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Time-lapse video shows the storm moving into the Sioux Falls, South Dakota area
NWS photographed a straight-line storm system moving past Sioux Falls on May 12, 2022.
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West Des Moines’ Guide One Insurance Company makes a nine-figure private equity investment and brings most of its employees to provide management and other services to the mutual company, an important source of insurance in the rural Midwest, including Iowa. The company plans to shift to a new business that will
Approximately 400 of GuideOne’s employees will now work at The Mutual Group, a business launched with a $200 million investment from Boston-based Bain Capital, the companies said in a news release. It was announced at Mutual insurance, which is essential to rural life, is often a small property and casualty insurance company owned by policyholders rather than investors.
The new company’s employees will underwrite mutual insurance policies, process claims and bill customers, according to a news release. The company will also offer “reinsurance purchases.” This is an important service for mutual insurance companies in the Midwest, which face closure if they cannot obtain that type of coverage. Reinsurance allows companies, in exchange for a fee, to reduce some of the risk of concentrated risks due to limited geographic coverage.
Midwest mutuals have struggled to obtain reinsurance in recent years due to an increase in derechos and other costly storm and hail damage. Traditional providers are leaving, leaving 17 of Iowa’s 76 mutual insurers looking for replacement coverage in his 2024 year. In neighboring Wisconsin, about 20 mutual companies merged with other companies this year after failing to obtain reinsurance.
This difficult situation has drawn some new entrants to the region, offering to protect or buy mutual companies facing closure.
“Our goal in supporting mutuals is to provide them with a modern, scalable operating platform that supports their long-term success while maintaining the independence and interaction benefits of mutual groups,” Guide One said. said Tim Fleming, former CEO of Mutual Group. statement.
A Bain spokesperson declined an interview request from the Des Moines Register.
Struggling GuideOne continues as a small, independent company
GuideOne CEO Bernie Hentgesborg said in a news release that Bain’s investment completes the company’s “strategic process to strengthen its capital position.”
The insurance company has been struggling recently, posting losses of $47 million from 2020 to 2022, according to its annual report. The company’s net assets decreased by 12% during this period to $389 million.
On Nov. 15, GuideOne announced in an Iowa Workforce Development Notice that it would lay off 43 employees in West Des Moines. A company spokesperson told the Register at the time that GuideOne executives were “working on a simplification process to streamline our operations, increase efficiency, and reduce expenses.”
GuideOne will continue to operate as a separate company from The Mutual Group, according to a Dec. 20 news release. However, GuideOne only employs approximately 70 people.
Mr. Hengesborg will step down from his role as CEO of the company and will instead become Chairman of GuideOne. Current Guide Chief Financial Officer Ken Cadematori will become the company’s president and CEO.
Meanwhile, Chuck Chamness, former CEO of National Mutual Insurance Company, will become chairman of Mutual Group.
The company started in 1947 as Preferred Risk Mutual Insurance Co., an auto insurance company that sold insurance to sober drivers. The company has grown into a property and casualty insurance company focused on targeting religious customers, especially churches.
In 2005, GuideOne launched a program to provide incentives to people of faith. The company waives deductibles for auto accidents that occur while policyholders are driving to and from church, and provides coverage if an emergency occurs while the policyholder is volunteering for a religious organization. Increased coverage for medical expenses incurred by the church and removed deductibles for replacing items stolen from church property.
Mutual Group’s support comes from the company once led by Mitt Romney
The company operates from a beautiful West Des Moines campus at 1111 Ashworth Road, which features Peter Marasco’s signature public sculpture. However, the company’s local workforce has fallen from 1,000 in 2000 to about 500 last month.
GuideOne will be the first insurance company to use Mutual Group’s services, according to a news release.
Former Republican presidential candidate Sen. Mitt Romney (R-Utah) co-founded and served as CEO of Bain before entering politics. The company manages approximately $180 billion in assets, according to its website.
more: Mitt Romney calls Donald Trump a ‘human gumball machine’ and won’t rule out voting for Joe Biden in 2024
The company announced it would deepen its investments in insurance in 2021 when it launched a new investment arm, Bain Capital Insurance.
Bain announced in July that it had raised $1.15 billion for a fund that invests in the insurance industry. Company officials told Reuters that a 20-person team in the insurance division plans to buy mid-sized companies. The company also plans to carve out new businesses from existing companies.
“Our approach to insurance is to avoid the crowd,” said Matt Popoli, Global Head of Bain Capital Insurance. “We have the expertise to dig where the crowd is not and find real growth opportunities. “We have a large enough team to do that.” he told Reuters.
Other companies entering the market (including those that were the focus of the registration study)
Other companies are trying similar moves in the Midwest this year.
Wood Canoe, a New York company, proposed acquiring several mutual companies in the area and combining their services to form one company with better diversification of risk. Mutuals typically can only sell insurance in their home state and surrounding counties, making them vulnerable to damage caused by a single severe storm. Restrictions on where mutuals can sell insurance policies also concern potential reinsurers.
Mutual Underwriters, an Indiana company, is also offering to manage mutuals in the Midwest. The Iowa Legislature passed a bill in 2023 that would allow the company to take over management of Algona-based Heartland Mutual Insurance Association, which lost reinsurance and was at risk of closing earlier this year. I was on the verge of death.
more: Help arrives as a rural Iowa insurance company faces an emergency. But their rescuers are carrying a burden.
As part of the agreement approved by the Iowa Department of Insurance, Heartland is transferring premiums to Newpoint Reinsurance, a company based in the Caribbean island nation of St. Kitts and Nevis.
A Des Moines Register investigation in December found that most of New Point Reinsurance’s listed assets were provided in the form of notes of unknown origin. The company is led by Keith Bakemeyer, a London businessman who has been accused of fraud by several former business partners.
more: Did Iowa do its due diligence in opening its doors to an insurance executive with a checkered past?
Tyler Jett is an investigative reporter for the Des Moines Register. Contact me at tjett@registermedia.com, 515-284-8215 or on Twitter. @Let’s Jet. He also accepts encrypted messages at tjett@proton.me.
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