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Frequently Asked Questions

Answers to Frequently Asked Questions – Mutual Holding Company Conversion

 

What is the Mutual Holding Company conversion?

  • The company will continue to be a mutual organization, operated for the benefit of its members, but Rockingham Mutual Insurance, which is currently structured as a Virginia domestic mutual company, will change to an incorporated stock insurer.
  • This conversion will change the company to a subsidiary of a newly created Mutual Holding Company, with a downstream stock holding company, as depicted below.

        

Where can I get a copy of the conversion plan?

What changes will I notice?

  • The name of Rockingham Mutual Insurance Company will change to Rockingham Insurance Company.
  • The voting and membership rights of policyholders of Rockingham Mutual Insurance Company will transfer to Rockingham Mutual Group, Inc., the company with ultimate control of the enterprise.

What are the voting rights?

  • Currently members of the mutual company are given one vote for every policy they hold with the mutual company.  At annual meetings and special meetings, members have the opportunity to vote on company matters, including the election of directors and other key decisions.
  • With this conversion, voting rights will move to the Mutual Holding Company and members will have the opportunity to continue to vote on company matters for Rockingham Mutual Group, Inc. the controlling or parent company.
  • New policyholders of Rockingham Insurance company will also become members of and have voting rights in the Mutual Holding Company.

Why is a change to the corporate structure needed?

  • To maintain the company’s financial strength and competitiveness, it must diversify the products and services offered.  The new corporate structure will allow the company more flexibility to do this through new product development, acquisitions, and raising additional capital.  It will put the company in a much better position to deal with the challenges it faces including major unexpected loss events like the 2012 Derecho.

Do other companies use the MHC type of structure?

  • Yes.  While Rockingham will be the first Virginia-based insurance company to use the MHC structure, it is utilized by several mutual companies in other states including companies like Nationwide and Liberty Mutual. 

What risks are there to the company?

  • There are no significant additional risks presented by this change in corporate structure. This conversion allows the company to maintain its mutual principles while gaining options for efficient future access to outside capital if it is needed.  It will also provide a more contemporary corporate structure for expansion and possible acquisitions.

What risks are there to the policyholder?

  • With the change to a mutual holding company structure, it is possible that there would be a new stakeholder group – shareholders.  The Board of Directors and Management of the company will need to balance the interests of shareholders and policyholders.

Will I be able to buy stock in the company?

  • We are not planning a public stock offering at this time.  If a public stock offering ever occurs, policyholders will be able to purchase stock and may be offered the first opportunity to do so.

Will the company be sold?

  • No.  Raising capital could include selling portions of the stock holding company.  However, as a Mutual Holding Company, Rockingham Mutual Group, Inc. is required to retain direct or indirect ownership and control of a majority of the outstanding voting shares of the stock holding company.

Is my policy the same?

  • There will be no changes to current policies, terms, or conditions as a result of this conversion including the amount of premium charged.  Rockingham Insurance Company will be responsible for and address any policy obligations of Rockingham Mutual Insurance Company.

Who is allowing this change?

  • The Board of Directors adopted the plan of conversion on December 5, 2012.
  • The Virginia Bureau of Insurance approved the presentation of the plan to members on June 20, 2013.
  • We received member approval at a special members meeting held on September 10, 2013.