Diversification never caught on at Homesteaders Life Co. “A predecessor of mine said, let’s cool it on the other stuff and see if we can make one thing work,” said Graham Cook, chairman and president of the company.

So Homesteaders stuck with one basic, very stable form of insurance – policies to cover funeral expenses. The steady approach has taken the company to a top-notch headquarters building on Westown Parkway in West Des Moines, more than $1 billion in assets and, this year, the centennial of its founding.

After 100 years, Homesteaders controls about 15 percent of the prearranged funeral market in the United States, according to Cook. The mutual company does business in 37 states, with about 5,000 people in 3,000 funeral homes acting as its agents.

“A lot of companies sell insurance to fund funerals,” Cook said. “We sell funerals funded by insurance.” The distinction, he said, is that Homesteaders policies are designed to take inflation into account. “The customer really has two contracts,” he said. “One is with us, and the other is with the funeral home, allowing the customer to say, ‘My beneficiaries won’t owe you a dime.’”

It’s an unusual form of insurance for several reasons. First, the company is selling coverage for a certain event, not a possible event such as a traffic accident or a house fire. “Not everybody is going to need fire insurance, but you’re going to need this,” Cook said. “In that respect, it’s a very clean market.”

The policies also tend to be purchased by older people, many with health problems, who expect to need the coverage within a few years. “Research says the trigger for buying funeral funding insurance is the writing of a will or retirement,” said Dean Lambert, the director of marketing. “People believe this kind of insurance is a good idea at an early age; we have to get them around to acting on it.”

The age of the customers and the certainty of payout require a relatively high premium rate. But the key for Homesteaders is in the handling of that premium money.

Insurance companies rely on investment returns for much of their profitability, and Cook said, “Investment is critical for us, because we don’t have the money very long.”

Still, he said, “our portfolio looks like any insurance company’s portfolio.” Homesteaders invests about 85 percent of its assets in bonds and much of the rest in commercial real estate.

Though the investment landscape has been tricky in recent years, the company has prospered by posting double-digit annual growth in sales for the past decade. “When I came here in 1998, the company was celebrating $400 million in assets,” Lambert said. Now assets have reached $1.2 billion.

Homesteaders left its longtime headquarters on Grand Avenue in Des Moines in 2003 to move to the 5700 Westown Parkway location. The purchase gave the company three times as much office space for its 150 employees and 18 acres of prime real estate.

Homesteaders began as a fraternal insurance society and sold its first policy Feb. 23, 1906. It became an insurance association in 1923 and transformed into a mutual company in 1948.

Cook joined the company as a Drake University student in 1964 and has been president for the past 11 years.