Nationwide has settled the lawsuit arising out of the insurer’s merger with Harleysville Insurance for $26 million. The suit, a consolidated class action and derivative suit, was filed by former Harleysville Mutual policyholders. It arose out of the $834 million merger of Nationwide Mutual and Harleysville, which was completed last May. 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, including 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 that the merger failed to provide for any consideration to the mutual policyholders of Harleysville Mutual beyond the fact that they would become members of Nationwide.
The suit was filed in the Court of Common Pleas of Philadelphia, First Judicial District of Pennsylvania, Civil Trial Division. The Court has not ruled on the merits of the suit, and now is not expected to do so. But the settlement won’t be final until it is approved by the Court. 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.
Source: Insurance Journal
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