Donegal insurance agents have something unique in that a mutual insurance company functions just like an insurance company. In a mutual insurance company setup you cannot find any shareholders in it; the entire policyholders instead own the company, or it may sometimes be restricted to certain classes of policyholders. Ownership rights usually has voting rights privileges, especially when electing the company’s board of directors, or in proposals to demutualise. The distributed surplus funds are paid directly to the policyholders. The global trade association for the mutual insurance industry, the International Cooperative and Mutual Insurance Federation, claims about 216 memberships in 74 countries, which in turn represents at about 400 insurers.

Donegal Mutual Insurance is a recognized member of the Donegal Insurance Group, which reported $1.0 billion in assets and $489 million in surplus as of June 30, 2009. The parent group Donegal Insurance, has net written its premium of $452.2 million in 2008. It earned a group A.M. best rating of A, and that rating simply meant excellence.

The Donegal Mutual Insurance Company is operating as a mutual fire and casualty insurance company in the market today. The company concentrates in providing a whole wide range of personal, farm, and other commercial products. It also offers in underwriting personal and commercial insurance types of coverage. Donegal Mutual’s headquarters are located in Marietta, Pennsylvania, and it offers its products exclusively through different independent agents in Pennsylvania, Maryland, Delaware, Virginia, Ohio and that in North Carolina. They also had a partnership with independent agents from the Mid-Atlantic, Southeastern and Midwestern regions in the United States of America. Donegal Mutual is already gearing up for its expansion in the future.

The major disadvantage of these mutual insurance organizations is their evident difficulty in raising capital. Unlike the regular, standard insurance companies operating in the market today with its shareholders as a major factor, its absence puts the directors of the mutual insurance companies in a very difficult position. They are having a hard time raising fresh capital to finance any new projects and ventures that they propose. Supposedly, it’s the shareholder’s job to pour in capital to commence these projects. Before, the idea of incorporating insurance into peoples’ lives began mainly with a mutual or a cooperative business structure. And now many companies have decided to opt through demutualization to become public companies, this gives them other good options which enable them to obtain further capital.

In response to the acquiring of fresh capital issue, the “mutual holding company” structure was introduced to the market first in Iowa back in 1995, and it had spread from there ever since. Along the way, there had been some concerns raised that the conversion into mutual is plain disadvantageous for the owners of the company, which are the company’s policyholders, but experts agreed that companies should go for full demutualization rather than being only partial about it. And as of August 2010, congress created the Mutual Holding Company Beneficial Owner’s Protection Act as a response to protect the owners.