Partner Anne Ross was quoted in the BizTimes article, “Wisconsin Insurance Companies Restructure to Innovate,” abut the trend among Wisconsin insurance providers to reorganize into mutual holding companies as a way to provide more flexibility in their business operations and diversify their products and services.
Some of the resulting innovations are expected to potentially lower premiums, and converting to an MHC gives insurers more flexibility to pursue a stake in those technologies. “The expectation in the property-casualty industry is that claims will go down and that insurance companies that want to grow, succeed and compete in the future are considering investments in these synergistic technologies,” Ross said of the mutual holding company structure.
The structure enables a company to move its technology-oriented subsidiaries out from under the insurance company parent so that they are owned directly by the mutual holding company or an intermediate stock holding company. The company is then able to grow and retain any earnings generated by its non-insurance businesses. “These are no longer assets that the company is relying on to pay claims,” Ross said. “They are no longer counted as part of the policy holder surplus that is the key measure of the financial strength of the insurance company and its ability to pay claims.”
However, Ross noted insurance companies haven’t yet seen premium volumes drop significantly because of new technologies.
“You’re not really seeing the full impact on revenue yet,” Ross said. “This is more forward-looking.”