First, we improve on the existing literature by considering the method of conversion in an effort to gain additional insight into what motivated insurers to demutualize
generally and then to explore if the motivations were similar across the firms that chose to fully demutualize
versus those that chose to adopt the MHC form.
The National Office also rejected the argument that the payment constituted a charge for the right to demutualize
and thus provided the taxpayer with significant long-term benefits in keeping with INDOPCO, Inc.
The conventional response to this heightened competition has been to demutualize
, moving capital to a holding company that is free to make more attractive investments and subjecting it to the demands of the stock market.
Any company planning to demutualize
must submit a conversion plan to its state insurance commissioner for approval, and its policyholders must vote for demutualization by either a 2/3 or 3/4 margin, depending on the state.
If we apply a relative standard to examine the question of whether policyholders of insurers that demutualize
are harmed by underpricing, then the answer becomes "not necessarily.
Apparently, insurers may intend to demutualize
to increase surplus or equity through issuing stock, but their rate of return or financial condition does not improve after conversion.
In addition, he said there will be less push among personal lines companies to demutualize
because their capital needs are smaller than those of their commercial lines counterparts.
In a sponsored demutualization, a mutual company opts to demutualize
as part of a decision to be acquired, most typically by a stock company.
but the latter two companies first must demutualize
, converting themselves into stock companies.
4, 2003, from Rhode Island's Superior Court to demutualize
PMI, and convert it into a stock company named Pawtucket Insurance Co.
Benmosche, not surprisingly, answers questions about MetLife's demutualization with the strained patience of one who has had to answer such questions many times before, but his discussion of the reasoning behind the decision to demutualize
is nevertheless enthusiastic.
If the cut through is indeed enacted, Fitch believes that in order to remain viable, Kemper would need to be able to demutualize
and complete an initial public offering within the 18 month period that the cut through is in place.