The Mutual Factor


During the association’s 128th annual convention, NAMIC released its annual report on the state of the mutual insurance industry. The 2023 Mutual Factor, produced in partnership with Aon, provides an updated look at more than 30 different performance metrics designed to illustrate how the mutual segment is doing in relation to other non-mutual companies.

The 2023 Mutual Factor report provides a sobering look at a challenging period from the start of 2022 through the first part of the current year.  During this time frame, the mutual insurance industry faced increasing pressures from weather and reinsurance factors, yet it has remained focused on its policyholders. The last report highlights the strong capital position of the mutual segment, despite external challenges, once again demonstrating the industry’s continued commitment to strengthen balance sheets to support policyholders and the broader economy.

Specific highlights include:

  • The mutual sector ended 2022 with an increase in losses and loss adjustment expense; the growth in net earned premium did not offset these losses that resulted in a higher loss and LAE ratio (76.4%) compared to 2021 (72.5%) for the industry.

  • In 2022, the industry lost capital and surplus, a 6.4% decrease from the record high of $1.053 trillion in 2021. Mutual insurers shrank by 8%, while stock companies lost 5.4%. The loss in surplus was mainly attributed to challenging underwriting results and investment volatility. On a five-year basis, the industry has grown surplus with mutuals’ five-year compound average growth rate 8.5% and stocks companies’ five-year surplus growth rate 11.4%.

  • The decline in capital and surplus have led to higher premium leverage industrywide thereby decreasing the amount of capital standing behind each dollar of premium written. Mutual and stock insurers held $1.26 in policyholder surplus backing up each dollar in net premiums written through 2022.

  • Mutual companies are well capitalized with median Best’s Capital Adequacy Ratio at the VaR 99.6 of 58%, 7 percentage points higher than stock companies at 51%. Eighty-nine percent of mutual companies also have the “Strongest” or “Very Strong” balance sheet strength, compared to 81% for stock companies.

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The Mutual Factor – A 2023 Midyear Update

Each year since its launch in 2018 NAMIC has unveiled the latest in an ongoing series of reports known as The Mutual Factor. The reports, developed by NAMIC in partnership with Aon, provide an updated look at multiple performance metrics illustrating how the mutual insurance industry is doing in relation to other non-mutual insurance companies. The reports also feature an opinion survey of key stakeholders regarding their view of mutuals compared to non-mutuals.

The 2023 Mutual Factor report continues this tradition, but with a few new and important differences. First, NAMIC and Aon have developed the first midyear Mutual Factor report, to provide members the opportunity to reflect on the close of the prior year, the challenges that remain for our industry, perspectives shared by the world’s leading reinsurers, and opportunities that lie ahead for mutual insurers. Specifically, the 2023 Midyear Report provides perspective on the impact of significant events on the mutual industry that occurred between September 2022 and April 2023, U.S. catastrophe losses, inflation and the economy, and the state of the reinsurance market.

Specific highlights include:

  • While Q1 catastrophe losses in 2023 trail the aberrational experience of 2021 from the vast storm named Uri, 2023 is already well above longer-term averages. The activity impacting several areas of the United States to start the year was largely driven by the severe convective storm peril.

  • Inflation trends for housing (shelter) and other services are not subsiding to the levels of other categories. Both tend to be key predictors of the influence that inflation stands to have on property/ casualty insurance company portfolios. Driven by wage growth, inertia for service inflation remains and will take longer to subside.

  • Aon estimates that global reinsurer capital declined by 15 percent, or $100 billion, to $575 billion over the year to December 31, 2022. The reduction was principally driven by substantial unrealized losses on investment portfolios.

Work is underway on the 2023 Mutual Factor Report with NAMIC and Aon continuing to partner in delivering expanded insights into the overall performance of the mutual insurer segment. The full 2023 Mutual Factor report will be published in September to coincide with NAMIC’s annual convention.

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Neil Alldredge



Sarah Schnettler
Senior Vice President – Member Experience