Economic Development A Connectional Strategy The African Methodist Episcopal Church.

Economic Development

A Connectional Strategy

The African Methodist Episcopal Church

Changing our stumbling blocks into stepping stones

“In order to meet the requirements of ministering in the new Millennium we must increase our capacity”

Case for consideration

Recently California, the 8th largest economy in the world dropped back to 14th largest when the electricity needed to run the state could not keep up with the demand. The world watched while rotating power outages wreaked havoc on the state. The problem then, which still plagues the state now is very simple. Demand has outpaced the states ability to maintain capacity. The net result is California will have difficulty enticing new industries into the state with instability in the delivery of the core infrastructure needed to drive the engines that industry need to succeed. California is an electricity economy.


How does this relate to the Black Church, the reason for this meeting and the program before you today? Simply put the AME Church is the oldest and was once the largest black denomination in the Christian Church. Today it is 4th and heading back into 6th largest within the black Church. The power that drove the Church years ago cannot keep up with the present day demands and the future is even more challenging as we, like California need a new core infrastructure to deliver the capacity our Church needs.

Challenges for our Church span issues relating not just to pulpits and local budgets but also to the future of our schools, corporate and connectional programs in the states and around the world. The revenue raised at the local Church level is no longer enough for the growing engine of our Connectional Administration and Programs. Our Connection continues to grow and needs to grow but the costs are driving Churches into difficulty.

The best way to increase our capacity is to exercise our business differently and by this create new streams of financial revenue.


How do we accomplish this critical need?

The AME Church has devised strategies for over 50 years and created, in 1972, the Office of Ecumenical and Urban Affairs to address this from the bench of the Council of Bishops. We have tried everything including Avon and GM affinity programs. Sadly while this raises some needed revenue it does not go far enough. We have yet to utilize our largest areas of economic enterprise, our properties and ourselves.

In 1970 the Church of England, Orthodox Jews and the Roman Catholic Church engaged companies in London and Bermuda to develop ways to create Insurance risk models that could take the obscenely profitable business of insurance and create a new line of revenue for them. AIG (American International Group) under the leadership of Mr. Hank Greenberg developed a unique plan of consolidating both Insurance and banking for these large groups and the business of religious business development began. Soon the Mormon faith initiated this along with all of the white denominations of faith in America. Today not one black denomination is involved in these programs.


Are they successful?

Simple answer to this question “Do the Arabs have oil?” These programs have saved the white denominations from financial collapse during the turbulent 1980’s and 90’s. The United Methodist Church began their program in the last 5 years and they are enjoying an outstanding performance and profitability. Profitability for our white brothers and sister Churches, that is measured not in hundreds of thousands of dollars annually but in tens of millions.

How is it done?

All major Christian Churches register under the U.S. Tax code of the IRS 501c3 tax exemption protocol so as to limit the payment of taxes as a religious organization. Under the IRS tax law, all “not for profit” organizations may own a “for profit” enterprise but with strict guidelines. There can be no direct line of operation or administration by the parent entity, as this would constitute a breach of the tax law. Churches enroll in-group programs and then engage in the practice of risk sharing through the creation of their owned Captive Insurance company. This company takes the majority of the risk and seeds the questionable portion to a re-insurer while keeping the profitable portion of the business. The Church’s company then can “gift back” to the Church a portion of the profit while keeping a financial reserve for unforeseen catastrophes, such as Hurricane Katrina last year.


Where are these companies located?

Most Church owned Insurance carriers are located in markets that deliver the best coverage in all lines and best pricing in the catastrophic loss arena. Top jurisdictions have been the U.S., London, Bermuda, Barbados and Cayman Islands. In the U.S. companies must pay tax on all revenue and interest on all holdings. This has always served as a dis-incentive to operate a captive carrier in the U.S. market and most companies have gone offshore for better rates and jurisdictions that do not levy tax, as is the model in the U.S. There are no taxes on investment or the interest earned on the investment in the other jurisdictions(incl.BVI).

Bermuda has emerged, in the last 5 years as the top captive market and re-insurance market in the world. The companies in Bermuda paid every dollar of insurance after the disaster of September 11th and the Hurricanes of Katrina and Rita. Insurance capacity in Bermuda now stands over $1trillion in active premium handled annually and will continue to grow with a well regulated Insurance and compliance environment.


How does this help the AME Church?

The AME Church in 2000 agreed, at the seat of the General Conference, to legislate the creation of its own captive insurance carrier (AME Reinsurance Limited). Is has also adopted 99% of all of the regulatory requirements for group insurance and will be asked in 2008 to approve 1-2 more bills connected to it.

The AME Church in 2004 approved amendments to the original legislation and included a program participation component. This simply put, the Church will require compulsory participation of its Churches into a program that meets the financial requirements for increased revenue sharing between the Church and an insurance provider.


What steps have been done?

AME Reinsurance has negotiated both a group “Master policy” program as well as a captive insurance program to be launched with Zurich North America Inc of Schaumburg Illinois. AME Re requested and received basic insurance information from many of the Episcopal Districts in 2002 and 2003 and needs very little more to begin. AME Re has appointed a placement producer to direct our business into this program and has been approved to begin this week. The “Master Policy” will be set and operated by each Episcopal District in conjunction with the fronting carrier.

AME Re has now formed an agreement to include a membership affinity program. This program improvement increases the profitability by 100-200%. This program will be able to allow members to purchase their present insurance through the Church and will afford the Church a larger level of profit by way of the increased commissions payable.

What is needed of the Church and its membership? What we need now is your support to register and begin paying into the new program. We need the Churches first to participate and pay into the program. We need the membership to be prepared to join after we have had 3-5 years settling the Insurance program. Consolidated banking would begin after the 5th year of the Insurance program and would need the support of members in participating in the second program.

Reporting of all business would be done semi annually within the Church with a comprehensive web-site that would be built for monthly reports, updates, special events and most importantly the critical education to both educate and elevate our people in the vital arena of economic literacy.

Critical is the need of both leadership and follow ship in this development to ensure success. We all have a part to play and the success of this program is set on the critical understanding of the Church and its future in the spiritual and economic advancement of our people.



Is there something beyond this program that will provide a value added plus for the Church and its members?

Yes! The next program that extends, as an outgrowth from this, is consolidated banking. This program is already in negotiations with the view that we pool our Church and membership banking to realize an even greater financial return for both our Church and membership. Profit is larger than the best performance the insurance program can deliver.

We cannot continue to operate our Church in the same manner hoping that we will one day see a better result. Repeating any course seeking a different result is not wise. We must therefore adopt a new program to engage and develop the economic machinery to drive our Church forward in the new Millennium.


The Empowerment Plan

•Consolidated Church Insurance

•Membership and Pastoral Group Portfolio Insurance

•Consolidated Banking

Consolidated Church Insurance The A.M.E. Church is now positioned to proceed forward with the launch of the first ever, Black Denominational, “Master Group Insurance Policy” with our negotiated carrier (Zurich North American Inc). This program will provide the following major benefits to the Church:

The proper level of insurance of every line required

Workman’s Compensation

Multiple lines of coverage meeting the need of every size Church

Greater control of pricing

Commissions for the Church

Risk and profit sharing with the Church’s Carrier

Access to Catastrophic Insurance (for areas like Florida & California)

The first objective is to provide a stabilization of coverage and stability across all of the Churches as the need for multiple lines of coverage are no longer a wish but a requirement. The day of the low budget program was not delivered when a catastrophe has occurred. Workman’s Compensation has been a benefit that has been denied by some carriers and this too must change as our churches seek to grow. The growth of our churches should not be challenged by external factors of insurance. Multiple lines of Insurance now enable both large and small churches access to all levels of coverage and allow the Connectional Church a full basket of coverage lines without having to shop with another carrier.

Greater control of pricing and the rates mean the higher value of coverage and stabilization of coverage will be achieved with pricing and increases better controlled with the shared relationship of the Church’s Insurance Carrier in partnership with the carrier of choice. Commissions for the Church allow for the financial compensation to the Church for the value of the business being held in one shop. The Church will no longer act as 6,000 plus business satellites but as one insurable business unit. The financial returns will be small in the beginning but will increase with the Church’s Own Insurance carrier involved in the risk and profit sharing. Risk and profit sharing with the Church’s Carrier allows the Church greater access, with the relevant loss management to enable greater profit for the Church. The greater lines of profit cannot be negotiated without the Church having an insurance carrier to participate in the program.

Access to Catastrophic Insurance lines is the greatest asset the Church’s Insurance carrier brings, as most Insurance companies will not provide coverage for areas such as Florida, the Gulf Coast Region and California. While rates will be higher for these areas the Church’s carrier will have access to the largest catastrophic and excess markets in Bermuda to gain the necessary coverage and pricing needed.

Membership and Pastoral Group Portfolio Insurance Once the group program has been launched the AME Church will be able to provide access to both members of Clergy and laity to have insurance provided under this policy. In the words of the old American Express Advertisement, “Membership has its privileges”. This program will provide access to insurance for members and allow the Church to receive a greater commission and higher level of profit towards the programs it so critically needs.

The Benefits

Sections, as presented in the beginning of this Plan, shall now reflect the anticipated potential benefits for these programs.

Consolidated Church Insurance

Net returns will be predicated on full participation by all Episcopal DistrictsA sampling average is that we have approximately 6,500 Churches in North America and the average cost for Insurance across all of the churches would be around $8,000.00 per Church. The statistics are as follows:No. of Churches = 6,500Avg premium = $8,000.00 eaTotal premium = $52,000,000.00 annuallyCommission at 5% = $ 2,600,000.00 annuallyCommission plus = $5.5-6.5 million annually

Membership and Pastoral Group Portfolio Insurance

The statistics are as follows:*No. members = 1 millionAvg premium = $3,000.00 eaTotal premium = $3 billion annuallyCommission at 5% = $150,000,000.00 annually

Combined Commissions = $155-$165 million annually * Estimate number for illustration purposes only

Membership and Pastoral Group Portfolio Insurance Once the group program has been launched the AME Church will be able to provide access to both members of Clergy and laity to have insurance provided under this policy. In the words of the old American Express Advertisement, “Membership has its privileges”. This program will provide access to insurance for members and allow the Church to receive a greater commission and higher level of profit towards the programs it so critically needs.

Consolidated Banking

With a denominational insurance carrier, the A.M.E. Church can negotiate with a major U.S. National Bank to achieve better rates on lending as well as a shared profit commission from the banks for the credit services our members use. Under the leadership of Bishop Cousin, in 1999, a test case was developed for the little island of Bermuda. The A.M.E. Church was able to negotiate a position that would remove mortgages and fees from the Church and a preferred rate of lending lower than market value. In the United States this constitutes the largest form of profit sharing, larger than the insurance portfolio, as the credit amount normally run per member can be anywhere from $500.00 per year to $50,000.00 per year.


Banks are normally not prepared to accept these offers. Their position is usually as a result of the so called “questionable credit risk of our people.” The Church’s carrier can offer the risk coverage required and better position the Church to gain access to a profit share program worth tens of millions of dollars annually. A careful review of the Episcopal Church in the United States and the Anglican Church (the Parent Body) in the United Kingdom and throughout the British Commonwealth will demonstrate partnerships between banks and Insurance Carriers have existed for decades. These relationships have become the staying power of many of their parishes when their congregations are in considerable decline. Surely we should question how they are able to maintain grand cathedrals with no real memberships nor sufficient tithe and offering? They do it through these historical relationships that reflect “trusts and endowments.’

Consolidated Banking

A combination of two projection statistics will be used. First shall be a projection based on a lower credit amount. The second will be higher.

The statistics are as follows:*No. members = 2 millionAvg. credit/member = $500.00 ea annuallyTotal credit = $1 billion annuallyCosts of risk coverage = $10 million annually projectedCommission at 10% = $100 million annually

The second statistics are as follows:These reflect a higher level of personal banking from members

*No. members = 2 millionAvg. credit/member = $2,000.00 ea annuallyTotal credit = $4 billion annuallyCosts of risk coverage = $ 20 million annually projectedCommission at 10% = $1 billion annually

Combining both the Insurance and Banking profits will yield the Church a new form of revenue never imagined and should not be ignored. The numbers speak for themselves.


In closing our ability to meet the mandate of our tomorrows has been provided already. God has provided the means to accomplish the most significant economic development in black history. As our history will show the AME Church provided for people of color both food and education when we had nothing. Today we must move higher.

Our ability to grow and meet the needs of our people as we seek to “Minister in this new Millennium” will be both achieved and enhanced. To reach this objective requires that we work together as “One Church and not Twenty Episcopal Districts.” It requires us to work as a single unit with our leaders. Our Churches, Pastors, Presiding Elders and Bishops understanding and executing their roles. May God deepen our thoughts, strengthen our commitment, and guide our direction to the Kingdom Building we have been called to achieve.

The Blessing of the Lord be upon you, this day and for ever moreAmen

AME Reinsurance Ltd Communications Office:

100 Reid Street, Hamilton Bermuda

Economic Development A Connectional Strategy The African Methodist Episcopal Church.

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