100 North Greene Street
Jefferson-Pilot's business strategy is to achieve nationwide growth through aggressive market penetration, partnering with independent agents, and effective consolidation of acquisitions. From a base as a strong regional life insurer, Jefferson-Pilot has grown into a major national presence in personal financial services.
Jefferson-Pilot Corporation is a major U.S. provider of life insurance, annuities, pension plans, and mutual funds for individuals and groups. The company also sells commercial casualty and title insurance and invests in various broadcasting ventures. Active primarily in the southern and southwestern United States, Jefferson-Pilot possesses a rich history characterized by shrewd, conservative growth.
In the Beginning: Jefferson Standard Life
Jefferson Standard Life Insurance was founded on August 7, 1907, in Raleigh, North Carolina. Although it set up operations in a relatively modest second-story office in the state's capital city, Jefferson Standard began with half a million dollars in capital. In fact, it was heralded as the largest corporation ever to have been established in North Carolina. The company was patriotically named after Thomas Jefferson, the third U.S. president and the framer of the Declaration of Independence. "A Jefferson Standard Policy is a Declaration of Independence for the Family," was Jefferson Standard's official slogan.
Jefferson Standard enjoyed immediate acceptance by the local community. Only 111 life insurance companies existed in the entire country when it opened its doors (compared to about 2,000 in the early 1990s), and people were eager to take advantage of the promise of security proffered by the fledgling insurance industry. After only five months of operation, Jefferson Standard had about $1 million of insurance in force and was finding strong demand in other parts of North Carolina and even outside of the state.
Jefferson Standard's quick start was orchestrated by brothers P. D. and Charles W. Gold, members of a prominent newspaper family from Wilson, North Carolina. The Golds had inherited an entrepreneurial bent from their father and had access to a pool of capital to back their ideas. In addition to their desire to create a new enterprise, the Golds were driven by another force. The Civil War had ended and Reconstruction was ongoing; the Golds wanted to make their contribution to the New South. Recognizing that large financial institutions, including insurance companies, in the North were draining vital development capital from the South, the Golds wanted to form an institution that could fund local industrial growth.
The Golds and 22 like-minded associates began Jefferson Standard with the intent of developing it into a regional insurance powerhouse. Charles Gold's daughter came up with the name of the company, and P. D. Gold crafted a logo that would serve the organization for decades to come. However, these developments were incidental to the primary mission of Jefferson Standard's founders&mdashø create a regional insurance company, operated with uncompromising ethics, that could withstand national fiscal upheavals and enhance the economic stability of North Carolina. Evidencing this goal and foreshadowing the philosophy that would dominate Jefferson Standard's future was this quote from the board minutes of 1910: "The future ... is fraught with difficulties. The way to profit is long, the task is arduous, and the cost is great."
The Julian Price Years: 1912--46
Eager to expand its reach and increase its capital strength, Jefferson Standard completed mergers with two other companies in 1912. It absorbed Security Life and Annuity Company and Greensboro Life Insurance Company, subsequently transferring its headquarters to Greensboro. The year 1912 also marked the beginning of an era of expanding prosperity for Jefferson Standard under the direction of Julian Price, who had worked for Greensboro Life before the merger. Although he was not named president of Jefferson Standard until 1919, when the last of the aging Gold brothers stepped down, Price played a pivotal role in the company's progression throughout the 1910s and until his death in 1946.
The 1912 mergers brought Jefferson Standard's total base of assets to a stunning $3.6 million and its total insurance in force to more than $37 million. Having established a firm footing and acquired a sizable sales force, the company stepped up its marketing efforts and worked at creating a more sophisticated investment program for its flourishing reserve of capital. In fact, the company realized stunning growth after the mergers, swelling its assets to almost $10 million by 1919 and boosting total insurance sales to more than $81 million. "The record is a success unparalleled in the history of southern life insurance companies, and one beyond our most sanguine expectations," reported the board of directors during that period.
Much of Jefferson's success in its early years stemmed from the devotion and persistence of its sales force. It was that group that actually went out to the farms and met with small-town business owners to educate them about the concept of life insurance and to sell them on the Jefferson Standard name. The agents often were not paid in cash, having to barter for their commissions instead. According to company annals, one salesman, after being paid with a bull yearling, fattened up his commission and sold the bull for twice its value the following year.
By the late 1910s, Price was pushing hard for faster growth--and he got it. Notwithstanding setbacks experienced during World War I, Jefferson Standard realized its greatest year ever in 1918, when it boosted sales more than 50 percent and extended its operations into a total of 14 southern states. The following year Price replaced George A. Grimsley as president of the company, gaining unfettered command of the organization. He quickly set Jefferson Standard on a course of expansion that would make it a national leader in the insurance industry and would make him one of the most respected CEOs in the United States. Noted as an articulate man of vision, Price combined top-notch skills in sales and finance with the deep sense of ethics originally prescribed by the company's founders.
Jefferson Standard, under Price, was still dedicated to its goal of building the South. It sought an aggressive lending strategy throughout the region, providing much-needed capital to farmers and industrialists. It also extended its sales activities throughout the Midwest and West during the 1920s in an effort to boost its reserves and generate new capital for regional investments. The company even authored a widely distributed book entitled A Pattern for Southern Progress. At one point Price, as part of a marketing effort, Price had an artist superimpose a rendering of a cow on a U.S. map; the cow was being fed in the South and milked in the North, signifying the loss of southern capital to northern financial institutions.
As if to stake its claim on the future of the life insurance industry, Jefferson Standard erected a 17-story "skyscraper" in the early 1920s. Although the project was considered bold and nervy, particularly in a town of only 19,000 people, the marble-laden complex was completed in 1923 and was completely paid for before its doors were opened. When the company moved into its new headquarters it boasted a record $200 million worth of insurance policies in force. Before the Great Depression hit, moreover, the company had boosted that figure to a striking $300 million and was unfurling a national sales force at a rate that awed many of its competitors.
Jefferson Standard was battered during the Depression. Many of its debtors defaulted, and its investments and sales soured. Nevertheless, it did emerge relatively unscathed in comparison to most of its industry counterparts, the result of its conservative fiscal strategy and the determination of its managers. Price, in particular, was credited with guiding the company through that trying era. Although some people, including some coworkers, castigated Price's cantankerous and outspoken personality, his assertiveness and grit helped the company weather financial adversity and stay its course through the 1930s and even through World War II.
Moreover, Price relished his reputation as a polite, though scrappy, man of principle and vision. He was admired and respected within his family, community, and industry. Shortly before his death in a car accident in 1946, the Greensboro newspaper, The Democrat, devoted almost an entire issue to Price. The paper offered some ideology and homespun common sense espoused by Price and also gave some insight into his unconventional character. For example, Price reportedly didn't own a home until he was 60 years old, choosing instead to rent: "Fools build houses. Wise men live in them," he believed. Other bits of Price wisdom were recorded for posterity: "Stay out of debt. If you don't owe any money, you're able to look a man in the eye and tell him to go to Hell," and "I like a fellow with his shoulders back and his head up. A fellow who looks like he is going somewhere, even if he isn't."
Steady, Quiet Growth: 1946--67
Price was succeeded as president of Jefferson Standard by his son, Ralph Clay Price, in 1946. However, Ralph Clay Price served for only four years before the board of directors essentially forced him out of his leadership role and selected Howard Holderness as president. Holderness had been with Jefferson Standard since the mid-1920s, first working there during the summers and then assuming a full-time job in 1925. His qualifications were impeccable. His father had helped found the company before sending his son to earn his Masters in Business Administration at Harvard. Holderness left Jefferson in 1945 and formed his own successful company before returning as president of Jefferson Standard.
Holderness was the antithesis of Julian Price. A soft-spoken, easy-going man, Holderness never gave direct orders and prided himself on not interfering with his fellow managers' duties. Although his style was different, the results were just as successful. One year after taking the helm at Jefferson, Holderness announced that the company had achieved $1 billion worth of life insurance in force. From there, the company embarked on a journey of steady and rapid expansion that propelled it to the forefront of the insurance industry.
By its 50th anniversary, Jefferson Standard had achieved total insurance in force of $1.5 billion. Just a few years later, in 1960, that figure had risen to $2 billion. In 1967, the same year in which Holderness retired as president, Jefferson Standard reached a record $3 billion of insurance in force and was approaching $1 billion in assets. By the late 1960s, in fact, Jefferson was providing insurance services to more than one million U.S. policyholders in 32 states, the District of Columbia, and Puerto Rico. Furthermore, the company had managed to retain its prized reputation as a fiscally sound enterprise, garnering the admiration of life insurance industry leaders nationwide.
Although Jefferson Standard was known to the general public as a life insurance company as it entered the 1970s, it was also active in several media ventures. Its interest in newspapers and broadcast companies could be traced back to the Gold and Price families, both of which owned newspapers at the time that the company was founded. Price, having become fascinated with newspapers, had authorized a sizable loan to a local Greensboro newspaper in 1923. Recognizing the lack of capital available to aspiring newspaper publishers, Price advanced money to several start-up newspapers that went on to become major publications during the mid-1900s. Jefferson Standard also purchased an interest in several radio stations and studios. The media division operated under a philosophy of "showmanship and citizenship" congruent with the purpose of the overall organization. Although the company continued to focus on insurance, its media holdings were a profitable arm of its operations in the mid-1900s and particularly into the 1980s and early 1990s.
Faster Growth, Greater Diversification: 1967--92
W. Roger Soles took the reins from Holderness in 1967 after 20 years of service to the company. Like Holderness, Soles was known as a soft-spoken, intuitive man with a knack for finance. However, he also possessed the visionary traits that had made Price so successful as the company's leader. The 46-year-old Soles displayed his intent to achieve a new vision for Jefferson Standard immediately after assuming leadership. To take advantage of tax laws and changing financial markets, Soles reorganized the organization into a holding company, under the name Jefferson-Pilot Corporation, to reflect the integration of a major subsidiary, Pilot Life. Soles believed that the holding company structure would allow Jefferson-Pilot to achieve faster growth and greater diversification in evolving U.S. financial markets.
Soles was correct. Under his leadership, Jefferson-Pilot experienced two decades of expansion unparalleled in its history. Soles brought a new emphasis on marketing to the organization and carried Jefferson-Pilot into the computer age by implementing vast automated systems. He also became a leader in the insurance industry, serving as the first chairman of the American Council of Life Insurers (ACLI), considered the highest management office in the industry. Jefferson-Pilot entered a variety of new business and consumer markets during the 1970s, including tax sheltered annuities, retirement and pension programs, and numerous investment and financial planning services. The company also restructured its sales force and developed new pay incentives for its agents.
By 1976, Jefferson-Pilot had more than $5 billion of insurance in force, reflecting rapid growth since Soles' selection as president. The company continued to expand in the late 1970s, boosting its insurance in force to $6 billion by 1978. Sales growth was augmented by increased investments in media ventures; Jefferson-Pilot began to actually acquire newspaper and broadcasting companies, rather than investing as a sideline. Despite its rampant increase in insurance and media revenues, however, Jefferson-Pilot's profit opportunities were diminished by widespread trends that were affecting the entire U.S. insurance industry. Specifically, rising interest rates and inflation in the late 1970s, combined with growing state and federal tax and regulatory pressures, crimped industry earnings.
While the overall life insurance industry suffered a general downturn during the late 1970s and early 1980s, Jefferson-Pilot sustained moderate growth and remained financially healthy in comparison to most of its competitors. During the 1980s, the company's operations continued to grow at a steady rate, though its growth lagged that of many of its life insurance company peers. Indeed, many insurers were able to reap huge investment gains during the 1980s by placing their reserves in real estate, junk bonds, and other high-risk vehicles that paid fantastic returns. Jefferson-Pilot, in contrast, maintained its staid, conservative strategy of investing in low-risk, long-term, wealth-building instruments.
By 1989, Jefferson-Pilot had increased its life insurance in force to $37 billion, more than six times the amount of in-force insurance just ten years earlier. Although this growth belied the lack of a corresponding rise in profits from life insurance sales, Jefferson-Pilot was able to bolster its bottom line during the decade by expanding into an array of complementary markets. While it earned about $109 million in net income during 1989 from life insurance, for example, it captured an additional $28 million from its casualty and title insurance activities, communications subsidiaries, and miscellaneous investment gains.
More important than Jefferson-Pilot's steady revenue and profit gains during the 1980s was its successful strategy of conservatively investing its reserves. By the early 1990s, the company's balance sheet contrasted sharply to the sea of red ink that swamped many of its competitors. Indeed, as new tax laws and an economic recession battered financial markets during the late 1980s and early 1990s, many insurers were teetering on the edge of bankruptcy or were, in fact, insolvent. "Jefferson-Pilot's got one of the best balance sheets in the business," said Myron Picoult, industry analyst, in the August 1992 issue of Business-North Carolina, adding "What they did was absolutely correct in terms of maintaining the integrity of their balance sheet, given the environment of the 1980s."
Despite Soles' success at keeping the company focused on long-term growth during the 1980s, he came under attack in the early 1990s from Louise Price Parsons, the daughter of Ralph Clay Price and a major shareholder in the company. Parsons and her husband petitioned the board to remove Soles as president of the company, citing, among other things, the company's slow profit growth in comparison to a few more successful insurers in the region.
While the Parsons did not succeed in their two-year effort to remove Soles, they were able to reach a settlement with the company that mandated that the board implement certain corporate governance principles. During his last two years as president, Soles oversaw healthy income and profit gains; revenues rose to $1.20 billion in 1992 as net income rose an impressive 48 percent in three years to $195 million. In early 1993, Soles retired at the age of 71 and was followed by several other senior managers who had reached retirement age.
1990s and Beyond: Becoming a National Force
Soles was replaced in 1993 by David A. Stonecipher, who came from the Life Insurance Company of Georgia. The aggressive Stonecipher set about transforming Jefferson-Pilot from a respected, regionally known company to a nationally recognized insurance power. Whereas Soles had been extremely conservative, amassing enormous cash reserves, Stonecipher proved more of a risk-taker. In 1995, he initiated a rapid-growth phase by purchasing the insurance in force from Kentucky Central Life and Alexander Hamilton Life. Two years later, Stonecipher made an even larger buy when he acquired the life insurance division of Chubb Corporation, which was renamed Jefferson-Pilot Financial Life Insurance Company. Altogether, the three acquisitions cost $1.5 billion.
Despite the large price tags, Stonecipher's spending accomplished what he had set out to do. Jefferson-Pilot rapidly ascended the ranks of life insurance companies, moving from the nation's 65th-largest in 1993 to the nation's 15th-largest in 1997. The company's total assets doubled, jumping to $23 billion, and its life insurance in force soared to $160 billion. The acquisitions also served to increase Jefferson-Pilot's presence throughout the United States. While the company had traditionally sold its products through approximately 1,000 of its own agents, by 1997, more than 17,000 independent agents were offering Jefferson-Pilot insurance in all 50 states.
The Chubb acquisition was important in another way, as well. It enhanced Jefferson-Pilot's already-strong position in the universal life insurance market. Chubb had a variable universal life product, which appealed to a more financially upscale market than Jefferson-Pilot's traditional universal policies. By the end of 1998, Jefferson-Pilot was the nation's third largest provider of universal life insurance policies. Variable policies made up one-third of the company's total life insurance production.
While Stonecipher was making acquisitions that added to the company's core business segments, he was simultaneously shedding those that no longer fit. Jefferson-Pilot Data Services and Jefferson-Pilot Fire & Casualty were both sold in 1995. In 1998, the company announced that it also planned to sell off its group medical insurance business. "In group medical insurance, Jefferson Pilot was a relatively small competitor in a market increasingly dominated by large managed-care companies, and it was a line of business that exposed our earnings to significant potential volatility," Stonecipher wrote in the company's 1998 annual report. He added, "Thus, group medical insurance simply no longer fit our definition of an attractive core business, and exiting it frees substantial capital for investment elsewhere."
Jefferson-Pilot closed out 1998 with record numbers: $2.6 billion in revenues and $418 million in net income. The company's insurance division accounted for approximately 90 percent of its total revenues. The remainder came from its radio and television broadcasting operations and from earnings on investments. With a strong capital position and the aggressive leadership of Stonecipher, Jefferson-Pilot was poised to continue growing in the coming years. The company planned to further expand through acquisitions that offered added distribution potential and products that extended and enhanced the Jefferson-Pilot product line. Growth was also expected in the existing subsidiaries in the form of new product introductions and new, innovative distribution channels.
Principal Subsidiaries: Alexander Hamilton Life Insurance Company of America; Jefferson-Pilot Communications Company; Jefferson-Pilot Financial Insurance Company; Jefferson-Pilot LifeAmerica Insurance Company; Jefferson-Pilot Life Insurance Company; JP Investment Management Company.