Capital Callings - Mutual Insurance Corporations -
[Cached Version]
Published on: 5/23/2006
Last Visited: 9/22/2007
"Insurers increasingly need capital to grow and achieve economies of scale, demonstrate financial strength, and offer better value to consumers," says Sue Collins, the managing principal, North America, for Tillinghast-Towers Perrin, a New York-based risk management consulting firm."With life insurance earnings down considerably from a decade ago because of the soft insurance market, a mutual's ability to grow its surplus has diminished."
The handicap has been particularly apparent in the recent mergers and acquisitions wave.When publicly traded Travelers Insurance, for example, acquired Salomon Brothers last year for $9 billion, it was an acquisition that most mutuals could not even entertain.And Broatch points out that the two acquisitions he has made since going public would not have been possible otherwise."In today's mergers and acquisitions market, [mutuals have] a serious hurdle to surmount," says Collins.
That lack of growth potential has also been noticed by the industry's rating agencies.
13 online sources [ view sources ]
Profile is not claimed [ this is me ]
