Finance: Merchandising Money

It was an odd announcement to come at a corporate Christmas party, but Transamerica Corp. likes to do things differently. As the sound of Jingle Bells faded in a banquet room at San Francisco’s Mark Hopkins Hotel, Chairman Horace W. Brower rose to address 80 of his top executives. Said Brower, 65, who is recuperating from major heart surgery: “I’m pulling out as chief executive Jan. 1. That will give me more time for fishing, for golf and the recovery of my health.” With that, command of one of the nation’s largest and least understood financial empires shifted to President John R. Beckett, 47, the architect of a five-year expansion that has transformed Transamerica, once the world’s No. 1 bank holding company, into a huge financial department store.

Transamerica was set up in 1928 by A. P. Giannini as a vehicle to expand his California-dominating Bank of America across the U.S. The company beat an antitrust suit in court, but Giannini later decided to divorce Transamerica from the bank anyway. By 1956, the separated company had built itself into a holding company that controlled 23 banks in eleven Western states, had also spread out into insurance and a few other fields. Congress ended all that with a law (aimed particularly at Transamerica) that forced the company either to get out of banking or cease all its other activities. The company chose to leave banking, decided to build up a whole range of subsidiaries that would offer practically every financial service but banking.

In Tandem. Today, Transamerica has resources of $2.3 billion, controls 20 major subsidiaries, has offices in all 50 states, France and Canada. It has 14,000 employees, more than 100,000 stockholders and 7,000,000 customers. It writes nearly every kind of insurance through 15 subsidiaries, including Occidental Life Insurance Co., the ninth largest insurers in North America, leases autos and plant equipment, offers consumer-finance and mortgage banking, develops real estate. It is scouting for a mutual fund and a savings and loan association with an eye to further improving its profits—which reached $39 million last year (48% from Occidental) and are expected to rise another 15% this year.

Up to now, Brower and Beckett have run Transamerica’s conglomerate bundle of businesses “in tandem,” as Beckett likes to put it. Salesman Brower, who will stay on in a less active role as Transamerica’s chairman, has concentrated on operating Los Angeles-based Occidental Life. Beckett, a former stockbroker, has run the rest of Transamerica’s interests out of an incongruously tiny (30 employees) headquarters in an unprepossessing old building near San Francisco’s nightclub belt. He spends nearly half his time jetting around Transamerica’s expanding realm, likes to ask fellow air passengers what they think Transamerica does. “Generally,” he says, “people think we’re a trucking, bus or shipping company—or ‘that airline.’ “

Slow Fame. Though public fame has not yet overtaken Transamerica’s rising fortunes, competitors have been quick to recognize the company’s innovations in the merchandising of financial services. In varying degrees, such giants as Sears Roebuck, J. C. Penney, and even International Telephone & Telegraph Co. have adopted the department-store concept of finance pioneered by Transamerica. Beckett wants “to blanket the U.S., Canada and Europe” with Transamerica financial services. By feeding business from one Transamerica subsidiary to another, and eventually selling all of the company’s services through single outlets, he aims to create a financial empire outside banking that will cater to almost every money need.