GuideOne enters mutual insurance field with Bain Capital investment

Boosted by a nine-figure private equity investment, West Des Moines’ GuideOne Insurance Co. will shift most employees to a new business that will offer management and other services to mutuals, an important source of insurance in the rural Midwest, including Iowa.

About 400 of GuideOne’s employees will now work for The Mutual Group, a business launched after a $200 million investment from Boston-based Bain Capital, the companies announced in a news release. A staple of rural life, mutuals tend to be small property and casualty insurance firms owned by their policyholders rather than investors.

According to the news release, the new company’s employees will underwrite policies, process claims and bill customers for mutuals. The company also will offer “reinsurance purchasing,” an important service for Midwestern mutuals that face closures if they can’t get that kind of coverage. Reinsurance allows firms, in exchange for a fee, to unload some of their risk, which often is concentrated because of their geographically limited coverage areas.

Heavy straight-line winds destroyed a grain elevator in Luther, Iowa.  The storm, a derecho, ripped through central Iowa on August 10, 2020, taking down trees and leaving at least 480,000 Iowans without power.

After expensive storms like derechos and an increase in hail damage in the last few years, Midwestern mutuals have struggled to obtain reinsurance. Traditional providers backed away, leaving 17 of Iowa’s 76 mutuals searching for replacement coverage as 2024 begins. In neighboring Wisconsin, about 20 mutuals have merged with other firms this year after failing to obtain reinsurance.

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