Question

The corporate structure of mutual insurers has changed over time. Describe in no less than 200 words, several trends that have had an impact on the corporate structure of mutual insurers.

Answer 1

Meaning of Mutual Insurers: Mutual insurers are incorporated with permanenet Capital Stock .Anyone purchasing insurance from a mutual insurer is both a customerand owner with rights to vote for the board of directors.capital structure decisions are the ease of access to financial markets. We expect insurer holds more capital in countries with developed Capital market.

The amount of capital an insurance company has on its balance sheet liability to policy holder determines its probability of insolvency and regulator monitor insurance capitalization.

Mutual insurer face higher cost to raise capital in comparison of stock insurers.

Impact of capital Structure : Most of the companies declined due to merger and acquistion

Establishment of mutual holding Companies: Mutualinsurance companies have converted into stock insurer, which is entirely held by mutual holding company