U.S. mutual accident and health insurers must adapt and evolve to
survive in a sector that has driven many of them to niche positions in a
world of health care dominated by managed care giants.
Remaining mutual A&H insurers have kept their status out of commitment
to the mutual way of doing business, or to preserve a particular family’s
controlling interest or operating philosophy.
Favorable surplus levels leave some A&H mutuals with no need to access
external capital via conversion to stock ownership, while others are
unable or unwilling to commit funds or time to a protracted
demutualization process.
Since 1995, the number of pure mutual A&H companies with A.M. Best
ratings has decreased from 19 to fewer than 15, a result of various
partial or full demutualizations and mergers.
Most mutual A&H insurers, as measured by net A&H premiums written,
have grown over the years, with the number of midsize mutuals now
equal to the number of small mutuals.
Small and midsize mutual A&H insurers have experienced the greatest
operating challenges, trying to establish market niches and changing
their distribution models and/or target markets.
Many small and midsize mutual A&H insurers have succeeded through
established reputations in their niche markets; conservative
underwriting; and appropriate pricing in market downturns.
A.M. Best has downgraded a sizable number of mutual A&H insurers since
1995.
A.M. Best believes mutual A&H insurers and mutual holding companies
can succeed if they continue to adapt and evolve in their core markets.
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Founded in 1899, A.M. Best Company is a global full-service credit
rating organization dedicated to serving the financial and health care
service industries, including insurance companies, banks, hospitals and
health care system providers. For more information, visit www.ambest.com.
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