By Ross Buchmueller, president and chief executive officer, PURE Risk Management LLC

Like many in the insurance industry, I enjoy reading the views of insurance company executives in their annual letters to shareholders (or policyholders, in the case of mutual insurers). This year, as I read the letters of some of the nation's largest and best-known insurers, I was struck by the enormous challenge of aligning the interests of insurance policyholders with those of shareholders.

In his annual letter, the CEO of a well-known policyholder-owned insurance and financial services company writes: "We gave back $1.2 billion to members in distributions, dividends, and bank rebates and rewards...members saved an estimated $110 million in mortgage interest by refinancing their homes with us... we helped members continue to pay on more than 95,000 credit and loan accounts by adjusting their payment plans... members saved an average of $461" on auto insurance." As for the bottom line, he writes: "We grew our net worth by 17 percent to a record $17 billion in 2009."

Compare this with the CEO of a prominent stock insurer, who begins his letter celebrating the "outstanding financial results" and "second-best year of operating income." (That's good news to everyone, because even policyholders want their carriers to be financially strong.) As the letter continues, however, the alignment problem comes into focus. The CEO writes: "We believe no company is better positioned than [us] to capitalize on market opportunities and rate increases as they materialize." In the previous year, the same executive stated that the company's "2008 results that were the third-best in the corporation's history" and suggested that there was "good cause for optimism" because investment losses would be "a catalyst for rate improvement;" catastrophe losses should "push up prices" and claims arising out of the financial crisis "have driven up rates for professional liability insurance and should spread to other lines as well."

Without question, these two companies are among the absolute best in the industry. These letters simply highlight the very real challenges that arise when insurers aim to delight both policyholders and shareholders. It's difficult, and the primary duty of stock insurers will always be to serve their investors.

There is growing evidence that stronger alignment with customers can create even greater profitability. In a Harvard Business Review article titled "The Age of Consumer Capitalism," Professor Roger Martin, dean of the Rotman School of Management at the University of Toronto, argues that it is impossible for companies to optimize both shareholder value and customer satisfaction. I believe this is particularly true for insurance companies. Professor Martin argues that companies that put customers first often deliver greater value to shareholders than some of the most iconic "shareholder-value" companies.

It may not be a surprise to learn that most of the highest-ranking companies in J.D. Power's annual customer satisfaction survey are policyholder-owned insurers. But when you evaluate the financial strength and profitability of USAA, Amica, ERIE, FM Global and many other well-known mutual or reciprocal insurance companies, it becomes clear that putting policyholders first can also create lasting financial strength.

Insurance is a difficult business, and stock companies are certainly not sinister. Those that succeed at serving both shareholders and policyholders should be applauded. But common sense and some growing evidence suggest that old-fashioned mutual companies offer unique contemporary value.

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Ross Buchmueller is president and chief executive officer with PURE Risk Management LLC. His company serves as the attorney-in-fact for PURE, a reciprocal insurance company serving the personal insurance needs of more than 7000 successful individuals and families in the United States. More information is available at www.purehnw.com.