Mutual holding companies: crafting a new structure

Article Abstract:

The reorganization of mutual insurance companies into mutual holding firms has been criticized for several reasons. Critics argue that policyholders lose economic value during a reorganization. It is maintained that nothing limits the amount of preferred stock or other dividend paying instruments that management can receive. Reorganizations also imply that states lose control of bankruptcy proceedings and puts policyholders at financial risks. However, mutual holding company transactions grant faster and cheaper access to capital markets.

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Learning an 82-year lesson: past arguments for the formation of mutual companies may come back to haunt the demutualization movement

Article Abstract:

The growing trend toward conversion to a stock corporation or toward formation of a mutual holding company by mutual insurers is being supported by Congress which understands the need of the latter to compete and ally with financial services firms. Mutual policyholders, however, may not receive full value in a mutual-to-stock conversion. In such an event, surplus policyholder equity may be transferred even to those who do not possess legal ownership interest.

Investment Offices, Investment Companies, Open-End Investment Funds, Mutual Fund Mgmt Companies, Portfolio Management, Mutual funds, Mutual fund industry, Stock funds

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