During the association’s 128th annual convention, NAMIC released its annual report on the state of the mutual insurance industry. The 2023 Mutual Factor, produced in partnership with Aon, provides an updated look at more than 30 different performance metrics designed to illustrate how the mutual segment is doing in relation to other non-mutual companies.
The 2023 Mutual Factor report provides a sobering look at a challenging period from the start of 2022 through the first part of the current year. During this time frame, the mutual insurance industry faced increasing pressures from weather and reinsurance factors, yet it has remained focused on its policyholders. The last report highlights the strong capital position of the mutual segment, despite external challenges, once again demonstrating the industry’s continued commitment to strengthen balance sheets to support policyholders and the broader economy.
Specific highlights include:
-
The mutual sector ended 2022 with an increase in losses and loss adjustment expense; the growth in net earned premium did not offset these losses that resulted in a higher loss and LAE ratio (76.4%) compared to 2021 (72.5%) for the industry.
-
In 2022, the industry lost capital and surplus, a 6.4% decrease from the record high of $1.053 trillion in 2021. Mutual insurers shrank by 8%, while stock companies lost 5.4%. The loss in surplus was mainly attributed to challenging underwriting results and investment volatility. On a five-year basis, the industry has grown surplus with mutuals’ five-year compound average growth rate 8.5% and stocks companies’ five-year surplus growth rate 11.4%.
-
The decline in capital and surplus have led to higher premium leverage industrywide thereby decreasing the amount of capital standing behind each dollar of premium written. Mutual and stock insurers held $1.26 in policyholder surplus backing up each dollar in net premiums written through 2022.
-
Mutual companies are well capitalized with median Best’s Capital Adequacy Ratio at the VaR 99.6 of 58%, 7 percentage points higher than stock companies at 51%. Eighty-nine percent of mutual companies also have the “Strongest” or “Very Strong” balance sheet strength, compared to 81% for stock companies.
Related Resources
IN magazine – Winter 2024
NAMIC’s membership looks a lot different today than when a group of leaders from small mutual companies gathered in 1895…
IN magazine – Fall 2024
There is a psychology behind current industry trends. Consumers might not understand the connection, but insurance professionals should. The fall…
IN magazine – Summer 2024
Hiring people who fit the job and the company culture is top of mind for insurers of all sizes. The…