The Mutual Group, launched in December by Bain Capital Insurance with GuideOne as its inaugural member, “fully expects” to continue adding members while it focuses on supporting GuideOne and increasing its surplus, the Mutual Group CEO Tim Fleming said.

The Mutual Group started with about $800 million in annual premiums serviced across 50,000 commercial policyholders by its over 400 employees, and is based in West Des Moines. Its 400 employees all came from GuideOne, while nearly everyone else from a group of 470 stayed behind to manage the niche-market mutual insurance carrier founded in 1947.

The only exception was Bernie Hengesbaugh, former CEO of GuideOne, who became chairman. Ken Cadematori, former chief financial officer of GuideOne, succeeded Hengesbaugh as CEO.

“One of the ways we describe it internally is that everything has changed, but nothing has changed,” Fleming said. … “The heart of what we’re doing day to day, most of our 400 people, their 70 people, are still serving those same customers, same policyholders in the same jobs they were in before. We were really happy that out of 470 people that were in place before the transaction, 469 of them are still in place, with the one exception being Ken’s predecessor, Bernie. … Every other employee had the opportunity to continue going forward. And really most of what we’re doing is continuing to work in the same ways supporting GuideOne’s business.”

GuideOne received $200 million for becoming the first member of the Mutual Group to strengthen its balance sheet and surplus position.

When Bain Capital launched an insurance-focused practice in 2021, one of the team’s early observations was that the mutual insurance community was underserved from a capital solution perspective, Fleming said.

“They were seeing that there’s a real need in the mutual insurance community,” he said. “It’s a tough time to be a small- to mid-sized mutual insurance company. What’s going on with climate and weather and volatility is making it very difficult for a small company to really maintain stability. And then you layer onto that the introduction of technology into the industry, and there’s really a necessity at this point to modernize technology. Well, it costs a lot of money.

“These smaller companies just don’t have the resources to do that. A lot of them are very limited in their geographic footprint, so they’re in one county or in one state, and so the ability to attract talent and to support their business is a challenge. And then you put on top of that over the past couple of years, one of the more difficult reinsurance markets that many of us have ever seen and certainly is being felt by the mutual insurance community, who rely on that.”

The idea behind the Mutual Group was to create an operating platform that could bring access to technology, talent, reinsurance purchasing decisions and other resources to help mutual insurance companies manage some of the more difficult challenges they face, in addition to helping strengthen their capital base.

As a mutual insurance company, owned by its policyholders, one of the challenges for GuideOne was having enough capital.

“We’re not publicly traded, so we can’t raise money in the stock market, we can’t really have debt offerings or those types of things, so our capital is really our policyholders’ capital,” Cadematori said. “So it’s hard to raise money. And if we think about the insurance industry over the last five years, it’s been very, very challenging, especially the property, where we’ve had a heightened level of catastrophic events.”

Fleming said a couple years ago, Bain Capital Insurance started the process of looking for the right partner. It didn’t want to build the Mutual Group from the ground up.

“Their idea was, let’s find a company who has a lot of these characteristics and then create the first transaction with the Mutual Group that would also form it,” Fleming said. “And that’s really what led them to GuideOne. They were on that path; GuideOne then in 2023 was on a path looking for a capital solution, seeing a lot of those same frustrations with the limited options available, and these two paths converged.”

The Mutual Group aims to be a utility for small- and mid-sized mutual companies that provides a broad range of capabilities, including underwriting, claims, technology, finance and human resources.

“We really do see this as a time when there is a need out there, so there is a strong need for an innovative capital solution coupled with a strong operating platform, and we fully expect there will be additional members coming on,” Fleming said. “We’re not in a hurry to make that happen overnight. We want to do this right. We’re in it for the long run. Mutual insurance companies, by their nature, are in it for the long run to support their policyholders, and just like we have a very long-term agreement with GuideOne, we expect to find very long-term partners through this, and we’ll take our time to do that the right way and make sure we can find good fits that we can grow the Mutual Group the right way.”