Two Moody brothers, members of a renowned island founding family, are at odds in a recently filed lawsuit asserting that bad business practices in Brazil led to a $6 billion regulatory penalty against an Austin insurance company.

An attorney for one brother says the lawsuit is about corporate misconduct in its business practices in South America that harms the company’s standing. But representatives for the other brother say the suit was motivated by personal grievances and vendettas.

Robert L. Moody Jr. on Sept. 28 filed a lawsuit in the 122nd District Court against his brother Ross Rankin Moody, chairman of Austin-based National Western Life Insurance Co. and six other National Western Life board members, asserting corporate misconduct and breach of fiduciary responsibilities.

The brothers are members of the Moody family, among Galveston’s oldest and most prominent, tracing its roots on the island to 1866, and responsible for founding American National Insurance Co., Moody National Bank and the Moody Foundation, to name a few. Those Galveston operations are not involved in the lawsuit.

Robert L. Moody Jr. filed the lawsuit on behalf of National Western Life Insurance Co. and its parent company, National Western Life Group, of which he’s a stockholder, according to the lawsuit.

In the lawsuit, Robert Moody Jr. accuses the company under Ross Moody’s direction of failing to get proper licensing to sell insurance in Brazil and failing to remedy or prevent the situation resulting in a $6 billion penalty and criminal investigation brought by the Brazilian government. The penalty was later reduced, according to the lawsuit.

The board also failed to act independently to investigate the claims or take action to correct the problem, the lawsuit asserts.

Robert Moody Jr. asks in the lawsuit that Ross Moody and the board members be terminated from their positions and numerous financial damages be recovered for the company, according to court documents.

“The evidence will show that because of fear of personal exposure and the significant influence of Ross Moody, the Boards did not act independently, disinterestedly, or with due care in response to the plaintiff’s demand,” according to the lawsuit.

The president of National Western Life Insurance Co. slammed Robert Moody Jr. and his claims against the company’s executive and board, calling his lawsuit meritless and done in an attempt to smear the board over personal grievances. National Western will move to dismiss the lawsuit, President Kitty Kennedy Nelson said.

The company has built a reputation for financial stability and integrity domestically and overseas, Nelson said.

“Given this track record of transparency and performance, National Western believes the suit brought by Robert L. Moody Jr. is not about the company or its business practices,” Nelson said in a prepared statement.

“Instead, it is a strikingly meritless case brought in an apparent attempt to embarrass the Moody family into appointing him to boards or grant him titles in family related entities and to smear the National Western directors for ending certain agreements for which Robert Moody Jr. received substantial commissions and fees.”


Robert Moody Sr. — Robert and Ross’ father — founded Austin-based National Western Life Insurance Co. in 1956, the company said. Moody Sr. was the chairman and chief executive officer until 2015 when Ross Moody, 54, was promoted to those roles.

Robert Moody Jr., 57, does not hold a position or title with the company, but was a major shareholder at the time of the action, owning more than $2.5 million worth of shares, according to the lawsuit

He brought his “shareholder derivative” lawsuit on behalf of the company against its chairman and board, said Michael Martin, a Houston lawyer representing Robert Moody Jr.

“It’s not just about Ross,” Martin said. “It’s about a course correction for the company to make systemic and institutional changes so that these things don’t happen again.

“The suit is to protect the company.”

An attorney for the company’s board has disputed Robert Moody Jr.’s standing to sue as a shareholder, asserting in legal documents that his recorded holding is valued at less than $12,000.


In the lawsuit, Robert Moody Jr. accuses Ross Moody of failing in his responsibilities to oversee international sales.

Ross Moody led the company’s expansion into international insurance markets and sale of insurance policies overseas beginning in 2000, the lawsuit asserts. By 2011, Brazil accounted for about 39 percent of the company’s international sales, according to court documents.

“Notwithstanding this dramatic rise in international sales in Brazil, other Latin American countries, as well as Asian and European countries, the National Western Board had failed to seek legal opinions on the legality of its sales in many of these markets, despite the NAIC recommendation,” the lawsuit asserts.

The lawsuit was referring to the National Association of Insurance Commissioners, the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories.

“Instead, the company tried to dodge the law by asserting it only provided insurance services in the United States, since the policies were issued in the United States, a position resoundingly rejected by the Brazilian authorities.”

On Aug. 17, 2015, National Western revealed for the first time in U.S. Securities and Exchange Commission disclosures that Brazilian authorities were investigating the company for criminal violations of Brazilian law in connection with its issuance of insurance policies to Brazilian residents, the lawsuit asserts.

On Aug. 29, 2016, the Brazilian Board of Appeals of the National Private Insurance, Open Private Pension and Capitalization System affirmed a 2011 regulatory penalty against National Western for the unlawful sale of insurance in Brazil without a license and without compliance with any Brazilian law, the lawsuit asserts.

The initial fine was $6 billion, one of the largest fines levied against a corporation in American history, according to the lawsuit. The fine was later reduced to about $900,000 because of changes to the law in Brazil, according to the lawsuit.

National Western SEC disclosures made in 2016 revealed a criminal investigation of the matter still was pending, the lawsuit asserts.

On April 27, Robert Moody Jr. served a written demand to National Western Life Group Inc. requesting corrective action on the Brazil dealings, according to the lawsuit. His attorney told the board the company faced ongoing risk in Brazil and requested Ross Moody’s termination, an investigation and disclosure to stakeholders of the Brazil situation, among other things, according to the demand letter.

In a May 15 response letter from an attorney representing the board, the board called the demands “frivolous and without merit.” The company has been selling policies overseas for at least 50 years, the letter said.

“At all times, the directors of the National Western Life Group Inc. and National Western Life Insurance Companies have been advised of all material facts regarding the issues raised in your letter,” attorney David Beck wrote.

“NWLIC has obtained numerous legal opinions over the years regarding the legality of its international business model.”

The company disagreed with the $900,000 fine, but paid it under protest, the letter said. The fine wasn’t large enough to be material to the total shareholder equity, the letter said.

The claims were not about Robert Moody Jr.’s concern for the company but personal grievances he harbors against his brother for being passed over as a trustee on the Moody Foundation and the company’s discontinuation of unlimited personal expenses for Robert Moody Jr., such as spa treatments, Beck wrote.

The Moody Foundation is a 75-year-old Galveston-based philanthropic organization founded by William Lewis Moody Jr. in 1942 to manage his substantial fortune.

The letter said Robert Moody Jr. lacked standing to sue and that his personal interests conflicted with those of other shareholders. The directors would hold him liable for their injuries, including attorney fees if he sued, according to the May 15 response.

“Were Robert Jr. to pursue a lawsuit against his brother Ross or other company directors, such a lawsuit has the potential to tarnish the Moody family reputation and inflict injury on NWLGI and its stakeholders,” according to the letter.

On June 26, the board voted to reject the demand, according to the lawsuit.

In the lawsuit, Robert Moody Jr. asserts the board did not take his concerns seriously because the members were personally involved and vested in the transactions. The lawsuit asserts some board members could face personal liability because of their involvement in corporate misconduct, preventing them from being objective and fulfilling their fiduciary duties.

“Board members are heavily influenced by Ross Rankin Moody,” the lawsuit asserts. “Many board members rely upon Ross Rankin Moody for their livelihood. Likewise, some board members are family members of Ross Rankin Moody.

“Since the Boards were not disinterested, they should have engaged an independent committee to investigate the demands,” the lawsuit asserts.

“The Boards failed to take this action. Instead, they gathered a handful of documents, held a discussion which included interested directors, failed to consider material evidence, and refused the demand.”

The boards had taken proper action to see whether any corrections were needed, Nelson said.

“After a comprehensive investigation assisted by outside counsel, the Boards of Directors of National Western Life Group Inc., and National Western Life Insurance Company voted unanimously to reject the allegations and each of the demands made by Robert L. Moody Jr. in his suit with full confidence the accusations are false and the case is wholly without merit,” Nelson said.

“National Western will move to dismiss the suit and recover its costs and legal expenses incurred in defending this frivolous and malicious action.”

The lawsuit was filed in Judge John Ellisor’s 122nd District Court in Galveston.

Marissa Barnett: 409-683-5257;

Senior Reporter

(1) comment

Randy Chapman

Battle it out, boys!

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