Guarantee Security Life Insurance Company
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In 1978, Mark Sanford and William Blackburn were working as stockbrokers in Louisville, Kentucky when they decided to form a business, Transmark USA. The company was domiciled in Florida and was licensed in 41 US states as well as Columbia, Puerto Rico, and the U.S. Virgin Islands.[1] In 1984, Transmark purchased Guarantee Security Life Insurance Company (GSLIC) of Jacksonville, Florida. The duo moved to Florida, with Blackburn taking charge of daily operations while Sanford managed the investment portfolio.
GSLIC's primary products were deferred annuities and life insurance policies. The firm marketed these products through a national sales force of over 16,000 insurance agents. Customers were attracted by the promised 10% interest rate, which was guaranteed for the first year. According to a sales brochure, customers were protected against loss of their investment: "The principal is fully guaranteed. It is not subject to losses created by market fluctuations."
However, the policies drawbacks soon became apparent. Returns after the first year dropped dramatically, but high cancellation penalties limited withdrawals..
Between 1984 and 1991, the company grew from less than $100 million to almost $1 billion in assets and had about 57,000 policyholders in 42 states. In 1991 the company crashed. Florida established a receivership to take control of the company.
References
Further reading
- Arens, Alvin A., et al., Auditing and Assurance Services, Prentice Hall, 2003.
- Briloff, Abraham J., "Junky Juggling Act", Barrons, April 6, 1992, page 14-17.
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