A North Dakota Insurance Company wants to change its status from being a “mutual” company to a “stockholder” company.
Nodak Mutual Insurance is a "member benefit" of the North Dakota Farm Bureau. You have to be a Farm Bureau member to purchase insurance. And the policy-holders own the company. If Insurance Commissioner Adam Hamm approves the change, you would still have to be a member of the Farm Bureau to buy a policy – but the company could seek outside investors.
A formal hearing on the change was held at the state Capitol Tuesday. Nodak Mutual executive vice-president Michael Alexander testified outside investors would own up to 45 percent of the company, but the board would still come from Farm Bureau members.
"It gives us access to capital that we would otherwise not have available to us," Alexander told the hearing. "The only way a mutual company can access capital is through borrowing."
Alexander said the additional capital will allow Nodak to further its plans to grow through acquisitions and "internal expansion."
Nodak already owns insurance companies in other states.
Alexander said the hope is to raise $90 million in a stock offering.
Hamm said there's not time frame in state law for him to make a decision. But he said as a practical manner, the decision will come soon -- because he's leaving office at the end of the year. Hamm said there are a lot of factors that will go into his decision.
"It boils down to -- is going through this process of demutualizing in the best interest of the policy holder?" Hamm said. "And has it complied will all components of North Dakota law?"
The 2015 Legislature changed state law to make it easier for insurance companies to make that change.
Nodak has nearly 28,000 policy holders. It’s headquartered in Fargo, and employs around 130 people.