National Travelers to convert to mutual holding company
National Travelers Life Co. has shed its status as a company owned exclusively by policyholders in an effort to raise future capital and possibly merge with another insurance company.
The Des Moines-based insurer is converting its status from a mutual company to a mutual holding company. A mutual company is owned by its policyholders. A mutual holding company can split ownership between policyholders and outside investors. National Travelers' plan to change its ownership was approved by Iowa Insurance Commissioner Therese Vaughan on Dec. 23.
James Wallace, president and CEO of National Travelers, says that although the company can now issue shares of stock to investors, it does not plan to do so yet. Wallace says the main reasons behind converting to a mutual holding company are significant tax advantages and a potential merger, which could be made easier since both companies would be able to retain their names under a mutual holding company merger. "We don't need capital currently. We're in great shape," he says. "But this positions us to raise capital very rapidly if we had to."
Policyholders voted 94 percent in favor of changing the ownership status at a Nov. 18 policyholder meeting. National Travelers has about 130,000 policyholders and does business in 40 states.