Re: sponsored demutualization -- request for opinions -- Insurance Forum

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Date Posted: Mon, July 22 2002, 19:12:10
Author: Brent D. Gardner, ChFC
Subject:

Re: sponsored demutualization -- request for opinions
In reply to: Rich Franzen 's message, "Re: sponsored demutualization -- request for opinions" on Sun, July 21 2002, 20:28:32

>An ethically
>and conservatively managed mutual life insurance
>company has a lot of built-in robustness. Does anyone
>care to comment about this assertion?

Rich,

I tend to agree with you, although I've heard all sorts of "reasons" why they should demutualize. One broker from NJ I know made millions getting his clients to set up accounts at mutual savings banks before they went public (and he used to sell life insurance, so he understood the business). He insisted that mutual companies didn't reward policy owners like they should. He cited the vast size of mutual companies, which he claimed would not have been that big if they were subject to public whim if they didn't pay out profits in the form of dividends.

His arguement was compelling, to say the least.

When a big mutual can fire its salespeople and stay in business another 100 years just paying claims and getting bigger every year, something is wrong with the system. That's where most mutuals were in the 1970s.

All the Whole Life I've sold this year is participating fom a true mutual company (albeit, a very small company that I can actually tour and inspect on demand). I hope they don't demutualize. That said, some of the behemoths might be more accountable if they were public rather than mutual. I'm wondereing how many ENRONS are amoung the insurance business? Although the business is heavily regulated, that doesn't mean they are risk free (we've had failures, and there will be more in the future).

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Replies:

Nationwide Insurance -- Rich Franzen, Tue, July 23 2002, 9:25:09
- American Home Life - A mutual company since 1909 -- Brent D. Gardner, ChFC, Tue, July 23 2002, 18:07:40