It’s official: The banks are out as owners of the Savings Bank Life Insurance Company of Massachusetts, and the policy holders are in charge.
The Woburn-based SBLI took the unusual step of converting into a mutually-owned firm. The company spent $57.3 million in surplus funds and debt to buy out its 30 bank shareholders.
About 10 percent of SBLI’s policyholders, about 61,500 people, took part in voting on whether to convert the firm into a mutual company. A vast majority of those voting, 92 percent, were in favor, said James Morgan, the insurer’s chief executive officer.
But the conversion process did hit some roadbumps along the way.
Earlier this summer, a New Hampshire woman with an SBLI policy asked a Suffolk County Superior Court judge to block the conversion. She argued that SBLI was paying the bank shareholders — including Bank of America Corp. and Citizens Financial Group — too much for their shares, and leaving policyholders with millions of dollars in debt. The insurance company had also failed to adequately inform policyholders of its intentions, the complaint said.
Superior Court Justice Mitchell H. Kaplan, however, denied the request for an injunction. Kaplan said he wasn’t deciding whether the conversion was, “good, bad, or indifferent,” for policyholders, but based his ruling on a finding that SBLI’s disclosures about the deal were adequate.
Massachusetts banks started SBLI, but new banking regulations and the low-interest-rate environment have made their involvement in the company increasingly expensive. The banks were demanding higher dividend payments, Morgan said.
The insurer plans to continue using the SBLI brand in its marketing, but will officially be known as The Savings Bank Mutual Life Insurance Company of Massachusetts. The newly-named firm has a nine-member board of directors, including four members who are affiliated with banks and will serve out their terms, Morgan said.
Other insurers, who have no ties to banks, still have banking experts on their board of directors who can help on accounting issues, Morgan said. As members retire and step down, Morgan said, he plans to seek out investment and technology experts to fill the vacant positions.
Deirdre Fernandes can be reached at email@example.com. Follow her on Twitter @fernandesglobe.