The Savings Bank Life Insurance Company of Massachusetts (SBLI) on July 26 announced the successful completion of its conversion from a stock insurance company owned by 30 shareholder banks to a mutual insurance company owned by its policyholders.
Following the conversion, the company’s name will change to The Savings Bank Mutual Life Insurance Company of Massachusetts.
The conversion was approved by approximately 92% of SBLI policyholders and holders of annuity contracts (about 10% of SBLI’s policyholders, or roughly 61,500 people) who voted at a special policyholder meeting on June 28 or by other means in advance of the meeting.
Prior to the policyholder vote, the proposed plan of conversion had been approved by the Massachusetts Commissioner of Insurance, the shareholders, and by unanimous votes of the SBLI board of directors and Policyholder Advisory Board.
Earlier this year, New Hampshire woman and SBLI whole life policyholder Leslie V. McEvoy asked a Suffolk County Superior Court judge to block the conversion. She argued that SBLI was going to pay the bank shareholders too much for their shares, leaving policyholders with millions of dollars in debt. The complaint said SBLI had also failed to adequately inform policyholders of its intentions.
Superior Court Justice Mitchell H. Kaplan denied the request for an injunction, basing his ruling on a finding that SBLI’s disclosures about the deal were adequate.
The conversion was facilitated by the issuance of $57.3 million in surplus notes by SBLI, the proceeds of which were used to pay the shareholder banks $57.3 million for all of their outstanding shares of SBLI stock.
“The management and board of directors of SBLI are pleased to have received the overwhelming support of the policyholder vote in favor of the conversion,” said SBLI President and CEO James Morgan. “We believe that moving forward as a mutual company is in the best interests of SBLI and its policyholders, and look forward to continuing our mission of providing our customers with safe, low-cost life insurance to protect their families.”
As a result of the conversion, SBLI is now owned by its policyholders and holders of annuity contracts, who have gained membership rights in the mutual company including the right to annually elect directors and to consider such other matters as are considered at annual and special meetings. The conversion will have no effect on existing insurance policies or annuity contracts or on policyholder dividends, nor will it change the operation of the company.
Conceived by future U.S. Supreme Court Justice Louis D. Brandeis, Savings Bank Life Insurance was established in Massachusetts in 1907 and for 85 years was sold through a network of life insurance departments located in mutual savings banks. In 1992 The Savings Bank Life Insurance Company of Massachusetts was created as a stock insurance company through state legislation.
New banking regulations and the low-interest-rate environment made involvement in the company increasingly expensive for the banks, who Morgan said were demanding higher dividend payments.
About The Savings Bank Life Insurance Company of Massachusetts: The Savings Bank Life Insurance Company of Massachusetts (SBLI) is currently licensed in 49 states and the District of Columbia, and is a leading provider of safe, low-cost life insurance products. For more information visit www.sbli.com or call 1-888-GET-SBLI.