Happy Birthday to an Insurance Pioneer (and Executioner?)

    Happy Birthday to an Insurance Pioneer (and Executioner?)

    By Allen Wastler

    calebToday, April 4, is Caleb Rice’s birthday.

    Who is Caleb Rice? Well, for us at MassMutual he’s a pretty important guy…the first president of the company when it started 165 years ago.

    But it’s his previous job that raises eyebrows. Who would think that one of the pioneers of insurance spent twenty years as the county sheriff?

    “In that office his duty had been to arrange not life insurance, but an abrupt exit from this world for any prisoners whom the courts ordered to be hanged,” notes the company history.1 (If that gives you the willies, relax. His county, Hampden, apparently had no executions during his tenure, according Massachusetts history and criminology enthusiasts).

    He left that sheriff job in 1851 and became the first president of Massachusetts Mutual Life Insurance Company. Of course, that position may have had to call on his keeping-the-peace job skills as well.

    The company was actually the brain child of his younger cousin, George Rice, an agent for a Connecticut insurance company, the company history points out. George saw a lot of business coming out of the Springfield, Mass., area. He believed a local insurance company there could do quite well.

    George Rice originally planned to start the company as a mutual enterprise, meaning the company would be owned by policyowners and, consequently, managed with the best interests of customers at its heart. Other insurance companies, like the one he worked for, had such structures.

    But Massachusetts law derailed that plan, requiring insurance companies to be chartered via stock ownership first, meaning investors had to put up a pool of money in exchange for shares in the company. That pool of money would act as a reserve for the company’s policies. Once a company was in business long enough to establish a large enough surplus out of its own funds, it could retire the stock, pay back the original investors, and mutualize.

    Undeterred, George and Caleb lobbied the leading businessmen of Springfield, Mass. Eventually they had a group of 31 investors, each making individual contributions adding up to a total of $100,000, which was enough to secure the charter. George, however, couldn’t serve on the board, since he still worked for a Connecticut insurance company. So Caleb became president (he was paid $50 for his first year of service).

    Trouble came early. As the investor group came together for one of its first board meetings in 1851, one of the lead investors withdrew from the enterprise, arguing his colleagues hadn’t put up solid enough collateral to cover their investment pledges. Nevertheless the company kept on.

    George unfortunately never saw the company grow out of its infancy. He died at the age of 33 of tuberculosis in 1856.2 Caleb continued on as president until his death in 1873 (and served as the first mayor of Springfield once it incorporated in 1852).

    By then MassMutual had made the shift to a mutual company, built its first office building, and passed $1 million in assets, a pretty hefty sum in those days. And look at where we are now.

    So Happy Birthday, Sheriff Caleb.

    Check out the MassMutual timeline

    1 Richard Hooker, “A Century of Service: The Massachusetts Mutual Story,” Massachusetts Mutual Life Insurance Co., 1951.

    2 Rusty Clark, West Springfield, Massachusetts: Stories Carved in Stone, Dog Pond Press, 2004.