company, with ownership calculated on cumulative premiums paid over time.

The company was formed in 1986 as an industry-owned insurance company designed to service the needs of the petroleum industry. At a meeting last week the company's shareholders agreed to recapitalise the company to form the mutual structure.

Next month the 6,657 common shares will be cancelled and the current 36 shareholders will receive cash equal to two times the amount paid for the shares.

The total cost of the repurchase will be $136 million, the company stated in a press release. At the same time a new common share will be issued to each current shareholders with a par value of $5,000.

The existing 27 non-shareholders who are also policyholders will become new shareholders over the next year. Based on relative premium levels the executives calculate that new shareholders will acquire about 20 percent of the company over the next five years.

"The restructuring offers additional value to the existing shareholders by providing a return on their investment and our new shareholders begin to build equity and can actively participate in the future direction of the company,'' Oil president and chief executive officer Jon R. King said.

Oil had net income of $34.3 million in the first nine months ended August 31.