Nodak Mutual Insurance Company Conversion FAQ

What is a conversion?

A conversion, also called demutualization, is the process by which a mutual insurance company, such as Nodak Mutual Insurance Company, which is owned by its members, becomes a stock insurance company owned by shareholders.

What is the process Nodak Mutual Insurance Company will need to follow to convert?

On Jan. 21, 2016, Nodak Mutual Insurance Company’s Board of Directors approved a Plan of Conversion which calls for Nodak Mutual Insurance Company to convert from a mutual company to a stock company. By April 20, 2016, Nodak Mutual Insurance Company must file the Plan with the North Dakota Insurance Department, which must approve or disapprove the Plan. If the Plan is approved, eligible members will be given the opportunity to vote on the Plan. If the members approve the Plan, the conversion will take place. If either the Department or the members disapprove the Plan, Nodak Mutual Insurance Company will remain a mutual company.

What is the North Dakota Insurance Department’s role?

The North Dakota Insurance Department will review Nodak Mutual Insurance Company’s Plan of Conversion and, utilizing experts as needed, will determine whether the Plan complies with the law, whether it is fair and equitable to the members and whether the company would be in a position to remain in good condition for the future.

Who are eligible members?

If you are a member who had a policy in force as of Jan. 21, 2016, and that policy remains in force, you are an eligible member.

Will this affect my insurance policy?

No. Your insurance policy remains the same.

Do I need to do anything?

Nodak Mutual Insurance Company is required to provide you a Notice when it files the Plan with the North Dakota Insurance Department. This Notice will provide further details that you will want to read carefully. You will have the opportunity to provide comments to the Department, Nodak Mutual Insurance Company or both by March 14, 2016. This information will also be available on the Department’s website.

If the Department approves the Plan, eligible members will be provided the opportunity to vote. Nodak Mutual Insurance Company is required to provide you notice of this vote. You can vote either for or against the conversion.

What happens if the Plan of Conversion is approved?

If the Plan of Conversion is approved, Nodak Mutual Insurance Company will convert to a stock company called Nodak Insurance Company. 

Will I automatically receive stock?

No. You will receive subscription rights which will provide you the opportunity to buy shares of stock for a price that is not known at this time. These subscription rights give you the first right to buy the stock before anybody else.

Do I have to buy stock?

No. If you don’t choose to buy the stock you will be sent their value in the form of a check. However, you cannot choose to buy some stock and receive some cash, you must either choose one or the other.

How much money will I get?

The amount of the cash you would receive if you do not buy the stock will depend on the fair market value of those rights. That value is being determined by an independent expert. At a later time, you will receive documents from the company explaining the process for purchasing stock and describing the payment you would receive if you do not buy stock.

What if I don’t make a choice?

If you do not make an active choice between buying stock or cash before the stated date you will automatically be sent cash. You will not receive a chance to change your mind.

If the conversion is approved, when will it be completed?

The effective date is unknown at this time. However, eligible members will be given 30 days from the date of the Notice to Members in which to provide comments. If the North Dakota Insurance Department approves the Plan, Nodak Mutual Insurance Company will have a meeting for members to vote. Nodak Mutual Insurance Company must give at least 45 days notice prior to this meeting.

If the conversion happens, who is my insurance company?

The new insurance company will be called Nodak Insurance Company. Of course, consumers can choose to change insurance companies whenever they want to under any applicable laws.

What happens if the Plan is not approved?

If the Plan of Conversion is not approved, Nodak Mutual Insurance Company will remain a mutual company and nothing will change for you.

Who can I talk to with my questions?

You may contact Nodak Mutual Insurance Company (877) 814-5011 or via email at comments@nodakmutual.com or you may contact the North Dakota Insurance Department.