Crunch time for Bert Collins: North Carolina Mutual's CEO is shrewd. But can he inspire the innovations needed to keep his insurance firm competitive?

Black Enterprise, Nov, 1993 by Frank McCoy

Many remember Jackie Robinson as the hero who broke the color barrier in professional baseball. But that's not what left a lifelong impression on a teenage Bert Collins. At the pinnacle of his power in the late forties, Robinson came to Collins' tiny, rural segregated high school in Austin, Texas. Discussing his triumph over adversity, Robinson stressed the importance of education, hard work and perseverance. inspired by Robinson's message, Collins has taken his own long journey from that small Texas town to the elite ranks of the top of his profession as president and CEO of North Carolina Mutual Life Insurance Co. (NCM), the nation's largest black-owned insurance firm.

Today, Collins appreciates more than ever the grit and uncompromising faith of the Robinson legacy, now that he faces the most challenging leg of his professional career. The company's lackluster credit ratings, unstable performance and precarious position as a black firm in an increasingly competitive industry, are testing both his creativity and character as an industry leader.

For one thing, unless they are willing to battle head-on with larger, majority-owned competitors, black-owned insurance companies could become obsolete in the next decade. Since 1973, the number of black insurance firms has shrunk from 42 to 23 in 1992. Acquisitions and bankruptcies have provided a one-two punch for an industry staggering from economic setbacks in the black community. Some companies have gone bankrupt, while others were bought by whites.

Collins' formidable predecessor in the CEO's office, William J. Kennedy III, best sums up the challenge: "I am not optimistic about the future of the insurance business as a whole. Most of the large companies are diversifying [their financial services and products] as fast as they can. If some of the black companies don't get into diversification, they are going to have a hard time just writing insurance."

Collins' performance also must measure up to the daunting 96-year-old entrepreneurial legacy of NCM. A perennial No. 1 on the BLACK ENTERPRISE Insurance List, NCM is a bulwark among black-owned businesses and one of the most important business institutions in Durham, N.C., a city nationally recognized as the most enduring example of black economic progress. Historically, the company has maintained a high-profile public image as a pathbreaker - with its own history of bold businessmen at the helm.

But Collins, a manager known for his soft-spoken intelligence, steady temperament, and focused style, has already brought his own quiet flair to a company whiplashed in recent years by an unstable business environment. From the start of his tenure as CEO in 1990, he has had to prove himself. When it was Collins who stepped into the big shoes of the larger-than-life CEO Kennedy, many were surprised by his rise to the top. Outsiders had expected Maceo K. Sloan, the head of the firm's asset management subsidiary, NCM Capital Management Group Inc., to become heir to the throne. Both Kennedy and Sloan are descendants of the company's founders, whereas Collins is not.

Collins also shifted the emphasis at the firm, moving it away from diversification of products - the favored course of his predecessors - and toward offering less expansive, back-to-basics insurance policies. Collins witnessed NCM's failed foray into selling health-care insurance. Basically, it got in too fast, without laying the proper groundwork. Clearly, the methodical Collins is not likely to make that kind of mistake, but how much risk is he willing to take?

He took the helm three years ago at a low ebb in NCM fortunes: Operating income was a negative $1.616 million, while net income a negative $819,745 by the end of 1990. The company was also suffering from the stigma of mediocre credit ratings by the leading insurance rating agencies. Meanwhile, a slow economy and flagging life insurance policy sales were further endangering NCM's financial health.

To stabilize the situation, Collins declared war on expenses. Trimming the sales force down from 325 to 240, NCM reaped the savings from the early retirement of 50 employees (including Kennedy) in 1990. These cuts, however, had both a positive and negative impact. On the plus side, general expenses fell by $2 million to $14.109 million and commissions paid to salespeople declined by $4 million since 1991. Of course, decreasing commissions mean fewer policies were sold and less premium income collected.

Another change was the 1991 sale of NCM Capital Management, an independent asset management firm. Its chief investment officer, Maceo Sloan, and 12 of his colleagues went with the firm to Minneapolis-based IDS Advisory Group. IDS paid NCM an estimated $7 million for the then four-year-old asset management firm. The upshot was an estimated $1 million profit for NCM. The company invested the money in a new training facility for new sales personnel and created an on-line computer system linking the 26 district offices to 11 states and the District of Columbia.