The conversion of a mutual life insurer to a stock company (i.e. a public company). Demutualization requires a vote from the existing mutual policyholders, and a final decision by the board of directors of the insurance company. Upon successful demutualization, it’s typical for all policyholders to be given shares of stock in proportion to their former mutual ownership in the company.
Once a company has demutualized, it may opt to suspend dividend payments to participating policyholders, however it may also continue paying dividends based on the performance of the whole life block. Since participating policyholders are no longer mutual owners or members of the company, they lose their voting rights except as otherwise provided by the demutualization.
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