American United Life: Indianapolis insurance company celebrates 125 years.

• Author: Beck, Bill
• Position: Centennial Business

Indiana was still primarily a rural state in the late 1870s. In the cities, growing numbers of German and Irish immigrants were swelling the populations of Indianapolis, Fort Wayne, Evansville and Madison. The immigrants worked on the railroads, in the packing houses and warehouses of the state's big cities.

Most had no access to burial insurance until the predecessors of American United Life Insurance Co. (AUL) began offering policyholders the much-needed service in 1877. "We trace our founding to November 7,1877," says Jerry Semler, AUL's chairman and CEO. "An act of Congress gave us our charter."

The company began as a fraternal insurance company founded by the Knights of Pythias. The Knights were a fraternal organization with strong membership in the state's cities, open to members of all faiths. They wanted to establish an insurance program for their current members and use the program to increase membership, which had been declining since the Panic of 1873. With paid-up dues and a one-time admission fee of $3, members of the Knights of Pythias could join the "Endowment Rank" and receive life protection of up to $1,000, a sizable sum in those days.

The Endowment Rank gave the Knights of Pythias a strong membership boost, as the organization reported more than 400,000 members by the mid-1890s. In 1899, the Indiana Compulsory Deposit Law created new rules which allowed for growth of stock insurance companies, a fact that established the Hoosier state as a headquarters location for a number of Midwestern insurance companies in the new century.

One of those companies was another AUL predecessor, American Central Life Insurance Co., founded on East Market Street in Indianapolis in 1899. American Central Life began specializing in reinsurance, which allows an insurance company to assume a portion of the liability of another company's policy. American Central Life's first reinsurance agreement was made in 1904 with The State Life Insurance Co. in Indianapolis, the first reinsurance agreement ever signed in the United States.

Both American Central Life and the Knights of Pythias insurance operation did strong business in Indiana during the first quarter of the 20th century, but the stock market crash of 1929 and the resulting Great Depression dramatically altered the insurance business. The Knights of Pythias separated the insurance activities from the fraternal organization and created the United Mutual Life Insurance Co. in 1930. Because its...