41-2855. CONVERSION OF MUTUAL INSURER TO STOCK INSURER. (1) A mutual insurer may become a stock insurer under such plan and procedure as may be approved by the director after a hearing thereon.
(2) The director shall not approve any conversion plan or procedure unless:
(a) It is equitable to the insurer’s members;
(b) It is subject to approval by vote of not less than a majority of the insurer’s current members voting thereon in person, by proxy, or by mail at a meeting of members called for the purpose pursuant to such reasonable notice and procedure as may be approved by the director. If a life insurer, the right to vote may be limited to members who hold policies other than term or group policies and whose policies have been in force for not less than one (1) year;
(c) The equity of each policyholder in the insurer is determinable under a fair formula approved by the director, which equity shall be based upon not less than the insurer’s entire surplus, after deducting contributed or borrowed surplus funds, plus a reasonable present equity in its reserves and in all nonadmitted assets;
(d) The policyholders entitled to participate in the purchase of stock or distribution of assets shall include all current policyholders and all existing persons who had been policyholders of the insurer within three (3) years prior to the date such plan was submitted to the director;
(e) The plan gives to each policyholder of the insurer, as specified in paragraph (d) of this subsection, a preemptive right to acquire his proportionate part of all of the proposed capital stock of the insurer within a designated reasonable period, and to apply upon the purchase thereof the amount of his equity in the insurer as determined under paragraph (c) of this subsection;
(f) Shares are so offered to policyholders at a price not greater than to be thereafter offered to others but at not more than double the par value of such shares;
(g) The plan provides for payment of cash in the amount of not less than fifty percent (50%) of the amount of the policyholder’s equity not so used for the purchase of stock to each policyholder not electing to exercise his preemptive right to apply his equity in the insurer toward the purchase of capital stock as provided in paragraph (e) of this subsection. The cash payment together with stock so purchased, if any, shall constitute full payment and discharge of the policyholder’s equity as an owner of such mutual insurer;
(h) The plan, when completed, would provide for the converted insurer paid-up capital stock and additional surplus in amounts not less than the minimum paid-up capital and surplus required of a domestic stock insurer transacting like kinds of insurance, as provided in section 41-313, Idaho Code; and
(i) It contains additional provisions or standards as the director may reasonably require.
(3) No director, officer, agent or employee of the insurer, nor any other person, shall receive any fee, commission or other valuable consideration whatsoever for aiding, promoting, or assisting therein except as set forth in the plan as approved by the director.
(4) Except as otherwise specifically provided in subsection (5) of this section, prior to and for a period of five (5) years following the director’s approval of a new stock insurer under subsection (2) of this section, no person other than the new stock insurer shall, without the prior approval of the director, directly or indirectly offer to acquire or acquire in any manner the beneficial ownership of five percent (5%) or more of any class of a voting security of the new stock insurer or of any institution which owns a majority or all of the voting securities of the stock insurer.
(5) Nothing in this section shall prohibit the inclusion in the plan of conversion of provisions under which individuals comprising the new stock insurer’s board of directors, officers, employees, agents, and persons acting as trustees of employee stock ownership plans or other employee benefit plans may be entitled to purchase for cash capital stock of the new stock insurer at the same price initially issued by the new stock insurer under the plan of conversion. Nothing in this section shall prohibit a management-incentive compensation program which is contained in the plan of conversion and approved by the director to be adopted upon conversion to the new stock insurer or prohibit such a program to be later adopted by the new stock insurer.
History:
[41-2855, added 1990, ch. 284, sec. 2, p. 794; am. 1998, ch. 304, sec. 1, p. 1004.]