Iowa Approves Farm Bureau Mutual's Plan to Reorganize as a Mutual Holding Co.
December 29, 2009 by Fran Lysiak
Iowa Approves Farm Bureau Mutual’s Plan to Reorganize as a Mutual Holding Co.
WEST DES MOINES, Iowa December 22 (BestWire) — Iowa insurance regulators and policyholders of Farm Bureau Mutual Insurance Co. have approved plans for the company to reorganize into a mutual holding company structure. The change takes effect Jan. 1, 2010.
In September, Farm Bureau Mutual said it would reorganize and form a mutual insurance holding company to be named Farm Bureau Mutual Holding Co., but said it had no immediate plans to issue stock (BestWire, Sept. 18, 2009).
Nancy Doll, a spokeswoman for the West Des Moines, Iowa-based Farm Bureau, said the reorganization provides the company with “strategic flexibility” and access to capital that will help it achieve a level a growth that surpasses what it could as a mutual company. Farm Bureau has no plans to convert to a public company, she said.
Under the plan, Farm Bureau Mutual will be reorganized as a stock property/casualty insurance company named Farm Bureau Property & Casualty Insurance Co., the company said. Farm Bureau Mutual also will organize an intermediate holding company, named Farm Bureau Multi-State Services Inc.
Shares of Farm Bureau Property & Casualty will be owned by Farm Bureau Multi-State and shares of Farm Bureau Multi-State will be owned by the mutual holding company.
Bruce Trost, executive vice president of operations, said in a statement that the move “will allow us to be even more competitive in the marketplace.”
The reorganization plan, including the articles of incorporation and bylaws of the companies created as a result of the reorganization, were approved by its policyholders on Oct. 30, Farm Bureau said.
To policyholders, the reorganization represents a change in the company’s name but otherwise, it doesn’t
represent a change to their coverages or anything related to their policies, Doll said.
Tom Alger, a spokesman for Iowa Insurance Commissioner Susan Voss, said the commissioner approved the company’s reorganization plan on Dec. 16. Farm Bureau has no plans to sell stock, he said. If Farm Bureau chooses to sell stock in the future, the company would have to come back to the department with an expanded application to do so, Alger said.
The commissioner’s order states the company may use the reorganization as a vehicle to provide access to capital for future company growth, he said.
Farm Bureau Financial Services underwrites a broad range of financial services products, including property/casualty insurance products and services, life insurance, investments and annuities to individuals and small businesses within a marketing territory that includes 15 states (BestWire, Sept. 18, 2009).
Farm Bureau Mutual Insurance Co. was established in 1939 and has had a Best’s Financial Strength Rating of A (Excellent) for more than 65 years (BestWire, Sept. 18, 2009).
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com) BN-NJ-12-22-2009 1135 ET #
