IOWA COURT REINSTATES CHALLENGE TO ALLIED DEMUTUALISATION

The Iowa supreme court has reinstated a lawsuit against Allied Mutual Insurance that had been brought by policyholders on allegations that the company executed a de facto demutualisation by gradually passing financial control of the company to a publicly traded affiliate. A lower court had dismissed five counts of the complaint on the grounds that under Iowa law only shareholders — rather than policyholders — can bring a suit on behalf of a corporation, and dismissed three other counts because the time limit for the statute of limitations had passed. However, the supreme court found that the statute of limitations remained in question and noted that the “de facto conversion and breach of fiduciary duty are valid class claims”. Allied Mutual incorporated its Allied Group subsidiary in 1974. From 1985, Allied Group sold off 21% of its stock and retained the proceeds, beginning a “process that would ultimately result in a role reversal between Mutual and Group”, the court heard. Ohio-based Nationwide Mutual agreed to buy Allied Group in 1998. All three companies are named as defendants in the lawsuit.