(a) A domestic mutual insurance company, upon approval of the Commissioner, may reorganize by directly or indirectly forming an insurance holding company based upon a mutual plan. The reorganized insurance company shall continue, without interruption, its corporate existence as a stock insurance company subsidiary to the mutual insurance holding company or as a stock insurance company subsidiary to an intermediate holding company which is subsidiary to the mutual insurance holding company.
(b) The Commissioner, after a public hearing as provided in § 31-703(g)(1), if satisfied that the interests of the policyholders are properly protected and that the plan of reorganization is fair and equitable to the policyholders, shall approve the proposed plan of reorganization and may require as a condition of approval such modifications of the proposed plan of reorganization as the Commissioner finds necessary for the protection of the policyholders' interests. The Commissioner may retain consultants as provided in § 31- 703(g)(3). A reorganization pursuant to this section is subject to § 31- 703(a), (b), and (c). The Commissioner shall retain jurisdiction over a mutual insurance holding company organized pursuant to this section to assure that policyholder interests are protected.
(c) All of the initial shares of the capital stock of the reorganized insurance company shall be issued to the mutual insurance holding company. The membership interests of the policyholders of the reorganized insurance company shall become membership interests in the mutual insurance holding company.
(d) Policyholders of the reorganized insurance company shall be members of the mutual insurance holding company in accordance with the articles of incorporation and bylaws of the mutual insurance holding company. The mutual insurance holding company shall at all times own a majority of the voting shares of the capital stock of the reorganized insurance company.
(Sept. 20, 1996, D.C. Law 11-159, § 2, 43 DCR 3714; Mar. 24, 1998, D.C. Law 12-81, § 41(a), 45 DCR 745; Mar. 26, 1999, D.C. Law 12-188, § 2(a), 45 DCR 7807.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 35-3721.
Temporary Amendments of Section
For temporary (225 day) amendment of section, see § 2(a) of the Mutual Holding Company Mergers and Acquisition Temporary Amendment Act of 1998 (D.C. Law 12- 119, June 11, 1998, law notification 45 DCR 4036).
Emergency Act Amendments
For temporary addition of §§ 35-3721 through 35-3728 [1981 Ed.], see § 2-9 of the Mutual Holding Company Emergency Act of 1996 (D.C. Act 11-288, July 1, 1996, 43 DCR 3707).
For temporary addition of §§ 35-3721 through 35-3728 [1981 Ed.], see § 2-9 of the Mutual Holding Company Congressional Review Emergency Act of 1996 (D.C. Act 11-368, August 21, 1996, 43 DCR 3721).
For temporary repeal of the Mutual Holding Company Emergency Act of 1996 (D.C. Act 11-288, July 1, 1996, 43 DCR 3707), see § 12 of the Mutual Holding Company Congressional Review Emergency Act of 1996 (D.C. Act 11-368, August 21, 1996, 43 DCR 4633).
For temporary amendment of section, see § 2(a) of the Mutual Holding Company Mergers and Acquisition Emergency Amendment Act of 1998 (D.C. Act 12-295, March 4, 1998, 45 DCR 1764), § 2(a) of the Mutual Holding Company Mergers and Acquisition Congressional Review Emergency Amendment Act of 1998 (D.C. Act 12- 364, June 5, 1998, 45 DCR 3875), and § 2(a) of the Mutual Holding Company Mergers and Acquisition Second Congressional Review Emergency Amendment Act of 1998 (D.C. Act 12-550, December 18, 1998, 46 DCR 512).
Legislative History of Laws
Law 11-159, the "Mutual Holding Company Act of 1996," was introduced in Council and assigned Bill No. 11-623, which was referred to the Committee on Consumer and Regulatory Affairs. The Bill was adopted on first and second readings on May 7, 1996, and June 4, 1996, respectively. Signed by the Mayor on June 21, 1996, it was assigned Act No. 11-290 and transmitted to both Houses of Congress for its review. D.C. Law 11-159 became effective on September 20, 1996.
For legislative history of D.C. Law 12-81, see Historical and Statutory Notes following § 31-702.
Law 12-188, the "Mutual Holding Company Mergers and Acquisitions Amendment Act of 1998," was introduced in Council and assigned Bill No. 12-541, which was referred to the Committee on Consumer and Regulatory Affairs. The Bill was adopted on first and second reading on July 7, 1998, and September 22, 1998, respectively. Signed by the Mayor on October 2, 1998, it was assigned Act No. 12-459, and transmitted to both Houses of Congress for review. D.C. Law 12-188 became effective on March 26, 1999.
(a) A domestic mutual insurance company, upon the approval of the Commissioner, may reorganize by merging its policyholders' membership interests into a mutual insurance holding company formed pursuant to this section and continuing the corporate existence of the reorganizing insurance company as a stock insurance company or as a stock insurance company subsidiary to an intermediate holding company which is a subsidiary to the mutual insurance holding company.
(b) The Commissioner, after a public hearing as provided in § 31-703(g)(1), if satisfied that the interests of the policyholders are properly protected and that the merger is fair and equitable to the policyholders, shall approve the proposed merger and may require as a condition of approval such modifications of the proposed merger as the Commissioner finds necessary for the protection of the policyholders' interests. The Commissioner may retain consultants as provided in § 31-703(g)(3). A merger pursuant to this section is subject to § 31-703(a), (b), and (c). The Commissioner shall retain jurisdiction over the mutual insurance holding company organized pursuant to this section to assure that policyholder interests are protected.
(c) All of the initial shares of the capital stock of the reorganized insurance company shall be issued to the mutual insurance holding company. The membership interests of the policyholders of the reorganized insurance company shall become membership interests in the mutual insurance holding company. Policyholders of the reorganized insurance company shall be members of the mutual insurance holding company in accordance with the articles of incorporation and bylaws of the mutual insurance holding company. The mutual insurance holding company shall at all times own a majority of the voting shares of the capital stock of the reorganized insurance company. A merger of policyholders' membership interests in a mutual insurance company into a mutual insurance holding company shall be deemed to be a merger of insurance companies pursuant to § 31-703 and § 31-703 is also applicable.
(Sept. 20, 1996, D.C. Law 11-159, § 3, 43 DCR 3714; Mar. 24, 1998, D.C. Law 12-81, § 41(b), 45 DCR 745.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 35-3722.
Emergency Act Amendments
See notes to § 35-3721.
Legislative History of Laws
For legislative history of D.C. Law 11-159, see Historical and Statutory Notes following § 31-731.
For legislative history of D.C. Law 12-81, see Historical and Statutory Notes following § 31-702.
(a) A mutual insurance holding company resulting from a reorganization of a domestic mutual insurance company organized under Chapter 44 of this title shall be incorporated pursuant to Chapter 44 of this title. The articles of incorporation and any amendments to such articles of the mutual insurance holding company shall be subject to approval of the Commissioner and Corporation Counsel of the District in the same manner as those of an insurance company. The Commissioner and Corporation Counsel shall promptly examine the articles of incorporation, and if they find that the articles of incorporation comply with the law, the Commissioner and Corporation Counsel shall endorse their approval upon each of the originals, place one on file in the Commissioner's office, and return the remaining sets to the incorporators. The incorporators shall promptly file such endorsed articles of incorporation with the D.C. Office of Corporations. The endorsed articles of incorporation shall be deemed effective as of the effective date of a reorganization accomplished pursuant to this act, upon the filing of the articles with the D.C. Office of Corporations.
(b) A domestic mutual insurance holding company may amend its articles of incorporation by vote of 2/3rds of those members who vote either in person or by proxy at a lawful meeting of its members, if the notice given members included due notice of the proposal to amend. Upon adoption of an amendment, the mutual holding company shall make under its corporate seal a certificate thereof, setting forth the amendment and the date and manner of the adoption thereof, which certificate shall be executed by the mutual insurance holding company's president or vice president and secretary or assistant secretary, and acknowledged before an officer authorized to take acknowledgments. The mutual insurance holding company shall deliver the originals of the certificate to the Commissioner and Corporation Counsel. The Commissioner and Corporation Counsel shall promptly examine the certificate of amendment, and, if the Commissioner and Corporation Counsel find that the certificate and the amendment comply with law, the Commissioner and Corporation Counsel shall endorse their approvals upon each of the originals, place one on file in the Commissioner's office, and return the remaining sets to the mutual insurance holding company. The mutual insurance holding company shall promptly file such endorsed certificates of amendment with the D.C. Office of Corporations. The D.C. Office of Corporations shall accept the endorsed certificates of amendment without further review or approval. The amendment shall be effective when filed with the D.C. Office of Corporations.
(Sept. 20, 1996, D.C. Law 11-159, § 4, 43 DCR 3714; Mar. 24, 1998, D.C. Law 12-81, § 41(c), 45 DCR 745; Mar. 26, 1999, D.C. Law 12-188, § 2(b), 45 DCR 7807.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 35-3723.
Temporary Amendments of Section
For temporary (225 day) amendment of section, see § 2(b) of the Mutual Holding Company Mergers and Acquisition Temporary Amendment Act of 1998 (D.C. Law 12- 119, June 11, 1998, law notification 45 DCR 4036).
Emergency Act Amendments
See notes to § 35-3721.
For temporary amendment of section, see § 2(b) of the Mutual Holding Company Mergers and Acquisition Emergency Amendment Act of 1998 (D.C. Act 12-295, March 4, 1998, 45 DCR 1764), § 2(b) of the Mutual Holding Company Mergers and Acquisition Congressional Review Emergency Amendment Act of 1998 (D.C. Act 12- 364, June 5, 1998, 45 DCR 3875), and § 2(b) of the Mutual Holding Company Mergers and Acquisition Second Congressional Review Emergency Amendment Act of 1998 (D.C. Act 12-550, December 18, 1998, 46 DCR 512).
Legislative History of Laws
For legislative history of D.C. Law 11-158, see Historical and Statutory Notes following § 31-731.
For legislative history of D.C. Law 12-81, see Historical and Statutory Notes following § 31-702.
Law 12-188, the "Mutual Holding Company Mergers and Acquisitions Amendment Act of 1998," was introduced in Council and assigned Bill No. 12-541, which was referred to the Committee on Consumer and Regulatory Affairs. The Bill was adopted on first and second reading on July 7, 1998, and September 22, 1998, respectively. Signed by the Mayor on October 2, 1998, it was assigned Act No. 12-459, and transmitted to both Houses of Congress for review. D.C. Law 12-188 became effective on March 26, 1999.
References in Text
"This act," referred to in (a), is D.C. Law 12-188.
(a) A mutual insurance holding company is deemed to be an insurer subject to Chapter 13 of this title, and shall automatically be a party to any proceeding under Chapter 13 of this title involving an insurance company, which as a result of a reorganization pursuant to § 31-731 or § 31-732 is a subsidiary of the mutual insurance holding company. In any proceeding under Chapter 13 of this title involving the reorganized insurance company, the assets of the mutual insurance holding company are deemed to be assets of the estate of the reorganized insurance company for purposes of satisfying the claims of the reorganized insurance company's policyholders.
(b) A mutual insurance holding company shall not dissolve or liquidate without the approval of the Commissioner or as ordered by the District Court pursuant to Chapter 13 of this title.
(Sept. 20, 1996, D.C. Law 11-159, § 5, 43 DCR 3714; Mar. 24, 1998, D.C. Law 12-81, § 41(d), 45 DCR 745.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 35-3724.
Emergency Act Amendments
See notes to § 35-3721.
Legislative History of Laws
For legislative history of D.C. Law 11-159, see Historical and Statutory Notes following § 31-731.
For legislative history of D.C. Law 12-81, see Historical and Statutory Notes following § 31-702.
(a) Section 19 of the Life Insurance Act is not applicable to a reorganization or merger pursuant to this section.
(b) A membership interest in a domestic mutual insurance holding company shall not constitute a security as defined in § 31-603.
(c) A mutual holding company created under this subchapter shall have the same powers to borrow or assume liability as a mutual insurance company organized under the provisions of District law.
(d) The requirement of § 31-4421 that every director of a stock company organized under the Chapter 44 of this title shall be a stockholder thereof is not applicable to a mutual insurance holding company, any intermediate insurance holding company, or any reorganized insurance company established pursuant to this subchapter. Every director of a mutual insurance holding company, any intermediate holding company, and any reorganized insurance company shall be a policyholder of the reorganized insurance company, having purchased a policy in a manner that shall not unfairly discriminate in favor of such director, either before or after the reorganization pursuant to § 31- 731 or § 31-732.
(e)(1) A mutual insurance holding company shall not be authorized to pay dividends or make distributions to any mutual insurance holding company member except as may be expressly provided by the Commissioner.
(2) Neither the adoption nor the implementation of a plan of reorganization, or a plan of merger or other affiliation, involving a mutual insurance holding company, shall be deemed to give rise to any obligation by or on behalf of a mutual insurance company or a mutual insurance holding company to make any distribution or payment to any member or policyholder, or to any other person, fund, or entity of any nature whatsoever, in connection with the ownership, control, benefits, policies, purpose, or nature of a mutual insurance company or a mutual insurance holding company, or otherwise, except as expressly provided in a plan of reorganization, a plan of merger or other affiliation involving a mutual insurance holding company, or as expressly approved by the Commissioner.
(f) A mutual insurance holding company created under this subchapter shall exercise any other power or engage in any activity permitted to a mutual insurance company organized under District laws.
(Sept. 20, 1996, D.C. Law 11-159, § 6, 43 DCR 3714; Mar. 26, 1999, D.C. Law 12-188, § 2(c), 45 DCR 7807.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 35-3725.
Temporary Amendments of Section
For temporary (225 day) amendment of section, see § 2(c) of the Mutual Holding Company Mergers and Acquisition Temporary Amendment Act of 1998 (D.C. Law 12- 119, June 11, 1998, law notification 45 DCR 4036).
Emergency Act Amendments
See notes to § 35-3721.
For temporary amendment of section, see § 2(c) of the Mutual Holding Company Mergers and Acquisition Emergency Amendment Act of 1998 (D.C. Act 12-295, March 4, 1998, 45 DCR 1764), § 2(c) of the Mutual Holding Company Mergers and Acquisition Congressional Review Emergency Amendment Act of 1998 (D.C. Act 12- 364, June 5, 1998, 45 DCR 3876), and § 2(c) of the Mutual Holding Company Mergers and Acquisition Second Congressional Review Emergency Amendment Act of 1998 (D.C. Act 12-550, December 18, 1998, 46 DCR 512).
Legislative History of Laws
For legislative history of D.C. Law 11-159, see Historical and Statutory Notes following § 31-731.
Law 12-188, the "Mutual Holding Company Mergers and Acquisitions Amendment Act of 1998," was introduced in Council and assigned Bill No. 12-541, which was referred to the Committee on Consumer and Regulatory Affairs. The Bill was adopted on first and second reading on July 7, 1998, and September 22, 1998, respectively. Signed by the Mayor on October 2, 1998, it was assigned Act No. 12-459, and transmitted to both Houses of Congress for review. D.C. Law 12-188 became effective on March 26, 1999.
References in Text
"Section 19 of the Life Insurance Act," which is referred to in (a), is probably a reference to former § 35-418 [§ 31-4318, 2001 Ed.]; it may also be a reference to § 31-4419.
If the mutual company complies substantially and in good faith with the notice requirements of this subchapter, the mutual company's failure to give any member or members any required notice does not impair the validity of any action taken under this subchapter.
(Sept. 20, 1996, D.C. Law 11-159, § 7, 43 DCR 3714.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 35-3726.
Emergency Act Amendments
See notes to § 35-3721.
Legislative History of Laws
For legislative history of D.C. Law 11-159, see Historical and Statutory Notes following § 31-731.
Any action challenging the validity of or arising out of acts taken or proposed to be taken under this subchapter shall be commenced within 30 days after the date of the issuance of any order by the Commissioner pursuant to this subchapter. In any action challenging the validity of or arising out of acts taken or proposed to be taken under this subchapter, or charging that the directors of the mutual insurance holding company or any of its subsidiaries have acted improperly in connection with any aspect of the acts taken or proposed to be taken under this subchapter, the mutual insurance holding company or any of its subsidiaries in whose right such action is brought, or the defendant(s) shall be entitled at any state of the proceedings before final judgment to require the plaintiff(s) to give security for the reasonable expenses, including attorney fees, which may be incurred by the mutual insurance holding company or any of its subsidiaries or any other defendant(s) in connection with such action. Thereafter, the amount of such security, from time to time, may be increased or decreased in the discretion of the court having jurisdiction of such action upon a showing that the security provided has or may become inadequate or excessive.
(Sept. 20, 1996, D.C. Law 11-159, § 8, 43 DCR 3714; Apr. 9, 1997, D.C. Law 11-202, § 4, 43 DCR 6054; Mar. 26, 1999, D.C. Law 12-188, § 2(d), 45 DCR 7807.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 35-3727.
Temporary Amendments of Section
For temporary (225 day) amendment of section, see § 2(d) of the Mutual Holding Company Mergers and Acquisition Temporary Amendment Act of 1998 (D.C. Law 12- 119, June 11, 1998, law notification 45 DCR 4036).
Emergency Act Amendments
See notes to § 35-3721.
For temporary amendment of section, see § 2 of the Mutual Holding Company Congressional Adjournment Emergency Amendment Act of 1996 (D.C. Act 11-449, December 10, 1996, 43 DCR 6866), and § 2 of the Mutual Holding Company Congressional Review Emergency Amendment Act of 1997 (D.C. Act 12-6, March 3, 1997, 44 DCR 1619).
For temporary amendment of § 8 of the Mutual Holding Company Act of 1996 (D.C. Act 11-290) to conform with this section, see § 11 of the Mutual Holding Company Congressional Review Emergency Act of 1996 (D.C. Act 11-368, August 21, 1996, 43 DCR 4633).
For temporary amendment of section, see § 2 of the Mutual Holding Company Congressional Adjournment Emergency Amendment Act of 1996 (D.C. Act 11-449, December 10, 1996, 43 DCR 6866), and § 2 of the Mutual Holding Company Congressional Review Emergency Amendment Act of 1997 (D.C. Act 12-6, March 3, 1997, 44 DCR 1619).
For temporary amendment of section, see § 2(d) of the Mutual Holding Company Mergers and Acquisition Emergency Amendment Act of 1998 (D.C. Act 12-295, March 4, 1998, 45 DCR 1764), § 2(d) of the Mutual Holding Company Mergers and Acquisition Congressional Review Emergency Amendment Act of 1998 (D.C. Act 12- 364, June 5, 1998, 45 DCR 3877), and § 2(d) of the Mutual Holding Company Mergers and Acquisition Second Congressional Review Emergency Amendment Act of 1998 (D.C. Act 12-550, December 18, 1998, 46 DCR 512).
Legislative History of Laws
Law 11-202, the "Medicare Supplement Insurance Minimum Standards Amendment Act of 1996," was introduced in Council and assigned Bill No. 11-627. The Bill was adopted on first and second readings on July 3, 1996, and July 17, 1996, respectively. Signed by the Mayor on August 5, 1996, it was assigned Act No. 11-367 and transmitted to both Houses of Congress for its review. D.C. Law 11- 202 became effective on , 1996. D.C. Law 11-202 became effective on April 9, 1994.
Law 12-188, the "Mutual Holding Company Mergers and Acquisitions Amendment Act of 1998," was introduced in Council and assigned Bill No. 12-541, which was referred to the Committee on Consumer and Regulatory Affairs. The Bill was adopted on first and second reading on July 7, 1998, and September 22, 1998, respectively. Signed by the Mayor on October 2, 1998, it was assigned Act No. 12-459, and transmitted to both Houses of Congress for review. D.C. Law 12-188 became effective on March 26, 1999.
(a) Subject to applicable requirements of this subchapter and subchapter I of this chapter, a mutual insurance holding company may:
(1) Merge or consolidate with, or acquire the assets of, a mutual insurance holding company licensed pursuant to this subchapter or any similar entity organized pursuant to laws of any other state;
(2) Either alone or together with one or more intermediate stock holding companies, or other subsidiaries, directly or indirectly acquire the stock of a stock insurance company or a mutual insurance company that reorganizes under this subchapter or the law of its state of organization;
(3) Together with one or more of its stock insurance company subsidiaries, acquire the assets of a stock insurance company or a mutual insurance company;
(4) Acquire a stock insurance company through the merger of such stock insurance company with a stock insurance company or interim stock insurance company subsidiary of the mutual insurance holding company; or
(5) Acquire the stock or assets of any other person to the same extent as would be permitted for any District stock corporation or, if the mutual insurance holding company writes insurance, a mutual insurance company.
(b) A merger or acquisition pursuant to this section is subject to the applicable procedures prescribed by the District laws applying to mutual insurance companies, except as otherwise provided in this subsection. The Commissioner may retain, at the expense of the mutual insurance company, any attorneys, actuaries, accountants, and other experts not otherwise a part of the Commissioner's staff as may be reasonably necessary to assist the Commissioner in reviewing the proposed merger or acquisition.
(1) The plan and agreement for merger shall be submitted to and approved by vote of 2/3rds of those members of any domestic mutual insurance holding company involved in the merger who vote either in person or by proxy thereon at a lawful meeting called for the purpose pursuant to such reasonable notice and procedure as has been approved by the Commissioner.
(2) No such merger shall be effectuated unless in advance thereof, the plan and agreement therefor have been filed with the Commissioner and approved by him. The Commissioner shall give such approval unless he finds such plan or agreement:
(A) Is inequitable to the policyholders of any domestic insurer involved in the merger or the members of any domestic mutual insurance holding company involved in the merger; or
(B) Would substantially reduce the security of and service to be rendered to policyholders of a domestic insurer in the District.
(September 20, 1996, D.C. Law 11-159, § 8a, as added Mar. 26, 1999, D.C. Law 12-188, § 2(e), 45 DCR 7807.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 35-3727.1.
Temporary Addition of Section
For temporary (225 day) addition, see § 2(e) of the Mutual Holding Company Mergers and Acquisition Temporary Amendment Act of 1998 (D.C. Law 12-119, June 11, 1998, law notification 45 DCR 4036).
Emergency Act Amendments
For temporary addition of section, see § 2(e) of the Mutual Holding Company Mergers and Acquisition Emergency Amendment Act of 1998 (D.C. Act 12-295, March 4, 1998, 45 DCR 1764), § 2(e) of the Mutual Holding Company Mergers and Acquisition Congressional Review Emergency Amendment Act of 1998 (D.C. Act 12- 364, June 5, 1998, 45 DCR 3877), and § 2(e) of the Mutual Holding Company Mergers and Acquisition Second Congressional Review Emergency Amendment Act of 1998 (D.C. Act 12-550, December 18, 1998, 46 DCR 512).
Legislative History of Laws
Law 12-188, the "Mutual Holding Company Mergers and Acquisitions Amendment Act of 1998," was introduced in Council and assigned Bill No. 12-541, which was referred to the Committee on Consumer and Regulatory Affairs. The Bill was adopted on first and second reading on July 7, 1998, and September 22, 1998, respectively. Signed by the Mayor on October 2, 1998, it was assigned Act No. 12-459, and transmitted to both Houses of Congress for review. D.C. Law 12-188 became effective on March 26, 1999.
The Mayor, pursuant to subchapter I of Chapter 5 of Title 2, may issue rules and regulations to implement the provisions of this subchapter.
(Sept. 20, 1996, D.C. Law 11-159, § 9, 43 DCR 3714.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 35-3728.
Emergency Act Amendments
See notes to § 35-3721.
Legislative History of Laws
For legislative history of D.C. Law 11-159, see Historical and Statutory Notes following § 31-731.
