The Liberty Corporation Business Information, Profile, and History
Greenville, South Carolina 29602-0789
We are a company that always has been committed to meeting basic human needs: offering the financial security that strengthens family ties; providing the means to help people communicate with each other; and serving as a source for the capital that is so critical to the American promise of economic freedom and progress. This heritage has made our company a leader in its field, and it will continue to inspire Liberty's growth as we look ahead to the next century.
History of The Liberty Corporation
The Liberty Corporation provides several types of insurance services and owns Cosmos Broadcasting, which operates television stations in several states. The company has been an important financial presence in South Carolina for most of the century.
Liberty Corporation's story begins in Spartanburg, South Carolina, in 1905 with the creation of the Southeastern Life Insurance Company, formed by insurance agent Elliott Estes and textile tycoon A. H. Twitchell. The company was steeped in support from the "sound, safe, conservative business element" (as the Spartanburg Weekly Herald described it), which contributed its first board of directors. Estes's old offices initially housed the company. John A. Law, a former banker, textile executive and one of the founding directors, bought the first policy, worth $5,000.
In spite of strong community and government support, within a few years Southeastern ran into serious trouble due to lax financial practices on the part of management (reckless investing, giving cash advances on commissions) and agents (accepting promissory notes as down payments on policies). After two years of takeover rumors, Estes resigned as shareholders initiated a reorganization in 1910 and named Arch Calvert to the top office.
Soon afterward, though, a group led by lumber executive T. Oregon Lawton bought out the company and relocated it to nearby Greenville. Within 10 years the more stringent management performed by Lawton's team increased the company's policies in force from just over $3 million to $18 million, while assets increased in value over six times, to $1.5 million. In 1915, Southeastern erected a new headquarters in downtown Greenville, topped with a giant illuminated Roman warrior.
Industrial Insurance Catches on After World War I
Textile mills in South Carolina made the fabric of life for the thousands who worked 11-hour days, shopped in mill-owned shops, and slept in mill-owned housing. As Doyle Boggs would record in Liberty's official history, the mills also gave the lower caste just enough money to become potential life insurance customers.
In this environment, W. Frank Hipp founded The Liberty Life Insurance Company in Greenville in 1919. He had just finished a two-year convalescence from tuberculosis by starting a successful business trading textile securities. The stern, practical Hipp had begun selling insurance for Southeastern in 1912 and before that had worked for Pacific Mutual Life. Hipp's venture was designed with the mill worker in mind. Premiums of even two or three cents would be collected on a weekly basis--a concept known as "industrial insurance."
In spite of the company's immediate success--it issued $1.7 million worth of new insurance in 1920--a rift developed between Hipp and his board of directors, who were keen on diversification. They were ousted, although the company began to offer ordinary life insurance in 1922. The same year, The Liberty Life was able to gain a small toehold at the other end of the state, in Charleston, by acquiring Home Life and Accident Insurance Company of Charleston.
Prevailing Throughout a Perilous Depression in the 1930s
At Southeastern, Lawton resigned in 1924 and also started a new business, the Pioneer Life Insurance Company. W. O. Milford, a musician by training, took over as CEO. The company merged with Associated Life in 1929, part of the unstable financial empire of Rogers Clark Caldwell.
In 1929, Liberty was tallying $1 million in annual premium income in spite of severe hard times and labor unrest in the textile industry. The Independence Insurance Company was created to service extremely low income accounts. Liberty absorbed two struggling companies the next year, the Great American Life Insurance Company and People's Life.
Liberty began broadcasting in 1930, when it purchased the newly formed Columbia, South Carolina radio station WIS, whose call letters--derived from the slogan "wonderful iodine state"--celebrated the region's unique mineral attributes. Hipp believed maintaining the station would garner positive regard for the insurance company though not necessarily earn any income on its own. Hipp invested heavily in equipment, hired promising people (including Godfrey Richard Shafto, the station's first manager and later one of the founders of Broadcast Music International, Inc.), and the venture proved profitable within months. WCSC radio, a subsequent Charleston acquisition, did not perform nearly as well out of the gate.
In 1931, The Liberty bought a controlling interest in Southeastern. The Bank of Tennessee was, like Associated Life, controlled by Caldwell, and when it failed most of Associate Life's subsidiaries went bankrupt. W. Frank Hipp rescued his old employer from receivership. Ten years later the two operations would be entirely integrated, although this process occurred, like a military campaign, in steps. The Southeastern's more traditional product line suffered heavily as numerous savings and loans institutions failed in the Great Depression, and Hipp executed a corporate coup, ousting both officers and employees and instituting a stricter financial regimen. In 1933, a common management scheme was worked out for the two separately operating companies, which were merged in 1941, the resulting company dropping the article "The" to become known simply as Liberty Life Insurance Company. The old Liberty Life's operations were continued under the name Surety Life Insurance Company.
A New Role After World War II
W. Frank Hipp died in 1943. After an interim filled by H. L. Vogel, his son Francis assumed the role of president. Less authoritarian than his father, he empowered trusted associates and exerted influence through carefully maintained relationships. In spite of the potential for instability inherent in the change of leadership and wartime austerity, Liberty managed to survive fairly well.
Its ranks full with demobilized veterans, Liberty increased its expansion into North Carolina after World War II. It focused more on long-term sales due to newfound postwar prosperity and the erosion of the mill system. The new approach was reinforced through vigorous training.
Liberty also expanded its radio broadcasting presence in North and South Carolina as it jockeyed for upcoming FCC television licenses. The Broadcasting Company of the South was created in 1950 to manage these operations and took in $718,236 the next year. Three years later, Liberty's first television station, NBC affiliate WIS-TV, began broadcasting from Columbia. The station was part-owned by Marseco Corporation.
In 1955, the company moved into an impressive new $2.5 million headquarters building. By then, an office in Atlanta had opened and Liberty agents scoured most of the Southeast. By the end of the decade, Liberty was insuring $1 billion worth of people and property and had just become computerized. The company had also lobbied effectively to manage industry regulation, calls for public health insurance, and the threat of heavier taxation.
The Broadcasting Company of the South changed its name to Cosmos Broadcasting Corporation after acquiring Toledo's WTOL-TV in 1965. Its five-year foray into cable broadcasting in the Charlotte area withered under FCC scrutiny. Soon after, though, Cosmos acquired another broadcasting jewel: WDSU-TV in New Orleans.
Insuring a Good Life in the 1960s and 1970s
A highly successful initial public offering took place in 1964. The Hipp family retained the majority of shares. In 1967 The Liberty Corporation holding company was formed and Liberty Life came under control of the parent; the next year both Cosmos and Surety Investment Company followed suit. However, a conceived merger with the South Carolina National Bank was squelched by pending federal antitrust legislation. The Liberty Corporation became the fourth South Carolina company to trade on the New York Stock Exchange in 1969 and a new subsidiary, Liberty Properties, Inc., the successor to Surety Investments, was organized to manage the real estate portfolio. Liberty Properties did not fare well in the next few years of recession and increasing construction costs.
Herman Hipp, former president of the Liberty Life subsidiary, became president and CEO of The Liberty Corporation in 1977. The next year, he merged Liberty Properties into Liberty Life. A $1 million "Have a Good Life" health promotion campaign was launched to enhance the company's image and to combat growing public suspicion regarding the life insurance industry.
Cosmos began buying radio stations again in 1979 with the purchase of Sarasota's WQSR-FM. It also bought Orion Broadcasting, which owned several television and radio stations in the Midwest, for $73 million.
W. Hayne Hipp succeeded Herman Hipp as Liberty Corporation president and CEO only two years into the latter's tenure. The Liberty Corporation bought United Fidelity of Texas and then sold it in 1982 for $70 million, nearly twice its purchase price. The company gained new management perspectives during the acquisition. At the same time, it upgraded its computer and training technology.
A new headquarters was completed in 1982; it would also house Cosmos Broadcasting which had previously been located in Columbia. By the mid-1980s, Liberty Life had $10 billion in policies in force. Cosmos owned ten radio and TV stations scattered from Toledo to Sarasota. Liberty Properties Group had been able to divest itself of its poorly-performing vacation home developments and concentrate on more viable residential and commercial opportunities.
Anticipating the Needs of a New Century
Liberty entered the pre-need market via the acquisition of several companies beginning in 1992: Pierce National Life (which had Canadian operations), Estate Assurance Company, American Funeral Assurance Company, and North American National Corporation, which owned Pan-Western Life Insurance Company, Howard Life Insurance Company, and Brookings International Life Insurance Company. All of these operations were merged into Pierce National by 1995. Two other Louisiana-based providers of home service insurance were also acquired in the mid-1990s: Magnolia Financial Corporation and State National Capital Corporation.
CableVantage was formed in 1994 in order to promote cable television advertising. The company had sold all of its radio stations in the 1980s. Liberty Corporation focused on building its strengths in the mid-1990s under the leadership of Hayne Hipp, who assumed the position upon the death of his father in July 1995. Two years later, the company sold $70 million worth of office and industrial property to Liberty Property Trust, an unrelated company based in Malvern, Pennsylvania.
Liberty Corporation also proved successful in administering insurance policies for other companies. Liberty Insurance Services (LIS) was created in 1992 and became one of the top life TPAs (Third Party Administration firms) in the country, with over 700,000 policies under administration for external client companies. LIS also serviced over three million policies for Liberty Corporation subsidiaries.
After special charges, The Liberty Corporation earned $37 million on 1996 revenues of $619 million. The company had $20 billion worth of policies in force; insurance revenues were $482 million. Seventy-seven percent of Liberty Life's revenues were in life insurance. Total broadcasting revenues were $137 million in 1996.
Liberty Corporation has had sufficient capital and skills to meet various challenges throughout the century. Its brand of cautious innovation (a function of its ownership, according to Hayne Hipp) and concentration on key areas of expertise seemed likely to assure it an equally successful future.
Principal Subsidiaries: Liberty Life Insurance Co.; Pierce National Life Insurance Co.; Liberty Insurance Services Corp.; Cosmos Broadcasting Corp.
Principal Divisions: Insurance Marketing; Insurance Services; Television Broadcasting.
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