Demutualization

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Demutualization

Refers to the process that has come about as the result of many not-for-profit exchanges (mutual companies owned by groups of members) converting to for-profit and then shareholder companies in order to go public.

Demutualization

The process by which a mutual company becomes a publicly-traded company. A mutual company is a company owned by its members or users for the benefit of those members or users. In demutualization, the members give up their rights and receive shares in the company in return, which the (now former) members may then sell. Demutualization happens most often when a stock exchange owned by its members goes public.

As an aside, a mutual company should not be confused with a mutual fund.
References in periodicals archive ?
Drawing on the coordinated risk management hypothesis of Stulz (1996) and Schrand and Unal (1998), we argue that the managers of demutualizing insurers have a stronger incentive to maximize firm value.
private investment firm The Blackstone Group, said that some state legislatures view mutual holding companies as conversions that allow many benefits of demutualizing except they don't deliver value to policyholders.
Fully demutualizing liberates insurance companies from the confines of a mutual structure and can finance a competitive new corporate strategy.
Prudential said it will be the first demutualizing insurer to offer policyholders the choice of voting by phone or Internet in addition to the traditional paper ballot.
We are the first demutualizing insurer to offer policyholders the convenience of voting by phone or Internet," said Executive Vice President, Mark Grier who is leading the company's demutualization efforts.
Also demutualizing last year were Toronto-based Sun Life Assurance Company of Canada, a wholly owned subsidiary of Sun Life Financial, which held its IPO on March 29, and AmerUs Group, Des Moines, Iowa, on Sept.
Prudential will be the first demutualizing insurer to offer policyholders the choice of voting by phone or Internet in addition to the traditional paper ballot.
Reinsuring in-force business is a strategy adopted by demutualizing companies to more accurately project earnings, he said.
First, that the defendants represented on October 5, 2000 that the management of Meridian Insurance Group had been directed to explore strategic alternatives to enhance shareholder value such as repurchasing the outstanding Meridian Insurance Group shares, engaging in a corporate reorganization or restructuring, taking Meridian Insurance Group private, demutualizing Meridian Insurance Group's mutual insurance company affiliates, or engaging in an affiliation or business combination, but no such exploration was undertaken.
Implicitly acknowledging this shortcoming, some demutualizing insurance companies, such as John Hancock Mutual Life Insurance Co.
The 157-year old financial services organization (which shed its mutual insurance company skin by demutualizing and completing an initial public offering last year) is launching a targeted, national brand advertising campaign.
Physician-owned mutuals, for example, were developed during the medical-malpractice crisis of the mid-1970s to provide doctors coverage when commercial insurers would not, and until recently, demutualizing would have defeated their purpose.