JurisdictionCaliforniaCode INSInsurance Code - INS
Div. 1.DIVISION 1. GENERAL RULES GOVERNING INSURANCE
Part 2.PART 2. THE BUSINESS OF INSURANCE
Ch. 3.CHAPTER 3. Reciprocal Insurers
Art. 17.ARTICLE 17. Conversion of Certain Reciprocal Insurers to Incorporated Stock Insurers
The definitions in this section apply to the following terms when used in this article:
(a)“Adoption date” means the date the governing body adopts the plan of conversion.
(b)“Converted insurer” means the incorporated stock insurer into which a domestic reciprocal insurer has been converted in accordance with the provisions of this article.
(c)“Converting insurer” means, for a plan of conversion under this article, the domestic reciprocal insurer that is converting under the plan.
(d)“Effective date” means the date upon which the conversion of a domestic reciprocal insurer is effective, as specified in the amended articles of incorporation of the reciprocal holding company filed with the Secretary of State, as a result of conversion proceedings under this article.
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The definitions in this section apply to the following terms when used in this article:
(a)
“Adoption date” means the date the governing body adopts the plan of conversion.
(b)
“Converted insurer” means the incorporated stock insurer into which a domestic reciprocal insurer has been converted in accordance with the provisions of this article.
(c)
“Converting insurer” means, for a plan of conversion under this article, the domestic reciprocal insurer that is converting under the plan.
(d)
“Effective date” means the date upon which the conversion of a domestic reciprocal insurer is effective, as specified in the amended articles of incorporation of the reciprocal holding company filed with the Secretary of State, as a result of conversion proceedings under this article.
(e)
“Eligible subscribers” means the subscribers of the domestic reciprocal insurer who are of record, fully paid-up, and otherwise in good standing on the domestic reciprocal insurer’s adoption date and on its effective date, but shall not include those persons covered solely under a reporting endorsement to a claims-made policy on either date.
(f)
“Governing body” means the body exercising subscribers’ rights selected pursuant to Section 1308 for the domestic reciprocal insurer.
(g)
“Independent director” means a member of the governing body of the reciprocal holding company who does not own shares, options, or any other equity interests in the stock holding company.
(h)
“Person” means an individual, partnership, firm, association, corporation, joint-stock company, limited liability company, trust, government or governmental agency, state or political subdivision of a state, public or private corporation, board, association, estate, trustee, or fiduciary, or any similar entity.
(i)
“Plan of conversion” or “plan” means a plan adopted by a domestic reciprocal insurer in compliance with this article.
(j)
“Policy” means an individual or group policy of insurance issued by a domestic reciprocal insurer. If a policy takes a form other than an individual form but holders of certificates or other interests under the policy are treated by the domestic reciprocal insurer as if they were holders of individual policies, the domestic reciprocal insurer may provide in its plan of conversion under this article that such a certificate or other interest is deemed to be a policy and deem the holder of the certificate or other interest to be an owner of a policy. Such a provision shall be for the sole purpose of determining the rights, if any, of policyholders of the domestic reciprocal insurer to vote upon and receive consideration under the plan of conversion and shall not affect the other voting rights and qualifications of members of the domestic reciprocal insurer.
(k)
“Policyholder” means the holder of a policy other than a reinsurance contract or a person covered solely under a reporting endorsement to a claims-made policy.
(
l
)
“Reciprocal holding company” means a corporation organized under the laws of this state subject to the General Corporation Law as set forth in the Corporations Code. The articles of incorporation of a reciprocal holding company shall contain provisions stating the following:
(1)
It is a reciprocal holding company organized under this article.
(2)
One purpose of the reciprocal holding company is to hold not less than 51 percent of the voting stock of a stock holding company, which in turn holds all of the voting stock of a converted insurer. In addition, the reciprocal holding company shall own not less than 51 percent of the total stockholders’ equity of the stock holding company at all times.
(3)
It is not authorized to issue voting stock.
(4)
Its subscribers have the rights specified in Section 1560.11 and in its articles of incorporation and bylaws.
(5)
Its assets and liabilities are subject to inclusion in the estate of the converted insurer in any proceedings successfully prosecuted against the converted insurer under Article 14 (commencing with Section 1010) or Article 14.3 (commencing with Section 1064.1) of Chapter 1.
(m)
“Rights in surplus” for a domestic reciprocal insurer, means rights of subscribers to a return of that portion of the surplus that has not been apportioned or declared by the governing body for policyholder dividends. “Rights in surplus” includes rights of subscribers to a distribution of surplus in liquidation or conservation of the insurer under this code, or in a dissolution or winding up. “Rights in surplus” does not include any right expressly conferred solely by the terms of an insurance policy.
(n)
“Stock holding company” means a corporation authorized to issue one or more classes of capital stock, the corporate purposes of which include holding all of the voting stock in an insurer that has been converted from a domestic reciprocal insurer into a stock insurer in proceedings under this article in which a reciprocal holding company is formed.
(o)
“Subscriber” means a person who, by the records of the domestic reciprocal insurer and its rules and regulations, is deemed to be a holder of a subscriber’s interest in the domestic reciprocal insurer. On and after the effective date of a plan of conversion, the term “subscriber” means a member of a reciprocal holding company, as provided in Section 1560.11.
(p)
“Subscriber interests” mean the interests of subscribers arising under this code and the rules and regulations of the domestic reciprocal insurer or otherwise by law.
(q)
“Voting stock” means securities of any class or any ownership interest having voting power for the election of directors, trustees, or management of a person, other than securities having voting power only because of the occurrence of a contingency. All references to a specified percentage of voting stock of any person mean securities having the specified percentage of the voting power in that person for the election of directors, trustees, or management of that person, other than securities having voting power only because of the occurrence of a contingency.