US Laws, Codes, Statutes & Cases

                                  TITLE  41
                                  INSURANCE
                                  CHAPTER 28
                    ORGANIZATION AND CORPORATE PROCEDURES
                         OF STOCK AND MUTUAL INSURERS
    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.