2021 Mutual Factor

The mutual property/casualty insurance industry remains financially sound despite the uncertainty created by the ongoing COVID-19 pandemic and an increasing number of severe natural disasters. That is the conclusion of the fourth annual market performance analysis released during its 126th annual convention by the National Association of Mutual Insurance Companies and its partner, Aon.

The latest report, “Mutual Factor 2021: How Performance, Structure, and Focus Set Mutual Insurance Companies Apart, evaluated nearly 30 performance metrics for mutual insurance companies in 2020 compared to other insurer categories and assessed the impact of rating agency criteria on mutuals. Similar to last year’s report, the newest Mutual Factor Report analyzed performance metrics for the first two quarters of 2021 and shared findings from a recent survey of independent insurance agents.

Among the key findings from the 2021 Mutual Factor:

1. In response to the challenges faced by policyholders during COVID-19, we estimated that the industry returned nearly $13 billion in premiums throughout 2020, with mutual insurers returning $6.1 billion mainly through policyholder dividends, while stocks returned $6.8 billion primarily through premium credits. In Q2 2021, the policyholder dividend ratio for mutual insurers was normalized to pre-pandemic levels of around 1 percent. Stock insurers dividend ratios remained flat through the pandemic as they returned money to insureds through premium credits.
2. Mutual insurers ran at an underwriting loss as a result of their increased policyholder dividend ratio. The combined ratio for mutual insurers for Q2 2021 was 100.3 percent compared to 95.6 percent for stock companies, which operated at an underwriting profit, aligning with their focus on returns.
3. Mutual companies are well capitalized with median Best’s Capital Adequacy Ratio at the VaR 99.6 of 61 percent, 9 points higher than stock companies at 62 percent. Eighty-nine percent of mutual companies also have the “Strongest” or “Very Strong” balance sheet strength compared to 81 percent for stock companies.

The 2021 Mutual Factor Report surveyed 200 independent insurance agents from across the country to assess their perceptions of mutual insurers in comparison to stock and other types of insurance companies. Specific highlights include:

1. Mutual companies are perceived as delivering better than other companies on six key criteria used by agents to select insurance companies. Among the criteria in the top tier of importance, mutual companies were rated higher on two key metrics: excellent communications with agents and always settle claims fairly.
2. The more favorable perceptions of mutuals among agents translates into positive business for mutual insurance companies, with the share of agents’ business among mutuals at 55 percent compared to 45 percent for stock companies.

Get Your Copy of The 2021 Report
Find out:

1. How independent insurance agents view mutual companies in comparison to stocks and what challenges agents see for the future.
2. How the industry performed in the first two quarters in 2021 amid the ongoing pandemic
3. Year-over-year data and how mutuals compare to others in the industry.