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North Carolina Mutual Life Insurance Company

North Carolina Mutual Life Insurance Company

Founded by seven black men who each pledged fifty dollars, the North Carolina Mutual and Provident Association (renamed the North Carolina Mutual Life Insurance Company in 1919) opened in Durham, North Carolina, on April 1, 1899, to provide insurance for black families. The Mutual sold primarily industrial insurance, which was obtained for as little as three cents a week by industrial laborers and which paid out correspondingly small amounts for sickness and death claims. In the summer of 1900 the Mutual went into debt, the income from its policies unable to pay for the claims on them, and all its founding members except the president, John Merrick, a successful businessman, and Aaron Moore, a physician who became secretary, withdrew. Merrick and Moore loaned personal funds to the Mutual to prevent it from going defunct and promoted Charles Clinton Spaulding to general manager.

By the end of 1902, after Merrick and Moore had loaned the Mutual an additional $600, its profits were finally greater than its losses, and by 1906 it had quadrupled its number of policyholders, its growth corresponding first to expansion within North Carolina, then expansion to South Carolina and the reinsurance of smaller black insurers who could not meet state regulations, which at that time were being strengthened. In 1913 the Mutual demonstrated its strength by raising $100,000 to meet a higher state deposit requirement. During World War I the Mutual's life insurance in force grew from $5,000,000 to $26,000,000 because a dramatic increase in cotton prices brought greater prosperity to southern blacks.

Embodying Booker T. Washington's popular philosophy that blacks would overcome prejudice with economic development, the Mutual drew attention to itself and to Durham because the growth of its assets enabled it to launch numerous subordinate institutions, such as the Merrick-Moore-Spaulding Land Company (1907), a real estate company; Mechanics and Farmers Bank (1908, with a branch in Raleigh, 1922); Banker's Fire, a fire insurance company (1920); Mutual Building & Loan Association (1921); the National Negro Finance Corporation (1924); and the Mortgage Company of Durham (1929)in effect bringing economic development to the black community of Durham by itself.

In 1926, after territorial expansion that followed the black migration north and that also included southwestern states, Spaulding, now president, a position he would retain until his death in 1952, realized that the income from expansion did not compensate for the operating costs and had the Mutual retrench, not to expand again until 1938. This retrenchment, along with its conservative investments in real estate, government bonds, and especially mortgage loans, protected the Mutual during the Great Depression. At $39,000,000 just before the stock market crash of 1929, the Mutual's life insurance in force never fell below $33,000,000 during the Depression.

The Mutual's prosperity during World War II, when its insurance in force increased from $51,000,000 to over $100,000,000, enabled it to offer its policyholders dividends for the first time and to compete with the mainstream companies that now insured blacks at standard rates.

The promotion of racial solidarity during the 1960s brought blacks back to the Mutual from white insurers. The urban riots of the late 1960s put pressure on white corporations to invest in black communities, and corporations such as General Motors, IBM, Chrysler, Procter and Gamble, Sun Oil, and Atlantic Richfield did so by buying more than $400,000,000 in insurance contracts between 1969 and 1971 from the Mutual, making it the first black company to pass the billion-dollar mark.

The Mutual's tenfold growth in insurance in force from the early 1970s to the early 1990s enabled it to maintain its status as the nation's largest black insurance company. To stimulate growth, the Mutual gradually began to phase out its industrial insurance and replace it with ordinary life insurance, and, through its subsidiary, NCM Capital, to enter the pension and corporate-fund management business.

See also Entrepreneurs and Entrepreneurship; Spaulding, Charles Clinton; Washington, Booker T.


Weare, Walter B. Black Business in the New South: A Social History of the North Carolina Mutual Life Insurance Company. Urbana: University of Illinois Press, 1973.

siraj ahmed (1996)

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