Our mutual mindset
What is a mutual company ?
Mutuals exist to serve their members/customers. A mutual company is one that is run in the interests of its members/policyholders and is totally focussed on delivering customer value. Unlike many other financial services companies, a mutual is not listed on the stock market or owned externally. This means that a mutual is solely centred on providing benefits to its members/policyholders as opposed to external shareholders or investors.
What makes a mutual different
· Mutuals are true customer-centric organisations. This means that any profits are used for the benefits of its members, enabling customers to avail of competitive prices and enhanced policy benefits, as customers are the ultimate beneficiaries of the mutual. The mutual does not exist to make profits for shareholders, unlike publicly listed companies.
· Mutuals can adopt a long-term strategic outlook which benefits the long-term interests of customers. This contrasts with stock-market based companies who often must satisfy the short-term goals and interests of their shareholders, particularly institutional investors.
· Financing outside of mutuals own resources is through long-term borrowing that is not subject to short-term volatility. In contrast, stock-market based companies are more liable to the negative effects of adverse speculation or dealings of shares. This was evident during the last 2007-2008 financial crisis which showed that mutuals are better equipped to cope with situations like this and are less prone to speculative activity1.
[1] https://www.smf.co.uk/wp-content/uploads/2023/06/Mutual-understanding-June-2023.pdf
History of mutuals
Mutuals in Ireland date back to the 19th century when they were known as Friendly Societies. These were voluntary groups that held social gatherings. Over time, with the introduction of modern insurance and regulation, Friendly Societies grew into the mutuals we have today. One of their primary goals was to ensure that members had access to burial benefits, which was crucial for avoiding paupers' graves. People were keen to avoid these burials because they were often seen as a mark of destitution and social stigma. As such, the driving force of their establishment was entirely benevolent, whereby for a few pence every month2, these companies could provide dignity and financial security to their members/policyholders.
Founded on the basis of solidarity, mutuals allowed profits to be reinvested into the organisation or shared among members, fostering a community-focused system that prioritised people’s need over profit and making a valuable contribution to the community.
[2] 190-year-foundation-fire-marks-book.pdf
It's everyone's business
Royal London Ireland is a purpose-driven modern company with a mutual ethos, and this is reflected in the strengths we have across our business.