Best's Review


L/H Mutual Insurers
US Mutuals Find Stability Key Amid Turbulence Following a Good 2021

Penn Mutual Life Insurance Co. led its mutual peers in growth of 2021 admitted assets. See the Best’s Rankings list of the Top 25 US Life/Health Mutual Insurers – 2022 Edition.
  • Terrence Dopp
  • September 2022

Key Points

  • Yield: Penn Mutual, Pacific Life and Securian Financial all posted double-digit growth in admitted assets to lead mutuals in the category.
  • Turnover: In the cases of both Penn Mutual and Pacific Life, 2022 saw transitions at the top that were filled in-house.
  • Structure: By nature of their structure, mutual companies are unfettered from some of the short-term financial reporting and quarterly earnings requirements of publicly traded carriers. This fosters longer-term thinking, company officials said.

Dave Raszeja, chief financial officer at Penn Mutual Life Insurance Co., ticks off a list of the company's achievements in 2021: It registered its best sales year ever with $275 million worth of life products distributed; admitted assets grew; and it celebrated over a decade with consecutive annual revenue growth of 9%.

At the heart of the company—and why it was able to perform so well in a turbulent year—is its structure as a mutual company, he said.

“In some respects my job as a mutual company CFO is easier than the same position at a public company,” Raszeja said. “We both look to maximize value for our stakeholders but at a public company, they also need to allocate that value between their clients and stock ownership.”

Dave Raszeja Penn Mutual Life Insurance Co.

(Photo by Kim Bjorheim)

“One of the things the mutual structure really allows is that it allows us to focus on the long term … when you’re focused on the long term you really make decisions that pay off during times of market volatility.”

Dave Raszeja
Penn Mutual Life Insurance Co.

He continued: “Folks in the distribution space understand the Penn Mutual story—and the mutual story more broadly—and I think in volatile markets like during the pandemic or all of the things we've seen externally, the safe havens of the mutual structure and the long-term decision making really resonate.”

In the mutual structure, each policyholder essentially owns a piece of the company, meaning the company's sole purpose is providing insurance protection to them without a concern over shareholders. The insured population shares any profit, buying them some degree of independence from a focus on quarterly earnings and share price.

Igor Bass, a senior financial analyst with AM Best who analyzes life and annuity insurers, said 2021 was a good year to be a mutual life insurer. The structure essentially allows them to remain focused on policyholders rather than stock owners. Additionally, mutual companies tend to have higher levels of capitalization than their publicly traded counterparts, he said. That capitalization allows some freedom in the way they invest that their publicly traded peers don't always have. Mutuals generally don't have the pressure to meet return on equity or return on revenue targets and improve book value to generate a higher share price quarter over quarter.

Related: Expansion Spurs Growth for US P/C Mutuals Moving Up the Charts

For Penn Mutual, its admitted assets grew by 12.8% to $37.7 billion in the biggest yearly gain among mutual insurers in the Best's Rankings of the Top 25 US Life/Health Mutual Insurers—2022 Edition ranked by 2021 admitted assets. Penn Mutual was among a trio that saw double-digit growth in the metric, with Pacific Life and Securian Financial each posting gains of 11.5%, according to the ranking.

All of this comes at a time when the later stages of the COVID-19 pandemic, along with the rise of inflation and market volatility as balance sheet forces, caused uncertainty across the life industry and entire economy.

“So they are able to take a little bit more risk and get rewarded for it,” Bass said. “They have room to do that because of the structure and the capitalization they have versus the stock companies. They are under pressure from shareholders—price and performance-wise. These mutual insurers are not.”

Higher capitalizations can often translate into a willingness to accept risk of credits a little further down the ratings scale, remaining safe but carrying a slightly higher yield as a way to deploy excess capital, according to Bass. At the same time, being free from mandatory reporting under the Securities and Exchange Commission can free up some resources. “You used to talk about mutuals as the old sleeping giant,” he said. “They're just moving along and making money and not just going with what the market is doing.”

Raszeja said the company's format was key to allowing it to look beyond “accounting noise” and approach what turned out to be a rocky year with a longer-term outlook that paid off. “One of the things the mutual structure really allows is that it allows us to focus on the long term,” Raszeja said. “And when you're focused on the long term you really make decisions that pay off during times of market volatility.”

In a turbulent 2021 and 2022, it can't be overlooked that turnover in the top-ranked leadership came from within in the case of both Penn Mutual and Pacific Life.

After serving as chief risk officer, Raszeja took the chief financial officer's chair in March 2020, two weeks before the pandemic forced the closure of Penn Mutual's Horsham, Pennsylvania, campus and sent employees into remote-work mode. Former Chairman and Chief Executive Officer Eileen McDonnell announced in September 2021 that she was assuming the position of executive chairman of the Penn Mutual board of trustees and David O'Malley would assume her role at the start of 2022.

The Big Picture

To put three mutuals' performances in perspective, the life insurance industry as a whole saw a drop of 0.9% in 2021 to $3.28 trillion in total life issued, according to AM Best data. At the same time, while admitted assets grew 6.3% to $8.7 trillion, Penn Mutual—ranked No. 45 on that list—saw about double that rate, as reported in the Best's Rankings Top 200 U.S. Life/Health Insurers — 2022 Edition. Topping the wider industry list of admitted assets was Prudential of America Group, which saw its admitted assets grow 7.3% to about $560.1 billion. The largest annual growth was No. 48 Resolution Life US Group, whose admitted assets jumped 124.4% to $34.9 billion.

Raszeja cites two factors for driving Penn Mutual's performance in 2021.

In April, the company borrowed $500 million in a 40-year surplus note at 3.8%, bolstering capital at attractive rates before the rise of interest rates and increased costs associated with such a move. At the same time, the investment portfolio posted strong returns. Specifically, he said the return on partnerships—alternative investments where the company is a limited partner investing with general partners—was 40%-50%. Returns of that size allowed the schedule BA asset class, which is about 5% of Penn Mutual's portfolio, to push it to an overall 7% return.

Raszeja points out that the mutual structure isn't a Get Out of Jail Free card allowing the company to shirk its responsibility to its trustees and policyholders. He calls mutuals the ultimate in stakeholder capital—an enterprise that strives for more than profit for the sake of profit.

“I think we still need to answer to quarterly and annual numbers, but management is able to look trustees and policyholders in the eye and explain when there is an accounting noise problem that has to do with short-term volatility,” he said. “It doesn't give us a pass, but it gives us a path to make the right decisions.”

Looking back, 2021 was a colorful year dominated by supply chain issues and inflation. The Consumer Price Index for All Urban Consumers, a common gauge of inflation, rose 7.5% from January 2021 to January 2022, a nearly four-decade high. Reacting to rising inflation, which has proven to be stickier than initial presumptions, has been top of mind for insurers and economists throughout 2022. The Federal Reserve raised interest rates on July 27 by 0.75 percentage point, its fourth interest rate increase of 2022 meant to curb inflation.

While insurers had long bemoaned persistently low interest rates, the increases brought their own set of problems as rising benchmarks created volatility and Russia's Feb. 24 invasion of Ukraine brought more uncertainty. In addition, concerns grew over a recession in the United States.

Related: Largest 25 U.S. Mutual Insurers 2020

Another Mutual's Story

At Pacific Life, which saw an 11.5% growth in admitted assets to $186.2 billion, strong stock market performance propelled the growth even as the company paid out a record $3.4 billion in coronavirus-related life claims. Pacific Life spokesman Steve Chesterman referred to an annual letter to policyholders. “As a mutual holding company, we have the benefit of long-horizon thinking, which aligns with our products and services, and allows us to invest in and focus on the needs of the future,” the letter said. “We are focused on markets and areas that present growth opportunities across our businesses while continuing an unwavering prioritization of the needs of our customers.”

On April 1, Darryl Button took over as president and chief executive officer following the retirement of long-time CEO Jim Morris. Button, formerly chief financial officer, is just the 15th chief executive in the company's 154-year history, according to Pacific Life. “Our company and industry were built to manage and respond in times of crisis, backed by a long-term promise that we will be here when you need us the most,” Button said in the letter.

Going Forward

While being a mutual company has its benefits, Raszeja said it doesn't free Penn Mutual from economic realities. In the remainder of 2022, he sees geopolitical risk as a big question for the industry but said with no business outside the United States and no meaningful foreign investments the company is on solid footing. He doesn't see any wholesale shift in how the company manages its portfolio in response to the economic climate going forward, but there could be a shift in new investments.

“I would say the decision making that the mutual structure allows is to really keep your strategy unchanged even in volatile markets even though your tactics will switch,” Raszeja said.

Best's Rankings

Top 25 US Life/Health Mutual Insurers — 2022 Edition

Insurers were ranked by 2021 admitted assets.

($ thousands)

Company/Group AMB# Total Admitted
Assets ($000)
1 1 New York Life Group 069714 $392,916,326 5.8
2 2 Massachusetts Mutual Life Group 069702 365,446,331 3.8
3 3 Northwestern Mutual Group 069515 334,756,177 8.4
4 4 Nationwide Life Group 070350 230,283,703 9.2
5 5 Pacific Life Group 069720 186,151,281 11.5
6 6 Guardian Life Group 069685 90,630,409 4.9
7 7 State Farm Life Group 070126 89,801,873 5.5
8 8 Securian Finl Ins Group 069565 68,586,241 11.5
9 9 Western & Southern Finl Group 069754 57,924,589 8.3
10 10 OneAmerica Group 070399 49,553,362 6.8
11 11 Mutual of Omaha Group 070203 40,887,288 9.0
12 13 Penn Mutual Group 069722 37,688,202 12.8
13 12 Natl Life Group 069953 36,549,920 5.3
14 14 CMFG Life Group 070262 33,193,837 7.3
15 15 Ameritas Life Group 069790 29,192,448 6.5
16 16 Mutual of America Life Ins Co 008851 28,283,361 9.2
17 17 Sentry Life Ins Group 070125 10,114,582 8.8
18 18 NGL Ins Group 070358 5,100,351 5.7
19 19 Physicians Mutual Group 069724 4,395,667 5.2
20 21 Savings Bank Mutual Life Ins Co of MA 006696 3,563,519 2.2
21 20 Pan-Amer Life Ins Group 069617 3,510,716 0.5
22 22 Homesteaders Life Co 006534 3,451,572 6.2
23 23 Security Mutual Life Ins Co of New York 007034 2,996,838 3.2
24 24 Amer Enterprise Group 070369 2,849,827 7.0
25 25 BCBS of Kansas Cos 070031 2,291,896 3.1
Total Top 25 $2,110,120,316 7.1
Total U.S. Life/Health Mutual Companies $2,120,006,895 7.0
Total U.S. Life/Health Industry $8,667,525,668 6.3

Note: Data for some companies in this report has been received from the NAIC.

Source: BestLink logo - Statement File - L/H, US; data as of June 21, 2022.

Terrence Dopp is a senior associate editor. He can be reached at

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