Dispute May Be a Factor in Pierce Sale : Insurance: A regulatory action may be behind financier Joe L. Allbritton’s decision to sell the mortuary chain.
California regulators’ order that financier Joe L. Allbritton repay $12 million in “illegal dividends” from his Pierce National Life Insurance Co. of Los Angeles may have figured in Allbritton’s decision to sell his prized Pierce Bros. funeral home chain.
Allbritton, chairman of Riggs National Bank, agreed last week to sell the regional chain of 60 funeral homes and nine cemeteries that was one of the foundation stones of his financial edifice.
Allbritton could receive more than $100 million from the sale of Pierce Bros.’ operations in California and Texas to Houston-based Service Corp. of America, industry sources said.
Although Allbritton denied any wrongdoing, his lawyer said he recently invested about $12 million in the insurance company to settle the dispute with California regulators.
Pierce National Life specializes in burial insurance and is a sister company to Pierce Bros. funeral homes. The insurance company is not part of the sale.
The California insurance regulators prohibited Pierce National from paying future dividends to Allbritton--cutting off one of his sources of income. They also ordered Pierce National to dispose of an unspecified amount of bonds it had purchased from Allbritton Communications Co., a media company whose properties include WJLA-TV in Washington. The effect of the order was to require Allbritton either to buy back the bonds or find another investor to purchase them.
Allbritton’s income from Riggs has dwindled since the bank eliminated its dividend and cut his $1.4- million-a-year salary as chairman by 28%.
Selling the funeral homes could provide cash that Allbritton could use to help deal with financial problems at some of his other ventures, including WJLA-TV.
A wealthy banker, media baron and race horse owner whose thoroughbred, Hansel, won this year’s Preakness and Belmont stakes, Allbritton began with the more mundane mortuary business. Before he bought the Washington Star, WJLA and Riggs, he built a highly successful chain of funeral homes, cemeteries and 11 other funeral-related businesses.
Funeral Service Insider, an industry newsletter, describes Pierce Bros. Mortuaries as a “regional jewel” that could be worth up to $160 million.
Established up-scale funeral homes in prime territories such as those where Pierce operates can generate $1 million a year each in cash flow, the newsletter said. With its own cemeteries and funeral-supply companies, Pierce Bros. is an even more attractive investment.
Newsletter editor Jean DeSapio said a few weeks ago that Pierce Bros. executives denied reports that the chain was being put up for sale because of Allbritton’s financial problems.
But last Friday, a tentative agreement to buy Pierce Bros. was announced by Service Corp., a Houston chain whose founder and chairman, Robert Waltrip, grew up in the same Houston neighborhood as Allbritton.
Service Corp. said the price paid for Pierce Bros. will be revealed when the transaction is completed this year. DeSapio said funeral industry sources expect Allbritton to receive cash and a substantial block of stock in Service Corp. International, whose shares are traded on the New York Stock Exchange.
