Services

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Enhanced Mutual Form of Insurance Company

The firm developed the enhanced mutual form for select mutual companies wishing to realize  the potential advantages of this form over the traditional mutual form.

Richard Bland’s article “The ‘Enhanced Mutual’ – A Potential Game Changer?” was featured in the first digital edition (July/August 2012) of the National Association of Mutual Insurance Companies’ IN Magazine. Read the Article. (PDF)

See below for the types of services we perform.

Virginia State Corporation Commission – Bureau of Insurance

Services include:

  • Organization
  • Licensing
  • Advise board of directors, subscribers advisory committee and officers on special corporate governance issues of reciprocals
  • Structuring of subscriber savings accounts
  • Strategic use of and structuring of other subscriber equity accounts
  • Subscriber account transfer structures
  • Allocations to subscriber accounts
  • Subscriber equity account allocation methodologies
  • Preparation of subscriber’s agreement and power of attorney
  • Capital contribution agreements
  • Preparation of other organizational documents
  • Conversion of stock insurance company to reciprocal insurance company
  • Internal Revenue Service rules on distributions
  • Agreements between reciprocals and attorney-in-fact
  • Attorney-in-fact organization and structuring purposes
  • Special reciprocal tax considerations and analysis
  • Internal Revenue Service Private Letter Ruling requests regarding various reciprocal and subscriber issues
  • Subordinated debt structures and documentation
  • Special considerations for “for profit” reciprocals
  • Blended reciprocal model

Advantages of an Enhanced Mutual Form of Insurance Company

Some potential advantages over traditional mutual model:

  • Significant additional capital and surplus generated internally
  • Increases member loyalty and stickiness (hard to believe – given historically very high mutual retention rates)
  • Significant tax savings
  • Directly aligns members’ interests with mutual’s interests
  • Gives members vested financial interest in mutual
  • Increases ability to compete against large commercial carriers
  • Fosters lifetime relationship with members
  • Counteracts pricing pressures of competitors
  • Existing mutuals can utilize enhanced mutual company model
  • Increases ability to gain “next” generation of members
  • Differentiates you from competitors
  • Cannot be duplicated by publicly traded insurance companies
  • Gives members vested interest in mutual’s success