A. A stock insurer other than title insurer may become a mutual insurer under such plan and procedure as may be approved by the superintendent after a hearing thereon.

B. The superintendent shall not approve any such plan, procedure or mutualization unless he finds that:

(1) it is equitable to stockholders and policyholders;

(2) it is subject to approval by holders of not less than two-thirds of the insurer's outstanding capital stock having voting rights, and by not less than two-thirds of those of the insurer's policyholders who vote on such plan in person or by proxy or by mail pursuant to such notice, information and procedure as approved by the superintendent;

(3) if a life insurer, right to vote thereon is limited to holders of policies other than term or group policies, and whose policies have been in force for more than one (1) year;

(4) the plan provides for purchase of the shares of any nonconsenting stockholders in the same manner and subject to the same applicable conditions as provided by the general business corporation laws of this state as to rights of nonconsenting stockholders with respect to merger or consolidation of business corporations;

(5) mutualization will result in retirement of the insurer's outstanding capital stock at a price not in excess of the fair market value thereof as determined by competent disinterested appraiser;

(6) the plan provides for definite conditions to be fulfilled by a designated reasonable date upon which such mutualization shall become effective; and

(7) mutualization would leave the insurer with competent and trustworthy management and surplus funds reasonably adequate for the security of its policyholders and to enable the insurer, in the states in which it is then authorized to transact insurance, to continue in business for the same kinds of insurance included in its certificates of authority in such states.

C. No director, officer, agent or employee of the insurer, nor any other person, shall receive any fee, commission or other valuable consideration whatsoever, other than customary salary or other regular compensation, for in any manner aiding, promoting or assisting in the mutualization, except as set forth in the plan of mutualization as approved by the superintendent.

D. This section does not apply to mutualization under order of court pursuant to Article 41 [Chapter 59A, Article 41 NMSA 1978] (conservation, rehabilitation, liquidation) of the Insurance Code.

History: Laws 1984, ch. 127, § 580.