N.C. Mutual sees improved first-quarter financial results

Jun. 19, 2014 @ 05:43 PM

N.C. Mutual Life Insurance Co., the Durham-based insurance company that was a prominent institution on the city’s historic Black Wall Street, reported a net loss of $7,446 in the first quarter of this year.

That was an improvement over the same quarter last year, when the company reported a loss of $651,125, according to financial information from the National Association of Insurance Commissioners.

N.C. Mutual President and CEO James H. Speed Jr. said the company is benefiting from cost reduction initiatives undertaken last year, as well as from changes to the company’s business model.

The company saw a 7 percent increase to bring revenues in the quarter from premium and annuity considerations from life, accident and health contracts to more than $5.05 million, according to the financial data.

The company also saw 75 percent growth in miscellaneous income to a total of $339,107, which Speed said related to favorable results from some of the company’s group insurance business.

The company is also benefiting from cost reductions, Speed said. Last year, the company cut jobs, switched to a more efficient technology system and made changes to its pension plan.

“We’re seeing more favorable results in our expenses, and (are more) efficient with our system,” Speed said.

The company spun out its sales staff into an independent agency that can sell the company’s own insurance products as well as the products of other companies, all while earning fees for those services. Speed said that starting June 1, agents in spin-out N.C. Mutual Insurance Agency added property and casualty insurance to the types of insurance they can sell.

The company will adding some sales and marketing employees this year, he said. He expects the company to be profitable in 2014.

For 2013, the company posted a net loss of about $2.3 million. In March, A.M. Best Co. downgraded the company’s financial strength rating to a marginal rating of C+ from C++, and downgraded its issuer credit rating to B- from B. Its financial strength rating outlook was revised to negative from stable, and its issuer credit rating was changed to negative from positive.

A.M. Best said the insurance company’s negative operating results were impacted by unfavorable underwriting results, lower net investment income, and higher pension and severance-related costs.

However, the rating agency also said those negative factors were partially offset by the company’s continued focus on its new business model, including its fee-based initiatives and operating expenses reductions.

The agency said the company’s overall premium is expected to increase this year due to the completion of payments related to an acquired business in 2008. Speed said in the interview Thursday that the company has completed paying for a block of business that the company acquired from Booker T. Washington Insurance Co. in Alabama in 2008, and will receive all of the profits from that block.