A long history of Living Mutual

By Allen Wastler
Allen Wastler is a former financial journalist with over 30-years of experience, including time at CNBC, CNN, and Knight-Ridder Newspapers.
Posted on Feb 16, 2018

Living mutual – enabling people to help and support one another – has a long history at MassMutual. It’s been our guiding principle since the day in 1851 when 31 investors came together and pooled their money to start an insurance company to serve people and businesses in the growing Pioneer Valley of Massachusetts.

Living up to that principle has come through in acts large and small by the company. Here are four notable ones…

Cash during the Great Depression

People can borrow against the cash value in their permanent life insurance policies and receive the loans in cash. That was pretty important during times when banks were going on “holidays” and not letting people have access to their accounts. It was particularly acute in the Detroit area, where the state had specific fiscal problems with declines in the auto and mining industries.

So in 1933 MassMutual sent $300,000 in cash to its agency in Detroit (along with deputizing agents as deputy sheriffs so they could carry guns and provide security). It also arranged for another $100,000 cash payment to a coal dealer so he could get supplies to freezing customers. You can read more about it here: How insurance money helped in hard, cold times.

The Great New England Flood of 1936

On March 11, 1936, it started raining … and didn’t stop for two weeks. The result was overflowing rivers and busted dams, resulting in a flood that killed as many as 200 people and left thousands homeless.

Flooding in the Springfield, Massachusetts, area alone is believed to have displaced as many as 20,000 people. MassMutual used the facilities and equipment at its company headquarters in the city to establish a feeding center for refugees. The company, working with the Red Cross through the crisis, served between 1,100 and 1,300 meals a day, according to a company history, well beyond the 500 meals a day it originally planned for.1

The company stepped up to help residents again in 2011, when a tornado ripped through the Springfield area on June 1, leaving three dead and at least 200 people injured. MassMutual donated $1.6 million to rebuilding efforts and employees participated in various restoration projects.

Restoring the Chrysler Building

Are you familiar with that iconic skyscraper so discernible on the New York City skyline? It had fallen on pretty hard times in the mid-1970s. The Chrysler Building, considered a monument of the Art Deco movement, had passed through a number of owners and was suffering from neglected maintenance. It was 58 percent occupied.2

MassMutual bought the Chrysler Building in a foreclosure proceeding in 1975.

''Many people felt that the city had lost its image and significance as the location for major corporations,'' Edward J. Kulik, the MassMutual senior vice president who spearheaded the restoration project, told The New York Times. “We did not share this view.''

MassMutual spent $58 million refurbishing the building, rehabilitating the marble and granite lobby, restoring the stainless steel eagles and gargoyles, and brushing up the spire. When it sold the building in 1979, 96 percent of its space had found tenants.3

The 1800s: Fighting unfair policies

Sometimes helping people means taking a stand against something. And that’s what MassMutual did in the late 1800s, when the insurance industry was seeing a “tontine” craze.

With tontine insurance, individuals invested in a group “tontine.” As each investor died, his or her share was reapportioned among the remaining investors. So as investors diminished, each individual’s annual dividend entitlement grew. But that dividend, along with the death benefit, wasn’t available for a so-called “tontine period,” which could range from five to 20 years. And if an investor failed to keep up the premiums or was late on a payment, he or she forfeited the policy entirely, without the return of any cash value.

Tontine policies allowed insurance companies to hoard cash, since they didn’t have to pay dividends for long periods of time and didn’t have to return the cash value of lapsed policies. But some in the business found them immoral.

“The basic premise was seen as directly profiting from other people’s deaths and the inclusion of lapsed policy premiums in the tontine pool was seen as directly profiting from other people’s economic misfortunes,” noted one historian.5

MassMutual was a major critic of tontine policies and did not offer them. In fact, the company and its executives campaigned against them in the press and before regulators as a detriment to consumers since such policies didn’t have the protections and guarantees of traditional insurance.

The popularity of tontine policies died around the turn of the century. The returns weren’t as great as originally advertised, thanks to some skimming and self-dealing by various companies that dealt in them. After some investigations, they were outlawed by New York state, home to the primary insurance companies dealing in them, in 1906.

That’s just a few examples of looking out for people from MassMutual’s 166-year plus history. There are more. And there will be more.

Live Mutual.

More from MassMutual…

A Packers’ connection

The Unsung

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1 Richard Hooker, “A Century of Service: The Massachusetts Mutual Story,” 1951.

2 Sarasota Herald-Tribune, “Chrysler Building Has Look of the Phoenix,” March 19, 1978.

3 The New York Times, “Edward J. Kulik Dies at 76; Revived Chrysler Building,” Dec. 31, 2002.

4 Kent McKeever, “A Short History of Tontines,” Fordham Journal of Corporate and Financial Law, 2009.

The information provided is not written or intended as specific tax or legal advice. MassMutual, its employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own, and do not necessarily represent the views of Massachusetts Mutual Life Insurance Company.