95% of policyholders OK company reorganization
By Mary Judice - The Times-Picayune
Pan-American Life Insurance policyholders overwhelmingly approved a reorganization of their company into a mutual fund holding company Tuesday.
At a special meeting at the insurer's office in downtown New Orleans, about 95 percent of policyholders voted in favor of the change. The move awaits approval of the state Insurance Department.
The company formerly was a mutual company, which means its policyholders owned it. With the change, Pan-American forms a mutual holding company, which the policyholders still own, and a stock holding company known as Pan-American Life Insurance Group, which is a subsidiary of the mutual holding company.
Jose Suquet, Pan-American president and chief executive, said the change allows Pan-American greater access to capital markets and gives the company the flexibility to grow through acquisitions.
Last year Pan-American raised $50 million with a surplus note, which is subordinated debt. Suquet said that as a mutual holding company it can issue different types of debt and hybrid securities, as well as sell a minority share of the company to outside investors. The company has no plans to issue stock to the public, although the conversion to a mutual holding company does give Pan-Am that option, he said.
"It gives us a number of different fund-raising plans that a mutual insurance company does not" have, he said.
He said his mission as chief executive has been to set the company on a growth path.
Unlike other insurance companies, Pan-American did not move to become a stock company, which is owned by its stockholders.
"We did not demutualize," Suquet said. "We converted the rights of mutual life policies to the mutual holding company."
Pacific Life, Western & Southern Financial Group, Ohio National and National Life have all made the move to become stockholder-owned companies, he said.
Pan-American has more than 800 employees worldwide, including 340 in New Orleans. The insurance company has $1.7 billion in assets, $500 million in equity as defined by accepted accounting rules and $290 million in adjusted surplus.