§431:19-106.5  Conversion or merger of

captive insurers.  (a)  Subject to this section, a captive insurance

company domiciled in the State may be converted into, or merged with, a

different form of captive insurer under this article.

     (b)  A plan of conversion or merger shall be

submitted to and be approved by the commissioner in advance of the proposed

conversion or merger.  The commissioner shall not approve the plan unless:

     (1)  The commissioner finds that it is fair,

equitable, and consistent with law;

     (2)  The plan has been approved by at least two-thirds

of the voting interest or unanimous written consent of the voting interest of

the captive insurance company;

     (3)  The plan provides for:

         (A)  The conversion of existing stockholder,

member, or subscriber interests into equal or proportionate interests in the

new converted or merged insurer, or such other method and basis for the

conversion of the stockholder, member, or subscriber interests that is fair and

equitable;

         (B)  The purchase or other disposition of the

shares of any nonconsenting shareholder of a stock insurer, policyholder

interest of any nonconsenting member of a mutual insurer, membership interest

of a limited liability company, or subscriber surplus account interest, if any,

of a subscriber of a reciprocal insurer, in accordance with either an agreement

with any nonconsenting stockholder, member, or subscriber or with the existing organizational

documents of the insurer relating to the buyback buyout, or the termination of

the stockholder, member, or subscriber interests, if any, or if no such

provisions exist, then in accordance with the laws of this State relating to

the rights of dissenting shareholders; and

         (C)  The novation, assignment, transfer,

run-off, or other disposition of in-force policies insuring any nonconsenting

shareholder, member, or subscriber;

     (4)  The conversion or merger will leave the resulting

converted insurer or surviving insurer of the merger with capital or surplus

funds reasonably adequate to preserve the security of its policyholders and an

ability to continue to transact business in the classes of insurance in which

it is then authorized to transact; and

     (5)  The commissioner finds that the conversion or

merger will promote the general good of the State.

     (c)  After approval of the plan of conversion

or merger by the commissioner, the converting or merging insurer shall file

with the director of commerce and consumer affairs, appropriate organizational

documents to commence the existence of the company in its converted or merged

form.  Documents filed with the director of commerce and consumer affairs

pursuant to this subsection shall comply with all applicable requirements for

such documents as may be contained in this article and chapter 414, 414D, or

428, as to the extent that these laws are applicable to the conversion or

merger.

     (d)  Where a stock or mutual insurer converts

to a reciprocal insurer or merges with a reciprocal insurer in which the

reciprocal insurer will be the surviving company, the stock or mutual insurer

shall include in its articles of amendment the fact of the conversion to, or

merger with, a reciprocal insurer and that the resulting or surviving entity

shall be a reciprocal insurer under the continued jurisdiction of the

commissioner, the effective date of the conversion or merger, and the name of

the agent for service of process of the converted or surviving reciprocal

insurer.

     (e)  In the case of the merger of two

reciprocal insurers, no articles of amendment, merger, or incorporation shall

be required to be filed with the director of commerce and consumer affairs, and

the merger shall be effective upon the effective date approved by the

commissioner pursuant to the plan of merger filed with and approved by the

commissioner.

     (f)  Notwithstanding that the corporate

existence of a stock or mutual insurer which converts to, or merges with, a

reciprocal insurer may cease, in all cases of a conversion or merger pursuant

to this section, and unless otherwise provided in the approved plan of conversion

or merger, the converted insurer or the surviving company of the merger shall

assume and succeed to all of the obligations and liabilities of the

pre-conversion insurer or the respective merging insurers and shall be held

liable to pay and discharge all such debts and liabilities and perform such

obligations in the same manner as if they had been incurred or contracted by

the converted or surviving merged insurer.

     (g)  An alien or foreign insurer may be a party

to a merger under this section provided that the surviving company shall

otherwise qualify and be approved by the commissioner as a captive insurance

company under this article.  For purposes of chapters 414 and 414D, an alien

stock or mutual insurer subject to this section shall be considered a foreign

corporation.

     (h)  This section shall not supersede section

431:19-102, and shall not apply to redomestications or conversions of captive

insurers under section 431:19-102.4. [L 2000, c 68, §2; am L 2001, c 55, §21;

am L 2002, c 40, §73; am L 2003, c 212, §115; am L 2007, c 232, §8; am L 2012,

c 253, §12]