(Hamlin a Jftnanrial ©imps
The South’s Leading Business Publication
Volume 10, Number 29
Some Insurers Claim Heavy Losses
by OWEN DAVIS
Financial Times Writer
Two distinctly different moods permeate
North Carolina’s insurance industry.
Life insurance companies are in reasonably
bright spirits, with sales climbing nicely and
profits making a comeback.
Property and casualty insurers, by contrast,
are downright gloomy. They say they are
losing money on many lines, because
inflationary costs have outpaced income from
premiums. Almost all are outraged by the
state Insurance Department’s refusal to grant
rate increases.
“At this point, writing insurance is not
profitable in North Carolina,” said Clayton
Price, underwriting manager for Allstate
Stock Plan Saves Company
CHARLOTTE- Jones K
I’resnell Studios Inc. a na
iion.il photographic service
company here and a wholly
owned subsidiary of bankrupt
VV T. (irtint Co has saved
it self front ruin through a
stock purchase through its
Kntplovee Stock Ownership
Trust
The $4.5 million stock
purchase was made possible
In a $2.5 million loan from
first Union National Hank.
$750,000 from the stock
mi net ship and $250,000 from
the company.
Said a first Union official.
■/This ;s the only comp "v t<>
come out of the W.T. Grant
bankruptcy clean."
The action, in effect, means
the company's 200 ( harlotte
employees and 200 others
spread throughout the United
States and Canada non own
their company through their
trust. The trust was set up to
purchase the stock and keep
the company and its personnel
ini act.
"F.st ahlishing t lie Km ploy ee
Stock Ownership Ulan to
purchase hack all of our
common stock was the only
wav our firm could survive."
said Thomas 0 Jones, com
oanv president. "When W.T.
Insurance Co.’s regional office in Charlotte.
Aetna Life and Casualty, for example, lost
$2 million on property and casualty writings in
North Carolina last year, says Thomas C.
Carpenter, the company's Charlotte general
manager.
“And we can’t get a rate increase in
anything,” he said.
“Unless something is rapidly done, 1976 and
1977 will be two of the worst years in the
history of the insurance industry in this state,”
said Bruce Fritz, resident secretary and
branch manager for Kemper Insurance
Companies in Charlotte.
"Basically, the reason is rates.”
Life insurance companies do not have the
same problems. Their premium rates are not
regulated, and the impact of recession and
Grant went bankrupt, it
literally took away t>o°/o of our
business."
Grant bought Jones &
I’resnell in 1969 and operated
it as a wholly owned subsi
diary. The photographic
studio specializes in providing
portrait type photographs to
customers under contracts
with various department and
chain stores in the United
States and Canada, such as
Belk Stores. McCrory's, G.C.
Murphy and Montgomery
Ward.
“We are delighted that the
(Continued on page 7)
A CFT Special On:
Insurance
Fayetteville Fraud Case Page 7
No-Fault Insurance Page 8
Blue Cross-Blue Shield Page 9
Profile: Royall Brown Page 10
inflation has not hit them as hard.
“Life companies are much better off than
casualty companies,” said Rick Berg, senior
vice president for financial operations of
Raleigh’s Occidental Life Insurance Co.
“Ordinary life insurance constitutes long
term contracts and is much less susceptible to
the peaks and valleys of the economy. We’re
affected by the economy over 20-30-year
periods.”
This year, "sales have been excellent
throughout the industry,” said Jefferson
Standard Life Insurance Co. president Roger
Soles of Greensboro.
"The life insurance industry did well last
year, even though sales were flat for the first
(Continued on page 11)
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Wilmington Morning Star
July 26, 1976