Pacific Life is a Fortune 500 company based in Newport Beach, California. It provides life insurance products, individual annuities, and mutual funds.
The present day Pacific Life formally began business in Sacramento, CA in 1868. In encountered significant problems during the depression and from 1936 until the end of 1957 it was in rehabilitation whereby it was managed by the California State Insurance Commissioner. On July 28, 1959 it was officially reborn as Pacific Mutual Life Insurance Company supposedly owned by its policyowners and operated solely for their benefit.
In 1997, it formed Pacific Mutual Holding Company (PMHC), a California mutual insurance holding company and then implemented a plan of conversion to form a mutual holding company structure. The conversion created PMHC and Pacific LifeCorp as an intermediate Delaware stock holding company. Pacific Mutual Life Insurance Company was converted to a stock life insurance company and renamed Pacific Life Insurance Company (Pacific Life). Pacific LifeCorp owns 100% of Pacific Life.
The type of reorganization undertaken by Pacific Life is not allowed in New York where attempts by mutual insurance to pass similar permissible legislation failed. Opponents of mutual insurance holding companies referred to it in New York as “Legalized Theft.”
Mutual life insurance companies such as Pacific Mutual were originally organized to provide insurance-at-cost. Despite that fundamental fact, they managed to accumulate massive profits over the years by overcharging policyowners for insurance and paying them too little in dividends.
At the end of the 20th beginning of the 21st century numerous mutuals such as Prudential, MetLife, and John Hancock decided to demutualize and return to policyowners all the profits earned over the years. Policyowners were awarded cash, stock and policy credits exceeding $100 billion in these demutualizations, which have been regarded as socially desirable.
Other mutual companies decided to not return the money to policyowners. The boards of directors of these other companies generally decided to either remain mutual or, like Pacific Mutual, they decided to form mutual insurance holding companies. In either case, policyowners were awarded nothing. As of December 31, 2005 Pacific Life had accumulated $5.7 billion in profits from its policyowners under the guise of mutuality.
Pacific Life’s whole life policyowners would receive an estimated $31,940 per policy and its other policyowners would receive $2,200 per policy in a demutualization according to financial data contained in Pacific Life’s 2005 Annual Statement to the National Association of Insurance Commissioners (NAIC), the company’s 2005 Annual Report and shown at http://policyownersfordemutualization.blogspot.com.