NEGOTIATIONS WITH OFFICIALS OF OMAHA MUTUAL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP59-00882R000100250007-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 2
• Document Creation Date: December 15, 2016
• Document Release Date: April 8, 2002
• Sequence Number: 7
• Publication Date: September 20, 1956
• Content Type: MF

Approved For Release 2003/03/25 : CIA-RDP59-00882R000100250007-4
20 September 1956
MEMORANDUM FOR: Mr. Lawrence R. Houston
SUBJECT: Negotiations with Officials of Omaha Mutual
1. Apparently there is continuing discussion of the basis on which
negotiations were conducted with officials of Omaha with respect to the
life insurance contract. Although the company involved is the United
Benefit Life Insurance Company the negotiations by CIA officials actually
were conducted with Omaha officials since United Benefit is a subsidiary
or otherwise linked to Mutual of Omaha. You have indicated to me that
there is still some belief that the risks of the type involved with personnel
under AQUATONE were not contemplated.
2. In the literal sense of the words used it possibly could be said
that the specific risk was not contemplated. However, this would be to
judge the entire situation without regard to all of the pertinent factors.
It is difficult of course after a number of years to recall specific
conversations. However, at the time of the negotiations there was a
newspaper article which involved WAEPA and its request for a zoning
permit. The newspaper article stated that WAEPA insured thousands
of CIA agents who were behind the iron curtain. This story was discussed
with Omaha officials. It is my clear recollection that they were given to
understand that the story as such was not true and that the normal types
of staff employees would be generally covered but that there might be
unusual situations which would encompass individuals such as were.
mentioned in the newspaper article. Certainly we did not advise the
Omaha officials that the AQUATONE type of risk would be covered
since we were not aware of that type of risk at the time.
3. There are certain risks excluded in the over-all United Benefit
policy such as the double indemnity feature not applying in the case of
crews of aircraft. The mechanics for administering the contract which
in effect provide for return of funds derived from premiums less claims
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paid less a fixed fee of 12% less, I believe, a further reserve factor
of 5%, indicates that the true basis of the risks to be covered was
left somewhat on an open-end basis and the experience factor was to
be the key to future contracts. Certainly it should be recognized that
Omaha in effect is acting as a banker in holding our funds, charging
a 12% fee for administration and in the initial steps assuming a small
risk. Incidently, it is my recollection that the 5% reserve factor is
simply to be held by Omaha for the benefit of GEHA. As a lawyer who
participated not only in the negotiations but in the review of the contract
provisions, I feel that the contract best expresses what risks should
or should not be viewed as having been contemplated. If Omaha as an
experienced and bigtime operator wished to exclude certain risks they
were under an obligation so to provide in the contract. Since they did
not, it is my view that the contract as written which does not exclude
AQUATONE type risks is consistent with the oral negotiations.
4. As I indicated orally I think a security factor in the payment of
AQUATONE claims should be reviewed carefully. The contract
specifically provides that in the event of a claim the Agency may
certify the death and have a check made payable to either the Agency
or a nominee for disbursement to the proper beneficiary. The cause
and circumstances of death are not a prerequisite under the contract
for payment of the death claim.
25X1A9A
OGC/ JSW :mks
Approved For Release 2003/
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