§ 27-1-40.1. Mutual insurance holding companies.
(a)(1) Any domestic mutual insurance company, upon approval of the commissioner, may reorganize
by forming or merging into a mutual insurance holding company based upon a plan of
reorganization and continuing the corporate existence of the reorganizing insurance
company as a stock insurance company. The commissioner, after a public hearing as
provided in §â€‚27-35-2(d), 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 or 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 §â€‚27-35-2(d)(5). A reorganization pursuant to this section is subject to §§â€‚27-35-1, 27-35-1.5, 27-35-2, and 27-35-2.5. The commissioner shall retain jurisdiction over a mutual insurance holding company
organized pursuant to this section to assure that policyholder interests are protected.
(2) A plan of reorganization must be approved by two-thirds (â…”) vote of the board of directors
or other governing body, the director of the department of business regulation, and
the affirmative vote of a majority of those members or policyholders (subscribers
in the case of a health service corporation) constituting a quorum, present in person
or by proxy at a meeting called by the board of directors or other governing body.
(3) 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.
(4) 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 §â€‚27-35-2 and that chapter is also applicable.
(b) A foreign mutual insurance company or a foreign health service corporation, which
if a domestic corporation would be organized under chapters 19, 20, 20.1, 20.2, or
20.3 of this title, may reorganize upon the approval of the commissioner and in compliance
with the requirements of any law or regulation that is applicable to the foreign mutual
insurance company or foreign health service corporation by merging its policyholders'
or subscribers' membership interests into a domestic mutual insurance holding company
in the same manner as under subsection (a) above.
(c) A mutual insurance holding company resulting from the reorganization of a domestic
mutual insurance company organized under chapter 1 of this title shall be incorporated pursuant to chapter 1 of this title. 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.
(d) A mutual insurance holding company is deemed to be an insurer subject to chapters
14.1, 14.2, 14.3, and 14.4 of this title and shall automatically be a party to any
proceeding under chapter 14.3 or 14.4 of this title involving an insurance company
that as a result of a reorganization pursuant to subsection (a) or (b) is a subsidiary
of the mutual insurance holding company. In any proceeding under chapter 14.3 or 14.4
of this title 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 superior court
pursuant to chapter 14.3 or 14.4 of this title.
(e) Section 27-1-40 is not applicable to a reorganization or merger pursuant to this section.
(f) A membership interest in a domestic mutual insurance holding company shall not constitute
a security as defined in chapter 11 of title 7.
(g) 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. The shares of the capital stock of the surviving or new company resulting
from a merger or consolidation of two (2) or more reorganized insurance companies
or two (2) or more intermediate holding companies that 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.
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
insurance company that 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 that is a subsidiary of a mutual insurance holding company,
and that 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.