Virginia Moves to Suspend North Carolina Mutual’s License
North Carolina Mutual Life Insurance Co. faces the loss of its Virginia license over its current financial condition and drop in surplus.Virginia's State Corporation Commission has recommended suspension of the company's license to sell insurance products in the state.An order issued in early November indicates that NCM reported a net loss of $3.74 million for the year ending June 30, 2009. The company's capital and surplus declined 34% to just less than $8 million during the same period, compared with a year earlier. The SCC order stated that the company's capital and surplus level dropped more than 50% in a 12-month period when based against the level required by statute. Under state law, the commission can use that condition to deem a situation as "hazardous to policyholders, creditors or the general public."NCM requested a hearing on the suspension recommendation on Nov. 9, but nothing had been scheduled as of Dec. 2.NCM spokesperson Kimberly Moore said the company is working with Virginia regulators on the issue. Moore said NCM is not writing new business and is holding the line on internal expenses company-wide. Moore said the company was not facing inquiries from other regulatory bodies.The Durham, N.C.-based company was founded in 1899 to serve the life insurance needs of the African-American community. The company has maintained its original consumer focus, but has evolved from a home-selling business in which agents collected premiums into one focusing on group life. NCM is the largest minority-managed life insurance company measured by total assets, according to BestLink.The company is licensed in 24 states and Washington D.C. Virginia comprises about 4% of the $17.5 million in U.S. premium that NCM collected through Sept. 30, 2009, according to an SCC filing. Based on that same filing, the company had $6.6 million in capital and surplus through the first three quarters of 2009, down 37%.Kristin Milam, spokesperson for the North Carolina Department of Insurance, said NCM continues to operate in its home-domicile state. She said state law prohibited her agency from confirming or denying regulatory actions against any company.On Sept. 1, A.M. Best Co. downgraded NCM's financial strength rating to C+ (Marginal) from B- (Fair), citing uncertainty surrounding the successful execution of a number of initiatives designed to increase the company's capital position.(By Al Slavin, senior associate editor, BestWeek)
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