The U.S. Securities and Exchange Commission has cleared a hurdle facing a Midwestern mutual insurer that is trying to convert into a stock company controlled by a mutual insurance holding company.
Fidelity Life Association, Oak Brook, Ill., wants to go through the conversion without having to treat the “membership interests” of its policyholder owners, or the membership interests of the new mutual insurance holding company, Members Mutual Holding Company, as securities, according to J. Brett Pritchard, the lawyer representing Fidelity Life.
Fidelity will not be paying policyholders for their membership interests, and the company believes that at least 2 U.S. Supreme Court cases provide guidelines indicating that Fidelity Life policyholder membership interests are not securities, Pritchard writes.