OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has downgraded the Financial Strength Rating to C+ (Marginal) from C++ (Marginal) and the Long-Term Issuer Credit Rating to “b-” from “b+” of North Carolina Mutual Life Insurance Company (NCM) (Durham, NC). The outlook of these Credit Ratings (ratings) remains stable. Concurrently, A.M. Best has withdrawn the ratings as the company has requested to no longer participate in A.M. Best’s interactive rating process.
The ratings reflect NCM’s significant decline in absolute capital and risk-based capital primarily due to operating performance.
Over the past few years, the company has been shifting its business model to a more fee-based profit stream through operating as a general agency and collecting administrative service fees, while de-emphasizing insurance-related risks. Strategically, the company has been reducing its fixed expenses (general and administrative) through investment in technology, headcount reduction and reducing the associated leasing expense for its home office. Although A.M. Best recognizes the overall strategy of increasing revenue and profits, and limiting risk, as it grows the business as a general agency, NCM has a limited business profile with a market defined by the niche it serves.
NCM has a well-established position and reputation in the African-American insurance market, which it has serviced since its inception in 1898. A.M. Best believes NCM has limited growth opportunities operating as an insurer with risk retention, as it continues to focus on its core target market and its operation as a general agency.
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