Seeking A New Policy For Growth

With their numbers dwindling, black insurers map out a plan for survival

1998, the industry saw 565 merger and acquisition deals take place to the tune of $165.4 billion. "One way to show an increase in revenues is to acquire one of your competitors or a line of business that you’re not in already," Hartwig adds.

Reality check: how many black-owned insurance companies have the wherewithal to pull off similar deals? Kirkwood Balton, CEO of Booker T. Washington Insurance Co. in Birmingham, Alabama (No. 4 on the 1999 be insurance companies list with $58.2 million in assets), says his company considered buying Universal, but he concedes Chapman was in a position to offer a better deal. "It was attractive to us because we could outsource some of their technical and home office operations into one unit," Balton says. "We could then serve more units, the cost-per-unit would go down and affect our general administrative expenses so we could operate at a more cost-effective rate. We want to grow just like any other company, but we want to grow safely."

In the past couple of years, the company has changed its delivery service from the expensive method of collecting premiums door-to-door to a mail and electronic-funds transfer system. The firm’s assets, premium income and net investment income have decreased from 1997 to 1998.

Booker T. Washington still targets a low- to middle-income customer base and believes it will continue to be successful with such offerings as term and whole-life policies as well as limited-pay life, endowments and living-benefits products, which enable people to receive payouts if they suffer from life-threatening illnesses such as cancer or AIDS. Asserts Balton: "The market we serve has great potential because many clients or potential clients do not carry adequate insurance. It probably results from some companies going upscale, and there’s a tendency to forget those who are in that income group we’ve always served."

Others, like Golden Circle Life Insurance Co. in Brownsville, Tennessee (No. 9 on the be insurance companies list with $7.1 million in assets), embrace their small stature. Licensed in only one state, the 41-year-old firm is run by CEO Cynthia Rawls Bond. Change has come at a snail’s pace for the company, which earned about $1 million in revenues last year, and the operation has just been computerized. The transition to new technology produced a loss in income, says Bond, "but now we’re back on track and I hope that by the end of the year we’ll be back where we were. Then we can start the next year off with some new things."

The Insurance Institute’s Hartwig believes there will always be room for smaller companies, like the be insurers, to carve out niches to serve particular customer groups. "Every group has unique insurance needs, and the large insurers do their best to meet all of them," he says. "Smaller companies tend to specialize. They get very, very good at underwriting one specific type of risk. They’re able to offer a product that may be more

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