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 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 him 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 his approval within a reasonable time after the filing unless he 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 he shall so notify the insurers in writing specifying his 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.
Last modified: February 27, 2006