A. A domestic stock insurer may convert to and become a New Mexico ordinary business corporation through the following procedures:

(1) the insurer must give the superintendent written notice of its intent to convert to an ordinary business corporation;

(2) the insurer must bulk reinsure all its insurance in force, if any, with another insurer authorized to transact such insurance in this state, under a bulk reinsurance agreement approved by the superintendent as provided in Section 586 [59A-34-40 NMSA 1978] of this article. The approval of bulk reinsurance may be made contingent upon approval of the stockholders as provided in Paragraph (4) below;

(3) the insurer must set aside in a special reserve fund in such amount and subject to such administration as may be found by the superintendent to be adequate and reasonable for the purpose, for payment of all obligations, if any, of the insurer incurred under its insurance contracts prior to the effective date of such bulk reinsurance and remaining unpaid, or make other reasonable arrangement for payment of such obligations as may be approved by the superintendent;

(4) the proposed conversion must be approved by affirmative vote of not less than two-thirds of each class of outstanding securities of the insurer having voting rights, at a special meeting of the holders of such securities called and held for the purpose; and at such meeting and by a like vote the articles of incorporation of the corporation must be amended to remove therefrom the power to transact insurance business as an insurer and to provide for such new powers and purposes as may be consistent with the purposes for which the corporation is thereafter to exist;

(5) security holders of the corporation who dissent from the proposed conversion shall have the same applicable rights as exist under the general corporation laws of this state as to dissent from proposed merger of business corporations; and

(6) upon compliance with the requirements of this section and filing of the amended articles of incorporation as required of ordinary business corporations, together with a copy of such amendment filed with the superintendent, the conversion shall thereupon become effective.

B. An insurer which has once converted to an ordinary business corporation shall not have power thereafter to convert to an insurer.

History: Laws 1984, ch. 127, § 581.