Ohio National - Demutualization

[Life Hawk]

Just curious . . . why did carriers demutualize?

Had a wonderful little mutual do this a few years back. The reason I was given was they wanted to raise capital but the current mutual structure was hobbling. It made sense to me at the time the vp sat me down to explain it. I think companies prefer to answer to investors rather than clients at times.

But... who really knows what goes on behind closed doors in smoke filled rooms?

 

[somarco]

I think Mass is now a Mutual Holding Company. Which allows them to easily spin off to demutualize if they want to. It also allows them to own non-mutual insurers under their "umbrella".

MONY owned North American Life and Accident (NALAC) when MONY was mutual and NALAC was stock. NALAC (based in MN) had lower priced term life (compared to MONY that only offered YRT and decreasing term) plus had par and non-par WL policies . . . lower rate than comparable face amounts with MONY and slightly higher commission (75% ?? vs 55% with MONY).

At some point they sold NALAC to Allianz.

NALAC was a great little company in its' own right and had some innovative group health insurance products at one time.

MONY later formed MONY Life of America so they could enter the UL market . . . either mutuals were not allowed to offer UL or it was easier for a stock carrier to offer UL . . . I don't recall.

Lincoln National is another carrier that has diversified heavily into financial services. I can't recall if they were ever mutual or always a stock company.

 

[Allen Trent]

One thing Ive noticed, is those carriers started to diversify more and more over the years. They got heavy into group benefits, advisory services, annuities, P&C, etc.

That is why Im a big fan of life companies that are mainly just life companies when Im selling a CV focused policy. Its no guarantee, but there are plenty of life carriers that could stop selling life insurance tomorrow, and still make ends meet via other product channels. The more a "mutual life carrier" diversifies away from life, its a warning sign imo. Using Met as an example, they essentially turned to P&C as their primary line of business.

Must be in other states than Michigan.. they are literally non existent here, other than a tiny bit of group employer PC personal lines, coming in at #43 largest PC writer in Michigan with 4 tenths of 1% of all premium & only $76M total premium in Michigan. considering the average person pays $2-3K in Michigan for home & auto per year, that is only about 30k clients

.......................plus, I remember they want out of PC too: MetLife Looks to Sell P&C Auto and Home Insurance Business: KBW Analysts (insurancejournal.com)

My guess is maybe they keep looking at other lines they dont have as better than the ones they do have................Grass is always greener, shiny object, woman flirting at the hotel bar on a business trip is better than loyal wife at home...........................I digress, you get the point

 

[Allen Trent]

Mass now owns Great American Annuity as a subsidiary. Are those profits flowing up to help dividends? I have no clue to be honest.

I know in the past, when Mass owned Oppenheimer Funds, that was always stated as a reason they were paying such a high WL dividend as Oppenheimer was making a lot of profit. Dont know if that is true, but Mass sold Oppenheimer a few years ago to Invesco & not sure if WL policyholders benefitted from that sale or not

 

[scagnt83]

Must be in other states than Michigan.. they are literally non existent here, other than a tiny bit of group employer PC personal lines, coming in at #43 largest PC writer in Michigan with 4 tenths of 1% of all premium & only $76M total premium in Michigan. considering the average person pays $2-3K in Michigan for home & auto per year, that is only about 30k clients

.......................plus, I remember they want out of PC too: MetLife Looks to Sell P&C Auto and Home Insurance Business: KBW Analysts (insurancejournal.com)

My guess is maybe they keep looking at other lines they dont have as better than the ones they do have................Grass is always greener, shiny object, woman flirting at the hotel bar on a business trip is better than loyal wife at home...........................I digress, you get the point

View attachment 7616

Then what is their primary line of business? I couldnt tell you. Employee benefits? I dont think they have any permanent policies anymore for individual sales.

 

[Allen Trent]

But... who really knows what goes on behind closed doors in smoke filled rooms?

I bet resident smoke filed room expert @goillini52 will be able to help answer this

CHEECH and CHONG Up In Smoke "I think we're parked" - YouTube

 

[Allen Trent]

Then what is their primary line of business? I couldnt tell you. Employee benefits? I dont think they have any permanent policies anymore for individual sales.

who really knows. I believe group benefits maybe. you are right, I dont believe they have manufactured an individual life product (term or permanent) for many years. A met Life 50 year agent that taught LUTC in my area was the last remaining agent covering half the state of michigan & was assigned tens of thousands of policies to service. Literally non-stop daily service of really old small face policies from 1920 to 1970 that needed death claims handled, Medicaid spend down cash outs, forced maturities on endowments at age 65/85 or age 100. complete cluster as whoever they sold the blocks off to or paid to service were literally the equivalent of a couple of part time people in a basement providing "superior" customer service

 

[scagnt83]

Interesting. Another prominent poster in the FB group says that the smaller insurers (Penn, One America, and others) lack scale... and THAT would lead to THEIR eventual demutualization.

Concerns on all sides.

What matters imo is the revenue to liability ratio. A carrier that is highly leveraged, plus lacks scale, has no other options to raise the capital needed to operate and maintain reserves.

A carrier that has lots of other lines of business, no longer has a financial need to stay dedicated to CV WL... especially when they are getting short on money.... especially considering overfunded WL requires higher reserves per dollar of premium vs. other lines of business.

Look at ON. They had Term, VA, Advisory, & DI sales to keep revenue coming in the door when WL sales tanked. Probably one reason they started to really push DI sales over the past few years and had very aggressive repricing on that product. What does Penn have if CV Life sales tank? Term and 2 crappy FIAs... no way they can make it a year on just that. jmo.

 

[Tahoe Ray]

I do know that the more Mass diversifies, the more "worried" I get about them remaining fully mutual. They have a very large advisory business now that has grown a lot over the past decade. Strong DI, and now really strong Annuities. Seems like they could drop the CV life insurance now and not skip a beat... and lets face it... the main reason agents/clients want a mutual insurer is for CV focused life insurance.

Mass is also aggressively going to brokerage. Not just agent appointments, but BGAs with legit contracts where the general agent doesn't have to hose the agent just to get an appointment.

smaller insurers (Penn, One America

Aren't those companies roughly the same size as ON?

But... who really knows what goes on behind closed doors in smoke filled rooms?

I'm pretty sure you can't smoke in those rooms anymore.

Probably one reason they started to really push DI sales over the past few years and had very aggressive repricing on that product.

Seemed like it was 15-20% less expensive vs. other major players for the same benefits for most white-collar professions. That couldn't have been a profit center.

 

[scagnt83]

who really knows. I believe group benefits maybe. you are right, I dont believe they have manufactured an individual life product (term or permanent) for many years.

In retrospect, I do think its group benefits. However, when professionals in the industry have no clue what a carriers main areas of focus are.... that is a major issue imo for that carrier.