When nations got to war, some companies - the gun makers and airplane manufacturers, the tent weavers and bandage cutters - get rich. Now, introducing a company that banks on peace; United Services Life.
This medium-sized firm based in Washington, sells life insurance exclusively to U.S. military personal, active and retired, around the world. Its profit chart looks like a seismic graph tracing the history of U.S. military involvement - rock bottom during half of the '40s, depressed during the early '50s, down again the late '60s.
But recently, with all fronts now quiet, the company has been going after military families more aggressively than ever and its profits are up. The firm even is considering an assault of sorts on the civilian market.
One look at United Service's board of directors and there shouldn't be any doubt that when this company plans an attack, it plans an attack. A meeting of the board has been described aptly as resembling a strategy session in the war room at the Pentagon. Of 15 members, 7 are retired top-ranking generals and 3 used to run the Navy.
There is Gen, William Westmoreland once top commander in Vietnam, two former Joint Chiefs of Staff Gen. Maxwell Taylor and Admiral Thomas Moorer, Admiral Adleigh Burke, known as "31-KnotBurke" for his Pacific exploits during World War II: Gen. Leonard Chapman Jr., former commandant of the marine Corps: Admiral Ephraim Holmes, who used to command the Atlantic Fleet: Gen. Jack Catton, who has flown almost every type of Air Force plane and was once the nation's youngest general: Gen. George Decker former Army chief of staff: and Gen. George Decker se 19th Tactical Air Command provided air support for Patton in his sweep across France.
The chairman of this star-studded bunch is retired Army Maj. Gen. George Olmsted, whose financial holding company. International Bank, acquired a 25 per cent interest in United Services in 1953. It was Olmsted's idea to stock the company's board with ex-military chief's to give the firm what one official today termed "mature and wise leadership."
"It really isn't like a war room" said United services president Leslie P. Schultz, who never made it above the rank of lieutenant during his stint in the navy. "That is, there isn't the discussion you might think about the old battle situations some of them in together. They take their corporate responsibility very seriously."
The military influence at United Services door. Several ex-commanders serve in key management positions planning strategies to penetrate military bases, and almost of the company's 153 field representatives are retired officers. You don't have to be colonel to sell insurance for Unites Services, but it helps.
'They make great salesmen," Schultz said, "They are fully familiar with the lifestyle, payscale and options available to the military family. And they are extremely disciplined. We have no supervisors, no managers. The field reps deal directly with the home office."
By avoiding supervisors, the company saves, particularly on the commissions. It also saves by having 70 per cent of the premiuns due it deducted automatically from military paycheeks. "it is certainly cheaper for us to get one from the Air Force to cover 63,000 policies than to bill one separately." Schultz remarked.
This helps explain why Conning & Company, a Connecticut securiies firm last year found United Services to have the third lowest general-expense to-premium-income ratio among 67 life insurance companies and the lowest ratio of commissions to total premium income.
But trying sell insurance to a military market has its disadvantages. The most serious, of course, its war. To lessen this risk, the company has classified most service jobs according to degree of combat exposure and fixed maximum insurable amounts for each class.
Another disadvantage is the company's vulnerability to troop shifts and reductions in military personnel. For instance, there were 415,000 officers on duty during the height of the Vietnam War in 1968: this year that number is down to 282,000, according to figures supplied by United Services, "We can have a viable territory today and it won't be there tomorrow," said Schutz.
Still, these minuses have hardly discouraged Schultz, who has big plans to expand sales efforts. As a group, military personnel tend to be in good pysical condition, Schultz said, and once they buy a life policy, chances are better than in the civilian trade they will not let it lapse. United Service's lapse rate was 4.5 per cent last year. The industry average is 8.5 per cent.
Until recently United Services sold only to military officers or officers in training. By 1979, the company plans to have 5 per cent of this market. At the same time, it has begun selling to non-commissioned officers through a small subsidiary named United services General Life Co. which was purchased in 1974 from International Bank. In 1975. the company bought General services Life, through which it plans to concentrate on insurance sales to civilians who work for the Department of Defense.
Finally, the company plans to buy Empire General, a California-based insurance holding company, which will give United Services a foothold in the civilian market. It now has more than $2.6 billion of insurance in force. Assets exceed $390 million. Net income last year was $6 million ($202 a share), up from $5.4 million (1.79) in 1975.
Does it help having a board full of generals and admirals? "We don't get any special arrangement if that's what you mean," Schultz said in response to the question. he said United Services is just one of 300 insurance companies the department of Defense has licensed to sell insurance on military bases.
ut it is the only one with so much military braid at the top, and that does make a difference at the point of sale. "If you're sitting there," said Schuktz. "and you don't know anything about this company and I show the board, and you se Jack Cotton on it, and you might have served under him. So you say to yourself. The company must be all right if Catton sits on the board."