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United Mutual, MetLife merge.

Harlem-based United Mutual Life Insurance Co. merged with the $103.2-billion Metropolitan Life Insurance Co. (MetLife) in October, ending the 63-year existence of the last black-owned insurance company in the Northeast. Unable to find a buyer, the nation's ninth-largest black-owned insurance company opted for the merger to protect the interests of its 30,000 policyholders.

Under the terms of the merger agreement, United Mutual's policy-holders will become policyholders of MetLife. MetLife acquires United Mutual's $12 million in assets and all of its liabilities. Employees of United Mutual will become employees of MetLife and oversee their same accounts during the transition period.

For years, United Mutual experienced financial difficulties. A group of insurance companies loaned the company $2.5 million in 1985, which delayed its ultimate demise. However, tougher times during the late 1980s and early 1990s proved too much to overcome.

Arthur R. Worrell, United Mutual executive vice president, says the last 12 years have caused severe losses for many insurance companies, particularly in the Northeast. "There has been a downward spiral that has been horrendous for our industry," Worrell says. "Adverse market forces and a bad economy, which led to people cashing in their policies, contributed to our going under."

MetLife Senior Executive Vice President Harry P. Kamen says, "We explored many ways to retain United Mutual, but its operation as a separate entity was eating up the little capital that it had. MetLife is doing what is needed to protect United Mutual's policyholders."

According to worrell, the merger should offer some additional benefits to policyholders. He projects that after a year, United Mutual's policyholders will probably be paid a dividend on their policies. it would be their first dividend payment since 1979. And he adds, "At some point, they will be able to roll over their present policy to a higher paying policy. United Mutual had a cap of $10,000 on its policies unless it was insured by another company."

At press time, the agreement was awaiting regulatory approval and the approval of policyholders from both institutions. The process was expected to be complete by the end of December.
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Title Annotation:Harlem, New York, New York-based United Mutual Life Insurance Co. and Metropolitan Life Insurance Co.
Author:Scott, Matthew S.
Publication:Black Enterprise
Date:Feb 1, 1993
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