§ 7311 — Conversion of domestic mutual property/casualty insurance companies or advance premium corporations into domestic stock property/casualty...

§ 7311. Conversion of domestic mutual property/casualty insurance\ncompanies or advance premium corporations into domestic stock\nproperty/casualty insurance companies; insurers in rehabilitation. (a) A\ndomestic mutual insurer organized under article twelve of this chapter\nand licensed pursuant to article forty-one of this chapter and operating\npursuant to an order of rehabilitation, or a domestic advance premium\ncorporation organized and licensed under article sixty-six of this\nchapter and operating pursuant to an order of rehabilitation, may, upon\napplication of the superintendent and pursuant to an order granted by\nthe court in which the rehabilitation is pending, be converted by the\nsuperintendent into a domestic stock insurer in rehabilitation to be\norganized under article twelve and licensed under article forty-one of\nthis chapter, in accordance with the provisions of subsection (b) of\nthis section.\n (b) Before making such application to the court, the superintendent\nshall hold a public hearing, notice of which shall be given by\npublication in a newspaper of general circulation in the county in which\nthe insurer has its principal office and in the two largest cities in\neach state in which the insurer has underwritten insurance within one\nyear preceding the date of the order of rehabilitation.\n (c) If, after such hearing, the superintendent concludes that such\nconversion is appropriate and is necessary for a successful\nrehabilitation or is likely to materially enhance the probability of a\nsuccessful rehabilitation, he may apply to the court in which the\nrehabilitation is pending for an order directing him to convert such\ninsurer into a domestic stock insurer in rehabilitation, pursuant to the\nplan of conversion that the superintendent shall propose, subject to\ncourt approval. The primary objective of the plan shall be the\nsuccessful rehabilitation of the insurer. In the development of such\nplan the superintendent shall take into account the policyholders'\nequity, if any, at the time of conversion and may in his discretion\nprovide for a distribution of such equity to each person who had a\npolicy in effect at any time during the three year period (or such\nshorter period that the superintendent determines is practicable)\npreceding the date of the filing of the application by the\nsuperintendent. The plan shall provide for appropriate procedures\nnecessary for the implementation of the proposed conversion. Such stock\ninsurer in rehabilitation shall be subject to all of the applicable\nprovisions of this chapter, except those provisions relating to\nlicensing and financial requirements from which it is exempted by the\nsuperintendent. Upon the termination of the order of rehabilitation, the\nexemptions granted by the superintendent shall cease and the insurer\nshall become subject to all applicable provisions of this chapter.\n (d) The authorized capital stock of the new domestic stock insurer\nshall be held for the benefit of the qualifying prospective shareholders\nor purchasers by an escrow agent appointed by the superintendent. Such\nstock shall be released to the owners of record after the court approves\nthe conversion and the order of rehabilitation is terminated.\n (e) All expenses of the conversion, including the expenses incurred by\nthe department of financial services, shall be borne by the company\nbeing converted.\n