By legal charter, SunAmerica Inc. is mainly in the insurance business, but to chairman and chief executive officer Eli Broad, that's a mere technicality.

In many ways, the company that Mr. Broad built during the past two decades is a repudiation of the club to which it nominally belongs.

Traditional competitors like Metropolitan Life, New York Life, and Hartford Financial Services market a broad array of life, disability, and health-care products, but SunAmerica jettisoned that slow-growth strategy a decade ago. It derives most of its sales from the annuities that Americans are using to bolster retirement savings.

Though multiline underwriters still sell policies mostly through agents, SunAmerica assembled an in-house army of 9,400 brokers-a number rivaling the sales forces of brokerage firms like Morgan Stanley, Dean Witter & Co. and Travelers Group's Smith Barney subsidiary.

And then there are matters of corporate culture. Insurance companies are typically populated by gray-haired lifers on salaries. Almost all SunAmerica's top managers are gung ho 30- and 40-somethings who derive most of their compensation from bonuses, restricted stock, and options. More than half of middle-level managers' compensation comes from sources other than salary.

"I have nothing against experienced older people," said Mr. Broad, 65, during a recent interview in his Century City office building in Los Angeles. "But if you want to do things differently, you don't want to hire people who have worked for a traditional life insurance company for 25 years because that's the kind of culture you're going to get."

Mr. Broad's salary has been frozen at $600,000 since 1994. Most of his pay is in stock options according to a formula that rewards him for generating shareholder returns in excess of the S&P 500 index.

"The kind of people this place doesn't attract are people who want to spend their life at golf courses or at conventions and are worried about their retirement benefits," Mr. Broad said.

Pay policies and other things SunAmerica does differently have helped Mr. Broad and his shareholders reap outsize returns from one of the most profitable of all financial services companies.

From January 1990 through 1997, SunAmerica shares rose 5,600%, more than any other New York Stock Exchange issue. From Jan. 1 through July 8 this year, SunAmerica's share price rose 42% while the S&P 500 index rose 20%.

In the fiscal 1998 second quarter, ended March 31, SunAmerica earned 60 cents a share, 33% more than a year earlier. The results were consistent with its 34% growth rate in operating earnings since 1990.

Return on shareholder equity has risen to 21%, from 16% in 1993, and is well above the 13% median for diversified, publicly traded life insurers, according to A.M. Best, the industry rating firm.

"I don't think anybody can quarrel with their success," said Stephen Hilbert, chief executive officer of Conseco, a financial services company that competes with SunAmerica in the sale of fixed annuities. Of his rival Mr. Broad, who owns 41% of the SunAmerica's voting stock, Mr. Hilbert said, "Eli has succeeded because he is an owner-operator, not just a caretaker."

"I think Eli Broad delights in growing the company at the expense of the big East Coast mutual insurance companies," said Eric Berg, an analyst at CIBC Oppenheimer.

Much of SunAmerica's recent growth can be attributed to the growing popularity of the variable annuity, an investment that lets consumers mostly in their 50s and 60s make mutual fund investments with tax-deferral and even death benefits.

By contrast, fixed annuity sales have been stagnant, in part because these interest rate-oriented investments do not share in the gains of the stock market.

At a time of widespread concern about the adequacy of pretax money being socked away in 401(k) and other qualified retirement plans, the variable annuity is being sold as an ideal vehicle for after-tax or nonqualified savings.

U.S. sales of variable annuities grew to $85 billion in 1997 from $12 billion in 1990. But here again SunAmerica has well exceeded the average, its market share in the last four years jumping to 3.7% from 1.4%.

In the first quarter this year, when U.S. variable annuity sales fell after five consecutive quarters of growth, SunAmerica increased its total by 16% over the previous quarter.

Mr. Broad said he sees opportunity in the fact that most Americans are clueless about variable annuities.

"If you stood outside this building and asked people what a mutual fund is, 90% of the people would be able to tell you," he said. "If you asked what a variable annuity is, you'd be lucky to get 3%.

"Let's remember that the best is yet to come for annuities."

Acting on trends comes naturally to Mr. Broad, a genteel but driven man who has amassed a net worth of $1.3 billion, according to Forbes magazine, by betting heavily on two seminal economic events-the post-World War II home building boom and the current retirement savings boom.

In 1957, Mr. Broad, then a disenchanted 24-year-old accountant, founded a home building company in the Detroit area with a local contractor and tax client, Donald Kaufman. Three years later, the men took Kaufman and Broad public. In time, the company would become one of the largest home builders in the country.

In 1971, Kaufman and Broad bought Sun Life Insurance Co. of America, an old-line underwriter based in Baltimore. Mr. Broad figured that insurance, an industry that held its own during the Great Depression, would offer a hedge against the cyclical housing market. The company went on to buy additional regional insurance underwriters.

By the early 1980s Mr. Broad saw retirement investing as the real place to be. He spent a decade and a half transforming his stodgy collection of insurance companies into one built around the sale of annuities and, to a lesser extent, mutual funds and trust services. He sold life and health insurance lines and even spun off the home building business to shareholders.

SunAmerica, say those who follow the company, stands tall today because of a number of distinct advantages that financial services competitors might do well to emulate-beginning with the fact that it controls its own "shelf space."

In recent years, the company bought four brokerages, creating the fifth- largest brokerage sales force in the country.

"They make money both ways, through commissions on sales of all financial products and on the sale of their own products," said Karl Erhardt, a senior financial analyst at A.M. Best.

Though SunAmerica brokers are not under the gun to sell the parent company's products, the affiliation helps make sales happen.

"Brokers want to do business with the home team," said Jay Wintrob, a SunAmerica vice chairman. "We are on their desktops, we are on their Internet sites."

Joseph W. Conway, an Anaheim, Calif., broker affiliated with Royal Alliance, one of SunAmerica's brokerages, said he sells a fair amount of SunAmerica's Polaris, a variable annuity plan that lets investors choose from among a variety of top-flight investment advisers.

"SunAmerica is basically saying, 'If you are going to sell a variable annuity, at least take a look at ours,'" Mr. Conway said.

Paradoxically in an era when many corporate pundits trumpet the importance of a strong brand identity, most of SunAmerica's success has come without benefit of one. "For all that we have accomplished, we might as well have been called Acme," said Mr. Wintrob.

But that is changing. In each of the past three years, SunAmerica has spent at least $10 million on television advertising to establish itself as "the retirement specialist."

Mr. Broad has no intention of straying from the retirement savings focus, but he would like to go beyond annuities by developing a variable life insurance product and building SunAmerica's small proprietary mutual fund management business. The purchase of a mutual fund house is a possibility, he said, if prices fall a bit.

SunAmerica's success has created some buzz that it could be a takeover target. A bank could buy it only if regulatory barriers that keep banks out of the insurance underwriting business crumble.

Even if SunAmerica remains independent for a while, many wonder whether Mr. Broad, a major Democratic Party fund-raiser and leading corporate supporter of President Clinton, might leave for a high-level Washington post.

Mr. Broad, who faces no mandatory retirement age, is more amused than annoyed by such conjecture.

His pat response to the takeover question: "Explain to me how joining forces with you will make our business better. The only answer I ever get is, 'I'll pay you a big premium.'

"A big premium might work for the short term," he said. But in the longer term, a major company would be hard-pressed to generate the kind of earnings growth and share-price appreciation that SunAmerica has achieved on its own.

As for a political appointment, Mr. Broad said, "Answering to the President of the United States (means) I'd have to work a lot harder than I'm working now."

So it sounds as though Mr. Broad will be enjoying the California sunshine for some time to come, generating the kinds of returns that people in high-level government service can only envy.

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