N.C. Mutual Life Insurance's financial strength has been downgraded by credit rating company A.M. Best.
Best cited the Durham-based company's lower surplus and continued operating losses, even though "losses have significantly declined from the prior year." N.C. Mutual is the nation's oldest and largest black-owned insurance company.
N.C. Mutual's financial strength rating was lowered to C+, or marginal, from B-, or fair, Best said in an announcement issued today.
The company's ratings "remain under review with negative implications, reflecting the uncertainty surrounding the successful execution of various initiatives being undertaken to strengthen its capital position and return to profitability," Best stated. "If N.C. Mutual's strategies are unsuccessful in the near term, A.M. Best may take additional rating actions."
N.C.. Mutual CEO James H. Speed Jr. said that the business was hurt this year by a nearly $900,000 write-off on bond investments in companies such as Citigroup.
The loss from operations in the first half of the year -- $677,000 -- is much better than the $2.3 million loss from operations in the first half of 2008, Speed said.
"We are pleased...operations are getting better," he said.
He said that the company has been cutting costs, including reductions in travels and salary cuts for executives. The company has about 75 employees today, about half the number it had four years ago.
Speed said that the company has been trying to raise new capital.
"It's just, in these economic times, it is very challenging to raise capital," he said.