Demutualization
Are you aware that a mutual insurance company converting to a stock insurance company should pay compensation to its mutual policyholders as part of that demutualization?
AKZ works to ensure that mutual insurance companies do not convert or demutualize without fully compensating their policyholders.
When a mutual insurance company announces that it is going to demutualize, we review the demutualization plans to ensure that the existing mutual policyholders will be adequately compensated for having their mutual insurance company convert into a stock insurance company. Many times, demutualizing insurance companies refuse to pay their policyholders the compensation they are entitled to and must be sued. We have litigated those suits in the past, and are available to review a demutualization involving you.
- In Rieff v. Evans et al., we represented a class of 300,000 members in which we succeeded in getting the Iowa Supreme Court to recognize the tort of de facto demutualization, certified the class and, after extensive motion practice, settled the case on a nationwide class basis for $128.5 million (plus $110 million in forced dividends).
- In Crandall v. Alderfer, we represented plaintiffs in a class action filed in federal court in Philadelphia that alleged that the defendant directors and Old Guard Mutual Insurance Company had clandestinely converted from a mutual insurance company without notice or compensation to the class. After extensive motion practice and discovery, and certification of the class, the case settled on behalf of the class for approximately $7 million.
- In re Harleysville Mutual Insurance Company, we were part of a team of law firms seeking equitable relief and damages, on behalf of Harleysville Mutual’s 200,000 policyholders due to alleged unfair agreement to merge Harleysville Mutual into Nationwide Mutual Insurance Company. The companies had proposed structuring the merger so that stockholders (including Harleysville Mutual executives) of a Harleysville subsidiary company would be paid a 137% premium for their stock, while Harleysville Mutual policyholders would receive no financial consideration. The matter settled for $26 million.
- We also challenged the demutualizations of John Hancock Mutual Life Insurance Company, Prudential Life Insurance Company, Principal Life Insurance Company and many others.
