged with a new, low-cost life insurance contract called the Ordinary Life Increasing Premium policy—a forerunner of the company’s OLIP plan and one of the forces behind an increase in business in 1933. The OLIP policies offer lower premiums to younger insureds.

During the Depression, Mutual Benefit Life reduced employees’ salaries but did not lay off any workers. The company also encouraged policyholders who had borrowed up to half of their original policies’ cash surrender value to surrender their policies and start again with new policies. In 1934 Mutual Benefit Life had more than 500,000 policies in force and elected its first woman officer, agency field secretary Mildred F. Stone.

The following year the company implemented a monthly budget plan whereby businesses deducted employee’s monthly life insurance premiums from their salaries. In 1938 revisions to the social security law significantly increased new life insurance.

In 1941, when the United States entered World War II, the company paid benefits on 98 war-related deaths; another 25 policyholders were listed as missing in action. The company’s total war-related loss was a relatively insignificant 1,332 claims totaling $4.8 million. In 1943 the National Association of Insurance Commissioners recommended that all insurance companies limit the coverage of armed forces personnel. Under this recommendation, servicemen’s deaths outside the United States or Canada would not be covered while the policyholder was in active service, regardless of the circumstances. If a serviceman was fatally injured while on leave in France, for example, he would not be covered. Mutual Benefit Life adopted the recommendations but continued coverage outside the designated area when the death was not war-related.

Sales were slow throughout World War II, and Mutual Benefit Life began to exploit opportunities in the growing business market, initiating pension trusts and employee benefit plans. In 1945, its centennial year, the company surpassed $1 billion in assets.

In 1946 W. Paul Stillman was elected the first chairman of the board of directors, and John S. Thompson was elected president. Under this new leadership, the company entered a very active period that saw new investment policies, sales methods, and products for the company. One of those products was special-class underwriting, which provided life insurance to many who were otherwise uninsurable.

In 1951 the company helped finance the New Jersey Turnpike. Two years later, Thompson became the board’s vice chairman, making way for 44-year-old H. Bruce Palmer to become the youngest president in the company’s history. In 1953 the company added a double-indemnity rider for deaths resulting from accidental bodily injury and began a monthly premium-payment plan for individual policyholders. In 1957 Mutual Benefit Life moved into its present home office at 520 Broad Street in Newark, and group life and health insurance coverage were added to the company’s product line.

Mutual Benefit Life maintained its strong and steady, but unspectacular, growth throughout the 1960s, 1970s, and 1980s. Robert V. Van Fossan was elected chairman and chief executive officer in 1972. Three years later, the company’s western home office and group insurance headquarters opened in Kansas City, Missouri. Frank E. Sullivan was elected president in 1978. In 1981 the company established Mutual Benefit Financial Service Company, which designs and manages annuities and tax-advantaged investments, and Mutual Benefit Life soon established itself as a leading insurance company in investment-product sales. Five years later, Mutual Benefit Life acquired Help-U-Sell, Inc., a national real estate franchise company.

In 1987 Sullivan became vice chairman and Henry E. Kates assumed the presidency at age 48, after serving as Mutual Benefit Life’s executive vice president of individual insurance. In 1989 Kates was named president and chief executive officer, following the death of Van Fossan.

Kates has led the way in extending Mutual Benefit Life’s reach beyond the United States. In 1989 the company entered into a joint venture with the Tong Yang Group, one of the largest industrial complexes in South Korea. The joint venture made Mutual Benefit Life one of the first U.S. insurance company to move into the South Korean market, and it was the first step forward in the company’s plans for marketing on a global scale. The joint venture company, called Tong Yang Benefit Life, has grown rapidly in a short time, selling Mutual Benefit Life’s insurance and financial services.

As Mutual Benefit Life poised for the 1990s, it began exploring other foreign opportunities, particularly in Europe. Anticipating a slower economy but a growing interdependency with other countries, the company continues to emphasize steady growth, skilled management, sound diversification, and continued responsiveness to the needs of policyholders.