In demutualization, a regulated process, mutual policyholders’ ownership and voting rights of the mutual company are exchanged for common shares in the stock company, the backgrounder explains. The two main types of insurance companies are mutual, owned and governed by their mutual policyholders/members; and stock, owned and governed by shareholders who may or may not also be policyholders….
… “It is likely that enabling legislation would require non-mutual policyholders to participate in a demutualization by having their policies (sometimes referred to as ‘cash’ policies) converted as well. In the process of converting, the demutualizing company distributes to eligible policyholders the proceeds of the conversion in the form of cash, transferable shares or a combination of cash and shares,” the backgrounder explains.
Canadian Underwriter.ca – June 24, 2014.
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