Union Labor Life Insurance Company, Inc. (“Ullico”) is a union-owned company that provides health and life insurance and other insurance and investment products to members of more than 13 labor unions, including the Teamsters, the United Food and Commercial Workers, and the Laborers International Union of North America (LiUNA). Through its investment funds, Ullico is a major player in financing residential and commercial properties and infrastructure projects across the United States.

Founding

In 1923, Matthew Woll, president of the Photo Engravers Union and George Perkins, president of the Cigar Makers Union, proposed the formation of a labor-financed life insurance company during the 1923 American Federation of Labor (AFL) national convention. At the time, many union members in industrial trades were uninsurable because their jobs were considered too dangerous. AFL leader Samuel Gompers supported the effort, and two years later the Union Labor Life Insurance Company was founded. Fifty international unions provided seed money through a $400,000 investment from the Bank of Labor. Ullico issued its first policies in 1927 and by the end of its first year of operations, had issued life insurance policies to nearly 50,000 union members. ^{1 2}

2003 Scandal

In 2003, after an insider self-dealing scandal compounded by out-of-control spending and poor management decisions, Ullico came close to failing. The company’s troubles started with its 1997 investment of $7.5 million in Global Crossing, a computer networking company. Within two years, Ullico’s capitalization had risen in value to more than $2 billion, or nearly ten times its previous value, almost solely on the basis of the Global Crossing investment. ³

Regulators became concerned about Ullico’s lack of diversification, and the company’s value plummeted during the 2000 tech recession. But it was later revealed that company management had changed stock purchase and repurchase rules, permitting senior management to cash out millions of dollars in stock gains. These cash-outs were facilitated by Ullico’s unusual structure, under which the board priced its stock once per year, which allowed managers to buy stock at a lower price and then sell it after the board revalued its price. ⁴ All told, the board members at the time—including then-Ullico chairman and CEO Robert Georgine; Morton Bahr, then-president of the Communications Workers of America; Douglas McCarron, then-general president of the United Brotherhood of Carpenters; and Martin Maddaloni, then-president of the United Association (Plumbers and Pipefitters)—dealt themselves more than $14 million in company stock. ⁵

The scandal was reported in 2002 in the Wall Street Journal, which called Ullico “Labor’s Enron.” The scandal triggered investigations by Congress, the Securities and Exchange Commission, the Department of Labor, and state insurance regulators. Ultimately, no criminal or administrative action was taken against the company, but the chairman resigned, and the board was replaced by institutional shareholders. Ullico eventually took legal action against the former managers and recovered more than $23 million from its former chairman, directors, and service providers. ⁶

At the time of the management ouster, Ullico was losing millions of dollars a week and was very close to bankruptcy. State regulators threatened to close the company down. It survived only after a $50 million capital infusion and $100 million in cost-cutting across its entire business line. ⁷

Operations

Since its founding, the company has expanded to offer health insurance, workers’ compensation, fiduciary and union liability insurance, and investment products. ⁸

In 1977, during a recession when many union members were without work, Ullico launched Separate Account J (J for Jobs), an investment vehicle that finances commercial and residential real estate property development. The fund originates and manages commercial first mortgages and requires the use of union labor on construction projects it finances. ⁹ Ullico’s president claims that the fund has created “335,000 good union jobs, all while generating solid returns for union investors.” ¹⁰ Among the commercial and residential projects the fund has financed are:

• In 2013, Ullico provided $46 million to finance the construction of a 190-unit below-market-rate residential project at 1400 Mission Street in the Mid-Market neighborhood of San Francisco, with a guarantee that construction would be provided by union labor. ¹¹
• In 2015, Ullico invested $228 million in two projects in downtown Philadelphia, a mixed-use residential and commercial building at 1100 Market Street in the Market East section of Philadelphia; and a 26-floor luxury condo building at 500 Walnut Street in Rittenhouse Square, with an unobstructed view of Independence Hall. ¹²
• In 2016, Ullico provided $21.7 million to support the acquisition of 944 Market Street, an eight-story mixed-used building located in San Francisco’s Mid-Market neighborhood. ¹³
• In 2017, Ullico was among the lenders providing $200 million in financing for Wolf Point East, a 698-unit residential tower at the confluence of the north and south branches of the Chicago River. ¹⁴
• In September 2022, the fund loaned $150 for the redevelopment of Suffolk Downs, a one-time horse racing track in East Boston and Revere. ¹⁵ In October 2022, the fund raised more than $500 million in capital to finance new projects. ¹⁶

In 2010, Ullico started the Ullico Infrastructure Fund to finance infrastructure projects that employ union labor. ¹⁷ The projects financed by Ullico include:

• The Terminal One project at JFK Airport in New York City, where Ullico took a 19 percent ownership stake in a private redevelopment consortium financing a $13 billion redevelopment of the airport’s international arrivals terminal and freight management facility. ¹⁸ As part of Ullico’s investment, construction companies agreed to use union workers and the New York Port Authority, which runs the airport, agreed to staff the terminal with union labor. ¹⁹
• In 2019, Ullico was the lead investor in a consortium that purchased Tidewater Holdings, which manages transportation, terminal, marine construction, and repair services in the Pacific along the Columbia and Snake Rivers in Oregon and port terminals in the Pacific Northwest and Vancouver Island. ²⁰
• In February 2021, Ullico purchased Hearthstone Holdings, a natural gas distribution holding company serves more than 82,000 residential, commercial, and industrial customers in five states. ²¹ In February 2022, Hearthstone acquired Hope Gas, Inc., a West Virginia-based natural gas utility serving more than 111,000 customers with roughly 5,200 miles of distribution pipes, for $690 million. ²²
• In September 2022, Ullico invested in Estuary Power LLC, a Reno, Nevada-based renewable energy company that develops, constructs, owns, and operates utility-scale renewable generation, energy storage, and related infrastructure projects. ²³
• In September 2022, Ullico loaned $109 million to finance the construction of 333 North Water Street, a luxury high-rise development in downtown Milwaukee. ²⁴

Governance

Ullico is a privately held joint-stock company. The company’s constitution and bylaws permit shares to be held only by trade unions, union officials, union members, and union benefit funds. The stock’s value changes only once a year, when company directors set a new share price on the advice of auditors. ²⁵

As of October 2022, Ullico had 239 total employees, with its staff split across its headquarters in Washington, D.C. and offices in Maryland, Chicago, New York, Los Angeles, and North Carolina. It had more than $4 billion in assets under management from more than 200 investors with 20 portfolio investments. ²⁶

Ullico, Inc. is now a holding company with multiple affiliated subsidiaries, including Union Labor Life Insurance, Ullico Casualty Group, Inc., Ullico Investment Company, Inc., and Ullico Investment Advisors. ²⁷

Leadership

Edward M. Smith has been president and CEO of Ullico, Inc. since 2011. He had previously worked as executive vice president. Before joining Ullico, Smith had a long career with the Laborers’ International Union of North America. Smith joined LiUNA at age 13 and was elected business manager of Laborer’s Local 773 at 21. He later become international vice president of LiUNA and served as chairman of the Illinois State Board of Investment. Smith graduated from Shawnee College with an associate’s degree in 1974. ²⁸

Stephanie B. Whalen is president of Ullico’s life insurance subsidiary. She began her career with Ullico in 1998 as a production assistant in the marketing division. She has more than 20 years of experience in the insurance industry and comes from a union family. ²⁹

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10. Edward M. Smith. “Workers Are Writing History in Their Struggle for a More Perfect Union.” Ullico.com. Aug. 31, 2022. https://www.ullico.com/workers-are-writing-history-in-their-struggle-for-a-more-perfect-union/
11. ^[1]K. Dineen. “Ullico kicks off affordable Mid-Market tower with $46 million loan.” San Francisco Business Times. Nov. 18, 2013. https://www.bizjournals.com/sanfrancisco/blog/2013/11/ullico-closes-46m-loan-for-mid-market.html
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15. Greg Ryan. “Suffolk Downs Project Lands $150M Loan for 475-Unit Apartment Complex.” NBC10 Boston. Sept. 19, 2022. https://www.nbcboston.com/boston-business-journal/suffolk-downs-project-lands-150m-loan-for-475-unit-apartment-complex/2838478/
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23. Michelle Loosbrock. “Ullico Invests in Reno, Nevada-Based Estuary Power.” Nevada Business Journal. Sept. 9, 2022. https://www.nevadabusiness.com/2022/09/ullico-invests-in-reno-nevada-based-estuary-power/
24. Sean Ryan. “Third Ward apartment tower moves forward after $6M land sale, $109M construction loan finalized.” Milwaukee Business Journal. Sept. 7, 2022. https://www.bizjournals.com/milwaukee/news/2022/09/07/third-ward-apartment-tower-moves-forward-after-6.html
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29. ^[1] “Stephanie B. Whalen.” Ullico.com. Accessed Nov. 5, 2022. https://www.ullico.com/people/stephanie-b-whalen/