Mutual of America Growth Hypothesis

Part
01
of two
Part
01

Mutual of America - Viable Strategies

The most viable strategies for Mutual of America to double its revenue (Assets Under Management) in a four to five-year period are its investment strategies, its partnership with Salesforce, the implementation of its Innovation Committee, and its social media initiative. Below is an overview of the findings.

Mutual of America's Most Feasible Strategies

1. Investment Strategies

  • The General Account of Mutual of America employs a sensible and disciplined investment strategy that is aimed at achieving a maximum total return within a tolerable risk level. Its policy stresses "capital adequacy, investing in high-quality assets, liquidity, and properly matching assets and liabilities." This strategy has placed the company among the top life insurance companies in the U.S., as has been confirmed by independent rating agencies such as A.M. Best, S&P Global, and Fitch.
  • Around 60% of the total assets "are invested in the 500 common stocks included in the S&P 500® Index to replicate the weightings of such stocks in the Index with respect to that 60% of the Fund’s total assets" to the extent practicable. While "approximately 40% of the total assets are actively managed by the Adviser, with approximately 20% of the total assets invested in large and mid-cap growth and value stocks, approximately 10% invested in small-cap growth stocks and approximately 10% in small-cap value stocks."

2. Partnership with Salesforce

  • Mutual of America partnered with Salesforce to further strengthen its commitment to customer service. This partnership should help the company attract, engage, and retain customers in new and innovative ways.
  • In 2018, Mutual of America and Salesforce partnered up with the aim of implementing a cloud-based customer relationship management (CRM) system in 2019. Salesforce will enable Mutual of America to streamline and customize its business processes and become more efficient. It will also affect the way its sales team functions as they will be able to connect better with prospects and customers, anticipate and understand the unique needs of the customer, and consequently create new opportunities.

3. Forming of Innovation Committee

  • Mutual of America formed an Innovation Committee. This committee aims to stimulate the employees to question the assumptions they have about the business and ask a fundamental but powerful question: How can we improve?
  • Mutual of America will continue to focus on new ways to improve its workflows, strengthen its products and services, and improve the relationship it has with its customers.
  • The results of this exercise will help the company discover new opportunities to increase its strengths, win the trust of prospective customers, and provide more retirement plans to plan sponsors and participants across the U.S.

4. Social Media Initiative

  • Mutual of America has launched social media pages on Facebook, Twitter, and LinkedIn. These pages will provide information to its customers, which approach half-a-million in number and vary from millennials to working parents to those who are almost or already retired, and to the public. The information should motivate people to contemplate and plan for a financially secure future.
  • Its pages will speak to various key corporate objectives such as "raising public awareness of the company, broadening engagement with its customers and prospects beyond traditional platforms, enhancing the promotion of its products and services, and further strengthening its employee recruitment efforts."

Part
02
of two
Part
02

Mutual of America - Competitors

The top three competitors of Mutual of America are Prudential Financial, Lincoln Financial Group, and MassMutual with written premium market share of 5.33%, 4.30%, and 4.15%, respectively. Mutual of America have positioned themselves to be the strongest among their competitors due to asset strength, asset quality, and the liquidity to meet their client's retirement needs.

Top competitors of mutual of America

Prudential Financial

  • Prudential Financial's main products and services include life insurance, annuities, retirement-related services, mutual funds, and investment management.
  • Prudential Financial is one of the world’s largest financial service institutions, offering individual and institutional clients a wide array of financial products and services. They operate in the United States, Asia, Europe, and Latin America.
  • Market Share: 5.33%

Lincoln Financial Group

  • Lincoln Financial Group core business include life insurance, annuities, retirement plan services, and group protection focused on supporting, preserving, and enhancing people’s lifestyles and retirement outcomes.
  • "Headquartered in the Philadelphia region, Lincoln Financial Group is a Fortune 500 company offering a diverse range of financial services and solutions. Led by over 9,000 employees, Lincoln Financial provide the tools and advice to help individuals take charge of their futures".
  • Market Share: 4.30%

MassMutual

  • MassMutual is a mutual company founded on May 15, 1851, and their key products and services includes insurances, retirement plans, investments, and financial Wellness.
  • "As a mutual company, we operate for the benefit of our members and participating policy owners. We manage the company with a focus on their long-term interests and are not subject to the expectations of Wall Street analysts or stockholders. Throughout our history, this focus on the long-term has helped us provide financial and retirement security to millions of people".
  • Market Share: 4.15%

Mutual of America's positioning

  • Mutual of America have positioned themselves to be the strongest among their competitors due to their asset strength, asset quality, and the liquidity to meet their client's retirement needs.

Your Research team applied the following Strategy:

Despite an extensive search, we were not able to identify the main competitor of Mutual of America. In order to determine the three competitors we have leveraged information on companies who have same target market and product offerings. However, most of the potential top competitors we found, their market share is not publicly available even after examining their company websites, annual reports/financial statements, and sites that provide company market shares like Fortune.com, Nasdaq, NAIC.org, CIS Market, Macro Trends, and other similar sites. However, we were able to find the top 10 life insurance companies ranked by market share based on their written premiums. According to Investopedia "written premiums are the principal source of an insurance company's revenues and appear on the top line of the income statement". Therefore, we selected those with the highest market share based on their written premiums with the same target market as Mutual of America.
Sources
Sources

From Part 01
Quotes
  • "The Company's General Account employs a prudent and disciplined investment strategy that seeks to maximize total return within an acceptable level of risk. The General Account investment policy stresses capital adequacy, investing in high-quality assets, liquidity and properly matching assets and liabilities. Virtually the entire portfolio, which has been consistently and skillfully managed over the years by Mutual of America Capital Management LLC, is invested in high quality corporate and mortgage-backed investment grade bonds that provide outstanding liquidity to permit the payment of benefits to Company policyholders as required. The Company is fully satisfied and confident in its ability to fulfill its General Account obligations, now and in the years ahead, for the retirement needs of our customers. "
  • "The investment strategy of capital adequacy, high-quality assets, liquidity and properly matching our assets and liabilities continues to place Mutual of America among the strongest of all life insurance companies in the United States, as affirmed by the major independent rating agencies."
Quotes
  • "This year, we further strengthened our commitment to customer service with two new technology-related initiatives aimed at helping us to attract, engage and retain customers in new and innovative ways: a partnership with Salesforce and the creation of an Innovation Committee."
  • "In 2018, we entered into an agreement with Salesforce to implement a cloud-based CRM (customer relationship management) system in 2019. This business intelligence platform will enable us to streamline and tailor our business processes and improve efficiency; it will also enable our sales teams to better reach prospects and customers, anticipate and understand their unique needs, and create new channels of opportunity."
  • "We also formed an Innovation Committee that encourages our employees to challenge their own assumptions about our business by asking a fundamental but powerful question: How can we improve? We will continue to look for ways to enhance our work flows, further strengthen our products and services, and deepen our connection with customers. The insights gleaned from this exercise will also help us to uncover opportunities to build on our strengths and become a trusted retirement plan provider to more plan sponsors and participants across the country."
Quotes
  • "Approximately 60% of the Fund’s total assets are invested in the 500 common stocks included in the S&P 500® Index to replicate, to the extent practicable, the weightings of such stocks in the Index with respect to that 60% of the Fund’s total assets. The components of the Index are market capitalization weighted, adjusted for free float. The indexed portion of the Fund is rebalanced at approximately the same time that the S&P 500® Index to which that portion of the Fund is benchmarked is rebalanced and reconstituted, which currently occurs on the third Friday of the last month of each quarter."
  • "Approximately 40% of the Fund’s total assets are actively managed by the Adviser, with approximately 20% of the Fund’s total assets invested in large and mid-cap growth and value stocks, approximately 10% invested in small-cap growth stocks and approximately 10% in small-cap value stocks. The Adviser generally invests in stocks that it considers undervalued, or to have attractive growth potential, and with the potential for investment returns that outperform their peer companies, based on bottom-up fundamental company research, including analysis of business models, financial statements, measures of earnings and cash flow, and potential for long-term growth in sales and cash flow."
  • "Under normal circumstances, at least 80% of the Fund's total assets are invested in securities of companies that are listed or principally traded on a United States stock exchange."
Quotes
  • "Mutual of America, a leading provider of retirement savings plans, has introduced social media pages on Facebook, Twitter and LinkedIn."
  • "These pages will provide another useful outlet for the Company's almost half-a-million customers – ranging from millennials to working parents to those nearing or already in retirement – as well as for the public in general, to think about and plan for a financially secure future. "
  • "Mutual of America's social media initiative addresses several key corporate objectives, including raising public awareness of the Company, broadening engagement with our customers and prospects beyond traditional platforms, enhancing the promotion of our products and services, and further strengthening our employee recruitment efforts."