31A-7-403 - Conversion to a Title 31A, Chapter 5, mutual insurer.
31A-7-403. Conversion to a Title 31A, Chapter 5, mutual insurer.
(1) An insurer organized and operating under this chapter may be converted into a mutualinsurer under Chapter 5 as provided in this section.
(2) (a) The board shall pass a resolution that the conversion is not contrary to the interestsof the policyholders specifying the reasons for and the purposes of the proposed conversion, andthe manner in which the conversion is expected to affect policyholders, particularly thepolicyholders that are members.
(b) The board's resolution shall also set forth a plan of conversion which shall include:
(i) the articles of incorporation of the new Chapter 5 mutual insurer, including adescription of the classes of policyholders who, by virtue of being policyholders, will have aninterest in the converted insurer;
(ii) the bylaws of the new Chapter 5 mutual insurer;
(iii) a description of any changes in the insurer's mode of operations after conversion to aChapter 5 mutual insurer; and
(iv) any other items specified by rule.
(3) The provisions of Chapter 16 apply to the conversion of a Chapter 7 insurer to aChapter 5 mutual insurance corporation.
(4) The plan of conversion shall be submitted to the commissioner for approval, togetherwith a projection of the planned or anticipated financial condition of the insurer for two yearsafter the conversion.
(5) The commissioner shall hold an adjudicative proceeding concerning the conversionapplication.
(6) The commissioner shall approve the plan of conversion, unless he finds that the planviolates the law, is contrary to the interests of policyholders or the public, or would result in anunfair distribution of interest among the insurer's policyholders.
(7) (a) Upon the commissioner approving the conversion under Subsection (6), thecommissioner shall issue a new certificate of authority.
(b) The issuance of the certificate is the conversion, and upon issuance of the certificatethe Chapter 7 insurer at once becomes a mutual insurance corporation organized under and fullysubject to Chapter 5.
(c) The mutual insurer is considered to have been organized at the time the convertedChapter 7 insurer was organized.
(d) Unless otherwise provided in the plan of conversion, the directors, officers, agents,and employees of the Chapter 7 insurer shall continue in like capacity with the mutual insurancecorporation.
Amended by Chapter 161, 1987 General Session