Phoenix Home Life eyes demutualization

Phoenix Home Life Mutual Insurance Co. is developing a plan to demutualize, making it the latest life insurance company looking to take its business to Wall Street. Demutualization is a process in which an insurance company converts ownership from policyholders to shareholders.

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On April 17, the board of directors for the Hartford, Conn.-based insurer authorized the company to develop a demutualization plan. Phoenix, which sells life insurance, annuities, mutual funds, and investment services, had revenues of $3.5 billion and net gains of $533 million in 1999.

If Phoenix goes public, policyholders would likely be eligible to receive compensation in the form of cash, stock, or policy credits. Phoenix says the demutualization will not affect existing policies with the company.

If Phoenix went public, policyholders would be eligible to receive compensation in the form of cash, stock, or policy credits.

Alice Ericson, a spokesperson for Phoenix, says that if all goes well with the demutualization plan, the company could possibly have its initial public offering in the next 12 to 18 months. By the middle of May, policyholders will be receiving brochures in the mail that briefly describe the planned demutualization. A more detailed package — along with a ballot that will ask them to vote yes or no on the demutualization — will also be mailed in the coming months.

Ericson says policyholders eligible to receive compensation in the demutualization plan are those who have policies in force on the date the board of directors adopts the plan. Those who have Phoenix Home Life policies — including term, whole, variable, variable universal, variable universal, and annuities — are eligible for compensation. However, those who have policies from the company's subsidiaries, such as PHL Variable Insurance Co. and Phoenix Life and Annuity Co., are not eligible for compensation.

Along with policyholder approval, the demutualization plan will need approval from the New York Department of Insurance. Although the company's headquarters are located in Hartford, it is "domiciled" — or holds it legal residence — in New York. When Phoenix Mutual Life Insurance Co. of Hartford and Home Life Insurance Co. of New York City merged in 1992 to form a new company, both agreed that the new entity would be domiciled in New York.

Phoenix Home Life is the latest in a number of life insurers who have either gone public or are eyeing Wall Street. John Hancock Financial Services, Metropolitan Life Insurance Co., and Sun Life Financial Services of Canada went public earlier this year. Prudential Life Insurance Co. of America also plans to have an IPO either later this year or early 2001.

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