Demutualization
Categories: Insurance, Regulations
It's totally trendy to join a co-op, whether it's for housing, groceries, freelance jobs, and anything in-between. The one thing that defines a cooperative or mutual business is that the members/customers are the owners. But what happens when that company converts into a corporation with shareholders?
Demutualization.
A famous example would be MetLife, the insurance company with the cute Snoopy commercials. In 2000, the company decided to convert from a mutual company that operated for the benefit of members to a for-profit company listed on the stock exchange. Policyholders received stock in the company during the process, but a lot of members weren't happy. MetLife ended up settling for $50 million after nine years of litigation. Good grief!