ustxtxb_obs_1956_02_29_50_00004-00000_000.pdf

Life Insurance Company in Texas with $1,000,006 Capital and Surplus .Paid in Cash Prior …to writing business August, 1954. To set a World’s Production record of over $33,000,000 in its first year. Over $43,000,000 LIFE INSURANCE IN FORCE AS OF DEC. 31, 1955. And Now Si ST Home Office: 5011 Fannin, Houston, Texas AGENCIES THROUGHOUT ;TEXAS Affiliated with Western Indemnity Life Insurance Company Jan. 20, 1956 ; 6582-E, Oscar James vs. Atlantic Finance Co., Time Plan Loans, American Finance Co., and Continental American, filed Dec. 23, 1955 ; and 2008-B, Fairrie Jo Estell vs. City Finance Service and Continental American, filed Aug. 15, 1955. Filed in a standard form by the firm of Fritz and Bridges, the pleadings -allege defendants, each individually “and each possible combination of thEin in conspiracy, fraudulently, usuriously,” and in violation of the Texas Constitution, committed certain acts, “thereby increasing the total interest charges to more than ten per cent per annum.” The suits have not been litigated. Queried by the Observer in Houston on his recent connection with Continental American, Brownlee authorized only the following quote: “Credit insurance, like interest; is allright as such or per se, but when excessive charges are made and contract obligations are not recognized, then that is not a good practice. There is no reason for the insurance business to be condemned or its good name hurt because of the greed of a very few persons.” In 1954, Continental American’s latest annual statement to the Insurance Commission indicates, it took in $1,466,046.67 in premiums and annuity considerations, of which it then returned to its agents, as “commissions,” $1,239,808.21 or 84.6 percent. Benefits paid to people who got the credit insurance on their loans totaled $75,616.62, or 5.1 percent of the premiums they paid. The balance of the money went into overhead and losses . for Continental American, whisch recorded a net loss from operations, excluding capital gains and losses, of $109,651.89 that year. Specifically, the company received $510,167.75 in life premiums and $955,878.92 in accident and health premiums in 1954. It paid out $16,213.70 in death benefits ; $5,454.79 in “matured coupons”; $53,725.16 in benefits under accident and health contracts ; and $222.97 on “supplementary contracts” that year. Brownlee joined Continental American in February, 1955, becoming executive vice president .and. director of agencies in April. He resigned in December, 1956, but stayed on for a time because of the illness of the president. The AP reported Brownlee was executive vice-president “until a few weeks ago.” He had 150 shares of stock in the company. He has returned 100 shares to J. B. Greenfield, the president of the company, and lie gave 50 shares to a friend, he told a reporter. Last November he disposed of his other stock holdings, and neither he nor his wife owns any stock now, he said. The charter file of the company shows that J. B. Greenfield was president by December, 1953. On April 9, 1955,’Brownlee appeared on a letterhead as vice president and director of agencies. He signed a formal document second among 14 of the officers. On July 11, 1955, he was listed as a director. ON ANNOUNCING Brownlee’s appointment, Gov. Shivers stated: “I think the state is most fortunate that Mr. Brownlee has agreed to serve in this important position. I am sure that the Insurance Commission’s program of strengthening the Texas insurance industry will be greatly benefited by the experience and knowledge which Mr. Brownlee brings to the commission.” Shivers said Brownlee has had experience in the fields of casualty, life, industrial, credit, credit union, group accident and .health, and fire and marine insurance. Brownlee commented: “I am not accepting the post as a political appointee. I am going as a hired hand.” He said he favors “prompt action on anything that is out of order.” His main object in taking the $15, 000-a-year appointment, he said, is to “be of some service to the state” and to “do an honest job of it.” He emphasized his appointment was “in no way political.” “I had met Gov. Shivers only once or twice before he called to ask me if I were available for the position,” he told a reporter. “I have never been a contributor to the Governor’s campaign, and I have never campaigned for him, although I did vote for him. The only reason I know he accepted AUSTI N Jerry Holleman, executive secretary of the Texas State Federation of Labor, writes in the current Texas Federationist that once “the advertised benefits to be derived by labor” from the Insurance Company of Texas are me is that he must have thought I was qualified for the job.” “This is a critical year for insurance in Texas,” he said. “There are obviously some irregularities and it will be my purpose to co-operate with the other commissioners in every way I can to take such corrective action as may be indicated, within the scope of our authority and keeping in mind the public interest and the good name of life insurance.” N PAST YEARS Brownlee has been general agent for Massachusetts Mutual Life Insurance Co., Provident Mutual Life Insurance Co. of Philadelphia, and State Mutual Life Assurance Co. of Worchester, Mass.; manager for Reliance Life Insurance Co. of Pennsylvania ; and agent for Ttavelers Insurance Co. of Hartford. Born in Zephyr, Texas, he attended Southern Methodist University and entered the insurance business in 1927. He is 48. He is a former president of the Houston Association of Life Underwriters and the Houston Junior Chamber of Commerce, df which he was named the best local president in 1942. He was chairman of the membership committee of the Houston Chamber of Commerce in 1955, when that chamber set an all-time record for new memberships in a given year. He has worked with the United Fund, Houston Fat Stock Show, Boy Scouts, S.M.U. Ex-Students’ Assn., and Houston Community Council. He has been a member of the board of stewards of St. Paul’s Methodist Church of the last ten years and is secretary of the Board of Methodist Hospital. In an editorial,. the Houston Post greeted Brownlee as a “fine choice” because of his “wide experience in various types of insurance business” and his “exemplary character.” “He is one of Houston’s most active and popular civic workers,” the Post said, and those who know him will vouch for his “integrity and conscientious sincerity.” realized, the federation should discontinue its connection with the insurance business. Holleman explained the background of the termination of a management contract ICT had with Jack Cage & Co. Two-thirds of the membership of the boards of directors of ICT Insurance Co. and ICT Corporation were AFL union members, he explained, but actual management was handled by Jack Cage & Co. While Holleman did not go into it, it is understood that Jack Cage & Co. spread the operation over numerous states and into various non-insurance business areas, entertaining state insurance officials in the course of expanding the business. “In recent months, it became apparent both to most union members on the ICT boards and to Cage and Nile Ball, as principal owners of Jack Cage & Co., that it would be best that the management contracts be terminaed and that the boards of directors assume their full responsibility,”. Holleman wrote. This was done Feb.. 1 “by mutual agreement.” The federation does not own or control these companies, Holleman said, but “this promotion was undertaken with the approval and recommendation of the Federation.” “Permitting ICT to lose money for its labor union stockholders would seriously damage the labor movement in Texas,” he said. He and other federation officials have spent a lot of time, therefore, “to see that no such loss was suffered,” and once “the program can be considered a success,” the federation’s executive board feels that the federation should “discontinue its connection with the insurance business altogether,” liesaid. House, Sent Probes Continue ‘Much Undone’Spilman; ‘About Over,’ Observes Fly AUSTIN Where do the House and Senate investigating committees go from here? They have held a lot of meetings on the insurance situation, but there has been no activity for several weeks Wade Spilman, chairman of the House group, says his committee is less than one-fourth through its investigation, but Senator William Fly, the Senate chairman, believes the major portion of the Senate inquiry is over with. Both Spilman and Fly assert their committees will question former Insurance Commissioner Garland Smith, who was before the Senate committee several days but was not questioned at that time. Spilman says he “could see where some criticism of unasked questions may be justified”such criticism has been advancedbut he adds that he “will not make any grandiose statements or mount .a white charger to lead a crusade.” “I certainly have no sympathy with anyone who has violated any moral, ethical, or state law, but I am very sympathetic with those who haven’t violated these laws and have become involved in castigation,” Spilman said. “Anyone doing wrong should be exposed, and the House committee Will turn over such evidence to the proper grand jury as it is found.” Fly says the Senate committee’s principal unfinished business is calling A. B. Shoemake. He says the committee “will have to call” the president of defunct U. S. Trust & Guaranty if he recovers enough to talk to them. Shoemake tried to kill himself. but is now recovering and can answer simply questions with brief answers. Last week more insurance companies went under. Apparently the Insurance Commission has decided, subsequent to the U.S. Trust debacle, to let a lot of firm’s slip quietly under the surface. Receivership action was ordered against American Home Mutual Life Insurance Co. and Trans-County Mutual Insurance Co. of Dallas and San Antonio. Dist. Judge Jack Roberts granted a temporary order against the latter company and named J. D. Wheeler temporary receiver. Glynn E. Hall of San Antonio was listed as corm pany president of TransCounty Mutual. Jack Shelton, Austin insurance man who represented Hall in Austin, said Hall thought liquidation could be accomplished without loss to policyholders. Hall reported. that some of the company’s policies had been reinsured by two now-receivered firms, one of which was Home Service Casualty of Dallas. The commission set hearings on show-cause order for mid-March on four other companies : Supreme Liberty Mutual Life Insurance Co., Houston ; Anderson Burial Assn., Cleveland, Tex. ; Denison Burial Association,. Denison ; and Star Mutual Burial Association, Tyler. The commission placed the affairs of the Gulf Burial Assn., Corpus Christi, in the hands of a’ conservator when officials of the firm didn’t show up at a show-cause hearing: Old Atlantic Life Insurance Co. of Texarkana, the first life insurance company to be organized since new laws went into effect Sept. 6, was given a license to do business. Insurance Commission Chairman Byron Saunders announced last week an agreement with Lloyds of London that that company will pay a five percent tax on the premium total of Texas surplus insurance it underwrites. This may bring , $1.5 million to the Texas treasury, advised sourct. said. THE TEXAS OBSERVER Page 4 — February 29, 1956 HOUSTON CIVIC LEADER Brownlee Sells Stock in Continental HOLLEMAN DISCUSSES ICT