CHAPTER 1. GENERAL PROVISIONS AND DEFINITIONS
IC 27-14
ARTICLE 14. MUTUAL INSURANCE HOLDINGCOMPANY LAW
IC 27-14-1
Chapter 1. General Provisions and Definitions
IC 27-14-1-1
Short title
Sec. 1. This article may be referred to as the Indiana mutualinsurance holding company law.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-2
"Members' surplus protection principle"
Sec. 2. (a) The requirements of this section constitute the"members' surplus protection principle" for purposes of this article.
(b) The MIHC must at all times have the voting power andeconomic interests required by IC 27-14-5-1.
(c) The aggregate value of the members' interests in an MIHCshall be protected from dilution as a result of sales of stock of areorganized insurer or stock holding company to persons other thanthe MIHC through compliance with the requirements ofIC 27-14-5-6, IC 27-14-5-7, IC 27-14-5-8, and IC 27-14-6-5.
(d) Dividends paid on participating policies shall be protected asprovided by IC 27-14-3-11.
(e) An MIHC, stock holding company, and reorganized insurermust have outside directors as required by IC 27-14-3-5.
(f) The officers and directors of the MIHC and any subsidiary ofthe MIHC are subject to the restrictions on stock ownership set forthin IC 27-14-5-2, IC 27-14-5-3, and IC 27-14-5-9.
(g) Dividends paid on the equity securities of a stock holdingcompany or reorganized insurer may be paid only in accordance withIC 27-14-3-11.
(h) Compensation payable to directors and executive officers ofan MIHC, stock holding company, or reorganized insurer may bepaid only in accordance with IC 27-14-3-12.
(i) Operations outside the ordinary course of the insurancebusiness may be conducted only as provided in IC 27-14-3-13.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-3
Applicability of definitions
Sec. 3. The definitions set forth in this chapter apply throughoutthis article.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-4
"Acting in concert"
Sec. 4. (a) Subject to subsection (b), "acting in concert" means: (1) a knowing participation in a joint activity whether or notunder an express agreement;
(2) interdependent conscious parallel action toward a commongoal under an express agreement or otherwise; or
(3) a combination or pooling of voting interests or otherinterests in the securities of any person for a common purposeunder any contract, understanding, relationship, agreement, orother arrangement, written or otherwise.
(b) An employee benefit plan is acting in concert with:
(1) its trustee; or
(2) a person who serves in a capacity similar to a trustee;
solely for the purpose of determining whether capital stock held bythe trustee or the person in a similar capacity and capital stock heldby the plan will be aggregated.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-5
"Adoption date"
Sec. 5. "Adoption date" means, with respect to a plan, the date onwhich the board of directors approves a plan of reorganization or aplan to issue stock.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-6
"Affiliate"
Sec. 6. "Affiliate" means a person who, directly or indirectly:
(1) controls;
(2) is controlled by; or
(3) is under common control with;
another person.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-7
"Applicant"
Sec. 7. "Applicant" means, with respect to a plan, a person thathas submitted a plan to the commissioner under this article.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-8
"Associate"
Sec. 8. (a) Subject to subsection (b), "associate" means any of thefollowing:
(1) With respect to a particular person, corporation, businessentity, or other organization (other than the applicant or anaffiliate of the applicant) for which the person is:
(A) an officer;
(B) a partner; or
(C) directly or indirectly the beneficial owner of at least tenpercent (10%) of any class of equity securities.
(2) With respect to an individual who is a director or an officer
of the applicant or of any of the applicant's affiliates, a:
(A) spouse; or
(B) member of the immediate family sharing the samehousehold.
(3) With respect to a particular person, a trust or other estate inwhich the person has a substantial beneficial interest or forwhich the person serves as trustee or in a similar fiduciarycapacity.
(b) The term does not apply to a person that:
(1) has a beneficial interest in; or
(2) serves as a trustee or in a similar fiduciary capacity for;
an employee benefit plan.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-9
"Board"
Sec. 9. "Board" means:
(1) the board of directors of an MIHC, an MIC, a stock holdingcompany, or a reorganized insurer; or
(2) another board or committee that is responsible under thearticles or bylaws of the company for decisions involving thestructure or management of an MIHC, MIC, stock holdingcompany, or reorganized insurer.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-10
"Commissioner"
Sec. 10. "Commissioner" refers to the insurance commissionerappointed under IC 27-1-1-2.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-11
"Company"
Sec. 11. "Company" means any of the following:
(1) An MIC.
(2) An MIHC.
(3) A stock holding company.
(4) A reorganized insurer.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-12
"Disinterested director"
Sec. 12. "Disinterested director" means a director of an MIHCwho does not hold, directly or indirectly, a material ownershipinterest in any subsidiary.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-13
"Effective date"
Sec. 13. "Effective date" means, with respect to a plan, the date on
which the plan becomes effective under this article.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-14
"Eligible member"
Sec. 14. "Eligible member" means, with respect to a plan, a personwho is a member of an MIC or MIHC, as applicable, on the adoptiondate of a plan and:
(1) solely for purposes of receipt of notice of and voting at ameeting of members on a plan of reorganization, continues tobe a member of the MIC on the record date for the meeting ofmembers; or
(2) solely for purposes of eligibility to receive stocksubscription rights under a plan to issue stock, continues to bea member of the MIC or MIHC, as applicable, on the date thecommissioner approves the plan to issue stock.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-15
"Employee benefit plan"
Sec. 15. "Employee benefit plan" means an employee benefit planestablished by an MIHC or by one (1) or more of the subsidiaries ofan MIHC for the sole benefit of its:
(1) employees; or
(2) sales agents.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-16
"Financial services businesses"
Sec. 16. "Financial services businesses" includes investmentbanking, commercial banking, industrial banking, savings and loanassociations, credit unions, trust companies, other lending and loanbrokerage services, services related to the extension of credit(including but not limited to real estate and personal propertyappraisal; arranging equity financing; check-guaranty services;collection agency services; asset management, servicing, andcollection activities; real estate settlement services; and leasefinancing transactions), securities broker-dealer and trading services,private placement services, acting as a futures commission merchant,securities underwriting, transactions in bullion, precious metals, andforeign currency, investment advisory services, financial planningservices, third party administration of insurance policy claims andaccounts receivable, the advance or loan of funds using accountsreceivable as collateral, organization and operation of investmentcompanies and mutual funds, employee benefit planning andconsultation services, actuarial services, issuance of money orders,savings bonds, and traveler's checks, and other operations andservices either closely related to or a proper incident to the foregoing.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-17
"Immediate family"
Sec. 17. "Immediate family" means any child, stepchild,grandchild, parent, stepparent, grandparent, sibling, mother-in-law,father-in-law, son-in-law, daughter-in-law, brother-in-law orsister-in-law, and includes adoptive relationships.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-18
"Internal Revenue Code"
Sec. 18. "Internal Revenue Code" refers to the Internal RevenueCode of 1986, as amended.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-19
"Material ownership interest"
Sec. 19. "Material ownership interest" means an ownershipinterest equal to more than one-half of one percent (0.5%) of thevoting securities of the issuer, or a larger percentage as thecommissioner may approve.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-20
"Member"
Sec. 20. "Member" means a person that, according to the:
(1) records; and
(2) articles of incorporation and bylaws;
of an MIC or MIHC, as applicable, is a member of the MIC orMIHC, as applicable.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-21
"Member's interest"
Sec. 21. "Member's interest" means:
(1) the voting rights of a member provided by law and by theMIC's or MIHC's articles of incorporation and bylaws; and
(2) the right to receive cash, stock, or other consideration in theevent of a conversion to a stock company under IC 27-1 throughIC 27-13 or a dissolution under IC 27-1-10, as provided bythose laws and by the MIC's or MIHC's articles of incorporationor bylaws.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-22
"MIC"
Sec. 22. "MIC" refers to a mutual insurance company.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-23
"MIHC" Sec. 23. "MIHC" refers to a mutual insurance holding company.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-24
"Mutual insurance company" or "MIC"
Sec. 24. "Mutual insurance company" or "MIC" means a mutualinsurer that is:
(1) submitting; or
(2) subject to;
a plan of reorganization or plan to issue stock under this article.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-25
"Mutual insurance holding company" or "MIHC"
Sec. 25. "Mutual insurance holding company" or "MIHC" meansa mutual insurance holding company established under IC 27-14-2.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-26
"Net income"
Sec. 26. "Net income" means an amount equal to the consolidatednet income of the company for which the determination is beingmade, determined in accordance with generally accepted accountingprinciples on a basis consistent with prior periods, less net realizedinvestment gains (reduced by capital gains tax, if any) on the sale ofinvestments (including real estate) that were held as of the effectivedate of the plan of reorganization by a former MIC. For purposes ofthis section, "net realized investment gains" means an amount equalto realized investment gains less realized investment losses (reducedby capital gains tax, if any) for the same accounting period for allinvestments (including real estate) held as of the effective date of theplan of reorganization as determined in accordance with generallyaccepted accounting principles on a basis consistent with priorperiods. The cumulative total of net realized investment gains afterthe effective date of the plan of reorganization that are applied toreduce one (1) or more years of net income for the purposes of thissection and IC 27-14-3-11(e) shall not exceed the net unrealizedinvestment gains as of the effective date of the plan ofreorganization. For purposes of this section, "net unrealizedinvestment gains" mean unrealized investment gains less unrealizedinvestment losses (as adjusted for deferred income taxes) as of theeffective date of the plan of reorganization.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-27
"Ordinary course of the insurance business"
Sec. 27. "Ordinary course of the insurance business" includes butis not limited to the following actions and activities of the MIHC andits subsidiaries:
(1) Operations, practices, and procedures of the company in
effect prior to the effective date of the plan of reorganization.
(2) Operations, practices, and procedures that are consistentwith industry practices and standards used or in effect at anyrelevant time.
(3) The payment of obligations due under any surplus noteissued by the company with the approval of the commissioner.
(4) Expanding the business of any company into otherinsurance, insurance-related, and financial services businesses.
Any expansion in the ordinary course of the insurance business maybe accomplished through acquisition, merger, consolidation, strategicalliance, joint venture, or other business combination.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-28
"Outside director"
Sec. 28. (a) "Outside director" means an individual who:
(1) is a member of a board of:
(A) an MIHC;
(B) a stock holding company; or
(C) a reorganized insurer;
(2) is not and has not been within the last three (3) years anofficer of, an employee of, or a consultant to the entity or anyaffiliate of the entity referred to in subdivision (1), of whoseboard the individual is a member;
(3) with respect to a director of an MIHC that does not, directlyor indirectly, own all of the stock of each of its reorganizedinsurers, is not and has not been within the last three (3) yearsa director of a stock holding company or a reorganized insurerthat is affiliated with the MIHC; and
(4) is not a spouse of or a member of the immediate family whoshares the same household with an officer of, an employee of,or a consultant to the entity or any affiliate of the entity referredto in subdivision (1), of whose board the individual is amember.
(b) For purposes of this section, a consultant is an individual whodirectly derives more than thirty-three percent (33%) of theconsultant's income in any calendar year from the MIHC or anaffiliate of the MIHC or an associate of a person who derives morethan thirty-three percent (33%) of its income in any calendar yearfrom the MIHC or any affiliate of the MIHC.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-29
"Participating policy"
Sec. 29. "Participating policy" means a policy providing for thedistribution of policy dividends.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-30
"Person" Sec. 30. "Person" means any of the following:
(1) An individual.
(2) A group of individuals acting in concert.
(3) A trust.
(4) An association.
(5) A partnership.
(6) A limited liability company.
(7) A corporation.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-31
"Plan"
Sec. 31. "Plan" means a plan:
(1) of reorganization; or
(2) to issue stock.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-32
"Plan of reorganization"
Sec. 32. "Plan of reorganization" means a plan adopted underIC 27-14-2.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-33
"Plan to issue stock"
Sec. 33. "Plan to issue stock" means a plan to issue shares of astock holding company or a reorganized insurer adopted underIC 27-14-4.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-34
"Policy"
Sec. 34. "Policy" means a contract providing one (1) or more ofthe kinds of insurance described in IC 27-1-5-1.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-35
"Reorganized insurer"
Sec. 35. "Reorganized insurer" means an entity:
(1) that is a domestic stock insurance company that is ownedentirely or in part by an MIHC or a stock holding company; and
(2) the policyholders of which may be or are entitled to becomemembers of the MIHC.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-36
"Stock holding company"
Sec. 36. "Stock holding company" means an entity other than areorganized insurer and its subsidiaries that:
(1) is owned entirely or in part, directly or indirectly, by an
MIHC; and
(2) directly or indirectly owns all or part of the capital stock ofa reorganized insurer.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-37
"Subsidiary"
Sec. 37. "Subsidiary" means, with respect to a particular person,an affiliate of the person that is controlled by the person, either:
(1) directly; or
(2) indirectly through one (1) or more intermediaries.
As added by P.L.5-2000, SEC.4.
IC 27-14-1-38
"Voting capital stock"
Sec. 38. "Voting capital stock" means capital stock whose holderhas the right to vote in the election of directors.
As added by P.L.5-2000, SEC.4.