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A Public Service Message from the American Income Life Insurance Co.Executive offices, Waco, TexasBernard Rapoport, Chairman of the Board Well, now we had the market and we had a product that could be profitably sold. Then we were ready to go. So we started out selling disability insurance. We sold lots of it. Then came 1972. Well, for a moment or two during that year I thought the world was coming to an end. We were just writing lots of business and we had our six months report coming out and this was prior to GAAP accounting and we showed a very substantial loss. Well, what really unsuspectingly happened to us was that the mores of our society were changing as the result of the radical reorientation resulting from the malaise of the ’60s. The commitment to the work ethic had diminished. The claims on disability insurance rose dramatically. Our stock went from $26 to $12 in one day. I will never forget that day and I resolved that I would try to do something that had never been done in our industry; to wit, to convert an accident and health sales force into a life insurance sales force. I know it sounds almost impossible to believe, but we really accomplished this almost overnight. There’s an old proverb that in order to give light to others, one-must first set fire to himself. I can tell you quite frankly that as the largest stockholder in the company, I was really on fire. And I guess it radiated throughout our entire sales force because we successfully made the conversion. Our relationship with the labor movement is a very interesting one, and I want to explain it. We do not sell health and welfare or pension plans or group insurance. We sell supplemental insurance. In other words, our agents sell individual policies to those union members who want additional insurance to supplement what is provided for them in their health and welfare program. In our manner of doing business, we go to the president or business agent of a Local and say to him “You have negotiated a fine health and welfare plan for Our members. The truth is that your members do buy supplemental or individual insurance additionally, and wouldn’t you prefer that they buy it from a union company rather than from a non-union company?” That answer is usually yes, and then we ask them to put out a mailing to their membership indicating that if the member is interested in supplemental insurance he can have it with a union label company. Well, generally we will get back anywhere from a four to fifteen percent response. We average selling about half of the responses. In other words, American Income’s growth is the result of having the privilege of dealing with 18,000 or 19,000 Locals throughout the United States and the fact that we will in most cases have a continuous relationship with the Local for these mailings. We are very supportive of causes which are of interest to unions, and this comes naturally to me because of my personal philosophy which succinctly stated recognizes that essential to a free democratic society is a free competitive business community, a free labor movement, and, of course, a free government. We have a Labor Advisory Board and many of the most important international union presidents are members of this Board. Their membership does not constitute either an endorsement of our company or its products, but it is an acknowledgement that American Income is a union label company. These members share with us the benefit of their thinking on how American Income can best serve the union membership and union causes. In addition to the union market, we have made some significant inroads into the credit union market. So marketingwise, we always try to remember that what built American Income is the fact that we had places for our agents to go. We can contract a person who has never been in insurance previously, train him or her for a period of ten days, and really and truly have him or her nearing $400 or $500 a week right from the very first week following their training. The reason is simple. We give our people thirty places to go each week. Now I don’t mean just a name and an address, but a place wherein the salesperson will be calling on someone who knows that the agent is coming, knows why, and generally understands that there is a community of interest between the two inasmuch as they are both union members. It is for this reason that American Income’s salespeople have one of the highest closing ratios relative to interview in our industry. We are constantly improving our marketing techniques. For example, we recently introduced a new accidental death program which enables Locals to provide an additional benefit for their members. This not only gives us an opportunity to serve unions and their members in a more meaningful way, but at the same time increases some tenfold the number of prospects that our agents have, and provides a base from which we can hopefully expand our marketing and sales operations exponentially. We are just now beginning to see some meaningful increases in our new business production. We are approaching some other new marketing techniques. We are in too early a stage to make any predictions. I do want to indelibly impress on you that there isn’t any company anywhere that is more committed to searching out new marketing opportunities than American Income. If I had to pick out American Income’s most valuable asset, I would have to say it’s not its Chairman of the Board or its officers, but rather its sales force. We have a thousand person sales force that is strong and probably one of the most productive on average in the entire insurance industry. We really are a company of opportunity unlimited. Most of our state general agents earn well in excess of $100,000 a year, a few even a half million dollars and, yes, one even earns one million dollars annually. Our general agents’ and our agents’ average earnings are considerably above industry average. Well, you can see up to this point that we were able to build a market and to gather a bunch of great salespeople under one roof. This is what it seems to me the entrepreneur has to do. What he can’t do, or at least generally can’t, is to delineate what his strengths and his weaknesses are. It’s because he is generally strong in the marketing and sales area that he gives too little attention to the real object of the business which is to make money. Subjectively speaking, I recognize that it takes people like me to build companies, but that the professional managers are far more adept at running them for profit. So I went out and employed Charles Cooper as President of our company. And while I am obviously prejudiced, he is in my mind the most competent manager I’ve ever met. Our Executive Vice President is Ken Phillips who is also our Financial Officer and Director of our computer operations. So under Cooper’s leadership and with Ken’s great talent, our company is so mechanized that it’s really indescribable. You would have to come down and take a look to see how effective the systems that Cooper and Phillips have implemented really are. They’ve got me using one of those terminals something I thought I would never do and today I would be at a loss to run the company without this terminal or without all the new systems that have been brought into play in our company. We have grown four or five times in size since Cooper has been our Chief Operating Officer, and we have fewer people employed in our executive office than we did five or six years ago. Operating costs, that is, our total cost of doing business in terms of net revenue, have continually decreased, and we expect this trend to continue for some time. To make sure that this will in fact be a fact, we recently hired Fred Hudson as our Executive Vice President in charge of agencies. So except for myself, I guess American Income has one of the youngest management teams in American business. Our President is 42 and our two Executive Vice Presidents are in their middle 30s, so we have a lot of continuity and aggressive youth in this management team of ours. So to tie it all together, we have the market, the product, and the people that are all in place. I am euphoric about the future because underlying these essential ingredients is a commitment and a very deep commitment that American Income is a company made up of union people dedicated to serving the common folk, serving them with sensitivity and a deep sense of responsibility. In this cynical and increasingly skeptical world in which we live, this may sound a little maudlin. If it does for you, it will just have to. It’s what we believe in at American Income. It’s right for us. And our success is definitive proof that we do believe it and that we have been able to get lots of other folks to share this philosophy. I think one of the reasons that we have such flexibility at American Income is because of this philosophy. We have a need to survive, a need to not only be successful, but to be outstandingly successful. We never get bogged down or enamored with what we are doing if we are persuaded that by changing we can do better. So long as we adhere to this philosophy, I believe that you will find American Income to always be among America’s fastest growing companies. 0 THE TEXAS OBSERVER 19