2005 Nevada Revised Statutes - Chapter 693A — Corporate Powers and Procedures of Domestic Stock and Mutual Insurers
CHAPTER 693A - CORPORATE POWERS ANDPROCEDURES OF DOMESTIC STOCK AND MUTUAL INSURERS
GENERAL PROVISIONS
NRS 693A.010 Scope.
NRS 693A.020 Applicabilityof statutes relating to corporations.
NRS 693A.030 Domesticinsurer prohibited from engaging in other business; exceptions.
NRS 693A.040 Principaloffices.
NRS 693A.050 Books,records, documents, accounts and vouchers.
NRS 693A.060 Assetsto be kept in State; exception.
NRS 693A.070 Removalor concealment of records or assets.
NRS 693A.080 Informationto stockholders and regulation of proxies: Scope of provisions.
NRS 693A.090 Informationto stockholders and regulation of proxies: Information in advance of meetings.
NRS 693A.100 Informationto stockholders and regulation of proxies: Solicitation and form of proxies.
NRS 693A.110 Managementand agency contracts; regulations.
NRS 693A.120 Prohibitedpecuniary interest of officers; regulations.
NRS 693A.130 Liabilityof officers and others for paying taxes, licenses and fees.
NRS 693A.140 Dividendsto stockholders.
NRS 693A.150 Participatingpolicies.
NRS 693A.160 Dividendsto policyholders.
NRS 693A.170 Purchaseof own shares by stock insurer.
NRS 693A.180 Borrowing.
NRS 693A.190 Mutualinsurers: Additional kinds of insurance.
NRS 693A.200 Mutualinsurers: Membership.
NRS 693A.210 Mutualinsurers: Bylaws.
NRS 693A.220 Mutualinsurers: Contingent liability of members.
NRS 693A.230 Mutualinsurers: Levy of contingent liability.
NRS 693A.240 Mutualinsurers: Enforcement of contingent liability.
NRS 693A.250 Mutualinsurers: Nonassessable policies; revocation of authority.
NRS 693A.260 Impairmentof capital, surplus or assets: Notice; time to cure; restrictions.
NRS 693A.270 Impairmentof capital, surplus or assets: Curing deficiency; failure to cure.
NRS 693A.280 Impairmentof capital, surplus or assets: Violation of restrictions; penalty.
NRS 693A.290 Mutualizationof stock insurer.
NRS 693A.300 Conversionto ordinary business corporation.
NRS 693A.310 Affiliationof stock insurers.
NRS 693A.320 Acquisitionof controlling stock.
NRS 693A.330 Mergeror consolidation of stock insurers.
NRS 693A.340 Preservationof old charter in merger or consolidation.
NRS 693A.350 Mergeror consolidation of mutual insurers.
NRS 693A.365 Assumptionof reinsurance: Limitations; application of provisions.
NRS 693A.370 Bulkreinsurance: Limitation; approval by Commissioner and members.
NRS 693A.380 Bulkreinsurance: Certificate of fees and commissions; restrictions upon payment;penalty.
NRS 693A.390 Membersshare of assets on liquidation.
CONVERSION OF MUTUAL INTO STOCK INSURER
NRS 693A.400 Definitions.
NRS 693A.405 Closedblock defined.
NRS 693A.410 Considerationdefined.
NRS 693A.415 Convertingmutual defined.
NRS 693A.420 Eligiblemember defined.
NRS 693A.425 Newstock insurer defined.
NRS 693A.430 Policyholderdefined.
NRS 693A.435 Procedurefor conversion.
NRS 693A.440 Resolutionby board of directors; plan of conversion.
NRS 693A.445 Applicationfor conversion: Filing and contents; filing fee.
NRS 693A.450 Publichearing on application.
NRS 693A.455 Actionby Commissioner on application.
NRS 693A.460 Meetingand vote of policyholders; notice.
NRS 693A.465 Abandonmentof plan of conversion.
NRS 693A.470 Issuanceand notice of final order approving application; issuance and effect ofcertificate of authority.
NRS 693A.475 Authorityof Commissioner to engage services of experts; payment of costs to review planof conversion.
NRS 693A.480 Confidentialityand publication of pertinent information and documents.
NRS 693A.485 Continuationof corporate existence of converting mutual.
NRS 693A.490 Purchaseof stock by directors, officers, employees, agents or trustees.
NRS 693A.495 Receiptof fee, commission or other consideration for aiding, promoting or assisting inplan of conversion.
NRS 693A.500 Offersto acquire and acquisition of voting securities of new stock insurer orinstitution that owns majority of voting securities of new stock insurer.
NRS 693A.505 Unlawfulacquisition of securities: Voting of securities prohibited; injunctive andother relief.
NRS 693A.510 Unlawfulacquisition of securities: Seizure or sequestration of securities.
NRS 693A.515 Unlawfulacquisition of securities: Imposition of administrative penalty for violation.
NRS 693A.520 Unlawfulacquisition of securities: Imposition of administrative penalty againstdirector, officer or agent.
NRS 693A.525 Unlawfulacquisition of securities: Orders by Commissioner.
NRS 693A.530 Regulationsand orders of Commissioner.
NRS 693A.535 Judicialreview of final order of Commissioner.
NRS 693A.540 Enforcementof provisions by Commissioner.
REORGANIZATION OF MUTUAL INTO STOCK INSURER
NRS 693A.550 Definitions.
NRS 693A.555 Intermediatestock holding company defined.
NRS 693A.560 Mutualinsurance holding company defined.
NRS 693A.565 Reorganizedstock insurer defined.
NRS 693A.570 Votingsecurities defined.
NRS 693A.575 Procedurefor reorganization.
NRS 693A.580 Proposedplan of reorganization: Filing and contents; filing fee.
NRS 693A.585 Publichearing on proposed plan.
NRS 693A.590 Actionby Commissioner on proposed plan; notice and expiration of approval.
NRS 693A.595 Meetingand vote of policyholders; notice.
NRS 693A.600 Abandonmentof plan of reorganization.
NRS 693A.605 Issuanceand effect of certificate of authority.
NRS 693A.610 Authorityof Commissioner to engage services of experts; payment of costs to review planof reorganization.
NRS 693A.615 Confidentialityand publication of pertinent information and documents.
NRS 693A.620 Continuationof corporate existence of mutual insurer.
NRS 693A.625 Issuanceof initial shares of capital stock; identity and rights of policyholders;status, rights, duties and assets of holding company.
NRS 693A.630 Conversionof mutual insurance holding company to domestic stock insurance company notprohibited.
NRS 693A.635 Membershipinterest in mutual insurance holding company is not security.
NRS 693A.640 Receiptof fee, commission or other consideration for aiding, promoting or assisting inplan of reorganization.
NRS 693A.645 Mutualinsurance holding company: Annual filing requirements.
NRS 693A.650 Mutualinsurance holding company: Production of records, books or other informationand papers.
NRS 693A.655 Regulationsand orders of Commissioner.
NRS 693A.660 Judicialreview of final order of Commissioner.
NRS 693A.665 Enforcementof provisions by Commissioner.
_________
GENERAL PROVISIONS
1. Except as provided in subsection 2, this chapterapplies only to domestic stock insurers and domestic mutual insurers.
2. Subsection 3 of NRS693A.050 also applies to foreign and alien insurers whose principal United States offices are located in this state; and subsection 5 of
(Added to NRS by 1971, 1797)
NRS
(Added to NRS by 1971, 1798)
NRS
1. Except as otherwise provided in subsections 2, 3and 4, a domestic insurer formed before, on or after January 1, 1972, shall notengage in any business other than the insurance business and in businessactivities reasonably and necessarily incidental to the insurance business.
2. A title insurer may also engage in business as anescrow agent.
3. Any insurer may also engage in business activitiesreasonably related to the management, supervision, servicing of and protectionof its interests as to its lawful investments, and to the full utilization ofits facilities.
4. An insurer may own subsidiaries which may engage insuch businesses as are provided for in NRS682A.130.
(Added to NRS by 1971, 1798; A 1997, 1628)
NRS
1. Except as provided in subsection 2, every domesticinsurer shall have and maintain its principal office and principal place ofbusiness in this state.
2. The Commissioner for good cause shown may permit aninsurer to have and maintain such office or place of business in another stateif found by the Commissioner to be in the best interests of the insurer and itspolicyholders and reasonably convenient to the Commissioner in his supervisionof the insurer, all subject to such reasonable terms and conditions as theCommissioner shall, by his order granting such permission, establish.
(Added to NRS by 1971, 1798)
NRS
1. Every domestic insurer shall keep at its principalplace of business its books, records, documents, accounts and vouchers in sucha manner that its financial condition can be ascertained and that its financialstatements filed with the Commissioner can readily be verified and itscompliance with the law determined.
2. No insurer shall make any disbursement of $25 ormore, unless evidenced by a voucher or other document correctly describing theconsideration for the payment and supported by a check or receipt endorsed orsigned by or on behalf of the person receiving the money. If the disbursementis for services and reimbursement, the voucher or other document, or some otherwriting referred to therein, shall describe the services and itemize theexpenditures. If the disbursement is in connection with any matter pendingbefore any Legislature or public body or before any public officer, the voucheror other document shall also correctly describe the nature of the matter andthe nature of the insurers interest therein.
3. All such books, records, documents, accounts andvouchers of a domestic insurer, or of any principal United States office of aforeign or alien insurer located in this State, shall be preserved and keptavailable for the purposes of examination and until authority to destroy orotherwise dispose of such records is secured from the Commissioner.
4. Any director, officer, agent or employee of anyinsurer who destroys any such books, records or documents without the authorityof the Commissioner in violation of this section is guilty of a grossmisdemeanor.
(Added to NRS by 1971, 1798)
NRS
1. Every domestic insurer shall keep its assets withinthe State of Nevada, except where requisite for the normal transaction of itsbusiness.
2. This section does not apply to:
(a) Assets maintained at the insurers principal placeof business located outside this State with the Commissioners permissiongranted under NRS 693A.040;
(b) Securities on deposit with or through the insurancesupervisory officer of another state, province or country as a condition toauthority for the transaction of insurance business by the insurer in thatstate, province or country; and
(c) Negotiable securities held in book entry formthrough the United States banking system and recorded in the name of thedomestic insurer or its nominee by the authorized transfer agency or trustee ofthe security.
(Added to NRS by 1971, 1799; A 1991, 647)
NRS
1. A person shall not remove all or any material partof the records or assets of a domestic insurer from this State except pursuantto a plan of merger, consolidation or bulk reinsurance approved by theCommissioner under this Code, or for such other reasonable purposes and periodsof time as may be permissible under NRS693A.050 and 693A.060, or as mayhave been approved by the Commissioner in writing in advance of such removal.
2. A person shall not conceal any such records orassets from the Commissioner.
3. A person who unlawfully removes or attempts toremove such records or assets or such material part thereof from the principalplace of business of the insurer or place of safekeeping thereof, or whounlawfully conceals or attempts to conceal the same from the Commissioner, isguilty of a category D felony and shall be punished as provided in
4. Upon any unlawful removal or attempted removal ofsuch records or assets, or upon retention of such records or assets or materialpart thereof outside this State in violation of the terms of the applicableconsent of the Commissioner, or upon any unlawful concealment of or attempt toconceal records or assets, the Commissioner may, in his discretion, institutedelinquency proceedings against the insurer pursuant to
(Added to NRS by 1971, 1799; A 1995, 1319)
NRS
1. This section and
(a) A domestic stock insurer having of record less than100 holders of any class of equity securities; but if 95 percent or more of theinsurers equity securities are owned or controlled by a parent or anaffiliated insurer, this section and NRS693A.090 and 693A.100 do not applyto such insurer unless its remaining securities are held of record by 500 ormore persons; and
(b) Domestic stock insurers which, relative to thevoting or other securities involved, file with the Securities and ExchangeCommission forms of proxies, consents and authorizations pursuant to theSecurities Exchange Act of 1934, as amended.
2. The Commissioner shall have authority to make andpromulgate reasonable rules and regulations for the effectuation of thissection and NRS 693A.090 and
(Added to NRS by 1971, 1800)
NRS
(Added to NRS by 1971, 1800)
NRS
1. No person shall solicit a proxy, consent orauthorization in respect of any stock or other voting security of such aninsurer unless he furnishes the person so solicited with written informationreasonably adequate as to:
(a) The material matters in regard to which the powersso solicited are proposed to be used; and
(b) The person or persons on whose behalf thesolicitation is made, and the interest of such person or persons in relation tosuch matters.
2. No person shall so furnish to another informationwhich the informer knows or has reason to believe is false or misleading as toany material fact, or which fails to state any material fact reasonablynecessary to prevent any other statement made from being misleading.
3. The form of all such proxies shall:
(a) Conspicuously state on whose behalf the proxy issolicited;
(b) Provide for dating the proxy;
(c) Impartially identify each matter or group ofrelated matters intended to be acted upon;
(d) Provide means for the principal to instruct thevote of his shares as to approval or disapproval of each matter or group, otherthan election to office; and
(e) Be legibly printed, with context suitablyorganized,
but a proxymay confer discretionary authority as to matters as to which a choice is notspecified pursuant to paragraph (d), if the form conspicuously states how it isintended to vote the proxy or authorization in each such case, and may conferdiscretionary authority as to other matters which may come before the meetingbut unknown for a reasonable time prior to the solicitation by the persons onwhose behalf the solicitation is made.
4. No proxy shall confer authority to:
(a) Vote for the election of any person to any officefor which a bona fide nominee is not named in the proxy statement; or
(b) Vote in any annual meeting (or adjournment thereof)other than the annual meeting next following the date on which the proxystatement and form were furnished stockholders.
5. Any proxy, consent or authorization obtained inviolation of, or which violates, this section or the lawful rules andregulations of the Commissioner relating thereto is void.
(Added to NRS by 1971, 1800)
NRS
1. After January 1, 1972, a domestic insurer shall notmake any contract whereby any person is granted or is to enjoy in fact themanagement of the insurer to the material exclusion of its board of directorsor to have the controlling or preemptive right to produce substantially allinsurance business for the insurer, or, if an officer, director or otherwisepart of the insurers management, is to receive any commission, bonus orcompensation based upon the volume of the insurers business or transactions,unless the contract is filed with and not disapproved by the Commissioner. Thecontract must become effective in accordance with its terms unless disapprovedby the Commissioner within 20 days after the date of filing, subject to suchreasonable extension of time as the Commissioner may require by notice givenwithin such 20 days. Any disapproval must be delivered to the insurer inwriting stating the grounds therefor.
2. Any such contract must provide that any suchmanager, producer of its business or contract holder shall within 90 days afterexpiration of each calendar year furnish the insurers board of directors awritten statement of amounts received under or on account of the contract andamounts expended thereunder during the previous calendar year, withspecification of the emoluments received therefrom by the respective directors,officers and other principal management personnel of the manager or producer,and with such classification of items and further detail as the insurers boardof directors may reasonably require.
3. The Commissioner shall disapprove any such contractif he finds that it:
(a) Subjects the insurer to excessive charges;
(b) Is to extend for an unreasonable length of time;
(c) Does not contain fair and adequate standards ofperformance; or
(d) Contains other inequitable provision or provisionswhich impair the proper interests of stockholders or members of the insurer.
4. The Commissioner may, after a hearing held thereon,disapprove any such contract theretofore permitted to become effective, if hefinds that the contract should be disapproved on any of the grounds specifiedin subsection 3.
5. This section does not apply to contracts enteredinto before January 1, 1972, or to extensions or amendments of such contracts.
6. The Commissioner may adopt regulations governingthe management and agency contracts of insurers.
(Added to NRS by 1971, 1801; A 1995, 1777)
NRS
1. Any officer or director, or any member of anycommittee or an employee of a domestic insurer, having the duty or power ofinvesting or handling the insurers funds, shall not:
(a) Deposit or invest such funds except in theinsurers name;
(b) Borrow the fund of the insurer, or be pecuniarilyinterested in any loan, pledge, deposit, security, investment, sale, purchase,exchange, reinsurance or other similar transaction or property of the insurerexcept as a stockholder, member, employee or director, unless the transactionis authorized or approved by the insurers board of directors, with theknowledge and recording of such pecuniary interest, by an affirmative vote ofnot less than two-thirds of the directors; and
(c) Take or receive to his own use any fee, brokerage,commission, gift or other similar consideration for or on account of any suchtransaction made by or on behalf of the insurer.
2. No insurer shall guarantee the financial obligationof any of its officers or directors.
3. This section does not prohibit:
(a) Such a director, officer, member of a committee oremployee from becoming a policyholder of the insurer and enjoying the usualrights of a policyholder or from participating as beneficiary in any pensiontrust, deferred compensation plan, profit-sharing plan, stock option plan orsimilar plan authorized by the insurer and to which he may be eligible; or
(b) Any director or member of a committee fromreceiving a reasonable fee for lawful services actually rendered to theinsurer.
4. The Commissioner may, by regulation from time totime, define and permit additional exceptions to the prohibitions contained insubsection 1 solely to enable payment of reasonable compensation to a directorwho is not otherwise an officer or employee of the insurer, or to a corporationor firm in which a director is interested, for necessary services performed orsales or purchases made to or for the insurer in the ordinary course of theinsurers business and in the usual private, professional or business capacityof such director, corporation or firm.
(Added to NRS by 1971, 1802)
NRS
(Added to NRS by 1971, 1803)
NRS
1. A domestic stock insurer shall not pay any cashdividend to stockholders except out of that part of its available andaccumulated surplus money otherwise unrestricted and derived from realized netoperating profits and realized and unrealized capital gains.
2. A stock dividend may be paid out of any availablesurplus. Upon payment of such a dividend the insurer shall transfer to itspaid-in capital stock accounts money equal to the aggregate of the par valuesof the shares so distributed.
3. A domestic stock insurer may declare and distributea dividend otherwise prohibited by this section if:
(a) Following the payment of the dividend, theinsurers surplus as regards policyholders is reasonable in relation to itsoutstanding liabilities and adequate to its financial needs, as determinedpursuant to NRS 692C.370; and
(b) The Commissioner approves the dividend before itspayment.
(Added to NRS by 1971, 1803; A 1995, 1778)
NRS
1. If provided for in its articles of incorporation orcharter, a stock insurer or mutual insurer may:
(a) Issue any or all of its policies or contracts withor without participation in profits, savings, unabsorbed portions of premiumsor surplus;
(b) Classify policies issued and perils insured on aparticipating and nonparticipating basis; and
(c) Determine the right to participate and the extentof participation of any class or classes of policies.
Any suchclassification or determination shall be reasonable, and shall not unfairlydiscriminate as between policies so classified.
2. A life insurer may issue both participating andnonparticipating policies or contracts if the right or absence of the right toparticipate is reasonably related to the premium charged.
3. After the first policy year, no dividend, otherwiseearned, shall be made contingent upon the payment of the renewal premium on anypolicy or contract; but a participating life or health insurance policyproviding for participation at the end of the first or second policy year orthe first and second policy year may provide that such dividend or dividendswill be paid subject to payment of the premium for the next ensuing year.
(Added to NRS by 1971, 1803)
NRS
1. The directors of a domestic mutual insurer may fromtime to time apportion and pay or credit to its members dividends only out ofthat part of its surplus funds which represents net realized savings, netrealized earnings and net realized capital gains, all in excess of the surplusrequired by law to be maintained by the insurer.
2. Subject to NRS688A.380 (participating, nonparticipating policies; accounting,allocations, dividends), a domestic stock insurer may pay dividends to holdersof its participating policies out of its available surplus.
3. No such dividend shall be paid which isinequitable, or which unfairly discriminates between classifications ofpolicies or policies within the same classification.
(Added to NRS by 1971, 1804)
NRS
1. For elimination of fractional shares.
2. Incidental to the enforcement of rights of theinsurer with respect to lawful transactions previously entered into in goodfaith for purposes other than the acquisition of such shares.
3. For the purposes of a general savings andinvestment plan for employees of the insurer.
4. For mutualization of the insurer, as provided in
5. For purposes as stated under a plan for suchacquisition submitted to and approved in writing by the Commissioner. TheCommissioner shall not approve a plan unless found by him to be for properpurposes, to be reasonable, fair and equitable as to the remaining stockholdersof the insurer, and not materially adverse to the protection of the insurerspolicyholders.
6. As the result of a gift or bequest of the shares tothe insurer.
7. By call for redemption and cancellation of acallable class of stock in accordance with provisions of the insurers articlesof incorporation.
(Added to NRS by 1971, 1804)
1. A domestic stock or mutual insurer may withoutpledge of assets borrow money to defray expenses of its organization, providesurplus funds or for any purpose of its business, upon a written agreement thatsuch money is required to be repaid only out of the insurers surplus in excessof that stipulated in such agreement. The agreement may provide for interestnot exceeding 6 percent per annum, which interest shall or shall not constitutea liability of the insurer as to its funds other than such excess of surplus,as stipulated in the agreement. No commission or promotion expense shall bepaid in connection with any such loan, except that if a public offering andsale is made of the loan securities the insurer may pay the reasonable coststhereof approved by the Commissioner.
2. Money so borrowed, together with the interestthereon if so stipulated in the agreement, shall not form a part of theinsurers legal liabilities except as to its surplus in excess of the amountthereof stipulated in the agreement, or be the basis of any setoff; but untilrepaid, financial statements filed or published by the insurer shall show as afootnote thereto the amount thereof then unpaid together with any interestthereon accrued but unpaid.
3. Any such loan shall be subject to theCommissioners approval. The insurer shall, in advance of the loan, file withthe Commissioner a statement of the purpose of the loan and a copy of theproposed loan agreement. The loan and agreement shall be deemed approved unlesswithin 15 days after the date of such filing the insurer is notified of theCommissioners disapproval and the reasons therefor. The Commissioner shalldisapprove any proposed loan or agreement if he finds the loan is unnecessaryor excessive for the purpose intended, or that the terms of the loan agreementare not fair and equitable to the parties and to other similar lenders, if any,to the insurer, or that the information so filed by the insurer is inadequate.
4. Any such loan to a mutual insurer or substantialportion thereof shall be repaid by the insurer when no longer reasonablynecessary for the purpose originally intended. No repayment of such a loanshall be made by a mutual insurer unless approved in advance by theCommissioner.
5. This section does not apply to other kinds of loansobtained by the insurer in the ordinary course of business, or to loans securedby a pledge or mortgage of assets.
(Added to NRS by 1971, 1805)
NRS
(Added to NRS by 1971, 1805)
NRS
1. Each policyholder of a domestic mutual insurer,other than a policyholder of a reinsurance contract, is a member of the insurerduring the period of the insurance with all the rights and obligations of suchmembership, and the policy shall so specify.
2. Any person, government or governmental agency orinstitution, estate, trustee or fiduciary may be a member of a mutual insurer.
(Added to NRS by 1971, 1806)
NRS
(Added to NRS by 1971, 1806)
NRS
1. Except as otherwise provided in
2. Every policy issued by the insurer shall contain astatement of the contingent liability.
3. Termination of the policy of any such member shallnot relieve the member of contingent liability for his proportion of theobligations of the insurer which accrued while the policy was in force.
4. Unrealized contingent liability of members does notconstitute an asset of the insurer in any determination of its financialcondition.
(Added to NRS by 1971, 1806)
NRS
1. If at any time the assets of a domestic mutualinsurer are less than its liabilities and the minimum amount of surplusrequired to be maintained by it under this Code for authority to transact thekinds of insurance being transacted, and the deficiency is not cured from othersources, its directors may, if the same is approved by the Commissioner asbeing reasonable and in the best interests of the insurer and its members, levyan assessment only on its members who held policies providing for contingentliability at any time within the 12 months next preceding the date the levy wasauthorized by the board of directors, and such members shall be liable to theinsurer for the amount so assessed.
2. The levy of assessment shall be for such an amountas is required to cure such deficiency and to provide a reasonable amount ofworking funds above such minimum amount of surplus, but such working funds soprovided shall not exceed 5 percent of the sum of the insurers liabilities andsuch minimum required surplus as of the date of the levy.
3. As to the respective policies subject to the levy,the assessment shall be computed upon the basis of the premium earned duringthe period covered by the levy.
4. No member shall have an offset against anyassessment for which he is liable, on account of any claim for unearned premiumor loss payable.
5. As to life insurance, any part of such anassessment upon a member which remains unpaid following a notice of assessment,demand for payment and lapse of a reasonable waiting period as specified insuch notice may, if approved by the Commissioner as being in the best interestsof the insurer and its members, be secured by placing a lien upon the cashsurrender values and accumulated dividends held or to be held by the insurer tothe credit of the members policy.
(Added to NRS by 1971, 1806)
NRS
1. The insurer shall notify each member of the amountof the assessment to be paid by written notice mailed to the address of themember last of record with the insurer. Failure of the member to receive thenotice so mailed, within the time specified therein for the payment of theassessment or at all, shall be no defense in any action to collect theassessment.
2. If a member fails to pay the assessment within theperiod specified in the notice, which period shall not be less than 20 daysafter mailing, the insurer may institute suit to collect the same.
(Added to NRS by 1971, 1807)
NRS
1. A domestic mutual insurer, by depositing throughthe Commissioner and thereafter maintaining unimpaired surplus funds not lessin amount than the minimum paid-in capital stock and surplus required of adomestic stock insurer for authority to transact the same kind or kinds of insurance,may, upon receipt of the Commissioners order so authorizing, extinguish thecontingent liability to assessment of its members as to all its policies inforce and, so long as such surplus and deposit are maintained, may omitprovisions imposing contingent liability in all policies currently issued. Anydeposit of the insurer made through the Commissioner as a prerequisite to itscertificate of authority may be included as part of the deposit required underthis section.
2. The Commissioner shall not authorize a domesticinsurer to extinguish the contingent liability of any of its members or in anyof its policies to be issued, unless it qualifies to and does extinguish suchliability of all its members and in all such policies for all kinds of insurancetransacted by it.
3. The Commissioner shall revoke the authority of adomestic mutual insurer to issue policies without contingent liability if:
(a) The insurers assets are less than the sum of itsliabilities and the surplus required for such authority and such deficiency isnot cured within 30 days after written notice thereof to the insurer by theCommissioner; or
(b) The insurer, by resolution of its board ofdirectors approved by a majority of its members, requests that the authority berevoked.
4. During the absence of such authority the insurershall not issue any policy without providing therein for the contingentliability of the policyholder, or renew any policy which is then in forcewithout endorsing the same to provide for such contingent liability.
5. A foreign mutual insurer may issue nonassessablepolicies to its members in this state as authorized by its charter and the lawsof the state or country of its domicile, if the requirements for issuance ofsuch policies are substantially equal to or higher than those applicable todomestic insurers under this Code.
(Added to NRS by 1971, 1807)
NRS
1. If at any time the amount of assets of a domesticstock or mutual insurer are less than the sum of its liabilities plus itspaid-in capital stock and minimum surplus required to be maintained (in thecase of a stock insurer), or the minimum surplus required to be maintained (inthe case of a mutual insurer), under this Code for authority to transact thekinds of insurance being transacted, the Commissioner shall at once determinethe amount of the deficiency and give written notice to the insurer of theamount of impairment and require that the impairment be cured and proof thereoffiled with him within such period, not less than 30 days nor more than 90 daysfrom date of the notice, as he may designate.
2. If the impairment of assets is 10 percent or lessof the combined required paid-in capital stock and surplus (as to a stockinsurer) or surplus (as to a mutual insurer), and the Commissioner believesthat the impairment might be made good by an extension of time, he may extendthe time within which the impairment may be cured by not to exceed anadditional 90 days.
3. The Commissioner shall require such restriction of,or arrangements as to, operations of the insurer while the impairment exists ashe deems advisable for the protection of policyholders, the insurer or thepublic.
(Added to NRS by 1971, 1808)
NRS
1. A deficiency referred to in
2. If the deficiency is not made good and proofthereof filed with the Commissioner within the period required under
(Added to NRS by 1971, 1809)
NRS
(Added to NRS by 1971, 1809)
NRS
1. A stock insurer other than a title insurer maybecome a mutual insurer under such plan and procedure as may be approved by theCommissioner after a hearing thereon.
2. The Commissioner shall not approve any such plan,procedure or mutualization unless:
(a) It is equitable to stockholders and policyholders;
(b) It is subject to approval by the holders of notless than two-thirds of the insurers outstanding capital stock having votingrights, and by not less than two-thirds of the insurers policyholders who voteon the plan in person, by proxy or by mail pursuant to such notice andprocedure as may be approved by the Commissioner;
(c) If a life insurer, the right to vote thereon islimited to holders of policies other than term or group policies, whosepolicies have been in force for more than 1 year;
(d) Mutualization will result in retirement of sharesof the insurers capital stock at a price not in excess of the fair marketvalue thereof as determined under a fair and reasonable formula approved by theCommissioner or, if so ordered, by an examination of the insurer and all of itscontrolled affiliates or by an appraisal committee, consisting of at leastthree qualified persons, to be appointed by the Commissioner;
(e) The plan provides for the purchase of the shares ofany nonconsenting stockholder in the same manner and subject to the sameapplicable conditions as provided by the general corporation law of the stateas to rights of nonconsenting stockholders, with respect to consolidation ormerger of private corporations;
(f) The plan provides for definite conditions to befulfilled by a designated early date upon which such mutualization will becomeeffective; and
(g) The mutualization leaves the insurer with a surplusreasonably adequate for the security of its policyholders and to enable it tocontinue successfully in business in the states in which it is then authorizedto transact insurance, and for the kinds of insurance included in itscertificates of authority in such states.
3. No director, officer, agent or employee of theinsurer, or any other person, may receive any fee, commission or other valuableconsideration whatsoever, other than his customary salary or other regularcompensation, for in any manner aiding, promoting or assisting in themutualization, except as set forth in the plan of mutualization as approved bythe Commissioner.
4. This section does not apply to mutualization underan order of court pursuant to rehabilitation or reorganization of an insurerunder chapter 696B of NRS.
(Added to NRS by 1971, 1809; A
NRS
1. A domestic stock insurer may convert to a Nevadaordinary business corporation through the following procedures:
(a) The insurer must give the Commissioner writtennotice of its intent to convert to an ordinary business corporation.
(b) The insurer must bulk reinsure all of its insurancein force, if any, with another authorized insurer under a bulk reinsuranceagreement approved by the Commissioner as provided in
(c) The insurer must set aside in a special reservefunds in such amount and subject to such administration as may be found by theCommissioner to be adequate and reasonable for the purpose, for payment of allobligations, if any, of the insurer incurred by it under its insurancecontracts prior to the effective date of such bulk reinsurance, and remainingunpaid, or make other reasonable disposition satisfactory to the Commissionerfor such payment.
(d) The proposed conversion must be approved by anaffirmative vote of not less than two-thirds of each class of the outstandingsecurities of the insurer having voting rights, at a special meeting of holdersof such securities called for the purpose, and at such meeting and by a likevote the articles of incorporation of the corporation must be amended to removetherefrom the power to transact an insurance business as an insurer and toprovide for such new powers and purposes as may be consistent with the purposesfor which the corporation is thereafter to exist.
(e) Security holders of the corporation who dissentfrom such proposed conversion shall have the same applicable rights as existunder the general corporation laws of this state with respect to a dissent froma proposed merger of the corporation.
(f) Upon compliance with paragraphs (a) to (d),inclusive, and upon filing of the amendment of the articles of incorporation asrequired by law, the conversion shall thereupon become effective.
2. An insurer which has once converted to an ordinarybusiness corporation shall not have the power thereafter to convert to aninsurer.
(Added to NRS by 1971, 1810)
NRS
1. A domestic stock insurer shall not acquire acontrolling interest in the shares of another stock insurer by an exchange ofsecurities or partly in exchange for securities and partly for cash orproperty, unless the insurer has first submitted the plan for such acquisitionand exchange to the Commissioner and the Commissioner has approved the same.
2. The Commissioner shall not so approve unless hefinds the plan for such acquisition and the terms and conditions thereof to befair and equitable to all parties concerned therein, after a hearing at whichall persons to whom it is proposed to issue securities in such exchange shallhave the right to appear.
3. Notice and conduct of such hearing shall be asprovided in NRS 679B.310 to
(Added to NRS by 1971, 1811)
NRS
1. Any person proposing to acquire the controllingcapital stock of any domestic stock insurer and thereby to change the controlof the insurer, other than through merger or consolidation or affiliation asprovided for in NRS 693A.310 and
2. The Commissioner shall not approve the proposedchange of control if he finds that:
(a) The proposed new owners are not qualified bycharacter, experience and financial responsibility to control and operate theinsurer, or cause the insurer to be operated, in a lawful and proper manner;
(b) As a result of the proposed change of control theinsurer may not be qualified for a certificate of authority under theprovisions of NRS 680A.090;
(c) The interests of the insurer or other stockholdersof the insurer or policyholder would be materially harmed through the proposedchange of control; or
(d) The proposed change of control would tendmaterially to lessen competition, or to create any monopoly, in a business ofinsurance in this state or elsewhere.
3. If the Commissioner does not by affirmative actionapprove or disapprove the proposed change of control within 60 days after thedate the application was so filed with him, the proposed change may be madewithout his approval, but if the Commissioner gives notice to the parties of ahearing to be held by him with respect to the proposed change of control, andthe hearing is held within the 30 days or on a date mutually acceptable to the Commissionerand the parties, the Commissioner has 10 days after the conclusion of thehearing within which to so approve or disapprove the proposed change. If not soapproved or disapproved, the change may thereafter be made without theCommissioners approval.
4. If the Commissioner disapproves the proposedchange, he shall give written notice thereof to the parties, setting forth indetail the reasons for disapproval.
5. The Commissioner shall suspend or revoke thecertificate of authority of any insurer the control of which has been changedin violation of this section.
6. The Commissioner may retain at the acquiringpartys expense attorneys, actuaries, accountants and other experts nototherwise a part of his staff as may be necessary only for the review of theproposed acquisition of control. Such a review may be conducted only if theparties fail to provide sufficient information to the Commissioner. Expenseschargeable to the acquiring party pursuant to this subsection must not exceed 1percent of the acquired insurers net revenue during the year immediatelypreceding the year in which the application for change of control is filed withthe Commissioner pursuant to subsection 1.
(Added to NRS by 1971, 1811; A 1995, 1779;
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1. Subject to subsections 2 and 3, a domestic stockinsurer may merge or consolidate with one or more domestic or foreign stockinsurers, by complying with the applicable provisions of the statutes of thisstate governing the merger or consolidation of stock corporations formed forprofit. A domestic stock insurer shall not merge or consolidate with anycorporation not formed for the purpose of transacting insurance as an insurer.
2. No such merger or consolidation shall beeffectuated unless in advance thereof the plan and agreement therefor have beenfiled with the Commissioner and approved in writing by him after a hearingthereon after notice to the stockholders of each insurer involved. TheCommissioner shall give such approval within a reasonable time after suchfiling unless he finds such plan or agreement:
(a) Is contrary to law;
(b) Unfair or inequitable to the stockholders of anyinsurer involved;
(c) Would substantially reduce the security of andservice to be rendered to policyholders of the domestic insurer in this stateor elsewhere;
(d) Would materially tend to lessen competition in theinsurance business in this state or elsewhere as to the kinds of insuranceinvolved, or would materially tend to create a monopoly as to such business; or
(e) Is subject to other material and reasonableobjections.
3. No director, officer, agent or employee of anyinsurer party to such merger or consolidation shall receive any fee, commission,special compensation or other valuable consideration whatsoever for in anymanner aiding, promoting or assisting therein except as set forth in such planor agreement.
4. If the Commissioner does not approve any such planor agreement, he shall so notify the insurer in writing specifying his reasonstherefor.
(Added to NRS by 1971, 1812)
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1. In any merger or consolidation of a foreign stockor mutual insurer into or with a domestic insurer under
(a) The plan and agreement for merger or consolidationshall provide for such continuation of corporate existence through designationof Nevada as the state of domicile of the foreign corporation by adoption, andshall specify the original date of incorporation of the foreign corporation inits original domiciliary state or country as being the date of incorporation ofthe Nevada corporation pursuant to this section.
(b) The articles of incorporation of the Nevadacorporation shall provide, or be amended to provide, that the corporation is acontinuance of the corporate existence, through adoption of the State of Nevadaas the corporate domicile, of the foreign corporation, and shall specify theoriginal date of incorporation of the foreign corporation in its originaldomiciliary state or country as being the date of incorporation of the Nevadacorporation pursuant to this section.
2. The continuing Nevada corporation shall have allthe rights and obligations of, and be given recognition in all respects as, acorporation formed under the laws of this state as of the date of incorporationof the foreign corporation in its original domiciliary state or country. Thisprovision shall not be deemed to impose upon the continuing Nevada corporationany liability or obligation with respect to filings, fees, taxes or otherwisewhich might have accrued prior to the effective date of the merger orconsolidation.
3. This section shall not be deemed in any manner topreserve, after the effective date of such merger or consolidation, thecorporate existence of such foreign corporation as a corporation of itsoriginal domiciliary state or country.
(Added to NRS by 1971, 1812)
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1. A domestic mutual insurer shall not merge orconsolidate with a stock insurer.
2. Except as provided in this section, a domesticmutual insurer may merge or consolidate with another mutual insurer under theapplicable procedures prescribed by the laws of this State governing ordinarybusiness corporations.
3. If the insurer is then unimpaired, the plan andagreement for merger or consolidation must be submitted to and approved by atleast two-thirds of the members of each mutual insurer voting thereon atmeetings called for the purpose pursuant to reasonable notice and procedure.The plan and agreement may provide for giving that notice to members bypublishing the notice once a week for 2 successive weeks in any two of the fourcities of greatest population in each state in which the insurer is authorized,or by depositing the notice in the United States mail, postage prepaid,addressed to the member at his address last of record with the insurer, or bypersonal delivery. For a life insurer, the right to vote may be limited tomembers whose policies are other than term and group policies, and have been ineffect for more than 1 year.
4. No such merger or consolidation may be effectuatedunless in advance thereof the plan and agreement therefor have been filed withthe Commissioner and approved by him in writing. If the insurer is not thenimpaired the Commissioner shall not act upon the plan and agreement until aftera hearing thereon. The Commissioner shall give his approval within a reasonabletime after the filing unless he finds the plan or agreement:
(a) Inequitable to the policyholders of any domesticinsurer involved;
(b) Would substantially reduce the security of andservice to be rendered to policyholders of the domestic insurer in this Stateand elsewhere;
(c) Would materially tend to lessen competition in theinsurance business in this State or elsewhere as to the kinds of insuranceinvolved, or would materially tend to create any monopoly as to that business;or
(d) Is subject to other material and reasonableobjections.
5. If the Commissioner does not approve the plan oragreement he shall so notify the insurers in writing specifying his reasonstherefor.
6. No director, officer, agent or employee of anyinsurer party to such merger or consolidation, or any other person, shallreceive any fee, commission or other special valuable consideration whatsoeverfor in any manner aiding, promoting or assisting therein except as set forth inthe plan and agreement approved by the Commissioner.
(Added to NRS by 1971, 1813; A 1979, 557)
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1. A domestic property or casualty insurer with lessthan $3,000,000 in surplus as regards policyholders shall not, without thewritten approval of the Commissioner, assume reinsurance on any risk that itotherwise is permitted to assume, except if the reinsurance is required by lawor regulation.
2. The provisions of this section are applicable to acontract of reinsurance executed or renewed on or after October 1, 1991.
3. The provisions of this section do not invalidateany reinsurance contract between the parties to the contract.
(Added to NRS by 1991, 2034)
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1. A domestic insurer shall not reinsure with anotherinsurer all or substantially all of its business in force, or of a major classthereof, or during a period of 6 consecutive months reinsure with anotherinsurer over 20 percent of its insurance in force exclusive of individual riskscurrently reinsured in the ordinary course of business, except under anagreement of bulk reinsurance and in compliance with this section. No suchagreement may become effective unless filed with the Commissioner and approvedby him in writing.
2. The Commissioner shall approve the agreement withina reasonable time after filing if he finds that:
(a) The plan and agreement are fair and equitable toeach insurer and to the policyholders involved;
(b) The reinsurance, if effectuated, would not substantiallyreduce the protection or service to the policyholders of any domestic insurerinvolved;
(c) The agreement embodies adequate provisions by whichthe reinsuring insurer becomes liable to the original insureds for any loss ordamage occurring under the policies reinsured in accordance with the originalterms of those policies;
(d) The assuming reinsurer is authorized to transactthat insurance in this State, or is qualified for that authorization and willappoint the Commissioner and his successors as its irrevocable attorney forservice of process, so long as any policy so reinsured or claim thereunderremains in force or outstanding;
(e) The reinsurance would not materially tend to lessencompetition in the insurance business in this State or elsewhere as to thekinds of insurance involved, and would not materially tend to create anymonopoly as to that business; and
(f) The proposed bulk reinsurance is free of otherreasonable objections.
3. If the Commissioner does not so approve he shall forthwithnotify each insurer involved in writing, specifying his reasons therefor.
4. If for reinsurance of all or substantially all ofthe business in force of a mutual insurer at a time when the insurers surplusis not impaired, the plan and agreement for reinsurance must be approved by avote of not less than two-thirds of the mutual insurers members voting thereonat a meeting of members called for the purpose, pursuant to such reasonablenotice and procedure as is provided for in the agreement. The agreement mayprovide for giving notice to members of a mutual insurer by publishing thenotice once a week for 2 successive weeks in any two of the four cities ofgreatest population in each state in which the insurer is authorized, or bydepositing the notice in the United States mail, postage prepaid, addressed tothe member at his address last of record with the insurer, or by personaldelivery. For a life insurer, the right to vote may be limited to members whosepolicies are other than term or group policies, and have been in effect formore than 1 year.
(Added to NRS by 1971, 1816; A 1979, 558)
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1. At the time of filing the agreement of bulkreinsurance with the Commissioner as provided in
2. No director or officer of any insurer party to suchbulk reinsurance shall, except as fully expressed in the bulk reinsuranceagreement, receive any fee, commission or other special or valuableconsideration whatever, directly or indirectly, for in any manner aiding,promoting or assisting in the negotiation or effectuation of such reinsurance.
3. Any person violating the provisions of subsection 2is guilty of a gross misdemeanor.
(Added to NRS by 1971, 1817)
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1. Upon any liquidation of a domestic mutual insurer,its assets remaining after discharge of its indebtedness, policy obligations,repayment of contributed or borrowed surplus, if any, and expenses ofadministration shall be distributed to currently existing persons who had beenmembers of the insurer for at least 1 year and who were its members at any timewithin 36 months next preceding the date such liquidation was authorized orordered, or the date of the last termination of the insurers certificate ofauthority whichever date is the earlier; but if the Commissioner has reason tobelieve that those in charge of the management of the insurer have caused orencouraged the reduction of the number of members of the insurer inanticipation of liquidation and for the purpose of reducing thereby the numberof persons who may be entitled to share in the distribution of the insurersassets, he may enlarge the 36-month qualification period as he may deem to bereasonable.
2. The insurer shall make a reasonable classificationof its policies so held by such members, and a formula based upon suchclassification for determining the equitable distributive share of each suchmember. Such classification and formula shall be subject to the approval of theCommissioner.
(Added to NRS by 1971, 1817)
CONVERSION OF MUTUAL INTO STOCK INSURER
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1. The board of directors of a domestic mutual insureror a mutual insurance holding company may adopt a resolution proposing a planof conversion and an amendment to its articles of incorporation. The resolutionmust be approved by a vote of not less than two-thirds of the members of theboard.
2. The plan of conversion must:
(a) Require the distribution of consideration equal tonot less than the fair market value of the surplus of the converting mutual tothe eligible members in exchange for the extinguishment of their membershipinterests in the converting mutual.
(b) Describe the manner in which the fair market valueof the converting mutual and its surplus has been or will be determined.
(c) Require the distribution of consideration to theeligible members upon extinguishment of their membership interests in theconverting mutual.
(d) Provide that membership interests in the convertingmutual are extinguished as of the effective date of conversion.
(e) Specify the structure and form of the proposedconsideration, including, without limitation, the projected range of the numberof shares of capital stock to be:
(1) Issued to policyholders by the new stockinsurer or the holding company of the new stock insurer; and
(2) Sold or reserved for sale to investors bythe new stock insurer or the holding company of the new stock insurer, or tothe trust established pursuant to this section.
(f) If the distribution of consideration will not bemade immediately following the final order of the Commissioner approving theconversion, provide for the establishment of a trust for the exclusive benefitof policyholders into which shares of the capital stock of the new stockinsurer or the holding company of the new stock insurer must be placed pendingdistribution to the policyholders. The terms of the trust are subject to theapproval of the Commissioner. Such a trust may exist only for a period of 6months after the final approval of the conversion, during which time thedistribution of consideration to eligible policyholders and other persons mustbe completed.
(g) Provide for the determination of the reasonabledividend expectations of eligible members and other policyholders of policiesthat provide for distribution of policy dividends and the preservation of suchexpectations through the establishment of a closed block of assets.
(h) Provide for such other proposed conditions andprovisions as the board of directors of the converting mutual determines arenecessary and are not inconsistent with the provisions of
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1. The plan of conversion adopted by the board ofdirectors.
2. A certification that the plan of conversion wasduly adopted by a vote of not less than two-thirds of the members of the boardof directors of the converting mutual.
3. A certification that the plan of conversion is fairand equitable to the policyholders. This certification must be adopted by avote of not less than two-thirds of the members of the board of directors ofthe converting mutual.
4. A statement of the reasons for the proposedconversion and why the conversion is in the best interest of the convertingmutual, including, without limitation, a:
(a) Detailed analysis of the risks and benefits of theproposed conversion to the converting mutual and its members; and
(b) Comparison of the risks and benefits of theconversion with the risks and benefits of a reasonable alternative to theconversion.
5. A written opinion addressed to the board ofdirectors of the converting mutual from a qualified, independent financialadviser attesting that the:
(a) Consideration to be provided to the membership ofthe converting mutual is fair to the eligible members as a group; and
(b) Total consideration to be provided to themembership is equal to or greater than the surplus of the converting mutual.
6. An opinion from a qualified actuary attesting thatall methodologies and formulas used to allocate the consideration amongeligible members are reasonable.
7. Certified copies of the proposed amendments to thearticles of incorporation and bylaws to effect the conversion.
8. A copy of the form of the trust agreement of anytrust to be used in connection with the conversion.
9. A plan of operation for a closed block to preservethe reasonable dividend expectations of eligible members and otherpolicyholders of policies that provide for the distribution of policydividends.
10. A form of the proposed notice to be mailed by theconverting mutual to its policyholders as required by
11. A 5-year business plan and at least 2 years offinancial projections for the new stock insurer and a parent company, if any.
12. A list of natural persons who are or have beenselected to become directors or officers of the new stock insurer and thefollowing information concerning each person on the list, unless theinformation is already on file with the Commissioner:
(a) Occupation;
(b) Criminal convictions, other than trafficviolations, during the immediately preceding 7 years;
(c) Personal bankruptcy of the person or the spouse ofthe person during the immediately preceding 7 years;
(d) Information regarding any consent decree enteredinto by the person; and
(e) Whether the person has been refused a fidelity orother bond during the immediately preceding 7 years.
13. Any plans that the new stock insurer or its parentcompany, if any, may have to:
(a) Raise additional capital through the issuance ofstock or otherwise;
(b) Sell or issue stock to any person;
(c) Liquidate or dissolve any company or sell anymaterial assets;
(d) Merge, consolidate or pursue any other form ofreorganization with any person; or
(e) Make any material change in its investment policy, business,corporate structure or management.
14. Copies of proposed articles of incorporation andany proposed bylaws of the new stock insurer.
15. Such additional information as the Commissionermay by regulation prescribe as necessary or appropriate for the protection ofpolicyholders and security holders of the converting mutual, or for theprotection of the public interest.
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1. The Commissioner shall issue an order making aninitial determination of approval or disapproval of the application not laterthan 30 days after the public hearing.
2. The Commissioner shall not approve the applicationunless he finds that the:
(a) Plan of conversion is fair and equitable to thepolicyholders;
(b) Plan of conversion does not deprive thepolicyholders of their property rights or due process of law;
(c) New stock insurer meets the minimum requirementsfor a certificate of authority to transact the business of insurance in thisstate; and
(d) Continued operation of the new stock insurer is nothazardous to future policyholders and the public.
3. For the purposes of this section, the Commissionermay consider any relevant factor, including, without limitation:
(a) The capital requirements of the new stock insurer;
(b) Whether a sufficient portion of the surplus of theconverting mutual was contributed by persons or entities whose policies orcontracts were not in force on the date on which the plan of conversion wasinitially approved by the board of directors of the converting mutual torequire the reduction of the consideration to policyholders to an amount equalto less than the surplus;
(c) Whether the plan of conversion includes preemptiverights for policyholders to purchase securities offered in the initial sale ofsecurities by the new stock insurer;
(d) Whether the plan of conversion includesestablishment of a preference account from which the payment of any shareholderdividends, including a regular, special or liquidation dividend, would beprohibited for such a reasonable period as the Commissioner may require;
(e) The suitability of the trustees of any trustcreated to effect the conversion; and
(f) Whether the utilization of a trust, if included inthe plan of conversion, has a material adverse effect on policyholders, otherthan delaying the receipt of shares of capital stock.
4. If the Commissioner makes a determination todisapprove the application, the Commissioner shall issue a final order settingforth specific findings for the disapproval.
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1. Unless the Commissioner for good cause establishesa different time, the converting mutual shall, not less than 45 days after thedate of the initial determination of approval by the Commissioner, hold ameeting of its policyholders at a reasonable time and place to vote upon theplan of conversion.
2. The converting mutual shall give notice not lessthan 30 days before the meeting, by first-class mail to the last known addressof each policyholder, that the plan of conversion will be voted upon at aregular or special meeting of the policyholders. The notice must include,without limitation, a:
(a) Brief description of the plan of conversion;
(b) Statement that the Commissioner has initiallyapproved the plan of conversion; and
(c) Written proxy permitting the policyholder to votefor or against the plan of conversion.
3. The Commissioner shall supervise and direct theconducting of the vote on the plan of conversion as necessary to ensure thatthe vote is fair and consistent with the requirements of this section. Eachpolicyholder is entitled to only one vote regardless of the number of policiesowned by the policyholder.
4. A plan of conversion is approved only if not lessthan two-thirds of the policyholders voting in person or by proxy at themeeting vote in favor of the plan of conversion.
5. For the purposes of notice and voting, thepolicyholder of a policy of group insurance is the entity to which the group policyis issued and not any person covered under the group policy.
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1. The Commissioner shall:
(a) Enter a final order approving the application toconvert to a stock insurer within 10 days after receiving a valid certificationfrom the converting mutual setting forth the vote and certifying that the planof conversion was approved by not less than two-thirds of the policyholdersvoting in person or by proxy on the plan of conversion; and
(b) Publish notification of the issuance of the finalorder in a newspaper of general circulation in Carson City and in the county ofdomicile of the converting mutual if different from Carson City.
2. Except as otherwise provided in
3. The conversion is effective upon the issuance ofthe certificate of authority by the Commissioner.
4. Upon issuance of the certificate of authority, thearticles of incorporation of the insurer shall be deemed to be amended incompliance with NRS 692B.030.
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1. Except as otherwise provided in subsection 2, allinformation and documents obtained by or disclosed to the Commissioner or anyother person in the course of preparing, filing and processing an applicationof a converting mutual, other than information and documents distributed topolicyholders in connection with the meeting of policyholders pursuant to
2. If the Commissioner, after giving the insurer andits affiliates who would be affected notice and opportunity to be heard,determines that the interests of policyholders, shareholders or the public willbe best served by the publication of such information and documents, theCommissioner may publish all or any part thereof in such a manner as hedetermines appropriate.
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1. No director, officer, employee or agent of theconverting mutual, or any other person, may receive any fee, commission orother valuable consideration, other than his usual regular salary andcompensation, for aiding, promoting or assisting in a plan of conversion exceptas set forth in the plan of conversion approved by the Commissioner.
2. Subsection 1 does not prohibit a management oremployee incentive compensation program that is contained in the plan ofconversion and approved by the Commissioner to be adopted upon conversion tothe new stock insurer or prohibit such a program to be adopted later by the newstock insurer.
3. Subsection 1 does not prohibit the payment ofreasonable fees and compensation to attorneys, accountants, actuaries andinvestment bankers for services performed in the independent practice of theirprofessions if the person is also a member of the board of directors of theconverting mutual.
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1. Except as otherwise specifically provided in theplan of conversion, before and for a period of 5 years after the issuance of acertificate of authority to a new stock insurer pursuant to
2. The Commissioner shall not approve an applicationfor acquisition filed pursuant to subsection 1 unless he finds that:
(a) The acquisition will not frustrate the plan ofconversion as approved by the policyholders and the Commissioner;
(b) The board of directors of the new stock insurer hasapproved the acquisition or extraordinary circumstances not contemplated in theplan of conversion have arisen which would warrant approval of the acquisition;and
(c) The acquisition is consistent with the purpose of
3. An application for acquisition filed pursuant tosubsection 1 must describe in sufficient detail all information necessary forthe approval of the application.
4. If any material change occurs in the facts setforth in an application for acquisition filed pursuant to subsection 1, anamendment setting forth the change, together with copies of all documents andother material relevant to the change, must be filed with the Commissioner.
5. The Commissioner may hold a public hearing on anapplication for acquisition filed pursuant to subsection 1. If the Commissionerdecides to hold a public hearing, the hearing must be held not later than 30days after the person seeking to acquire securities files an application foracquisition with the Commissioner pursuant to subsection 1. The Commissionershall give at least 20 days notice of the hearing to the person filing the applicationfor acquisition. The person filing the application for acquisition shall givenot less than 7 days notice of the hearing to the new stock insurer and tosuch other persons as may be designated by the Commissioner. In connection withthe hearing, the person filing the application for acquisition, the new stockinsurer, any other person to whom notice of the hearing was given, and anyother person whose interest may be affected may conduct discovery proceedingsin the same manner as is allowed in the district court. All discoveryproceedings must be concluded not later than 3 days before the commencement ofthe hearing. At the hearing, the person filing the application for acquisition,the new stock insurer, any other person to whom notice of the hearing wasgiven, and any other person whose interest may be affected may presentevidence, examine and cross-examine witnesses, and offer oral and writtenarguments. If any acquisition referred to in the application for acquisition isproposed by means of a registration statement under the Securities Act of 1933,15 U.S.C. 77a et seq., in circumstances requiring the disclosure of similarinformation under the Securities Exchange Act of 1934, 15 U.S.C. 78a etseq., or under a state law requiring similar registration or disclosure, theperson required to file the statement may utilize such documents in furnishingthe information required by the application for acquisition. The person filingthe application shall serve the new stock insurer and any institution that ownsa majority of the voting securities of the new stock insurer with a copy of theapplication for acquisition and any amendments thereto on the day the documentsare filed with the Commissioner.
6. The new stock insurer and any institution that ownsa majority of the voting securities of the new stock insurer must be permittedto become parties to the hearing upon request.
7. The Commissioner may retain, at the expense of theperson filing an application for acquisition pursuant to subsection 1, anyattorneys, actuaries, accountants and other experts who are not employees ofthe Division as may be reasonably necessary to assist the Commissioner inreviewing the application.
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1. No security which is the subject of any agreementor arrangement regarding acquisition, or which is acquired or to be acquired,in contravention of NRS 693A.500 or ofany regulation or order of the Commissioner may be voted at any shareholdersmeeting or may be counted for quorum purposes, and any action of theshareholders requiring the affirmative vote of a percentage of shares may betaken as though such securities were not issued and outstanding, but no actiontaken at any such meeting may be invalidated by the voting of such securitiesunless:
(a) The action would materially affect control of thenew stock insurer or an institution that owns a majority of the votingsecurities of the new stock insurer; or
(b) A court of competent jurisdiction has so ordered.
2. If a new stock insurer or the Commissioner hasreason to believe that any security of the new stock insurer or an institutionthat owns a majority of the voting securities of the new stock insurer has beenor is about to be acquired in contravention of
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1. If the Commissioner has reason to believe that anyperson or any director, officer, employee or agent of the person is engaged inany conduct in violation of NRS 693A.500,the Commissioner may order the person to cease and desist immediately fromengaging in any further such conduct. The order is permanent unless the person,not later than 20 days after receipt of the order, files a written request fora hearing with the Commissioner.
2. If, after a hearing pursuant to subsection 1, theCommissioner determines that such action is in the best interest of thepolicyholders, the creditors or the public, the Commissioner may also order theperson to void any contract entered into in violation of
3. An order of the Commissioner pursuant to thissection is a final decision in a contested case for the purpose of judicialreview pursuant to chapter 233B of NRS.
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REORGANIZATION OF MUTUAL INTO STOCK INSURER
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1. Merging the membership interests of itspolicyholders into:
(a) A mutual insurance holding company formed for thepurpose of the reorganization; or
(b) An existing mutual insurance holding company; and
2. Continuing the corporate existence of the mutualinsurer as a stock insurer subsidiary of the mutual insurance holding company.
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1. An analysis of the benefits and risks of theproposed reorganization, including, without limitation, the rationale andcomparative benefits and risks of converting to a domestic stock insurerpursuant to NRS 693A.400 to
2. A statement of how the plan is fair and equitableto the policyholders;
3. Information sufficient to demonstrate that thefinancial condition of the mutual insurer will not be diminished uponreorganization;
4. Provisions to ensure immediate membership in themutual insurance holding company for all existing policyholders of the mutualinsurer;
5. Provisions for membership interests for futurepolicyholders of the reorganized stock insurer;
6. Provisions to ensure that, in the event ofproceedings for rehabilitation or liquidation involving a stock insurersubsidiary of the mutual insurance holding company, the assets of the mutualinsurance holding company will be available to satisfy the obligations of thestock insurer subsidiary to policyholders;
7. Provisions for the periodic distribution of theaccumulated earnings of the mutual insurance holding company;
8. Certified copies of the proposed articles ofincorporation and bylaws of the mutual insurance holding company, intermediatestock holding company and reorganized stock insurer, or proposed amendmentsthereto as necessary to carry out the reorganization;
9. A certification that the plan of reorganization hasbeen duly adopted by a vote of not less than two-thirds of the members of theboard of directors of the mutual insurer;
10. A certification adopted by not less thantwo-thirds of the members of the board of directors of the mutual insurer thatthe plan of reorganization is fair and equitable to the policyholders;
11. The names, addresses and occupations of allpersons who are or have been selected to become directors or officers of themutual insurance holding company;
12. A description of the nature and content of theannual report and financial statement to be sent by the mutual insuranceholding company to each policyholder;
13. The number of members of the board of directors ofthe mutual insurance holding company who are required to be policyholders;
14. A description of any plans for the initialsale of stock of the intermediate stock holding company or reorganized stockinsurer;
15. A form of the proposed notice to be mailed bythe mutual insurer to its policyholders as required by
16. Such additional information as the Commissionermay by regulation prescribe as necessary or appropriate for the protection ofpolicyholders and security holders of the domestic mutual insurer or for theprotection of the public interest.
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(Added to NRS by
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1. The Commissioner shall issue an order approving ordisapproving a proposed plan of reorganization not later than 30 days after thepublic hearing required by NRS 693A.585.
2. The Commissioner shall not approve a proposed planof reorganization unless he finds that the:
(a) Plan of reorganization is fair and equitable to thepolicyholders;
(b) Plan of reorganization does not deprive thepolicyholders of their property rights or due process of law;
(c) Reorganized stock insurer meets the minimumrequirements for a certificate of authority to transact the business ofinsurance in this state; and
(d) Continued operation of the reorganized stockinsurer is not hazardous to future policyholders and the public.
3. If the Commissioner approves a plan ofreorganization, the Commissioner shall publish notification of the issuance ofthe order in a newspaper of general circulation in Carson City and in thecounty of domicile of the mutual insurer if different from Carson City.
4. If the Commissioner approves a plan ofreorganization, the approval expires if the reorganization is not completedwithin 180 days after the date of approval, unless the period is extended bythe Commissioner for good cause.
5. If the Commissioner disapproves a plan ofreorganization, the Commissioner shall issue an order setting forth specificfindings for the disapproval.
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1. Within 45 days after the date of the Commissionersapproval of a plan of reorganization pursuant to
2. If a mutual insurer complies substantially and ingood faith with the notice requirements of this section, the mutual insurersfailure to give any policyholder the required notice does not impair thevalidity of any action taken pursuant to this section.
3. If the meeting of policyholders to vote upon theplan of reorganization is held coincident with the mutual insurers annualmeeting of policyholders, only one combined notice of meeting is required.
4. The form of any proxy must be filed with andapproved by the Commissioner.
5. For the purposes of notice and voting, a person isnot a policyholder unless he was a policyholder of the mutual insurer on thedate on which the plan of reorganization was initially approved by the board ofdirectors of the mutual insurer.
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1. The Commissioner shall issue a certificate ofauthority to a reorganized stock insurer when the mutual insurer files with theCommissioner a:
(a) Certificate stating that all the conditions setforth in the plan of reorganization have been satisfied, so long as the boardof directors of the mutual insurer has not abandoned the plan of reorganizationpursuant to NRS 693A.600.
(b) Certificate from the mutual insurer setting forththe vote and certifying that the plan of reorganization was approved by notless than two-thirds of the policyholders voting in person or by proxy on theplan of reorganization.
2. The reorganization is effective upon the issuanceof a certificate of authority by the Commissioner.
3. Upon issuance of the certificate of authority, thearticles of incorporation of the mutual insurer shall be deemed to be amendedin compliance with NRS 692B.030.
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1. Except as otherwise provided in subsection 2, allinformation and documents obtained by or disclosed to the Commissioner or anyother person in the course of preparing, filing and processing an applicationto reorganize pursuant to NRS 693A.580,other than information and documents distributed to policyholders in connectionwith the meeting of policyholders pursuant to
2. If the Commissioner, after giving the insurer andits affiliates who would be affected notice and opportunity to be heard,determines that the interests of policyholders, shareholders or the public willbe best served by the publication of such information and documents, theCommissioner may publish all or any part thereof in such a manner as hedetermines appropriate.
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1. All the initial shares of the capital stock of areorganized stock insurer must be issued to the mutual insurance holdingcompany or to one or more intermediate stock holding companies.
2. Policyholders of a domestic mutual insurer that hasbeen reorganized are members of the mutual insurance holding company, and theirvoting rights must be determined in accordance with the articles ofincorporation and bylaws of the mutual insurance holding company. The mutualinsurance holding company shall provide its members with the same membershiprights as were provided to policyholders of the mutual insurer immediatelybefore reorganization. The reorganization must not reduce, limit or otherwiseaffect the number or identity of the policyholders who may become members ofthe mutual insurance holding company or secure for managerial personnel anyunfair advantage through or connected with the reorganization.
3. A mutual insurance holding company or anintermediate stock holding company formed pursuant to
(a) Must not be authorized to transact the business ofinsurance;
(b) Is subject to the jurisdiction of the Commissioner,who shall ensure that policyholder interests are protected; and
(c) Shall be deemed to be an insurer for the purposesof chapter 696B of NRS.
4. An intermediate stock holding company formedpursuant to NRS 693A.550 to
5. A mutual insurance holding company formed pursuantto NRS 693A.550 to
(a) Shall not issue stock.
(b) Shall invest in insurers not less than 50 percentof its net worth as determined by generally accepted accounting practices.
6. The aggregate pledges and encumbrances of theassets of a mutual insurance holding company must not affect more than 49percent of the mutual insurance holding companys stock in an intermediatestock holding company or a reorganized stock insurer.
7. If any proceeding under
8. No distribution to members of a mutual insuranceholding company may occur without the prior written approval of theCommissioner. The Commissioner may give such approval only if he is satisfiedthat the distribution is fair and equitable to policyholders as members of themutual insurance holding company.
9. No solicitation for the sale of the stock of anintermediate stock holding company or a reorganized stock insurer may be madewithout the prior written approval of the Commissioner.
10. A mutual insurance holding company or anintermediate stock holding company may not voluntarily dissolve without theapproval of the Commissioner.
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(Added to NRS by
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(Added to NRS by
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1. No director, officer, employee or agent of themutual insurer, or any other person, may receive any fee, commission or othervaluable consideration, other than his usual regular salary and compensation,for aiding, promoting or assisting in a plan of reorganization except as setforth in the plan of reorganization approved by the Commissioner.
2. Subsection 1 does not prohibit a management oremployee incentive compensation program that is contained in the plan ofreorganization and approved by the Commissioner to be adopted uponreorganization to the reorganized stock insurer or prohibit such a program tobe adopted later by the reorganized stock insurer.
3. Subsection 1 does not prohibit the payment ofreasonable fees and compensation to attorneys, accountants, actuaries andinvestment bankers for services performed in the independent practice of theirprofessions if the person is also a member of the board of directors of themutual insurer.
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1. A mutual insurance holding company shall file withthe Commissioner, by March 1 of each year, an annual statement consisting of anincome statement, balance sheet and cash flows prepared in accordance withgenerally accepted accounting practices and a confidential statement disclosingany intention to pledge, borrow against, alienate, hypothecate or in any wayencumber the assets of the mutual insurance holding company.
2. A mutual insurance holding company shall, on orbefore June 1 of each year, file with the Commissioner in a form approved bythe Commissioner a financial statement as of December 31 of the precedingcalendar year that is certified by a certified public accountant.
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(Added to NRS by
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(Added to NRS by
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