CHAPTER 2. MUTUAL INSURANCE COMPANY REORGANIZATION
IC 27-14-2
Chapter 2. Mutual Insurance Company Reorganization
IC 27-14-2-1
Prerequisites to reorganization
Sec. 1. (a) A mutual insurance company (MIC) may reorganizeunder this chapter as a mutual insurance holding company (MIHC)with one (1) or more subsidiaries after the following have occurred:
(1) The favorable vote of its board of directors to reorganize.
(2) The filing of an application with the commissioner.
(3) A notice of a public hearing made to its members and thepublic.
(4) At least one (1) public hearing conducted by thecommissioner.
(5) The approval of the plan by the commissioner.
(6) A favorable vote of the eligible members of the MIC.
(7) The issuance of an order of completion by thecommissioner.
(b) The subsidiaries of an MIHC:
(1) must include at least one (1) reorganized insurer;
(2) may include one (1) or more stock holding companies; and
(3) may include one (1) or more stock insurance companies, thepolicyholders of which are not and do not become members ofthe MIHC.
As added by P.L.5-2000, SEC.4.
IC 27-14-2-2
Methods of reorganization
Sec. 2. The reorganization of an MIC or two (2) or more MICsinto an MIHC structure under this chapter may be accomplished byany means approved by the commissioner, including the following:
(1) The establishment of at least one (1) company.
(2) The amendment or restatement of the articles and bylaws ofany company.
(3) The transfer or acquisition of any or all of the assets andliabilities or of the stock of any company.
(4) The merger or consolidation of two (2) or more MICs.
(5) The merger or consolidation of two (2) or more stockholding companies as part of the merger of two (2) or moreMIHCs.
(6) The merger or consolidation of two (2) or more stockinsurance companies.
(7) The merger of an MIC's membership interests into anyexisting MIHC, with the continued corporate existence of thereorganized MIC as a reorganized insurer.
As added by P.L.5-2000, SEC.4.
IC 27-14-2-3
Adoption of plan of reorganization by directors
Sec. 3. (a) A plan of reorganization must be adopted by the board
of directors of the MIC.
(b) For a plan of reorganization to be adopted by the board ofdirectors of an MIC, at least seventy-five percent (75%) of themembers of the board of directors must vote in favor of the adoption.
As added by P.L.5-2000, SEC.4.
IC 27-14-2-4
Application for reorganization
Sec. 4. Within ninety (90) days after the adoption of a plan ofreorganization and before a vote on the plan by the members, thecompany adopting the plan must file with the commissioner anapplication containing the following:
(1) A plan of reorganization.
(2) The form of the notices to be sent to members undersections 8 and 12(b) of this chapter.
(3) A copy of the:
(A) proposed articles of incorporation; and
(B) bylaws;
of each company to be formed under the plan, including thereorganized insurer in compliance with the requirements ofIC 27-1-6.
(4) If it is necessary to amend the current articles ofincorporation or bylaws of any company that is affected by theplan, a copy of:
(A) the proposed articles of amendment or amended andrestated articles of incorporation; and
(B) amended or restated bylaws;
of the company, which in the case of each domestic insurancecompany must comply with the requirements of IC 27-1-8.
(5) With respect to participating policies and contracts of thereorganized insurer, a description of:
(A) the current dividend practices of the MIC; and
(B) the dividend practices to be followed by the reorganizedinsurer following the effective date of reorganization.
As added by P.L.5-2000, SEC.4.
IC 27-14-2-5
Requirements for plan of reorganization
Sec. 5. A plan of reorganization filed with the commissionerunder this chapter must meet the following requirements:
(1) It must describe all significant terms of the proposedreorganization.
(2) It must describe in a narrative form any plan to issue stockthat may be proposed in connection with the plan ofreorganization.
(3) It must:
(A) describe the reasons for and purposes of the proposedreorganization;
(B) describe the manner in which the reorganization isexpected to benefit and serve the best interests of the
members; and
(C) include an analysis of the risks and benefits to the MICand its members of the proposed reorganization, andcompare those risks and benefits with the risks and benefitsof reasonable alternatives (including demutualization of theMIC) to the reorganization.
(4) It must provide that:
(A) a member's interest in the MIC becomes a member'sinterest in the MIHC;
(B) the members' surplus protection principle will govern theactions of the MIHC and its subsidiaries;
(C) a member's interest in the MIHC may not be transferred,assigned, pledged, or alienated in any manner except inconnection with a transfer, assignment, pledge, or alienationof the policy from which the member's interest is derived;and
(D) any member's interest in an MIHC will automaticallyterminate upon the lapse or other termination of the policyfrom which the member's interest is derived.
(5) It must describe how the plan of reorganization is to beeffected, including a description of a contemplated transfer,acquisition, or assumption of assets, rights, franchises, interests,debts, liabilities, or other obligations of the applicant and anyother company affected by the plan or reorganization.
(6) It must describe the:
(A) establishment of companies;
(B) amendment or restatement of the articles ofincorporation and bylaws of a company; and
(C) merger of companies;
that will take place under the plan of reorganization.
(7) It must provide a list of:
(A) all individuals who are or have been selected to becomedirectors or officers of the MIHC or any company that is asubsidiary of the MIHC; and
(B) other individuals who perform or will perform dutiescustomarily performed by a director or officer.
(8) The list prepared under subdivision (7) must include, foreach individual on the list:
(A) the individual's principal occupation;
(B) all offices and positions the individual has held in thepreceding five (5) years;
(C) any crime of which the individual has been convicted(other than traffic violations) in the preceding ten (10) years;
(D) information concerning any personal bankruptcy of theindividual or the individual's spouse during the previousseven (7) years;
(E) information concerning the bankruptcy of anycorporation of which the individual was an officer ordirector during the previous seven (7) years;
(F) information concerning any state or federal securities
law allegations against the individual that within theprevious ten (10) years resulted in a:
(i) determination that the individual violated the state orfederal securities law;
(ii) plea of nolo contendere; or
(iii) consent decree;
(G) information concerning the revocation during theprevious ten (10) years of any state or federal license issuedto the individual; and
(H) information as to whether the individual was refused aperformance or other bond during the previous ten (10)years.
(9) It must provide that any policy of any reorganized insurerthat goes into force after the effective date of thereorganization, will provide that:
(A) the owner of the policy; or
(B) another person or persons specified in the:
(i) policy; or
(ii) MIHC's articles of incorporation or bylaws;
becomes a member of the MIHC. However, a plan ofreorganization may provide that any person who becomes anowner of a policy or who would otherwise become a memberunder a policy issued during a particular period of not morethan three (3) years immediately after the effective date of theplan of reorganization will not become a member until after theexpiration of that period.
(10) It must provide that, with regard to a policy of the MIC inforce on the effective date of the plan of reorganization:
(A) the policy continues to remain in force under the policy'sterms as the policy of a reorganized insurer;
(B) the holder of a participating policy continues to have theright to receive policy dividends as provided for in thepolicy; and
(C) the policyholder's right to benefits, values, guarantees,and other contractual obligations of the MIC continues afterthe effective date of the plan of reorganization as obligationsof the reorganized insurer.
(11) It must describe the nature and content of the report andfinancial statement to be sent annually to each memberfollowing the reorganization.
(12) It must provide that, in the event of proceedings underIC 27-9 involving a reorganized insurer, the assets of the MIHCthat is affiliated with the reorganized insurer are available tosatisfy the policyholder obligations of the reorganized insurer.
(13) It must provide that the name of the reorganized insurerdoes not include the term "mutual", except as approved by thecommissioner as not being misleading to the policyholders orthe public.
(14) It must provide any additional information that thecommissioner may request.As added by P.L.5-2000, SEC.4.
IC 27-14-2-6
Amendment or termination of plan of reorganization
Sec. 6. (a) A plan of reorganization that is adopted by the boardof directors of the applicant may be:
(1) amended by the board of directors of the applicant:
(A) in response to the comments or recommendations of thecommissioner, or any other state or federal agency or entity,before any solicitation of proxies from the members to voteon the plan of reorganization; and
(B) otherwise, with the consent of the commissioner; or
(2) terminated by the board of directors of the applicant:
(A) before notice is sent to the members under section 8 ofthis chapter; or
(B) with the consent of the commissioner.
(b) For a plan of reorganization to be:
(1) amended; or
(2) terminated;
by the board of directors of an MIC, at least seventy-five percent(75%) of the members of the board of directors must vote in favor ofthe amendment or termination.
As added by P.L.5-2000, SEC.4.
IC 27-14-2-7
Public hearing
Sec. 7. (a) The commissioner shall, as soon as practicable after aplan of reorganization is filed with the commissioner but not morethan ninety (90) days (or a longer period after the plan is filed as thecommissioner determines for good cause), conduct a public hearingunder IC 4-22-2-26 to afford interested persons an opportunity topresent information, views, arguments, or comments about the plan.
(b) At least thirty (30) days before a hearing held under thissection, the commissioner shall publish notice of the hearing in anewspaper of general circulation in:
(1) the city of Indianapolis;
(2) the city in which the principal office of the applicant islocated; and
(3) other cities or towns that the commissioner considersappropriate.
The commissioner may provide written notice of the hearing by othermeans and to other persons that the commissioner considersappropriate.
(c) The notice provided under this section must:
(1) refer to the applicable statutory provisions;
(2) state the date, time, and location of the hearing; and
(3) include a brief statement of the subject of the hearing.
(d) At the discretion of the commissioner or the commissioner'sappointee, testimony may be taken under oath or by affirmation at apublic hearing under this article.As added by P.L.5-2000, SEC.4.
IC 27-14-2-8
Notice of hearing to members and policyholders
Sec. 8. The applicant shall, at least thirty (30) days before thepublic hearing required under this chapter, mail notice of the publichearing to the last known address of each member and policyholderof the MIC as shown on the books of the MIC. The notice mustachieve a minimum score of forty (40) on the Flesch reading ease testor an equivalent score on a comparable test approved by thecommissioner. The notice must include the following:
(1) Reference to the applicable statutory provisions.
(2) A statement of the date, time, and location of the hearing.
(3) A brief statement of the subject of the hearing, includingspecific notice to the member that the member's interest in theMIC will be affected by the reorganization.
As added by P.L.5-2000, SEC.4.
IC 27-14-2-9
Prerequisites to approval of plan of reorganization
Sec. 9. The commissioner may not approve a plan ofreorganization submitted under this article unless the applicant hasshown, by a preponderance of the evidence, that the plan ofreorganization:
(1) complies with the law;
(2) includes the disclosures and notices required under thisarticle;
(3) is fair, reasonable, and equitable to the members andpolicyholders of the MIC; and
(4) complies with the members' surplus protection principle.
As added by P.L.5-2000, SEC.4.
IC 27-14-2-10
Approval or disapproval of plan of reorganization bycommissioner
Sec. 10. (a) Not more than one hundred eighty (180) days after thefiling of the application and submission of all other informationrequested by the commissioner relative to the plan, or a longer periodif extended by the commissioner for good cause, the commissionershall approve or disapprove the plan of reorganization. Thecommissioner's approval of the plan must be conditioned upon:
(1) the approval of the plan by the eligible members under thischapter; and
(2) the requirements of sections 16 and 17 of this chapter.
(b) The commissioner shall fully consider any comments receivedat the public hearing under IC 4-22-2-27 before issuing an orderunder subsection (a).
As added by P.L.5-2000, SEC.4.
IC 27-14-2-11 Notice of approval or disapproval
Sec. 11. The commissioner shall notify the applicant uponreaching a decision on a plan of reorganization.
As added by P.L.5-2000, SEC.4.
IC 27-14-2-12
Submitting plan of reorganization to members
Sec. 12. (a) A plan of reorganization of an MIC must be submittedfor approval by the eligible members of the MIC after approval of theapplication by the commissioner under section 10 of this chapter. Avote by the eligible members to approve the plan must be made at aspecial or annual meeting held under IC 27-1-7-7 and this chapter.
(b) The eligible members must be sent notice of the meeting atwhich a plan of reorganization will be submitted for approval byeligible members. The notice must:
(1) be mailed at least thirty (30) days before the meeting;
(2) refer to the applicable statutory provisions;
(3) state the date, time, and location of the meeting;
(4) include or be accompanied by a brief statement of thesubject of the meeting, including specific notice to the memberthat the member's interest in the MIC will be affected by thereorganization;
(5) include or be accompanied by a copy of the plan or asummary of the plan; and
(6) describe the member's right to attend and participate in themeeting.
(c) The notice sent under this section must achieve a minimumscore of forty (40) on the Flesch reading ease test or an equivalentscore on a comparable test approved by the commissioner.
As added by P.L.5-2000, SEC.4.
IC 27-14-2-13
Voting on plan of reorganization
Sec. 13. Notwithstanding IC 27-1-7-9, with respect to a vote undersection 12 of this chapter, an eligible member:
(1) may vote in person or by proxy if the proxy solicitingmaterial:
(A) includes reference to the applicable statutory provisions;
(B) states the date, time, and location of the meeting;
(C) contains a brief statement of the subject of the meeting,including specific notice that the member's interest in theMIC will be affected by the reorganization;
(D) was solicited and obtained from the member after thecommissioner has approved the plan of reorganization underthis article; and
(E) was found to be sufficient in the reasonabledetermination of the commissioner for the eligible membersto make an informed decision about the plan ofreorganization; and
(2) is entitled to cast only one (1) vote on the proposed plan of
reorganization, regardless of the number of policies or theamount of insurance that the member has with the MIC or anyaffiliate of the MIC.
As added by P.L.5-2000, SEC.4.
IC 27-14-2-14
Approval of plan of reorganization by members
Sec. 14. For a plan of reorganization to be approved by themembers of an MIC:
(1) the plan of reorganization must be approved at a meeting atwhich at least ten percent (10%) of the eligible members arerepresented in person or by proxy; and
(2) at least two-thirds (2/3) of the eligible members voting inperson or by proxy must vote in favor of the plan.
As added by P.L.5-2000, SEC.4.
IC 27-14-2-15
Filing minutes of meeting at which plan approved
Sec. 15. Not later than thirty (30) days after members haveapproved a plan of reorganization at a special or annual meeting ofmembers under this chapter, an applicant must file with thecommissioner the minutes of the meeting at which the plan ofreorganization was approved.
As added by P.L.5-2000, SEC.4.
IC 27-14-2-16
Issuance of permit for completion of organization
Sec. 16. (a) Before the commissioner issues a permit forcompletion of organization under subsection (b):
(1) a public hearing must have been conducted under thischapter;
(2) the commissioner must have issued notice to the applicantthat the commissioner has approved the plan of reorganizationof the applicant under section 10 of this chapter; and
(3) the commissioner must have received the minutes of themeeting of the members at which the plan was approvedreflecting that the plan of reorganization was on the agenda andthe plan was approved.
(b) After the events referred to in subsection (a), thecommissioner shall issue:
(1) a permit for completion of organization of the MIHC; and
(2) in the case of:
(A) a newly organized domestic insurance company, apermit for completion of organization as provided inIC 27-1-6-11; or
(B) amended articles of incorporation of a domesticinsurance company, an amended certificate of authority asprovided in IC 27-1-8-9.
As added by P.L.5-2000, SEC.4.
IC 27-14-2-17
Effectiveness of plan of reorganization
Sec. 17. A plan of reorganization is effective when eachreorganized insurer and MIHC affected by the plan has filed:
(1) its articles of incorporation or, if appropriate, its articles ofamendment; and
(2) the certificate of authority and any amended certificate ofauthority issued to the company by the commissioner under thischapter;
in the office of the county recorder of the county in which theprincipal office of the company is located, or at any later datespecified in the plan of reorganization.
As added by P.L.5-2000, SEC.4.
IC 27-14-2-18
Organization of insurer under plan of reorganization
Sec. 18. The organization of a domestic insurance company undera plan of reorganization under this article must be conducted underIC 27-1-6 concerning the formation of domestic insurancecompanies.
As added by P.L.5-2000, SEC.4.
IC 27-14-2-19
Amendment of articles of incorporation of insurer under plan ofreorganization
Sec. 19. The amendment of the articles of incorporation of adomestic insurance company under a plan of reorganization underthis article must be conducted in compliance with IC 27-1-8.
As added by P.L.5-2000, SEC.4.