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The Vermont Statutes Online



Title

08

:
Banking and Insurance






Chapter

141

:
CAPTIVE INSURANCE COMPANIES






Subchapter

001
:
GENERAL PROVISIONS










 

§

6020. Conversion to or merger with reciprocal insurer

(a) An

association captive insurance company, risk retention group, industrial insured

captive insurance company formed as a stock or mutual corporation, or other

insurer approved by the Commissioner may be converted to or merged with and

into a reciprocal insurer in accordance with a plan therefore and the

provisions of this section.

(b) Any plan for

such conversion or merger shall provide a fair and equitable plan for

purchasing, retiring, or otherwise extinguishing the interests of the

stockholders and policyholders of a stock insurer, and the members and

policyholders of a mutual insurer, including a fair and equitable provision for

the rights and remedies of dissenting stockholders, members, or policyholders.

(c) In the case

of a conversion authorized under subsection (a) of this section:

(1) such

conversion shall be accomplished under such reasonable plan and procedure as

may be approved by the Commissioner; provided, however, that the Commissioner

shall not approve any such plan of conversion unless such plan:

(A) satisfies

the provisions of subsection (b) of this section;

(B) provides for

a hearing, of which notice is given or to be given to the captive insurance

company, its directors, officers, and policyholders, and, in the case of a

stock insurer, its stockholders, and in the case of a mutual insurer, its

members, all of which persons shall be entitled to attend and appear at such

hearing; provided, however, that if notice of a hearing is given and no

director, officer, policyholder, member, or stockholder requests a hearing, the

Commissioner may cancel such hearing;

(C) provides a

fair and equitable plan for the conversion of stockholder, member, or

policyholder interests into subscriber interests in the resulting reciprocal

insurer, substantially proportionate to the corresponding interests in the

stock or mutual insurer; provided, however, that this requirement shall not

preclude the resulting reciprocal insurer from applying underwriting criteria

that could affect ongoing ownership interests; and

(D) is approved:

(i) in the case

of a stock insurer, by a majority of the shares entitled to vote represented in

person or by proxy at a duly called regular or special meeting at which a

quorum is present; and

(ii) in the case

of a mutual insurer, by a majority of the voting interests of policyholders

represented in person or by proxy at a duly called regular or special meeting

thereof at which a quorum is present;

(2) the

Commissioner shall approve such plan of conversion if the Commissioner finds

that the conversion will promote the general good of the State in conformity

with those standards set forth in subdivision 6006(d)(2) of this title;

(3) if the

Commissioner approves the plan, the Commissioner shall amend the converting

insurer's certificate of authority to reflect conversion to a reciprocal

insurer and issue such amended certificate of authority to the company's

attorney-in-fact;

(4) upon the

issuance of an amended certificate of authority of a reciprocal insurer by the

Commissioner, the conversion shall be effective; and

(5) upon the

effectiveness of such conversion the corporate existence of the converting

insurer shall cease and the resulting reciprocal insurer shall notify the

Secretary of State of such conversion.

(d) A merger

authorized under subsection (a) of this section shall be accomplished

substantially in accordance with the procedures set forth in sections 3424,

3426, and 3431 of this title, except that, solely for purposes of such merger:

(1) the plan of

merger shall satisfy the provisions of subsection (b) of this section;

(2) the

subscribers' advisory committee of a reciprocal insurer shall be equivalent to

the board of directors of a stock or mutual insurance company;

(3) the

subscribers of a reciprocal insurer shall be the equivalent of the

policyholders of a mutual insurance company;

(4) if a

subscribers' advisory committee does not have a president or secretary, the

officers of such committee having substantially equivalent duties shall be

deemed the president or secretary of such committee;

(5) the

Commissioner may, upon request of an insurer party to a merger authorized under

subsection (a) of this section, waive the requirement of subdivision 3424(6) of

this title;

(6) subdivision

3424(7) of this title shall not apply to such merger;

(7) the

Commissioner shall approve the articles of merger if the Commissioner finds

that the merger will promote the general good of the State in conformity with

those standards set forth in subdivision 6006(d)(2) of this title. If the

Commissioner approves the articles of merger, the Commissioner shall indorse

the Commissioner's approval thereon and the surviving insurer shall present the

same to the Secretary of State at the Secretary of State's office;

(8)

notwithstanding section 6004 of this title, the Commissioner may permit the

formation, without surplus, of a captive insurance company organized as a

reciprocal insurer, into which an existing captive insurance company may be

merged for the purpose of facilitating a transaction under this section;

provided, however, that there shall be no more than one authorized insurance

company surviving such merger; and

(9) an alien

insurer may be a party to a merger authorized under subsection (a) of this

section; provided, that the requirements for a merger between a domestic and a

foreign insurer under section 3431 of this title shall apply to a merger

between a domestic and an alien insurer under this subsection. Such alien

insurer shall be treated as a foreign insurer under section 3431 and such other

jurisdictions shall be the equivalent of a state for purposes of section 3431.

(e) A conversion

or merger under this section shall have all of the effects set forth in

subdivisions 3430(3), (4), and (5) of this title, to the extent such effects

are not inconsistent with the provisions of this chapter. (Added 1997, No. 100

(Adj. Sess.), § 1, eff. April 16, 1998; amended 1999, No. 38, § 16, eff. May

20, 1999; 2003, No. 55, § 7; 2009, No. 137 (Adj. Sess.), § 22, eff. May 29,

2010.)