After discussing the main tenets of stakeholder and agency theory, the paper provides an
exploratory empirical study of the relative performance of mutual and proprietary life
insurance companies in the UK during the period 1995-96. The mutual companies
included in the sample performed well relative to the proprietary companies in terms of
their overall financial strength, annual surpluses and investment earnings. While the
mutuals had slightly higher expense ratios than the proprietary companies, they were
relatively more cost efficient and operated with potential economies of scale. There is
also evidence that fund managers in mutuals perform at least as well on average as those
in proprietary companies
