Required Notice to Policyholders of Mutual-to- Stock Conversions; Notice No. 1997-03
[27 Pa.B. 4054]
Under section 803-A(b) of the Insurance Company Mutual-to-Stock Conversion Act (act) (40 P. S. § 913- A(b)) a mutual company whose board of directors has adopted a plan of conversion is required to file an application for conversion with the Insurance Commissioner (Commissioner). This notice is to inform all domestic mutual insurance companies that the Insurance Department (Department) has established procedures relating to notice to policyholders of a conversion of a mutual to stock company under the act. The Department has implemented these procedures to ensure the dissemination of greater information and disclosure to policyholders and other parties potentially interested in a mutual-to-stock conversion filing made with the Department under the act.
This notice is intended to provide guidance to mutual companies with respect to the initial mailing to policyholders (eligible members) of a proposed plan, as well as the final notice of the policyholder meeting and vote. This notice does not apply to applications for conversion under section 814-A of the act (40 P. S. § 924-A) relating to insolvent companies or companies in financially hazardous condition.
Upon filing of an application for conversion with the Commissioner, section 803-A(b)(7) of the act (40 P. S. § 913-A(b)(7)) requires the mutual company to notify eligible members of the adoption and filing of the plan, as well as of their right to submit written comments on the plan to the Commissioner and the mutual company. Additionally, the Department requires the applicant company to include in this initial mailing, the following information: 1) notice that any eligible member may obtain a copy of the proposed plan from the company, upon request, and 2) notice that the proposed plan has not been approved by the Commissioner, and that it may vary from the final plan, if and when it is approved.
Further, after a plan has been approved by the Commissioner, section 803-A(f) of the act (40 P. S. § 913-A(f)) requires the applicant company to mail notice to eligible members of the meeting to vote on adoption of the plan. With this final mailing, the Department requires the applicant company to include a copy of the final approved plan, as well as notice to eligible members that the Commissioner's approval of the plan does not constitute or imply endorsement of the plan by the Commissioner or the Department.
Although not required under the act, a mutual company considering conversion to the stock form is encouraged to contact Department staff to discuss any and all requirements prior to commencing the process. Should persons have questions or wish to discuss a potential conversion, contact either Steve Harman, Chief of Company Licensing (717) 783-2143, or Will Smith, Director of the Bureau of Licensing and Financial Analysis (717) 787-2735, Insurance Department, Office of Regulation of Companies, 1345 Strawberry Square, Harrisburg, PA 17120.
GREGORY S. MARTINO,
Acting Insurance Commissioner
[Pa.B. Doc. No. 97-1277. Filed for public inspection August 8, 1997, 9:00 a.m.]
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