TITLE XXXVII
INSURANCE
Chapter 403-F
MUTUAL INSURANCE HOLDING COMPANIES
Section 403-F:1
403-F:1 Authorization. –
A mutual insurance company organized under the laws of this state may reorganize by converting to a stock insurance company and forming a mutual insurance holding company, upon compliance with the provisions of this chapter.
Source. 2000, 247:1, eff. June 8, 2000.
Section 403-F:2
403-F:2 Definitions. –
In this chapter:
I. "Commissioner" means the insurance commissioner.
II. "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 reorganization by the board of directors pursuant to RSA 403-F:4, II or, with respect to a mutual life insurance company, such policyholders defined in the plan of reorganization approved by the commissioner.
III. "Mutual insurance holding company" means an incorporated entity without permanent capital stock that is organized under this chapter.
IV. "Subsidiary insurance company" means a stock insurance company, the majority of the voting shares of the capital stock of which are at all times owned, directly or through an intermediate holding company, by a mutual insurance holding company.
V. "Intermediate holding company" means a holding company which is a subsidiary of a mutual insurance holding company, and which directly or through a subsidiary intermediate holding company owns a majority of the voting shares of the capital stock of one or more subsidiary insurance companies.
Source. 2000, 247:1, eff. June 8, 2000.
Section 403-F:3
403-F:3 Formation of a Mutual Insurance Holding Company. –
I. A mutual insurance company may reorganize as a mutual insurance holding company system consisting of a mutual insurance holding company and a subsidiary insurance company. The reorganization may be effected by the organization of one or more companies, amendment or restatement of the articles of incorporation and bylaws of one or more companies, transfer of assets and liabilities among 2 or more companies, issuance, acquisition or transfer of capital stock of one or more companies, or merger or consolidation of 2 or more companies. The mutual insurance holding company shall at all times own a majority of the voting shares and a majority in economic value of the capital stock of each controlled subsidiary and any intermediate stock holding company.
II. All of the initial shares of the capital stock of the insurance company which reorganized as a subsidiary insurance company shall be issued either to the mutual insurance holding company or to an intermediate holding company which is wholly owned by the mutual insurance holding company. This restriction shall not preclude the subsequent issuance of additional shares of stock by the subsidiary insurance company so long as the requirements of paragraph I are not violated. The membership interests of the policyholders of the subsidiary insurance company shall become membership interests in the mutual insurance holding company. Policyholders of the subsidiary insurance company which was formerly the mutual 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.
Source. 2000, 247:1, eff. June 8, 2000.
Section 403-F:4
403-F:4 Plan of Reorganization. –
I. A plan of reorganization shall include the following provisions:
(a) A description of the structure of the mutual insurance holding company system.
(b) A description of the qualifications for membership in and the rights of members of the mutual insurance holding company.
(c) A description of the corporate restructuring and other transactions, and the parties to such transactions, that will effect the reorganization, including the organization of companies, amendment or restatement of articles of incorporation or bylaws, mergers, consolidations, and transfer and assumption of policies, contracts, assets, and liabilities.
(d) The reasons and purposes of the proposed restructuring, including an analysis of alternative transactions considered.
(e) An analysis of the benefits and risks associated with the proposed reorganization to the mutual insurance company.
(f) An explanation of how the restructuring will benefit policyholders, as well as a description of any potential risks to policyholder interests.
(g) A complete disclosure of all anticipated transaction costs, including:
(1) Any changes to director or management compensation or compensation plans; and
(2) The issuance or sale, to officers or directors, of shares or options to purchase shares of stock of any corporate member of the mutual insurance holding company system.
(h) All amendments to the mutual insurance company's articles of incorporation to address the restructuring from a mutual to a stock insurer.
(i) The proposed articles of incorporation and bylaws of the mutual insurance holding company and any other entities to be created in the restructuring.
(j) If applicable, a description of rights of policyholders in any initial stock offering.
(k) If applicable, a description of any plans for sale of stock to third parties, including:
(1) A statement of intent to conduct an initial sale of voting stock within a specified time after the effective date of the restructuring;
(2) A description of the maximum percentage of stock to be sold;
(3) A description of the process to be used in offering the stock and setting the initial sale price for the stock;
(4) A description of the rights of members to subscribe to the stock offering; and
(5) A description of any limitations on management participation in the stock offering and ownership.
(l) Any other documents filed with other regulatory bodies relating to the reorganization.
(m) In the case of a mutual life insurer, provisions for the establishment, for policyholder dividend purposes only, of a closed block. The closed block will consist of all of the participating individual policies of life insurance of the mutual life insurer in force on the effective date of the plan for which the insurer had an experience-based dividend scale payable in the year in which the plan is adopted. Assets of the insurer shall be allocated to the closed block in an amount that produces cash-flows, together with anticipated revenues from the closed block business, expected to be sufficient (1) to support the closed block business, including payment of claims and those expenses and taxes specified in the plan and (2) to provide for continuation of dividend scales in effect on the adoption date if the experience underlying the scales continues, and for appropriate adjustments in the scales if the experience changes. The plan may provide for conditions under which the converted insurer may cease to maintain the closed block and its allocated assets. Regardless of such a cessation, the obligation under the policies constituting the closed block business remain the obligations of the converted insurer. Dividends on those policies shall be apportioned by the board of directors of the converted insurer in accordance with the terms of the policies.
II. A plan of reorganization must be adopted by 2/3 of the board of directors of the mutual insurance company.
III. Upon the adoption of a plan of reorganization the mutual insurance company shall submit to the commissioner the following:
(a) The plan of reorganization.
(b) The form of notice to be sent to eligible policyholders, informing them of their right to vote on the plan of reorganization.
(c) The form of proxy statement to be sent to eligible policyholders, informing them of their right to vote by proxy on the plan of reorganization, and describing the plan.
(d) The form of proxy to be sent to eligible policyholders to solicit their vote on the plan of reorganization.
(e) Proposed articles of incorporation, merger, or consolidation, restatements of or amendments to articles of incorporation or bylaws, and plans of merger or consolidation, with respect to each entity to be organized, reorganized, or otherwise subject to such action under the plan of reorganization.
(f) Such other information as the commissioner may reasonably require.
Source. 2000, 247:1, eff. June 8, 2000.
Section 403-F:5
403-F:5 Hearing; Approval. –
I. Within 60 days after receipt of a complete plan of reorganization, the commissioner shall hold a public hearing to allow public comment on the plan of reorganization. The commissioner shall give written notice of the hearing to the mutual insurer not less than 30 days before the hearing. Within 15 days after receiving the notice of hearing, the mutual insurer shall notify eligible policyholders. Such notice shall include a copy of the plan of reorganization or a summary of the plan approved by the commissioner.
II. The commissioner may retain, at the insurer's expense, such attorneys, actuaries, accountants, and other experts not otherwise a part of the commissioner's staff as shall be reasonably necessary to assist in the conduct of the examination hereunder. Any persons so retained shall be under the direction and control of the commissioner and shall act in a purely advisory capacity.
III. Within 30 days after the conclusion of the hearing, the commissioner shall approve the plan of reorganization, unless the commissioner finds:
(a) The plan of reorganization is unfair or inequitable to policyholders;
(b) The plan of reorganization will cause the insurer to become unable to fulfill its contractual obligations;
(c) After the reorganization, 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 the mutual insurer is presently licensed;
(d) The financial condition of the insurer would be such as might jeopardize the financial stability of the 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 reorganization; or
(f) The plan of reorganization does not comply with the provisions of this chapter.
IV. Upon approval by the commissioner, the plan of reorganization 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 20 days' prior written notice to eligible policyholders. Notice to eligible policyholders shall contain a copy of the plan of reorganization and such other information as the commissioner may require. The vote of either (a) 2/3 of the eligible policyholders voting in person or by proxy or (b) if at least 20 percent of eligible policyholders vote, a simple majority of the eligible policyholders voting in person or by proxy, shall be necessary for the adoption of the plan of reorganization.
V. At any time prior to the date of the vote of eligible policyholders, the plan of reorganization may be withdrawn or amended by majority vote of the entire board of directors, except that no amendment which materially changes the plan of reorganization shall take effect unless such amendment is approved by the commissioner and policyholders in accordance with the same conditions and procedures applicable to the original plan of reorganization.
VI. Upon adoption of the plan of reorganization by the eligible policyholders, the commissioner shall certify approval of the plan of reorganization by an endorsement upon the articles of incorporation of the mutual insurance holding company, 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. 2000, 247:1, eff. June 8, 2000.
Section 403-F:6
403-F:6 Issuance of Shares to Officers, Directors, and Employees. –
A number of shares or options to purchase shares equal in the aggregate to 5 percent of the outstanding voting shares of the capital stock of one corporate member of the mutual insurance holding company system selected by the mutual insurance holding company may be issued or sold to directors and officers as part of a plan of compensation, and such shares shall not be considered part of the majority shares to be owned by the mutual insurance company under RSA 403-F:3. A number of shares or options to purchase shares equal in the aggregate to an additional 5 percent of the outstanding voting shares of the capital stock of one corporate member of the mutual insurance holding company system selected by the mutual insurance holding company may be issued or sold to employees, which may not include any officer or director, as part of an employee stock dividend or benefit plan, and such shares shall not be considered part of the majority shares to be owned by the mutual insurance company under RSA 403-F:3. Prior to issuance of shares or options to purchase shares in excess of the authorized 5 percent to either officers and directors or employees, the commissioner may require a fairness opinion by an independent authority acceptable to the commissioner to assure that the long term interests of the shareholders and policyholders are adequately protected. The commissioner shall approve or disapprove the issuance of such shares within 30 days after receipt of the fairness opinion. Directors and officers shall be prohibited from purchasing shares of stock, whether or not part of a plan of compensation, for a period of 6 months following any initial public offering of such shares.
Source. 2000, 247:1, eff. June 8, 2000.
Section 403-F:7
403-F:7 Applicability of General Corporation Statutes. –
A mutual insurance holding company organized under this chapter shall be subject to only those provisions of the laws relating to corporations in general that are not inconsistent with the provisions of title XXXVII, the insurance code.
Source. 2000, 247:1, eff. June 8, 2000.
Section 403-F:8
403-F:8 Merger. –
Subject to applicable requirements of this chapter, a mutual insurance holding company may merge or consolidate with a mutual insurance holding company licensed pursuant to this chapter or any similar entity organized pursuant to the laws of any other state.
Source. 2000, 247:1, eff. June 8, 2000.
Section 403-F:9
403-F:9 Membership. –
I. Membership in a mutual insurance holding company shall be determined in accordance with the mutual insurance holding company's articles of incorporation and bylaws and shall be based upon each member holding a policy of insurance with a subsidiary insurance company. Group certificate holders may also be members of the mutual insurance holding company if specified in the bylaws.
II. No member of a mutual insurance holding company may transfer membership or any right arising therefrom.
III. A member of a mutual insurance holding company is not, as such, personally liable for the acts, debts, liabilities, or obligations of the company and may not be assessed by the directors of such company.
IV. A membership interest in a mutual insurance holding company shall not constitute a security, as defined in RSA 421-B:1-102(53).
Source. 2000, 247:1. 2015, 273:15, eff. Jan. 1, 2016.
Section 403-F:10
403-F:10 Members' Share of Assets on Voluntary Dissolution. –
I. Upon any voluntary dissolution of a domestic mutual insurance holding company, its assets remaining after discharge of its indebtedness, if any, and expenses of administration, shall be distributed to existing persons who were its members at any time within the 3-year period preceding the date such liquidation was authorized or ordered, or date of last termination of the insurer's certificate of authority, whichever date is earlier; except, if the commissioner has reason to believe that those in charge of the management of the mutual insurance holding company have caused or encouraged the reduction of the number of members of the insurer in anticipation of liquidation and for the purpose of reducing thereby the number of persons who may be entitled to share in distribution of the insurer's assets, the commissioner may enlarge the 3-year qualification period by such additional time as the commissioner may deem to be reasonable.
II. The distributive share of each such member shall be determined by a formula based upon such reasonable classifications of members as the commissioner may approve.
Source. 2000, 247:1, eff. June 8, 2000.
Section 403-F:11
403-F:11 Application of Holding Company Statutes and Regulations. –
Each reorganized subsidiary insurance company shall be subject to the applicable laws of this state relating to insurance holding company systems. A mutual insurance holding company shall not be subject to provisions of this title or rules adopted thereunder with respect to the writing of insurance or required capital or surplus. A mutual insurance holding company system shall be considered an insurance holding company.
Source. 2000, 247:1, eff. June 8, 2000.
Section 403-F:12
403-F:12 Converting Mutual Insurance Holding Company. –
A mutual insurance holding company may convert to a stock holding company by complying with the procedures set forth in RSA 403-B, with the mutual insurance holding company to be treated as the "insurer" and with its members to be treated as "eligible policyholders" for purposes of such chapter.
Source. 2000, 247:1, eff. June 8, 2000.
Section 403-F:13
403-F:13 Rulemaking. –
The commissioner shall adopt rules, pursuant to RSA 541-A, as may be necessary for the administration of this chapter.
Source. 2000, 247:1, eff. June 8, 2000.