Article at a glance:

Mutually assured survival

As the insurance industry becomes more competitive, mutual insurers need to use their capital more productively. But becoming a public company by demutualizing is an expensive way to approach this problem. Other financial-engineering tools—such as sale/leasebacks—can improve a mutual insurer's return on capital, with far less cost and disruption.

The take-away

Unlocking the mutual-insurance industry's $180 billion in surplus capital and investing it more profitably would create enormous opportunities for the industry: mutuals could grow faster, reshape themselves as low-cost corporate lenders (such as GE Capital), or finance higher-margin activities (for instance, financial or estate-planning businesses).