Vermont § 6020 - Conversion to or merger with reciprocal insurer

§ 6020. Conversion to or merger with reciprocal insurer

• (a) An association captive insurance company, risk retention group, industrial insured
  captive insurance company formed as a stock or mutual corporation, or other insurer
  approved by the Commissioner may be converted to or merged with and into a reciprocal
  insurer in accordance with a plan therefore and the provisions of this section. (b) Any plan for such conversion or merger shall provide a fair and equitable plan for
  purchasing, retiring, or otherwise extinguishing the interests of the stockholders
  and policyholders of a stock insurer, and the members and policyholders of a mutual
  insurer, including a fair and equitable provision for the rights and remedies of dissenting
  stockholders, members, or policyholders. (c) In the case of a conversion authorized under subsection (a) of this section: (1) such conversion shall be accomplished under such reasonable plan and procedure as
  may be approved by the Commissioner; provided, however, that the Commissioner shall
  not approve any such plan of conversion unless such plan: (A) satisfies the provisions of subsection (b) of this section; (B) provides for a hearing, of which notice is given or to be given to the captive insurance
  company, its directors, officers, and policyholders, and, in the case of a stock insurer,
  its stockholders, and in the case of a mutual insurer, its members, all of which persons
  shall be entitled to attend and appear at such hearing; provided, however, that if
  notice of a hearing is given and no director, officer, policyholder, member, or stockholder
  requests a hearing, the Commissioner may cancel such hearing; (C) provides a fair and equitable plan for the conversion of stockholder, member, or policyholder
  interests into subscriber interests in the resulting reciprocal insurer, substantially
  proportionate to the corresponding interests in the stock or mutual insurer; provided,
  however, that this requirement shall not preclude the resulting reciprocal insurer
  from applying underwriting criteria that could affect ongoing ownership interests;
  and (D) is approved: (i) in the case of a stock insurer, by a majority of the shares entitled to vote represented
  in person or by proxy at a duly called regular or special meeting at which a quorum
  is present; and (ii) in the case of a mutual insurer, by a majority of the voting interests of policyholders
  represented in person or by proxy at a duly called regular or special meeting thereof
  at which a quorum is present; (2) the Commissioner shall approve such plan of conversion if the Commissioner finds that
  the conversion will promote the general good of the State in conformity with those
  standards set forth in subdivision 6006(d)(2) of this title; (3) if the Commissioner approves the plan, the Commissioner shall amend the converting
  insurer’s certificate of authority to reflect conversion to a reciprocal insurer and
  issue such amended certificate of authority to the company’s attorney-in-fact; (4) upon the issuance of an amended certificate of authority of a reciprocal insurer by
  the Commissioner, the conversion shall be effective; and (5) upon the effectiveness of such conversion the corporate existence of the converting
  insurer shall cease and the resulting reciprocal insurer shall notify the Secretary
  of State of such conversion. (d) A merger authorized under subsection (a) of this section shall be accomplished substantially
  in accordance with the procedures set forth in sections 3424, 3426, and 3431 of this title, except that, solely for purposes of such merger: (1) the plan of merger shall satisfy the provisions of subsection (b) of this section; (2) the subscribers’ advisory committee of a reciprocal insurer shall be equivalent to
  the board of directors of a stock or mutual insurance company; (3) the subscribers of a reciprocal insurer shall be the equivalent of the policyholders
  of a mutual insurance company; (4) if a subscribers’ advisory committee does not have a president or secretary, the officers
  of such committee having substantially equivalent duties shall be deemed the president
  or secretary of such committee; (5) the Commissioner may, upon request of an insurer party to a merger authorized under
  subsection (a) of this section, waive the requirement of subdivision 3424(6) of this title; (6) subdivision 3424(7) of this title shall not apply to such merger; (7) the Commissioner shall approve the articles of merger if the Commissioner finds that
  the merger will promote the general good of the State in conformity with those standards
  set forth in subdivision 6006(d)(2) of this title. If the Commissioner approves the articles of merger, the Commissioner shall indorse
  the Commissioner’s approval thereon and the surviving insurer shall present the same
  to the Secretary of State at the Secretary of State’s office; (8) notwithstanding section 6004 of this title, the Commissioner may permit the formation, without surplus, of a captive insurance
  company organized as a reciprocal insurer, into which an existing captive insurance
  company may be merged for the purpose of facilitating a transaction under this section;
  provided, however, that there shall be no more than one authorized insurance company
  surviving such merger; and (9) an alien insurer may be a party to a merger authorized under subsection (a) of this
  section; provided, that the requirements for a merger between a domestic and a foreign
  insurer under section 3431 of this title shall apply to a merger between a domestic and an alien insurer under this subsection.
  Such alien insurer shall be treated as a foreign insurer under section 3431 and such
  other jurisdictions shall be the equivalent of a state for purposes of section 3431. (e) A conversion or merger under this section shall have all of the effects set forth
  in subdivisions 3430(3), (4), and (5) of this title, to the extent such effects are
  not inconsistent with the provisions of this chapter. (Added 1997, No. 100 (Adj. Sess.), § 1, eff. April 16, 1998; amended 1999, No. 38, § 16, eff. May 20, 1999; 2003, No. 55, § 7; 2009, No. 137 (Adj. Sess.), § 22, eff. May 29, 2010.)