The Guardian Life Insurance Company of America
Certain American businesses can share an appreciation for longevity as a standard of success throughout both the good and bad times of this country's history. One such company with a proven track record of over 150 years is The Guardian Life Insurance Company of America® (Guardian). Though it has not shared the public spotlight like many of its peers, Guardian has remained one of the stalwarts in the whole life insurance and disability insurance industry. By examining its path over the last century, how it managed itself through a collection of wars, and came out as a respected leader within the insurance sector, a better understanding will be determined about its continued success going forward.
A group of 21 businessmen met together at Delmonico’s restaurant in New York City on March 28th, 1860 to discuss the formation of a life insurance company focused on serving the needs of German-Americans nationwide.1 During that period, 15 percent of New York City’s residents were German-born and another 10 percent were of German descent.2 The company's first president, Hugo Wesendonck, opened the company's doors for business on July 16th, 1860 and begun actively selling life insurance with their first policy for a face amount of $3,000.00 sold to a cigar merchant named Selig King on Wall Street.3
Agents were personally required to notify policyholders when premiums were due, collect the premiums, present proof of a policyholders death, and remit monthly profit-and-loss reports to the home office. As the company grew - it expanded into other areas of the country which had large German-American populations, namely Albany, Chicago, Wisconsin and Ohio.4
Times of Turmoil
Over a 100 year span - Guardian weathered through the American Civil War, World War I and World War II. No less than one year after the company opened its doors for business did the Civil War begin. Even though the company's office was based within the Union-sided New York, by 1862, had expanded into such southern states as Virginia and as far west as California.5
Financially, the war did not have such a devastating effect on the company's finances since mortgage rates on its real estate holdings rose. Returns of nearly 10% were provided from real estate mortgage loans.6 By the end of the Civil War, sales for life insurance in force grew to nearly 15 million and the total agent force came to 138.7 During World War I - with the focus against Germany - Guardian provided nearly $500,000.00 to the U.S. Government to support the war through Liberty Loans. This motion certainly was made to ensure the American public at large that full support would be for America.
They even changed their company name from Germania to Guardian. It was at this point as well ironically, that Guardian designed a brand new insurance policy - disability insurance - for sale. World War II brought forth additional challenges when in 1944 mortality experience (the measure used by insurance companies to determine death benefit losses that year) exceeded expectations by 50 percent due to a domestic rise of nonmilitary related deaths.8 Guardian battled through and survived.
One of the cornerstones of Guardian’s reputation has been its structure as a mutual life insurance company. This conversion occurred in 1925 and the point of changing was to further benefit all its member policyholders.9 Essentially, a mutual life insurance company passes all its net profits - after expenses are deducted - in the form of a dividend to its shareholders which are all the policyholders of the company.
Mutuality provides an excellent value for its policyholders by providing this additional growth to boost cash value accumulations or help offset the cost of insurance premiums. Even today - when a person is selecting the right company to purchase a whole life insurance policy - it will most likely be with a mutual life insurance company as opposed to a publicly traded insurance company.
While past performance should never be used to reflect future returns in any business, the steady upward track record of Guardian shows its own ability to adapt and succeed within an ever-changing business landscape. In 2001, Guardian acquired The Berkshire Life Insurance Company of America in large part to obtain their top-tier disability insurance product. Today - while maintaining a strong foothold within the whole life insurance marketplace, they are also a leading provider of individual disability insurance products to professionals, physicians and dentists nationwide.
Guardian's values, financial strength and stability to meet the obligations of its policyholders has made it one of the most trusted insurance companies in America. This history should indicate a solid future for a company that continues to head in the right direction.