CUNA Mutual Group announced Friday that its board approved a plan during its June meeting to convert from a mutual insurance company structure to a mutual holding company structure.
The new structure will allow CUNA Mutual greater access to capital, according to CUNA Mutual President/CEO Jeff Post. In the limited mutual holding company structure, CUNA Mutual will continue to be mutually owned with policyholders having full ownership of the MHC. The board’s vote was unanimous.
Post emphasized that CUNA Mutual only asked for a limited MHC and it has no plans to convert to a stock-held company. “We don’t have any interest in demutualizing the company,” Post added.
“We just hope that nobody makes this bigger than it is.” Essentially this is a logistical move, Post said. No compensation will be made to management, the board of directors or any policyholders.
“The only people making money on this are the lawyers,” he quipped. Post stated that CUNA Mutual wanted to be able to raise debt capital cheaper and plan for future acquisitions. “We’ve got nothing on the plate to buy today,” he added, but the conversion process takes a year and the company doesn’t want to miss out on the possibility.
“Could we have converted to a [full] MHC?” Post pondered. “Yes, but the board and management agree that being a mutual is an advantage.” Voting packets will go out to the policyholders in early July, along with proxy vote opportunity.
Onsite voting will take place Sept. 7. Voting rights for the MHC will be the same as the mutual insurance company. The mutual holding company plan must be approved by a two-thirds majority of a policyholder vote. The plan also requires regulatory approval in Iowa, New York and Wisconsin.
“This strengthens our ability to stay a mutual,” Post concluded.