Nationwide has agreed to settle litigation related to the merger with Harleysville Insurance.
The $26 million settlement relates to In re Harleysville Mutual, a consolidated class action and derivative suit related to the merger of Nationwide Mutual and Harleysville Mutual that has been brought on behalf of former Harleysville Mutual policyholders.
The $834 million merger was completed last May, and Harleysville Insurance is now part of the Nationwide family of companies.
Financial terms of the deal had come under attack by some Harleysville Mutual policyholders as well as by some other third-party observers such as David Schiff, editor of Schiff’s Insurance Observer and an advocate of mutual policyholders. Critics argued that Nationwide offered a significant premium for common stock of Harleysville Group, a publicly traded subsidiary of Harleysville Mutual — which critics contend enriched stockholders including top executives at Harleysville Mutual.
But, the critics also noted, the merger didn’t provide for any consideration to the mutual policyholders of Harleysville Mutual beyond the fact that they would become members of Nationwide.
The suit and settlement were filed in the Court of Common Pleas of Philadelphia, First Judicial District of Pennsylvania, Civil Trial Division.
Nationwide said it believes that settling this lawsuit was in the best interest of all Nationwide and Harleysville stakeholders, given the potential cost and burden of continued litigation.
Nationwide said it is “pleased to resolve this matter and put the Harleysville class action and derivative litigation behind it.”
The company pointed out that the settlement is not an admission of wrongdoing or liability by Nationwide or Harleysville. The court has not ruled on the merits of the suit, and is not expected to do so in the course of the settlement-related proceedings. The settlement will not be final until it is approved by the court and any appeals from the court’s ruling are resolved.
As part of the settlement process, the parties involved have requested that the court certify a class for the purposes of settlement only. Before the court can approve the settlement, class members must be given notice of the terms of the settlement and their rights with respect to it, and the court must hold a hearing to determine the fairness of the settlement.
The court must still determine a timeline for when class members will receive written notice of the settlement, their deadline for objecting to or opting out of the settlement, and the date of the fairness hearing on the settlement.
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