Reorganization into a Mutual Insurance Holding Company System
A domestic mutual insurance company – excluding those that issued assessable policies before July 1, 1997, and already held a Florida certificate of authority on that date – may restructure into a mutual insurance holding company system. This system must include a mutual insurance holding company and one or more companies it controls,potentially utilizing intermediate stock holding companies and further subsidiaries.
This reorganization can be achieved through various methods, including:
* establishing new companies
* Amending or rewriting existing company documents (articles of incorporation and bylaws)
* Transferring assets and liabilities between companies
* Issuing, acquiring, or transferring company stock
* Merging or consolidating companies
Following the reorganization’s approval, the mutual insurance holding company must maintain the power – directly or indirectly – to control the majority of votes for electing the board of directors of each controlled subsidiary and any intermediate stock holding company.
Initially, all shares of a reorganized subsidiary insurance company must be issued to either the mutual insurance holding company or an intermediate holding company fully owned by it. The subsidiary can issue additional shares later, provided the mutual insurance holding company (directly or through intermediate companies) retains majority voting control.
Policyholders of the subsidiary insurance company will become members of the mutual insurance holding company, adhering to the holding company’s articles of incorporation and bylaws. Specifically, policyholders of the original mutual insurer will be members. Policyholders of other subsidiaries will only become members if:
* Their subsidiary was a mutual insurer that merged with the holding company under Florida Statute 628.715; or
* They were members of the original mutual insurer when an affiliated stock insurance company assumed the original insurer’s policies as part of a conversion process.
After the initial formation, membership rules will be governed by Florida Statute 628.727.
History: Originally enacted as s. 1, ch. 97-216; amended by s. 2, ch. 2003-76; and s. 27, ch. 2004-374.
