644.25 Conversion of domestic mutual holding company into a stock corporation.

(1) Conversion permitted and procedures. A mutual holding company formed by a converted insurance company under this chapter may convert into a stock corporation organized under ch.180. Subject to this section, s. 611.76 (1) to (3) and (5) to (11) applies to mutual holding companies.

(2) Plan of conversion.

(a) In this subsection, “net premium" means gross premium less return premium and dividends paid.

(b) The board of a domestic mutual holding company may adopt a plan of conversion that specifies all of the following:

1. The number of shares proposed to be authorized for the new stock corporation, their par value and the price at which they will be offered to members, which price may not exceed 50 percent of the median equitable share of all members under subd. 2.

2. That each member who has been a policyholder of a converted insurance company and has paid premiums within 5 years prior to the resolution passed by the board related to the conversion under this section shall be entitled without additional payment to so much common stock of the new stock corporation as his or her equitable share of the value of the converting mutual holding company will purchase.

3. That each member's equitable share shall be determined by the ratio that the net premium paid by such member to the converted insurance company during the 5 years immediately preceding the resolution specified in subd. 2. bears to the total net premium received by the converted insurance company during the same period.

4. That, if a member's equitable share is sufficient only for the purchase of a fraction of a share of stock, the member shall have the option either to receive the value of the fractional share in cash or to purchase a full share by paying the balance in cash.

5. That, notwithstanding subds. 2. to 4., each member who was a policyholder of a converted life insurance company on the date of the resolution specified in subd. 2. or within 5 years prior to that date shall be entitled to an equitable share based on a formula that fairly reflects the policyholder's interest in the company and the policies and contracts issued by the company to the policyholder, and that takes into account premiums paid, cash surrender values, policy loans, reserves, surplus benefits payable and other relevant factors.

6. That a member's equitable share shall be provided to the member on a uniform basis approved by the commissioner in the form of common stock, cash, increased benefits or lower premiums or a combination of those forms.

7. The procedure for stock subscriptions, which shall include a written offer to each such member indicating his or her individual equitable share and the terms of subscription.

8. That no common stock under subd. 2. may be issued to persons other than the members under subd. 2. until all subscriptions by the members have been filled and that thereafter any new issue of stock for 5 years after the conversion shall first be offered to the persons who have become shareholders under subd. 2. in proportion to their interests under subd. 2.

9. That no member, other than a member who is a policyholder of a converted life insurance company, may receive a distribution of shares valued in excess of the amount to which he or she is entitled under s. 645.72 (4) (b). Any excess over that amount shall be distributed in shares to the state treasury for the benefit of the common school fund. After 5 years the shares may be sold by the treasurer at his or her discretion and the proceeds credited to the common school fund.

10. That, except with the approval of the commissioner, during the first 5 years after the conversion under this section the directors and officers of a mutual holding company with a converted life insurance company subsidiary and persons acting in concert with them may not, in the aggregate, acquire control over more than 5 percent of the common stock of the converted mutual holding company or any other corporation that acquires control of more than 5 percent of the common stock of the converted mutual holding company.

(3) After conversion. Upon the conversion of a mutual holding company under this section, this chapter no longer applies to the mutual holding company, any intermediate stock holding company or the converted insurance company.

History: 1997 a. 227.