| BUSINESSWEEK ONLINE : NOVEMBER 8, 1999 ISSUE | ||||||||
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| LEGAL AFFAIRS
Father Knew Best--And So Did Grandfather When the top job at State Farm Mutual Insurance Co. opened up in 1985, Edward B. Rust Jr. didn't seem to have all the right credentials for the position. Only 35 years old at the time, he had started as a trainee at the No. 1 property insurer immediately after he received his degree from Southern Methodist University's graduate business school in 1975. But Rust had one qualification other candidates lacked: His father was the outgoing chairman, Edward B. Rust Sr. At State Farm, lineage counts for a lot. The company was founded in 1922 by retired farmer George Mecherle, who passed on the presidency to his son Ramond in 1937. When Ramond gave up the post in 1954, it passed to his father's right-hand man, Adlai Rust, whose son and grandson have followed in his footsteps. This tight-knit family rule has certainly given State Farm a strong sense of corporate mission. Unlike other insurers, the company has largely resisted the pressure to sell other financial services. Instead, it sticks to what it knows best: offering reasonably priced auto and home insurance. ''They don't throw the long bomb, they just move the ball ahead slowly and steadily,'' says one industry analyst. ''A RELIGION.'' But some outsiders say the Rust dynasty has also created a culture that, while intensely loyal, is inbred and hostile to change. ''State Farm is a religion,'' says New York City attorney Eugene Anderson, who specializes in suing insurance companies. True believers in the company, he argues, are ''sometimes capable of outrageous antisocial conduct.'' Hot air from a plaintiffs' attorney? Perhaps. But State Farm's critics have been able to convince a lot of juries that there's something amiss in Bloomington. By Mike France _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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