Nrs: Chapter 693A - Corporate Powers And Procedures Of Domestic Stock And Mutual Insurers

Link to law: https://www.leg.state.nv.us/NRS/NRS-693A.html
Published: 2015

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[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)