A.M. Best Special Report: Mutual Life Insurance Companies — Staying the Course

Business Wire, Dec 18, 2006

OLDWICK, N.J. -- In September 2002, A.M. Best Co. issued "Demutualizations: The State of Conversions in 2002." Among the most critical findings was that the wave of mutual company conversions since the mid-1990s had subsided, and the remaining mutual life insurers had made conscious decisions to remain mutual. Four years later, the message has not changed, and the prognosis for well-run mutuals to thrive continues. A.M. Best's meetings with mutual company management teams indicate that mutual life companies will retain their mutual status, with no major demutualizations on the near-term horizon.

In this article, A.M. Best assesses the state of the mutual life marketplace, noting the bifurcation in the market between the remaining largest mutual life companies and the smaller mutual life companies. The issues faced by the smaller mutual insurers mirror--in many ways--the concerns faced by their similarly sized stock competitors.

With a longer time horizon, mutuals are not driven by short-term profits or stock movements. It also can be said that mutual companies can focus their resources on their current customers (through participating dividends) rather than focusing primarily on acquiring new business--a concern of stock companies in order to generate ongoing growth of revenue.

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A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.