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ISMIE Board to Explore Stock Conversion Alternatives |
Recently, the ISMIE Board of Governors took action to consider alternatives to converting ISMIE from a reciprocal insurance company to a stock company. Begun in May 1999, the original stock conversion plan was intended to enhance ISMIE's competitiveness through continued growth in the Illinois medical malpractice marketplace.
While most of the regulatory paperwork had been completed for the conversion process, the ISMIE Board of Governors shelved the plan and withdrew its conversion plan application from the Securities and Exchange Commission (SEC) due to persistent market volatility and considerable losses experienced by other stockholding insurance companies.
According to Dr. Harold Jensen, Chairman of the ISMIE Board of Governors, market conditions and severe losses in the property/casualty industry would have forced ISMIE to issue its stock at roughly fifty percent of book value, effectively devaluing the company by half. Recognizing that such a devaluation would expose ISMIE to unnecessary financial and strategic risk, Dr. Jensen recommended that conversion alternatives be explored that better reflect ISMIE's mission of fiduciary responsibility and physician-first service.
The ISMIE Board of Governors is now considering a proposal to convert ISMIE from a reciprocal company to a mutual insurance company. This will create opportunities for flexibility and long-term growth, without the risks associated with stock conversion. Since the lengthy regulatory approval process must be begun anew, this proposal will be slated for consideration by the second quarter 2001.
ISMIE policyholders will experience no changes whatsoever in their insurance coverage as a result of these conversion activities. Once the proposed conversion strategy for mutual conversion is confirmed, it will be subject to approval by all eligible policyholders at an appropriate time.