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Demutualization Innovations

May 2017
Jeffrey P. Waldron

Two recent transactions represent significant innovations in the demutualization of mutual insurance companies.

The first, the formation by Nodak Mutual Insurance Company of a mutual holding company, the sale of a 45% interest in an intermediate holding company, and a related distribution of cash to Nodak policyholders, represents a fundamental development in the subscription rights demutualization model. The second, the full conversion of Illinois Casualty Company to stock form with the assistance of minority standby investors, while not as transformative, may open up even more opportunity for mutuals seeking capital without loss of control.

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Jeffrey P. Waldron