2008-03-17 23:50:08 -

www.ambest.com - In the last year, some insurance holding companies, including mutual insurer Nationwide Mutual, have opted to privatize their publicly held affiliates. These defections from the public market may be motivated by a general sense among the companies that they can manage capital, integrate operations and reduce regulatory reporting requirements better by being a private entity,

experts told BestWeek U.S./Canada.

Cost reduction is an important issue here, said Jason Croft, a financial analyst in the life/health division of A.M. Best Co. "There are operating expense savings and integration savings that can be achieved by purchasing back the publicly traded company. Some of these companies believe the costs just outweigh the benefits of having those entities traded publicly," Croft said.

He said the benefit might even outweigh the risk of unanticipated or greater-than-expected operational disruptions and expenses--as seen in the fourth quarter earnings report of Alfa Mutual Group, another entity that is close to privatizing its publicly traded subsidiary.

Like Alfa 10 months ago, Nationwide Mutual announced in the past week it made an offer to buy subsidiary Nationwide Financial (NYSE: NFS) for $2.2 billion. The property/casualty insurer listed among anticipated benefits: better alignment and flexibility around serving customers; enhanced ability to meet the needs of combined customers; opportunities for stronger top line growth for financial services by better leveraging its large property/casualty customer base; and a simpler ownership structure.

Also, in BestWeek Europe:

For the two largest reinsurers in the world, Swiss Re and Munich Re, the year 2007 brought markedly differing results stemming from differences of emphasis in the business mix.

Also, in BestWeek U.S./Canada:

Joe Finnegan's work can be seen in many movies and television shows. He's the vice president in charge of Fireman's Fund Insurance Co.'s entertainment division, an operation that provides cover for the production of 75% of films made in the United States.

And in both editions of BestWeek:

The Best's Global Insurance Composite Index finished the week of March 13 down 11.28% from a year ago. The composite index reflects the performance of 170 insurance stocks. The week's top stocks were Nationwide Financial Services, EMC Insurance Group, National Atlantic Holdings, National Western Life Insurance Co., and Kansas City Life Insurance Co.

The bottom five stocks were Humana, WellPoint, UnitedHealth Group, Health Net, and Benfield Group.

BestWeek is published by A.M. Best Co. for insurance professionals. To subscribe, please call A.M. Best's customer service department at (908) 439-2200, ext. 5742, or e-mail your request to customer_service@ambest.com.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best Co.
Caroline Saucer, 908-439-2200, ext. 5774
caroline.saucer@ambest.com