A. A domestic mutual insurer shall not merge or consolidate with a stock insurer.

B. A domestic mutual insurer may merge or consolidate with another domestic or foreign mutual insurer under applicable procedures prescribed by the laws of this state governing private business corporations as modified by this section.

C. If the insurer is then unimpaired, the plan and agreement for merger or consolidation shall be submitted to and approved by at least two-thirds of the members of each mutual insurer voting thereon at meetings called for the purpose pursuant to reasonable notice and procedure. The plan and agreement may provide for giving such notice to members by publishing the same once a week for two (2) consecutive weeks in newspapers of general circulation in two (2) out of the four (4) cities of greatest population according to the last preceding national census by an agency of the United States government, in each of the states in which the insurer in [is] authorized to transact insurance; or notice may be given by depositing the same in the United States mail, postage prepaid, addressed to the member at his address last of record with the insurer, or by personal delivery. As to a life insurer, the right to vote may be limited to members whose policies are other than term or group and have been in effect for more than one year.

D. No such merger or consolidation shall be effectuated unless in advance thereof the plan and agreement therefor have been filed with the superintendent and approved by him in writing. Prior to or at time of filing the plan a foreign insurer party to the plan if not then an authorized insurer shall file with the superintendent the documents and information required as for application for certificate of authority under Paragraphs (1), (3), (4), (5) and (7) of Subsection A, and under Subsection B, of Section 88 [59A-5-21 NMSA 1978] of the Insurance Code. The superintendent shall not act upon the plan and agreement until after a hearing thereon. The superintendent shall give such approval unless he finds such plan or agreement:

(1) inequitable to policyholders of any insurer involved; or

(2) would substantially reduce the security of and service to policyholders of the insurers, or result in a surviving insurer which does not meet the basic surplus requirements for certificate of authority of a like insurer under Section 83 [59A-5-16 NMSA 1978] of the Insurance Code or is otherwise inadequately financed for reasonable continuing conduct of its business; or

(3) would materially tend to lessen competition in the insurance business in this state or elsewhere as to the kinds of insurance involved or would materially tend to create a monopoly as to such business; or

(4) is unlawful or subject to other material and reasonable objections.

E. No director, officer, agent or employee of any insurer party to such merger or consolidation, or any other person, shall receive any fee, commission or other special valuable consideration whatsoever for in any manner aiding, promoting or assisting therein except as set forth in the plan and agreement as approved by the superintendent.

F. Subsection D of Section 582 [59A-34-36 NMSA 1978] (merger, consolidation of domestic stock insurers) of this article shall also apply as to merger or consolidation under this section.

History: Laws 1984, ch. 127, § 584.