Greater Potential Value

Research by AFM shows that in 2010 PLC insurers paid out on average 3p to shareholders for every £1 invested by their customers. With no shareholders to pay mutual insurers can ensure that their profits are only distributed to customers like you, or reinvested to give you better returns, better value and higher levels of service.

Each mutual insurers is owned by its members and does not have shareholders. A public limited company (plc) is owned by external shareholders and pays dividends to shareholders which comes from the profit the organisation makes.

New AFM research into six shareholder-owned insurers shows that £2.275 billion was paid out as dividends for 2010.  Put another way, nearly 3p of every £1 premiums made by policyholders is passed onto shareholders. 

  Gross written Premiums
£ mill
Total Assets
£ mill
Dividend Paid
£ mill
% of Premium
Friends Provident 6,452 59,671 192 3.0%
Legal & General Group 5,275 297,044 255 4.3%
Royal & Sun Alliance 7,744 22,041 264 3.4%
Prudential plc 20,299 206,353 481 2.4%
Aviva 34,690 354,391 853 2.5%
Standard Life 3,562 146,613 260 7.3%
Totals 78,022 1,086,113 2,275 2.92%

This is the ‘dividend drag’- the loss to policyholder value that results from being shareholder-owned.  In mutual organisations the dividend drag does not exist, with 100% of premiums paid being used within the business.  This helps to explain how mutual organisations typically: 

  •  pay higher investment returns;
  •  provide better standards of service;
  •  pay more claims;
  •  have levels of innovation that often belie their size.

Source: Association of Financial Mutuals. Figures compiled by published accounts from each insurer.