644.07 Restructuring procedures.

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A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(1)Formation of mutual holding company.

1. A domestic mutual insurance company organized under ch. 611 may restructure by forming a mutual holding company in accordance with this section.

2. A domestic service insurance corporation organized under ch. 613 may restructure by simultaneously converting to a mutual insurance company that is subject to ch. 611 and forming a mutual holding company in accordance with this section.

(b)The mutual holding company may use the word “mutual” in its name. The restructuring shall continue the corporate existence of the converting insurance company as a stock insurance company subsidiary of the mutual holding company or as a stock insurance company subsidiary of an intermediate stock holding company that is a subsidiary of the mutual holding company. The converted insurance company may continue to use the word “mutual” in its name if the name includes the abbreviation “SI” for stock insurer, or the words “stock insurer”.

(2)Resolution of the board. The board shall pass a resolution to the effect that restructuring is fair and equitable to policyholders. The resolution shall specify the reasons for and the purposes of the proposed restructuring, and explain the manner in which the restructuring is expected to benefit policyholders.

(3)Adoption of plan. The board shall adopt a mutual holding company plan. The mutual holding company plan shall set forth the reasons for and the purposes of the proposed restructuring, explain how the restructuring is expected to benefit policyholders and provide for amending the converting insurance company’s articles of incorporation to give effect to the restructuring from a mutual, nonstock corporation into a stock corporation.

(4)Submission of plan. The board shall submit the mutual holding company plan to the commissioner for approval, together with all of the following:

(a)The proposed articles and bylaws of the mutual holding company, which shall comply with s. 644.09 , of the converted insurance company, which shall comply with s. 611.12 , and of any intermediate stock holding company.

(b)So much of the following information pertaining to the mutual holding company as the commissioner reasonably requires:

1. The names and, for the preceding 10 years, all addresses and all occupations of all proposed directors and officers.

2. All agreements relating to the mutual holding company to which any proposed director or officer is a party.

3. The amount and sources of the funds available for organization expenses and initial operating expenses.

4. The proposed compensation of directors and officers.

5. The proposed capital.

6. A business plan of the mutual holding company for the first 5 years of operation.

(c)Such other relevant documents or information as the commissioner reasonably requires.

(5)Plan contents.

(a)The plan shall include all of the following:

1. A description of any plans for the initial sale of voting stock to 3rd parties by the converted insurance company or any intermediate stock holding company, or a statement that the converted insurance company or intermediate stock holding company has no current plans for the sale of voting stock.

2. A description of any plans for the transfer of assets and assumption of obligations, including any one or more subsidiaries of the converting insurance company, to the mutual holding company or to the intermediate stock holding company.

1. A plan for the initial sale of voting stock shall be adequately described under par.

(a)1. if it contains all of the following:

a. A statement of intent to conduct an initial sale of voting stock of the converted insurance company or of any intermediate stock holding company within a specified time after the effective date of the restructuring.

b. A description of the maximum percentage of the stock to be sold.

c. A description of the process to be used in offering the stock and setting the initial sale price for the stock.

d. A description of the rights of members to subscribe to the stock offering if the initial sale of voting stock by the converted insurance company or any intermediate stock holding company involves an initial public offering.

e. Such other information as may be prescribed by the commissioner.

2. No plan for the initial sale of voting stock that is approved by policyholders as part of the approval of a mutual holding company conversion plan under sub.

(8)or by members as part of an approval under s. 644.15 shall be effective for more than the specified time under subd. 1. a. after the effective date of the restructuring or the date on which the plan is approved by members under s. 644.15

(1), whichever is applicable.

(5m)Additional plan contents for service insurance corporations. If the converting insurance company is a service insurance corporation, in addition to satisfying the requirements under sub.

(5), the plan shall state all of the following:

(a)That those persons who are policyholders of the converting service insurance corporation on the date of the resolution under sub.

(2)and who remain policyholders on the record date established by the board for the vote under sub.

(8)shall have the right to vote on the plan under sub.

(8).

(b)That the members of the mutual holding company shall be those persons who are policyholders of the converting service insurance corporation on the effective date of the restructuring, and that thereafter membership shall be as provided in sub.

(d).

(c)Any other conditions that the commissioner may require relating to the company’s conversion from a service insurance corporation to a mutual holding company.

(6)Hearing.

(a)The commissioner or a hearing examiner designated by the commissioner shall hold a hearing after receipt of a mutual holding company plan.

1. Notice of the hearing shall be mailed by the converting insurance company not more than 60 days and not less than 10 days before the scheduled date of the hearing to the last-known address of each person who was a policyholder of the converting insurance company on the date of the resolution under sub.

(2), together with a copy of the mutual holding company plan, or a copy of a summary of the plan if the commissioner approves the summary, and any comment that the commissioner considers necessary for the adequate information of policyholders. Failure to mail notice to a policyholder does not invalidate a proceeding under this subsection if the commissioner determines that the converting insurance company has substantially complied with this subdivision and has attempted in good faith to mail notice to all policyholders entitled to notice.

2. The notice, the plan or a summary of the plan and any comments under subd. 1. shall also be mailed by the converting insurance company not more than 60 days and not less than 10 days before the scheduled date of the hearing to the commissioner of every jurisdiction in which the converting insurance company is authorized to do any business.