TITLE XXXVII
INSURANCE
Chapter 403-B
CONVERSION OF MUTUAL INSURERS
Section 403-B:1
403-B:1 Application of Chapter. –
A mutual insurance company organized under the laws of this state, other than an assessment mutual, may convert into a stock insurance company upon compliance with the provisions of this chapter.
Source. 1992, 288:16, eff. May 18, 1992.
Section 403-B:2
403-B:2 Definitions. –
In this chapter:
I. "Commissioner" means the insurance commissioner.
II. "Conversion value" means the amount of the insurer's policyholder surplus, determined in accordance with those accounting procedures and practices prescribed by the National Association of Insurance Commissioners and by the commissioner, brought current to the date of adoption by the board of directors of the plan of conversion.
III. "Eligible policyholder" means, with respect to a mutual fire or casualty insurance company, a policyholder of the insurer on the date of adoption of the plan of conversion by the board of directors pursuant to RSA 403-B:3, I or, with respect to a mutual life insurance company, such policyholders defined in the plan of conversion approved by the commissioner.
IV. "Net premiums" means gross premiums paid by a policyholder to the insurer, less return premiums and dividends paid.
Source. 1992, 288:16, eff. May 18, 1992.
Section 403-B:3
403-B:3 Procedure for Conversion. –
I. An insurer may apply to the commissioner for conversion pursuant to this chapter by filing with the commissioner a plan of conversion adopted by 2/3 of the entire board of directors, which shall contain the following:
(a) The proposed articles of incorporation and bylaws to be adopted by the insurer upon its conversion to a stock insurance company.
(b) A statement of the manner of treating holders of surplus notes, if any notes are outstanding.
(c) Provisions for distribution of the conversion value in accordance with RSA 403-B:4.
(d) Provisions stating the manner and basis of exchanging the equitable share of each eligible policyholder for securities of the stock insurance company into which the insurer is to be converted, and the disposition of any unclaimed shares.
(e) The effective date of the plan of conversion or the method of determination of such effective date.
(f) Such other information as the commissioner may reasonably require.
II. The commissioner may retain at the insurer's expense such attorneys, actuaries, accountants, appraisers and other experts as shall be reasonably necessary to assist in the review of the insurer's plan of conversion.
III. Within 60 days after receipt of the completed plan of conversion the commissioner shall hold a hearing, written notice of which shall be given to the insurer not less than 30 days in advance of the hearing. Within 15 days after receiving the notice of hearing, the insurer shall notify eligible policyholders. Notice of such hearing shall be made at the expense of the insurer by mail to eligible policyholders, which notice shall include a copy of the plan of conversion or a summary of such plan approved by the commissioner.
IV. At the hearing, the insurer and any eligible policyholders shall have the right to appear and to present evidence, orally and in writing.
V. Within 30 days after the conclusion of the hearing, the commissioner shall approve the plan of conversion, unless the commissioner finds:
(a) The plan of conversion is unfair or inequitable to policyholders;
(b) The plan of conversion will cause the insurer to become unable to fulfill its contractual obligations;
(c) After the conversion of the insurer the stock insurance company would not be able to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed;
(d) The financial condition of the insurer would be such as might jeopardize the financial stability of the converted stock insurance company, or prejudice the interest of its policyholders;
(e) The competence, experience and integrity of those persons who would control the operation of the stock insurance company are such that it would not be in the interest of policyholders of the insurer and of the public to permit conversion; or
(f) The plan of conversion does not comply with the provisions of this chapter.
VI. Upon approval by the commissioner, the plan of conversion shall be submitted to a vote of eligible policyholders. The board of directors shall schedule a meeting to be held for such purpose, and shall provide at least 10 days' prior written notice to eligible policyholders. Notice to eligible policyholders shall contain a copy of the plan of conversion and such other information as the commissioner may require. The notice of such meeting may be sent prior to the commissioner's approval, provided the notice clearly states that the plan of conversion is subject to such approval. The vote of 2/3 of the eligible policyholders voting in person or by proxy shall be necessary for the adoption of the plan of conversion.
VII. At any time prior to the date of the vote of eligible policyholders, the plan of conversion may be withdrawn or amended by majority vote of the entire board of directors, except that no amendment which materially changes the plan of conversion shall take effect unless such amendment is approved by the commissioner and eligible policyholders in accordance with the same conditions and procedures applicable to the original plan of conversion.
VIII. Upon adoption of the plan of conversion by the eligible policyholders, the commissioner shall certify his approval of the plan of conversion by an endorsement upon the articles of incorporation, which may then be recorded in accordance with the provisions of RSA 293-A, provided that copies of the original documents filed with the secretary of state shall also be filed with the commissioner.
Source. 1992, 288:16, eff. May 18, 1992.
Section 403-B:4
403-B:4 Distribution of Conversion Value. –
The insurer shall follow the following conversion methodology:
I. Each eligible policyholder of a mutual fire or casualty insurance company shall have the right to purchase securities of the stock insurance company into which the insurer is to be converted, based upon such policyholder's proportionate amount of the conversion value determined by dividing the net premium paid by each eligible policyholder to the insurer with respect to the 3-year period immediately preceding the date of adoption of the resolution by the board of directors approving the plan of conversion by the total net premiums received by the insurer from eligible policyholders with respect to that period.
II. Each eligible policyholder of a mutual life insurance company shall have the right to purchase securities of the stock insurance company into which the insurer is to be converted based upon such policyholder's proportionate amount of the conversion value determinable under a fair formula approved by the commissioner.
III. The stock offering shall provide that eligible policyholders have the first right to purchase the stock at its stated value. Shares remaining unsold or not subscribed for may be offered to the general public, including the insurer's directors, officers, agents or employees, provided, however, that the price of shares offered to the general public shall be greater than or equal to the price of shares offered to eligible policyholders.
IV. The above distribution method shall constitute full payment and discharge of the policyholder's proportionate conversion value, but this provision shall not be held to prohibit the stock insurance company from including in the plan of conversion provisions for the distribution of any other valuable consideration to policyholders. Notwithstanding any other provision of law, the policyholders shall have no other rights with respect to the conversion of the insurer after the effective date of the conversion under this chapter.
Source. 1992, 288:16, eff. May 18, 1992.
Section 403-B:5
403-B:5 Compensation. –
No director, officer or other employee of the insurer shall receive any fee, commission or other valuable consideration whatsoever, other than regular salary and compensation, for in any manner aiding, promoting or assisting in the conversion.
Source. 1992, 288:16, eff. May 18, 1992.
Section 403-B:6
403-B:6 Issuance of New Certificate of Authority. –
After approval by the secretary of state of the articles of incorporation and certification by the insurer that the conversion has been effected, the commissioner shall issue a new certificate of authority to the insurer as a stock insurance company, effective as of the effective date of the conversion. The conversion shall be deemed to have been completed and the insurer shall become a domestic stock insurance company on such effective date, unless the plan of conversion shall have been terminated by the board of directors with the concurrence of the commissioner prior to such effective date. The stock insurance company shall be a continuation of the insurer and deemed to have been organized at the time the insurer was formed. The conversion shall not eliminate or change any of the insurer's rights and obligations existing prior to the date of conversion except as provided by this chapter. The stock insurance company, after conversion, shall exercise all the rights and powers and perform all the duties conferred or imposed by law upon insurers writing the classes of insurance written by it.
Source. 1992, 288:16, eff. May 18, 1992.
Section 403-B:7
403-B:7 Officers and Directors. –
The directors and officers of the insurer shall serve until the directors and officers of the stock insurance company have been duly elected and qualified pursuant to the articles of incorporation and bylaws of the stock insurance company.
Source. 1992, 288:16, eff. May 18, 1992.
Section 403-B:8
403-B:8 Judicial Review. –
Any person aggrieved by any order or decision of the commissioner pursuant to this chapter may appeal from such decision in accordance with the provisions of RSA 541.
Source. 1992, 288:16, eff. May 18, 1992.
Section 403-B:9
403-B:9 Rules. –
The commissioner may adopt rules, pursuant to RSA 541-A, as may be necessary for the administration of this chapter.
Source. 1992, 288:16. 2002, 207:47, eff. July 15, 2002.