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Stonybrook Capital’s Mutual Insurance Company News Analysis: Activist Stake in EMCI

January 30, 2019

NEW YORK, Jan. 30, 2019 (GLOBE NEWSWIRE) -- The following is a statement from Stonybrook Capital regarding a case study the company is releasing.

Stonybrook writes today to provide perspectives on the recent announcement that it has recently been disclosed that activist investor Gregory Shepard has built a 5.09% stake in EMCI and is pushing to increase the valuation offered by the mutual parent Employers Mutual.

This transaction is representative of the increase in activity Stonybrook is seeing in the mutual sector. Whether it is pursuing affiliations and acquisitions, raising capital by issuing surplus notes, or especially more recently, restructuring as mutual holding, mutual insurers are increasingly looking for ways to broaden their options as they face increasing market competition and industry restructuring. In the past 3 years, Nodak Mutual went public with NI Holdings, and American Family, Standard Mutual, Illinois Casualty, MLMIC, and Federal Life have formed private mutual holding companies with many more being planned for the new future.

The rationale seems to be straight-forward: to compete on product, invest in innovation, and to have additional options in raising capital, business as usual may not be the most desirable option. To be clear: most mutuals still love being mutuals and all that entails - the ability to think and plan long term, a policyholder-oriented business approach, a sense of shared values - and do not plan to abandon the premise entirely.

With Greg Shepard’s track record (e.g., Donegal, Meridian, Nationwide), it will be interesting to see how the EMCI transaction takes shape. Shepard’s interest in mutuals seems also to represent the market’s broader interest in mutuals as a source of unlocked value (read economic value) with sometimes little overlap with mutual’s policyholder-centric priorities.

Please click here to read the filing.

Click here to view a case study Stonybrook prepared on the subject.

About Stonybrook CapitalStonybrook Capital is the preeminent expert on the mutual sector and has helped many mutuals raise capital, grow inorganically, and invest in the InsureTech Sector. Ravi Arps, a Managing Director and Board Member of Stonybrook, was recently featured in an interview by AM Best TV discussing surplus note securities and the market for them. Click here to watch the interview.

For further discussion, please feel free to contact using the information below

Ravi ArpsManaging Director, Board MemberStonybrook Capital(860) 301-6595 ravi.arps@stonybrookcapital.com

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