Bill Text: FL S0356 | 2013 | Regular Session | Enrolled
Bill Title: Mutual Insurance Corporations
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2013-06-10 - Chapter No. 2013-125 [S0356 Detail]
Download: Florida-2013-S0356-Enrolled.html
ENROLLED 2013 Legislature SB 356, 1st Engrossed 2013356er 1 2 An act relating to mutual insurance corporations; 3 amending ss. 627.971 and 627.972, F.S.; providing that 4 such corporations include licensed mutual insurers as 5 well as licensed stock insurers; amending s. 6 617.01401, F.S.; revising the definition of the term 7 “distribution” to exclude a not-for-profit insurance 8 company subsidiary from ch. 617, F.S., relating to 9 not-for-profit corporations; amending s. 628.371, 10 F.S.; providing that certain dividends or 11 distributions by a not-for-profit insurance company to 12 its mutual insurance holding company which meet 13 certain requirements are permitted under part I of ch. 14 628, F.S., relating to stock and mutual insurers; 15 amending s. 628.703, F.S.; amending definitions 16 relating to mutual insurance holding companies to add 17 provisions for not-for-profit insurance companies and 18 nonprofit health care plans; amending s. 628.707, 19 F.S.; conforming terminology; amending s. 628.715, 20 F.S.; adding not-for-profit insurance companies and 21 nonprofit health plans to provisions relating to 22 mergers and acquisitions; amending s. 628.727, F.S.; 23 authorizing the articles of incorporation and bylaws 24 of a mutual insurance holding company to restrict 25 certain rights of policyholders to receive 26 distributions; providing effective dates. 27 28 Be It Enacted by the Legislature of the State of Florida: 29 30 Section 1. Subsection (6) of section 627.971, Florida 31 Statutes, is amended to read: 32 627.971 Definitions.—As used in this part: 33 (6) “Financial guaranty insurance corporation” means a 34 stock or mutual insurer licensed to transact financial guaranty 35 insurance business in this state. 36 Section 2. Subsection (1) of section 627.972, Florida 37 Statutes, is amended to read: 38 627.972 Organization; financial requirements.— 39 (1) A financial guaranty insurance corporation must be 40 organized and licensed in the manner prescribed in this code for 41 stock or mutual property and casualty insurers except that: 42 (a) A corporation organized to transact financial guaranty 43 insurance may, subject tothe provisions ofthis code, be 44 licensed to transact: 45 1. Residual value insurance, as defined by s. 624.6081; 46 2. Surety insurance, as defined by s. 624.606; 47 3. Credit insurance, as defined by s. 624.605(1)(i); and 48 4. Mortgage guaranty insurance as defined in s. 635.011 if,49providedthatthe provisions of chapter 635 are met. 50 (b)1. Prior to the issuance of a license, a corporation 51 must submit to the office for approval,a plan of operation 52 detailing: 53 a. The types and projected diversification of guaranties to 54 be issued; 55 b. The underwriting procedures to be followed; 56 c. The managerial oversight methods; 57 d. The investment policies; and 58 e. Any other matters prescribed by the office.;59 2. An insurer thatwhichis writing only the types of 60 insurance allowed under this part on July 1, 1988, and otherwise 61 meets the requirements of this part, is exempt fromthe62requirements ofthis paragraph. 63 (c) An insurer transacting financial guaranty insurance is 64 subject to all provisions of this code whichthatare applicable 65 to property and casualty insurers to the extent that those 66 provisions are not inconsistent with this part. 67 (d) The investments of an insurer transacting financial 68 guaranty insurance in any entity insured by the corporation may 69 not exceed 2 percent of its admitted assets as of the end of the 70 prior calendar year. 71 (e) An insurer transacting financial guaranty insurance may 72 only assume those lines of insurance for which it is licensed to 73 write direct business. 74 Section 3. Subsection (7) of section 617.01401, Florida 75 Statutes, is amended to read: 76 617.01401 Definitions.—As used in this chapter, the term: 77 (7) “Distribution” means the payment of a dividend or any 78 part of the income or profit of a corporation to its members, 79 directors, or officers. 80 (a) A donation or transfer of corporate assets or income to 81 or from another not-for-profit corporation qualified as tax 82 exempt under s. 501(c) of the Internal Revenue Code or a 83 governmental organization exempt from federal and state income 84 taxes, if such corporation or governmental organization is a 85 member of the corporation making such donation or transfer, is 86 not a distribution for purposes of this chapter. 87 (b) A dividend or distribution by a not-for-profit 88 insurance company subsidiary to its mutual insurance holding 89 company organized under part III of chapter 628, directly or 90 indirectly through one or more intermediate holding companies 91 authorized under that part, is not a distribution for the 92 purposes of this chapter. 93 Section 4. Subsection (5) is added to section 628.371, 94 Florida Statutes, to read: 95 628.371 Dividends to stockholders.— 96 (5) A dividend or distribution by a not-for-profit 97 insurance company subsidiary to its mutual insurance holding 98 company, directly or indirectly through one or more intermediate 99 holding companies, pursuant to part III of this chapter, which 100 meets the requirements of this section and which applies to a 101 stock insurer, is permitted under this section. 102 Section 5. Section 628.703, Florida Statutes, is reordered 103 and amended to read: 104 628.703 Definitions.—For purposes of this part: 105 (2)(1)“Mutual insurance holding company” means an 106 incorporated entity without permanent capital stock whichthat107 is organized under this part and whose members are determined in 108 accordance with this part. 109 (5)(2)“Subsidiary insurance company” means: 110 (a) A stock insurance company, of which the majority of the 111 voting shares of the capital stockof whichare at all times 112 owned by a mutual insurance holding company. As used inFor113purposes ofthis part, the term “majority of the voting shares 114 of the capital stock” means the shares of the capital stock of 115 such company which carry the right to cast a majority of the 116 votes entitled to be cast by all of the outstanding shares of 117 the capital stock for the election of directors. The ownership 118 of a majority of the voting shares of the capital stock of a 119 former mutual reorganized insurance company which are required 120 by this part to be at all times owned by a mutual insurance 121 holding company includes indirect ownership through one or more 122 intermediate holding companies. However, indirect ownership 123 through one or more intermediate holding companies mayshallnot 124 result in a mutual insurance holding company owning less than 125 the equivalent of a majority of the voting shares of the capital 126 stock of the former mutual reorganized insurance company; or 127 (b) A not-for-profit insurance company or nonprofit health 128 care plan, of which the majority of the voting membership 129 interests are at all times owned by a mutual insurance holding 130 company, which entitles the mutual insurance holding company to 131 elect the board of directors of the not-for-profit insurance 132 company or nonprofit health care plan. This also applies to the 133 indirect ownership of the not-for-profit insurance company or 134 nonprofit health care plan through one or more intermediate 135 holding companies. A not-for-profit insurance company subsidiary 136 resulting from reorganization into a not-for-profit mutual 137 insurance company under this part, or which is subsequently 138 organized as an additional subsidiary insurance company of the 139 holding company, is subject to the Florida Insurance Code and 140 chapter 617 applies to the organization of such company. 141 (1)(3)“Intermediate holding company” means: 142 (a) A holding company thatwhichis a subsidiary of a 143 mutual insurance holding company, and which directly or through 144 a subsidiary intermediate holding company owns a majority of the 145 voting shares of the capital stock of one or more subsidiary 146 insurance companies; or 147 (b) A holding company that is a not-for-profit corporation 148 and a subsidiary of a mutual insurance holding company, of which 149 a majority of the voting membership interests entitled to elect 150 the board of directors of such corporation are owned, directly 151 or through a subsidiary intermediate holding company, by the 152 mutual insurance holding company. 153 (3) “Nonprofit health care plan” means a not-for-profit 154 domestic or foreign hospital or medical and surgical service 155 plan or corporation that is licensed in one or more states, 156 issues no capital stock, and is engaged in the business of 157 providing prepaid indemnity or health care benefits. 158 (4) “Paid premiums” means all premiums paid for insurance 159 by a member of a mutual insurance holding company to a 160 subsidiary insurance company. 161 Section 6. Subsection (5) of section 628.707, Florida 162 Statutes, is amended to read: 163 628.707 Applicability of general corporation statutes.—The 164 applicable statutes of this state relating to the powers and 165 procedures of domestic private corporations formed for profit 166 shall apply to domestic mutual insurance holding companies, 167 except: 168 (5) In the case of the reorganization of aanymutual 169 insurance company organized as a not-for-profitnonprofit170 corporation under chapter 617, a mutual insurance holding 171 company organized under this part shall be deemed to be a not 172 for-profitnonprofitcorporation. 173 Section 7. Subsection (1) of section 628.715, Florida 174 Statutes, is amended to read: 175 628.715 Merger and acquisitions.—Subject to applicable 176 requirements of this chapter, a mutual insurance holding company 177 may: 178 (1)(a) Merge or consolidate with, or acquire the assets of, 179 a mutual insurance holding company licensed pursuant to this 180 partactor any similar entity organization pursuant to laws of 181 any other state; 182 (b) Either alone or together with one or more intermediate 183stockholding companies, or other subsidiaries, directly or 184 indirectly acquire the stock of a stock insurance company or a 185 mutual insurance company that reorganizes under this partactor 186 the law of its state of organization; 187 (c) Together with one or more of itsstock insurance188companysubsidiaries, acquire the assets of a stock insurance 189 company or a mutual insurance company, or the membership 190 interests of a not-for-profit insurance company or nonprofit 191 health care plan; 192 (d) Acquire a stock insurance company through the merger of 193 thesuchstock insurance subsidiary with a stock insurance 194 company or interim stock insurance company subsidiary of the 195 mutual insurance holding company, or acquire a not-for-profit 196 insurance company or nonprofit health care plan through the 197 merger of such entities with a mutual insurance company, or with 198 a not-for-profit insurance company subsidiary of the mutual 199 insurance holding company or intermediate holding company; 200 (e) Acquire the stock or assets of any other person to the 201 same extent as would be permitted for any not-for-profit 202 corporation under chapter 617 or, if the mutual insurance 203 holding company writes insurance, a mutual insurance company; 204 (f) Jointly, with a domestic or foreign mutual insurance 205 company thatwhichredomesticates pursuant to s. 628.520, file 206 an application with the office, pursuant tothe provisions of207 this part, to merge the domestic or foreign mutual insurance 208 company policyholder’s membership interests into the mutual 209 insurance holding company. The reorganizing mutual insurance 210 company may merge with the mutual insurance holding company’s 211 stock subsidiary or continue its corporate existence as a 212 domestic stock insurance company subsidiary. The members of the 213 foreign mutual insurance company may approve in a 214 contemporaneous vote both the redomestication plan and the 215 agreement for merger and reorganization; or 216 (g) Merge or consolidate with, or acquire the assets of, a 217 domestic or foreign reciprocal insurance company, a group self 218 insurance fund, or any other similar entity. 219 Section 8. Subsection (1) of section 628.727, Florida 220 Statutes, is amended to read: 221 628.727 Membership.— 222 (1) Membership in a mutual insurance holding company shall 223 be determined in accordance with the mutual insurance holding 224 company’s articles of incorporation and bylaws andshallbe 225 based upon each member holding a policy of insurance with a 226 subsidiary insurance company or a health maintenance contract 227 with a subsidiary health maintenance organization. Group 228 certificateholders may also be members of the mutual insurance 229 holding company if specified in the bylaws. The articles of 230 incorporation and bylaws may provide for one or more classes of 231 members and may restrict the voting or other rights of a class 232 of policyholders of a nonprofit health care plan from receiving 233 distributions pursuant to this chapter if the assets of the 234 nonprofit health care plan may not be treated as assets 235 available for distribution. 236 Section 9. Except for sections 3 through 8, which shall 237 take effect January 1, 2014, this act shall take effect upon 238 becoming a law.