2014 Kentucky Revised Statutes CHAPTER 304 - INSURANCE CODE Subtitle 49 - Captive Insurers 49.49-180 Conversion or merger of consortium captive insurer or industrial insurer group into reciprocal insurer -- Plan of conversion or merger -- Other conditions.
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304.49-180 Conversion or merger of consortium captive insurer or industrial
insurer group into reciprocal insurer -- Plan of conversion or merger -Other conditions.
(1)
(2)
(3)
A consortium captive insurer or industrial insured group formed as a stock or
mutual corporation or other legal or statutory entity may be converted to or
merged with and into a reciprocal insurer in accordance with a plan therefor
and the provisions of this section.
Any plan for such conversion or merger shall be fair and equitable to the
shareholders, in the case of a stock insurer, or the policyholders, in the case of
a mutual insurer.
In the case of a conversion authorized under subsection (1) of this section:
(a) The conversion shall be accomplished under any reasonable plan and
procedure approved by the commissioner, but the commissioner shall not
approve any plan of conversion unless the plan:
1.
Satisfies the provisions of subsection (2) of this section;
2.
Provides for a hearing, of which notice has been given to the
insurer, its directors, officers, and stockholders, in the case of a
stock insurer, or policyholders, in the case of a mutual insurer, all of
whom shall have the right to appear at the hearing, except that the
commissioner may waive or modify the requirements for the hearing,
provided that if a notice of hearing is required, but no hearing is
requested, the commissioner may cancel the hearing;
3.
Provides for the conversion of existing stockholder or policyholder
interests into subscriber interests in the resulting reciprocal insurer,
proportionate to stockholder or policyholder interests in the stock or
mutual insurer; and
4.
Is approved:
a.
In the case of a stock insurer, by a majority of the shares
entitled to vote represented in person or by proxy at a duly
called regular or special meeting at which a quorum is present;
b.
In the case of a mutual insurer, by a majority of the voting
interests of policyholders represented in person or by proxy at
a duly called regular or special meeting at which a quorum is
present;
(b) The commissioner shall approve the plan of conversion if the
commissioner finds that the conversion will promote the general good of
the state in conformity with those standards set forth in KRS
304.49-060(7);
(c) If the commissioner approves the plan, the commissioner shall amend the
converting insurer's certificate of authority to reflect conversion to a
reciprocal insurer and issue an amended certificate of authority to the
company's attorney-in-fact;
(d) Upon the issuance of an amended certificate of authority of a reciprocal
insurer by the commissioner, the conversion shall be effective; and
(e) Upon the effectiveness of the conversion, the corporate existence of the
(4)
converting insurer shall cease and the resulting reciprocal insurer shall
notify the Secretary of State of the conversion.
A merger authorized under subsection (1) of this section shall be accomplished
substantially in accordance with the procedures set forth in KRS 304.24-390,
except that, solely for purposes of the merger:
(a) The plan of merger shall satisfy the provisions of subsection (2) of this
section;
(b) The subscribers' advisory committee of a reciprocal insurer shall be
equivalent to the board of directors of a stock or mutual insurer;
(c) The subscribers of a reciprocal insurer shall be the equivalent of the
policyholders of a mutual insurer;
(d) If a subscribers' advisory committee does not have a president or
secretary, the officers of the committee having substantially equivalent
duties shall be deemed the president or secretary of the committee;
(e) The commissioner may, upon request of an insurer party to a merger
authorized under subsection (1) of this section, waive the requirement of
KRS 304.24-390(4);
(f) The commissioner shall approve the articles of merger if the
commissioner finds that the merger will promote the general good of the
state in conformity with those standards set forth in KRS 304.49-060(7). If
the commissioner approves the articles of merger, the commissioner shall
indorse his or her approval thereon and the surviving insurer shall present
and file them with the Secretary of State;
(g) Notwithstanding KRS 304.49-040, the commissioner may permit the
formation, without surplus, of a captive insurer organized as a reciprocal
insurer, into which an existing captive insurer may be merged for the
purpose of facilitating a transaction under this section; however, there
shall be no more than one (1) authorized insurer surviving the merger;
and
(h) An alien insurer may be a party to a merger authorized under subsection
(1) of this section, provided that the requirements for a merger between a
domestic and a foreign insurer under KRS 304.24-390 shall apply to a
merger between a domestic and an alien insurer under this subsection.
The alien insurer shall be treated as a foreign insurer under KRS
304.24-390 and the other jurisdictions shall be the equivalent of a state
for purposes of KRS 304.24-390.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1616, effective July 15, 2010; and
ch. 91, sec. 10, effective July 15, 2010. -- Amended 2006 Ky. Acts ch. 252,
Pt. XXXIV, sec. 11, effective April 25, 2006. -- Created 2000 Ky. Acts ch. 434,
sec. 18, effective July 14, 2000.
Legislative Research Commission Note (7/15/2010). This section was amended
by 2010 Ky. Acts chs. 24 and 91, which do not appear to be in conflict and have
been codified together.
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