ENROLLED HB 0235, Engrossed 1 2003 Legislature
1	A bill to be entitled
2	An act relating to mutual insurance holding companies;
3	amending s. 628.703, F.S.; providing a definition;
4	amending ss. 628.709 and 628.727, F.S.; revising
5	membership criteria of mutual insurance holding companies;
6	amending ss. 628.729, 628.730, and 628.733, F.S.;
7	specifying basis of distributive shares and corporate
8	equity of members under certain circumstances; providing
9	an effective date.
10
11	Be It Enacted by the Legislature of the State of Florida:
12
13	Section 1. Subsection (4) is added to section 628.703,
14	Florida Statutes, to read:
15	628.703 Definitions.--For purposes of this part:
16	(4) "Paid premiums” means all premiums paid for insurance
17	by a member of a mutual insurance holding company to a
18	subsidiary insurance company.
19	Section 2. Subsection (2) of section 628.709, Florida
20	Statutes, is amended to read:
21	628.709 Formation of a mutual insurance holding company.--
22	(2) All of the initial shares of the capital stock of the
23	insurance company which reorganized as a subsidiary insurance
24	company shall be issued either to the mutual insurance holding
25	company, or to an intermediate holding company which is wholly
26	owned by the mutual insurance holding company. This restriction
27	does not preclude the subsequent issuance of additional shares
28	of stock by the subsidiary insurance company so long as the
29	mutual insurance holding company at all times owns directly or
30	through one or more intermediate holding companies, a majority
31	of the voting shares of the capital stock of the subsidiary
32	insurance company. The membership interests of the policyholders
33	of the subsidiary insurance company shall become membership
34	interests in the mutual insurance holding company. Policyholders
35	of the subsidiary insurance company which was formerly the
36	mutual insurer shall be members of the mutual insurance holding
37	company in accordance with the articles of incorporation and
38	bylaws of the mutual insurance holding company. At the time of
39	formation,policyholders of any other subsidiary insurance
40	company of the mutual insurance holding company shall not be
41	members of the mutual insurance holding company unless they are
42	policyholders of a subsidiary which was a mutual insurer which
43	merged with the holding company pursuant to s. 628.715.
44	Subsequent to formation, membership shall be governed by s.
45	628.727.
46	Section 3. Subsection (1) of section 628.727, Florida
47	Statutes, is amended to read:
48	628.727 Membership.--
49	(1) Membership in a mutual insurance holding company shall
50	be determined in accordance with the mutual insurance holding
51	company's articles of incorporation and bylaws and shall be
52	based upon each member holding a policy of insurance with a
53	subsidiary insurance company or a health maintenance contract
54	with a subsidiary health maintenance organizationservice
55	corporation. Group certificateholders may also be members of the
56	mutual insurance holding company if specified in the bylaws.
57	Section 4. Subsection (2) of section 628.729, Florida
58	Statutes, is amended to read:
59	628.729 Member's share of assets on voluntary
60	dissolution.--
61	(1) Upon any voluntary dissolution of a domestic mutual
62	insurance holding company, its assets remaining after discharge
63	of its indebtedness, if any, and expenses of administration,
64	shall be distributed to existing persons who were its members at
65	any time within the 3-year period preceding the date such
66	liquidation was authorized or ordered, or date of last
67	termination of the insurer's certificate of authority, whichever
68	date is earlier; except, if the department has reason to believe
69	that those in charge of the management of the mutual insurance
70	holding company have caused or encouraged the reduction of the
71	number of members of the insurer in anticipation of liquidation
72	and for the purpose of reducing thereby the number of persons
73	who may be entitled to share in distribution of the insurer's
74	assets, the department may enlarge the 3-year qualification
75	period by such additional time as the department may deem to be
76	reasonable.
77	(2) The distributive share of each such member shall be
78	determined:
79	(a) For domestic mutual insurance holding companies owning
80	solely life and health insurance subsidiaries,by a formula
81	based upon such reasonable classifications of members as the
82	department may approve.
83	(b) For all other domestic insurance holding companies,
84	based upon the ratio that the total amount of paid premiums paid
85	by such member for policies of insurance during the 3-year
86	period or part of such period specified in subsection (1) during
87	which such recipient was a member bears to the total amount of
88	paid premiums paid by all members entitled to receive a
89	distributive share as a result of such dissolution during such
90	entire 3-year period and upon such reasonable classifications of
91	members as the department may approve, unless the domestic
92	mutual insurance holding company submits another fair formula
93	that is approved by the department.
94	Section 5. Subsection (2) of section 628.730, Florida
95	Statutes, is amended to read:
96	628.730 Merger with intermediate holding company.--
97	(2) The distributive share of each such member shall be
98	determined:
99	(a) For domestic mutual insurance holding companies owning
100	solely life and health insurance subsidiaries,by a formula
101	based upon such reasonable classifications of members as the
102	department may approve.
103	(b) For all other domestic insurance holding companies,
104	based upon the ratio that the total amount of paid premiums paid
105	by such member for policies of insurance during the 3-year
106	period or part of such period preceding the date of such merger
107	during which such recipient was a member bears to the total
108	amount of paid premiums paid by all members entitled to receive
109	a distributive share as a result of such merger during such
110	entire 3-year period and upon such reasonable classifications of
111	members as the department may approve, unless the domestic
112	mutual insurance holding company submits another fair formula
113	that is approved by the department.
114	Section 6. Paragraph (b) of subsection (2) of section
115	628.733, Florida Statutes, is amended to read:
116	628.733 Converting mutual insurance holding company.--
117	(2) The department shall not approve any such plan and
118	procedure unless:
119	(b) The corporate equity of each member is determinable:
120	1. For domestic mutual insurance holding companies owning
121	solely life and health insurance subsidiaries,under a fair
122	formula approved by the department, which equity shall be based
123	upon not more than the company's net assets.
124	2. For all other domestic insurance holding companies,
125	based upon the ratio that the total amount of paid premiums paid
126	by such member for policies of insurance during the 3-year
127	period or part of such period specified in paragraph (c) during
128	which such recipient was a member bears to the total amount of
129	premiums paid by all members entitled to receive equity as a
130	result of such conversion during such entire 3-year period and
131	upon such reasonable classifications of members as the
132	department may approve, unless the domestic mutual insurance
133	holding company submits another fair formula that is approved by
134	the department. Such equity shall be based upon not more than
135	the company’s net assets.
136	(c) The persons entitled to participate in the
137	distribution of stock shall include all current members and all
138	existing persons who had been members within 3 years prior to
139	the date such plan was submitted to the department.
140	Section 7. This act shall take effect upon becoming a law.