E. Tom Hughes, General American’s Corporate Actuary and Treasurer,
made these comments in a December 1997 article:
"Unlike most companies that have adopted or are considering adopting the
MHC structure, General American does not intend to raise capital by issuing
common stock, either at the holding company level or at the life company level,
for the foreseeable future...General American has strongly and successfully promoted the mutuality concept
in marketing its core product line, traditional life insurance policies sold to
individuals. It believes that these policyholders have a right to expect that
General American will keep its commitment to provide them insurance at the
lowest possible cost and, further, that they will benefit from General American’s
future growth.General American believes that its covenant with these policyholders would be
compromised, or at least threatened, were it to introduce stockholders who
would compete for the earnings that are now generated for distribution solely
to our policyholders. It believes the existence of two groups of owners would
create tensions and conflicts that could not be resolved to everyone’s satisfaction,
and that solutions such as ‘closed blocks’ for the mutual policyholders may
effectively remove them from participating in the future growth of the company."Excerpt from E. Tom Hughes, "Mutual Holding Companies — An Alternative
Approach," The Financial Reporter, December 1997.