SB 356                                           First Engrossed
       
       
       
       
       
       
       
       
       2013356e1
       
    1                        A bill to be entitled                      
    2         An act relating to mutual insurance corporations;
    3         amending ss. 627.971 and 627.972, F.S.; providing that
    4         such corporations include licensed mutual insurers as
    5         well as licensed stock insurers; amending s.
    6         617.01401, F.S.; revising the definition of the term
    7         “distribution” to exclude a not-for-profit insurance
    8         company subsidiary from ch. 617, F.S., relating to
    9         not-for-profit corporations; amending s. 628.371,
   10         F.S.; providing that certain dividends or
   11         distributions by a not-for-profit insurance company to
   12         its mutual insurance holding company which meet
   13         certain requirements are permitted under part I of ch.
   14         628, F.S., relating to stock and mutual insurers;
   15         amending s. 628.703, F.S.; amending definitions
   16         relating to mutual insurance holding companies to add
   17         provisions for not-for-profit insurance companies and
   18         nonprofit health care plans; amending s. 628.707,
   19         F.S.; conforming terminology; amending s. 628.715,
   20         F.S.; adding not-for-profit insurance companies and
   21         nonprofit health plans to provisions relating to
   22         mergers and acquisitions; amending s. 628.727, F.S.;
   23         authorizing the articles of incorporation and bylaws
   24         of a mutual insurance holding company to restrict
   25         certain rights of policyholders to receive
   26         distributions; providing effective dates.
   27  
   28  Be It Enacted by the Legislature of the State of Florida:
   29  
   30         Section 1. Subsection (6) of section 627.971, Florida
   31  Statutes, is amended to read:
   32         627.971 Definitions.—As used in this part:
   33         (6) “Financial guaranty insurance corporation” means a
   34  stock or mutual insurer licensed to transact financial guaranty
   35  insurance business in this state.
   36         Section 2. Subsection (1) of section 627.972, Florida
   37  Statutes, is amended to read:
   38         627.972 Organization; financial requirements.—
   39         (1) A financial guaranty insurance corporation must be
   40  organized and licensed in the manner prescribed in this code for
   41  stock or mutual property and casualty insurers except that:
   42         (a) A corporation organized to transact financial guaranty
   43  insurance may, subject to the provisions of this code, be
   44  licensed to transact:
   45         1. Residual value insurance, as defined by s. 624.6081;
   46         2. Surety insurance, as defined by s. 624.606;
   47         3. Credit insurance, as defined by s. 624.605(1)(i); and
   48         4. Mortgage guaranty insurance as defined in s. 635.011 if,
   49  provided that the provisions of chapter 635 are met.
   50         (b)1. Prior to the issuance of a license, a corporation
   51  must submit to the office for approval, a plan of operation
   52  detailing:
   53         a. The types and projected diversification of guaranties to
   54  be issued;
   55         b. The underwriting procedures to be followed;
   56         c. The managerial oversight methods;
   57         d. The investment policies; and
   58         e. Any other matters prescribed by the office.;
   59         2. An insurer that which is writing only the types of
   60  insurance allowed under this part on July 1, 1988, and otherwise
   61  meets the requirements of this part, is exempt from the
   62  requirements of this paragraph.
   63         (c) An insurer transacting financial guaranty insurance is
   64  subject to all provisions of this code which that are applicable
   65  to property and casualty insurers to the extent that those
   66  provisions are not inconsistent with this part.
   67         (d) The investments of an insurer transacting financial
   68  guaranty insurance in any entity insured by the corporation may
   69  not exceed 2 percent of its admitted assets as of the end of the
   70  prior calendar year.
   71         (e) An insurer transacting financial guaranty insurance may
   72  only assume those lines of insurance for which it is licensed to
   73  write direct business.
   74         Section 3. Subsection (7) of section 617.01401, Florida
   75  Statutes, is amended to read:
   76         617.01401 Definitions.—As used in this chapter, the term:
   77         (7) “Distribution” means the payment of a dividend or any
   78  part of the income or profit of a corporation to its members,
   79  directors, or officers.
   80         (a) A donation or transfer of corporate assets or income to
   81  or from another not-for-profit corporation qualified as tax
   82  exempt under s. 501(c) of the Internal Revenue Code or a
   83  governmental organization exempt from federal and state income
   84  taxes, if such corporation or governmental organization is a
   85  member of the corporation making such donation or transfer, is
   86  not a distribution for purposes of this chapter.
   87         (b) A dividend or distribution by a not-for-profit
   88  insurance company subsidiary to its mutual insurance holding
   89  company organized under part III of chapter 628, directly or
   90  indirectly through one or more intermediate holding companies
   91  authorized under that part, is not a distribution for the
   92  purposes of this chapter.
   93         Section 4. Subsection (5) is added to section 628.371,
   94  Florida Statutes, to read:
   95         628.371 Dividends to stockholders.—
   96         (5) A dividend or distribution by a not-for-profit
   97  insurance company subsidiary to its mutual insurance holding
   98  company, directly or indirectly through one or more intermediate
   99  holding companies, pursuant to part III of this chapter, which
  100  meets the requirements of this section and which applies to a
  101  stock insurer, is permitted under this section.
  102         Section 5. Section 628.703, Florida Statutes, is reordered
  103  and amended to read:
  104         628.703 Definitions.—For purposes of this part:
  105         (2)(1) “Mutual insurance holding company” means an
  106  incorporated entity without permanent capital stock which that
  107  is organized under this part and whose members are determined in
  108  accordance with this part.
  109         (5)(2) “Subsidiary insurance company” means:
  110         (a) A stock insurance company, of which the majority of the
  111  voting shares of the capital stock of which are at all times
  112  owned by a mutual insurance holding company. As used in For
  113  purposes of this part, the term “majority of the voting shares
  114  of the capital stock” means the shares of the capital stock of
  115  such company which carry the right to cast a majority of the
  116  votes entitled to be cast by all of the outstanding shares of
  117  the capital stock for the election of directors. The ownership
  118  of a majority of the voting shares of the capital stock of a
  119  former mutual reorganized insurance company which are required
  120  by this part to be at all times owned by a mutual insurance
  121  holding company includes indirect ownership through one or more
  122  intermediate holding companies. However, indirect ownership
  123  through one or more intermediate holding companies may shall not
  124  result in a mutual insurance holding company owning less than
  125  the equivalent of a majority of the voting shares of the capital
  126  stock of the former mutual reorganized insurance company; or
  127         (b) A not-for-profit insurance company or nonprofit health
  128  care plan, of which the majority of the voting membership
  129  interests are at all times owned by a mutual insurance holding
  130  company, which entitles the mutual insurance holding company to
  131  elect the board of directors of the not-for-profit insurance
  132  company or nonprofit health care plan. This also applies to the
  133  indirect ownership of the not-for-profit insurance company or
  134  nonprofit health care plan through one or more intermediate
  135  holding companies. A not-for-profit insurance company subsidiary
  136  resulting from reorganization into a not-for-profit mutual
  137  insurance company under this part, or which is subsequently
  138  organized as an additional subsidiary insurance company of the
  139  holding company, is subject to the Florida Insurance Code and
  140  chapter 617 applies to the organization of such company.
  141         (1)(3) “Intermediate holding company” means:
  142         (a) A holding company that which is a subsidiary of a
  143  mutual insurance holding company, and which directly or through
  144  a subsidiary intermediate holding company owns a majority of the
  145  voting shares of the capital stock of one or more subsidiary
  146  insurance companies; or
  147         (b) A holding company that is a not-for-profit corporation
  148  and a subsidiary of a mutual insurance holding company, of which
  149  a majority of the voting membership interests entitled to elect
  150  the board of directors of such corporation are owned, directly
  151  or through a subsidiary intermediate holding company, by the
  152  mutual insurance holding company.
  153         (3) “Nonprofit health care plan” means a not-for-profit
  154  domestic or foreign hospital or medical and surgical service
  155  plan or corporation that is licensed in one or more states,
  156  issues no capital stock, and is engaged in the business of
  157  providing prepaid indemnity or health care benefits.
  158         (4) “Paid premiums” means all premiums paid for insurance
  159  by a member of a mutual insurance holding company to a
  160  subsidiary insurance company.
  161         Section 6. Subsection (5) of section 628.707, Florida
  162  Statutes, is amended to read:
  163         628.707 Applicability of general corporation statutes.—The
  164  applicable statutes of this state relating to the powers and
  165  procedures of domestic private corporations formed for profit
  166  shall apply to domestic mutual insurance holding companies,
  167  except:
  168         (5) In the case of the reorganization of a any mutual
  169  insurance company organized as a not-for-profit nonprofit
  170  corporation under chapter 617, a mutual insurance holding
  171  company organized under this part shall be deemed to be a not
  172  for-profit nonprofit corporation.
  173         Section 7. Subsection (1) of section 628.715, Florida
  174  Statutes, is amended to read:
  175         628.715 Merger and acquisitions.—Subject to applicable
  176  requirements of this chapter, a mutual insurance holding company
  177  may:
  178         (1)(a) Merge or consolidate with, or acquire the assets of,
  179  a mutual insurance holding company licensed pursuant to this
  180  part act or any similar entity organization pursuant to laws of
  181  any other state;
  182         (b) Either alone or together with one or more intermediate
  183  stock holding companies, or other subsidiaries, directly or
  184  indirectly acquire the stock of a stock insurance company or a
  185  mutual insurance company that reorganizes under this part act or
  186  the law of its state of organization;
  187         (c) Together with one or more of its stock insurance
  188  company subsidiaries, acquire the assets of a stock insurance
  189  company or a mutual insurance company, or the membership
  190  interests of a not-for-profit insurance company or nonprofit
  191  health care plan;
  192         (d) Acquire a stock insurance company through the merger of
  193  the such stock insurance subsidiary with a stock insurance
  194  company or interim stock insurance company subsidiary of the
  195  mutual insurance holding company, or acquire a not-for-profit
  196  insurance company or nonprofit health care plan through the
  197  merger of such entities with a mutual insurance company, or with
  198  a not-for-profit insurance company subsidiary of the mutual
  199  insurance holding company or intermediate holding company;
  200         (e) Acquire the stock or assets of any other person to the
  201  same extent as would be permitted for any not-for-profit
  202  corporation under chapter 617 or, if the mutual insurance
  203  holding company writes insurance, a mutual insurance company;
  204         (f) Jointly, with a domestic or foreign mutual insurance
  205  company that which redomesticates pursuant to s. 628.520, file
  206  an application with the office, pursuant to the provisions of
  207  this part, to merge the domestic or foreign mutual insurance
  208  company policyholder’s membership interests into the mutual
  209  insurance holding company. The reorganizing mutual insurance
  210  company may merge with the mutual insurance holding company’s
  211  stock subsidiary or continue its corporate existence as a
  212  domestic stock insurance company subsidiary. The members of the
  213  foreign mutual insurance company may approve in a
  214  contemporaneous vote both the redomestication plan and the
  215  agreement for merger and reorganization; or
  216         (g) Merge or consolidate with, or acquire the assets of, a
  217  domestic or foreign reciprocal insurance company, a group self
  218  insurance fund, or any other similar entity.
  219         Section 8. Subsection (1) of section 628.727, Florida
  220  Statutes, is amended to read:
  221         628.727 Membership.—
  222         (1) Membership in a mutual insurance holding company shall
  223  be determined in accordance with the mutual insurance holding
  224  company’s articles of incorporation and bylaws and shall be
  225  based upon each member holding a policy of insurance with a
  226  subsidiary insurance company or a health maintenance contract
  227  with a subsidiary health maintenance organization. Group
  228  certificateholders may also be members of the mutual insurance
  229  holding company if specified in the bylaws. The articles of
  230  incorporation and bylaws may provide for one or more classes of
  231  members and may restrict the voting or other rights of a class
  232  of policyholders of a nonprofit health care plan from receiving
  233  distributions pursuant to this chapter if the assets of the
  234  nonprofit health care plan may not be treated as assets
  235  available for distribution.
  236         Section 9. Except for sections 3 through 8, which shall
  237  take effect January 1, 2014, this act shall take effect upon
  238  becoming a law.