§ 521A.14 — Mutual insurance holding companies

Iowa § 521A.14

• Jurisdiction: Iowa
• Title XIII: COMMERCE
• Ch. 521A: INSURANCE HOLDING COMPANY SYSTEMS

Text

1. a. For purposes of this section, “domestic mutual insurance company” includes a
company qualified and licensed in this state pursuant to chapter 518 or 518A. A domestic
mutual insurance company, upon approval of the commissioner, may reorganize by forming
an insurance holding company based upon a mutual plan and continuing the corporate
existence of the reorganizing insurance company as a stock insurance company. The
reorganized insurance company may continue to use the word “mutual” in the company’s
name provided that the company’s name also includes the words “stock insurer”, or the
abbreviation “SI”. The commissioner, after a public hearing as provided in section 521A.3,
§521A.14, INSURANCE HOLDING COMPANY SYSTEMS 24
subsection 4, paragraph “b”, if satisfied that the interests of the policyholders are properly
protected and that the plan of reorganization is fair and equitable to the policyholders, may
approve the proposed plan of reorganization and may require as a condition of approval such
modifications of the proposed plan of reorganization as the commissioner finds necessary
for the protection of the policyholders’ interests. The commissioner may retain consultants
as provided in section 521A.3, subsection 4, paragraph “d”. A reorganization pursuant to this
section is subject to section 521A.3, subsections 1, 2, and 3. The commissioner shall retain
jurisdiction over a mutual insurance holding company organized pursuant to this section to
assure that policyholder interests are protected.
b. All of the initial shares of the capital stock of the reorganized insurance company
shall be issued to the mutual insurance holding company. The membership interests of the
policyholders of the reorganized insurance company shall become membership interests
in the mutual insurance holding company. Policyholders of the reorganized insurance
company 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 shares of
the capital stock of the reorganized insurance company.
2. a. A domestic mutual insurance company, upon the approval of the commissioner,
may reorganize by merging its policyholders’ membership interests into a mutual insurance
holding company formed pursuant to subsection 1 and continuing the corporate existence of
the reorganizing insurance company as a stock insurance company subsidiary of the mutual
insurance holding company. The reorganized insurance company may continue to use the
word “mutual” in the company’s name provided that the company’s name also includes the
words “stock insurer”, or the abbreviation “SI”. The commissioner, after a public hearing
as provided in section 521A.3, subsection 4, paragraph “b”, if satisfied that the interests of
the policyholders are properly protected and that the merger is fair and equitable to the
policyholders, may approve the proposed merger and may require as a condition of approval
such modifications of the proposed merger as the commissioner finds necessary for the
protection of the policyholders’ interests. The commissioner may retain consultants as
provided in section 521A.3, subsection 4, paragraph “d”. A merger pursuant to this section is
subject to section 521A.3, subsections 1, 2, and 3. The commissioner shall retain jurisdiction
over the mutual insurance holding company organized pursuant to this section to assure
that policyholder interests are protected.
b. All of the initial shares of the capital stock of the reorganized insurance company
shall be issued to the mutual insurance holding company. The membership interests of the
policyholders of the reorganized insurance company shall become membership interests in
the mutual insurance holding company. Policyholders of the reorganized insurance company
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 shares of the capital stock of
the reorganized insurance company. A merger of policyholders’ membership interests in a
mutual insurance company into a mutual insurance holding company shall be deemed to be
a merger of insurance companies pursuant to chapter 521 and chapter 521 is also applicable.
c. A foreign mutual insurance company, or a foreign health service corporation, which
if a domestic corporation would be organized under chapter 514, may 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 insurance company or foreign health
service corporation by merging its policyholders’ or subscribers’ membership interests into
a mutual insurance holding company formed pursuant to subsection 1 and continuing the
corporate existence of the reorganizing foreign mutual insurance company or reorganizing
foreign health service corporation as a foreign stock insurance company subsidiary of the
mutual insurance holding company. The commissioner, after a public hearing as provided
in section 521A.3, subsection 4, paragraph “b”, may approve the proposed merger. The
commissioner may retain consultants as provided in section 521A.3, subsection 4, paragraph
“d”. A merger pursuant to this paragraph is subject to section 521A.3, subsections 1, 2,
and 3. The reorganizing foreign mutual insurance company or reorganizing foreign health
25 INSURANCE HOLDING COMPANY SYSTEMS, §521A.14
service corporation may remain a foreign company or foreign corporation after the merger,
and may be admitted to do business in this state. A foreign mutual insurance company or
foreign mutual health service corporation which is a party to the merger may at the same
time redomesticate in this state by complying with the applicable requirements of this state
and its state of domicile. The provisions of paragraph “b” shall apply to a merger authorized
under this paragraph, except that a reference to policyholders in that paragraph is also
deemed to include subscribers in the case of a health service corporation.
3. A mutual insurance holding company resulting from the reorganization of a domestic
mutual insurance company organized under chapter 491 shall be incorporated pursuant to
chapter 491. This requirement shall supersede any conflicting provisions of section 491.1.
The articles of incorporation and any amendments to such articles of the mutual insurance
holding company shall be subject to approval of the commissioner in the same manner as
those of an insurance company.
4. A mutual insurance holding company is deemed to be an insurer subject to chapter
507C and shall automatically be a party to any proceeding under chapter 507C involving an
insurance company which as a result of a reorganization pursuant to subsection 1 or 2 is a
subsidiary of the mutual insurance holding company. In any proceeding under chapter 507C
involving the reorganized insurance company, the assets of the mutual insurance holding
company are deemed to be assets of the estate of the reorganized insurance company for
purposes of satisfying the claims of the reorganized insurance company’s policyholders. A
mutual insurance holding company shall not dissolve or liquidate without the approval of the
commissioner or as ordered by the district court pursuant to chapter 507C.
5. a. Chapters 508B and 515G are not applicable to a reorganization or merger pursuant
to this section.
b. Chapter 508B is applicable to demutualization of a mutual insurance holding company
which resulted from the reorganization of a domestic mutual life insurance company
organized under chapter 508 as if it were a mutual life insurance company.
c. Chapter 515G is applicable to demutualization of a mutual insurance holding company
whichresultedfromthereorganizationofadomesticmutualpropertyandcasualtyinsurance
company organized under chapter 515 as if it were a mutual property and casualty insurance
company.
6. A membership interest in a domestic mutual insurance holding company shall not
constitute a security as defined in section 502.102.
7. a. The majority of the voting shares of the capital stock of the reorganized insurance
company, which is required by this section to be at all times 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 shares of the reorganized insurance company which is
required by this section to be at all times owned by a mutual insurance holding company,
is in violation of this section and shall be void in inverse 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 shares. The majority of the voting shares of the capital stock of the reorganized
insurance company which is required by this section to be at all times owned by a mutual
insurance holding company shall not be subject to execution and levy as provided in chapter
626. The shares of the capital stock of the surviving or new company resulting from a
merger or consolidation of two or more reorganized insurance companies or two or more
intermediate holding companies which were subsidiaries of the same mutual insurance
holding company are subject to the same requirements, restrictions, and limitations as
provided in this section to which the shares of the merging or consolidating reorganized
insurance companies or intermediate holding companies were subject by this section prior
to the merger or consolidation.
b. As used in this section, “majority of the voting shares of the capital stock of the
reorganized insurance company” means shares of the capital stock of the reorganized
§521A.14, INSURANCE HOLDING COMPANY SYSTEMS 26
insurance company 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 insurance company
for the election of directors and on all other matters submitted to a vote of the shareholders
of the reorganized insurance company. The ownership of a majority of the voting shares
of the capital stock of the reorganized insurance company which are required by this
section to be at all times owned by a parent mutual insurance holding company includes
indirect ownership through one or more intermediate holding companies in a corporate
structure 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 shares of the capital stock of
the reorganized insurance company. The commissioner shall have jurisdiction over an
intermediate holding company as if it were a mutual insurance holding company. As used in
this section, “intermediate holding company” means a holding company which is a subsidiary
of a mutual insurance holding company, and which either directly or through a subsidiary
intermediate holding company has one or more subsidiary reorganized insurance companies
of which a majority of the voting shares of the capital stock would otherwise have been
required by this section to be at all times owned by the mutual insurance holding company.