Supported by a nine-figure private equity investment, GuideOne Insurance Co. in West Des Moines will transfer the majority of its staff to a new company that will provide management and additional services to mutuals, a vital insurance source in the rural Midwest, including Iowa.
The Mutual Group, a company founded following a $200 million investment from Boston-based Bain Capital, will now employ about 400 GuideOne workers, the businesses said in a press release. Mutuals, a mainstay of rural life, are often modest property and liability insurance companies controlled by policyholders as opposed to investors.
Employees of the new business will handle claims, bill clients for mutuals, and underwrite policies, according to the press statement. Additionally, the business will provide “reinsurance purchasing,” a crucial service for Midwestern mutual insurance companies that risk closing if they are unable to obtain that form of coverage. Reinsurance enables businesses to offload a portion of their risk, which is frequently concentrated due to their geographically constrained coverage areas, in return for a fee.
Midwesterner mutual insurance companies have had difficulty obtaining reinsurance in the wake of costly storms such as derechos and an upsurge in hail damage recently. As 2024 approaches, 17 of Iowa’s 76 mutual insurance companies are still looking for replacement coverage due to traditional suppliers’ retreat. About 20 mutual funds in Wisconsin’s surrounding states have merged with other businesses this year after failing to get reinsurance.
The fraught situation has lured some new players to the region, offering to protect or buy mutuals facing closures.
“Our goal in supporting mutuals is to preserve their independence and benefits of mutuality while providing a modern, scalable operating platform that supports long-term success,” Tim Fleming, a GuideOne executive who will now serve as the Mutual Group’s CEO, said in a statement.
An interview request from the Des Moines Register was turned down by a Bain representative.
Operating from a beautifully manicured West Des Moines facility at 1111 Ashworth Road, GuideOne is distinguished by a public sculpture by renowned artist Peter Marasco. However, the company’s local workforce shrank from 1,000 in 2000 to roughly 500 as of last month.