What is demutualization? What are some reasons companies want to demutualize?
What will be an ideal response?
Demutualization is the process of changing a mutual organization to the stock form. Some mutuals want to change to the stock form in order to raise funds in the capital markets and become more globally competitive. Mutuals are only able to grow through additions to surplus through operations and this is seen as a great impediment to competitive growth. Finally, the Gramm-Leach-Bliley Act of 1999 gave mutuals an incentive to convert to stock ownership, since they can then more easily be acquired by other firms.
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What will be an ideal response?
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