Senate Bill 0182c1

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    Florida Senate - 2000                            CS for SB 182

    By the Committee on Banking and Insurance; and Senator
    Diaz-Balart




    311-1114A-00

  1                      A bill to be entitled

  2         An act relating to insurance; amending s.

  3         628.231, F.S.; prescribing factors that

  4         directors of a domestic insurer may consider in

  5         carrying out their duties; amending s. 628.715,

  6         F.S.; authorizing a mutual insurance holding

  7         company to merge or consolidate with or acquire

  8         the assets of a foreign mutual insurance

  9         company; authorizing the Department of

10         Insurance to retain certain consultants for

11         merger evaluation purposes; requiring certain

12         companies to pay consultant costs; amending s.

13         628.723, F.S.; prescribing factors that

14         directors of a mutual insurance holding company

15         may consider in carrying out their duties;

16         amending s. 628.729, F.S.; correcting a

17         reference to the qualification period for

18         distribution of assets to members of a domestic

19         mutual insurance company upon voluntary

20         dissolution; providing an effective date.

21

22  Be It Enacted by the Legislature of the State of Florida:

23

24         Section 1.  Subsection (5) is added to section 628.231,

25  Florida Statutes, to read:

26         628.231  Directors; number, election.--

27         (5)  In discharging their duties, directors may

28  consider such factors as they consider to be relevant,

29  including the long-term prospects and interests of the

30  corporation and its shareholders and the social, economic,

31  legal, or other effects of any action on the employees,

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    Florida Senate - 2000                            CS for SB 182
    311-1114A-00




  1  suppliers, or policyholders of the corporation or its

  2  subsidiaries, the communities and society in which the

  3  corporation or its subsidiaries operate, and the economy of

  4  the state and nation. The directors may also consider the

  5  short-term and long-term interests of the insurer, including

  6  benefits that may accrue to the insurer from its long-term

  7  plans, and the possibility that these interests may be best

  8  served by the continued independence of the insurer; the

  9  resources, intent, and conduct, past, stated, and potential,

10  of any person seeking to acquire control of the insurer; and

11  any other relevant factors.

12         Section 2.  Subsection (1) and paragraph (b) of

13  subsection (2) of section 628.715, Florida Statutes, are

14  amended to read:

15         628.715  Merger and acquisitions.--Subject to

16  applicable requirements of this chapter, a mutual insurance

17  holding company may:

18         (1)(a)  Merge or consolidate with, or acquire the

19  assets of, a mutual insurance holding company licensed

20  pursuant to this act or any similar entity organization

21  pursuant to laws of any other state;

22         (b)  Either alone or together with one or more

23  intermediate stock holding companies, or other subsidiaries,

24  directly or indirectly acquire the stock of a stock insurance

25  company or a mutual insurance company that reorganizes under

26  this act or the law of its state of organization;

27         (c)  Together with one or more of its stock insurance

28  company subsidiaries, acquire the assets of a stock insurance

29  company or a mutual insurance company;

30         (d)  Acquire a stock insurance company through the

31  merger of such stock insurance subsidiary with a stock

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    Florida Senate - 2000                            CS for SB 182
    311-1114A-00




  1  insurance company or interim stock insurance company

  2  subsidiary of the mutual insurance holding company; or

  3         (e)  Acquire the stock or assets of any other person to

  4  the same extent as would be permitted for any not-for-profit

  5  corporation under chapter 617 or, if the mutual insurance

  6  holding company writes insurance, a mutual insurance company;

  7  or.

  8         (f)  Merge or consolidate with, or acquire the assets

  9  of, a foreign mutual insurance company that redomesticates

10  pursuant to s. 628.520. The members of the foreign mutual

11  insurance company may approve in a contemporaneous vote both

12  the redomestication plan and the agreement for merger and

13  reorganization as provided in subsection (2).

14         (2)  A reorganization pursuant to this section is

15  subject to the applicable procedures prescribed by the laws of

16  this state applying to corporations formed for profit, except

17  as otherwise provided in this subsection.

18         (b)  No such merger shall be effectuated unless, in

19  advance thereof, the plan and agreement therefor have been

20  filed with the department and approved by it. The department

21  may retain outside consultants to evaluate each merger. The

22  domestic mutual insurance holding company shall pay reasonable

23  costs associated with retaining such consultants. Such

24  payments shall be made directly to the consultant. The

25  department shall give such approval unless it finds that such

26  plan or agreement:

27         1.  Is inequitable to the policyholders of any domestic

28  insurer involved in the merger or the members of any domestic

29  mutual insurance holding company involved in the merger; or

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    Florida Senate - 2000                            CS for SB 182
    311-1114A-00




  1         2.  Would substantially reduce the security of and

  2  service to be rendered to policyholders of a domestic insurer

  3  in this state.

  4         Section 3.  Subsection (5) is added to section 628.723,

  5  Florida Statutes, to read:

  6         628.723  Directors; number; election.--

  7         (5)  In discharging their duties, directors may

  8  consider such factors as they consider to be relevant,

  9  including the long-term prospects and interests of the

10  corporation and its shareholders and the social, economic,

11  legal, or other effects of any action on the employees,

12  suppliers, or policyholders of the corporation or its

13  subsidiaries, the communities and society in which the

14  corporation or its subsidiaries operate, and the economy of

15  the state and nation. The directors may also consider the

16  short-term and long-term interests of the insurer, including

17  benefits that may accrue to the insurer from its long-term

18  plans, and the possibility that these interests may be best

19  served by the continued independence of the insurer; the

20  resources, intent, and conduct, past, stated, and potential,

21  of any person seeking to acquire control of the insurer; and

22  any other relevant factors.

23         Section 4.  Subsection (1) of section 628.729, Florida

24  Statutes, is amended to read:

25         628.729  Member's share of assets on voluntary

26  dissolution.--

27         (1)  Upon any voluntary dissolution of a domestic

28  mutual insurance holding company, its assets remaining after

29  discharge of its indebtedness, if any, and expenses of

30  administration, shall be distributed to existing persons who

31  were its members at any time within the 3-year period

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    Florida Senate - 2000                            CS for SB 182
    311-1114A-00




  1  preceding the date such liquidation was authorized or ordered,

  2  or date of last termination of the insurer's certificate of

  3  authority, whichever date is earlier; except, if the

  4  department has reason to believe that those in charge of the

  5  management of the mutual insurance holding company have caused

  6  or encouraged the reduction of the number of members of the

  7  insurer in anticipation of liquidation and for the purpose of

  8  reducing thereby the number of persons who may be entitled to

  9  share in distribution of the insurer's assets, the department

10  may enlarge the 3-year 5-year qualification period by such

11  additional time as the department may deem to be reasonable.

12         Section 5.  This act shall take effect July 1, 2000.

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14          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
15                         Senate Bill 182

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17  Authorizes the Department of Insurance to retain outside
    consultants to evaluate each merger of a domestic mutual
18  insurance holding company and a foreign mutual insurance
    company, for which the domestic mutual insurance holding
19  company would be required to pay reasonable costs.

20  Amends s. 627.729, F.S., to correct a reference in the current
    law related to dissolution of a domestic mutual insurance
21  holding company. Upon dissolution, the assets are required to
    be distributed to persons who were members at any time within
22  the 3-year period prior to the dissolution. However, a
    provision of the law incorrectly refers to a "5-year"
23  qualification period, which the bill corrects by changing the
    reference to a "3-year" qualification period.
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