Dare To Dream

ABOVE: Loudon “Lod” Webster and Peggy Kurnett kept busy about purchasing stock in Farmers Mutual Managers, Inc. Wittwer listened, rolling an Upmann cigar between his fingersat Wittwer, Kalbskopf and Webster, Inc., the home office agency. for a long time after Maurer presented his case. With more than $1 million in assets and annual premiums nearing $2 million, themanagement consultant to iron out its problems. The consul- company had already grown far beyond Wittwer’s dreams. Hetant was an evangelist for a new generation of business machines needed an expert who could make hard decisions to help himthat used punch cards to store information, and he spent most manage the organization, and Maurer was far more qualified thanof his time with Bob Kelliher in accounting. While punch card Kalbskopf. Kalbskopf, of course, would never agree, but Wittwermachines revolutionized the process of applications and claims, believed Rammer could be convinced. “I’ll take it up with thethey did little to ease the feuding among senior management. board,” Wittwer said. The stress of conflict eventually got to Maurer, who suffered After hearing of Maurer’s desire to buy common stock,a nervous breakdown and took a month’s rest in Florida. When Kalbskopf and Rammer wondered whether other employeeshe returned, he found that he’d been replaced by his assistant, should be given similar opportunities. In July, the board gaveKen Bruce, and demoted to underwriting manager. Despite the Maurer a chance to make his pitch. Maurer detailed his contri-demotion, Wittwer and Kalbskopf continued to lean heavily on butions to the company, implying he would leave Farmers MutualMaurer, asking him to write bulletins and speeches. Yielding to if he didn’t receive the stock option.his wife’s advice, Maurer refused, insisting those tasks weren’t inthe job description of an underwriting manager. Kalbskopf presented a letter from Harold Wilkie, attor- ney for the Wisconsin Mutual Insurance Alliance, urging the Kalbskopf eventually took over as agency director, but the company to open up stock options to other employees. Rammerjob was difficult and time-consuming, and the department floun- proposed a compromise: The company would sell Maurer the fivedered under his leadership. In 1944, he and Wittwer appointed shares he requested, and then develop a comprehensive employeestate directors to head most of the nine states, placing them on stock ownership plan. Rammer and Wittwer voted for the reso-commission and giving them authority to run their operations. lution, Kalbskopf against it.They also wrote the company’s first district manager agreements,formalizing their relationship with Farmers Mutual. In August, the board issued five shares of common stock to Maurer at $100 per share. Rammer and Wittwer again voted Maurer by this time was ready to leave the company unless for the resolution, Kalbskopf against it. The infighting intensi-he was given more authority, and he boldly approached Wittwer fied when Wittwer promoted Maurer to assistant secretary and proposed putting him in charge of a production department, overseeing the agency, information and sales promotion efforts. Kalbskopf fought the appointment, but Rammer again sided with Wittwer. During a bitter argument with Wittwer over Maurer’s appointment, Kalbskopf issued an ultimatum: “Either Maurer goes, or I do!” Kalbskopf left on Nov. 8, 1944. At a special meeting of the board, he submitted his resignation and sold his stock for $52,500 to Wittwer and Rammer. The following week, with only a pass- ing mention of Kalbskopf ’s resignation, Wittwer announced Maurer’s promotion to treasurer and election to the Farmers Mutual board of directors. “The important part Mr. Maurer has played in the development and growth of the company has been so self-evident since the early days of the company that no further amplification is needed,” Wittwer wrote. Within Farmers Mutual, little was said of Kalbskopf after his departure. He became a general agent for Franklin Mutual Life Insurance Company out of Illinois, reportedly developing a million-dollar business. He died Oct. 31, 1961 in Oshkosh, Wisconsin, at the age of 67. Dare to Dream | 45



Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they really didn’t do it, they just saw something. It seemed obvious to them after a while. That’s because they were able to connect experiences they had and synthesize new things. — STEVE JOBS, co-founder, Apple, Inc.3 BOLD MOVES AND GROWING PAINS

CHAPTER 3 | BOLD MOVES AND GROWING PAINSW ith Germany defeated and Japan on the brink of surrender, President Harry S. Truman released more than 7 million men and women from the armed forces in the summer of 1945. Among them were Bob Koch, amotorcycle-riding M.P. in Europe; John (Pete) Miller, a special It was also a heck of a time to be selling automobile insur-agent in the Counter Intelligence Corps assigned to the ance. More than doubling in the four years after the war ended,Manhattan Project; Floyd Desch, a B-24 communications offi- industrywide sales exceeded $2 billion in 1949. After the war,cer; Joe Nicolay, a tank commander under Gen. George Patton; Detroit worked overtime turning out prewar models to sell atJohn Reed, a navy radar operator in the South Pacific; Joe Chvala, inflated prices to a car-starved country. In 1947, Studebakera B-24 pilot hunting Nazi submarines off the coast of Spain, and unveiled the first “modern” automobile. Low, sleek and stream-Bob DeVoe, a radio operator in a B-17 over Europe. lined, it bore little resemblance to its prewar ancestors. The 1948 Cadillac, sporting “fins” on its rear fenders, took automobile style These men and other young vets — future Farmers Mutual a step farther. Modeled after the P-38 fighter plane, the Cadillacemployees including Dale Eikenberry, Charlie Ambrosavage, captured America’s infatuation with speed and power.Sterling Schallert, Robbie Robinson, Jim Pfefferle, BobAmundson and Hugh Wallace — returned home to a nation tired The combination of young vets and powerful new carsof economic depression and war but filled with optimism. They was predictably dangerous. Accidents and claims began toentered colleges and universities under the G.I. Bill, intent on climb. While roughly 27,000 people died in auto fatalities incompleting their education before embarking on business careers 1942, by 1948, almost 31,000 individuals would die in car acci-in a land that held consumerism as a moral imperative — the best dents. Insurance companies responded to this post-war jumpdefense against communism. with premium increases, and state governments with stronger “I was taking 20 credits a semester and going aroundthe clock,” Koch remembered. “I wanted to finish as soonas I could and beat the tidal wave of veterans who weregoing to be job hunting.” Koch beat the wave by nearly a year, joining FarmersMutual as an underwriter in the spring of 1948 — onthe same day Ambrosavage joined the agency depart-ment. It was also the day of the men’s annual golf outing.After spending a half day at work, the two rookiesfound themselves on the rolling hills of Maple BluffCountry Club: “We agreed it was going to be a heck ofa company to work for.”RIGHT: A World War II soldier celebrates the end ofthe conflict.48 | Bold Moves and Growing Pains

LEFT: Postwar automobiles like this 1949 Ford captured America’s infat-uation with speed and power. Wisconsin and other states responded toincreasing highway accidents with stronger financial responsibility lawsthat compelled eight of ten drivers to buy insurance.financial respon- Insolvency wasn’t an immediate threat, but the situationsibility laws. In 1946, the called for drastic action. In the spring of 1947, Irv MaurerWisconsin legislature passed a bill scheduled a meeting of the executive staff withrequiring the driver in an accident to present state directors. “Gentlemen, our lifeblood isproof of insurance, put down a security deposit to running out at the rate of $1,000 a day,” hecover possible damages or lose their license to drive for 60 days. said. “We’ve got to do something.” Farmers Mutual responded with the People who had driven for years without insurance flocked competitive security program, which raisedto agents for coverage to meet the requirements. At Farmers rates 20 percent and lowered commissions toMutual, earned premiums doubled to $7 million between 1945 bring them in line with what other companies wereand 1947. Although the home office urged the field to accept onlythose drivers who met strict standards, many agents were more charging policyholders and paying agents. Agent training empha-interested in maximum sales — and commissions. Meanwhile, sized a return to more selective underwriting. To reinforce thethe company’s two underwriters found it impossible to keep pace program, Farmers Mutual for the first time linked agent andwith the steady stream of new business. “The vault,” underwrit- district manager production bonuses to the claims experience oning supervisor Les Ramiker remembered, “was full of unhandled their book of business. The fewer accidents their policyholdersapplications.” Farmers Mutual’s cost per claim As with the aftermath of the 1935 judgment law, the surge of more than doubled betweennew business had left Farmers Mutual cash poor because acquisi- 1947 and 1952 to $144. Higher speedstion costs and the growth in claims for the flood of new business contributed to the increase, as did carshad to be paid immediately while the premiums, placed in reserve, themselves. Automatic transmissions, rearwere earned gradually. At the same time, postwar inflation drove fender fins, chrome trim, two-toned paintup the cost of car repairs and medical care, straining the entire jobs and panoramic windshields all addedindustry. In 500 days between 1945 and 1947, Farmers Mutual to the cost of repairs. Increasing by 5 percentlost $500,000. The policyholders’ surplus dropped by one-third a year, medical costs were also a factor in theto $832,000 as premiums soared to a record $6.1 million, leaving increased cost per claim, as were the growingFarmers Mutual with a scant 14-cent surplus for every premium legions of attorneys specializing in personaldollar — just one-third the recommended ratio. injury claims. Dare to Dream | 49

BIRTH OF AN ASSOCIATIONIn 1944, the U.S. Supreme Court found themselves handicapped by In 1994-95, American Family startled the insurance industry their independence. Fearing that Insurance Chairman and CEO and the 48 state regulators with larger stock companies would Dale Mathwich served as chair its opinion in the United States dominate the process, Herman of the NAII as it celebrated its v. the Southeastern Underwriters Wittwer and Irving Maurer trav- golden anniversary. By that time, Association. The court ruled that eled to Chicago on June 1, 1945, the association had grown to insurance companies operating to represent Farmers Mutual at a represent nearly 600 companies across state lines participated in meeting of independent insurance with more than $220 billion in interstate commerce, and were organizations. premiums. thereby subject to federal regula- tion. The ruling contradicted more After four intense hours of When the NAII merged with than a century of law giving state discussion, representatives the Alliance of American Insurers governments exclusive domain from 29 companies formed to create the Property Casualty over insurance regulation. the National Association of Insurers Association of America Apprehensive about deal- Independent Insurers (NAII). (PCI) in 2004, American Family ing with a federal bureaucracy, While Wittwer remained active in CEO Harvey Pierce was named the insurance industry turned the mutual associations, Maurer vice chair of the powerful new to Congress for help. Congress became Farmers Mutual’s ambas- trade association. The follow- responded in 1945 with the sador to the NAII and in 1946, was ing year, Pierce became PCI chair. McCarran-Ferguson Act, delegat- elected to its board of directors. In 2017, PCI represented nearly ing regulation to the states, with He served as the association’s 1,000 members who comprised the admonition that they preserve chair in 1967-68, when insurers 42 percent of the U.S. auto insur- competition and independence. came under intense public scru- ance market, 27 percent of the The insurance industry quickly tiny due to rapidly increasing homeowners’ market, 33 percent organized to help state lawmak- premiums and Congress launched of the commercial property and ers write the necessary legisla- a Department of Transportation liability market and 34 percent of tion. Insurers like Farmers Mutual study of the auto insurance the private workers’ compensa- industry. tion insurance market.had, the larger their bonus checks. The company also linked state ENTERING THE LIFEdirector bonuses to the profitability of their states. AND HEALTH MARKETS In Milwaukee, where losses were particularly high, Maurer The competitive security program solved some immediate prob-realized that too many part-time agents, who sold for multiple lems. But for the long term, Farmers Mutual had to diversify.companies, had little stake in Farmers Mutual’s success. So the To compete with larger organizations, the company had tocompany severed agreements with half its Milwaukee repre- reconsider life insurance. In 1940, before he left the company,sentatives and consolidated their policies under the remaining Kalbskopf made a deal with the National Guardian Lifeagents. Because of the sudden increase in their volume of Insurance Company of Madison to sell its line through Farmersbusiness, a growing number of agents found themselves repre- Mutual agents in Minnesota. About 100 Farmers Mutual agentssenting Farmers Mutual exclusively, giving them greater actively sold National Guardian policies, putting a sparse $8personal interest in the success of the company. The following million of life insurance in force in five years. The postwar finan-year, Milwaukee showed an underwriting profit. The competitive cial crisis ended the relationship, as Farmers Mutual refocusedsecurity program succeeded — if only temporarily — in slow- on its auto insurance problems.ing premium growth and cutting in half the number of claimsper premiums earned. Not as cyclical as casualty insurance, life insurance proved consistently profitable and was a way to smooth out the bumps50 | Bold Moves and Growing Pains

ABOVE LEFT: In 1948 Farmers Mutual’s 2,500 agents began selling Union Mutual life and health insurance. Understood in the agree-ment was that one day Farmers Mutual would offer its own life and health coverage. ABOVE RIGHT: Union Mutual President RollandE. Irish. BELOW: Union Mutual, one of the oldest life insurance companies in the nation, wanted to expand its territory beyond theEast Coast.in the casualty market. In 1948, Wittwer and Maurer begansearching for a small life insurance company to purchase. Atthe same time, the Union Mutual Life Insurance Company ofPortland, Maine, wanted to expand into the Midwest. UnionMutual President Rolland Irish heard of Farmers Mutual’s inter-est in selling life insurance and traveled to Madison to meet withWittwer and Maurer. For Wittwer, business was a personal matter. He oftenbased decisions as much on his regard for a man as the deal itself.Agreements were a matter of trust and friendship as well as reve-nue and profit. Such was the case with Union Mutual. As theninth-oldest life insurance company in the nation, Union Mutualwas financially strong and highly respected. But the rapportbetween Irish, Wittwer and Maurer clinched the agreement.Irish was a distinguished, well-dressed man who bore a resem-blance to Wittwer in manner and appearance. Formal by nature,he smoked a pipe and introduced himself as Rolland E. Irish.Wittwer was taken by Irish’s direct approach; Irish by Wittwer’shonest, easy manner. In late 1948, they signed an agreementunder which Farmers Mutual became Union Mutual’s exclu-sive Midwestern representative for both life and sickness andaccident (S&A) insurance. In exchange, the Portland companywould teach Farmers Mutual’s 2,500 agents how to sell healthand life coverage. Maurer and agency director Gus Kinnamon were pleasedwith the arrangement. A broader portfolio made it easier toattract and keep high-quality agents. And if Farmers Mutualwas ever to be represented by exclusive agents, these new lineswere essential. In the late 1940s, most Farmers Mutual agents were stillfarmers first and agents second, and virtually all had their feet Dare to Dream | 51

firmly planted in the casualty and fire insurance fields. When he Maxine Lighthall Les Schultzunveiled the agreement with Union Mutual, Maurer estimatedthat only 100 of the company’s 2,500 agents were prepared to sellhealth and life insurance. Furthermore, he thought that only 1 in5 could be trained to sell the new lines. To improve their chance of success, Union Mutual kept itsimple.The company provided shortened training and sales mate-rial, a condensed rate book and 11 basic policies — eight life andthree S&A plans. Selling began on Jan. 1, 1949, in Wisconsin, Minnesotaand Missouri. Walter Simon, supervisor of Wisconsin District10, sold the first sickness and accident policy. District SupervisorJohn Giovannini of Kirksville, Missouri, sold the first life policy. Life Department Manager Les Schultz and cashier MaxineLighthall recorded the apps as they came in, then sent them on toUnion Mutual, which handled underwriting, issued policies andsent renewal notices. Lighthall, who ran the windstorm compa-ny’s clerical operation for 11 years, handled the department witha cool efficiency that enabled Schultz to spend much of his timeworking with agents in the field. Schultz left Farmers Mutual inearly 1952 to join Union Mutual’s agency department — andeventually rose to become the chief executive officer of U.S. Life.Before leaving Farmers Mutual, Schultz recommended that SalesPersonnel Manager Bob Koch succeed him.FIRE INSURANCE — ABOVE: After World War II, new housing developments helpedA HOT LINE FOR THE 1950S grow suburbs across the country. Fire insurance quickly becameAs one of America’s most prosperous decades, the bustling post-war 1950s saw a building boom in single family homes. New an important product line for the industry. OPPOSITE PAGE: Insuburbs with winding streets and cookie-cutter houses sproutedin open fields and farm land. Homeownership rose from 55 deference to town mutuals, whose agents helped launchpercent in 1950 to 62 percent in 1960.The cocktail party becamethe cocktail circuit. Young couples gathered at a different house Farmers Mutual Automobile Insurance Company, the companyeach Friday to drink and talk about work and children over thestrains of Eddie Fisher or Harry Belafonte. Just one subject cast didn’t offer fire insurance to farmers until 1957.a pall over the national optimism: The Cold War with the SovietUnion was growing increasingly bitter. In the summer of 1950,North Korea invaded South Korea. Coming to South Korea’sdefense, the United States and United Nations also entered intothe three-year conflict that brought them to the brink of warwith the Soviet Union and China. America’s prosperity, however, was undaunted by the deep-ening Cold War, and the exploding growth in new homes madefire insurance and extended coverage the hottest lines in theindustry. So when Wisconsin and other states passed laws in52 | Bold Moves and Growing Pains

WRAP IT UP — homeowners, homeowners with Finally, premiums were ridiculously extended coverage and renters low — often just a few dollarsP“ olicy Wallets” were at one insurance. (A farmowners policy more than basic fire insurance. time a popular item for followed in 1962, combining fire, insurance agents to present windstorm, extended cover- Farmers Mutual — a conserva- as gifts to customers and pros- age, theft and liability.) As it had tive company by nature — was pects. The typical American family attempted in 1950 with fire insur- not above the fray. In 1960, Vice carried separate insurance policies ance, Farmers Mutual tried to President of Underwriting Howard for auto, hospital and doctor bills, shoehorn the homeowners policy Hayes admitted that rates for fire damage, theft, personal liabil- into its semi-annual approach, homeowners insurance were too ity and more, giving them a stack replacing prepaid policies with low. “Do we want homeowners of documents to keep on hand. six-month renewals. But financial business in spite of the fact that By the mid-1950s, Americans institutions, worried this provided the current rates are probably too were tired of carrying half-a- too many opportunities for cover- low?” Hayes asked in the October dozen insurance policies — only to age to lapse, rejected the plan. 1960 issue of FM. “Emphatically find gaps in their coverage after — YES!” filing a claim. The insurance indus- Intense competition for home- try responded with the homeown- owners coverage caused insurers Hayes urged agents to be strict ers policy, rolling fire, theft and to commit a multitude of under- in their risk selection, writing the personal liability protection into writing sins. Policies provided homeowners package policy on one package. It was an instant overly broad coverage with low or only the best risks, while selling success. no deductibles — almost begging fire and extended coverage for all Farmers Mutual joined the for claims to be filed. Minimum others. “When the time comes for homeowners market in June coverages all but vanished. a rate increase, our increase can 1958, offering its version of the Insurance-to-value requirements be less than that needed by other three most popular policies fell steadily in the face of increas- companies,” Hayes reasoned. ing costs to rebuild or repair. “Our rates will be even more competitive.”1949 and 1950 allowing insurance companies to sell multiple Typically issued in three- to five-year prepaid policies, firelines, Farmers Mutual rushed in. In deference to the town mutu- insurance didn’t mesh well with Farmers Mutual’s semi-annualals that had helped launch Farmers Mutual and still dominated approach to auto insurance, forcing the company to establish athe farm fire insurance market, the company limited its expan- separate fire unit. After a year of writing fire insurance the conven-sion to selling fire insurance to non-farm customers. tional way, Assistant Secretary Alex Opgenorth, Underwriting Dare to Dream | 53

Manager Howard Hayes and Chief Fire Underwriter Don station owners and car dealers, bakers and teachers, all stitchedTaylor devised a 1-year fire insurance policy with a semi-annual together by district agents who were themselves farmers andpremium. Farmers Mutual was the first and perhaps the only tradesmen selling insurance on the side. Many agents wrote justcompany to experiment with this semi-annual approach to fire a few policies a year, keeping records in a shoebox beneath theinsurance. Insurance commissioners, impressed by the innova- bed. Training, conducted by the district agents, was informal attion, readily approved the plan, but banks and finance companies best. Many agents’ knowledge of insurance didn’t extend muchwere not enthusiastic. Fearing semi-annual payments provided beyond the 32-page agent manual and rate book.too many opportunities to let coverage lapse, many refused toaccept the insurance. Farmers Mutual found a compromise, offer- Concerned about the quality and training of insurance agents,ing three-year and five-year policies, but with annual payments. the Wisconsin legislature first debated a proposal for state test- ing of agents in 1931. Arguing that testing would discriminateTO BUILD A BETTER AGENT against part-time agents, the state’s mutual insurance companies easily defeated the legislation. But in the late 1940s and earlyFor more than 20 years, Farmers Mutual grew and prospered 1950s, many states, including Wisconsin, passed laws requiringwith a field force comprised of farmers and tradesmen, gas that agents be licensed.BELOW: Among the more than 1,500 agents who completed The passage of multiple-line laws increased the need for well- trained agents. Many companies, wary of spending too muchFarmers Mutual’s sales and service training course by the end to train agents who also sold for their competitors, resorted toof 1955 were (standing from left): Loyal Gibbs, Earl Willhite minimum production rules. Beginning in 1951, Farmers Mutualand James McCloskey; (seated from left): Harland Curry and required agents with two or more years’ experience to collect atHarvey Fisher. least $2,000 in total casualty and fire premiums annually. New agents had to reach the minimum level in their third year. If Farmers Mutual expected more from its agents, it also was willing to provide more. In October 1951, the board passed a resolution, drafted by Maurer, aimed at creating “conditions which will encourage the part-time agent to devote continuous time and study to the profession, and which will assist the full- time agents to realize greater development.” To create these conditions, the resolution called for an education and research department. Under the direction of Lorin Schoephoerster, the department produced a 15-lesson sales and service training course for agents in the field. Within four years, 70 percent of the agents had completed the course. The depart- ment wrote educational articles for FM, a monthly newsletter for agents, on topics ranging from reading monthly account state- ments to prospecting for life insurance to insuring television sets. Schoephoerster also produced office aids, such as a pros- pecting and records management system designed specifically for Farmers Mutual agents. The 1951 resolution included another, more controversial mandate, requiring district agents to give up personal sales and work full time to recruit, train and manage local agents. Board members including August Rammer and Harvey Spriggs, who as district agents had some of the company’s largest agencies, found this a difficult proposition. Giving up personal sales meant sacri- ficing a large income. Understanding the need for better training and management of agents, the board nevertheless approved the resolution unanimously.54 | Bold Moves and Growing Pains

ABOVE: In 1951, Farmers Mutual’s board of directors started the company down the rocky path toward exclusive agent represen-tation. Clockwise from left: William Aberg, Bernard Gehrmann, August Rammer, Herman Wittwer, Harvey Spriggs, M.A. Koehlerand Irving Maurer. Although most members of the board and executive staff Beginning in 1949, Farmers Mutualurged slow implementation, Maurer pushed for immediate action. agents could offer new life insurance“Otherwise it’ll drag out and never get done,” he argued. policyholders a “tri-coin savings bank” to help them save enough to pay the annual premium. In some When Agency Director Gus Kinnamon hit the road to work cases, the agent kept the key, ensuring that ownersout the details with Farmers Mutual’s district agents, he found didn’t use their savings for something else.their reaction predictably negative. Several longtime districtagents, particularly in Wisconsin, initially refused to give up theiragencies. In the end, most accepted the decision. Some relin-quished their districts to remain agents. Others quit or were fired.STUMBLING TOWARD EXCLUSIVITYThe number of automobiles on American roadways doubled inthe six years following the war, reaching 52 million in 1951. Twoof every three families owned a car, and 1 in 10 owned two. A neweconomy evolved along America’s highways. The first Holiday Dare to Dream | 55

The number of automobiles on American road- ways doubled in the six years following World War II, crowding streets and causing accidents.56 | Bold Moves and Growing Pains

Perceived by many as a short-term, emergency measure, the plan in fact had a long-term goal of “attitude adjustment.” The crux of Farmers Mutual’s persistent underwriting losses, the committee reasoned, was poor selectivity. Farmers Mutual’s un-level premium approach, with its loaded initial premium and low renewal rate, depended on insuring only preferred drivers, at risk for few accidents. Many agents, however,John Farnsworth Henry Harvey Howard Hayes failed to understand their role in risk selection and focused more on the volume of business rather than the quality. To change the situation, district managers and the directors of seven red-ink states would haveInn opened in 1951, signaling the advent of the motor lodge. to become more conscious of profit as well as volume.McDonald’s served its first hamburger in 1955. Drive-in movie In the summer of 1953, Farmers Mutual summoned eachtheaters, restaurants, banks, convenience stores and churches of the seven state directors to the home office to discuss thesprang up. Even drive-up electric shaving stations enjoyed a problem and solution and, as Hayes explained in a memo, “tobrief period of popularity as Americans took to the road. engrave indelibly on their minds that the primary determinantAnd there were more roads for Americans to take. An of our success as a company in their states is the ability and will-acute housing shortage after the war led to the rapid develop- ingness of the men in the field to perform their jobs.” Chastised,ment of suburbs, all connected to central cities by new highways. the directors left Madison with a mission — to turn their statesWith the Interstate Highway Act of 1956, the federal govern- around. For many, this meant terminating scores of agents whoment authorized construction of41,000 miles of toll-free highways,paid for with a 3-cent per-gallongasoline tax. BELOW: Agents who earned the 1952 production bonus wore special derbies at the 1953 With more drivers on the road, Midland sales convention in Jefferson City, Missouri. Pictured from left: Earl Willhite,the rate and severity of accidents Harold Schafer, R.J. Williams, Wilroy Schaffner, George Sallwasser, Leo Huenefeld, Orenincreased, leading to another tide Blackwell and Arthur Bourne.of red ink in the insurance indus-try. Many companies responded byexperimenting with their ratingsystems. Farmers Mutual, however,returned to the fundamentals withOperation Blue Ink, described byMaurer as “more income and lessoutgo.” Developed in 1953 byAgency Director Gus Kinnamon,Underwriting Director HowardHayes, Comptroller HenryHarvey and Claims Director JohnFarnsworth, Operation Blue Inkfocused on turning underwrit-ing losses in seven of its 10 statesto underwriting profits throughadministrative cost-cutting,restrictive underwriting, improvedtraining and increased sales. Dare to Dream | 57

IRVING J. MAURER A LEGEND IN HIS OWN TIMEBorn Ervin J. Maurer on May 11, President 1959 - 1968 everything he learned about the busi- 1905, he was the fifth of Joseph Chairman and CEO 1968 -1972 ness. They married in 1933 and raised and Anna Maurer’s seven chil- two children. dren. His father and mother, German Chairman 1972 - 1977 immigrants, had settled in Marshfield, Maurer joined Farmers Mutual in 1929, Wisconsin, where they ran a success- Cross-Examination” for his debate club, hoping to work part time while attend- he decided to become a lawyer. ing the University of Wisconsin. But the ful business selling ice to the railroads. It position as underwriting manager was was a prosperous time for the Maurers. Though intent on studying law, full time, so Maurer rolled up his sleeves But when Ervin was 5, his father sold Maurer’s frugal nature compelled him and went to work. the ice business and moved the family after graduating from high school to to Withee, where he built a broom enter Stevens Point Normal School, Headstrong and well-versed in the handle factory. This, too, proved a primarily a teachers’ college. There, insurance business, Maurer was responsi- success, until fire destroyed the build- by taking the teachers’ track, Maurer ble for many early innovations at Farmers ing. Without a penny of insurance, the avoided paying tuition. Mutual, the credit for which he readily Maurers could only stand there and shared with Kathryn. These included the watch the factory burn. After this, Maurer accepted an offer unorthodox, semi-annual renewal plan from Carl Jacobs, a family friend and the in 1932; the shift to an exclusive agent Joseph categorized people as president of Hardware Mutual, to learn system in the 1950s, and the company’s either producers or consumers, and he the insurance business “from the ground venture into the life insurance market. believed strongly in being a producer. He up” as an underwriter. Maurer advanced Though often unpopular at the time, moved his family to Stevens Point and steadily, learning underwriting and sales these changes ultimately proved essen- started another ice business. After that management at Hardware Mutual. Here, tial to the company’s success. failed, he opened a theater with another too, he met Kathryn Fischer. Intelligent man who stole money from the busi- and inquiring, Kathryn developed a As treasurer, president and finally ness. Financial problems strained the strong interest in insurance, and Irving chairman of Farmers Mutual/American Maurer family, and in 1916, Joseph and spent much of his free time teaching her Family, Maurer practiced the art of Anna separated and his father moved to cross-examination, relentlessly ques- Neillsville. Ervin contributed to the family tioning those under him. Employees finances by taking a job as a bellhop at able to fire back the answers adapted to the Jacob House, where his most famous Maurer’s autocratic style. Others simply customer was William Jennings Bryan, feared him. twice a Democratic candidate for pres- ident. He tipped Maurer a 1913 dime. “I Maurer retired in 1977 but stayed was hoping for folding money,” Maurer physically and mentally active, continu- recalled. When his father came down ing a strict exercise regimen and careful with the flu during the 1918 epidemic, diet. In 1994, at 89, he and his second Ervin moved to Neillsville to run the wife, Nan, bicycled 235 miles across the business until his father recovered. Loire Valley in France. Books had a tremendous impact Maurer and his wife visited American on young Maurer. He so thoroughly Family’s national headquarters in 2000. enjoyed the stories of Washington Irving At dinner that evening at an elegant that he adopted the spelling of his first restaurant, the ever-frugal former CEO name. And after reading “The Art of looked around and asked, “Who’s paying for this?” Maurer died in 2008 at age 103.58 | Bold Moves and Growing Pains

were inactive, showed high loss ratios or were ABOVE: Operation Blue Ink’s objective was to align the agents’unwilling to cooperate with Farmers Mutual inpreventing further losses. incentive with the company’s. The implicit goal was to create a field force of agents who represented Farmers Mutual only. Simultaneously, the agency departmentimplemented the metropolitan program. Mistrust deepened with a series of lawsuits filed in 1954Remembering what happened in Milwaukee by a number of longtime agents and district managers. Theywhen agents dedicated full time to Farmers argued that the company had violated their “property rights” byMutual, the program required full-time, sending renewal notices to their policyholders and providingexclusive representation in all metropolitan successor agents with policyholder information. The plaintiffs,areas by Jan. 1, 1955. including Joseph Radtke, former general manager of the wind- storm company, argued that their original verbal agreements with From an underwriting standpoint, Farmers Mutual assured them that agents would own and controlOperation Blue Ink was a success. In 1954 the policies.and 1955, despite the widespread industrylosses, Farmers Mutual showed a profit in Richard Kalbskopf resurfaced at some of these trials, testi-every state. But the blue ink did not come fying that in essence, yes, that’s exactly what he had promisedwithout taking a toll on the field force. because it was the only way he could get new people to sign on. Implicit in the agency reorganiza-tion program was the company’s desireto be represented by full-time agentsselling exclusively for Farmers Mutual.Except in the metropolitan program,however, the home office never explic-itly stated exclusive representation asits goal. Until the fall of 1955, FarmersMutual described itself as “an agencycompany,” meaning it workedthrough independent agents whoowned the policies they submittedto Farmers Mutual. Mixed messages from company leaders complicated thesituation. Maurer, who disliked the independent agency system,pushed for exclusive representation. Wittwer preferred the statusquo and constantly backpedaled from Maurer’s statements onthe subject. State directors and disgruntled district managers furthermuddied the message. Some managers quickly terminated part-time and multiple-company agents, consolidating their businessesto support new, full-time agents. Others preferred a more slowlyimplemented approach that delayed exclusive representation butavoided the bad blood brought on by mass terminations. Withouta clear message, agents interpreted for themselves FarmersMutual’s intent. Agents representing multiple companies assumedFarmers Mutual was canceling non-exclusive representatives. Part-time agents assumed the company was canceling all part-timers.Those with low sales in one line or another figured their agencieswere next on the chopping block. In the process, Farmers Mutual’sfield force plunged from 3,258 in 1950 to 1,903 by mid-decade. Dare to Dream | 59

In one case, Kalbskopf testified, “I told… all the district men I On Oct. 27, 1955, the Farmersappointed, here is a great opportunity; sure it will take some of Mutual board of directorsyour money and a lot of your time, but you will have something unanimously supported the company’shere after you have built it up for yourself. I told them they’d own move to a field force of agents who wouldthe business. They’d own the sales force. I told them it would be represent Farmers Mutual exclusively.their own business.” But the votes cast by such longtime agents as Harvey Spriggs and August Rammer Farmers Mutual argued that in a mutual company, policies were not without regrets. Paul Miller,belong to the members who control where they have their insur- who succeeded Spriggs as district manager,ance. Farmers Mutual lost every case, including one that went recalled driving past Spriggs’ house on theto the Wisconsin Supreme Court, paying tens of thousands of way back from terminating an agent whodollars in damages. wouldn’t accept the exclusive arrangement. “Harvey was standing out in his driveway With agent morale at an all-time low, the executive staff shaking his cane at me,” Miller said.met throughout the summer of 1955 to find a solution to thedeteriorating relationship between home office and field force. THE MINNESOTA UPRISINGDiscussion focused on the discrepancy between the company’spublic policy supporting independent agents who could sell for The friction between the company and its field force boiled overmultiple companies and Operation Blue Ink’s implicit goal of in December 1955. Disgruntled over being taken off commis-exclusive agency. Wittwer continued to raise concerns about the sion and placed on salary, Minnesota State Director Len Wolfimpact of exclusive representation on longtime agents who had resigned and joined Market Men’s Mutual, a Milwaukee-basedrelationships with major companies. But Underwriting Director insurance company. In itself, Wolf ’s defection wasn’t noteworthy.Howard Hayes produced reports showing that exclusive agents But he convinced his 11 district managers that they were aboutnot only sold more than multi-company representatives but also to be fired. They too resigned and began recruiting Farmerswere more selective, creating more income for themselves and Mutual agents for Market Men’s Mutual. Other competitorsthe company. With the company facing increasing competition, had also used the turmoil in Farmers Mutual to lure away agentsthe exclusive agent seemed vital to its survival. “Should senti- and policyholders. Nothing, however, approached the scope ofment override judgment if judgment dictates that the salvation this mass resignation.of Farmers Mutual lies in exclusive agency?” Maurer wondered. Poor relations with Minnesota Insurance Commissioner In August, the staff completed its deliberations, recommend- Cyril Sheehan made a bad situation worse. Earlier in the year,ing the board declare exclusive agency representation the official Farmers Mutual requested permission to reduce auto rates incompany policy. Wittwer, by this time, was in no mood for an Minnesota. But Sheehan — angry about the company’s lawsuitargument. After suffering a long illness, Barbara had died in late forcing him to accept its fire insurance plan — rejected theJuly. For years, she’d been a constant source of motivation, his proposed auto rates as inadequate. As a result, Farmers Mutualconfidant and the most important person in his life. But she had higher auto premiums than its competitors. This combinedwasn’t there now to encourage him through this fight. with the widespread propaganda circulated by Wolf and his men forced many of the company’s 327 Minnesota agents to question Maurer, with the help of his wife, Kathryn, wrote a memo the wisdom of staying with Farmers Mutual.proposing Farmers Mutual make exclusive agent representationits official policy and begin working toward that goal. DespiteWittwer’s reservations, the board approved the recommendationon Oct. 27, 1955. They did, however, urge staff to implement thenew policy “with tolerance and understanding,” so that agentswould not have to “suddenly and arbitrarily” end longtime rela-tionships with other companies. Pushed by Maurer, the executive staff set Jan. 1, 1958, asthe target date for all agents to represent Farmers Mutual exclu-sively. Because Farmers Mutual didn’t sell farm fire coverage, ruralagents were exempt from the requirement. However, they wererequired to place all possible business with Farmers Mutual.60 | Bold Moves and Growing Pains

ABOVE: The Minnesota claims office became the hub of activity after Farmers Mutual’s Minnesota state director and 11 district man-agers quit in December 1955. After word of the resignations reached Madison, Kinnamon In 1942, the averageand Koch spent three grueling days and nights working the Farmers Mutual agentphones, talking with district managers and agents. Minnesota served 30 policyholders. Ten yearsclaims adjusters and underwriters joined the effort. Under the later, the average increased to 75.direction of Si Sandeen, they immediately drove to their territo- By 1962 — less than 10 years afterries to convince the agents to stay with the company. the company began its transition to exclusive agency — the average The amount of misinformation and the depth of distrust agent served 400 policyholders.caught the two home office men off guard. Kinnamon respondedwith a memo to Minnesota agents explaining directly to them meeting rooms, where angry agents barraged the home office men— for the first time — the company’s policy relating to exclusive with questions and accusations based on half-truths and grossagency. At a special executive staff meeting Saturday morning, exaggerations. Near the end of this taxing week, Alex Opgenorth,December 24, Kinnamon and Koch reported what they’d heard a member of Koch’s team, phoned home and learned of his wife’sfrom the agents and former district managers.The executive staff unexpected death. Koch drove his friend to the airport thatagreed that a series of meetings with agents around Minnesota evening. The next day’s drive to Thief River Falls was somber.was necessary. With the early January temperatures well below zero, twohome office teams set out for a week of agent meetings inMinnesota. Kinnamon and his team met with agents in the TwinCities, while Koch and his team toured rural Minnesota. More than 230 agents turned out to hear what FarmersMutual had to say. But there was little warmth in the crowded Dare to Dream | 61

After the home office men returned to Madison, the claims exclusive representation. Of the nearly 2,000 agreements signedadjusters and resident underwriters again hit the road to shore up in 1956, more than 1,700 were standard. Among the fewer thansupport among agents. “They kept me in the office handling all 200 men to sign exclusive full-time career agreements was Dalethese claims that came in,” said adjuster Milt Olson. “The others Mathwich, a former bank manager who signed his agreement ontraveled all over the state trying to keep agents, telling them to October 3 — the company’s 29th birthday.stay with the company.” THE In the end, nearly half the Minnesota field force quit, taking FIRSTmore than $1 million of the company’s $20 million in premi- TO SIGNums with them to Market Men’s. “A million dollars in premiums ON THEdoesn’t sound like much today, but in those days it was,” Koch DOTTEDlater recalled. “But if their commitment to Farmers Mutual LINEwasn’t any stronger than that, we figured we were better offwithout them.” After Marvin Klitzke returned home from the Korean conflict in To replace Wolf, the company selected Joe Stephan, who 1953, the Reedsburg, Wisconsin,had successfully implemented Operation Blue Ink in Kansas. native took a construction job and gotPerpetually optimistic, Stephan livened up the gloomy St. Paul married. For insurance, he turned to Frankoffice with his full-speed-ahead enthusiasm and off-the-cuff Feivor, an agent for Farmers Mutual — theone-liners. He approached Minnesota as though he were open- company his father used. A few monthsing a new state, spending most of his time aggressively recruiting later, Feivor became a district managerdistrict managers and agents. One of his first recruits was Wally and recruited Klitzke.Huebsch, the realtor who sold Stephan and his wife their TwinCities home. In December 1954, Klitzke and his wife Bert moved from their hometown in south Huebsch started as a district manager, covering a large area central Wisconsin to Seymour, just westthat extended from the Twin Cities’ northern suburbs to Duluth. of Green Bay. He lost money the first year.“It was a rough time. Wolf would follow me around and talk to But he was breaking even in 1956 whenanybody I tried to recruit,” Huebsch said. “He’d get the list of Feivor encouraged him to sign a careerpeople taking the state licensing exam and contact them about agent agreement with Farmers Mutual.joining Market Men’s — which went broke a few years later.” Klitzke didn’t hesitate and became the first to sign on as a career agent in 1956. John Reed, a young Wisconsin agent, was another recruit,accepting a district manager position in Tracy, Minnesota. “I had Klitzke remained with the company32 agents on my list,” Reed said. “After finding out who really for the next 39 years, including six as awanted to sell for Farmers Mutual, I was down to three.” district manager. But he never slacked off. The month before he retired in mid-1995, The company bolstered Stephan and his district managers’ Klitzke wrote 75 applications and quali-efforts with nearly $75,000 of advertising and by offering a $2 fied for the All American Convention inbonus on new business and $1 bonus on renewals. But it took San Diego.years for Farmers Mutual to return its Minnesota sales to thepre-1955 level. The career agreement was far from a one-sided deal. In exchange for only representing Farmers Mutual, career agentsPUT IT IN WRITING had access to company-paid training, advertising assistance, hospital insurance — and advanced compensation. DevelopedWith the Minnesota revolt still boiling, Farmers Mutual began by Koch, Budget Director Hugh Wallace, and Agency Secretarywork on its first written agent contracts. After consulting withagents, district managers and state directors across the territory,Alex Opgenorth and Gus Kinnamon developed two contracts.The standard agreement allowed current agents to continue sell-ing for multiple companies. The career agreement — required ofall new agents but optional for existing ones — bound them to62 | Bold Moves and Growing Pains

ABOVE: Agency Director Gus Kinnamon personally signed nearly When Koch first approached Maurer about the plan, Maurer’s answer was no. “It’s a privilege for them to be part of2,000 agent contracts. this company and to represent us,” he snapped. “We’re not going to pay them for that privilege.”Charlie Ambrosavage, the advanced compensation plan offerednew agents a monthly subsidy of up to $400 for 18 months, with Koch, however, was one of the few people at Farmers Mutualthe requirement that they pay it back over time. who knew how to stand up to the domineering Maurer. He stuck to his guns, answering every question Maurer fired at him. Koch presented estimates showing that 100 subsidized agents meeting their minimum production levels would produce nearly 35,000 casualty, fire and S&A applications, plus more than $9 million in life insurance a year. The company risked little. Successful agents would pay back their advances, most often out of bonus money they earned. If an agent failed, he and/or his manager would be responsible for 60 percent of the draw, while Farmers would write off the remainder. Maurer eventually agreed, but for years he referred to the plan as “the dole.” Farmers Mutual also stepped up its training program. In 1957, Floyd Desch, the first sales training supervisor, developed Farmers Mutual’s first written sales tracks. Desch and Koch also initiated home office sales schools. They designed the basic sales school as a training ground for successful agents with a year ofRIGHT: After World War II, agent manuals grew thickerand the need for training mushroomed. Dare to Dream | 63

THE ALL AMERICAN CONVENTIONMotivation through destina- introduced the Leading Career offered an additional incentive to tion. That’s the simplest Agent Club (LCA) to emphasize convention qualifiers with its first way to describe the All and increase multi-line sales. To air-travel trip to an award destina- American agent convention. But qualify, an agent had to sell at tion — Miami Beach. the All American — with its storied least 100 casualty policies, 120 fire policies, and $100,000 of life, From there, the sky was the history, exciting sickness, accident and hospital limit for All American destina- and diverse loca- insurance, plus receive the under- tions. From stunning beaches tions, and impres- writing-incentive bonus. The and mountain retreats to cosmo- sive scope and prize? An all-expenses-paid trip politan city-centers and theme- to the Edgewater Beach Hotel in park resorts, the convention has scale — is far Chicago for the LCA Convention. criss-crossed the nation — and from simple. It In total, 55 agents qualfied for the stamped its passport in a few started off with trip to the Windy others — for more than 60 years. a straightfor- City the next year … and a new tradition Highland Park — 1962 ward prem- was born. ise: Successful Some of the more popular venues salespeople Over the next have included New York City, are naturally few years, some Hawaii, the Bahamas, Vancouver, changes were San Diego and Walt Disney World. competitive made, includ- and goal-ori- ing expanding the Regardless of the location, ented, so opportunity to though, the template is gener- dangling a sales managers in ally the same for carrot in front 1961, and chang- qualifiers. They still of them — in this case, a first-class ing the name to earn their way to getaway — is a sure way to drive the All American the convention production and performance to Convention in by selling certain even greater heights. 1964 to reflect the amounts and types From the beginning, Farmers company’s new American Family of the compa- Mutual sponsored contests to identity. Along with the name ny’s insurance foster competition within the change that year, the company products, along field force and give agents goals with maintain- to achieve. In 1955, though, the ing high custom- company raised the bar when it er-satisfaction and reten-Estes Park — 1957 tion scores. While the64 | Bold Moves and Growing Pains

Orlando — 1996 consec- utivequalification requirements may convey strategic messages conven-change somewhat from year to from company leadership and tions toyear, the number of qualifiers honor indi- his name,generally falls between 25 to 35 vidual agents nearly all ofpercent of the field force. In 2016, who achieved them as a top 10 finisher. distinctive “The people are what make the All that number totaled recognition American special. In my younger 1,304 agents. that year. The days, it was an annual family vaca- Once they arrive primary focus tion for us.” And that’s been the at the All American, is on the top 10 same for many agents over the agents and their agents in the years. Kids grow up going to guests enjoy a mix of company that the All American. “It’s a place scheduled company year as well as to spend time and make memo- events and free time the “hall-of- ries with the people you enjoy. to relax and take fame agents” It’s an opportunity to see old advantage of the who have qual- friends, meet new ones and cele- recreational oppor- ified for 10, 15, 20, 25 or more brate together the accomplish- tunities the conven- consecutive conventions. tion locale offers. Orlando — 2002 In recent years, a Beyond the glamorous loca- community service tions, ritzy accommodations ments earned through hard work activity has also and swanky and dedication to customers. The been added to events, the All American is part of the fabric the list of options All American of American Family.” for attendees. Convention is One standard ultimately about Banff — 2014 event that quali- one thing: “The fiers are expected people,” said Paul Young, to attend is the annual AmericanAll American business meeting. Family’s mostThe purpose of this elaborate, decoratedmulti-media production is three- All Americanfold: thank the agents for the busi- agent, with 46ness they bring to the company, Dare to Dream | 65

ABOVE: A Farmers Mutual committee selected applicant William Mervar to receive the company’s first sickness and accident policy.Mervar purchased a “Provider” policy covering himself, his wife, Mae, and their three children from Bob Steffen. The Mervars rep-resented the “most nearly ideal family,” Underwriting Manager Louis Olson explained. Mervar, a floor covering contractor fromSheboygan, had been a policyholder since 1949 and at the time owned six Farmers Mutual policies.sales behind them. Intermediate schools were for agents with “Everyday insurance needs for farmers, individuals and families.”three to five years’ experience. Advanced schools, added later, But rural agents increasingly complained that their sales caserecognized longtime agents for their years of service and helped lacked an important ingredient — farm fire protection. Finally,improve their ability to sell all the company’s lines. Within 10 in 1957, after three years of debate, Farmers Mutual test-mar-years, 1,700 agents completed basic, intermediate or advanced keted farm fire insurance in Wisconsin. Agents wrote 695 farmsales school. fire policies that year, totaling $11.9 million in coverage. The company eventually offered farm fire — and later farm owners It wasn’t long before Farmers Mutual saw the benefits of and liability protection in all states.exclusive representation. By 1959, 22 percent of the field forcerepresented Farmers Mutual exclusively and sold more than half Exclusive agency also sped up Farmer’s Mutual’s decisionits new auto, fire and health policies and 80 percent of its new to offer its own life and health insurance policies. Union Mutuallife insurance coverage. knew from the outset that Farmers Mutual eventually wanted to offer its own health and life insurance coverage, but the Portland,EXPANDING COVERAGES Maine-based company believed it wouldn’t happen for a decade or more. Exclusive agency changed that. In 1954, Kansas regula-Exclusive representation also led to changes in the coverage tors questioned whether requiring exclusive agents under FarmersFarmers Mutual provided. In 1954, the company’s slogan was Mutual’s metropolitan program to represent Union Mutual66 | Bold Moves and Growing Pains

violated federal law prohibiting LEFT: Sickness and accident“boycott, intimidation andcoercion.” Though never insurance — and later liferaised in court, the issue insurance — filled out thecaused concern. Farmers Mutual sales case. The next year, with compa- committee recommended termi-ny-wide exclusive agency in the nating the agreement with Unionoffering, Wittwer and Maurer raised Mutual. They suggested writingthe subject of independence with S&A first, then life insurance. TheUnion Mutual President Rolland Irish. Farmers Mutual board unanimouslyIrish understood their desire but urged approved the recommendation.them to consider the expense, particularlyin the area of life insurance. That spring, with the nation in a brief but sharp recession, Farmers In Maurer’s eyes, Farmers Mutual had Mutual announced it would writethe volume to support the move. By the close of its own sickness and accident insur-1955, Farmers Mutual agents had sold $45 million ance by year’s end. Much work hadworth of life insurance, collecting nearly $1 million to be done before that could happen.in premiums and another $218,000 in S&A (sickness Farmers Mutual had to get licensesand accident) premiums for Union Mutual. Wittwer in all states, write and print policies,was less convinced. Farmers Mutual had sold life and file them with all the state insurancehealth insurance for only a few years, and he wasn’t commissioners, and establish rate sched-certain it was ready to manage its own program. Home ules and commissions, design and printoffice relations with agents were terrible, and the future was forms, create training and promotional material, set up machin-far from certain. ery to handle the new line, and much more. Farmers Mutual’s first actuary, George Burt, laid much of Alex Opgenorth, Henry Harvey, Howard Hayes and Gus the foundation for the S&A department. Implementation fellKinnamon — assistant secretary, comptroller, the head of under- to Louis Olson, underwriting supervisor for Kansas, Missouriwriting, and agency director, respectively — studied the possibility and Nebraska. As the S&A department’s first underwriter, Olsonof offering health and life insurance coverage. In February 1957, handwrote the first two policies, patterned after Union Mutualestimating that Farmers Mutual agents would sell more than plans. “The Provider” offered hospital coverage with a $6 to $20$200 million in new life insurance over the next 10 years, the “daily room benefit” and optional surgical coverage. “The Protector” offered income protection through monthly payments in the event of sickness or injury. Breaking with the Union Mutual approach, Farmers Mutual applied its semi-annual plan to S&A. By loading acquisition costs — mainly agent commissions — into the initial premium, the company could offer a lower renewal rate. S&A sales began Nov. 1, 1957 — a month after Farmers Mutual celebrated its 30th anniversary — with 40 applications arriving the first day in two months, premiums totaled $100,000. By 1960, annual premiums exceeded $500,000. With the addition of a major medical policy, premiums grew 32 percent the follow- ing year, and the number of policies surpassed 6,000. Recognizing the growing importance of this line, the company formed a sepa- rate S&A department in 1962, with Fred Luick supervising. Olson continued as underwriter, and John Hicks handled claims. Dare to Dream | 67

LIFE STARTS IN ‘58 Many assumed the new company would be named Farmers Mutual Life Insurance. But Maurer and Koch, among others, feltNot entirely sure when it would be ready to sell its own line of life the name Farmers Mutual didn’t sell well in urban areas. Even ininsurance, Farmers Mutual in March 1957 put up $2 million to Wisconsin, Farmers Mutual was often confused with other agri-form a wholly owned subsidiary for that purpose, with Wittwer cultural companies. Besides, the name didn’t reflect the nature ofas chairman and Maurer as president. Incorporating the new the new life company.venture as a stock company made it easier to start than a mutualand gave the company a strong financial base — $1 million in Although Wittwer wouldn’t hear of changing the parentcapital and $1 million in surplus. Many of the company’s senior company’s name, he didn’t fight Maurer on the life company’sand middle managers hoped Farmers Mutual would offer stock title. The working name during development was the Familyto agents and employees as many newer life companies had done. Life Insurance Company, but a small Seattle firm had that title.But the board — committed to the mutual philosophy — feared Maurer considered “family” an essential part of the name, and hethat policyholders would frown on an individually owned stock had plans to expand nationwide. In a June 1957 memo he mused,company. “We were so risk-averse that the board wasn’t even “Perhaps we should merely incorporate a geographical prefix andwilling to listen to the idea,” recalled Vice President John Reed. call the company American Family Life Insurance Company.”“We were very, very careful in those days.” Later that summer, Sales Promotions Manager CharlieBELOW: Bob Koch was selected to organize and manage the Ambrosavage went to Capitol Square in Madison and, with a list of possible names in hand, asked passersby which was the best forAmerican Family Life Insurance Company. Only 33, Herman a life insurance company. American Family won. “That was theWittwer and Irving Maurer had quickly recognized Koch’s extent of our market research,” Koch remembered with a laugh.ability to lead and motivate employees and agents. Koch was the obvious choice to manage the new company. He’d headed the life department in the early 1950s before being promoted to sales personnel manager, a position he held through the turbulent transition to exclusive agency. He’d impressed Wittwer and Maurer by handling the situation in a friendly but straightforward manner that earned him the trust and respect of a wary field force and a frazzled home office. Just 33, Koch assumed the new position on Jan. 1, 1958. Maurer, in typical full-speed-ahead style, set July 1 as the launch date for the American Family Life Insurance Company — leav- ing Koch just six months to set up the operation. “That was absolutely the busiest, the most frantic time I’ve ever had with the company,” Koch remembered. “Still, it was fun, because we were creating something from scratch.” Not entirely from scratch. Farmers Mutual had nine years of sales training under Union Mutual, during which time it68 | Bold Moves and Growing Pains

sold $75 million of life insurance. But the company had no real United Life Insurance Company of Indianapolis, the reinsurance company Koch selected, also provided extensive training.home-office experience in managing a life insurance operation. Koch’s outgoing personality and enthusiasm for the newJim Dallman, previously director of company helped him draw much-needed support from across the Farmers Mutual organization. Desch worked overtime writ-the life department, stayed on as ing training manuals. Comptroller Hugh Wallace designed a punch-card system to process the policies. The printing andlife services manager, but after the supply departments scrambled to get promotional and sales mate- rials to the agents. And when help was needed to collate agenttransition Maxine Lighthall joined packets, the entire company stuffed folders.Union Mutual as its Madison office Because of the short time available to set up the new company, Koch and Maurer kept its structure simple and economical.manager. Union Mutual agreed to Koch kept administrative expenses down by adopting Farmers Mutual’s semi-annual approach rather than the costly monthlytrain its new competitor’s employ- billing system common among life insurance carriers. Noting that four basic policies accounted for 90 percent of sales under Unionees. Other companies helped as Mutual, Koch started with just those policies — Whole Lifewell. Maurer spent several daysin Bloomington, Illinois, learn-ing how State Farm structured Jim Dallmanits life insurance operation. Kochand Kinnamon contacted still others — Travelers, NorthwesternMutual and Franklin Mutual Life among them — for insights onhow to run a successful life insurance company. And AmericanBELOW: In 1957, Sales Promotion Manager Charlie Ambrosavage pushed hard to create a new name for Farmers Mutual’s new lifeinsurance company. Irving Maurer, Bob Koch and Ambrosavage favored American Family Life Insurance Company, believing itappealed to broader market segments. Company founder Herman Wittwer wasn’t enthusiastic about the idea but agreed. Just afew years later, Wittwer strongly opposed changing the name of Farmers Mutual to American Family Mutual Insurance Company,but a majority of the board of directors favored it. Ambrosavage is shown speaking to a gathering celebrating Farmers Mutual’s30th anniversary in 1957, flanked by Wittwer (left) and Maurer. Dare to Dream | 69

(paid-up at 85), Executive Life (paid-up at 90), 4-Way Security a year. Koch believed the key to American Family’s success was(20 pay life), and the Insured Savings Plan (endowment at age serving 200,000 middle-income families — the same ones who65). By adopting these basic policies along with Union Mutual’s had their car, health and property insurance with Farmers Mutual.premium and dividend schedules, Koch lopped months off thedevelopment stage and enabled agents to begin with familiar A MILLION-DOLLAR DAYproducts. Not until 1960 did the company have its own forms,rates and schedules. The hottest American product in the summer of 1958 was Wham-O’s Hula-hoop, selling for $1.98. Within six months, 30 “We are committed to the proposition that the simpler we million people were gyrating — most unsuccessfully — to keepkeep our plans and our sales presentations, the more we enhance the plastic hoop moving around their waists. In the midst of thisyour opportunity to build your agency through life insurance craze, the American Family Life Insurance Company openedsales,” Koch told agents. for business. Agents in Wisconsin, Indiana and the Dakotas began selling American Family policies in June. They turned in Identifying the company’s market was important. Family their applications before the end of the month so they’d be inincome increased 15 percent during the prosperous Eisenhower the home office by July 1, when the company’s charter becameyears. As their lifestyles improved, parents of the burgeoning baby- effective. As Koch walked toward the office that morning, heboom considered the protection offered by life insurance a necessity. hoped American Family Life would have a fraction of Wham-But many of the “life only” companies continued to focus onupper-income families who made more than $10,000 or $15,000BELOW: Milton Mantz (left), an agent in Sussex, Wisconsin, June 1950 was Farmers Mutual’s first $1 million month. Casualtyreceived the first AFLIC trophy from Vice President Bob premiums alone totaled $1,022,802. Just 12Koch in January 1960. years earlier, the company had celebrated its first $1 million year. O’s success. American Family set the goal high — $1 million the first day. When the numbers were finally tallied, the result was an astounding $1.6 million of life insurance sold — $1.29 million from Wisconsin alone. It was the biggest opening day any life insurance company had ever posted. By the end of the month, American Family Life Insurance had $3.5 million of life insurance in force covering 780 people. Dennis Streif, an agent in New Glarus, Wisconsin, had the busi- est first day, selling $54,700 of life insurance. Joe Sanks of Stevens Point, Wisconsin, had the biggest month, writing $155,000 of life coverage. American Family Life’s first-day sales set the bar high for the six states the company would enter in the following 12 months. Before each opening day, state directors and district managers pointed to Wisconsin’s $1.29 million figure. “Are we going to let Wisconsin beat us?” the state director would shout. “No!” was the resounding response.70 | Bold Moves and Growing Pains

As the company’s home state, Wisconsin boasted the most insurance in a calendar year. Milton Mantz, an agent in Sussex,agents, the longest experience and the greatest market penetra- Wisconsin, was the first to qualify, exceeding the goal by Augusttion, making it almost impossible to beat. But on June 1, 1959, 31. While 110 agents qualified for the Leading Career AgentsAmerican Family entered Missouri. State Director Jim Caskey, (LCA) convention that year, only 11 made AFLIC.known as J.E. to district managers and agents alike, had built astrong, fiercely loyal field force, making the state second only Just 12 days after American Family Life Company’sto Wisconsin in production. But J.E was tired of being second. phenomenal opening, Bernard Gehrmann died following a heartHe leaned hard on his men before the June 1 kickoff, and they attack. This left an opening on both the Farmers Mutual and theweren’t about to let him down. When the numbers were tallied, American Family Life boards. Alex Opgenorth, already secretarythey’d sold a whopping $2.66 million of life insurance. Jack on the American Family Life board, filled Gehrmann’s seat onMainprize, a Kansas City agent, led the field, writing $140,000 the Farmers Mutual board. At Maurer’s urging, the life companyof life insurance. directors promoted Koch to vice president and named him to succeed Gehrmann on the American Family Life board, as well. Koch understood the motivational power of recognition The title didn’t change Koch’s role. He stayed in the trenches,and constantly sought new ways to reward the field force for doing everything from training agents to hauling boxes. Inits achievements. To keep agents focused on life insurance year- contrast to Maurer, who was unpopular among agents becauseround, he expanded on some district managers’ programs to of the changes he made, Koch spent a great deal of time in thedevelop the American Family Life Insurance Club (AFLIC) field. Agents responded with loyalty to the life company thatin 1959. To qualify, an agent needed to write $250,000 of life rivaled the fierce allegiance of early agents to Farmers Mutual.BELOW: Missouri agents more than doubled the opening-day life insurance sales record set by Wisconsin. Pictured are (standingfrom left): W.G. Lauer, State Director Jim Caskey, J.C. Rudloff, Lyle Cummings, Joe Williams, Paul Moosmann, Noel Warren, RussSeibert and Bob Mudd; (seated from left): Bob Littrell, Dave Impey, Dick Lowry, Vern Bridwell and Walt Rottmann. Dare to Dream | 71



To be successful, you have to have your heart in your business, and your business in your heart. — THOMAS WATSON, SR., former CEO, IBM4 TOO MANY PEOPLE, TOO LITTLE SPACE

CHAPTER 4 | TOO MANY PEOPLE, TOO LITTLE SPACEA t some point in their first few days at Farmers Mutual, new employees took the stairs to the second floor to see Herman Wittwer. The prospect of meet- ing the founder made most a little nervous; having to first pass Edna Scheaffer,Wittwer’s executive secretary since 1930, didn’t ease their appre- parking was restricted to one hour. Someone always kept an eyehension. Scheaffer was stern and proper, with a husky voice used out for police officers marking tires. Then everyone poured outsparingly. Her straight hair was cropped above the shoulders, her of the building and jockeyed their cars around to avoid tickets.wardrobe dominated by sensible navy blue dresses. Even morefrugal than Wittwer, Scheaffer shared a season ticket to Badger Despite the addition, Farmers Mutual quickly outgrew thefootball games with a friend. She went to the first half and her Boyd property and by 1950 made plans to move. In the earlyfriend went to the second. BELOW: Irving Maurer and Edna Scheaffer celebrate her retire- An exacting woman, she expected others to do precisely whatshe asked. If she requested two sheets of paper from the supply ment after 33 years with Farmers Mutual. She was the gate-department, she meant two. Should more be delivered, she’d send keeper secretary outside Herman Wittwer’s office.back the remainder. Once inside Wittwer’s office, new employees found a pleas-ant, unassuming man who seemed genuinely interested in whothey were and why they’d joined Farmers Mutual. Wittwer tookspecial pleasure in telling them how the company started andemphasized that service was the key to its success. The home office’s commitment to service helped FarmersMutual and its 2,500 agents do more than $7.5 million of busi-ness in 1947, twice its 1945 volume. But providing excellentservice became increasingly difficult. The number of employeestripled to more than 200 between 1944 and 1947, forcing someto work in the halls. An addition behind the Boyd mansion doubled theoffice space and bought Farmers Mutual a few more years onWisconsin Avenue. Although air conditioning was becomingcommon by 1947, the brick annex didn’t include such a luxury.During heat waves, Farmers Mutual ran water from a hose ontothe roof to cool the building. Parking was another problem. Withno company lot, employees left their cars on the street, where74 | Too Many People, Too Little Space

1950s, economic activity in the city of Madison was split into two ABOVE: An architect (right) from the Chicago firm Childs andgeneral areas, geographically separated by the State Capitol. WestMadison was home to the city’s four hospitals and the University Smith showed Bob Kelliher (center) and Harold Frank blue-of Wisconsin. East Madison, at the time, was more industrial. prints for Farmers Mutual’s new home office.While many expected Farmers Mutual to move west, Wittwerlooked east, where land was more affordable. Later that year, Bob entrance, they saw a two-story building. But employees whoKelliher, director of office operations, chose an old gravel pit just parked in the rear found a third story cut into the hill. Among theeast of the city limits as the site for the new headquarters. building’s many modern features were heated pipes set beneath the sidewalk to keep the pavement clear during Wisconsin’s The nation was in a building boom, and on several occasions snowy winters, acoustic ceiling tiles and “non-skid” plastic floors.material shortages delayed construction at 3099 East WashingtonAvenue.The cornerstone of the $1.36 million building wasn’t laiduntil Aug. 6, 1951, and Farmers Mutual, which had already soldits current home, had to move by January 1. When employeescame in over the Christmas weekend to help move into the unfin-ished building, they found plywood covering the lobby windowsand wires dangling from the uncovered ceiling. For weeks, the350 employees worked to the rhythm of hammers and saws. The low-slung building had a classic 1950s appeal thatcaptured the personality of Farmers Mutual. FM, the companypublication for agents, described it as “conservative and strong,yet modern and efficient without being ornate.” Indiana lime-stone and large double-glazed windows gave the building a bright,clean look. As visitors drove up the curved blacktop to the frontBELOW: An artist’s sketch provided a glimpse of Farmers Mutual’s new headquarters at 3099 East Washington Ave. in Madison.Herman Wittwer wanted the building located on Madison’s east side where many of his company’s employees resided. He wasconvinced the new home office would serve his company’s needs forever. Dare to Dream | 75

The number of employees at Farmers Mutualtripled between 1944 and 1947. More than 200employees posed for this 1946 photo. Though the new home more than doubled Farmers Mutual’s standard 7 hour and 40-minute work day, with bells signaling theoffice space, it brought employees closer together by bringing end of the shift at 4:10 p.m.them into the same building. With no restaurants nearby, thehome office had its own cafeteria with a staff of eight serving In the fall of 1952, Farmers Mutual held an open house. Tobreakfast and lunch. Now, instead of a quick lunch and window promote the event, the company purchased a special four-pageshopping downtown, employees ate together, talking and play- section in the Capital Times. Nearly 5,000 people toured the newing cards afterward. A shuffleboard court in the back provided building September 20 and 21, and all three local radio stationsadditional entertainment. covered the open house.Two weeks later, during the district manag- ers’ convention at the home office, Farmers Mutual celebrated its Regular bus service went only as far as Schenk’s Corners 25th anniversary with a giant cake replicating the new building.— more than a mile shy of the company’s new home. To help With annual premiums approaching $20 million — 20 times largerFarmers Mutual employees get to and from work, a special bus than Wittwer dared dream in the spring of 1927 — the founderpicked them up at Capitol Square every morning, returning again was amazed at his company’s success. “We finally have a buildingat 4:15 in the afternoon. This was the impetus for the company’s we’ll never outgrow,” he confidently told district managers.76 | Too Many People, Too Little Space

In a few years, company quarters were again cramped. Walls employees spent their entire day pulling files and replacing them.were knocked down to create more room, managers were forced As Farmers Mutual grew, it began to look for ways toto share private offices, and the need to decentralize operationsbecame as much an issue of limited space as sound management. improve these processes. In the 1930s and 1940s, the assembly line epitomized efficiency, and service industries looked to manu-DECENTRALIZING facturing for ways to improve productivity. In 1941, Kelliher, withPEOPLE AND PROCESSES the help of a management consultant, organized each department into three regional sections — Wisconsin, Minnesota, and Other.Processing insurance “apps” and claims has always been a Paperwork passed through the assembly line from department tolabor-intensive job. This was particularly true before the advent department in geographic batches — but everyone worked fromof computers, when nearly a third of all Farmers Mutual staff a single central filing system.time was spent checking and rechecking facts and figures thatothers had typed or manually calculated. Meanwhile, eight In 1947, Kelliher, Alex Opgenorth and Howard Hayes took regionalization a step further. Their research showed it was most efficient for single units to serve from 65,000 to 100,000 policies Dare to Dream | 77

ABOVE: On Aug. 6, 1951, the Farmers Mutual board of directors hosted a small cornerstone laying ceremony for the company’s newheadquarters. From left: Herman Wittwer, August Rammer, Irving Maurer, Bernard Gehrmann, Harvey Spriggs and William Aberg.each. On this basis, they organized three geographical service Farmers Mutual split theunits, each with its own filing system, to handle the flow of paper- Other States Division intowork from beginning to end. Wisconsin, under Kelliher, had 76 the Central and Southwest divisions inemployees; Minnesota, under Hayes, had 30, and Missouri and 1954. The Central Division includedOther States, under Bill Hoppe, had a staff of 37. This reor- Illinois, Indiana, Iowa and Kansas,ganization shortened lines of communication within the home with about 60,000 policies. Southwest,office and laid the groundwork for further decentralization of which included Missouri and Nebraska,the company. served roughly 90,000 policyholders. With this strategy in mind, Farmers Mutual designed itsnew home office to service up to 400,000 policies and plannedto build regional offices as the number of policies in the areareached 100,000. To this end, Farmers Mutual established theNorthwest Division, comprised of Minnesota, North Dakota78 | Too Many People, Too Little Space

JOHN “PETE” MILLERA NEW GENERATION FOR A CHANGING AMERICAN FAMILYPete Miller had already accepted President 1968 - 1972 Maurer, Miller chaired the decentral- a job selling life insurance for President and CEO 1972 - 1977 ization committee in 1955, shaping the another Madison company in the Chairman and CEO 1977 - 1982 company’s regional structure. He also summer of 1945 when he walked into organized the operations department, the Wittwer & Webster Agency to pay claims and negotiating settlements merging the personnel, methods and his mother’s auto insurance premium. for Farmers Mutual. “We used to play materials divisions into a single unit. After hearing the young man had a law cards after a day on the road,” recalled degree, Lod Webster took Miller upstairs Jim Mintz, underwriting director, auto The board of directors named Miller to see Alex Opgenorth, Farmers Mutual’s and health lines. “He could follow his the company’s first vice president in claims director. After spending an hour cards — and I think my cards — and 1958. He became president of American with Opgenorth, Miller agreed to join the talk constantly about something else. I Standard Insurance Company in 1961 company as a claims attorney in north- could never beat him because I couldn’t and executive vice president of Farmers eastern Wisconsin. concentrate like he could.” Mutual the following year. The next day, Miller was in the office studying policies and claim forms. Two When the personnel manager’s posi- Upon Wittwer’s death in 1968, Miller days later, he was on the bus to Fond tion opened up in 1951, Miller — set on advanced to the presidency. Four years du Lac, Wisconsin, to work with claims someday heading up the claims depart- after that, he was named chief executive attorney Bob Putman. Putman moved to ment — ignored the posting until officer of the American Family Insurance the home office 10 days later, and Miller Herman Wittwer asked him to apply. Group. When Maurer retired in 1977, took over. Miller won the job and returned to Miller became chairman of the board. Born in Marinette in northeastern Madison to head the personnel depart- Wisconsin, on Aug. 10, 1917, Miller was ment, which consisted of himself and As an executive, Miller’s hands- the youngest of five children. Named Helen Esser. off style flattered and frustrated those after his father, John, he acquired his around him. He believed the men and nickname from the housekeeper, who A favorite of both Wittwer and Irv women working for American Family insisted on calling him Peter. “I was in were capable people who needed high school before I realized my given little supervision. While the executive name was John,” Miller once said. staff enjoyed the confidence Miller put After receiving his law degree from in them, at times they wanted more the University of Wisconsin Law School direction. in 1941, Miller served a brief stint with a Chicago-based trust company before Miller’s keen intellect and personable joining the army’s Counter Intelligence though somewhat introverted manner Corps. Assigned to the Manhattan made him highly regarded within the Project, he spent the war in the industry. While chairman and CEO of Southwest, closely watching suspected American Family, he served on the security risks and foreign agents while boards of both the National Association scientists developed the atomic bomb. of Independent Insurers and the Health Miller helped put himself through Insurance Association of America, in school by playing poker and pool, and addition to various other positions in both remained pastimes as he traveled industry organizations. to northeastern Wisconsin, adjusting Miller stepped down as chairman of American Family in 1982 but contin- ued to serve on the board of directors and the finance committee until 1987. He died Dec. 31, 1997, at the age of 80. Dare to Dream | 79

ABOVE: Established in 1951, the Northwest Division of the home office served nearly 100,000 policyholders in Minnesota, NorthDakota and South Dakota.and South Dakota in early 1951. Two years later, the company The first step, in February 1957, was to organize an operationsannounced its intent to build a regional office in the Minneapolis/ division by merging the personnel, methods and materials divi-St. Paul area.  sions, thereby improving decision-making and implementation. This new division, under Miller, became the “line,” implement- Several factors, however, forced Farmers Mutual to table ing policies and procedures developed by the executive staff.those plans. Years of underwriting losses and the onset of Previously, the executive staff — the comptroller and the directorsOperation Blue Ink demanded the company’s immediate atten- of the agency, claims personnel, methods and underwriting divi-tion, as did controversy surrounding Farmers Mutual’s transition sions — had been responsible for doing the work they plannedto exclusive agent representation. and programmed, blurring the lines between staff (policy making) and line (implementing) operations. But senior management remained committed to decentral-ization, and despite having their hands full with mass dissension Later that year, Farmers Mutual decentralized the oper-in the field force, persistent underwriting losses and intense ation division into four regions, each with a regional managercompetition, the harried executive staff continued planning reporting to Miller. Regional managers oversaw distinct staffsfor decentralization. In 1955, at Maurer’s urging, the board got that included personnel, agency, claims, underwriting, salesbehind the effort, appointing Personnel Director Pete Miller to and services. The Central Region, under Sales Promotionschair a decentralization committee comprised of Hayes, Kelliher, Manager Bill Kleinheinz, included Illinois, Indiana and Iowa.Kinnamon and John Farnsworth. Working with a consultant who The Northwest Region, headed by Underwriting Manager Leshelped State Farm and Nationwide decentralize their operations, Ramiker, included Minnesota and North and South Dakota.Thethe committee spent nearly two years developing a regionalized Midland Region, under Dale Eikenberry, manager of the Kansasmanagement structure for Farmers Mutual.80 | Too Many People, Too Little Space

ABOVE: The arrival of the RAMAC 305 caught employees’ attention in 1959. Pictured with the computer are(from left): Evelyn Peterson, Maybelle Seery, Lucy Ashwill, Marian Longfield and Jennie Lewis.MODERN COMPUTING — THE OLD-FASHIONED WAYAs late as 1958, Farmers Business Machines (IBM) into frequently endured 90-hour weeks. Mutual employees spent Farmers Mutual in 1942. He Farmers Mutual found useful nearly a third of their time was responsible for leasing thechecking and rechecking facts and computer at an estimated annual the vast amount of data stored onfigures that others had typed and cost of $250,000. Data resources the memory disks, which resem-manually calculated. This labor administrator George Riege and bled records in a jukebox. Eachintensity forced the company — his assistant Bill Henry handled the disk held 5 to 10 million characters,and other insurers — to hire addi- system design and programming making it far easier to store andtional staff as business grew. — which involved hardwiring the manipulate data than with the old boards. punch cards. “Faster information But on Aug. 3, 1959, Farmers processing was available,” RiegeMutual helped lead the insur- RAMAC was intended to recalled, “provided a tube didn’tance industry into the Information improve the efficiency of process- blow, the information-assessingAge, becoming one of the first ing applications and renewal seeking arm didn’t touch a diskinsurers to use an IBM computer. notices. The computer could and clear the whole darn track, andRAMAC (Random Access Method handle a week’s worth of apps none of the records just somehowof Accounting and Control) was and 1,000 renewal notices in 2 disappeared.”a room-size mass of wires, tubes, 1/2 hours, compared to 40 hourskeyboards, card punches, flash- of manual work. There were, of Just about the time Farmersing lights and whirling “magnetic course, glitches — a misplaced Mutual got most of the bugsmemory disks.” decimal point resulted in one poli- worked out of RAMAC — and Riege cyholder receiving a premium and his staff were catching up on Bob Kelliher, director of systems notice for $3,452 rather than their sleep — IBM unveiled theand procedures, had ushered the $34.52 — and Riege and his staff 1400 series, which used magneticfirst generation of International tape to store information. Dare to Dream | 81

City claims office, comprised Kansas, Missouri and Nebraska. the Northwest Region, choosing instead the rapidly growingWisconsin became its own region under Al Gruenisen, the Midland Region. The committee selected St. Joseph, a thriving,Milwaukee branch claims manager. industrial community in northwestern Missouri, as the site for the first regional headquarters. Centrally located in the MidlandMEET ME IN ST. JOSEPH Region, St. Joseph offered a strong labor market, good schools and excellent transportation. Because Farmers Mutual alreadyThough largely autonomous, the four regions remained headquar- had a claims office in town, St. Joseph city officials wanted thetered in the home office. But with Farmers Mutual now serving regional office in their community and sold the company 5 acresmore than half a million policyholders, employees were again work- of land overlooking the Moila Golf Course for $5. On Nov. 14,ing in the halls, increasing the need for at least one regional office. 1956, Farmers Mutual broke ground at 3131 Frederick Avenue. With Minnesota devastated by the mass resignation of Although 20 home office staff members would move toagents and managers, the decentralization committee bypassed the new regional center, with other employees transferringBELOW: Groundbreaking for Farmers Mutual’s regional office captured the attention of the St. Joseph, Missouri, media. Ten radioand television broadcasts carried the groundbreaking story, and the St. Joseph Gazette carried this photo in its Nov. 15, 1957,issue. Those with shovels are (from left to right): State Directors Darwin Liljegren, Kansas, and J.E. Caskey, Missouri; St. Josephagent Walter West; contractor Andrew Glaze; St. Joseph District Manager J.C. Rudloff; and Nebraska State Director A.J. Egan.82 | Too Many People, Too Little Space

from claims offices in Kansas City and St. Louis, most of the BELOW: Seven St. Joseph, Missouri, women stepped off themore than 100 employees would come from St. Joseph. On Oct.6, 1957, seven women — the first clerical supervisors for the train in Madison, where they would spend a cold Wiscon-Midland regional office — boarded a train bound for Madison. sin winter training to be clerical supervisors in the Midland“It was an overnight train ride,” Phyllis Benitz, Midland clerical regional office. Pictured with Virginia Wiggen (right fore-supervisor, later recalled. “We didn’t know each other, any of us, ground) of the home office’s Midland unit are: (from left tobut we formed some great friendships.” right) Rita Bender, Phyllis Benitz, Carole Harvey, Darlene Hahn, Patricia York, Mary Coil and Esther Gasper. Don Breitenbach and Virginia Wiggen met them at theMadison train depot the next morning for a tour of FarmersMutual. “We were quite a spectacle. Everybody wanted tosee who these people were from Midland,” Benitz recalled.“They thought we had terrible southern accents. But they werevery nice.” The company rented two apartments for the trainees, whostayed in Madison until May — with a single trip home forChristmas. Over the course of the winter, more than 40 St. Josephwomen joined them for training before returning to work at thenew regional center. In May 1958, a skeleton crew left for St. Joseph to get theoffice ready for operation. Heavy rains greeted them and soakedBELOW: Centrally located in the Midland Region, St. Joseph made an ideal site for the regional office. Dare to Dream | 83

An Eagleville, Missouri, agent named island in a sea of mud. This was the first of several floods at the V.J. McWhinney earned $50 by suggest- new site. Setting up a brand-new office for more than 100 people ing the new office in St. Joseph be named the Midland and organizing the files for 150,000 policies was an arduous task. regional office. “It describes the location now, and also Not until mid-August was the St. Joseph facility ready to begin later if more states should be added, since St. Joseph serving 400 agents and 26 district managers in Missouri, Kansas is near the center of the United States,” McWhinney and Nebraska. explained. By 2017, the Midland Region was known as the Central Region. The West regional office was in CHANGES AT THE TOP Denver and the East regional office was in Madison. In the late 1950s, Maurer initiated several steps to bringthe torn-up ground around the new $700,000 building. The road, Farmers Mutual’s organizational structure up to date. Farmersthe parking lot and trucks filled with office equipment were mired Mutual did not have functional vice presidents (division direc-in muck. The sidewalks had not yet been laid, and temporary tors constituted senior management). In 1958, however, thewooden sidewalks helped employees get into the building, an board approved the creation of vice presidential positions when “time, circumstances and affected personnel perfor- mances warrant.” They then named Pete Miller vice president of operations — making him heir-apparent to the presi- dency. Shortly thereafter, the board named Hayes, Kinnamon and Amory Moore vice presidents of underwriting, agency, and claims.BELOW: In 1960, the Farmers Mutual Automobile Insurance Company dissolved its management agreement with Farmers MutualManagers, Inc., buying the company for $10,000. The managers, Irving Maurer (left), Herman Wittwer (center) and AugustRammer, each received 10-year deferred compensation packages that began after they retired from Farmers Mutual.84 | Too Many People, Too Little Space

Active in the National Association of Independent Insurers the management company reduced the percentage of premium(NAII) and other industry groups where his peers were presidents income it received — from 42 percent in the 1940s to 17.5and chairmen, Maurer had always disliked his title of treasurer. In percent in 1956.1959, he convinced the directors to modernize Farmers Mutual’sboard structure. Wittwer, who’d carried the title secretary, became Finally, in 1960, Maurer succeeded in severing the manage-chairman of the board, Rammer vice chair and Maurer presi- ment agreement altogether. He proposed 10-year deferreddent. Alex Opgenorth became secretary, and Comptroller Henry compensation packages for the managers — Wittwer, RammerHarvey joined the board as treasurer. and himself — providing Wittwer and Rammer with the income security they wanted while freeing the insurance company of its To improve its responsiveness, the board created an execu- management contract. Under the agreement, Farmers Mutualtive committee — including Wittwer, Maurer, Opgenorth and bought out the management company for $10,000 plus theBill Aberg — empowered to act on its behalf between quar- deferred compensation. Farmers Mutual changed the manage-terly meetings. ment company’s name to Webb, Inc., after the avenue that ran behind the office. Webb, Inc. lay dormant until the late 1960s, Maurer also disliked Farmers Mutual Managers, the when it was resurrected as American Family Financial Services, Inc.management company he once fought to join.The main reason forhis disdain was that regulators in some states distrusted mutual The passing of time also changed the composition ofinsurance companies with management contracts and refused to Farmers Mutual’s leadership. On July 12, 1958, while sitting onissue them licenses. Although Farmers Mutual Managers had his front porch, Bernard Gehrmann, the old Progressive, died ofwaived tens of thousands of dollars of fees almost every year since a heart attack at 78. A year later, Harvey Spriggs — who at 90its inception, this prejudice remained — limiting Maurer’s plans still pinched “the girls” and told off-color jokes when he visitedfor a national company. “We were all dressed up with nowhere the office — died, as did August Rammer in the fall of 1960.to go,” he commented. The board eulogized all three men at length, noting their From the outset, Farmers Mutual Managers hired the contributions not only to Farmers Mutual but also to farmers inemployees and paid all the operating expenses, for which it general and the community at large. Their passing marked thereceived a percentage of the premiums. Over the years, Maurer beginning of a new era for Farmers Mutual. With new leadersconvinced Wittwer and Rammer to shift its increasing respon- like Miller stepping in, the company began making moves towardsibility from Farmers Mutual Managers to the Farmers becoming an industry leader able to meet all the insurance needsMutual Automobile Insurance Company. At the same time, of American families.DEATH OF A LEGEND a debate ensued as to what tribute should be placed in the minutes.All organizations have Finally, Harvey Spriggs, the sheep their legends, stories farmer from Racine with a wit as told again and again until dry as wool, leaned forward on hispeople who weren’t there claim to cane and said, “How about this:remember the moment distinctly, The first of September was theand events that never happened last of August.”become gospel truth. One suchtale in the history of American CEO Bob Koch loved to tell theFamily Insurance surrounds the story, but unfortunately it couldn’tdeath of August Rammer, the be true. August Rammer passedcompany’s board president from away Oct. 14, 1960, nearly a year1927 to 1960. after Harvey Spriggs’s death. And so it goes. As the story goes, when theboard met after Rammer’s death, Dare to Dream | 85



It takes a big idea to attract the attention of consumers and get them to buy your product. Unless your advertising contains a big idea, it will pass like a ship in the night. I doubt if more than one campaign in a hundred contains a big idea. — D AVID OGILVY, founder, Ogilvy & Mather Worldwide advertising firm5 ADVERTISING A NEW NAME

CHAPTER 5 | ADVERTISING A NEW NAMED ale Mathwich turned up the radio of his ‘56 Ford and sang along with Hank Williams as he drove into New London. Mathwich wasn’t like many other young men of his time. He liked country-western more than the new rock ‘n’roll, and at 22, had already been a bank manager and a part- he was the Farmers Mutual agent. To this, Mathwich added antime insurance agent. Now, in October 1956, he was moving advertisement in the local newspaper and a daily regimen of mail-to the small Wisconsin community to become one of Farmers ing 10 prospecting letters, which he followed up two days laterMutual’s first “career agents.” with 10 phone calls. He put an ad in the phone book, a sign on his car and used every Farmers Mutual promotional aid at his disposal. The previous Farmers Mutual agent in New London was a But building his business was still a matter of knocking on doorsfarmer who sold insurance on the side. He had about 150 poli-cyholders — mostly friends, relatives and neighbors — among BELOW: As a 22-year-old new agent in town, Dale Mathwichthe town’s 5,000 residents. Like most Farmers Mutual agents,the farmer hadn’t advertised. So, apart from the 150 accounts he aggressively advertised his new business with signs on hiswas taking over, Mathwich essentially was starting from scratch. car and billboards at the edge of New London. Raised a Lutheran, Mathwich made the largest Lutheranchurch his first stop in New London. After introducing himself,Mathwich asked the minister whether he knew someone whorented rooms. The pastor referred him to Molly Pribbenow, awidow whose bungalow had a bedroom on the first floor andtwo small, empty rooms upstairs. Pribbenow rented him bothsecond-story rooms — one for a bedroom, the other for an office— and agreed to let him use her phone for business. “I’d answerthe phone saying ‘Farmers Mutual Insurance, Dale Mathwich,’and it might be the next door neighbor calling to see if Mollywanted to have tea,” Mathwich recalled. Mathwich’s district manager, Frank Feivor, was a strongproponent of agent advertising. Under Feivor’s guidance,Mathwich bought two 4-by-8-foot signs from the company, thenhe convinced two people living at either end of town to allow himto put up his signs.That afternoon, he dug post holes himself andhung the signs so that everyone entering New London knew88 | Advertising a New Name

in the small town where everyone was a native and newcomers spent a whopping $665.17were not readily accepted. When he came home at night, some- on advertising, much oftimes tired and discouraged, Molly Pribbenow invited him to it on radiator emblemswatch television with her — maybe “I Love Lucy” or Groucho for its 4,500 policyhold-Marx’s “You Bet Your Life.” He’d relax for an hour or so in front ers. The following year,of the old black-and-white set before turning in for the night. the advertising budget nose-dived to $53. Mathwich’s experience wasn’t unusual. Not until 1949 didthe home office provide ad slicks for agents to place in local A few pioneering agentsnewspapers — at their own expense — and eventually radio placed ads in local newspapers. Written by men not well-versedcopy. Trouble was, 19 of 20 Farmers Mutual agents still worked in laws applying to insurance advertising, these ads occasion-part time and didn’t consider advertising worth the expense. As ally drew complaints to the commissioner of insurance abouta result, many Wisconsin residents hadn’t heard of the 30-year- misleading statements or inaccurate claims. To avoid fines andold company — or they confused it with other farm organizations. even the revocation of its license, Farmers Mutual insisted that all advertising bearing the company name be cleared throughADVERTISING AVERSE the home office.From the outset, Farmers Mutual, preferring promotional items In the early 1930s, Lod Webster, agency director for a briefand old-fashioned prospecting, did little traditional advertising. period, convinced Wittwer and Kalbskopf to sponsor a morn-The company’s 1927 financial statement shows no separate line- ing news show on WIBA, a Madison radio station. A WIBAitem for advertising. Policyholders at the annual Policyholders employee with no advertising experience wrote the copy, featur-Meeting in January 1928 approved the design of a radiator ing the catch phrase, “Insurance that really insures.” Whenemblem for advertising purposes. That year, Farmers Mutual Underwriting Manager Irving Maurer complained about the quality of the radio spots, Wittwer gave him the job. For an extraBELOW: A firm believer in the value of hard work and advertising, Farmers Mutual agent Dale Mathwich put up a pair of 4-by-8 footroad signs himself, one on each end of New London, Wisconsin. Every day, he mailed 10 prospecting letters, which he followedup two days later with a phone call. Dare to Dream | 89

The metal radiator emblem (previous page) and penny postcard (left) stand among Farmers Mutual’s earliest advertising efforts. The 1940s- era coaster (below) advertised Gerald Woelffer as the man to see about low-cost auto insur- ance in Baraboo, Wisconsin.$25 a month, Maurer wrote daily radio spots — often resembling school games for the Wisconsin State Journal. That was enough experience to qualify him as Farmers Mutual’s first advertisingdissertations more than commercials. supervisor.In addition to the WIBA radio spots, Farmers Mutual ran Kleinheinz’s position fell under the agency department and its new director, Gus Kinnamon. Starting his career withads in the Wisconsin Agriculturalist, the state’s largest farm General Motors’ insurance division, Kinnamon joined Farmers Mutual’s claims division in 1941. He transferred to the agencypublication, and conducted a few direct mail campaigns. In 1938, department a couple of years later and advanced to director in 1947.The division handled advertising and promotions, managedthe company introduced Farmers Mutual News, becoming one the appointment and termination of local and district agents, administered nearly 3,000 agent accounts, and produced weeklyof the first insurance companies to send promotional materials production reports. Lacking sales experience, Kinnamon occa- sionally seemed out of place in his role. But friendly and agreeable,along with renewal notices. he related well to the agents and gave those who worked in the division a free hand. If a program worked, Kinnamon madeAfter the war, competition in the rapidly growing auto sure the person who initiated it received the credit; if it failed, Kinnamon willingly took the blame. It was a style that workedinsurance market convinced Wittwer and Maurer to step up well, given the talent that flourished in the division over the next quarter century. promotions and develop Kleinheinz was one such talent. To bring the agency force closer ties with the field force. closer together, in 1949 he introduced FM, a monthly agents’ publication providing information about the field force, the Looking for talent within home office and the industry. He also encouraged agents, most of whom worked out of their homes, to promote themselves the home office, they tapped underwriter Bill Kleinheinz. Ineligible for the mili- tary because of a bad knee, Kleinheinz joined Farmers Mutual after graduating from the University of Wisconsin in 1943. The war created a shortage of reporters, and Kleinheinz moonlighted asBill Kleinheinz a sports writer, covering high90 | Advertising a New Name

— and Farmers Mutual — more aggressively, primarily through made it company policy to list the agent and companythe production of camera-ready advertising mats and spot radio name whenever possible — and to share the cost.announcements for agents to use at their own expense. Someagents found that county fair booths drummed up business, and One of the most successful and enduringin 1952, Kleinheinz constructed four Farmers Mutual display promotional items was the “Rand McNally Roadboards for agents to reserve for county fairs. Atlas.” Beginning in 1948, agents could purchase the atlas, which retailed for $1.25, for 35 cents Kleinheinz also accelerated Farmers Mutual’s use of specialty apiece. In 1953, Farmers Mutual had its owngifts beyond key chains and key cases. In 1947, he introduced the atlas cover printed in orange and black. TwoFarmers Mutual calendar blotter. In three years, agents ordered years later, Kleinheinz commissioned a Nativemore than 600,000 desk blotters at 22 cents apiece. In 1950, American artist in northern Wisconsin to paintKleinheinz introduced the “ad-tip” pencil at 3 cents each, and two a northern wood scene for the cover. For theyears later, ball-point pens at two for a quarter. He put the company next 10 years, motorists associated Farmersemblem on ice scrapers, policy wallets, rulers, letter openers, calen- Mutual with the beautiful, four-color rendi-dars, clocks, thermometers, savings banks — and tape from the tion of a deer and her fawn by a wooded lake.Topflight Tape Company. Each roll contained 1,300 companyemblems and agent imprints. Initially, only the Farmers Mutual Kleinheinz’s job grew with thename appeared on many of these items. But as modern manu- company and in 1956, a consultant workingfacturing techniques brought production costs down, Kleinheinz with Farmers Mutual on its decentralization plan recommended dividing his position into three jobs — advertising, salesBELOW: After complaining about the quality of Farmers Mutual radio spots on WIBA–Madison, Underwriting Manager Irving Maurertook on the task of writing the company’s radio commercials. Dare to Dream | 91

promotion and public relations. Kleinheinz assumed the public relations role, including publications, and hired Fran Hanson as FM editor. Bob Salisbury, another underwriter, filled the advertising post. Salisbury had worked in Washington, D.C., for the top- secret National Security Agency during the Korean conflict, joining Farmers Mutual in 1953. As advertising supervisor, he directed the production and distribution of direct-mail letters, newspaper ads, circulars, and other sales aids available to agents. Agency Department Secretary Charlie Ambrosavage became Farmers Mutual’s sales promotions manager. An Air Force veteran who served in Africa and Italy during World War II, Ambrosavage joined the company in 1948. He’d worked closely with Kleinheinz on sales promotion material, and he served as FM editor for several years. As agency secretary, Ambrosavage took on special projects related to Farmers Mutual’s transition to exclusive agency. Among them were the advance compensation plan, the agent-company agreements and the agents’ hospitalization plan. BELOW: Kenosha County agents Ed Tobias (right) and Dick Nachreiner (center), and District Manager Paul Miller drummed up business with a booth at the Kenosha County Fair, circa 1960.92 | Advertising a New Name

ADVERTISING PARTNERS agents placed a high priority on Farmers Mutual advertising, dampening attempts to build a company image. The conver-Traditionally managed by conservative men who’d come up sion to exclusive agency made the situation worse for the shortthrough the legal or underwriting ranks, most insurance compa- term. In 1950, the company had more than 3,200 agents. Withinnies at the time had little interest in advertising. “Insurance eight years, that figure fell to 1,647, cutting in half the numberexecutives are bottom-line people,” Salisbury explained. “It’s of agents who might place a Farmers Mutual ad in a local paper.hard for them to see the role that advertising plays in the saleof insurance.” To boost customer awareness and provide additional benefits to full-time career agents, Ambrosavage and Salisbury developed Under the leadership of Wittwer and Maurer, Farmers a cooperative advertising program meant to share with qualifiedMutual was among the most conservative of advertisers. With agents the cost of advertising. Beginning in June 1959, the homeearned premiums exceeding $17 million in 1954, Farmers office paid 50 percent of the cost of highway signs and 25 percentMutual was the eighth-largest mutual automobile insurance of the cost of newspaper, radio and television advertising.company in the nation. But its advertising budget amounted toa mere $65,000. The following year, Ambrosavage presented Kinnamon with a detailed study comparing Farmers Mutual’s advertising budget Maurer, possibly more than Wittwer, believed in the value and growth trends to those of its main competitors — State Farmof advertising — but considered it the agents’ job. “We are the and Allstate. Both companies were much larger than Farmerswholesaler.The agents are the retailers,” he pronounced. “It is the Mutual and naturally had larger advertising budgets. But fromretailer’s responsibility to try to advertise.” 1954 to 1958 State Farm’s advertising expenditures totaled 1.01 But with most agents representing multiple companies, fewBELOW: In the late 1950s, the company advertised two names — Farmers Mutual and American Family Life Insurance. Sometimesthe advertising said Farmers Mutuals rather than Farmers Mutual. Any confusion ended in 1963 after the board of directors andpolicyholders agreed to change Farmers Mutual to American Family Mutual Insurance Company. Dare to Dream | 93

RIGHT: Useful novelty gifts SERVING THE EVERYDAY NEEDS OF AMERICAN FAMILIESsuch as this letter opener,pen and automobile Throughout the 1950s, company leaders began to realize Farmersexpense book proved Mutual’s name no longer reflected the company itself. By 1960,to be popular city dwellers outnumbered farmers 2 to 1 among the compa-advertising ny’s 600,000 policyholders. Recognizing that Farmers Mutualtools. had grown far beyond auto insurance, the company adopted the slogan, “Protection for the everyday insurance needs of the indi-percent of premiums and Allstate’s 1.47 percent, compared with vidual and the family.”The life insurance subsidiary also adoptedjust .49 percent for Farmers Mutual. In the same period, State the name American Family Life, creating some awkwardness inFarm and Allstate each grew more than 80 percent, Farmers advertising and a fuzzy image in the eyes of the public.Mutual just 4.8 percent. In December 1959, Amory Moore, vice president of claims, Stunned by the numbers, Wittwer and Maurer quickly drafted a memo recommending that the company change itsapproved Ambrosavage’s proposal for a $100,000 advertising name to American Family Mutual Insurance Company. Maurercampaign in 1960 — more than the company had spent in the presented Moore’s recommendation to the board in February.previous year on all its promotions. Wittwer and Aberg spoke against it, arguing that the company was at heart a farm organization. “When you look at who we serve today,” Maurer argued, “American Family is the more appropriate name.”Maurer’s reason- ing was sound, but Wittwer still controlled the board. Without a consensus on the name change, the directors decided a change was premature. Grudgingly, however, Wittwer allowed the staff to research the new name — beginning with the field force which, after all, directly represented the company. The following month, the agency department surveyed the field. Of 900 responses, 532 agents and 61 district managers favored changing the name, while 291 agents and just seven district managers opposed it. “Even in Wisconsin, where we were strongest, the agents were for the name change,” Ambrosavage recalled. The next question was how the insurance-buying public would react. A research firm conducted opinion polls in Wisconsin, Missouri, Nebraska and Minnesota to determine how well Farmers Mutual was known and how people felt about the name American Family Insurance.The polls showed that although Farmers Mutual was widely known in Wisconsin, people in other states weren’t as familiar with it, often confusing Farmers Mutual with other agricultural organizations. “The images the people had of a company called Farmers Mutual ranged from a strong national company to a bunch of farmers passing the hat to pay claims,” the researchers reported. Respondents, however, liked the name American Family Insurance, preferring it over such names as Allstate, Nationwide, Prudential and State Farm. Wittwer eventually dropped his opposition, and the issue came before the board on Aug. 11, 1961. After some debate, Maurer, Jim Caskey, Pete Miller, Alex Opgenorth and Walter Renk voted to rename the company American Family Mutual94 | Advertising a New Name