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Associates Investment Co. - Lehman Brothers Collection

Associates Investment Co.

List of Deals

Associates Investment Company was incorporated under the laws of the state of Indiana on May 29, 1918. It became the fourth-largest automobile sales finance company in the United States. The main executive offices were located in South Bend, Indiana.

The company and its subsidiaries were engaged primarily in automobile sales financing and insurance incident. The main business territories were east of the Rocky Mountains in the United States and Canada. The financing business was classified into four types: purchase of retail installment obligations, wholesale financing of dealers, direct and personal loans, and industrial and commercial loans. The business of the retail and wholesale division, practically all relating to automobiles, was the principal business of the company. The financing business of the company was in a highly competitive field. In addition to the competition offered by other finance companies, there was also competition among commercial banks, small loan companies, industrial banks, and industrial loan companies. The volume of automobile receivables is in part dependent on the level of automobile production and the proportion of such production financed.

In 1932 the company showed a profit in line with what it had made in 1928, the fourth-best year in the company's history. For 1928 Associates reported a net profit of $630,293 equal after dividend payments on 7 percent preferred stock to $6.74 a share on the 80,000 outstanding shares of common stock. During 1928, gross receivables totaled $24,627,662, or a monthly average of slightly more than $2 million.

Most of the automobile business acquired by the company carried collision insurance, and the company required insurance against fire and theft on almost all automobiles that it financed. Such insurance was usually placed with its subsidiary, Emmco Insurance Company, which entered the insurance business in 1936.

Alinco Life Insurance Company was formed in 1953 to underwrite credit life and health accident risks, its business to date being confined to the reinsurance of credit life risks relating to installment receivables. The volume of installment sales directly influenced the reinsurance business of Alinco, and there were several companies engaged in this type of reinsurance business, resulting in its being highly competitive.

Durham Manufacturing Corporation, a subsidiary of the company, produced metal furniture, chairs, and card tables. The products were sold directly to approximately 17,000 retail dealers. The company's equity in net assets of this subsidiary in June 1959 amounted to $2.5 million.

In 1956 Robert L. Oare, chairman of the company, said earnings after preferred dividends were equal to $4.42 a share, compared with $4.20 a share the previous year.

In February 1957 the company acquired all of the issued and outstanding stock of the Capitol Life Insurance Company, a Colorado corporation formed in 1905, in exchange for 85,000 shares of its common stock.

In 1958 the financing business contributed 59 percent of consolidated net income, the insurance business other than life was 14 percent, life insurance business 26 percent, and manufacturing and other business 1 percent.

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