National Western Life’s Shareholders to Vote in June on Reorganization Proposal
April 9, 2015 by Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com
AUSTIN, Texas – At its annual shareholders’ meeting in June, National Western Life Insurance Co. said its shareholders will be asked to vote on a proposal to approve a reorganization under which the current company would become a subsidiary of a holding company, National Western Life Group Inc., a newly formed Delaware corporation.
Pending approval, shareholders would become stockholders of the new holding company, National Western said in a statement. When it’s completed, the holding company will replace the present company as the publicly held corporation. The holding company, through its subsidiaries, will continue to conduct the operations currently conducted by the company and its subsidiaries.
The shareholders meeting will be held on June 19 in Galveston, Texas.
“We believe that implementing the holding company structure, which is how most of our public company peers are organized, will provide the company with strategic, operational and financing flexibility, and incorporating the new holding company in Delaware should allow us to take advantage of the flexibility, predictability and efficiency that Delaware corporate law provides,” said Ross R. Moody, president and chief operating officer, in a statement.
Each share of the company’s Class A and Class B common stock outstanding at the time of the reorganization would be converted into one share of Class A and Class B common stock, respectively, in the holding company, National Western said.
National Western Life Insurance Co. is the 71st-largest U.S. life insurer based on 2013 admitted assets of $9.77 billion, according to A.M. Best Co.
National Western Life is a stock life insurance company offering individual universal life, whole life and term insurance plans, annuities and investment contracts in 49 states and in countries in Central and South America, the Caribbean, Eastern Europe, Asia, and the Pacific Rim.
The reorganization is intended to be tax-free for the company and its shareholders for U.S. federal income tax purposes. The directors of the company before the reorganization also will be the same as the directors of the holding company after the reorganization.
The shares of National Western Life Group Inc. common stock are expected to trade under the company’s current ticker symbol, “NWLI” on the NASDAQ Global Select Market, Moody said.
According to A.M. Best, National Western Life maintains a relatively diverse business profile, offering primarily equity-indexed annuities within the United States and equity-indexed universal life domestically and to residents in international markets. National Western Life mitigates the added risk of international exposure by accepting applications from foreign nationals in upper socioeconomic classes and by denominating policies in the U.S. dollar. A.M. Best said (Best’s News Service, June 4, 2014).
However, National Western Life has a large exposure to interest-sensitive liabilities due to growth in fixed-indexed annuities in recent years. The company mitigates the risk of spread compression through a well-matched fixed income portfolio and active management of crediting rates. A continued low interest rate environment, however, could negatively impact the company’s operating results, A.M. Best said (Best’s News Service, June 4, 2014).
On the morning of April 7, National Western Life Insurance Co.’s stock was trading at $254.31 a share, down 0.70% from the previous close.
National Western Life Insurance Co. currently has a Best’s Financial Strength Rating of A (Excellent).
