2020 Mutual Factor

The mutual property/casualty insurance industry remains financially sound despite the tumultuous first half of 2020 and is well positioned for the future. That is the conclusion of the third annual market performance analysis released during the 125th convention by the National Association of Mutual Insurance Companies and its partner, Aon.

The latest report, “Mutual Factor 2020: How Performance, Structure, and Focus Set Mutual Insurance Companies Apart,” evaluated nearly 30 performance metrics for mutual insurance companies in 2019 compared to other insurer categories and assessed the impact of ratings agency criteria on mutuals. The 2020 report goes a step further, however, in recognition of the unparalleled circumstances facing the insurance industry as the result of the COVID-19 pandemic. The 2020 Mutual Factor report also analyzed performance metrics for the first two quarters of 2020 and looked at how thought leaders perceive the mutual industry.

Among the key findings from the 2020 Mutual Factor:

1. In response to the challenges faced by policyholders during COVID-19, the report estimated that the industry returned nearly $9 billion in premiums in Q2 2020, with mutual insurers returning $4.5 billion mainly through policyholder dividends, while stocks returned $4.3 billion primarily through premium credits.
2. In Q2 2020, policyholder dividend ratio for mutual insurers was 5.8 percent compared to 1.1 percent in Q1 2020, while the policyholder dividend ratio for stock insurers remained below 1.0 percent for both quarters
3. Mutual companies are well capitalized with median Best’s Capital Adequacy Ratio at the VaR 99.6 of 59 percent, 10 points higher than stock companies at 49 percent. Ninety percent of mutual companies also have the “Strongest” or “Very Strong” balance sheet strength, compared to 79 percent for stock companies.

In a survey of 22 industry executives across different sizes and lines of business, the 2020 Mutual Factor report sought to gain perspective on what challenges the industry currently faces and will face in the future. Specific highlights include:

1. Many executives agreed that the pandemic served as a catalyst and accelerated the pace of technological change. As a result, many predict that digitization and advanced technology may lead to consolidations of smaller companies.
2. The executives highlighted the benefits of being a mutual insurer and the commitment mutual insurers place on impacting their communities and to diversity.

Get Your Copy of The 2020 Report
Find out:

1. What leaders in the industry see as the challenges and opportunities that lie ahead.
2. How the industry performed in the first two quarters in 2020 amid the pandemic
3. Year-over-year data and how mutuals compare to others in the industry.