Policyholders of American Family Mutual Insurance Co. (AFMIC) have voted to approve the company’s plan to convert its corporate structure to a mutual holding company.
Madison, Wis.-based American Family said it received 84.5 percent support for the conversion from votes cast by proxy or in person, surpassing the required 75 percent.
The conversion to a mutual holding company, previously approved by the Wisconsin Office of the Commissioner of Insurance and American Family’s board of directors, will become effective upon issuance of a certificate of authority by the Wisconsin Office of the Commissioner, which is expected on or shortly after Jan. 1, 2017.
Under the new structure, American Family Insurance Mutual Holding Co. will become the group’s new parent company, with AFMIC becoming a stock subsidiary company wholly owned by the mutual holding company.
American Family said the approval will provide the company with the additional flexibility it needs to pursue future customer-driven opportunities. These include investing in and/or acquiring non-insurance companies that specialize in products and services that proactively protect customers from accidents and injuries, such as smart-home technology and distracted-driving prevention. The conversion also better positions American Family to acquire other mutual insurance companies.
A mutual holding company also retains American Family’s nearly 90-year history as a company owned by its policyholders. Policyholders of AFMIC will have the same membership rights they have now, while membership rights will also be extended to policyholders of certain other subsidiaries who underwrite property/casualty products sold by American Family agents.
While a mutual holding company structure would allow American Family to consider the sale of stock to raise capital, it has no plans do so. Any initial sale of voting stock would require prior approval of the mutual holding company board and members, and the Wisconsin Office of the Commissioner of Insurance.
Coverage, premium rates and claims handling under existing American Family insurance policies are unaffected by the change to a mutual holding company. Company and agent operations are also unaffected.
Nearly 210,000 AFMIC policyholders voted on the conversion plan, for a response rate of approximately 6 percent. That response rate is consistent with proxy votes of other financial services companies, according to AST Fund Solutions, a firm that specializes in conducting and tabulating proxy votes and assisted American Family in its effort.