Demutualization

A demutualization is the conversion of the legal form of a company in customer -owned, such as a mutual insurance company ( mutuals ) into a corporation. There is the possibility of demutualization and IPO and the sponsored demutualization.

In a demutualization and flotation members receive shares in the corporation as compensation for membership.

In a sponsored demutualization an investor acquires a newly established company. Compensation for membership can take place in the form of improved insurance benefits or payments.

Partial demutualization

The mutuals is the parent company through an intermediate holding company in the form of a joint-stock company, which holds the investments in the operational insurance corporations. The holdings of mutual insurance companies will be transferred to the operating companies.

Full demutualization

The full demutualization is the conversion, merger or transfer of assets / insurance stocks on / in a corporation.

Reasons for demutualization

• Financing of the corporation
• Group design factually problematic
• Not a passive group ability
• Problem of corporate culture and balance of interests between members / policyholders and business leaders of mutuals