Policyholder-owned U.S. life insurers seem to do better in hard times than publicly traded insurers do.

Analysts at Moody’s Investors Service, New York, come to that conclusion in a comment on life company performance.

Although some life mutuals have been downgraded, “they have experienced fewer – and less severe downgrades,” Moody’s says.

The mutual insurers tend to be better capitalized, take fewer business and product risks, face less exposure to negative publicity, rely less on capital markets, and have a longer-term orientation, Moody’s says.

Public life insurers had ratings that were about 2 notches lower than the mutuals’ ratings from 2001 until early 2008, and the gap then widened to 3 notches, Moody’s reports.

“Mutual insurers often focus on career (proprietary) distribution, which has long been thought of as the classic ‘life insurance agent,’” Moody’s says. “The successful operation of a career sales force is an activity that takes lots of effort, time, and money. More often than not, stock companies are unwilling to devote such resources. Because of the proprietary relationship that companies have with their career agents, there is less urgency for the mutual insurers to develop products with the newest features and guarantees versus insurers that instead need to secure and hold shelf space with independent third-party distributors.”

Stock companies have offered generous performance guarantees and other relatively high-risk features to appeal to independent distributors, Moody’s says.