Cedar Rapids, Iowa-based United Fire & Casualty Co. has signed an agreement and filed a reorganization plan with United Fire Group Inc. (United Fire Group), a newly formed subsidiary of United Fire, and UFC MergeCo Inc. (MergeCo), a newly formed subsidiary of United Fire Group. Under the plan of reorganization United Fire will operate under a holding company structure.
United Fire will merge into and with MergeCo, with MergeCo as the surviving company. United Fire would become the subsidiary of United Fire Group, and United Fire shareholders would become shareholders of United Fire Group, a new Iowa holding company.
Upon reorganization, each outstanding share of United Fire common stock will be automatically converted into one share of United Fire Group common stock. Shareholders of United Fire common stock would hold the same number of shares and the same ownership percentage after the reorganization as they held immediately prior to the reorganization.
The reorganization generally would be tax-free for United Fire shareholders.
At a special meeting, United Fire shareholders will vote on the proposal to approve the reorganization. The date of the special meeting has not yet been set.
United Fire Group will replace United Fire as the publicly held corporation. United Fire Group, through United Fire and its subsidiaries, would continue to conduct all of the operations currently conducted by United Fire and its subsidiaries.
The directors and executive officers of United Fire prior to the reorganization would be the same as the directors and executive officers of United Fire Group following the reorganization.
The company believes a holding company structure will provide it with greater strategic, business, financing and regulatory flexibility.
“The proposed change in structure should provide us more flexibility as a company to operate and finance our businesses,” President and Chief Executive Officer Randy A. Ramlo said in the company’s announcement. “Under this structure we would operate as a holding company as most of the companies in our industry operate — we are one of a very few insurance companies that do not operate with a holding company structure.”
If approved at the special meeting, it is currently expected that the reorganization would take place before the end of 2011.
Source: United Fire and Casualty