1 STATE OF OKLAHOMA
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2 2nd Session of the 59th Legislature (2024)
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3 HOUSE BILL 3090 By: Tedford
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6 AS INTRODUCED
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7 An Act relating to insurance; providing definitions;
7 providing the effect of reorganization; stating that
8 the converting mutual insurer becomes a converted
8 stock insurer; requiring certain filings; directing
9 the Insurance Commissioner to make certain amendment;
9 describing certain conversion; clarifying membership
10 of the mutual holding company; directing for the
10 acquisition and retention of certain shares of stock;
11 directing for continuation of corporate existence of
11 converting mutual insurer; directing that certain
12 intermediate stock holding companies be incorporated;
12 permitting certain issuances to certain third
13 parties; directing who shall serve as directors and
13 officers; permitting domestic mutual insurers under
14 certain circumstances to engage in conversion;
14 requiring mutual insurer to make certain filings
15 before seeking approval of plan; directing the
15 Insurance Commissioner to approve or disapprove plan
16 following certain procedure; permitting board to make
16 amendments or withdraw plan; providing requirements
17 for approval by eligible members of the converting
17 mutual insurer; mandating that the plan shall be
18 carried out; clarifying that certain information and
18 documents are confidential except in certain
19 circumstance; providing required contents of plan of
19 reorganization of a domestic mutual insurer;
20 directing the Insurance Commissioner to review plan
20 of reorganization; directing the Insurance
21 Commissioner to approve plan if certain findings are
21 made; directing the Insurance Commissioner to gauge
22 certain effects of merger; setting time frame for
22 expiration of approval of plan; permitting Insurance
23 Commissioner to retain certain experts; permitting
23 Insurance Commissioner to hold hearing; clarifying
24 that a mutual holding company is not an insurer;
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 1 prohibiting dissolution without certain approval;
1 stating that Insurance Commissioner retains certain
2 jurisdiction; clarifying that members have certain
2 rights and obligations; prohibiting transfer of
3 certain membership and rights; clarifying members are
3 not personally liable; prohibiting certain
4 assessment; clarifying assessment; clarifying
4 membership does not constitute a security;
5 establishing voting rights of members; directing that
5 meetings of members be governed in same manner as
6 domestic mutual insurer; providing required
6 provisions for the articles of incorporation of a
7 mutual holding company; directing that mutual holding
7 company be party to certain rehabilitation or
8 liquidation proceedings; permitting for concurrent
8 reorganization of domestic mutual insurer with one or
9 more mutual insurers; permitting certain
9 reorganization of certain converting companies;
10 clarifying that a mutual holding company is
10 considered an insurer; establishing that a mutual
11 holding company is party to certain proceedings;
11 prohibiting certain dissolution or liquidation;
12 permitting certain conversion; directing that the
12 Insurance Commissioner review certain plan;
13 permitting Insurance Commissioner to make certain
13 requirements; permitting the retention of qualified
14 expert; establishing Insurance Commissioner's
14 jurisdiction over certain mutual holding companies;
15 directing that certain mutual holding companies
15 follow certain organization guidelines; clarifying
16 that certain articles and amendments are subject to
16 approval of Insurance Commissioner; clarifying that
17 certain interests become interests in the mutual
17 holding company; clarifying that certain members
18 become members of the mutual holding company;
18 establishing that certain membership interest does
19 not constitute security; providing definitions;
19 directing issuance of certain initial shares of
20 capital stock; directing that mutual holding company
20 own majority of certain voting shares of capital
21 stock; permitting certain indirect ownership;
21 prohibiting certain actions by mutual holding company
22 or intermediate holding company; providing process
22 for certain violation; providing procedure for
23 approved reorganization of foreign mutual insurance
23 companies; permitting foreign mutual insurance
24 companies to remain foreign; permitting foreign
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 1 mutual insurance companies to redomesticate;
1 providing for codification; and providing an
2 effective date.
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5 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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6 SECTION 1. NEW LAW A new section of law to be codified
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7 in the Oklahoma Statutes as Section 660.1 of Title 36, unless there
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8 is created a duplication in numbering, reads as follows:
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9 As used in this act, unless the context otherwise requires:
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10 1. "Board" means the board of directors of a converting mutual
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11 insurer;
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12 2. "Conversion" means a process by which a domestic mutual
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13 insurer is converted to a domestic stock insurer as part of a
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14 reorganization;
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15 3. "Converted stock insurer" means a domestic stock insurer
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16 into which a domestic mutual insurer is converted as part of a
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17 reorganization;
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18 4. "Converting mutual insurer" means a domestic mutual insurer
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19 that is converting to a domestic stock insurer as part of a
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20 reorganization;
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21 5. "Effective date" means, with respect to a plan, the date on
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22 which the plan or a part of the plan becomes effective as set forth
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23 in an order of the Oklahoma Insurance Commissioner;
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 1 6. "Eligible member" means a member of the converting mutual
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2 insurer whose insurance policy is in force as of the date on which
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3 the board adopts the plan of reorganization or on some other date
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4 that the plan specifies as the record date and that the Insurance
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5 Commissioner approves;
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6 7. "Intermediate stock holding company" means a corporation
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7 that satisfies all of the following:
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8 a. the corporation was incorporated under Title 18 of the
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9 Oklahoma Statutes,
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10 b. a mutual holding company holds directly or indirectly
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11 at least a majority of the corporation's voting stock,
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12 and
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13 c. the corporation holds directly or indirectly at least
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14 a majority of the voting stock of a converted stock
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15 insurer;
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16 8. "Member" means:
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17 a. with respect to a domestic mutual insurer, a member as
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18 described in Section 2115 of Title 36 of the Oklahoma
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19 Statutes, or
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20 b. with respect to a mutual holding company, any holder
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21 of one or more policies of insurance, other than a
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22 policy of reinsurance, issued by the converted stock
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23 insurer resulting from a reorganization involving the
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24 organization of a mutual holding company and, if
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 1 permitted under the articles of incorporation or
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2 bylaws of the mutual holding company, may include any
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3 holder of one or more policies of insurance, other
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4 than a policy of reinsurance, issued by any other
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5 insurer that is a direct or indirect subsidiary or
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6 affiliate of the mutual holding company;
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7 9. "Membership interest" means:
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8 a. with respect to a converting mutual insurer, a member
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9 of a domestic mutual insurer shall have the same
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10 character of rights and relationship as a stockholder
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11 has toward a domestic stock insurer, with respect to
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12 the management, records, and affairs of the insurer,
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13 or
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14 b. with respect to a mutual holding company on and after
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15 the effective date of the plan, any right that a
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16 member of the mutual holding company may hold by
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17 virtue of membership in the mutual holding company
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18 arising under the articles of incorporation and bylaws
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19 of the mutual holding company, including the right to
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20 vote for the board;
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21 10. "Mutual holding company" means a corporation that is formed
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22 and existing under the laws of this state and pursuant to the
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23 reorganization of a mutual insurance company;
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24 11. "Plan" means a plan of reorganization;
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 1 12. "Reorganization" means a process by which a domestic mutual
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2 insurer is converted to a domestic stock insurer and a mutual
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3 holding company is organized; and
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4 13. "Voting stock" means:
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5 a. stock of any class or any percentage ownership
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6 interest having voting power for the election of
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7 directors, trustees or management, and
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8 b. includes stock having voting power only by reason of
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9 the happening of a contingency.
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10 SECTION 2. NEW LAW A new section of law to be codified
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11 in the Oklahoma Statutes as Section 660.2 of Title 36, unless there
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12 is created a duplication in numbering, reads as follows:
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13 A. On the effective date of a plan of reorganization, all of
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14 the following occur:
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15 1. The converting mutual insurer becomes a converted stock
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16 insurer. The amended or restated articles of incorporation and
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17 bylaws of the converting mutual insurer shall be filed with the
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18 Oklahoma Insurance Commissioner as part of the plan and shall become
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19 effective on the effective date of the conversion. The Insurance
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20 Commissioner shall amend the certificate of authority of the
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21 converting mutual insurer on the effective date of the conversion;
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22 2. All membership interests and rights in surplus of the
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23 converting mutual insurer are extinguished and the members of the
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24 converting mutual insurer become members of the mutual holding
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 1 company in accordance with this act and the articles of
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2 incorporation and bylaws of the mutual holding company;
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3 3. Any owner of one or more policies of insurance, other than a
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4 policy of reinsurance, issued by the converted stock insurer after
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5 the effective date of the conversion and, if permitted under the
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6 articles of incorporation or bylaws of the mutual holding company,
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7 any holder of one or more policies of insurance, other than a policy
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8 of reinsurance, issued by any other insurer that is a direct or
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9 indirect subsidiary or affiliate of the mutual holding company after
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10 the effective date of the reorganization becomes a member of the
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11 mutual holding company;
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12 4. The mutual holding company or, if created, an intermediate
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13 stock holding company acquires and shall retain all shares of the
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14 voting stock of the converted stock insurer;
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15 5. The mutual holding company acquires and shall retain all
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16 shares of the voting stock of any intermediate stock holding
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17 company; and
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18 6. A converted stock insurer continues the corporate existence
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19 of the converting mutual insurer. Except as provided in the plan,
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20 the conversion does not annul, modify or change any existing license
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21 or other authority or any of the existing civil actions, rights,
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22 contracts or liabilities of the converting mutual insurer. The
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23 converted stock insurer retains all property, debts and choices in
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24 action and every other interest belonging to the converting mutual
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 1 insurer before the conversion without further action needed. On and
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2 after the effective date of the conversion, the converted stock
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3 insurer may exercise all rights and powers conferred and shall
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4 perform all duties imposed by law on insurers writing the classes of
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5 insurance written by the converted stock insurer, shall retain the
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6 rights and contracts of the converting mutual insurer existing
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7 immediately before the conversion and shall be subject to all
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8 obligations and liabilities of the converting mutual insurer
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9 existing immediately before the conversion, subject to the terms of
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10 the plan.
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11 B. Any intermediate stock holding company created at the time
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12 of reorganization to hold the stock of the converting mutual insurer
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13 shall be incorporated under Title 18 of the Oklahoma Statutes and
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14 may engage in any business or activity permitted by Title 18 of the
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15 Oklahoma Statutes.
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16 C. The converted stock insurer and any intermediate stock
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17 holding company may issue to third parties debt securities, stock
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18 other than voting stock, and voting stock if all of the following
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19 apply:
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20 1. No shares of stock representing a majority of the voting
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21 power of all issued and outstanding voting stock of either the
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22 converted stock insurer or the intermediate stock holding company,
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23 if any, are issued to third parties; and
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 1 2. A majority of the voting stock of the converted stock
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2 insurance company is at all times owned by the mutual holding
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3 company or by the intermediate stock holding company, a majority of
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4 whose voting stock is held by the mutual holding company, and such
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5 majority interest in the converted stock insurance company and any
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6 intermediate stock holding company is not conveyed, transferred,
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7 assigned, pledged, subjected to a security interest or lien, placed
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8 in a voting trust, encumbered or otherwise hypothecated or alienated
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9 by the mutual holding company or by the intermediate stock holding
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10 company. Any conveyance, transfer, assignment, pledge, security
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11 interest, lien, placement in a voting trust, encumbrance or
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12 hypothecation or alienation of, in or on a majority of the voting
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13 shares of the converted stock insurer or the intermediate stock
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14 holding company in violation of this paragraph is void in inverse
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15 chronological order as to the shares necessary to constitute a
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16 majority of such voting stock.
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17 D. Unless otherwise specified in the plan, the directors and
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18 officers of the converting mutual insurer shall serve as directors
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19 and officers of the mutual holding company, any intermediate stock
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20 holding company and the converted stock insurer until new directors
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21 and officers are elected.
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22 SECTION 3. NEW LAW A new section of law to be codified
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23 in the Oklahoma Statutes as Section 660.3 of Title 36, unless there
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24 is created a duplication in numbering, reads as follows:
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 1 A. A domestic mutual insurer may engage in a conversion as part
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2 of a reorganization as a mutual holding company, only if the board
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3 passes a resolution that the reorganization is fair and equitable to
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4 the policyholders an