2008 North Carolina Mutual Annual Report
Letter from the President and CEO

Our nation ended 2008 facing one of the greatest challenges in its history, with chaos in the financial industry and the economy in a downward spiral. Regardless, 2008 will be remembered as a year of hope, anticipation and celebration as the United States of America elected its first African-American president. While millions were making history at polling places across the nation, we were celebrating our history and legacy here at North Carolina Mutual – 110 years of doing business. Earl Graves, the internationally recognized entrepreneur and publisher of Black Enterprise magazine, was the keynote speaker at our Founder’s Day event.

Could the founders of our company ever have imagined in 1898 as they struggled to establish a life insurance company to serve the underserved in the African-American community that a little more than a century later an African-American would be elected President? As early leaders in the African-American community, could Mr. Merrick, Dr. Moore or Mr. Spaulding possibly have imagined themselves as part of the base of a great pyramid that over a century would grow and grow until the capstone became Barack Obama, President of the United States?

I recently read a statement by Pastor T.D. Jakes that made me think of our founders. He said, “If you have achieved any level of success, then pour it into someone else. Success is not success without a successor.” That has been the tradition at North Carolina Mutual. Each generation of leadership has mentored the next, providing smooth transitions and sharing generously of their experience and knowledge.

I know that has been the case with me. I draw inspiration today from our founders, and I feel fortunate to have Bert Collins, whom I succeeded, chairing our Board and providing me with guidance. Guidance and leadership have been the hallmarks of our corporate reputation throughout its history. Leadership provided by subsequent presidents William J. Kennedy, Jr., Asa T. Spaulding, Joseph Goodloe and William J. Kennedy, III continued our legacy and built upon a great tradition. This tradition, in my opinion, accounts in large part for the fact that at 110 years old, North Carolina Mutual is the oldest life insurance company chartered in the state of North Carolina and the largest and oldest life insurance company in the United States with its roots in the African-American community.

Because we are firmly rooted, we are able to weather storms like that of 2008, although the crisis in the financial industry and the general downturn in the economy affected the insurance sector and companies like our own. Companies with whom we do business are negotiating harder and reducing our profits as they struggle to stay profitable themselves. At the same time, our internal expenses, such as healthcare for employees, have risen. Consequently, we have systematically examined our budget from top to bottom to effect savings. As others tightened their belts and looked for ways to increase profits and make their dollars go farther, so did we. We re-priced products based on experience gained over the years. We outsourced some technology functions. We also implemented Lean Six Sigma principles to identify duplication, all the time being conscious that these troubled times require special efforts on our part to be more effective and efficient.

Fortunately, even in difficult times, there are opportunities. One opportunity which North Carolina Mutual availed itself of in 2008 was the chance to acquire all of the premium-paying policies of Birmingham, Alabama insurer, Booker T. Washington Insurance Company, and its distribution channels. This was a major step forward in our Southern strategy of renewing operations in select Southern cities where North Carolina Mutual once had a strong presence and brand awareness. The opportunity to acquire 51,000 policies and merge Booker T. Washington’s agent force with ours fit perfectly with that strategy. We also were able to leverage our existing overhead and achieve economy of scale by servicing these policies.

The Booker T. Washington agents double our captive agency sales force and mean that North Carolina Mutual is selling its policies in Birmingham, Montgomery, and Mobile, as well as Brownsville, Tennessee. This broadened and strengthened agency force means that North Carolina Mutual Life Insurance Company again will be a recognized name in these major Southern cities. Meanwhile, we will continue to aggressively seek out additional blocks of business for purchase and seize opportunities to expand our presence in areas where we believe the North Carolina Mutual brand will have strong appeal.

We continue to work closely with and value our relationships with affinity groups within the African-American community. North Carolina Mutual’s tradition of providing broad leadership as well as financial security for its policyholders is very much in evidence as we find mutually beneficial ways to partner with communities of faith, the NAACP, fraternities and sororities, Historically Black Colleges and Universities, and others. At the same time we are casting our net widely as we market across the country through strategic alliances with companies such as Minnesota Life and provide coverage for organizations such as NASCAR, that value diversity and understand North Carolina Mutual’s sphere of influence in the African-American marketplace.

We look to 2009 with optimism, believing that in spite of the challenges of the times, profitability is within our reach and that our experienced board of directors, leadership team, staff and enthusiastic sales force are sufficient to the task. Even at 110, the North Carolina Mutual story is still unfolding, and there is much more history to be made.


Sincerely,

James H. Speed, Jr.
President and Chief Executive Officer


Success Story
A short film about the "Mutual" that was a featured trailer in black movie theaters circa 1940. Play Video >
© 2008 North Carolina Mutual Life Insurance Company.