NASHVILLE, Ga. — Four miles from the town square, a mile beyond where the pavement gives way to soft, sandy soil, lies a crossroads of Georgia business and politics.

It's the Life of the South Plantation, a 2,000-acre hunting preserve and a welcoming paradise for some of Georgia's most powerful public officials. Governors, lawmakers, regulators — all gather here to hunt quail, relax at twilight on the porch of the rustic lodge, and enjoy the old-time hospitality of an insurance company they oversee.

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Life of the South founder Butch Houston takes in the view from the lodge of his company's South Georgia plantation.
BEN GRAY/AJC STAFF (ENLARGE)
State Rep. Penny Houston (R-Nashville) founded Life of the South with Butch Houston, now her former husband, and remains a shareholder.
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LIFE OF THE SOUTH CORP. Founded: 1982 Headquarters: Nashville, Ga. Founder and chairman: Norman George "Butch" Houston III Ownership: Privately held by family, friends and company associates Company snapshot: A financial services holding company. Life of the South Corp.'s primary clients are banks, finance companies and auto dealers. In addition to insurance products, the company provides administrative outsourcing and sales training services. Subsidiaries and related companies: Bankers Life of Louisiana, Insurance Company of the South, Southern Financial Life, LOTS Reassurance Co., CRC Reassurance Co., Life of the South Agency, Life of the South Service Co., Life of the South Plantations, LOTSolutions. Within the industry: Life of the South's insurance companies had net written premiums of more than $100 million in 2003. It is among the nation's top 15 credit insurance companies. Web sites: www.life-south.com; www.lotsplantation.com POLITICAL CONNECTIONS At least 25 current or just-retired legislators have connections to Life of the South.* Among them: 4 are licensed as agents to sell the company's policies. 20 are on boards or are executives with banks licensed to sell the policies. 1 is a member of the Life of the South board. 2 own stock in Life of the South. 2 have family connections to Life of the South executives. *Some lawmakers qualify in multiple categories. WHAT IS CREDIT INSURANCE? If you've taken a loan to buy a house, a car or furniture, or if you've borrowed from a small-loan company, you have probably been offered credit insurance. Credit life insurance pays off a debt if a borrower dies. Credit disability insurance makes payments on a loan if a borrower is sick or injured and can't work. Credit property insurance can cover merchandise bought with a loan, such as a television financed by an electronics store. Or it can cover a car or household items a borrower offers as collateral, typically for a small loan. It usually pays off a loan if the property is destroyed, but doesn't replace the property. Here's why the policies can be controversial: Mortgages: Credit life insurance may be useful if premiums are paid monthly, but consumer advocates say unscrupulous lenders sell policies requiring borrowers to pay years of premiums upfront, so-called single-premium policies. The cost is added to the mortgage. For example, a $10,000 credit insurance policy could cost a borrower $30,000 with interest charges factored in. Auto loans: Car dealers have a slang term for credit insurance: "croak and choke." A "croak" policy is credit life insurance; a "choke" policy is credit disability. Auto dealers often push the policies because they earn handsome commissions. Small loans: The average borrower from a small-loan company ends up with at least three insurance policies as part of the loan. In Georgia, the insurance can cost as much or more than the interest on the cash advanced to the borrower. WHAT THEY'RE SAYING "Somehow or another, I think profit has become a dirty word in this country. I don't understand that. If we don't have profit, we don't have business. If we don't have business, we are upside-down." -- Butch Houston, founder and chairman, Life of the South Corp. "The plantation in the past gave Life of the South their start. It allowed you the opportunity to have [clients] come, spend an evening, have a couple of nice meals together. And if they hunt, hunt. Go home and say, 'Those are nice Georgia people.' " -- W. Dale Bullard, chief marketing officer, Life of the South "You are paying the premium on a policy that does not protect you or your family -- it protects the lender. Which is such a joke." -- Consumer reporter Clark Howard "It [credit insurance] is a gimmick. There's no two ways about it." -- Former state Sen. Don Cheeks, on the sale of credit insurance "If you have got someone with no assets . . . not even to pay a $500 loan . . . the creditor is saying, 'I've got to have protection.' You almost need it [credit insurance] more for someone with no assets." -- Insurance Commissioner John Oxendine

The plantation's owner, Life of the South Corp., has used these visits to foster a favorable environment for its primary product: credit insurance. Viewed by critics as overpriced and often unnecessary, credit insurance pays lenders when borrowers die or become disabled. The insurance generates high commissions for the lenders who sell it — and it can dramatically increase the cost of borrowing for the state's poorest citizens.

Life of the South has flourished in a way that embodies how business is conducted in Georgia: by building relationships with a network of influential politicians who have the power to affect the company's bottom line.

The plantation, the company's idyllic homage to the rural South, has drawn an impressive list of guests to this remote section of South Georgia.

State Insurance Commissioner John Oxendine, who has not reviewed credit insurance rates during his 10 years in office, has been here.

So has Gov. Sonny Perdue. He took a free hunting trip to the plantation six weeks before signing into law a bill that loosened restrictions on credit insurance in mortgage lending.

Former House Speaker Terry Coleman, an insurance agent and one of at least 25 current or recently retired state legislators with business connections to Life of the South, has been a plantation guest several times. He wishes he could visit more often. Said Coleman (D-Eastman): "Every red-blooded American is a hunter, aren't they?"

Life of the South's story of growth and prosperity is one of quail hunting, political connections and the business savvy of a hardworking, gifted salesman. It is quintessential Georgia, the embodiment of a business environment that has made this one of the least friendly states for borrowers in the nation.

Strategy pays off

The idea to turn a plantation into a marketing tool came from Life of the South's founder and chairman: Norman George Houston III, or "Butch" to his friends.

Over two decades, Houston (pronounced HOW-ston) built Life of the South into one of the nation's largest purveyors of credit insurance.

Houston, 63, said the reason for his success is simple.

"We sell a good product for a good price," he said. "We provide a service to people."

Credit insurance has been marketed to borrowers for three-quarters of a century. And for most of that time, it has been controversial.

Lenders offer the coverage on home mortgages, car loans and many other kinds of credit, especially to consumers they consider risky. Consequently, it often ratchets up the cost of borrowing for the people who can least afford it. Lenders tout it as a way to protect consumers, but it is lenders who benefit most.

And in Georgia, permissive regulation makes credit insurance more lucrative for lenders than in many other states.

But even people who think credit insurance is bad for consumers talk about what a great guy Butch Houston is. He and former Gov. Roy Barnes, one of the toughest critics of credit insurance, have been friends for 30 years. Barnes said he never hunted at the plantation during his years as a lawmaker or as governor, but has since leaving office.

For Houston, winning even the unlikeliest of friends comes naturally.

On a clear day in June, a shiny black Chevrolet Suburban was bumping across the plantation's open spaces when Fred, a chocolate-colored llama, loped out of nowhere, stuck his snoot through the window and smothered the jowly man inside with kisses.

"I'm getting him a girlfriend," an unfazed Houston declared to his longtime business partner, Loyd Shaw.

"That's good," Shaw said from the driver's seat as he gunned the vehicle to lose the llama. "People are beginning to talk."

For more than two decades, these two Southern gentlemen and their perfectly timed comic banter have brought together two important groups of people: some of the state's biggest lenders, who act as their sales force, and the elite of Georgia politics, who have the authority to determine the cost of credit insurance or pass legislation regulating its sale.

They come to the plantation for rest and recreation, and leave with a good feeling about Life of the South and the people who run it.

"You can go to restaurants in Atlanta and you can play nice golf courses," said Houston, an avid outdoorsman. The plantation is "just a little extra something."

In the company's early years, when the plantation operated on a shoestring, Houston guided hunters while Shaw sneaked ahead, stocking the bushes with quail to ensure a bountiful hunt.

Today, the plantation is staffed by professionals who raise enough birds to satisfy the hunters and who maintain the expanse of towering pines, lush peanut fields and menagerie of peacocks and llamas and other exotic animals.

The investment has paid off. With every batch of birds cleaned and packed into a white Styrofoam cooler emblazoned with a Life of the South Plantation logo, a potential client or political ally is made.

"They are real good at smoothing over politicians and everybody else that will help their business," said Augusta lawyer John B. "Jack" Long, who challenged credit insurance companies in a class-action lawsuit 15 years ago.

"They bring in their customers and politicians and the insurance commissioner and everybody else to make sure they can do what they want to do," Long said.

Houston said the plantation is no longer as key to his business model as it once was, now that the company has expanded to other states. He calls it part of Life of the South's heritage.

Still, the hunts give Houston a chance to dispel criticisms that Georgia officials and lenders often hear about his industry.

Credit insurance, Houston said, provides an underserved group of people with access to money by lowering the risk to lenders.

Lenders like the insurance because it guarantees they will be paid if something happens to the borrower.

At the same time, Houston said, it protects borrowers, as well as family members who could get stuck with the debt if disaster strikes.

"I never met a widow yet who thought her husband had too much insurance," said Houston, who was 14 when his own father died uninsured.

Hometown focus

Houston has been making his pitch for credit insurance going on four decades.

He began selling the policies a few weeks after graduating from Emory University as an agent for a Macon credit insurance company. He traveled Georgia's back roads, signing up community banks, car dealerships, small-loan companies and other lenders as clients. They, in turn, would add the insurance to loans they made to consumers.

Standing 6 feet 3 inches and still possessing the bulk that made him a standout tackle for the Berrien County High School Rebels in the late 1950s, Houston easily could come across as imposing. But his mastery of the soft sell — getting to know his clients personally before pitching his products — continues to serve him well today.

"I would rather have a company built on relationships rather than transactions," Houston said. "I've got people who've been doing business with me for 40 years."

Life of the South's corporate motto reflects that sentiment: "Everything else being equal, friends would rather do business with friends."

Houston gambled on his friends remaining loyal when he founded his own company. He gambled, too, when he located his headquarters in Nashville, the Berrien County seat.

Houston recalled the response of his business advisers.

"They said, 'Who in the hell has ever heard of Nashville, Ga.?' I said, 'They are going to.' "

Nashville is a town of another time. When people here recite a local telephone number, they give just the last four digits; everyone has the same three-digit prefix. Farmers peddle watermelons from roadside stands, and front lawns are dotted with signs listing the Ten Commandments.

Houston's ties to his hometown are strong. His grandfather served on the County Commission and established one of two community banks in which Houston now is a shareholder. His grandmother helped keep the town library open during the Depression; it is now named in her honor. In 1995 Houston moved much of his insurance operation to Jacksonville, a city better able to handle the company's growing technology needs. But he kept his headquarters in a contemporary red cedar building two blocks off Nashville's courthouse square.

The square is a collection of low-cost furniture stores, small-loan companies and empty storefronts. The median income of the county's 16,000 residents is well below the state average, the poverty rate well above.

Houston's personal wealth — he's now a multimillionaire — stands out. His lifestyle does not. Houston lives modestly and prides himself on being a good corporate citizen.

"If he hears of a need, he's freehearted, very freehearted," said Susan Griner, Berrien County's probate judge, who writes "Susan's Corner," a society column in the weekly Berrien Press. "He has it, but he shares it."

Balancing act

Houston shares with his sales force, too.

The lenders who market Life of the South policies are the chief beneficiaries of the insurance. For every dollar in premiums they pass on to the company, they usually get at least 40 cents in commissions.

"The sellers have very strong incentives to push this on people," said Robert W. Klein, director of the Center for Risk Management and Insurance Research at Georgia State University and a former chief economist for the National Association of Insurance Commissioners, an organization of state regulators.

Traditional term life insurance would be a better value for most consumers, Klein said. Credit insurance "is just not the right product for most people."

Like virtually every other credit insurer, Life of the South pays high commissions and still makes money, although its profit margin is relatively meager — $2.6 million on revenues of $112 million in 2002. To pay generous commissions and turn a profit, it needs to keep its rates high. And for that, it needs the approval of the state of Georgia.

Credit insurance is considered to be reasonably priced if 60 percent of premiums are paid out to cover claims, according to model laws adopted by the national insurance commissioners' group. In Georgia, only credit life insurance comes close to meeting that guideline; some kinds of coverage pay out less than 10 percent of premiums.

The state's insurance commissioner sets the rates, a role that Houston describes as a balancing act.

"The commissioner has got to wear two hats," Houston said. "He's got to protect his industry, which is us. But he's also got to try to protect the consumer."

No one knows that tension better than former Insurance Commissioner Tim Ryles.

After campaigning as a consumer advocate, he cut the credit life rates in 1993, as his predecessor had done. "I said, 'I'm going to bite the bullet and do it,' " Ryles said recently. "So I did it."

His decision incurred the wrath of Georgia lenders, who are among the most politically connected people in the state.

"It was going to mean less income for them," Ryles said. "And I remember getting a lecture from some bankers — telling me that if I did that, I would cut out Christmas bonuses and other things that they used as incentives and rewards."

A few legislators threatened to strip Ryles of his rate-setting power.

"I'm not against credit life insurance or credit insurance, period," said Ryles, who lost to Oxendine when he sought re-election in 1994. "All I wanted to do was to step into a situation that is governed by rules of reverse competition and speak for the people who were unable to speak for themselves."

People like Susie Hall.

To pay her bills, the Gainesville grandmother borrowed from a small-loan company near her home. She then refinanced about $450 of that debt, with the lender tacking on $367 in insurance premiums — for which she also was charged interest. With more than $350 in finance charges and other fees, the new loan had a payback of nearly $1,200 over three years.

The insurance is itemized on loan papers Hall signed. But she said those papers were hard to understand.

"I can read," said Hall, who finished the eighth grade, "but I don't read too good."

Hall, who used to be a food server in a cafeteria, said she thinks she knows why her lender sold her so much credit insurance.

"To get more from the working dude, that's what I think," said Hall, 65, sitting in her back yard, examining a sweepstakes offer that had just arrived in the mail.

After borrowing the money, Hall became ill, was no longer able to work and fell behind on payments to the small-loan company. It sued her a year ago but has been unable to collect because Hall has few assets.

Capitol ties

There is no shortage of people to speak for Butch Houston. Many of his friends are influential not only in the community banks of small-town Georgia, but in the legislative chambers of the state Capitol.

Life of the South, its executives and their relatives contributed about $44,000 in Georgia's 2002 and 2004 election campaigns, according to reports filed with the secretary of state.

The company's outside directors gave a comparable amount during those elections.

By the standards of modern campaigns, the donations hardly stand out. But they are well-placed. Among the recipients: Democrats Barnes and Lt. Gov. Mark Taylor, and Republicans Perdue and Oxendine, the reports show.

"I don't think I've ever asked anything of any of these people," Houston said. "They are friends of mine. If I felt like there was something I particularly needed, I would certainly do it. I've never had to."

The connection between Life of the South and some members of the General Assembly runs especially deep.

At least 25 current or just-retired state lawmakers have business relationships with Life of the South, according to their financial disclosure reports and filings with the Georgia Department of Insurance.

Twenty lawmakers are officers or executives of Georgia banks that sell Life of the South policies. In those roles, the lawmakers have a voice in deciding whether their banks sell credit insurance and, if they do, which company's policies they offer. Nine other legislators sell other companies' credit insurance, eight of them as bank directors and one as a car dealer.

Some lawmakers' ties are more direct.

State Rep. Jay Shaw (D-Lakeland) is the brother of Life of the South executive Loyd Shaw.

Terry Coleman, who stepped down as House speaker when Republicans took over the chamber this legislative session, is a director of a bank that markets Life of the South products. Coleman, who still serves in the House, also has been a licensed agent for the company since November 2003, according to Department of Insurance records.

Coleman, who has an insurance agency and operates as an independent broker, said he receives a commission for Life of the South policies sold by two financial institutions, which are his clients.

He said credit insurance is a valuable product, particularly for people who can't qualify for other types of life insurance.

And former Rep. Larry Walker (D-Perry), the longtime House majority leader who just retired from the Statehouse, has served on Life of the South's corporate board since 1997. According to the last financial disclosure report he filed, covering calendar year 2002, Walker owned an undisclosed amount of stock in the company. His son, Larry Walker III, is an agent for Life of the South's insurance agency.

The former legislator said his involvement with Life of the South grew out of legal work he did for Houston. He declined to elaborate.

Exactly how many public officials have visited the plantation is impossible to determine; state ethics laws don't require officials to disclose such trips or other gifts.

Oxendine recalled a hunting trip to the plantation a few years back with a group of legislators. Some plantation visitors are avid hunters. Not Oxendine.

"I am not any kind of an enthusiast," he said, "and the quality of my marksmanship definitely indicates that I don't get a whole lot of practice."

As the state's chief insurance regulator, Oxendine holds unmatched power over Life of the South's business. Along with setting rates for credit insurance, he oversees the small-loan companies that sell many of the policies.

Nevertheless, Oxendine said, he sees nothing inappropriate about accepting the hospitality of a company he regulates.

"If spending a few hours one afternoon taking a shotgun and shooting a couple of quail, if someone can be influenced that easy," he said, "that is pretty sad."

Stake in company

No public official is more overtly tied to Life of the South than Rep. Penny Houston (R-Nashville), Butch Houston's former wife.

The lawmaker, a member of the House banking committee who switched party affiliations after the 2004 elections, founded Life of the South with her then-husband and continues to own stock in the privately held company, a decade after their divorce.

As recently as 2003, Penny Houston's campaign finance and financial disclosure statements listed her office telephone number as Life of the South's headquarters. These days, she said, she no longer plays a role in Life of the South, other than to engage in community public relations, such as sending condolences on the company's behalf to families of Nashville-area residents who die.

In an interview, she described her former husband as "a good man, a benevolent person."

"We have a great relationship," she said.

That relationship, she said, had no bearing on her role in legislation that threatened the profitability of Life of the South and other credit insurers.

A high-profile bill backed by then-Gov. Barnes in 2002 aimed to restrict predatory lending practices in home mortgages. It primarily targeted lenders who prey on the poor and elderly with high-interest loans and excessive fees.

The measure also banned the controversial sale of so-called single-premium credit insurance. On such policies, insurers collect the premium upfront rather than in installments. The single premium is added to the loan amount, and a borrower pays for the insurance — and interest on it — over the life of a loan, dramatically increasing the ultimate cost.

Penny Houston was among the lawmakers who tried, without success, to defeat the bill. She even remarked to colleagues on the banking committee, which held hearings on the measure, that if it passed, it would cut into her alimony payments.

The Houstons' divorce records in Berrien County are sealed. It is clear, though, that Penny Houston has a stake in the company's well-being. Butch Houston's financial statement filed with the Department of Insurance notes that he is required to pay alimony and must make payments to his former wife if he sells all his Life of the South stock. He owns 37 percent of the company's shares, according to the financial statement.

Penny Houston recently described her allusion to her alimony as a joke.

"I'm going to get my alimony no matter what," she said. "Good Lord. I probably joke about it too much."

She added: "I certainly don't feel like when I voted on predatory lending that it had anything to do with me being a stockholder [in Life of the South] any more than an attorney would on tort reform or a doctor would on tort reform."

However, the 2002 vote was not the last word on the matter.

Backtracking

One month after the predatory lending law took effect, Perdue defeated Barnes for governor.

One of the first invitations the new governor accepted was to hunt on the Life of the South Plantation.

A few days before the trip, a Life of the South executive said in a letter to the governor's office that the company was "quite excited" about Perdue's coming to hunt with U.S. Rep. Charlie Norwood (R-Ga.).

"I am referring to it as Charlie's Hunt," the executive wrote, "since I am trying to keep secret the fact that the governor is going to be part of the group."

The trip easily might have gone unnoticed. But after a citizen filed an ethics complaint, Perdue called attention to the visit by reimbursing the state for having used a taxpayer-owned helicopter to fly to Nashville. The trip took place as momentum was building to revamp the 2002 predatory lending law, an effort that Perdue supported after lenders said it jeopardized their credit ratings.

Butch Houston said recently he did not discuss the predatory lending issue with Perdue, who stayed at the plantation only a few hours before returning to Atlanta. In fact, Houston said, he barely saw the governor that afternoon.

Five days later, the governor's Senate floor leader introduced legislation to repeal many provisions in the predatory lending law.

On March 7, one day after the measure passed, Perdue signed it into law. One effect: Banks could again sell single-premium credit insurance.

Through an aide, Perdue said his trip to the plantation did not influence his position on the predatory lending bill, and that he had heard from both sides on the issue.

Houston and his lobbyists downplay any influence Life of the South exerted on the predatory lending debate. The banking industry, they said, led the fight.

Life of the South and other credit insurers emerged victorious, but their product was badly tarnished.

Even though banks are free to offer single-premium policies again, many have shied away out of fear of being associated with lending practices described as predatory.

Sitting in his Nashville office, Houston pondered the future of the company he worked so hard to build.

"I am against predatory lending. I absolutely think it is the worst thing in the world," Houston said.

"And yet, we wound up being the villains in all of this. We didn't do anything."

But he worries: Now that the banks have gotten cold feet, can the small-loan companies and car dealers be far behind?

The answer is likely to test the many friendships forged in the fields and the lodge of the plantation, friendships that Life of the South has staked its existence on.

"The long term of this company? I'd love to think that we are going to be here forever," Houston said.

"I think that last chapter has yet to be written."