Life-Sustaining Measures

Black insurance companies search for strategies to halt the erosion of their ranks

century. Since 1996, the firm, which has offices in 11 states and the District of Columbia, has held an A.M. Best “B++” or “very good” rating. In 1998, Collins says he wants an “A.”

Collins says the company’s growth and good ratings have been keyed by its ability to create products attractive to the middle-income market while maintaining its home service base of selling small policies worth under $15,000–the firm’s “heart and soul.”

To honor its anniversary and entice new customers, North Carolina Mutual recently created a “Centennial” universal life policy and a new whole life policy. The Centennial’s attraction hinges on the fact that all life policies build cash for you after the cost of the insurance has been paid. The difference between universal and whole life policies is that the former offers yields to the purchaser on the cash-value portion–at a higher rate than on whole life policies. Collins says the Centennial has a “very attractive” 6% return, whereas most universal policies offer about 4%.

The firm is also broadening its base through two workplace sales plans. The first sells universal life policies through a payroll deduction plan. Customers include Dudley Pr
oducts, (No. 64 on the BE INDUSTRIAL/SERVICE 100 list), the city of Raleigh and several historically black colleges and universities. North Carolina Mutual is also selling a direct group insurance product that will allow an employer to pay its employees’ premiums. During the next five years, Collins projects premium growth worth $15 million in each of these workplace sales divisions. And, he says with a laugh, that is not the traditional way “of selling policies over the kitchen table.”

In 1997, Atlanta Life Insurance Co. added at least $3 million to its capital and surplus which is an insurance company’s equity. It also had a net profit of about $2 million. This was the first time the net income of the firm (No. 2 on the BE INSURANCE COMPANIES list with assets of $202 million) has gone up since 1995. But the firm, which operates in 17 states and gets nearly 60% of its premiums from Georgia, Texas and Illinois, achieved these goals through subtraction, not addition. How? Since becoming Atlanta Life’s president and CEO in 1996, Charles H. Cornelius has been busy. He hired a new management team, sold the firm’s real estate portfolio, slashed district offices from 35 to 23, made a corresponding cut in agents and reinvented its home service area.

The payoff has been greater efficiency and reduced distribution costs, although consolidating offices reduced 1997 premiums by $2 million. Cornelius says, “We shrunk, but we had income from operations for the first time in quite a few years. We are smaller and more profitable, and we are gearing up for growth mode in 1998.”

Here’s the plan. In 1998, the firm is increasing its minimum policy size from $1,000 to $10,000, which should be within the budget of its mostly working-class home service customers.

Plus, the company is unveiling products created specifically to attract members of the black

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