| (a) Approval of a plan of conversion or reinsurance under Article 14.61 must be obtained from the commissioner of insurance prior to the time any such plan is submitted to the membership of any company or association for their ratification or rejection. When the commissioner of insurance has entered a written order approving such plan of conversion or reinsurance or approving such plan as amended to meet the requirements of the commissioner of insurance as provided by law, the plan of conversion or reinsurance shall be submitted to the members of the company or association affected for their ratification or rejection, and such submission shall be made in the manner provided by law and these sections. (b) The following procedure shall be followed in submitting a plan of conversion or reinsurance to the commissioner of insurance. (1) A complete outline of the plan, together with all exhibits necessary to show compliance with the
applicable statutes, which outline shall be duly verified and submitted to the commissioner of insurance in writing in quintuplicate (five copies). (2) The plan submitted shall set out all facts pertinent thereto. Approval of the plan may be given by the commissioner of insurance only after a public hearing held following due notice and only after it has been established that: (A) the plan is in conformity with the Insurance Code, Article 14.61, and other applicable statutes and in conformity with these sections; and (B) the written application to the commissioner of insurance has been authorized by proper action of the board of directors of each company or association involved, and that a true and correct copy of the minutes of the meetings of such boards of directors, duly certified, be submitted with the applications. (3) As exhibits attached to the written application, the following information and
documents in blank form must be furnished on behalf of each mutual assessment company or association involved. (A) A copy of the form of notice of each membership meeting, which notice is to be sent to the policyholders to be affected by the proposed plan of conversion or reinsurance. The form of notice must provide the following: (i) the date, hour, and place of the meeting of the membership; (ii) the name of the company or association and the date of the notice, such notice to bear the signature (actual or facsimile) of the secretary or other appropriate officer of such company or association; (iii) an accurate summary of the plan and the reasons for the conversion or reinsurance; and (iv) a list of enclosures, which shall include a copy of the proposed reinsurance agreement if reinsurance is involved, a copy of the proposed certificate or assumption, and a copy of the ballot to be used in
voting by mail. (B) The form of the affidavit to be executed by the secretary (verified as required by law) showing that the notice of the membership meeting was mailed to each member at the last known address of said member as reflected by the records of such company or association, and the date of the mailing of the notice. (C) A statement or outline giving the proposed procedure to be followed at the membership meeting of the mutual assessment companies or associations affected, which statement or outline shall provide: (i) a tabulation giving the number of members who appear at the membership meeting in person; (ii) a tabulation giving the number of members represented at the membership meeting by a special proxy; (iii) a tabulation giving the number of members voting by mail ballot; (iv) a statement that the procedure, purpose, and probable effect of such reinsurance
or conversion will be fully explained to the members at the meeting; (v) a copy of the proposed resolution or motion to be adopted by the members approving such plan; (vi) provisions that the minutes of such membership meeting will be duly recorded and signed by the president or vice-president and the secretary or an assistant secretary of such company or association, and that such minutes will reflect the date, time, and place of such membership meeting and the matters considered and action taken at such meeting; (vii) a statement of any other action proposed to be taken at such membership meeting; (viii) a copy of the proposed resolution or motion to be submitted to the members dissolving or converting the mutual assessment company or association and authorizing the surrender of its articles of incorporation or articles of association and its certificate of authority to the commissioner of insurance for
cancellation; (ix) if the plan involves a conversion, copies of the proposed articles of incorporation and all other papers required to effect the organization of a company under the Insurance Code, Chapter 11, and under the applicable provisions of the Texas Business Corporation Act. (4) If the plan involves reinsurance, the following must be furnished by the assuming company as exhibits attached to the written application: (A) the minutes of the meeting of the board of directors of the assuming company approving the plan of reinsurance and authorizing the officers of such company to enter into the reinsurance agreement involved in the plan; (B) a copy of the reinsurance agreement involved in such plan, which agreement shall comply with the provisions of the Insurance Code, Article 14.16, shall state the date, hour, and minute when the agreement is to become effective, shall provide that the assuming company
will assume all of the liabilities of the mutual assessment companies or associations being reinsured including making provisions for proper credit for advance premiums paid, and that the mutual assessment companies or associations being reinsured shall be dissolved and their certificates of authority and articles of association or articles of incorporation shall be surrendered to the commissioner of insurance for cancellation upon consummation of the plan; and (C) a financial statement setting forth the current financial condition of the legal reserve life insurance company, including therein information as to all liabilities, contingent or otherwise. (5) Whether such plan involves reinsurance or conversion, the following, in blank form, must be furnished as exhibits attached to the written application: (A) the proposed certificate of assumption or policy, which shall be in conformity with the provisions of the Insurance Code,
Chapters 3 and 11, as applicable, and shall not contain any provisions prohibited by the Insurance Code, Chapter 3; (B) the form of the letter of transmittal to be sent with the assumption certificate or policy, in which letter the member shall be furnished a copy of the plan, or, in lieu thereof, an accurate summary of the plan and the reasons for the conversion or reinsurance and advised that the member may refuse to accept the assumption certificate or policy, that he or she may make request for his actuarial portion as of a certain date within 60 days following the date of conversion or reinsurance (if notice is not sent to the policyholder on the effective date of the conversion or reinsurance, the policyholder will have 60 days from the date the notice is mailed to request the actuarial portion) and that, upon request by the member to the association or company, he or she shall be advised as to the actuarial portion of the mortuary fund as of a certain date to
which he or she may be entitled; and (C) a current statement of the condition of the affairs of each mutual assessment company or association affected by such reinsurance or conversion, which statement shall set forth the following minimum facts: (i) the number of bona fide, premium paying members; (ii) the amount of the mortuary fund balance; (iii) the amount of the expense fund balance; and (iv) a list of all unpaid claims and liabilities, contingent or otherwise. (c) Following the issuance by the commissioner of insurance of a written order approving such plan of conversion or reinsurance, or approving such plan as amended to meet the requirements of the commissioner of insurance as provided by law, notice of the special membership meeting to be held by each mutual assessment company or association involved shall be mailed to the respective members not less than 15 days
nor more than 50 days prior to the date such meeting is to be held, but in no event shall such meeting be held until notice has been given in accordance with the constitution and bylaws of the respective mutual assessment company or association. (1) The following items shall be enclosed with the notice of meeting sent to each member of all the mutual assessment companies or associations affected by such plan: (A) an exact copy of the proposed reinsurance agreement; (B) an exact copy of the proposed certificate of assumption; and Cont'd... |
