(a) An association captive insurance company, risk retention group or industrial insured captive insurance company formed as a stock insurer or mutual corporation may be converted to or merged with and into a reciprocal insurer in accordance with a plan for such conversion or merger and the provisions of this section.
(b) Any plan for such conversion or merger shall provide a fair and equitable plan for purchasing, retiring or otherwise extinguishing the interests of the stockholders and policyholders of a stock insurer, and the members and policyholders of a mutual corporation, including a fair and equitable provision for the rights and remedies of dissenting stockholders, members or policyholders.
(c) In the case of a conversion authorized under subsection (a) of this section:
(1) Such conversion shall be accomplished under such reasonable plan and procedure as may be approved by the commissioner, except that the Insurance Commissioner shall not approve any such plan of conversion unless such plan:
(A) Satisfies the provisions of subsection (b) of this section;
(B) Provides for a hearing, of which notice is given or to be given to the captive insurance company, its directors, officers and policyholders, and in the case of a stock insurer, its stockholders, and in the case of a mutual corporation, its members, all of which persons shall be entitled to attend and appear at such hearing, except that if notice of a hearing is given and no director, officer, policyholder, member or stockholder requests a hearing, the commissioner may cancel such hearing;
(C) Provides a fair and equitable plan for the conversion of stockholder, member or policyholder interests into subscriber interests in the resulting reciprocal insurer, substantially proportionate to the corresponding interests in the stock insurer or mutual corporation, except that such plan shall not preclude the resulting reciprocal insurer from applying underwriting criteria that could affect ongoing ownership interests; and
(D) Is approved:
(i) In the case of a stock insurer, by a majority of the shares entitled to vote represented in person or by proxy at a duly called regular or special meeting at which a quorum is present; and
(ii) In the case of a mutual corporation, by a majority of the voting interests of policyholders represented in person or by proxy at a duly called regular or special meeting thereof at which a quorum is present;
(2) The commissioner shall approve such plan of conversion if the commissioner finds that the conversion will promote the general good of the state in conformity with those standards set forth in subdivision (2) of subsection (g) of section 38a-91ff;
(3) If the commissioner approves the plan, the commissioner shall amend the converting insurer's certificate of authority to reflect conversion to a reciprocal insurer and issue such amended certificate of authority to the company's attorney-in-fact;
(4) The conversion shall be effective upon the issuance of an amended certificate of authority of a reciprocal insurer by the commissioner; and
(5) Upon the effective date of such conversion the corporate existence of the converting insurer shall cease and the resulting reciprocal insurer shall notify the Secretary of the State of such conversion.
(d) A merger authorized under subsection (a) of this section shall be accomplished substantially in accordance with the procedures set forth in this chapter, except that, solely for purposes of such merger:
(1) The plan of merger shall satisfy the provisions of subsection (b) of this section;
(2) The subscribers' advisory committee of a reciprocal insurer shall be equivalent to the board of directors of a stock insurer or mutual corporation;
(3) The subscribers of a reciprocal insurer shall be the equivalent of the policyholders of a mutual corporation;
(4) If a subscribers' advisory committee does not have a president or secretary, the officers of such committee having substantially equivalent duties shall be deemed the president or secretary of such committee;
(5) The commissioner shall approve the articles of merger if the commissioner finds that the merger will promote the general good of the state in conformity with those standards set forth in subdivision (2) of subsection (g) of section 38a-91ff. If the commissioner approves the articles of merger, the commissioner shall endorse the commissioner's approval thereon and the surviving insurer shall present the articles of merger to the Secretary of the State at the Secretary of the State's office;
(6) Notwithstanding section 38a-91dd, the commissioner may permit the formation, without surplus, of a captive insurance company organized as a reciprocal insurer, into which an existing captive insurance company may be merged for the purpose of facilitating a transaction under this section, except that there shall be no more than one authorized insurance company surviving such merger; and
(7) An alien insurer may be a party to a merger authorized under subsection (a) of this section, except that the requirements for a merger between a domestic and a foreign insurer under this chapter shall apply to a merger between a domestic and an alien insurer under this subsection. Such alien insurer shall be treated as a foreign insurer under this chapter and such other jurisdictions shall be the equivalent of a state for purposes of this chapter.
(e) The commissioner may permit the formation of a captive insurance company that is established for the sole purpose of merging or consolidating with, or assuming existing insurance or reinsurance business from, an existing captive insurance company or, subject to such conditions as the commissioner may impose that are not inconsistent with this chapter, any existing captive insurance company organized in any other jurisdiction. Upon request of such newly formed captive insurance company, the commissioner may waive or modify the requirements of subparagraph (B) of subdivision (1) of subsection (c) of section 38a-91bb, and subdivision (2) of subsection (c) of section 38a-91bb.
(f) A conversion or merger under this section shall have the effects of conversion or merger set forth in this chapter to the extent such effects are not inconsistent with the provisions of sections 38a-91aa to 38a-91tt, inclusive.
(P.A. 08-127, S. 16; Oct. Sp. Sess. P.A. 11-1, S. 68.)
History: P.A. 08-127 effective January 1, 2009; Oct. Sp. Sess. P.A. 11-1 made technical changes in Subsecs. (a) to (d), added new Subsec. (e) re formation of a captive insurance company established for sole purpose of merging with or assuming existing insurance business from an existing captive insurance company, and redesignated existing Subsec. (e) as Subsec. (f) and made a technical change therein, effective July 1, 2012.