It looks like the plasticizer cooked out. That will make the insulation brittle and cause it to shrink. If it cannot withstand the hoop stress, insulation chunks will break loose. Flexing the wire will cause the insulation to flake off. It may be most of the plasticizer left before installation and the insulation was stiff or the temp wasn't above the limit but remained elevated for a long time.
Check elsewhere outside the cabinet to see if it's just too hot in the cabinet or just bad wire overall.