Insurance Companies

Gramm-Leach-Bliley Act (GLB)

November 1999
GLB allows banks, security dealers,
and insurance companies to combine
to form financial services holding
companies.
GLB allows banks to acquire
insurance companies, insurance
companies to acquire banks, banks
to start their own insurance
companies, and insurance companies
to start banks.

Regardless of its form of legal organization, the main function of

an insurance company is to redistribute the cost of losses.

Types of Insurance
Companies

Stock Insurance Companies

Mutual Insurance Companies
Lloyds of London
Reciprocal Exchange
Fraternal Insurers
Savings Bank Life Insurance
Blue Cross and Blue Shield
Health Maintenance Organizations
Preferred Provider Organizations

Most Important Ones

Mutual IC and Stock IC
Write either life or nonlife insurance
coverage
Insurance holding companies can
combine both life and nonlife
insurance, but should keep
operations separate.
Multiple line insurers property
insurers that provide more than one
type of coverage.

Stock Insurance Companies

Stockholder-owners provide the
capital to establish and operate a
corporation.
Owners are entitled to the financial
results, whether favorable or
unfavorable.
They exercise right to vote and elect
the management of the corporation.

Mutual Insurance
Companies
Nonprofit corporations
Owners are the insured policyholders
Have rights to vote and elect
management

Difference?
1. SIC - own an interest in the stock
company and not purchase a
insurance from it; Being insured and
not having an ownership interest.
2. SIC - additional funds not provided
by past or present insureds, but by
owners, can be used to absorb
losses and expenses not covered by
premiums.

Subcategories of MIC

Advance Premium Mutuals

Assessment Mutuals
Factory Mutuals
Perpetual Mutuals

Advance Premium Mutuals

Highest volume of insurance written
Premiums during insurance and
dividends when favorable results
Mutual Life insurance favorable
operating results are the norm
Dividend return of part of the
premium
Not subject to federal income tax

Assessment Mutual
Do much less business
Insured members may or may not
pay a premium.
But liable to pay fair share of losses
and expenses.
Liability may or may not be limited

Factory Mutual
Provides substantial loss prevention
services, regular inspection of the
insured premises
Highly protected risk only those
exposures meeting rigid safety and
construction qualifications can
qualify for coverage
Advance deposit of the entire
premium
Selective underwriting insurance

Perpetual Mutual
Requires each insured to contribute
to a large initial premium, with no
future premiums
18th century by Ben Franklin
Very rare in insurance marketplace

Demutualization
1st method: Occurs when a mutual
insurer changes its legal form to that
of a stock company.
1. Overcome a limit on the amount of
policyholder dividends a mutual
insurer can deduct on its federal tax
return, causing an increased tax
liability.
2. Financial weakness

Demutualization
GLB Act encouraged demutualization
Stock insurers more flexible capital
structures
Ownership rights membership
rights
Consumer groups critics: not fair
market value of interests in cash;
voting stock to existing policyowners,
fin. markets will set the value of each
share.

Demutualization
2nd method: mutual holding company
a mutual insurance company forms
and owns a stock insurance
company.
Complicated transactions, many
problems
Life Insurance Fact Book decreased
from 109 to 83 MIC providing 10.4%
of life insurance.

Lloyds of London
Has been one of the worlds most
important markets for marine,
aviation, and other lines of
insurance.
Since 1980s billions of losses.
3% of the global nonlife
10% large industrial insurance
Interesting market for marine,
aviation, reinsurance

Lloyds of London
A large insurance marketplace
A meeting place where sellers (underwriters)
meet buyers(orgs with exposures to loss)
NYSE broker meets broker
Lloyds broker meets underwriter
1688, coffeehouse of Edward Lloyd
Underwriting syndicate
General Insurance Standards Council of
Lloyds
A premium trust fund

Reciprocal Exchange
Like a mutual insurance company
policyholders insure each other on a
nonprofit basis.
Reciprocal exchange is
unincorporated each insured
insures every other insured
Automobile insurance is of
considerable amount
Managed by an attorney-in-fact

Fraternal Insurers
Some fraternal orders or societies
Aid Association for Lutherans or the
Knights of Columbus
Life insurance protection
2% of all life insurance

Savings Bank Life Insurance

Largest amount of life insurance in
these states: New York, Connecticut,
Massachusetts, and other East Coast
states

Blue Cross and Blue Shield

Health insurance over 80 million of
Americans in 2003
Blue Cross provides direct payments to
health care providers on behalf of their
insureds. Specified no. of days coverage.
Blue Shield provides payments for
physicians services, including dental and
vision services. Based on usual,
reasonable, and customary charges.

Blue Cross and Blue Shield

In all 50 states
80% of U.S. hospitals and 90% U.S.
physicians accept
$111 billion claims a year

Health Maintenance Organizations

More than half of the health insurance market
Operate in limited geographic areas
Broad health care coverage for a set of fee
capitation payment
Physicians charges, hospital costs, X-ray films,
and emergency care
Preventive physical examinations
Popular for providing broad coverage, for
stressing prevention, not requiring long claims
to be filed

Preferred Provider Organizations

Associations of cooperating
physicians and hospitals
Agree to provide employers with
health care services for their
employees for discount prices

Differences?
1. Employers cost with PPOs is
determined by use
2. Covered employees do not have to
use the personnel or facilities of the
PPO
3. PPO arrangement may not provide
coverage for annual physical
examinations as do HMOs

Insurance Industry in 2001

1,200 life insurance companies

900 property insurance companies
20 largest competitors
Few barriers to entering
Over 2 million employed
www.iii.org Insurance Information
Institute

Top Ten Insurance Companies in the United States

1. Allstate Insurance Company

2. State Farm Insurance Company
3. Prudential Insurance Company
4. Travelers Insurance Company
5. Fidelity Insurance Company
6. MetLife Insurance Company
7. Farmers Insurance Company
8. AIG Insurance Company
9. MassMutual Insurance Company
10.
The Hartford Insurance Company
TopRatedInsuranceCompanies.com

TopRatedInsuranceCompanies.com has put

together a comprehensive list of the top 10
insurance companies in the United States for
the year 2009 (so far).
Top 10 Insurance Companies:
1.)Allstate Insurance Company-Allstate auto insurance quotes and anonymous ballpark
estimates to help protect you, your family and your automobile. Insurance and financial products
include car insurance, home insurance, business insurance, life insurance, IRAs and annuities.
2.)State Farm Insurance Company-State Farm Insurance offers coverage for auto, life, home,
health, and more. State Farm also offers mutual funds, banking, loans, and credit cards.
3.)Prudential Insurance Company-Life Insurance, Annuities, Mutual Funds, Long Term Care,
Real Estate and Retirement Services from Prudential Financial.
4.)Travelers Insurance Company-Protect your personal and business investments with
Travelers Insurance. From auto insurance to homeowners or business insurance, we have the
solution to suit your needs.
5.)Fidelity Insurance Company-Fidelity has the people, guidance, and investments to help
you find your way, whatever your destination. Fidelity offers up to the minute financial news,
market updates, stock quotes and all the financial services you?ll need to reach your goals.
6.)MetLife Insurance Company-MetLife offers life insurance, annuities, disability insurance,
retirement products, auto insurance, dental insurance, employee benefits, banking, and more.
7.)Farmers Insurance Company-Farmers Insurance Group offers insurance including auto
insurance, home insurance and life insurance. Farmers HelpPoint claims service offered through
Farmers Insurance Company.
8.)AIG Insurance Company International insurance and financial services organization, with
operations in approximately 130 countries and jurisdictions.
9.)MassMutual Insurance Company-Learn how products and solutions from MassMutual can
be part of your financial plan. Well help you get there.
10.)The Hartford Insurance Company-Offers a complete line of personal insurance and
financial service products, including auto, homeowners, life, annuities, and mutual funds.

2009 Largest Insurance Companies

Topping the list is a Japanese company, Japan Post
Insurance Co Ltd, with $1,095,621,460,000 in assets.
Yes, you are reading that correctlyJapan Post has
over one trillion dollars in assets.
Believe it or not, that total is actually down 5.28
percent from the previous year. Still not too shabby.
A French company, Axa SA, snagged the second spot
with slightly less than one trillion dollars in assets.
Their 2009 balance sheet revealed a 5.69 percent
increase from 2008, with $962,833,608,000 in assets.
American International Group, Inc (AIG) was the
largest U.S insurance company, and the third largest
in the world.
Looks like the government bailout helped them stay
alive with $847,585,000,000 in assets on their books.
Rounding out the top five were MetLife, Inc and
Prudential Financial, Inc, the only other two insurers
from the United States to make it into the top ten,
with $539,314,000,000 and $480,203,000,000, in
assets, respectively.
A total of five U.S. insurers made the top 25 largest
insurers in the world, including Hartford Financial
Services Group, Inc and Warren Buffets Berkshire
Hathaway (which includes GEICO).

2010

The top 25 insurance

companies in the world

http://www.economywatch.com/insur
ance-in-world/topinsurancecompanies.html?page=full

Rank

Company

Market Value
(Billions)

China Life Insurance

118.74

Ping An Insurance Group

52.80

Allianz

52.74

AXA Group

46.02

ING Group

35.46

Generali Group

35.19

Zurich Financial Services

34.71

Manulife Financial

32.56

China Pacific Insurance

32.21

10

Munich Re

30.12

11

MetLife

29.93

12

The Travelers Companies

27.26

13

Prudential Financial

24.86

14

Aflac

23.47

15

Tokio Marine Holdings

22.29

16

Prudential

20.05

17

QBE Insurance Group

19.74

18

ACE

16.97

19

Allstate

16.94

20

Chubb

16.77

21

Swiss Re

16.44

22

Sun Life Financial

16.24

23

Cathay Financial

15.86

24

CNA Financial

15.64

25

15.51

Kyrgyz Insurance
Companies
19 insurance companies registered in Kyrgyzstan
14 are operating, reported by the State Service for Regulation and
Supervision of Financial State of the Kyrgyz Republic.
2 reinsurance companies (Strahovoi reserv (Insurance Reserve)
and Favorite) and
5 companies with non-residents participation (ICJSC
Kyrgyzinstrah, Rosstrah Kyrgyzstan CJSC IC, London Bishkek
CJSC, Strahovoi reserv CJSC, CJSC Affiliated Company Neftenaya
IC).
The major part of the insurance business is concentrated in the capital
of 13 companies and only 1 insurance company is operating in JalalAbad (Dos-invest Insurance Company). Three insurance companies
have their regional branches.
Activities of several organizations were suspended: Strahovoi dom
OJSC Insurance Company, English-Kyrgyz Insurance Company CJSC,
Capital Insurance Association CJSC, AUB-insurance CJSC, Kyrgyz
reinsurance company CJSC.
Total assets of - 833.7 million KGS and increased by 3.6%.
Net worth of insurance companies is estimated at 621.8 million KGS, it
decreased by 5%.