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The past 15 years has been a time of substantial change within the ever-decreasing universe of mutual life insurance companies. Fifteen years ago, demutualization was being examined by many mutual company boards. Subsequently, a number of mutuals have converted to a stock form -- both directly (such...

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Bibliographic Details
Published inBest's Review Vol. 107; no. 12; p. 98
Main Author Shapiro, Robert D
Format Trade Publication Article
LanguageEnglish
Published Oldwick A.M. Best Company 01.04.2007
Subjects
Accountability
Business conditions
Demutualization
Insurance industry
Life insurance companies
Mutual holding companies
Mutual life insurance companies
Product lines
Stockholders
United States > US
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Summary:The past 15 years has been a time of substantial change within the ever-decreasing universe of mutual life insurance companies. Fifteen years ago, demutualization was being examined by many mutual company boards. Subsequently, a number of mutuals have converted to a stock form -- both directly (such as MetLife and Prudential) and through sponsorship (such as Axa's sponsored demutualization of Equitable). Theoretically, the mutual company form offers advantages of a structure that is "cooperative" in nature, with its absence of shareholders (and required shareholder returns) and annual member dividend returns. However, relatively few mutual life companies have developed into strong, lean organizations. Some would attribute this unfortunate evolution to the lack of accountability present in companies that have no shareholder or public market pressures. Others would attribute this condition to the many decades of development during which mutuals dominated the life insurance business with limited competitive pressure.
ISSN:1527-5914
2161-282X