07 LC 28
3345ER
House
Bill 377
By:
Representative Knox of the
24th
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend Title 33 of the Official Code of Georgia Annotated, relating to insurance,
so as to provide a short title; to define certain terms; to provide for
reorganization of mutual insurers and formation of mutual insurance holding
companies; to provide for mergers of mutual insurers or other entities with
mutual insurance holding companies; to provide for approval of reorganization
plans or merger plans by policyholders; to provide for approval of
reorganization plans or merger plans by the Commissioner of Insurance; to
provide for domestication of mutual insurance holding companies; to provide for
conversion of mutual insurance holding companies; to provide for applicability
of certain provisions and rehabilitation and liquidation; to provide that
certain membership interests shall not be deemed securities; to provide
restrictions on voting stock of reorganized stock insurers; to provide for
powers of mutual insurance holding companies and restrictions on dividends; to
provide time limits for challenges; to provide for payment of costs and expenses
of reorganization or merger; to provide for retention of experts to assist in
evaluating reorganization or merger plans; to provide an effective date; to
repeal conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Title
33 of the Official Code of Georgia Annotated, relating to insurance, is amended
by adding a new Chapter 13A to read as follows:
"CHAPTER
13A
33-13A-1.
This
chapter shall be known and may be cited as the 'Mutual Holding Company
Act.'
33-13A-2.
As
used in this chapter, the term:
(1)
'Independent committee of the board' means a committee of the board of directors
of a mutual insurance holding company that is comprised exclusively of
nonmanagement board members.
(2)
'Intermediate holding company' means one or more stock corporations that own all
of the shares of voting stock of one or more reorganized stock companies after a
reorganization under Code Section 33-13A-4 or a merger under Code Section
33-13A-5.
(3)
'Majority of the voting stock of the reorganized stock insurer' means shares of
the capital stock of the reorganized stock insurer which carry the right to cast
a majority of the votes entitled to be cast by all of the outstanding shares of
the capital stock of the reorganized stock insurer for the election of directors
and on all other matters submitted to a vote of the shareholders of the
reorganized stock insurer.
(4)
'Member' means a person who obtains a membership interest in a mutual insurance
holding company by virtue of being a policyholder of a mutual insurer that is
the subject of a reorganization plan under Code Section 33-13A-4 or a merger
under Code Section 33-13A-5.
(5)
'Merger plan' means a plan approved by a domestic mutual insurer´s board of
directors under Code Section 33-13A-5 which proposes to merge a domestic or
foreign mutual insurer into an existing mutual insurance holding company or into
an intermediate holding company, thereby converting the domestic or foreign
mutual insurer into a stock insurer.
(6)
'Mutual insurance holding company' means a domestic corporation incorporated
pursuant to a reorganization plan under Code Section 33-13A-4 or a merger under
Code Section 33-13A-5, which company is the ultimate parent of a reorganized
stock insurer and which may be the parent company of one or more intermediate
holding companies.
(7)
'Nonmanagement board member' means a board member of the board of directors of a
mutual insurance holding company who is not an officer or employee of the mutual
insurance holding company or any of its subsidiaries.
(8)
'Policyholder' means a person who is insured under one or more insurance
policies or annuity contracts by a mutual insurer at the time of a
reorganization under Code Section 33-13A-4 or a merger under Code Section
33-13A-5; provided, however, that the term 'policyholder' shall not include a
person who holds a nonparticipating policy issued by a mutual life insurer if so
limited by the bylaws of such mutual life insurer.
(9)
'Reorganization plan' means a reorganization plan adopted by a mutual
insurer´s board of directors in accordance with Code Section 33-13A-4 which
proposes to convert the domestic mutual insurer into a stock
insurer.
(10)
'Reorganized stock insurer' means the domestic or foreign stock insurer
resulting from a domestic or foreign mutual insurer´s reorganization under
Code Section 33-13A-4 or merger under Code Section 33-13A-5.
(11)
'Voting stock' means securities of any class or any ownership interest having
voting power for the election of directors, trustees, or management of a
corporation, other than securities having voting power only as a result of a
contingency. Voting stock shall also mean a voting security as defined in Code
Section 33-14-17.
33-13A-3.
This
article shall apply only to:
(1)
Domestic and foreign mutual insurers which are actively engaged in the business
of insurance in Georgia; and
(2)
Domestic mutual insurance holding companies.
33-13A-4.
(a)
A domestic mutual insurer may, upon receipt of the approval of the Commissioner,
reorganize by forming a mutual insurance holding company based upon a
reorganization plan that is consistent with the requirements of this chapter.
Such a reorganization plan must be adopted by the affirmative vote of not less
than two-thirds of the mutual insurer´s board of directors.
(b)
At any time prior to the mailing to policyholders of the notice pursuant to Code
Section 33-13A-7, a mutual insurer´s board of directors may amend the
reorganization plan by the affirmative vote of not less than two-thirds of the
members of the board of directors. At any time before the Commissioner´s
approval or disapproval of the reorganization plan, a mutual insurer´s
board of directors may withdraw the reorganization plan by the affirmative vote
of not less than two-thirds of the board of directors.
(c)
The reorganization plan shall provide for the creation and incorporation of a
mutual insurance holding company and for the continuation of the corporate
existence of the mutual insurer as a stock insurer.
(d)
The reorganization plan shall provide that all of the initial shares of voting
stock of the reorganized stock insurer or insurers shall be issued to the mutual
insurance holding company or to an intermediate holding company. The
reorganization plan shall provide that the mutual insurance holding company
shall at all times own a majority of the voting stock of the reorganized stock
insurer or, alternatively, that the mutual insurance holding company shall at
all times own the majority of voting stock in an intermediate holding company,
which intermediate holding company shall at all times own all of the voting
stock of the reorganized stock insurer. The shares of voting stock required to
be owned by the mutual insurance holding company or by any intermediate holding
company shall not be pledged, hypothecated, or in any way encumbered with regard
to any obligation, guaranty, or commitment undertaken by or on behalf of the
mutual insurance holding company or the intermediate holding company, if any.
The plan shall also provide that the board of directors of the mutual insurance
holding company will be elected by the members.
(e)
The reorganization plan shall provide that membership interests of the
policyholders of the mutual insurer or insurers shall automatically become
membership interests in the mutual insurance holding company as long as the
policy is in force, and that, concurrently upon the effective date of the
reorganization, the policyholder´s membership interests in the mutual
insurer or insurers shall be extinguished.
(f)
The reorganization plan or merger plan must also address each of the following
items:
(1)
In the case of a reorganization under this Code section, establishing a mutual
insurance holding company with at least one stock insurer subsidiary or, in the
case of a reorganization by merger under Code Section 33-13A-5, a description of
the terms and conditions of the proposed reorganization or merger;
(2)
An analysis of the benefits and risks attendant to the proposed reorganization,
including the rationale for the reorganization;
(3)
The provisions for protection of the immediate and long-term interests of
existing policyholders;
(4)
Ensuring immediate membership in the mutual insurance holding company of all
existing policyholders of the reorganizing domestic insurer or
insurers;
(5)
Describing the membership interests in the mutual insurance holding company for
all future policyholders of the reorganized stock insurer;
(6)
Identifying the number of members of the board of directors of the mutual
insurance holding company, if any, that are required to be policyholders of the
reorganized stock insurer;
(7)
Describing the nature and content of the annual report and financial statement
to be sent to each policyholder;
(8)
A copy of the proposed mutual insurance holding company´s articles of
incorporation and bylaws specifying all membership rights;
(9)
The names, addresses, and occupational information of all corporate officers and
members of the proposed mutual insurance holding company´s board of
directors, to the extent that such documentation has not already been filed with
the department;
(10)
Information sufficient to demonstrate that the financial condition of the
reorganizing or merging insurer will not be materially diminished upon
reorganization or merger, including information concerning any subsidiaries of
the reorganizing or merging insurers that will become subsidiaries of the mutual
insurance holding company or any intermediate holding company as part of the
reorganization or merger;
(11)
A copy of the articles of incorporation and bylaws for any proposed insurance
subsidiary or intermediate holding company subsidiary;
(12)
A description of any plans for an initial subscription or sale of stock or other
securities of the reorganized stock insurer or any intermediate holding company;
and
(13)
Any other information related to the reorganization or merger reasonably
requested by the Commissioner.
(g)
The board of directors of a domestic mutual insurer shall file all of the
following with the Commissioner within 60 days after adopting a reorganization
plan or a merger plan pursuant to subsection (a) of this Code
section:
(1)
The reorganization plan or the merger plan;
(2)
The forms of notices to be sent to such mutual insurer´s
policyholders;
(3)
The form of proxy, if any, to be solicited from policyholders in connection with
any policyholder vote on the reorganization plan or the merger
plan;
(4)
The proposed articles of incorporation and bylaws for the mutual insurance
holding company and the reorganized stock insurer and, where applicable, for any
intermediate holding company; and
(5)
Such other documents as the Commissioner may reasonably require to evaluate the
proposed reorganization or merger.
(h)
The reorganization plan may provide that any subsidiaries of the reorganized
stock insurer may remain as subsidiaries of such company or become direct
subsidiaries of the mutual insurance holding company.
(i)
The reorganization plan shall address the rules for determining membership
interests in the mutual insurance holding company of any policyholder of the
mutual insurer or the reorganized stock insurer who acquires or terminates his
or her policy after the reorganization plan is submitted and adopted by the
board and approved by the Commissioner. Nothing in this Code section shall be
construed as requiring membership in the mutual insurance holding company of any
new or terminating policyholder.
(j)
A mutual insurance holding company resulting from the reorganization of a
domestic mutual insurer organized pursuant to Chapter 14 or Chapter 41 of this
title shall be incorporated pursuant to the authority of this chapter. The
articles of incorporation and any amendments to such articles of the mutual
insurance holding company shall be subject to approval of the Commissioner and
the Secretary of State in the same manner as those of any domestic stock or
mutual insurer incorporated under Chapter 14 or Chapter 41 of this
title.
(k)
The reorganization plan shall provide that a majority of the board of directors
of the mutual insurance holding company shall be nonmanagement board
members.
(l)
Each director of the board of directors of the mutual insurance holding company
shall have a fiduciary duty to the members.
(m)
The plan shall provide that the rights of a holder of a surplus note to
participate in the conversion, if any, shall be governed by the terms of the
surplus note.
33-13A-5.
(a)
A domestic mutual insurer may, upon receipt of the approval of the Commissioner,
reorganize by merging into an existing domestic mutual insurance holding company
or an existing intermediate holding company formed pursuant to Code Section
33-13A-4 and continuing the corporate existence of the reorganizing mutual
insurer as a stock insurer subsidiary of the mutual insurance holding company.
The Commissioner, with or without a public hearing as provided in Code Section
33-13A-8 and if satisfied that the interests of the policyholders are properly
protected and that the merger plan is fair and equitable to the policyholders,
may approve the proposed merger plan and may require as a condition of approval
such modifications of the proposed merger plan as the Commissioner finds
necessary for the protection of the interests of such policyholders. A merger
pursuant to this Code section shall not be subject to Code Section 33-13-3,
relating to acquisition of control of or merger with domestic insurers, or Code
Section 33-13-3.1, relating to acquisition of insurers and effect on
competition.
(b)
A foreign mutual insurer may also reorganize upon the approval of the
Commissioner and in compliance with the requirements of any law or regulation
which is applicable to the foreign mutual insurer by merging its
policyholders´ membership interests into an existing domestic mutual
insurance holding company or an existing intermediate holding company formed
pursuant to a reorganization plan under Code Section 33-13A-4 and continuing the
corporate existence of the reorganizing foreign mutual insurer as a foreign
stock insurer subsidiary of the domestic mutual insurance holding company. The
Commissioner, with or without a public hearing as provided in Code
Section 33-13A-8, may approve the proposed merger. The Commissioner may
retain consultants as provided in Code Section 33-13A-17. The reorganizing
foreign mutual insurer may remain a foreign company or foreign corporation after
the merger and may be admitted to do business in this state. A foreign mutual
insurer which is a party to the merger may at the same time redomesticate to
this state by complying with the applicable requirements of this state and any
other requirements imposed by its current state of domicile. The provisions of
subsection (c) of this Code section shall apply to a merger authorized under
this subsection.
(c)
All of the initial shares of the voting stock of the reorganized stock insurer
shall be issued to the mutual insurance holding company or an intermediate
holding company. The membership interests of the policyholders of the
reorganized stock insurer shall become membership interests in the mutual
insurance holding company. Policyholders of the reorganized stock insurer shall
be members of the mutual insurance holding company in accordance with the
articles of incorporation and bylaws of the mutual insurance holding company.
The mutual insurance holding company shall at all times own a majority of the
voting stock of the reorganized stock insurer or, alternatively, the mutual
insurance holding company shall at all times own a majority of the voting stock
in an intermediate holding company which at all times owns all of the voting
stock of the reorganized stock insurer.
(d)
A mutual insurance holding company resulting from the reorganization of a
domestic mutual insurer organized under Code Section 33-13A-4 shall be
incorporated pursuant to the provisions of this chapter. The articles of
incorporation and any amendments to such articles of the mutual insurance
holding company shall be subject to approval of the Commissioner and the
Secretary of State in the same manner as those of any domestic stock or mutual
insurer incorporated under Chapter 14 or Chapter 41 of this title.
33-13A-6.
If,
at any time during or following the creation of a mutual insurance holding
company, an intermediate holding company or the reorganized stock insurer
engages in a public offering of voting stock:
(1)
Members of the mutual insurance holding company shall receive, without payment,
nontransferable subscription rights to subscribe to that portion of the public
offering as has been approved by the board of directors of the mutual insurance
holding company as reasonable in order to effectuate the public offering of
shares and the infusion of new public capital, which such subscription rights
shall be no less than 20 percent of the total number of shares available through
such offering;
(2)
The plan may provide that the directors and officers of the mutual insurance
holding company shall receive, without payment, nontransferable subscription
rights to purchase up to 10 percent of the capital stock of the reorganized
stock insurer or the stock of another corporation that is participating in the
reorganization or merger plan as provided in this chapter. Those subscription
rights shall be allocated among the directors and officers by a fair and
equitable formula approved by the Commissioner. Subscription rights provided to
a director or officer under this Code section shall be in addition to any
subscription rights provided to that director or officer under paragraph (1) of
this Code section in his or her capacity as a member of the mutual insurance
holding company. Stock purchased by a director or officer under this Code
section may not be sold within one year following the effective date of the
acquisition of shares. The plan may also provide that a director or officer or
person acting in concert with a director or officer of the mutual insurance
holding company may not acquire any capital stock of the reorganized stock
insurer for three years after the effective date of the reorganization or merger
plan, except through a broker or dealer, without the permission of the
Commissioner; provided, however, that such restrictions may not apply to
prohibit the directors and officers from purchasing stock through subscription
rights received in the plan under this Code section;
(3)
The plan may allocate to a tax-qualified employee benefit plan nontransferable
subscription rights to purchase up to 10 percent of the capital stock of the
reorganized stock insurer or the stock of another corporation that is
participating in the reorganization or merger plan as provided in this chapter.
Such employee benefit plan shall be entitled to exercise its subscription rights
regardless of the amount of shares purchased by other persons;
(4)
The plan shall provide that any shares of capital stock not subscribed to by
persons exercising subscription rights received under paragraphs (1), (2), and
(3) of this Code section shall be included in the public offering;
(5)
The plan shall provide that any one person or group of persons acting in concert
may not acquire, through public offering or subscription rights, more than 10
percent of the capital stock of the reorganized stock insurer for a period of
two years from the effective date of the reorganization or merger plan without
the prior approval of the Commissioner; provided, however, that directors and
officers of the mutual insurance holding company shall not be considered a
'group acting in concert' solely because they are directors and officers of the
mutual insurance holding company or when exercising subscription rights provided
under this Code section; and
(6)
The terms and conditions of any such public stock offering shall be approved by
an independent committee of the board of directors of the mutual insurance
holding company.
33-13A-7.
(a)
A reorganization plan or merger plan adopted by a mutual insurer´s board of
directors pursuant to Code Section 33-13A-4 or 33-13A-5 shall be voted on and
approved by the policyholders of the reorganizing mutual insurer at a special
policyholders´ meeting convened for the sole purpose of voting on the
reorganization plan or merger plan. Each policyholder shall be entitled to cast
only one vote, in person, by proxy, or by ballot sent in by mail, regardless of
the number of policies or contracts that he or she owns or holds; provided,
however, that if the vote relates to reorganization of a life insurer, the right
to vote may be limited by the mutual life insurer´s bylaws to members whose
policies are other than term or group policies and which policies have been in
effect for more than one year. Any proxy must relate specifically to the
reorganization plan or merger plan. Policyholders shall be given at least 30
days´ written notice of the meeting to vote upon the reorganization plan or
merger plan. The notice shall include at least a summary of the reorganization
or merger as adopted by the board of directors, a uniform ballot for voting on
the question of the proposed reorganization or merger, and a statement informing
policyholders that the Commissioner may hold a public hearing on the proposed
reorganization or merger to be held within 60 days after the policyholders´
approval of any reorganization plan or merger plan. Any policyholder approval
required by this Code section shall be approved by the affirmative vote of at
least a two-thirds´ majority of the votes cast by policyholders either in
person, by proxy, or by ballot sent in by mail. Notice of any reorganization
plan or merger plan so approved shall be forwarded to the Commissioner within
ten days of the policyholder vote.
(b)
In the case of a merger plan pursuant to Code Section 33-13A-5, such plan must
be approved by a two-thirds´ majority of the policyholders of the mutual
insurer or insurers voting on the proposed merger and also by a two-thirds´
majority of the members of the existing mutual insurance holding company voting
on the proposed merger, provided that the approval of the members of the
existing mutual insurance holding company shall not be required if the
Commissioner determines that the proposed merger would not have a material
adverse effect on the management or the financial condition of the mutual
insurance holding company.
(c)
In the case of a merger of two mutual insurance holding companies, the merger
plan must be approved by a two-thirds´ majority of the members of both
mutual insurance holding companies voting on such merger; provided, however,
that the approval of such members of either or both mutual insurance holding
companies shall not be required if the Commissioner determines that the proposed
merger would not have a material adverse effect on the management or the
financial condition of either or both mutual insurance holding companies, as the
case may be.
(d)
In any case where a domestic mutual insurance holding company is merging with a
mutual insurance holding company domiciled in another state and regulated under
that other state´s law, nothing in this article shall prohibit the
application of the new domestic state´s approval procedures, provided that
the Commissioner determines that the approval requirements of this chapter
applicable to the domestic mutual insurance holding company have been met, and
further provided that the Commissioner determines that the approval by the other
mutual insurer´s members according to that other state´s procedures is
in the best interests of the members of the Georgia mutual insurance holding
company that is party to the merger.
33-13A-8.
(a)
The Commissioner, after receiving notice of policyholder approval of a
reorganization plan pursuant to Code Sections 33-13A-4 and 33-13A-7 or after
receiving notice of policyholder or member approval of a merger plan pursuant to
Code Sections 33-13A-5 and 33-13A-7 may, but need not, conduct a public hearing
regarding any such proposed plan. The hearing shall be held within 60 days
after the submission of a completed reorganization plan or merger plan as
approved by the policyholders or, if applicable, by the members. The
Commissioner shall give the reorganizing or merging company or companies at
least 20 days´ prior notice of the hearing. Such notice shall specify the
time and place of the hearing. Any mutual insurer or mutual insurance holding
company which is a party to the proposed reorganization plan or merger plan
shall provide public notice of the time and place of the hearing to be published
for five consecutive days in a newspaper of general state-wide circulation. At
the public hearing, the reorganizing or merging mutual insurer, its
policyholders, and any other person whose interest may be affected by the
proposed reorganization or merger may present evidence, examine and
cross-examine witnesses, and offer oral and written arguments or comments
according to the procedure for contested cases under Chapter 2 of this
title.
(b)
Any interested person or group which desires to correspond with the
policyholders of the mutual insurer which is the subject of a proposed
reorganization plan or merger plan may petition the Commissioner to supervise a
mailing of any notice or materials which is pertinent to the proposed
reorganization or merger. Any such interested party or group must submit such
petition and the materials intended to be mailed at least ten days prior to the
date of the proposed public hearing on the reorganization or merger. The
Commissioner shall review the materials and may in his or her discretion require
the mutual insurer to mail such materials to all policyholders who would be
affected by the proposed reorganization or merger; provided, however, that the
Commissioner must provide notice of the required mailing to policyholders and
the approved contents of any such mailing to the mutual insurer at least five
days prior to any proposed public hearing on the reorganization or merger. The
mutual insurer shall provide satisfactory proof to the Commissioner that the
notice or materials have been sent to all policyholders. The costs of any such
additional mailing shall be assessed to the party or group requesting the
mailing, and under no circumstances shall the mutual insurer or Commissioner be
required to distribute a list of policyholder names and addresses to the
requesting party or group. In the event that the mutual insurer advises the
Commissioner that there is inadequate time prior to the public hearing for the
required mailing or for reasonable evaluation of the materials by the
policyholders, the Commissioner may allow one single postponement of the public
hearing for up to an additional 30 days in order to allow additional time for
the distribution of the requested notice and materials to the policyholders.
Any such postponement shall not operate to extend the deadline for submission of
the petition to the Commissioner at least ten days in advance of the public
hearing by any interested party, as contemplated in this Code
section.
(c)
The Commissioner shall by order approve or disapprove the proposed
reorganization plan or merger plan within 60 days after the Commissioner deems
the filing of such plan to be complete, if no public hearing is to be held, or
60 days after the filing is deemed complete and after the conclusion of the
public hearing. The Commissioner may extend the time for issuance of such order
by an additional 30 days by providing written notice to the board of directors
of the mutual insurer.
(d)
The Commissioner shall approve the proposed reorganization or merger unless the
Commissioner finds that:
(1)
The provisions of this Code section or Code Section 33-13A-4, 33-13A-5, or
33-13A-7 have not been complied with;
(2)
Disapproval is necessary to prevent the financial impairment of the mutual
insurer or proposed stock insurer;
(3)
The financial resources or management of the mutual insurer warrant disapproval
of the proposed reorganization or merger; or
(4)
The proposed reorganization or merger would be unfair or inequitable to the
policyholders of the mutual insurer.
(e)
Upon deciding to approve or disapprove a proposed reorganization plan or merger
plan, the Commissioner shall notify the mutual insurer´s board of directors
of the decision. If the Commissioner disapproves the proposed reorganization or
merger, the Commissioner´s notice to the mutual insurer´s board of
directors shall detail the reasons for such disapproval. If the Commissioner
approves the proposed reorganization or merger, then the effective date of the
reorganization or merger shall coincide with the date the Commissioner gives
such approval, or any later date, not to exceed 180 days, if requested by the
mutual insurer at the time the reorganization plan or merger plan was filed
originally with the Commissioner.
(f)
After any approval of a reorganization plan or merger plan, the mutual insurance
holding company, the reorganized stock insurer and, if applicable, any
intermediate holding company shall submit final copies of their respective
articles of incorporation and bylaws to the Commissioner and to the Secretary of
State.
(g)
Upon a reorganization plan or merger plan taking effect in accordance with this
Code section, the corporate existence of the mutual insurer shall continue in
the reorganized stock insurer. Unless otherwise specified in the reorganization
plan or merger plan, those persons who are the directors and officers of the
mutual insurer on the effective date of the reorganization or merger shall serve
as interim directors and officers of the reorganized stock insurer until new
directors and officers are elected pursuant to the terms of the reorganized or
merged company´s articles of incorporation and bylaws.
(h)
If the name of a mutual insurer reorganizing into a stock insurer or merging to
create a stock insurer includes the word mutual, then the new reorganized stock
insurer may continue to use the word mutual in its name unless the Commissioner
finds that the continued use of the word mutual in the company´s name is
likely to mislead or deceive the public.
33-13A-9.
(a)
Any mutual insurance holding company organized under the laws of any other state
which owns an insurer authorized to transact business in this state may become a
domestic mutual insurance holding company by complying with all of the
requirements relative to the organization of a mutual insurance holding company
under the laws of this state.
(b)
Any domestic mutual insurance holding company, upon the approval of the
Commissioner, may transfer its domicile to any other state which authorizes
mutual insurance holding companies and which evidences its approval of the
redomestication of the Georgia domestic mutual insurance holding company and,
upon such transfer, shall cease to be a domestic mutual insurance holding
company. The Commissioner shall, within 60 days after the filing of a request
to transfer its domicile by the domestic mutual insurance holding company,
approve any such proposed transfer of domicile of a mutual insurance holding
company unless the Commissioner determines that the proposed transfer is not in
the best interests of the members of the mutual insurance holding
company.
33-13A-10.
A
domestic mutual insurer which reorganized under Code Section 33-13A-4 or merged
under Code Section 33-13A-5 into a mutual insurance holding company that has
been organized for at least two years or has been organized for at least one
year and which owns an intermediate holding company or an insurance company
subsidiary that has sold shares of its capital stock equal to at least 25
percent of the total policyholders´ surplus of such insurance company
subsidiary may convert to a domestic stock corporation pursuant to the
provisions of Code Section 33-14-76, relating to the conversion of a mutual
insurer to a stock insurer. The terms and conditions of any such reorganization
plan shall be approved by an independent committee of the board of directors of
the mutual insurance holding company.
33-13A-11.
(a)
A mutual insurance holding company is deemed to be subject to Chapter 14 and
Chapter 3 of this title and as such shall automatically be a party to any
proceeding under Chapter 37 of this title involving an insurance company which
as a result of a reorganization pursuant to this chapter is a subsidiary of the
mutual insurance holding company. In any proceeding under Chapter 37 of this
title involving the reorganized stock insurer, the assets of the reorganized
stock insurer which have been transferred, directly or indirectly, to the mutual
insurance holding company at the time of and as a part of the reorganization are
deemed to be assets of the estate of the reorganized stock insurer for purposes
of satisfying the claims of the reorganized stock insurer´s
policyholders.
(b)
A mutual insurance holding company shall not dissolve or liquidate without the
approval of the Commissioner or as ordered by the superior court pursuant to the
provisions of Chapter 37 of this title.
(c)
At any time after a merger as contemplated in Code Section 33-13A-5 or after any
reorganization under Code Section 33-13A-4, the Commissioner shall retain
jurisdiction over any mutual insurance holding company or intermediate holding
company that is involved in the merger or reorganization. The Commissioner
shall have jurisdiction over any mutual insurance holding company or
intermediate holding company pursuant to Code Sections 33-13-4 through 33-13-15
to ensure the solvency, financial strength, and continued compliance of the
insurer and its affiliates, provided that the definitions in paragraphs (1)
through (8) of Code Section 33-13-1 shall apply to the application of the
provisions of 33-13-4 through 33-13-15. Notwithstanding the provisions of Code
Section 33-13-5, any stock dividend proposed to be paid within one year of the
effective date of any reorganization or merger under this chapter shall be
subject to prior approval of the Commissioner. The Commissioner shall approve
or disapprove the proposed dividend within 30 days of receipt of the dividend
payment request. Stock dividends proposed to be paid after one year from the
effective date of any reorganization or merger under this article shall be
governed by the provisions of Code Section 33-13-5.
33-13A-12.
A
membership interest in a domestic mutual insurance holding company shall not
constitute a security under the laws of this state; provided, however, that
nothing in this Code section shall limit the voting rights of a member. No
member of the mutual insurance holding company shall transfer membership in the
mutual insurance holding company or any right arising from membership. If, at
any time prior to a reorganization under Code Section 33-13A-4 or a merger under
Code Section 33-13A-5, a policyholder ceases to be a policyholder of the mutual
insurer, such policyholder shall not become a member of the mutual insurance
holding company or any intermediate holding company. Additionally, if at any
time subsequent to the reorganization or merger, a policyholder of the
reorganized stock insurer shall cease to be a policyholder, such policyholder
shall also cease to be a member of the mutual insurance holding company or any
intermediate holding company.
33-13A-13.
(a)
The voting stock of the reorganized stock insurer which is owned by a mutual
insurance holding company shall not be conveyed, transferred, assigned, pledged,
subjected to a security interest or lien, encumbered, or otherwise hypothecated
or alienated by the mutual insurance holding company or intermediate holding
company. Any conveyance, transfer, assignment, pledge, security interest, lien,
encumbrance, or hypothecation or alienation of, in, or on the majority of the
voting stock of the reorganized stock insurer which is owned by a mutual
insurance holding company shall be a violation of this Code section and shall be
void in reverse chronological order of the date of such conveyance, transfer,
assignment, pledge, security interest, lien, encumbrance, or hypothecation or
alienation as to the shares necessary to constitute a majority of such voting
stock. The shares of the capital stock of the surviving or new company
resulting from a merger or consolidation of two or more reorganized stock
insurers or two or more intermediate holding companies which were subsidiaries
of the same mutual insurance holding company shall be subject to the same
requirements, restrictions, and limitations as provided in this Code section for
the shares of the merging or consolidating reorganized stock insurers or
intermediate holding companies.
(b)
The majority of the voting stock of the reorganized stock insurer shall be owned
by a mutual insurance holding company which may include indirect ownership
through one or more intermediate holding companies in a corporate structure as
approved by the Commissioner. However, indirect ownership through one or more
intermediate holding companies shall not result in the mutual insurance holding
company owning less than the equivalent of a majority of the voting stock of the
reorganized stock insurer.
(c)
Any stock insurer or any intermediate holding company subsidiary of the mutual
insurance holding company may issue incentive stock options, stock appreciation
rights, or any other incentive plan based upon an increase in the stock price of
the subsidiary only with the prior approval of a majority vote of the board of
directors of the mutual insurance holding company.
33-13A-14.
(a)
A mutual insurance holding company organized under this chapter may hold,
directly or indirectly, multiple subsidiaries, including multiple intermediate
holding companies, and an intermediate holding company may in turn hold multiple
subsidiaries, directly or indirectly, including multiple stock or mutual
insurers.
(b)
A mutual insurance holding company shall not pay dividends to its members,
although it may receive dividends from any of its subsidiaries. Nothing within
this Code section shall prohibit a converted stock insurer subsidiary of a
mutual insurance holding company from issuing policyholder dividends, refunds,
credits, or other forms of compensation to its policyholders related to or based
upon an individual policyholder´s loss ratio, years as a policyholder, or
other facts related to a policyholder´s underlying policies.
33-13A-15.
Any
action challenging the validity of, or arising out of, actions taken or proposed
to be taken in connection with a reorganization or merger under this chapter
shall be commenced not later than 30 days after the effective date of such
reorganization or merger.
33-13A-16.
All
costs and expenses of the process of a reorganization or merger pursuant to this
chapter shall be paid for or reimbursed by the mutual insurer.
33-13A-17.
The
Commissioner may engage the assistance of experts, including, but not limited
to, accountants, actuaries, and other consultants, to assist in the evaluation
of any proposed reorganization plan or merger plan. All reasonable costs
related to the review of a reorganization plan or merger plan or any other
related matter, including the costs attributable to the Commissioner´s use
of experts, shall be paid by the mutual insurer or the reorganized stock insurer
filing the reorganization plan or merger plan.
33-13A-18.
The
hearing procedures as specified in this chapter shall supersede any other
provisions of Chapter 2 of this title to the extent of any conflict
therewith.
33-13A-19.
The
Commissioner shall have the authority to promulgate rules and regulations to
implement and enforce the provisions of this chapter."
SECTION
2.
This
Act shall become effective on July 1, 2007.
SECTION
3.
All
laws and parts of laws in conflict with this Act are repealed.