Securities Act of 1933
December 5, 2016
Response of the Office of Chief Counsel
Division of Corporation Finance
American Family Mutual Insurance Company
Incoming letter dated November 30, 2016
Based on the facts presented, the Division will not recommend enforcement action to the Commission if, in reliance on your opinion of counsel that membership interests in the Mutual Holding Company are not securities within the meaning of the Securities Act or the Exchange Act, AFMIC causes current and future policyholders of AFMIC and the Designated Subsidiaries, to become members of Mutual Holding Company in connection with and after the Reorganization without registration under the Exchange Act. Capitalized terms have the same meanings as defined in your letter.
In reaching this position, we particularly note that:
- the Reorganization will be effected under Wisconsin law permitting the formation of mutual insurance holding companies by mutual insurance companies;
- with the Reorganization, policyholders of AFMIC and the Designated Subsidiaries will automatically become members of Mutual Holding Company;
- membership interests in Mutual Holding Company will be substantially the same as membership interests in AFMIC, will not be transferable and will be extinguished once a member is no longer a policyholder;
- Mutual Holding Company will not pay dividends or make other distributions or payments of income or profits to members, except to policyholders of AFMIC, in the event of a dissolution or liquidation or as otherwise approved by the Wisconsin Commissioner of Insurance;
- the Reorganization is subject to approval by the Wisconsin Commissioner of Insurance after notice to policyholders and a public hearing where policyholders were entitled to appear;
- the Wisconsin Commissioner of Insurance must approve the Reorganization after finding that it is fair and equitable to AFMIC’s policyholders; and
- Mutual Holding Company will be subject to oversight by the Wisconsin Commissioner of Insurance in its conduct toward members comparable to the oversight governing AFMIC, the Designated Subsidiaries and their respective members.
This position is based on the representations made to the Division in your letter. Any different facts or conditions might require the Division to reach a different conclusion. We express no views as to registration under Section 5 of the Securities Act or exemptions from registration in connection with the policyholder vote to approve the Plan. Further, this response expresses the Division’s position on enforcement action only and does not express any legal conclusion on the question presented.
The Incoming Letter is in Acrobat format.