[Rev. 11/21/2013 1:16:40
PM--2013]
CHAPTER 693A - CORPORATE POWERS AND
PROCEDURES OF DOMESTIC STOCK AND MUTUAL INSURERS
GENERAL PROVISIONS
NRS 693A.010 Scope.
NRS 693A.020 Applicability
of statutes relating to corporations.
NRS 693A.030 Domestic
insurer prohibited from engaging in other business; exceptions.
NRS 693A.040 Principal
offices.
NRS 693A.050 Books,
records, documents, accounts and vouchers.
NRS 693A.060 Assets
to be kept in State; exception.
NRS 693A.070 Removal
or concealment of records or assets.
NRS 693A.080 Information
to stockholders and regulation of proxies: Scope of provisions.
NRS 693A.090 Information
to stockholders and regulation of proxies: Information in advance of meetings.
NRS 693A.100 Information
to stockholders and regulation of proxies: Solicitation and form of proxies.
NRS 693A.110 Management
and agency contracts; regulations.
NRS 693A.120 Prohibited
pecuniary interest of officers; regulations.
NRS 693A.130 Liability
of officers and others for paying taxes, licenses and fees.
NRS 693A.140 Dividends
to stockholders.
NRS 693A.150 Participating
policies.
NRS 693A.160 Dividends
to policyholders.
NRS 693A.170 Purchase
of own shares by stock insurer.
NRS 693A.180 Borrowing.
NRS 693A.190 Mutual
insurers: Additional kinds of insurance.
NRS 693A.200 Mutual
insurers: Membership.
NRS 693A.210 Mutual
insurers: Bylaws.
NRS 693A.220 Mutual
insurers: Contingent liability of members.
NRS 693A.230 Mutual
insurers: Levy of contingent liability.
NRS 693A.240 Mutual
insurers: Enforcement of contingent liability.
NRS 693A.250 Mutual
insurers: Nonassessable policies; revocation of authority.
NRS 693A.260 Impairment
of capital, surplus or assets: Notice; time to cure; restrictions.
NRS 693A.270 Impairment
of capital, surplus or assets: Curing deficiency; failure to cure.
NRS 693A.280 Impairment
of capital, surplus or assets: Violation of restrictions; penalty.
NRS 693A.290 Mutualization
of stock insurer.
NRS 693A.300 Conversion
to ordinary business corporation.
NRS 693A.310 Affiliation
of stock insurers.
NRS 693A.320 Acquisition
of controlling stock.
NRS 693A.330 Merger
or consolidation of stock insurers.
NRS 693A.340 Preservation
of old charter in merger or consolidation.
NRS 693A.350 Merger
or consolidation of mutual insurers.
NRS 693A.365 Assumption
of reinsurance: Limitations; application of provisions.
NRS 693A.370 Bulk
reinsurance: Limitation; approval by Commissioner and members.
NRS 693A.380 Bulk
reinsurance: Certificate of fees and commissions; restrictions upon payment;
penalty.
NRS 693A.390 Member’s
share of assets on liquidation.
CONVERSION OF MUTUAL INTO STOCK INSURER
NRS 693A.400 Definitions.
NRS 693A.405 “Closed
block” defined.
NRS 693A.410 “Consideration”
defined.
NRS 693A.415 “Converting
mutual” defined.
NRS 693A.420 “Eligible
member” defined.
NRS 693A.425 “New
stock insurer” defined.
NRS 693A.430 “Policyholder”
defined.
NRS 693A.435 Procedure
for conversion.
NRS 693A.440 Resolution
by board of directors; plan of conversion.
NRS 693A.445 Application
for conversion: Filing and contents; filing fee.
NRS 693A.450 Public
hearing on application.
NRS 693A.455 Action
by Commissioner on application.
NRS 693A.460 Meeting
and vote of policyholders; notice.
NRS 693A.465 Abandonment
of plan of conversion.
NRS 693A.470 Issuance
and notice of final order approving application; issuance and effect of
certificate of authority.
NRS 693A.475 Authority
of Commissioner to engage services of experts; payment of costs to review plan
of conversion.
NRS 693A.480 Confidentiality
and publication of pertinent information and documents.
NRS 693A.485 Continuation
of corporate existence of converting mutual.
NRS 693A.490 Purchase
of stock by directors, officers, employees, agents or trustees.
NRS 693A.495 Receipt
of fee, commission or other consideration for aiding, promoting or assisting in
plan of conversion.
NRS 693A.500 Offers
to acquire and acquisition of voting securities of new stock insurer or
institution that owns majority of voting securities of new stock insurer.
NRS 693A.505 Unlawful
acquisition of securities: Voting of securities prohibited; injunctive and
other relief.
NRS 693A.510 Unlawful
acquisition of securities: Seizure or sequestration of securities.
NRS 693A.515 Unlawful
acquisition of securities: Imposition of administrative penalty for violation.
NRS 693A.520 Unlawful
acquisition of securities: Imposition of administrative penalty against
director, officer or agent.
NRS 693A.525 Unlawful
acquisition of securities: Orders by Commissioner.
NRS 693A.530 Regulations
and orders of Commissioner.
NRS 693A.535 Judicial
review of final order of Commissioner.
NRS 693A.540 Enforcement
of provisions by Commissioner.
REORGANIZATION OF MUTUAL INTO STOCK INSURER
NRS 693A.550 Definitions.
NRS 693A.555 “Intermediate
stock holding company” defined.
NRS 693A.560 “Mutual
insurance holding company” defined.
NRS 693A.565 “Reorganized
stock insurer” defined.
NRS 693A.570 “Voting
securities” defined.
NRS 693A.575 Procedure
for reorganization.
NRS 693A.580 Proposed
plan of reorganization: Filing and contents; filing fee.
NRS 693A.585 Public
hearing on proposed plan.
NRS 693A.590 Action
by Commissioner on proposed plan; notice and expiration of approval.
NRS 693A.595 Meeting
and vote of policyholders; notice.
NRS 693A.600 Abandonment
of plan of reorganization.
NRS 693A.605 Issuance
and effect of certificate of authority.
NRS 693A.610 Authority
of Commissioner to engage services of experts; payment of costs to review plan
of reorganization.
NRS 693A.615 Confidentiality
and publication of pertinent information and documents.
NRS 693A.620 Continuation
of corporate existence of mutual insurer.
NRS 693A.625 Issuance
of initial shares of capital stock; identity and rights of policyholders;
status, rights, duties and assets of holding company.
NRS 693A.630 Conversion
of mutual insurance holding company to domestic stock insurance company not
prohibited.
NRS 693A.635 Membership
interest in mutual insurance holding company is not security.
NRS 693A.640 Receipt
of fee, commission or other consideration for aiding, promoting or assisting in
plan of reorganization.
NRS 693A.645 Mutual
insurance holding company: Annual filing requirements.
NRS 693A.650 Mutual
insurance holding company: Production of records, books or other information
and papers.
NRS 693A.655 Regulations
and orders of Commissioner.
NRS 693A.660 Judicial
review of final order of Commissioner.
NRS 693A.665 Enforcement
of provisions by Commissioner.
_________
_________
GENERAL PROVISIONS
NRS 693A.010 Scope.
1. Except as provided in subsection 2,
this chapter applies only to domestic stock insurers and domestic mutual
insurers.
2. Subsection 3 of NRS
693A.050 also applies to foreign and alien insurers whose principal United
States offices are located in this state; and subsection 5 of NRS 693A.250 applies to the issuance of nonassessable
policies by foreign mutual insurers.
(Added to NRS by 1971, 1797)
NRS 693A.020 Applicability of statutes relating to corporations. Domestic stock and mutual insurers shall be
governed by the applicable provisions of the general statutes of this state
relating to private corporations as such statutes are constituted on January 1,
1972, or may thereafter be constituted, except where such general statutes are
in conflict with the express provisions of this Code and the reasonable
implications of such provisions, in which case the provisions of this Code
shall govern.
(Added to NRS by 1971, 1798)
NRS 693A.030 Domestic insurer prohibited from engaging in other business;
exceptions.
1. Except as otherwise provided in
subsections 2, 3 and 4, a domestic insurer formed before, on or after January
1, 1972, shall not engage in any business other than the insurance business and
in business activities reasonably and necessarily incidental to the insurance
business.
2. A title insurer may also engage in
business as an escrow agent.
3. Any insurer may also engage in business
activities reasonably related to the management, supervision, servicing of and
protection of its interests as to its lawful investments, and to the full
utilization of its facilities.
4. An insurer may own subsidiaries which
may engage in such businesses as are provided for in NRS 682A.130.
(Added to NRS by 1971, 1798; A 1997, 1628)
NRS 693A.040 Principal offices.
1. Except as provided in subsection 2,
every domestic insurer shall have and maintain its principal office and
principal place of business in this state.
2. The Commissioner for good cause shown
may permit an insurer to have and maintain such office or place of business in
another state if found by the Commissioner to be in the best interests of the
insurer and its policyholders and reasonably convenient to the Commissioner in
his or her supervision of the insurer, all subject to such reasonable terms and
conditions as the Commissioner shall, by order granting such permission,
establish.
(Added to NRS by 1971, 1798)
NRS 693A.050 Books, records, documents, accounts and vouchers.
1. Every domestic insurer shall keep at
its principal place of business its books, records, documents, accounts and
vouchers in such a manner that its financial condition can be ascertained and
that its financial statements filed with the Commissioner can readily be
verified and its compliance with the law determined.
2. No insurer shall make any disbursement
of $25 or more, unless evidenced by a voucher or other document correctly
describing the consideration for the payment and supported by a check or
receipt endorsed or signed by or on behalf of the person receiving the money.
If the disbursement is for services and reimbursement, the voucher or other
document, or some other writing referred to therein, shall describe the
services and itemize the expenditures. If the disbursement is in connection
with any matter pending before any Legislature or public body or before any
public officer, the voucher or other document shall also correctly describe the
nature of the matter and the nature of the insurer’s interest therein.
3. All such books, records, documents,
accounts and vouchers of a domestic insurer, or of any principal United States
office of a foreign or alien insurer located in this State, shall be preserved
and kept available for the purposes of examination and until authority to
destroy or otherwise dispose of such records is secured from the Commissioner.
4. Any director, officer, agent or
employee of any insurer who destroys any such books, records or documents
without the authority of the Commissioner in violation of this section is
guilty of a gross misdemeanor.
(Added to NRS by 1971, 1798)
NRS 693A.060 Assets to be kept in State; exception.
1. Every domestic insurer shall keep its
assets within the State of Nevada, except where requisite for the normal
transaction of its business.
2. This section does not apply to:
(a) Assets maintained at the insurer’s principal
place of business located outside this State with the Commissioner’s permission
granted under NRS 693A.040;
(b) Securities on deposit with or through the
insurance supervisory officer of another state, province or country as a
condition to authority for the transaction of insurance business by the insurer
in that state, province or country; and
(c) Negotiable securities held in book entry form
through the United States banking system and recorded in the name of the
domestic insurer or its nominee by the authorized transfer agency or trustee of
the security.
(Added to NRS by 1971, 1799; A 1991, 647)
NRS 693A.070 Removal or concealment of records or assets.
1. A person shall not remove all or any
material part of the records or assets of a domestic insurer from this State
except pursuant to a plan of merger, consolidation or bulk reinsurance approved
by the Commissioner under this Code, or for such other reasonable purposes and
periods of time as may be permissible under NRS
693A.050 and 693A.060, or as may have been
approved by the Commissioner in writing in advance of such removal.
2. A person shall not conceal any such
records or assets from the Commissioner.
3. A person who unlawfully removes or
attempts to remove such records or assets or such material part thereof from
the principal place of business of the insurer or place of safekeeping thereof,
or who unlawfully conceals or attempts to conceal the same from the
Commissioner, is guilty of a category D felony and shall be punished as
provided in NRS 193.130.
4. Upon any unlawful removal or attempted
removal of such records or assets, or upon retention of such records or assets
or material part thereof outside this State in violation of the terms of the
applicable consent of the Commissioner, or upon any unlawful concealment of or
attempt to conceal records or assets, the Commissioner may, in the discretion
of the Commissioner, institute delinquency proceedings against the insurer
pursuant to chapter 696B of NRS
(conservation, rehabilitation and liquidation).
(Added to NRS by 1971, 1799; A 1995, 1319)
NRS 693A.080 Information to stockholders and regulation of proxies: Scope of
provisions.
1. This section and NRS 693A.090 and 693A.100
apply to all domestic stock insurers except:
(a) A domestic stock insurer having of record
less than 100 holders of any class of equity securities; but if 95 percent or
more of the insurer’s equity securities are owned or controlled by a parent or
an affiliated insurer, this section and NRS 693A.090
and 693A.100 do not apply to such insurer unless
its remaining securities are held of record by 500 or more persons; and
(b) Domestic stock insurers which, relative to
the voting or other securities involved, file with the Securities and Exchange
Commission forms of proxies, consents and authorizations pursuant to the
Securities Exchange Act of 1934, as amended.
2. The Commissioner shall have authority
to make and promulgate reasonable rules and regulations for the effectuation of
this section and NRS 693A.090 and 693A.100, and in so doing shall give due
consideration to rules and regulations promulgated for similar purposes by the
insurance supervisory officers of other states.
(Added to NRS by 1971, 1800)
NRS 693A.090 Information to stockholders and regulation of proxies:
Information in advance of meetings. Every
insurer to which this section and NRS 693A.080 and
693A.100 apply shall seasonably furnish to its
stockholders, in advance of stockholder meetings, information in writing
reasonably adequate to inform them relative to all matters to be presented by
the insurer’s management for consideration of stockholders at such meeting.
(Added to NRS by 1971, 1800)
NRS 693A.100 Information to stockholders and regulation of proxies:
Solicitation and form of proxies.
1. No person shall solicit a proxy,
consent or authorization in respect of any stock or other voting security of
such an insurer unless he or she furnishes the person so solicited with written
information reasonably adequate as to:
(a) The material matters in regard to which the
powers so solicited are proposed to be used; and
(b) The person or persons on whose behalf the
solicitation is made, and the interest of such person or persons in relation to
such matters.
2. No person shall so furnish to another
information which the informer knows or has reason to believe is false or
misleading as to any material fact, or which fails to state any material fact reasonably
necessary 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
is solicited;
(b) Provide for dating the proxy;
(c) Impartially identify each matter or group of
related matters intended to be acted upon;
(d) Provide means for the principal to instruct
the vote of the shares of the principal as to approval or disapproval of each
matter or group, other than election to office; and
(e) Be legibly printed, with context suitably
organized,
Ê but a proxy
may confer discretionary authority as to matters as to which a choice is not
specified pursuant to paragraph (d), if the form conspicuously states how it is
intended to vote the proxy or authorization in each such case, and may confer
discretionary authority as to other matters which may come before the meeting
but unknown for a reasonable time prior to the solicitation by the persons on
whose behalf the solicitation is made.
4. No proxy shall confer authority to:
(a) Vote for the election of any person to any
office for 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 proxy statement and form were furnished stockholders.
5. Any proxy, consent or authorization
obtained in violation of, or which violates, this section or the lawful rules
and regulations of the Commissioner relating thereto is void.
(Added to NRS by 1971, 1800)
NRS 693A.110 Management and agency contracts; regulations.
1. After January 1, 1972, a domestic
insurer shall not make any contract whereby any person is granted or is to
enjoy in fact the management of the insurer to the material exclusion of its
board of directors or to have the controlling or preemptive right to produce
substantially all insurance business for the insurer, or, if an officer,
director or otherwise part of the insurer’s management, is to receive any
commission, bonus or compensation based upon the volume of the insurer’s
business or transactions, unless the contract is filed with and not disapproved
by the Commissioner. The contract must become effective in accordance with its
terms unless disapproved by the Commissioner within 20 days after the date of
filing, subject to such reasonable extension of time as the Commissioner may
require by notice given within such 20 days. Any disapproval must be delivered
to the insurer in writing stating the grounds therefor.
2. Any such contract must provide that any
such manager, producer of its business or contract holder shall within 90 days
after expiration of each calendar year furnish the insurer’s board of directors
a written statement of amounts received under or on account of the contract and
amounts expended thereunder during the previous calendar year, with
specification 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 insurer’s board
of directors may reasonably require.
3. The Commissioner shall disapprove any
such contract if the Commissioner 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
of performance; or
(d) Contains other inequitable provision or
provisions which 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 the Commissioner finds that the contract should be disapproved on any of the
grounds specified in subsection 3.
5. This section does not apply to
contracts entered into before January 1, 1972, or to extensions or amendments
of such contracts.
6. The Commissioner may adopt regulations
governing the management and agency contracts of insurers.
(Added to NRS by 1971, 1801; A 1995, 1777)
NRS 693A.120 Prohibited pecuniary interest of officers; regulations.
1. Any officer or director, or any member
of any committee or an employee of a domestic insurer, having the duty or power
of investing or handling the insurer’s funds, shall not:
(a) Deposit or invest such funds except in the
insurer’s name;
(b) Borrow the fund of the insurer, or be
pecuniarily interested in any loan, pledge, deposit, security, investment,
sale, purchase, exchange, reinsurance or other similar transaction or property
of the insurer except as a stockholder, member, employee or director, unless
the transaction is authorized or approved by the insurer’s board of directors,
with the knowledge and recording of such pecuniary interest, by an affirmative
vote of not less than two-thirds of the directors; and
(c) Take or receive to his or her own use any
fee, brokerage, commission, gift or other similar consideration for or on
account of any such transaction made by or on behalf of the insurer.
2. No insurer shall guarantee the
financial obligation of any of its officers or directors.
3. This section does not prohibit:
(a) Such a director, officer, member of a
committee or employee from becoming a policyholder of the insurer and enjoying
the usual rights of a policyholder or from participating as beneficiary in any
pension trust, deferred compensation plan, profit-sharing plan, stock option
plan or similar plan authorized by the insurer and to which he or she may be
eligible; or
(b) Any director or member of a committee from
receiving a reasonable fee for lawful services actually rendered to the
insurer.
4. The Commissioner may, by regulation
from time to time, define and permit additional exceptions to the prohibitions
contained in subsection 1 solely to enable payment of reasonable compensation
to a director who is not otherwise an officer or employee of the insurer, or to
a corporation or firm in which a director is interested, for necessary services
performed or sales or purchases made to or for the insurer in the ordinary
course of the insurer’s business and in the usual private, professional or
business capacity of such director, corporation or firm.
(Added to NRS by 1971, 1802)
NRS 693A.130 Liability of officers and others for paying taxes, licenses and
fees. No director, trustee,
officer or agent of any insurer shall be subject to personal liability by
reason of any payment or any determination not to contest or seek recovery of any
payment made subsequent to June 4, 1944, by or on behalf of such insurer on
account of any tax, license, fee, deposit or other charge paid pursuant to the
terms of any statute, law or ordinance of this or any other state, county, city
or taxing authority, unless prior to such payment or determination such
statute, law or ordinance has been expressly held invalid by the state court
having final appellate jurisdiction in the premises or by the Supreme Court of
the United States.
(Added to NRS by 1971, 1803)
NRS 693A.140 Dividends to stockholders.
1. A domestic stock insurer shall not pay
any cash dividend to stockholders except out of that part of its available and
accumulated surplus money otherwise unrestricted and derived from realized net
operating profits and realized and unrealized capital gains.
2. A stock dividend may be paid out of any
available surplus. Upon payment of such a dividend the insurer shall transfer
to its paid-in capital stock accounts money equal to the aggregate of the par
values of the shares so distributed.
3. A domestic stock insurer may declare
and distribute a dividend otherwise prohibited by this section if:
(a) Following the payment of the dividend, the
insurer’s surplus as regards policyholders is reasonable in relation to its
outstanding liabilities and adequate to its financial needs, as determined
pursuant to NRS 692C.370; and
(b) The Commissioner approves the dividend before
its payment.
(Added to NRS by 1971, 1803; A 1995, 1778)
NRS 693A.150 Participating policies.
1. If provided for in its articles of
incorporation or charter, a stock insurer or mutual insurer may:
(a) Issue any or all of its policies or contracts
with or without participation in profits, savings, unabsorbed portions of
premiums or surplus;
(b) Classify policies issued and perils insured on
a participating and nonparticipating basis; and
(c) Determine the right to participate and the
extent of participation of any class or classes of policies.
Ê Any such
classification or determination shall be reasonable, and shall not unfairly
discriminate as between policies so classified.
2. A life insurer may issue both
participating and nonparticipating policies or contracts if the right or
absence of the right to participate is reasonably related to the premium
charged.
3. After the first policy year, no
dividend, otherwise earned, shall be made contingent upon the payment of the
renewal premium on any policy or contract; but a participating life or health
insurance policy providing for participation at the end of the first or second
policy year or the first and second policy year may provide that such dividend
or dividends will be paid subject to payment of the premium for the next
ensuing year.
(Added to NRS by 1971, 1803)
NRS 693A.160 Dividends to policyholders.
1. The directors of a domestic mutual
insurer may from time to time apportion and pay or credit to its members
dividends only out of that part of its surplus funds which represents net
realized savings, net realized earnings and net realized capital gains, all in
excess of the surplus required by law to be maintained by the insurer.
2. Subject to NRS 688A.380 (participating,
nonparticipating policies; accounting, allocations, dividends), a domestic
stock insurer may pay dividends to holders of its participating policies out of
its available surplus.
3. No such dividend shall be paid which is
inequitable, or which unfairly discriminates between classifications of
policies or policies within the same classification.
(Added to NRS by 1971, 1804)
NRS 693A.170 Purchase of own shares by stock insurer. A domestic insurer shall have the right to
purchase or acquire shares of its own stock only as follows:
1. For elimination of fractional shares.
2. Incidental to the enforcement of rights
of the insurer with respect to lawful transactions previously entered into in
good faith for purposes other than the acquisition of such shares.
3. For the purposes of a general savings
and investment plan for employees of the insurer.
4. For mutualization of the insurer, as
provided in NRS 693A.290.
5. For purposes as stated under a plan for
such acquisition submitted to and approved in writing by the Commissioner. The
Commissioner shall not approve a plan unless found by the Commissioner to be
for proper purposes, to be reasonable, fair and equitable as to the remaining
stockholders of the insurer, and not materially adverse to the protection of
the insurer’s policyholders.
6. As the result of a gift or bequest of
the shares to the insurer.
7. By call for redemption and cancellation
of a callable class of stock in accordance with provisions of the insurer’s
articles of incorporation.
(Added to NRS by 1971, 1804)
NRS 693A.180 Borrowing.
1. A domestic stock or mutual insurer may
without pledge of assets borrow money to defray expenses of its organization,
provide surplus funds or for any purpose of its business, upon a written
agreement that such money is required to be repaid only out of the insurer’s
surplus in excess of that stipulated in such agreement. The agreement may
provide for interest not exceeding 6 percent per annum, which interest shall or
shall not constitute a 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 be paid in connection with any such loan, except that if a public
offering and sale is made of the loan securities the insurer may pay the
reasonable costs thereof approved by the Commissioner.
2. Money so borrowed, together with the
interest thereon if so stipulated in the agreement, shall not form a part of
the insurer’s legal liabilities except as to its surplus in excess of the
amount thereof stipulated in the agreement, or be the basis of any setoff; but
until repaid, financial statements filed or published by the insurer shall show
as a footnote thereto the amount thereof then unpaid together with any interest
thereon accrued but unpaid.
3. Any such loan shall be subject to the
Commissioner’s approval. The insurer shall, in advance of the loan, file with
the Commissioner a statement of the purpose of the loan and a copy of the
proposed loan agreement. The loan and agreement shall be deemed approved unless
within 15 days after the date of such filing the insurer is notified of the
Commissioner’s disapproval and the reasons therefor. The Commissioner shall
disapprove any proposed loan or agreement if the Commissioner finds the loan is
unnecessary or excessive for the purpose intended, or that the terms of the
loan agreement are 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
substantial portion thereof shall be repaid by the insurer when no longer
reasonably necessary for the purpose originally intended. No repayment of such
a loan shall be made by a mutual insurer unless approved in advance by the
Commissioner.
5. This section does not apply to other
kinds of loans obtained by the insurer in the ordinary course of business, or
to loans secured by a pledge or mortgage of assets.
(Added to NRS by 1971, 1805)
NRS 693A.190 Mutual insurers: Additional kinds of insurance. A domestic mutual insurer after being
authorized to transact one kind of insurance may be authorized to transact such
additional kinds of insurance as are permitted under NRS 680A.120, if otherwise complying
with this Code and maintaining unimpaired surplus funds in an amount not less
than the amount of paid-in capital stock and surplus required to be maintained
by a domestic stock insurer transacting like kinds of insurance. When first so
authorized to transact an additional kind of insurance, the domestic mutual
insurer shall be subject to the additional expendable surplus requirements of NRS 680A.120 applicable to a stock
insurer.
(Added to NRS by 1971, 1805)
NRS 693A.200 Mutual insurers: Membership.
1. Each policyholder of a domestic mutual
insurer, other than a policyholder of a reinsurance contract, is a member of
the insurer during the period of the insurance with all the rights and
obligations of such membership, and the policy shall so specify.
2. Any person, government or governmental
agency or institution, estate, trustee or fiduciary may be a member of a mutual
insurer.
(Added to NRS by 1971, 1806)
NRS 693A.210 Mutual insurers: Bylaws. Every
domestic mutual insurer shall promptly file with the Commissioner a copy,
certified by the insurer’s secretary, of its bylaws and of every modification
thereof or addition thereto. The bylaws and modifications thereof shall be
subject to the Commissioner’s approval. The Commissioner shall not disapprove
any such bylaw or modification unless found by the Commissioner, after a
hearing held thereon, to be unlawful, unreasonable, inadequate, unfair or
injurious to the proper interests or protection of the insurer’s members or any
class thereof. The insurer shall not, after receiving written notice of such
disapproval and during the existence thereof, effectuate any bylaw provision so
disapproved.
(Added to NRS by 1971, 1806)
NRS 693A.220 Mutual insurers: Contingent liability of members.
1. Except as otherwise provided in NRS 693A.250 with respect to nonassessable policies,
each member of a domestic mutual insurer shall have a contingent liability, pro
rata and not one for another, for the discharge of its obligations incurred
while such member was a policyholder of the insurer, which contingent liability
shall be in such maximum amount, not less than one nor more than six times the
premium for the member’s policy at the annual premium rate, as shall be
specified in the insurer’s articles of incorporation.
2. Every policy issued by the insurer
shall contain a statement of the contingent liability.
3. Termination of the policy of any such
member shall not relieve the member of contingent liability for the member’s
proportion of the obligations of the insurer which accrued while the policy was
in force.
4. Unrealized contingent liability of
members does not constitute an asset of the insurer in any determination of its
financial condition.
(Added to NRS by 1971, 1806)
NRS 693A.230 Mutual insurers: Levy of contingent liability.
1. If at any time the assets of a domestic
mutual insurer are less than its liabilities and the minimum amount of surplus
required to be maintained by it under this Code for authority to transact the
kinds of insurance being transacted, and the deficiency is not cured from other
sources, its directors may, if the same is approved by the Commissioner as
being reasonable and in the best interests of the insurer and its members, levy
an assessment only on its members who held policies providing for contingent
liability at any time within the 12 months next preceding the date the levy was
authorized by the board of directors, and such members shall be liable to the
insurer for the amount so assessed.
2. The levy of assessment shall be for
such an amount as is required to cure such deficiency and to provide a
reasonable amount of working funds above such minimum amount of surplus, but
such working funds so provided shall not exceed 5 percent of the sum of the
insurer’s liabilities and such 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 during the period covered by the levy.
4. No member shall have an offset against
any assessment for which the member is liable, on account of any claim for
unearned premium or loss payable.
5. As to life insurance, any part of such
an assessment upon a member which remains unpaid following a notice of
assessment, demand for payment and lapse of a reasonable waiting period as
specified in such notice may, if approved by the Commissioner as being in the
best interests of the insurer and its members, be secured by placing a lien
upon the cash surrender values and accumulated dividends held or to be held by
the insurer to the credit of the member’s policy.
(Added to NRS by 1971, 1806)
NRS 693A.240 Mutual insurers: Enforcement of contingent liability.
1. The insurer shall notify each member of
the amount of the assessment to be paid by written notice mailed to the address
of the member last of record with the insurer. Failure of the member to receive
the notice so mailed, within the time specified therein for the payment of the
assessment or at all, shall be no defense in any action to collect the
assessment.
2. If a member fails to pay the assessment
within the period specified in the notice, which period shall not be less than
20 days after mailing, the insurer may institute suit to collect the same.
(Added to NRS by 1971, 1807)
NRS 693A.250 Mutual insurers: Nonassessable policies; revocation of
authority.
1. A domestic mutual insurer, by
depositing through the Commissioner and thereafter maintaining unimpaired
surplus funds not less in amount than the minimum paid-in capital stock and
surplus required of a domestic stock insurer for authority to transact the same
kind or kinds of insurance, may, upon receipt of the Commissioner’s order so
authorizing, extinguish the contingent liability to assessment of its members
as to all its policies in force and, so long as such surplus and deposit are
maintained, may omit provisions imposing contingent liability in all policies
currently issued. Any deposit of the insurer made through the Commissioner as a
prerequisite to its certificate of authority may be included as part of the
deposit required under this section.
2. The Commissioner shall not authorize a
domestic insurer to extinguish the contingent liability of any of its members
or in any of its policies to be issued, unless it qualifies to and does
extinguish such liability of all its members and in all such policies for all
kinds of insurance transacted by it.
3. The Commissioner shall revoke the
authority of a domestic mutual insurer to issue policies without contingent
liability if:
(a) The insurer’s assets are less than the sum of
its liabilities and the surplus required for such authority and such deficiency
is not cured within 30 days after written notice thereof to the insurer by the
Commissioner; or
(b) The insurer, by resolution of its board of
directors approved by a majority of its members, requests that the authority be
revoked.
4. During the absence of such authority
the insurer shall not issue any policy without providing therein for the
contingent liability of the policyholder, or renew any policy which is then in
force without endorsing the same to provide for such contingent liability.
5. A foreign mutual insurer may issue
nonassessable policies to its members in this state as authorized by its
charter and the laws of the state or country of its domicile, if the
requirements for issuance of such policies are substantially equal to or higher
than those applicable to domestic insurers under this Code.
(Added to NRS by 1971, 1807)
NRS 693A.260 Impairment of capital, surplus or assets: Notice; time to cure;
restrictions.
1. If at any time the amount of assets of
a domestic stock or mutual insurer are less than the sum of its liabilities
plus its paid-in capital stock and minimum surplus required to be maintained
(in the case of a stock insurer), or the minimum surplus required to be
maintained (in the case of a mutual insurer), under this Code for authority to
transact the kinds of insurance being transacted, the Commissioner shall at
once determine the amount of the deficiency and give written notice to the
insurer of the amount of impairment and require that the impairment be cured
and proof thereof filed with the Commissioner within such period, not less than
30 days nor more than 90 days from date of the notice, as the Commissioner may
designate.
2. If the impairment of assets is 10
percent or less of the combined required paid-in capital stock and surplus (as
to a stock insurer) or surplus (as to a mutual insurer), and the Commissioner
believes that the impairment might be made good by an extension of time, the
Commissioner may extend the time within which the impairment may be cured by
not to exceed an additional 90 days.
3. The Commissioner shall require such
restriction of, or arrangements as to, operations of the insurer while the
impairment exists as the Commissioner deems advisable for the protection of
policyholders, the insurer or the public.
(Added to NRS by 1971, 1808)
NRS 693A.270 Impairment of capital, surplus or assets: Curing deficiency;
failure to cure.
1. A deficiency referred to in NRS 693A.260 may be made good in whole or in part in
cash or in assets eligible under chapter 682A
of NRS (investments) for investment of the insurer’s funds, or by amendment of
the insurer’s certificate of authority to cover only such kind or kinds of
insurance thereafter for which the insurer has sufficient paid-in capital stock
and surplus (if a stock insurer) or surplus (if a mutual insurer) under this
Code, or, if a stock insurer, by reduction of its capital stock to an amount of
authorized and unimpaired paid-in capital stock not below the minimum thereof
required for the kinds of insurance thereafter to be transacted.
2. If the deficiency is not made good and
proof thereof filed with the Commissioner within the period required under NRS 693A.260, the insurer shall be deemed insolvent
and the Commissioner shall institute delinquency proceedings against it under chapter 696B of NRS.
(Added to NRS by 1971, 1809)
NRS 693A.280 Impairment of capital, surplus or assets: Violation of
restrictions; penalty. If, while
any such deficiency exists any officer, director, representative or employee of
the insurer knowingly violates or fails to comply with any restriction or
requirement placed upon the insurer and its operation by the Commissioner
pursuant to NRS 693A.260, he or she shall be
punished by a fine of not less than $500 nor more than $5,000 for each offense.
(Added to NRS by 1971, 1809)
NRS 693A.290 Mutualization of stock insurer.
1. A stock insurer other than a title
insurer may become a mutual insurer under such plan and procedure as may be
approved by the Commissioner 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
not less than two-thirds of the insurer’s outstanding capital stock having
voting rights, and by not less than two-thirds of the insurer’s policyholders
who vote on the plan in person, by proxy or by mail pursuant to such notice and
procedure as may be approved by the Commissioner;
(c) If a life insurer, the right to vote thereon
is limited to holders of policies other than term or group policies, whose
policies have been in force for more than 1 year;
(d) Mutualization will result in retirement of
shares of the insurer’s capital stock at a price not in excess of the fair
market value thereof as determined under a fair and reasonable formula approved
by the Commissioner or, if so ordered, by an examination of the insurer and all
of its controlled affiliates or by an appraisal committee, consisting of at
least three qualified persons, to be appointed by the Commissioner;
(e) The plan provides for the purchase of the
shares of any nonconsenting stockholder in the same manner and subject to the
same applicable conditions as provided by the general corporation law of the
state as to rights of nonconsenting stockholders, with respect to consolidation
or merger of private corporations;
(f) The plan provides for definite conditions to
be fulfilled by a designated early date upon which such mutualization will
become effective; and
(g) The mutualization leaves the insurer with a
surplus reasonably adequate for the security of its policyholders and to enable
it to continue successfully in business in the states in which it is then
authorized to transact insurance, and for the kinds of insurance included in
its certificates of authority in such states.
3. No director, officer, agent or employee
of the insurer, or any other person, may receive any fee, commission or other
valuable consideration whatsoever, other than his or her customary salary or
other regular compensation, for in any manner aiding, promoting or assisting in
the mutualization, except as set forth in the plan of mutualization as approved
by the Commissioner.
4. This section does not apply to
mutualization under an order of court pursuant to rehabilitation or
reorganization of an insurer under chapter 696B
of NRS.
(Added to NRS by 1971, 1809; A 2001, 2247)
NRS 693A.300 Conversion to ordinary business corporation.
1. A domestic stock insurer may convert to
a Nevada ordinary business corporation through the following procedures:
(a) The insurer must give the Commissioner
written notice of its intent to convert to an ordinary business corporation.
(b) The insurer must bulk reinsure all of its
insurance in force, if any, with another authorized insurer under a bulk
reinsurance agreement approved by the Commissioner as provided in NRS 693A.370. The agreement of bulk reinsurance may
be made contingent upon approval of the stockholders as provided in paragraph
(d).
(c) The insurer must set aside in a special
reserve funds in such amount and subject to such administration as may be found
by the Commissioner to be adequate and reasonable for the purpose, for payment
of all obligations, if any, of the insurer incurred by it under its insurance
contracts prior to the effective date of such bulk reinsurance, and remaining
unpaid, or make other reasonable disposition satisfactory to the Commissioner
for such payment.
(d) The proposed conversion must be approved by
an affirmative vote of not less than two-thirds of each class of the
outstanding securities of the insurer having voting rights, at a special
meeting of holders of such securities called for the purpose, and at such
meeting and by a like vote the articles of incorporation of the corporation
must be amended to remove therefrom the power to transact an insurance business
as an insurer and to provide for such new powers and purposes as may be
consistent with the purposes for which the corporation is thereafter to exist.
(e) Security holders of the corporation who
dissent from such proposed conversion shall have the same applicable rights as
exist under the general corporation laws of this state with respect to a
dissent from a 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 as
required by law, the conversion shall thereupon become effective.
2. An insurer which has once converted to
an ordinary business corporation shall not have the power thereafter to convert
to an insurer.
(Added to NRS by 1971, 1810)
NRS 693A.310 Affiliation of stock insurers.
1. A domestic stock insurer shall not
acquire a controlling interest in the shares of another stock insurer by an
exchange of securities or partly in exchange for securities and partly for cash
or property, unless the insurer has first submitted the plan for such
acquisition and exchange to the Commissioner and the Commissioner has approved
the same.
2. The Commissioner shall not so approve
unless the Commissioner finds the plan for such acquisition and the terms and
conditions thereof to be fair and equitable to all parties concerned therein,
after a hearing at which all persons to whom it is proposed to issue securities
in such exchange shall have the right to appear.
3. Notice and conduct of such hearing
shall be as provided in NRS 679B.310
to 679B.370, inclusive.
(Added to NRS by 1971, 1811)
NRS 693A.320 Acquisition of controlling stock.
1. Any person proposing to acquire the
controlling capital stock of any domestic stock insurer and thereby to change
the control of the insurer, other than through merger or consolidation or
affiliation as provided for in NRS 693A.310 and 693A.330, must first apply to the Commissioner in
writing for approval of the proposed change of control. The application must
state the names and addresses of the proposed new owners of the controlling
stock and contain such additional information as the Commissioner may
reasonably require.
2. The Commissioner shall not approve the
proposed change of control if the Commissioner finds that:
(a) The proposed new owners are not qualified by
character, experience and financial responsibility to control and operate the
insurer, or cause the insurer to be operated, in a lawful and proper manner;
(b) As a result of the proposed change of control
the insurer may not be qualified for a certificate of authority under the
provisions of NRS 680A.090;
(c) The interests of the insurer or other
stockholders of the insurer or policyholder would be materially harmed through
the proposed change of control; or
(d) The proposed change of control would tend
materially to lessen competition, or to create any monopoly, in a business of
insurance in this state or elsewhere.
3. If the Commissioner does not by
affirmative action approve or disapprove the proposed change of control within
60 days after the date the application was so filed with the Commissioner, the
proposed change may be made without the approval of the Commissioner, but if
the Commissioner gives notice to the parties of a hearing to be held by the
Commissioner with respect to the proposed change of control, and the hearing is
held within the 30 days or on a date mutually acceptable to the Commissioner
and the parties, the Commissioner has 10 days after the conclusion of the
hearing within which to so approve or disapprove the proposed change. If not so
approved or disapproved, the change may thereafter be made without the
Commissioner’s approval.
4. If the Commissioner disapproves the
proposed change, the Commissioner shall give written notice thereof to the
parties, setting forth in detail the reasons for disapproval.
5. The Commissioner shall suspend or
revoke the certificate of authority of any insurer the control of which has
been changed in violation of this section.
6. The Commissioner may retain at the
acquiring party’s expense attorneys, actuaries, accountants and other experts
not otherwise a part of the staff of the Commissioner as may be necessary only
for the review of the proposed acquisition of control. Such a review may be
conducted only if the parties fail to provide sufficient information to the
Commissioner. Expenses chargeable to the acquiring party pursuant to this
subsection must not exceed 1 percent of the acquired insurer’s net revenue
during the year immediately preceding the year in which the application for
change of control is filed with the Commissioner pursuant to subsection 1.
(Added to NRS by 1971, 1811; A 1995, 1779; 2001, 2248)
NRS 693A.330 Merger or consolidation of stock insurers.
1. Subject to subsections 2 and 3, a
domestic stock insurer may merge or consolidate with one or more domestic or
foreign stock insurers, by complying with the applicable provisions of the
statutes of this state governing the merger or consolidation of stock
corporations formed for profit. A domestic stock insurer shall not merge or
consolidate with any corporation not formed for the purpose of transacting
insurance as an insurer.
2. No such merger or consolidation shall
be effectuated unless in advance thereof the plan and agreement therefor have
been filed with the Commissioner and approved in writing by the Commissioner
after a hearing thereon after notice to the stockholders of each insurer involved.
The Commissioner shall give such approval within a reasonable time after such
filing unless the Commissioner finds such plan or agreement:
(a) Is contrary to law;
(b) Unfair or inequitable to the stockholders of
any insurer involved;
(c) Would substantially reduce the security of
and service to be rendered to policyholders of the domestic insurer in this
state or elsewhere;
(d) Would materially tend to lessen competition
in the insurance business in this state or elsewhere as to the kinds of
insurance involved, or would materially tend to create a monopoly as to such
business; or
(e) Is subject to other material and reasonable
objections.
3. No director, officer, agent or employee
of any insurer party to such merger or consolidation shall receive any fee,
commission, special compensation or other valuable consideration whatsoever for
in any manner aiding, promoting or assisting therein except as set forth in
such plan or agreement.
4. If the Commissioner does not approve
any such plan or agreement, the Commissioner shall so notify the insurer in
writing specifying the reasons therefor.
(Added to NRS by 1971, 1812)
NRS 693A.340 Preservation of old charter in merger or consolidation.
1. In any merger or consolidation of a
foreign stock or mutual insurer into or with a domestic insurer under NRS 693A.330 or 693A.350,
and if so provided in accordance with this section, the continuing Nevada
corporation shall for all purposes be deemed to be a continuation of the
corporate existence of the foreign corporation, with Nevada as the adoptive
state of domicile and with date of corporate origin the same as the original
date of incorporation of the foreign insurer in its original domiciliary state
or country, subject to the following conditions:
(a) The plan and agreement for merger or
consolidation shall provide for such continuation of corporate existence
through designation of Nevada as the state of domicile of the foreign
corporation by adoption, and shall specify the original date of incorporation
of the foreign corporation in its original domiciliary state or country as
being the date of incorporation of the Nevada corporation pursuant to this
section.
(b) The articles of incorporation of the Nevada
corporation shall provide, or be amended to provide, that the corporation is a
continuance of the corporate existence, through adoption of the State of Nevada
as the corporate domicile, of the foreign corporation, and shall specify the
original date of incorporation of the foreign corporation in its original
domiciliary state or country as being the date of incorporation of the Nevada
corporation pursuant to this section.
2. The continuing Nevada corporation shall
have all the rights and obligations of, and be given recognition in all
respects as, a corporation formed under the laws of this state as of the date
of incorporation of the foreign corporation in its original domiciliary state
or country. This provision shall not be deemed to impose upon the continuing
Nevada corporation any liability or obligation with respect to filings, fees,
taxes or otherwise which might have accrued prior to the effective date of the
merger or consolidation.
3. This section shall not be deemed in any
manner to preserve, after the effective date of such merger or consolidation,
the corporate existence of such foreign corporation as a corporation of its
original domiciliary state or country.
(Added to NRS by 1971, 1812)
NRS 693A.350 Merger or consolidation of mutual insurers.
1. A domestic mutual insurer shall not
merge or consolidate with a stock insurer.
2. Except as provided in this section, a
domestic mutual insurer may merge or consolidate with another mutual insurer
under the applicable procedures prescribed by the laws of this State governing
ordinary business corporations.
3. If the insurer is then unimpaired, the
plan and agreement for merger or consolidation must be submitted to and
approved by at least two-thirds of the members of each mutual insurer voting
thereon at meetings called for the purpose pursuant to reasonable notice and
procedure. The plan and agreement may provide for giving that notice to members
by publishing the notice once a week for 2 successive weeks in any two of the
four cities 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 or her address last of record with the
insurer, or by personal delivery. For a life insurer, the right to vote may be
limited to members whose policies are other than term and group policies, and
have been in effect for more than 1 year.
4. No such merger or consolidation may be
effectuated unless in advance thereof the plan and agreement therefor have been
filed with the Commissioner and approved by the Commissioner in writing. If the
insurer is not then impaired the Commissioner shall not act upon the plan and
agreement until after a hearing thereon. The Commissioner shall give approval
within a reasonable time after the filing unless the Commissioner finds the
plan or agreement:
(a) Inequitable to the policyholders of any
domestic insurer involved;
(b) Would substantially reduce the security of
and service to be rendered to policyholders of the domestic insurer in this
State and elsewhere;
(c) Would materially tend to lessen competition
in the insurance business in this State or elsewhere as to the kinds of
insurance involved, or would materially tend to create any monopoly as to that
business; or
(d) Is subject to other material and reasonable
objections.
5. If the Commissioner does not approve
the plan or agreement the Commissioner shall so notify the insurers in writing
specifying the reasons therefor.
6. No director, officer, agent or employee
of any insurer party to such merger or consolidation, or any other person,
shall receive any fee, commission or other special valuable consideration
whatsoever for in any manner aiding, promoting or assisting therein except as
set forth in the plan and agreement approved by the Commissioner.
(Added to NRS by 1971, 1813; A 1979, 557)
NRS 693A.365 Assumption of reinsurance: Limitations; application of
provisions.
1. A domestic property or casualty insurer
with less than $3,000,000 in surplus as regards policyholders shall not,
without the written approval of the Commissioner, assume reinsurance on any
risk that it otherwise is permitted to assume, except if the reinsurance is
required by law or regulation.
2. The provisions of this section are
applicable to a contract of reinsurance executed or renewed on or after October
1, 1991.
3. The provisions of this section do not
invalidate any reinsurance contract between the parties to the contract.
(Added to NRS by 1991, 2034)
NRS 693A.370 Bulk reinsurance: Limitation; approval by Commissioner and
members.
1. A domestic insurer shall not reinsure
with another insurer all or substantially all of its business in force, or of a
major class thereof, or during a period of 6 consecutive months reinsure with
another insurer over 20 percent of its insurance in force exclusive of
individual risks currently reinsured in the ordinary course of business, except
under an agreement of bulk reinsurance and in compliance with this section. No
such agreement may become effective unless filed with the Commissioner and
approved by the Commissioner in writing.
2. The Commissioner shall approve the
agreement within a reasonable time after filing if the Commissioner finds that:
(a) The plan and agreement are fair and equitable
to each insurer and to the policyholders involved;
(b) The reinsurance, if effectuated, would not
substantially reduce the protection or service to the policyholders of any
domestic insurer involved;
(c) The agreement embodies adequate provisions by
which the reinsuring insurer becomes liable to the original insureds for any
loss or damage occurring under the policies reinsured in accordance with the
original terms of those policies;
(d) The assuming reinsurer is authorized to
transact that insurance in this State, or is qualified for that authorization
and will appoint the Commissioner and the successors of the Commissioner as its
irrevocable attorney for service of process, so long as any policy so reinsured
or claim thereunder remains in force or outstanding;
(e) The reinsurance would not materially tend to
lessen competition in the insurance business in this State or elsewhere as to
the kinds of insurance involved, and would not materially tend to create any
monopoly as to that business; and
(f) The proposed bulk reinsurance is free of
other reasonable objections.
3. If the Commissioner does not so approve
the Commissioner shall forthwith notify each insurer involved in writing,
specifying the reasons therefor.
4. If for reinsurance of all or
substantially all of the business in force of a mutual insurer at a time when
the insurer’s surplus is not impaired, the plan and agreement for reinsurance
must be approved by a vote of not less than two-thirds of the mutual insurer’s
members voting thereon at a meeting of members called for the purpose, pursuant
to such reasonable notice and procedure as is provided for in the agreement.
The agreement may provide for giving notice to members of a mutual insurer by
publishing the notice once a week for 2 successive weeks in any two of the four
cities 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 or her address last of record with the insurer,
or by personal delivery. For a life insurer, the right to vote may be limited to
members whose policies are other than term or group policies, and have been in
effect for more than 1 year.
(Added to NRS by 1971, 1816; A 1979, 558)
NRS 693A.380 Bulk reinsurance: Certificate of fees and commissions;
restrictions upon payment; penalty.
1. At the time of filing the agreement of
bulk reinsurance with the Commissioner as provided in NRS
693A.370, the parties shall also file with the Commissioner a certificate
or certificates under oath of a principal officer of each insurer involved, as
to fees, commissions and other valuable considerations paid or to be paid to
any person directly or indirectly in connection with the agreement or the
proposed bulk reinsurance. This subsection does not apply to fees of attorneys,
accountants, actuaries and other independently contracting persons rendering
similar technical services in connection with the bulk reinsurance, or to
regular salaried compensation received or to be received by employees in the
ordinary course of business.
2. No director or officer of any insurer
party to such bulk reinsurance shall, except as fully expressed in the bulk
reinsurance agreement, receive any fee, commission or other special or valuable
consideration 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 2 is guilty of a gross misdemeanor.
(Added to NRS by 1971, 1817)
NRS 693A.390 Member’s share of assets on liquidation.
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 of administration shall be distributed to currently existing persons
who had been members of the insurer for at least 1 year and who were its members
at any time within 36 months next preceding the date such liquidation was
authorized or ordered, or the date of the last termination of the insurer’s
certificate of authority whichever date is the earlier; but if the Commissioner
has reason to believe that those in charge of the management of the insurer
have caused or encouraged the reduction of the number of members of the insurer
in anticipation of liquidation and for the purpose of reducing thereby the
number of persons who may be entitled to share in the distribution of the
insurer’s assets, the Commissioner may enlarge the 36-month qualification
period as the Commissioner may deem to be reasonable.
2. The insurer shall make a reasonable
classification of its policies so held by such members, and a formula based
upon such classification for determining the equitable distributive share of
each such member. Such classification and formula shall be subject to the
approval of the Commissioner.
(Added to NRS by 1971, 1817)
CONVERSION OF MUTUAL INTO STOCK INSURER
NRS 693A.400 Definitions. As
used in NRS 693A.400 to 693A.540,
inclusive, unless the context otherwise requires, the words and terms defined
in NRS 693A.405 to 693A.430,
inclusive, have the meanings ascribed to them in those sections.
(Added to NRS by 2001, 2232)
NRS 693A.405 “Closed block” defined. “Closed
block” means an allocation of assets of the converting mutual sufficient to
maintain payments of guaranteed benefits and the continuation of the current
dividends for eligible members.
(Added to NRS by 2001, 2232)
NRS 693A.410 “Consideration” defined. “Consideration”
means cash, stock or other valuable compensation approved by the Commissioner.
(Added to NRS by 2001, 2232)
NRS 693A.415 “Converting mutual” defined. “Converting
mutual” means a domestic mutual insurance company or a mutual insurance holding
company that has adopted a plan of conversion to a domestic stock insurance
company pursuant to NRS 693A.400 to 693A.540, inclusive.
(Added to NRS by 2001, 2232)
NRS 693A.420 “Eligible member” defined. “Eligible
member” means a person who has a membership interest in the converting mutual
on the date on which the board of directors of the converting mutual adopts a
resolution proposing a plan of conversion and an amendment to its articles of
incorporation.
(Added to NRS by 2001, 2232)
NRS 693A.425 “New stock insurer” defined. “New
stock insurer” means the domestic stock insurer that is created when the
Commissioner issues a certificate of authority to a converting mutual pursuant
to NRS 693A.470.
(Added to NRS by 2001, 2232)
NRS 693A.430 “Policyholder” defined. “Policyholder”
means a person who holds a policy issued by the converting mutual on the day on
which the plan of conversion is initially approved by the board of directors of
the converting mutual.
(Added to NRS by 2001, 2232)
NRS 693A.435 Procedure for conversion. A
domestic mutual insurer or a mutual insurance holding company may amend its
articles of incorporation to become a domestic stock insurer by complying with NRS 693A.400 to 693A.540,
inclusive, and obtaining a certificate of authority from the Commissioner.
(Added to NRS by 2001, 2232)
NRS 693A.440 Resolution by board of directors; plan of conversion.
1. The board of directors of a domestic
mutual insurer or a mutual insurance holding company may adopt a resolution
proposing a plan of conversion and an amendment to its articles of incorporation.
The resolution must be approved by a vote of not less than two-thirds of the
members of the board.
2. The plan of conversion must:
(a) Require the distribution of consideration
equal to not less than the fair market value of the surplus of the converting
mutual to the eligible members in exchange for the extinguishment of their
membership interests in the converting mutual.
(b) Describe the manner in which the fair market
value of the converting mutual and its surplus has been or will be determined.
(c) Require the distribution of consideration to
the eligible members upon extinguishment of their membership interests in the
converting mutual.
(d) Provide that membership interests in the
converting mutual are extinguished as of the effective date of conversion.
(e) Specify the structure and form of the
proposed consideration, including, without limitation, the projected range of
the number of shares of capital stock to be:
(1) Issued to policyholders by the new
stock insurer or the holding company of the new stock insurer; and
(2) Sold or reserved for sale to investors
by the new stock insurer or the holding company of the new stock insurer, or to
the trust established pursuant to this section.
(f) If the distribution of consideration will not
be made immediately following the final order of the Commissioner approving the
conversion, provide for the establishment of a trust for the exclusive benefit
of policyholders into which shares of the capital stock of the new stock
insurer or the holding company of the new stock insurer must be placed pending
distribution to the policyholders. The terms of the trust are subject to the
approval of the Commissioner. Such a trust may exist only for a period of 6
months after the final approval of the conversion, during which time the
distribution of consideration to eligible policyholders and other persons must
be completed.
(g) Provide for the determination of the
reasonable dividend expectations of eligible members and other policyholders of
policies that provide for distribution of policy dividends and the preservation
of such expectations through the establishment of a closed block of assets.
(h) Provide for such other proposed conditions
and provisions as the board of directors of the converting mutual determines
are necessary and are not inconsistent with the provisions of NRS 693A.400 to 693A.540,
inclusive.
(Added to NRS by 2001, 2232)
NRS 693A.445 Application for conversion: Filing and contents; filing fee. A converting mutual shall file with the
Commissioner an application to convert to a domestic stock insurer. The
application must be accompanied by a nonrefundable fee of $2,450. The
application must include, without limitation:
1. The plan of conversion adopted by the
board of directors.
2. A certification that the plan of
conversion was duly adopted by a vote of not less than two-thirds of the
members of the board of directors of the converting mutual.
3. A certification that the plan of
conversion is fair and equitable to the policyholders. This certification must
be adopted by a vote of not less than two-thirds of the members of the board of
directors of the converting mutual.
4. A statement of the reasons for the
proposed conversion and why the conversion is in the best interest of the
converting mutual, including, without limitation, a:
(a) Detailed analysis of the risks and benefits
of the proposed conversion to the converting mutual and its members; and
(b) Comparison of the risks and benefits of the
conversion with the risks and benefits of a reasonable alternative to the
conversion.
5. A written opinion addressed to the
board of directors of the converting mutual from a qualified, independent
financial adviser attesting that the:
(a) Consideration to be provided to the
membership of the converting mutual is fair to the eligible members as a group;
and
(b) Total consideration to be provided to the
membership is equal to or greater than the surplus of the converting mutual.
6. An opinion from a qualified actuary
attesting that all methodologies and formulas used to allocate the
consideration among eligible members are reasonable.
7. Certified copies of the proposed
amendments to the articles of incorporation and bylaws to effect the
conversion.
8. A copy of the form of the trust
agreement of any trust to be used in connection with the conversion.
9. A plan of operation for a closed block
to preserve the reasonable dividend expectations of eligible members and other
policyholders of policies that provide for the distribution of policy
dividends.
10. A form of the proposed notice to be
mailed by the converting mutual to its policyholders as required by NRS 693A.460.
11. A 5-year business plan and at least 2
years of financial projections for the new stock insurer and a parent company,
if any.
12. A list of natural persons who are or
have been selected to become directors or officers of the new stock insurer and
the following information concerning each person on the list, unless the
information is already on file with the Commissioner:
(a) Occupation;
(b) Criminal convictions, other than traffic
violations, during the immediately preceding 7 years;
(c) Personal bankruptcy of the person or the
spouse of the person during the immediately preceding 7 years;
(d) Information regarding any consent decree
entered into by the person; and
(e) Whether the person has been refused a
fidelity or other bond during the immediately preceding 7 years.
13. Any plans that the new stock insurer
or its parent company, if any, may have to:
(a) Raise additional capital through the issuance
of stock or otherwise;
(b) Sell or issue stock to any person;
(c) Liquidate or dissolve any company or sell any
material assets;
(d) Merge, consolidate or pursue any other form
of reorganization 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 and any proposed bylaws of the new stock insurer.
15. Such additional information as the
Commissioner may by regulation prescribe as necessary or appropriate for the
protection of policyholders and security holders of the converting mutual, or
for the protection of the public interest.
(Added to NRS by 2001, 2233)
NRS 693A.450 Public hearing on application. The
Commissioner shall conduct a public hearing not later than 120 days after the
date on which the application is filed unless, for good cause, the Commissioner
extends this time. Any interested person may appear or otherwise be heard at
the public hearing. The Commissioner may continue the hearing for a reasonable
period, not to exceed 60 days. The converting mutual shall give such reasonable
notice of the hearing as the Commissioner requires. The hearing must be
conducted pursuant to NRS 679B.320 to
679B.370, inclusive.
(Added to NRS by 2001, 2235)
NRS 693A.455 Action by Commissioner on application.
1. The Commissioner shall issue an order
making an initial determination of approval or disapproval of the application
not later than 30 days after the public hearing.
2. The Commissioner shall not approve the
application unless the Commissioner finds that the:
(a) Plan of conversion is fair and equitable to
the policyholders;
(b) Plan of conversion does not deprive the
policyholders of their property rights or due process of law;
(c) New stock insurer meets the minimum
requirements for a certificate of authority to transact the business of
insurance in this state; and
(d) Continued operation of the new stock insurer
is not hazardous to future policyholders and the public.
3. For the purposes of this section, the
Commissioner may 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 the converting mutual was contributed by persons or entities whose policies
or contracts were not in force on the date on which the plan of conversion was initially
approved by the board of directors of the converting mutual to require the
reduction of the consideration to policyholders to an amount equal to less than
the surplus;
(c) Whether the plan of conversion includes
preemptive rights for policyholders to purchase securities offered in the
initial sale of securities by the new stock insurer;
(d) Whether the plan of conversion includes
establishment of a preference account from which the payment of any shareholder
dividends, including a regular, special or liquidation dividend, would be
prohibited for such a reasonable period as the Commissioner may require;
(e) The suitability of the trustees of any trust
created to effect the conversion; and
(f) Whether the utilization of a trust, if
included in the plan of conversion, has a material adverse effect on
policyholders, other than delaying the receipt of shares of capital stock.
4. If the Commissioner makes a
determination to disapprove the application, the Commissioner shall issue a
final order setting forth specific findings for the disapproval.
(Added to NRS by 2001, 2235)
NRS 693A.460 Meeting and vote of policyholders; notice.
1. Unless the Commissioner for good cause
establishes a different time, the converting mutual shall, not less than 45
days after the date of the initial determination of approval by the
Commissioner, hold a meeting of its policyholders at a reasonable time and
place to vote upon the plan of conversion.
2. The converting mutual shall give notice
not less than 30 days before the meeting, by first-class mail to the last known
address of each policyholder, that the plan of conversion will be voted upon at
a regular 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 initially
approved the plan of conversion; and
(c) Written proxy permitting the policyholder to
vote for or against the plan of conversion.
3. The Commissioner shall supervise and
direct the conducting of the vote on the plan of conversion as necessary to
ensure that the vote is fair and consistent with the requirements of this
section. Each policyholder is entitled to only one vote regardless of the
number of policies owned by the policyholder.
4. A plan of conversion is approved only
if not less than two-thirds of the policyholders voting in person or by proxy
at the meeting vote in favor of the plan of conversion.
5. For the purposes of notice and voting,
the policyholder of a policy of group insurance is the entity to which the
group policy is issued and not any person covered under the group policy.
(Added to NRS by 2001, 2235)
NRS 693A.465 Abandonment of plan of conversion. A
converting mutual may, by not less than a two-thirds vote of the members of its
board of directors and with the approval of the Commissioner, abandon the plan
of conversion at any time before the issuance of the certificate of authority
by the Commissioner pursuant to NRS 693A.470. Upon
abandonment, all rights and obligations arising out of the plan of conversion
terminate and the converting mutual shall continue to conduct its business as a
domestic mutual insurer or a mutual insurance holding company as though no plan
of conversion had ever been adopted.
(Added to NRS by 2001, 2236)
NRS 693A.470 Issuance and notice of final order approving application;
issuance and effect of certificate of authority.
1. The Commissioner shall:
(a) Enter a final order approving the application
to convert to a stock insurer within 10 days after receiving a valid
certification from the converting mutual setting forth the vote and certifying
that the plan of conversion was approved by not less than two-thirds of the
policyholders voting in person or by proxy on the plan of conversion; and
(b) Publish notification of the issuance of the
final order in a newspaper of general circulation in Carson City and in the
county of domicile of the converting mutual if different from Carson City.
2. Except as otherwise provided in NRS 693A.465, the Commissioner shall issue a
certificate of authority to the new stock insurer when the converting mutual
files a certificate with the Commissioner stating that all the conditions set
forth in the plan of conversion have been satisfied.
3. The conversion is effective upon the
issuance of the certificate of authority by the Commissioner.
4. Upon issuance of the certificate of
authority, the articles of incorporation of the insurer shall be deemed to be amended
in compliance with NRS 692B.030.
(Added to NRS by 2001, 2236)
NRS 693A.475 Authority of Commissioner to engage services of experts; payment
of costs to review plan of conversion. In
determining whether a plan of conversion meets the requirements of NRS 693A.400 to 693A.540,
inclusive, or with regard to any other matters relating to the development of a
plan of conversion, the Commissioner may engage the services of experts. All
reasonable costs related to the review of a plan of conversion or such other
matters, including those costs attributable to the use of experts, must be paid
by the converting mutual filing the application or initiating discussions with
the Commissioner about such matters.
(Added to NRS by 2001, 2237)
NRS 693A.480 Confidentiality and publication of pertinent information and
documents.
1. Except as otherwise provided in
subsection 2 and NRS 239.0115, all
information and documents obtained by or disclosed to the Commissioner or any
other person in the course of preparing, filing and processing an application
of a converting mutual, other than information and documents distributed to
policyholders in connection with the meeting of policyholders pursuant to NRS 693A.460 or filed or submitted as evidence in
connection with the public hearing pursuant to NRS
693A.450, are confidential and not subject to subpoena, and must not be
made public by the Commissioner, the National Association of Insurance
Commissioners or any other person, except to insurance departments of other
states, without the prior written consent of the insurer to which such
information and documents pertain.
2. If the Commissioner, after giving the
insurer and its affiliates who would be affected notice and opportunity to be
heard, determines that the interests of policyholders, shareholders or the
public will be best served by the publication of such information and
documents, the Commissioner may publish all or any part thereof in such a
manner as the Commissioner determines appropriate.
(Added to NRS by 2001, 2237; A 2007, 2160)
NRS 693A.485 Continuation of corporate existence of converting mutual. The corporate existence of a converting mutual
pursuant to NRS 693A.400 to 693A.540, inclusive, does not terminate, and the new
stock insurer shall be deemed to be a continuation of the converting mutual and
to have been organized on the date the converting mutual was originally
organized.
(Added to NRS by 2001, 2237)
NRS 693A.490 Purchase of stock by directors, officers, employees, agents or
trustees. The provisions of NRS 693A.400 to 693A.540,
inclusive, do not prohibit the inclusion in the plan of conversion of
provisions under which members of the board of directors, officers, employees
or agents of the new stock insurer, 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, except
that no such purchase may be made while any shares of capital stock are held in
a trust established pursuant to the plan of conversion.
(Added to NRS by 2001, 2237)
NRS 693A.495 Receipt of fee, commission or other consideration for aiding,
promoting or assisting in plan of conversion.
1. No director, officer, employee or agent
of the converting mutual, or any other person, may receive any fee, commission
or other valuable consideration, other than his or her usual regular salary and
compensation, for aiding, promoting or assisting in a plan of conversion except
as set forth in the plan of conversion approved by the Commissioner.
2. Subsection 1 does not prohibit a
management or employee incentive compensation program that is contained in the
plan of conversion and approved by the Commissioner to be adopted upon
conversion to the new stock insurer or prohibit such a program to be adopted
later by the new stock insurer.
3. Subsection 1 does not prohibit the
payment of reasonable fees and compensation to attorneys, accountants,
actuaries and investment bankers for services performed in the independent
practice of their professions if the person is also a member of the board of
directors of the converting mutual.
(Added to NRS by 2001, 2238; A 2003, 3330)
NRS 693A.500 Offers to acquire and acquisition of voting securities of new
stock insurer or institution that owns majority of voting securities of new
stock insurer.
1. Except as otherwise specifically
provided in the plan of conversion, before and for a period of 5 years after
the issuance of a certificate of authority to a new stock insurer pursuant to NRS 693A.470, no person other than the new stock
insurer may directly or indirectly offer to acquire or acquire in any manner
the beneficial ownership of 5 percent or more of any class of a voting security
of the new stock insurer or of any institution that owns a majority of the
voting securities of the new stock insurer without the prior approval by the
Commissioner of an application for acquisition.
2. The Commissioner shall not approve an
application for acquisition filed pursuant to subsection 1 unless the
Commissioner finds that:
(a) The acquisition will not frustrate the plan
of conversion as approved by the policyholders and the Commissioner;
(b) The board of directors of the new stock
insurer has approved the acquisition or extraordinary circumstances not
contemplated in the plan of conversion have arisen which would warrant approval
of the acquisition; and
(c) The acquisition is consistent with the
purpose of NRS 693A.400 to 693A.540,
inclusive, to permit conversions on terms and conditions that are fair and
equitable to the policyholders.
3. An application for acquisition filed
pursuant to subsection 1 must describe in sufficient detail all information
necessary for the approval of the application.
4. If any material change occurs in the
facts set forth in an application for acquisition filed pursuant to subsection
1, an amendment setting forth the change, together with copies of all documents
and other material relevant to the change, must be filed with the Commissioner.
5. The Commissioner may hold a public
hearing on an application for acquisition filed pursuant to subsection 1. If
the Commissioner decides to hold a public hearing, the hearing must be held not
later than 30 days after the person seeking to acquire securities files an
application for acquisition with the Commissioner pursuant to subsection 1. The
Commissioner shall give at least 20 days’ notice of the hearing to the person
filing the application for acquisition. The person filing the application for acquisition
shall give not less than 7 days’ notice of the hearing to the new stock insurer
and to such other persons as may be designated by the Commissioner. In
connection with the hearing, the person filing the application for acquisition,
the new stock insurer, any other person to whom notice of the hearing was
given, and any other person whose interest may be affected may conduct
discovery proceedings in the same manner as is allowed in the district court.
All discovery proceedings must be concluded not later than 3 days before the
commencement of the hearing. At the hearing, the person filing the application
for acquisition, the new stock insurer, any other person to whom notice of the
hearing was given, and any other person whose interest may be affected may
present evidence, examine and cross-examine witnesses, and offer oral and
written arguments. If any acquisition referred to in the application for
acquisition is proposed 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 similar information under the Securities Exchange Act of
1934, 15 U.S.C. §§ 78a et seq., or under a state law requiring similar
registration or disclosure, the person required to file the statement may
utilize such documents in furnishing the information required by the
application for acquisition. The person filing the application shall serve the
new stock insurer and any institution that owns a majority of the voting
securities of the new stock insurer with a copy of the application for
acquisition and any amendments thereto on the day the documents are filed with
the Commissioner.
6. The new stock insurer and any
institution that owns a majority of the voting securities of the new stock insurer
must be permitted to become parties to the hearing upon request.
7. The Commissioner may retain, at the
expense of the person filing an application for acquisition pursuant to
subsection 1, any attorneys, actuaries, accountants and other experts who are
not employees of the Division as may be reasonably necessary to assist the
Commissioner in reviewing the application.
(Added to NRS by 2001, 2238)
NRS 693A.505 Unlawful acquisition of securities: Voting of securities
prohibited; injunctive and other relief.
1. No security which is the subject of any
agreement or arrangement regarding acquisition, or which is acquired or to be
acquired, in contravention of NRS 693A.500 or of
any regulation or order of the Commissioner may be voted at any shareholders’
meeting or may be counted for quorum purposes, and any action of the
shareholders requiring the affirmative vote of a percentage of shares may be
taken as though such securities were not issued and outstanding, but no action
taken at any such meeting may be invalidated by the voting of such securities unless:
(a) The action would materially affect control of
the new stock insurer or an institution that owns a majority of the voting
securities of the new stock insurer; or
(b) A court of competent jurisdiction has so
ordered.
2. If a new stock insurer or the
Commissioner has reason to believe that any security of the new stock insurer
or an institution that owns a majority of the voting securities of the new
stock insurer has been or is about to be acquired in contravention of NRS 693A.400 to 693A.540,
inclusive, or of any regulation or order of the Commissioner, the new stock
insurer or the Commissioner may apply to the First Judicial District Court in
and for Carson City for an order to enjoin any offer or acquisition made in
contravention of NRS 693A.500 or any regulation or
order of the Commissioner to enjoin the voting of any security so acquired, to
void any vote of such a security already cast at any shareholders’ meeting, and
for such other equitable relief as the nature of the case and the interest of
the policyholders, creditors and shareholders of the new stock insurer, or the
public, may require.
(Added to NRS by 2001, 2239)
NRS 693A.510 Unlawful acquisition of securities: Seizure or sequestration of
securities. In any case where a
person has acquired or is proposing to acquire any voting securities in
violation of NRS 693A.400 to 693A.540, inclusive, or any regulation or order of
the Commissioner, the First Judicial District Court in and for Carson City may,
upon the application of the Commissioner or the new stock insurer, and on such
notice as the court determines appropriate, seize or sequester any voting
securities of the new stock insurer or an institution that owns a majority of
the voting securities of the new stock insurer owned directly or indirectly by
such a person and issue any order with respect thereto as the court determines
appropriate to effectuate the provisions of NRS
693A.400 to 693A.540, inclusive.
Notwithstanding any other provision of law, for the purposes of NRS 693A.400 to 693A.540,
inclusive, the situs of the ownership of such securities shall be deemed to be
in this state.
(Added to NRS by 2001, 2240)
NRS 693A.515 Unlawful acquisition of securities: Imposition of administrative
penalty for violation. A person
who offers to acquire or acquires a security in violation of subsection 1 of NRS 693A.500 may be required by the Commissioner,
after notice and hearing, to pay an administrative penalty of $100 for each day
that the person remains in violation, except that the aggregate penalty
pursuant to this section may not exceed $10,000.
(Added to NRS by 2001, 2240)
NRS 693A.520 Unlawful acquisition of securities: Imposition of administrative
penalty against director, officer or agent. Any
director or officer of a person, or an agent of the person, who knowingly
violates or assents to or permits any officer or agent of the person to violate
the requirements of NRS 693A.500 may be required
by the Commissioner, after notice and hearing, to pay, in his or her individual
capacity, an administrative penalty of not more than $5,000 per violation. In
determining the amount of the penalty, the Commissioner shall take into account
the appropriateness of the penalty with respect to the gravity of the
violation, the history of previous violations, and such other matters as the
Commissioner determines are required in the interest of justice.
(Added to NRS by 2001, 2240)
NRS 693A.525 Unlawful acquisition of securities: Orders by Commissioner.
1. If the Commissioner has reason to
believe that any person or any director, officer, employee or agent of the
person is engaged in any conduct in violation of NRS
693A.500, the Commissioner may order the person to cease and desist
immediately from engaging 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 for a hearing with the Commissioner.
2. If, after a hearing pursuant to
subsection 1, the Commissioner determines that such action is in the best
interest of the policyholders, the creditors or the public, the Commissioner
may also order the person to void any contract entered into in violation of NRS 693A.500.
3. An order of the Commissioner pursuant
to this section is a final decision in a contested case for the purpose of
judicial review pursuant to chapter 233B of
NRS.
(Added to NRS by 2001, 2240)
NRS 693A.530 Regulations and orders of Commissioner. The
Commissioner may adopt such regulations and issue such orders as the
Commissioner determines are necessary to carry out the provisions of NRS 693A.400 to 693A.540,
inclusive.
(Added to NRS by 2001, 2241)
NRS 693A.535 Judicial review of final order of Commissioner. Any person aggrieved by a final order of the
Commissioner issued pursuant to NRS 693A.400 to 693A.540, inclusive, may petition for judicial review
in the manner provided by chapter 233B of
NRS.
(Added to NRS by 2001, 2237)
NRS 693A.540 Enforcement of provisions by Commissioner. Whenever it appears to the Commissioner that
any person or any director, officer, employee or agent of the person has
committed or is about to commit a violation of any provision of NRS 693A.400 to 693A.540,
inclusive, or of any regulation or order of the Commissioner relating thereto,
the Commissioner may apply to the First Judicial District Court in and for
Carson City for an order enjoining the person, director, officer, employee or
agent from violating or continuing to violate any provision of NRS 693A.400 to 693A.540,
inclusive, or any such regulation or order, and for such other equitable relief
as the nature of the case and the interest of the policyholders, creditors and
shareholders of the insurer, or the public, may require.
(Added to NRS by 2001, 2237)
REORGANIZATION OF MUTUAL INTO STOCK INSURER
NRS 693A.550 Definitions. As
used in NRS 693A.550 to 693A.665,
inclusive, unless the context otherwise requires, the words and terms defined
in NRS 693A.555 to 693A.570,
inclusive, have the meanings ascribed to them in those sections.
(Added to NRS by 2001, 2241)
NRS 693A.555 “Intermediate stock holding company” defined. “Intermediate stock holding company” means a
holding company of which at least a majority of the voting securities are owned
by a mutual insurance holding company and which directly owns all the voting
securities of a reorganized stock insurer.
(Added to NRS by 2001, 2241)
NRS 693A.560 “Mutual insurance holding company” defined. “Mutual insurance holding company” means a
holding company based on a mutual plan which at all times owns a majority of
the voting securities of a single intermediate stock holding company or, if no
such intermediate stock holding company exists, which owns a majority of the
voting securities of a reorganized stock insurer.
(Added to NRS by 2001, 2241)
NRS 693A.565 “Reorganized stock insurer” defined. “Reorganized
stock insurer” means a stock insurer subsidiary that results from a
reorganization of a domestic mutual insurer pursuant to NRS
693A.550 to 693A.665, inclusive.
(Added to NRS by 2001, 2241)
NRS 693A.570 “Voting securities” defined. “Voting
securities” means securities of any class or any ownership interest having
voting power for the election of directors, trustees or management, other than
securities having voting power only because of the occurrence of a contingency.
(Added to NRS by 2001, 2241)
NRS 693A.575 Procedure for reorganization. A
domestic mutual insurer may, by complying with NRS
693A.550 to 693A.665, inclusive, and obtaining
the approval of the Commissioner, reorganize by:
1. Merging the membership interests of its
policyholders into:
(a) A mutual insurance holding company formed for
the purpose of the reorganization; or
(b) An existing mutual insurance holding company;
and
2. Continuing the corporate existence of
the mutual insurer as a stock insurer subsidiary of the mutual insurance
holding company.
(Added to NRS by 2001, 2241)
NRS 693A.580 Proposed plan of reorganization: Filing and contents; filing
fee. A domestic mutual insurer
shall file with the Commissioner for review and approval a proposed plan of
reorganization that has been approved by a vote of not less than two-thirds of
the members of the board of directors of the domestic mutual insurer. The
proposed plan of reorganization must be accompanied by a nonrefundable fee of
$2,450. The plan of reorganization must include:
1. An analysis of the benefits and risks
of the proposed reorganization, including, without limitation, the rationale
and comparative benefits and risks of converting to a domestic stock insurer
pursuant to NRS 693A.400 to 693A.540, inclusive;
2. A statement of how the plan is fair and
equitable to the policyholders;
3. Information sufficient to demonstrate
that the financial condition of the mutual insurer will not be diminished upon
reorganization;
4. Provisions to ensure immediate
membership in the mutual insurance holding company for all existing
policyholders of the mutual insurer;
5. Provisions for membership interests for
future policyholders of the reorganized stock insurer;
6. Provisions to ensure that, in the event
of proceedings for rehabilitation or liquidation involving a stock insurer
subsidiary of the mutual insurance holding company, the assets of the mutual
insurance holding company will be available to satisfy the obligations of the
stock insurer subsidiary to policyholders;
7. Provisions for the periodic
distribution of the accumulated earnings of the mutual insurance holding
company;
8. Certified copies of the proposed
articles of incorporation and bylaws of the mutual insurance holding company,
intermediate stock holding company and reorganized stock insurer, or proposed
amendments thereto as necessary to carry out the reorganization;
9. A certification that the plan of
reorganization has been duly adopted by a vote of not less than two-thirds of
the members of the board of directors of the mutual insurer;
10. A certification adopted by not less
than two-thirds of the members of the board of directors of the mutual insurer
that the plan of reorganization is fair and equitable to the policyholders;
11. The names, addresses and occupations of
all persons who are or have been selected to become directors or officers of
the mutual insurance holding company;
12. A description of the nature and
content of the annual report and financial statement to be sent by the mutual
insurance holding company to each policyholder;
13. The number of members of the board of
directors of the mutual insurance holding company who are required to be
policyholders;
14. A description of any plans for the
initial sale of stock of the intermediate stock holding company or reorganized
stock insurer;
15. A form of the proposed notice to be
mailed by the mutual insurer to its policyholders as required by NRS 693A.595; and
16. Such additional information as the
Commissioner may by regulation prescribe as necessary or appropriate for the
protection of policyholders and security holders of the domestic mutual insurer
or for the protection of the public interest.
(Added to NRS by 2001, 2241)
NRS 693A.585 Public hearing on proposed plan. Unless
the Commissioner, for good cause, extends the time, the Commissioner shall
conduct a public hearing regarding a proposed plan of reorganization not later
than 120 days after the date on which the completed proposed plan of
reorganization is filed pursuant to NRS 693A.580.
Any interested person may appear or otherwise be heard at the public hearing.
The Commissioner may continue the public hearing for a reasonable period, not
to exceed 60 days. The mutual insurer shall give such reasonable notice of the
public hearing as the Commissioner requires.
(Added to NRS by 2001, 2242)
NRS 693A.590 Action by Commissioner on proposed plan; notice and expiration
of approval.
1. The Commissioner shall issue an order
approving or disapproving a proposed plan of reorganization not later than 30
days after the public hearing required by NRS 693A.585.
2. The Commissioner shall not approve a
proposed plan of reorganization unless the Commissioner finds that the:
(a) Plan of reorganization is fair and equitable
to the policyholders;
(b) Plan of reorganization does not deprive the
policyholders of their property rights or due process of law;
(c) Reorganized stock insurer meets the minimum
requirements for a certificate of authority to transact the business of
insurance in this state; and
(d) Continued operation of the reorganized stock
insurer is not hazardous to future policyholders and the public.
3. If the Commissioner approves a plan of
reorganization, the Commissioner shall publish notification of the issuance of
the order in a newspaper of general circulation in Carson City and in the
county of domicile of the mutual insurer if different from Carson City.
4. If the Commissioner approves a plan of
reorganization, the approval expires if the reorganization is not completed
within 180 days after the date of approval, unless the period is extended by
the Commissioner for good cause.
5. If the Commissioner disapproves a plan
of reorganization, the Commissioner shall issue an order setting forth specific
findings for the disapproval.
(Added to NRS by 2001, 2242)
NRS 693A.595 Meeting and vote of policyholders; notice.
1. Within 45 days after the date of the
Commissioner’s approval of a plan of reorganization pursuant to NRS 693A.590, unless extended by the Commissioner for
good cause, the mutual insurer shall hold a meeting of its policyholders at a
reasonable time and place to vote upon the plan of reorganization. The mutual
insurer shall give notice not less than 30 days before the meeting, by
first-class mail to the last known address of each policyholder, that the plan
of reorganization will be voted upon at a regular or special meeting of the
policyholders. The notice must include a brief description of the plan of reorganization,
a statement that the Commissioner has approved the plan of reorganization, and
a written proxy permitting the policyholder to vote for or against the plan of
reorganization. For the purposes of notice and voting, the policyholder of a
policy of group insurance is the entity to which the group policy is issued and
not any person covered under the group policy. A plan of reorganization is
approved only if not less than two-thirds of the policyholders voting in person
or by proxy at the meeting vote in favor of the plan of reorganization. Each
policyholder is entitled to only one vote regardless of the number of policies
owned by the policyholder. The Commissioner shall supervise and direct the
conducting of the vote on the plan of reorganization as necessary to ensure
that the vote is fair and consistent with the requirements of this section.
2. If a mutual insurer complies
substantially and in good faith with the notice requirements of this section,
the mutual insurer’s failure to give any policyholder the required notice does
not impair the validity of any action taken pursuant to this section.
3. If the meeting of policyholders to vote
upon the plan of reorganization is held coincident with the mutual insurer’s
annual meeting of policyholders, only one combined notice of meeting is
required.
4. The form of any proxy must be filed
with and approved by the Commissioner.
5. For the purposes of notice and voting,
a person is not a policyholder unless the person was a policyholder of the
mutual insurer on the date on which the plan of reorganization was initially
approved by the board of directors of the mutual insurer.
(Added to NRS by 2001, 2243)
NRS 693A.600 Abandonment of plan of reorganization. A
mutual insurer may, by not less than a two-thirds vote of the members of its
board of directors and with the approval of the Commissioner, abandon a plan of
reorganization at any time before the issuance of the certificate of authority
by the Commissioner pursuant to NRS 693A.605. Upon
abandonment, all rights and obligations arising out of the plan of
reorganization terminate and the mutual insurer shall continue to conduct its
business as a domestic mutual insurer as though no plan of reorganization had
ever been adopted.
(Added to NRS by 2001, 2244)
NRS 693A.605 Issuance and effect of certificate of authority.
1. The Commissioner shall issue a
certificate of authority to a reorganized stock insurer when the mutual insurer
files with the Commissioner a:
(a) Certificate stating that all the conditions
set forth in the plan of reorganization have been satisfied, so long as the
board of directors of the mutual insurer has not abandoned the plan of
reorganization pursuant to NRS 693A.600.
(b) Certificate from the mutual insurer setting
forth the vote and certifying that the plan of reorganization was approved by
not less than two-thirds of the policyholders voting in person or by proxy on
the plan of reorganization.
2. The reorganization is effective upon
the issuance of a certificate of authority by the Commissioner.
3. Upon issuance of the certificate of
authority, the articles of incorporation of the mutual insurer shall be deemed
to be amended in compliance with NRS
692B.030.
(Added to NRS by 2001, 2244)
NRS 693A.610 Authority of Commissioner to engage services of experts; payment
of costs to review plan of reorganization. In
determining whether a plan of reorganization meets the requirements of the
provisions of NRS 693A.550 to 693A.665, inclusive, or with regard to any other
matters relating to the development of a plan of reorganization, the
Commissioner may engage the services of experts. All reasonable costs related
to the review of a plan of reorganization or such other matters, including
those costs attributable to the use of experts, must be paid by the mutual
insurer filing the application or initiating discussions with the Commissioner
about such matters.
(Added to NRS by 2001, 2244)
NRS 693A.615 Confidentiality and publication of pertinent information and
documents.
1. Except as otherwise provided in
subsection 2 and NRS 239.0115, all
information and documents obtained by or disclosed to the Commissioner or any
other person in the course of preparing, filing and processing an application
to reorganize pursuant to NRS 693A.580, other than
information and documents distributed to policyholders in connection with the
meeting of policyholders pursuant to NRS 693A.595
or filed or submitted as evidence in connection with the public hearing
pursuant to NRS 693A.585, are confidential and not
subject to subpoena, and must not be made public by the Commissioner, the
National Association of Insurance Commissioners or any other person, except to
insurance departments of other states, without the prior written consent of the
insurer to which such information and documents pertain.
2. If the Commissioner, after giving the
insurer and its affiliates who would be affected notice and opportunity to be
heard, determines that the interests of policyholders, shareholders or the
public will be best served by the publication of such information and
documents, the Commissioner may publish all or any part thereof in such a
manner as the Commissioner determines appropriate.
(Added to NRS by 2001, 2244; A 2007, 2160)
NRS 693A.620 Continuation of corporate existence of mutual insurer. The corporate existence of a mutual insurer
reorganizing pursuant to NRS 693A.550 to 693A.665, inclusive, does not terminate, and the
reorganized stock insurer shall be deemed to be a continuation of the mutual
insurer and to have been organized on the date on which the mutual insurer was
originally organized.
(Added to NRS by 2001, 2245)
NRS 693A.625 Issuance of initial shares of capital stock; identity and rights
of policyholders; status, rights, duties and assets of holding company.
1. All the initial shares of the capital
stock of a reorganized stock insurer must be issued to the mutual insurance
holding company or to one or more intermediate stock holding companies.
2. Policyholders of a domestic mutual
insurer that has been reorganized are members of the mutual insurance holding
company, and their voting rights must be determined in accordance with the
articles of incorporation and bylaws of the mutual insurance holding company.
The mutual insurance holding company shall provide its members with the same
membership rights as were provided to policyholders of the mutual insurer
immediately before reorganization. The reorganization must not reduce, limit or
otherwise affect the number or identity of the policyholders who may become
members of the mutual insurance holding company or secure for managerial
personnel any unfair advantage through or connected with the reorganization.
3. A mutual insurance holding company or
an intermediate stock holding company formed pursuant to NRS 693A.550 to 693A.665,
inclusive:
(a) Must not be authorized to transact the
business of insurance;
(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
purposes of chapter 696B of NRS.
4. An intermediate stock holding company
formed pursuant to NRS 693A.550 to 693A.665, inclusive, shall be deemed to be a mutual
insurance holding company subject to the provisions of NRS
693A.400 to 693A.540, inclusive.
5. A mutual insurance holding company
formed pursuant to NRS 693A.550 to 693A.665, inclusive:
(a) Shall not issue stock.
(b) Shall invest in insurers not less than 50
percent of its net worth as determined by generally accepted accounting
practices.
6. The aggregate pledges and encumbrances
of the assets of a mutual insurance holding company must not affect more than
49 percent of the mutual insurance holding company’s stock in an intermediate
stock holding company or a reorganized stock insurer.
7. If any proceeding under chapter 696B of NRS is brought against a
reorganized stock insurer, the mutual insurance holding company and each
intermediate stock holding company must be named parties to the proceeding. All
the assets of the mutual insurance holding company and each intermediate stock
holding company shall be deemed assets of the estate of the reorganized stock
insurer to the extent necessary to satisfy claims against the reorganized stock
insurer.
8. No distribution to members of a mutual
insurance holding company may occur without the prior written approval of the
Commissioner. The Commissioner may give such approval only if the Commissioner
is satisfied that the distribution is fair and equitable to policyholders as
members of the mutual insurance holding company.
9. No solicitation for the sale of the
stock of an intermediate stock holding company or a reorganized stock insurer
may be made without the prior written approval of the Commissioner.
10. A mutual insurance holding company or
an intermediate stock holding company may not voluntarily dissolve without the
approval of the Commissioner.
(Added to NRS by 2001, 2245; A 2003, 3330)
NRS 693A.630 Conversion of mutual insurance holding company to domestic stock
insurance company not prohibited. Nothing
contained in NRS 693A.550 to 693A.665, inclusive, prohibits a mutual insurance
holding company from converting to a domestic stock insurance company pursuant
to NRS 693A.400 to 693A.540,
inclusive.
(Added to NRS by 2001, 2246)
NRS 693A.635 Membership interest in mutual insurance holding company is not
security. A membership interest in
a mutual insurance holding company does not constitute a security under the
laws of this state.
(Added to NRS by 2001, 2246)
NRS 693A.640 Receipt of fee, commission or other consideration for aiding,
promoting or assisting in plan of reorganization.
1. No director, officer, employee or agent
of the mutual insurer, or any other person, may receive any fee, commission or
other valuable consideration, other than his or her usual regular salary and
compensation, for aiding, promoting or assisting in a plan of reorganization
except as set forth in the plan of reorganization approved by the Commissioner.
2. Subsection 1 does not prohibit a
management or employee incentive compensation program that is contained in the
plan of reorganization and approved by the Commissioner to be adopted upon
reorganization to the reorganized stock insurer or prohibit such a program to
be adopted later by the reorganized stock insurer.
3. Subsection 1 does not prohibit the
payment of reasonable fees and compensation to attorneys, accountants,
actuaries and investment bankers for services performed in the independent
practice of their professions if the person is also a member of the board of
directors of the mutual insurer.
(Added to NRS by 2001, 2246; A 2003, 3331)
NRS 693A.645 Mutual insurance holding company: Annual filing requirements.
1. A mutual insurance holding company
shall file with the Commissioner, by March 1 of each year, an annual statement
consisting of an income statement, balance sheet and cash flows prepared in
accordance with generally accepted accounting practices and a confidential
statement disclosing any intention to pledge, borrow against, alienate,
hypothecate or in any way encumber the assets of the mutual insurance holding
company.
2. A mutual insurance holding company
shall, on or before June 1 of each year, file with the Commissioner in a form
approved by the Commissioner a financial statement as of December 31 of the
preceding calendar year that is certified by a certified public accountant.
(Added to NRS by 2001, 2246)
NRS 693A.650 Mutual insurance holding company: Production of records, books
or other information and papers. The
Commissioner may order the production of any records, books or other
information and papers in the possession of a mutual insurance holding company
or its affiliates as is reasonably necessary to ascertain the financial
condition of the reorganized stock insurer or to determine compliance with this
title.
(Added to NRS by 2001, 2246)
NRS 693A.655 Regulations and orders of Commissioner. The
Commissioner may adopt such regulations and issue such orders as the
Commissioner determines are necessary to carry out the provisions of NRS 693A.550 to 693A.665,
inclusive.
(Added to NRS by 2001, 2247)
NRS 693A.660 Judicial review of final order of Commissioner. Any person aggrieved by a final order of the
Commissioner issued pursuant to the provisions of NRS
693A.550 to 693A.665, inclusive, may petition
for judicial review in the manner provided by chapter
233B of NRS.
(Added to NRS by 2001, 2244)
NRS 693A.665 Enforcement of provisions by Commissioner. Whenever it appears to the Commissioner that
any person or any director, officer, employee or agent of the person has
committed or is about to commit a violation of any provision of NRS 693A.550 to 693A.665,
inclusive, or of any regulation or order of the Commissioner relating thereto,
the Commissioner may apply to the First Judicial District Court in and for
Carson City for an order enjoining the person, director, officer, employee or
agent from violating or continuing to violate any provision of NRS 693A.550 to 693A.665,
inclusive, or any such regulation or order, and for such other equitable relief
as the nature of the case and the interest of the policyholders, creditors and
shareholders of the insurer, or the public, may require.
(Added to NRS by 2001, 2246)
