Fraternals to Founders to Foundational: The Legacy of Black Insurance Companies
By Stafford L. Thompson, Jr.
Small Talk, June 2021
The 1890’s were an effervescent time. Reconstruction had concluded just a mere decade ago. The end of the Civil War (and slavery) had reached its quarter-century anniversary. 7.5 million Black Americans found themselves un/underinsured. This population did not garner the attention of the major insurance companies of the day. However, Black people were no strangers to insurance. In the early 1800’s, mutual benefit societies run by churches and fraternals run by groups such as the Masons offered insurance to bury black people with dignity and care for widows and children. However, without the organization and funding as an insurance company, they did not survive. In 1898 North Carolina Mutual (NC Mutual) was founded by John Merrick as the North Carolina Mutual and Provident Association. NC Mutual was not the first industrial life insurance company. That distinction belongs to the Southern Aid Society of Virginia which was founded in 1893. However, NC Mutual would become the largest of the black insurance companies.
John Merrick was an entrepreneur who owned at least six barber shops, real estate, etc., and had been involved with fraternal insurance. Merrick also received strong mentorship and encouragement from Washington Duke, founder of Duke University, whose hair he cut. Merrick along with Dr. Aaron Moore, a noted physician, and five others gathered to form NC Mutual. In 1900 the company reorganized with only Merrick and Moore remaining as founders. They would also hire C.C. Spaulding as the general manager. This became what was known as the triumvirate that would lead NC Mutual for years to come. They would later hire Asa T. Spaulding the first black actuary.
In 1901 Afro-American Life Insurance Company was founded by Abraham Lincoln Lewis in Jacksonville, Florida as the Afro-American Industrial and Benefit Association. A.L. Lewis and six other leaders from the African Methodist Episcopal Church formed the company at a meeting in the Bethel Baptist Church of Jacksonville. Rev. E.J. Gregg was the first president followed by President A.W. Price. Lewis served as the first treasurer. Afro-American Life had its own triumvirate with Price, Lewis and John Spearing as vice president. Lewis became president in 1919 until 1936 when his son James H. Lewis followed him. A.L. Lewis remained chair of the board from 1936 until his death in 1947. He was also founder of American Beach (now a part of Fernandina Beach) an upscale vacation spot for black people who were not allowed on segregated beaches.
In 1905 Atlanta Life Insurance Company was founded by Alfonso Franklin Herndon in Atlanta, Georgia as the Atlanta Benevolent and Protection Association. A.F. Herndon was a barber and real estate entrepreneur. He too gathered tips from the men whose hair he cut. If you believe the movie “The Banker,” this was a common practice among successful Black people. Herndon was the first president of Atlanta Life and remained president until his death in 1927. His son Norris Herndon took the helm of Atlanta Life next. Jesse Hill, Jr., an actuary, took over from Herndon in 1973 until 1992. In 2001 Atlanta Life changed its focus to financial services emphasizing investment management in addition to insurance.
In 1925 Golden State Mutual Life Insurance Company was founded by William Nickerson, Jr. in Los Angeles, California as the Golden State Guarantee Fund Insurance Company. William Nickerson, Jr. was an insurance agent for a majority insurance company before moving to Los Angeles and founding Golden State, making Golden State the first company founded by a person with extensive insurance experience. Golden State would too have a triumvirate to lead it with Nickerson, Norman O. Houston, and George Beavers, Jr. with Nickerson as the first president. Houston followed Nickerson as president upon his death in 1945. In 1970, Ivan J. Houston, an actuary, took over as president after his father’s death with his brother Norman B. Houston becoming chairman of the board. In 1980 Ivan took on the title of CEO and named Larkin Teasley, FSA 1966, as the president and COO. Teasley would become CEO in 1991.
These companies and the many that followed became foundational to the black economy. From these companies, banks were born, investment management companies were born, funeral homes were born, radio stations were born, real estate development companies were born (just to name a few). NC Mutual started and inspired so many black businesses that Durham, North California became known as Black Wall Street like the one in Tulsa, Oklahoma.
In 1921 the National Negro Insurance Association would form to represent the interest of black insurance companies. At its height 65 companies were members, mostly in the South and Chicago with such companies as Supreme Life. The association also had a staff actuary to support those companies that did not have an actuary. Black insurance companies were training grounds for black actuaries in the 1930s, 1940s and beyond. Asa T. Spaulding led the way as the first black actuary having obtained a Master’s in Actuarial Science from the University of Michigan in 1932. Michigan would train several of the early pioneers. Historically Black Colleges and Universities such as Florida A&M University would also train many of the early pioneers. Dr. Sadie Tanner Mossell Alexander had worked at NC Mutual as an “unofficial” actuary in 1921 for two years before returning to Philadelphia and going to law school. Segregation by policy and practice locked blacks out of the credentialing process until Robert J. Randall, Sr. broke through in 1952 as the first black credentialed actuary (FSA 1952). Many of these actuaries went on to become company presidents like Spaulding, Hill, Houston, Teasley, and Randall.
Unfortunately, the black insurance industry would not survive. Insureds were no longer co-located with the advent of integration, which had significant impact on the debit agent distribution model. Expense ratios were too high, capital requirements increased, regulation changed, the economic environment changed, and company leadership also played a part. Unfortunately, the loss of these companies has left a void. The un/underinsured has risen since the industry has crumbled. But history tells me that whenever a void exists, someone will step up and make great use of the opportunity.
As for the Black Insurance Industry, it will always be remembered for how it went from fraternals which offered insurance to bury black people with dignity and care for widows and children to founders like Merrick, Lewis, Herndon, and Nickerson who used their own wealth, resources, and intellect to create an insurance industry, to being foundational to other black business such M&F Bank, Gaston Funeral Home, and Piedmont Investment Advisors that transformed the wealth profile of an entire people.
Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries, the editors, or the respective authors’ employers.
Stafford L. Thompson, FSA, MAAA, is senior vice president, life product management at Lincoln Financial Group. He can be reached at stafford.thompson@lfg.com.