With a $200 million investment, Bain Capital Insurance acquired the operational platform of mutual insurer GuideOne Insurance Company, the companies announced in late December.

The transaction initiated the launch of The Mutual Group, described as a member-centric insurance services platform designed to improve the operational efficiency and scalability of mutual insurance carriers, with GuideOne serving as the inaugural member.

Under the arrangement, GuideOne, a mutual insurance carrier founded in 1947 serving niches including religious organizations, nonprofits and human services businesses, will continue to operate as an independent mutual insurance company owned by its policyholders.

As part of the transaction, Bernie Hengesbaugh, chief executive officer of GuideOne, will become chairman of GuideOne, and Ken Cadematori, chief financial officer of GuideOne, will succeed Hengesbaugh as president and CEO.

In addition, GuideOne will retain approximately 70 employees and key strategic leadership roles including chief financial officer, chief underwriting officer, general counsel and investment management along with other critical functions.

“This creative solution marks the successful conclusion to the GuideOne Board of Directors’ strategic process to bolster our capital base,” said Hengesbaugh in a media statement. “The Mutual Group transaction allows us to achieve all of our goals while maintaining our heritage and history as a mutual insurance company.”

The Mutual Group will provide all the services a mutual insurance carrier requires to function efficiently, including underwriting, claims and reinsurance purchasing as well as a robust technological suite that provides policy administration, enterprise billing and enterprise claims administration systems.

The Mutual Group will launch with roughly $800 million in annual premium serviced across 50,000 commercial policyholders by its over 400 employees. The Group is based in West Des Moines, Iowa.

Chuck Chamness, former CEO of the National Association of Mutual Insurance Companies (NAMIC), was appointed chairman of The Mutual Group.

Tim Fleming, senior vice president of Core Commercial Lines at GuideOne, will lead The Mutual Group as chief executive officer.

GuideOne will use the $200 million to strengthen its balance sheet and surplus position and to bolster its continued growth in support of policyholders. As The Mutual Group’s inaugural member, GuideOne will further support its long-term stability through improved operational efficiencies and underwriting performance, the statement said.

“Bain Capital Insurance’s significant capital infusion and the opportunity to be the foundation for an innovative, new platform is a testament to the strength of our organization and stability of our businesses,” Cadematori said. “Our improved financial strength sets us on an exciting course for growth and opportunity to benefit our employees and our policyholders…”

“The Mutual Group is an exciting new platform that combines GuideOne’s nearly eight decades of experience as a niche mutual insurance carrier and its highly specialized team with the insurance investing acumen and strategic vision of Bain Capital Insurance,” said Fleming. “Our goal in supporting mutuals is to preserve their independence and benefits of mutuality while providing a modern, scalable operating platform that supports long-term success.”

The investment was made out of the $1.17 billion Bain Capital Insurance Fund, LP, the inaugural dedicated insurance private equity fund managed by Bain Capital Insurance and its team of over 20 investment professionals.

Bain Capital Insurance is the dedicated insurance investing business of Bain Capital, a leading global private investment firm with approximately $180 billion under management across 23 offices on four continents.

Kirkland & Ellis LLP served as legal advisor to Bain Capital Insurance on the transaction. Foley & Lardner LLP served as legal advisor to GuideOne on the transaction.

Source: Bain Capital; GuideOne, The Mutual Group