Bill Text: IA HSB35 | 2019-2020 | 88th General Assembly | Introduced
Bill Title: A bill for an act relating to the division of domestic stock insurers.
Spectrum: Committee Bill
Status: (N/A - Dead) 2019-02-05 - Committee report, recommending amendment and passage. H.J. 213. [HSB35 Detail]
Download: Iowa-2019-HSB35-Introduced.html
House
Study
Bill
35
-
Introduced
HOUSE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
COMMERCE
BILL
BY
CHAIRPERSON
CARLSON)
A
BILL
FOR
An
Act
relating
to
the
division
of
domestic
stock
insurers.
1
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
2
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1677YC
(3)
88
ko/rn
H.F.
_____
Section
1.
NEW
SECTION
.
521I.1
Definitions.
1
As
used
in
this
chapter,
unless
the
context
otherwise
2
requires:
3
1.
“Assets”
means
property
whether
real,
personal,
mixed,
4
tangible,
or
intangible
and
any
right
or
interest
therein,
5
including
all
rights
under
a
contract
or
other
agreement.
6
2.
“Capital”
means
the
capital
stock
component
of
a
7
statutory
surplus
as
defined
in
the
latest
edition
of
the
8
national
association
of
insurance
commissioners’
accounting
9
practices
and
procedures
manual.
10
3.
“Commissioner”
means
the
commissioner
of
insurance.
11
4.
“Divide”
or
“division”
means
a
transaction
in
which
12
a
domestic
stock
insurer
splits
into
two
or
more
resulting
13
domestic
stock
insurers.
14
5.
“Dividing
insurer”
means
a
domestic
stock
insurer
that
15
approves
a
plan
of
division.
16
6.
“Domestic
stock
insurer”
means
a
stock
insurer
domiciled
17
and
organized
under
the
laws
of
this
state
pursuant
to
chapter
18
508,
514B,
or
515,
including
domestic
stock
insurers
affiliated
19
with
a
mutual
insurance
holding
company
organized
pursuant
to
20
section
521A.14,
and
including
those
insurers
which
confer
21
membership
rights
in
the
mutual
insurance
holding
company.
22
7.
“Liability”
means
a
secured
or
contingent
debt
or
23
obligation
arising
in
any
manner.
24
8.
“Resulting
insurer”
means
a
dividing
domestic
stock
25
insurer
that
survives
a
division
or
a
new
domestic
stock
26
insurer
that
is
created
by
a
division.
27
9.
“Shareholder”
means
the
person
in
whose
name
shares
are
28
registered
in
the
records
of
a
corporation
or
the
beneficial
29
owner
of
shares
to
the
extent
of
the
rights
granted
by
a
30
nominee
certificate
on
file
with
a
corporation.
31
10.
“Surplus”
means
total
statutory
surplus
less
capital
32
stock
calculated
in
accordance
with
the
current
national
33
association
of
insurance
commissioners’
accounting
practices
34
and
procedures
manual.
35
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11.
“Transfer”
includes
an
assignment,
assumption,
1
conveyance,
sale,
lease,
encumbrance,
security
interest,
gift,
2
or
transfer
by
operation
of
law.
3
Sec.
2.
NEW
SECTION
.
521I.2
Plan
of
division
——
general
4
requirements.
5
A
domestic
stock
insurer’s
plan
of
division
shall
include
6
all
of
the
following:
7
1.
The
name
of
the
domestic
stock
insurer
seeking
to
divide.
8
2.
The
name
of
each
resulting
insurer
created
by
the
9
proposed
division
and
for
each
resulting
insurer
a
copy
of
all
10
of
the
following:
11
a.
Proposed
articles
of
incorporation.
12
b.
Proposed
bylaws.
13
3.
The
manner
of
allocating
assets
and
liabilities,
14
including
policy
liabilities,
between
or
among
all
resulting
15
insurers.
16
4.
The
manner
of
distributing
shares
in
the
resulting
17
insurers
to
the
dividing
insurer
or
the
dividing
insurer’s
18
shareholders.
19
5.
A
description
of
all
liabilities
and
all
assets
that
20
the
dividing
insurer
proposes
to
allocate
to
each
resulting
21
insurer,
including
the
manner
by
which
the
dividing
insurer
22
proposes
to
allocate
all
reinsurance
contracts.
23
6.
All
terms
and
conditions
required
by
the
laws
of
this
24
state
and
the
articles
and
bylaws
of
the
dividing
insurer.
25
7.
All
other
terms
and
conditions
of
the
division.
Terms
of
26
a
plan
of
division
may
be
made
dependent
on
facts
objectively
27
ascertainable
outside
of
the
plan
of
division.
28
Sec.
3.
NEW
SECTION
.
521I.3
Plan
of
division
——
dividing
29
insurer
to
survive
division.
30
If
a
dividing
insurer
will
survive
a
division,
the
plan
31
of
division
shall
include,
in
addition
to
the
requirements
32
pursuant
to
section
521I.2,
all
of
the
following:
33
1.
All
proposed
amendments
to
the
dividing
insurer’s
34
articles
of
incorporation
and
bylaws.
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2.
If
the
dividing
insurer
intends
to
cancel
some
but
not
1
all
shares
in
the
dividing
insurer,
the
manner
in
which
the
2
dividing
insurer
intends
to
cancel
such
shares.
3
3.
If
the
dividing
insurer
intends
to
convert
some
but
4
not
all
shares
in
the
dividing
insurer
into
securities,
5
obligations,
money,
other
property,
rights
to
acquire
shares
or
6
securities,
or
any
combination
thereof,
a
statement
disclosing
7
the
manner
in
which
the
dividing
insurer
intends
to
convert
8
such
shares.
9
Sec.
4.
NEW
SECTION
.
521I.4
Plan
of
division
——
dividing
10
insurer
not
to
survive
division.
11
If
a
dividing
insurer
will
not
survive
a
division,
the
plan
12
of
division
shall
include,
in
addition
to
the
requirements
13
pursuant
to
section
521I.2,
the
manner
in
which
the
dividing
14
insurer
will
cancel
or
convert
shares
in
the
dividing
insurer’s
15
shares
into
shares,
securities,
obligations,
money,
other
16
property,
rights
to
acquire
shares
or
securities,
or
any
17
combination
thereof.
18
Sec.
5.
NEW
SECTION
.
521I.5
Amending
plan
of
division.
19
1.
A
dividing
insurer
may
amend
the
dividing
insurer’s
20
plan
of
division
in
accordance
with
any
procedures
set
forth
21
in
the
plan
of
division,
or
if
no
such
procedures
are
set
22
forth
in
the
plan
of
division,
in
a
manner
determined
by
the
23
board
of
directors
of
the
dividing
insurer.
A
shareholder
24
that
is
entitled
to
vote
on
or
consent
to
approval
of
the
plan
25
of
division
shall
be
entitled
to
vote
on
or
consent
to
an
26
amendment
of
the
plan
of
division
that
will
affect
any
of
the
27
following:
28
a.
The
amount
or
kind
of
shares,
securities,
obligations,
29
money,
other
property,
rights
to
acquire
shares
or
securities,
30
or
any
combination
thereof
to
be
received
by
any
of
the
31
shareholders
of
the
dividing
insurer
under
the
plan
of
32
division.
33
b.
The
articles
of
incorporation
or
bylaws
of
any
resulting
34
insurer
that
become
effective
when
the
division
becomes
35
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effective
except
for
changes
that
do
not
require
approval
of
1
the
shareholders
of
the
resulting
insurer
under
such
articles
2
of
incorporation
or
bylaws.
3
c.
Any
other
terms
or
conditions
of
the
plan
of
division
4
if
the
change
may
adversely
affect
the
shareholders
in
any
5
material
respect.
6
2.
A
dividing
insurer
shall
not
amend
the
dividing
insurer’s
7
plan
of
division
after
the
plan
of
division
becomes
effective.
8
Sec.
6.
NEW
SECTION
.
521I.6
Abandoning
plan
of
division.
9
1.
A
dividing
insurer
may
abandon
the
dividing
insurer’s
10
plan
of
division
in
any
of
the
following
circumstances:
11
a.
After
the
dividing
insurer
has
approved
the
plan
12
of
division
without
any
action
by
the
shareholders
and
in
13
accordance
with
any
procedures
set
forth
in
the
plan
of
14
division,
or
if
no
such
procedures
are
set
forth
in
the
plan
of
15
division,
in
a
manner
determined
by
the
board
of
directors
of
16
the
dividing
insurer.
17
b.
After
the
dividing
insurer
has
filed
a
certificate
18
of
division
with
the
secretary
of
state
pursuant
to
section
19
521I.10,
the
dividing
insurer
may
file
a
signed
certificate
of
20
abandonment
with
the
secretary
of
state
and
file
a
copy
with
21
the
commissioner.
The
certificate
of
abandonment
shall
be
22
effective
on
the
date
the
certificate
of
abandonment
is
filed
23
with
the
secretary
of
state.
24
2.
A
dividing
insurer
shall
not
abandon
the
dividing
25
insurer’s
plan
of
division
after
the
plan
of
division
becomes
26
effective.
27
Sec.
7.
NEW
SECTION
.
521I.7
Approval
of
plan
of
division
——
28
articles
of
incorporation
and
bylaws.
29
1.
A
dividing
insurer
shall
not
file
a
plan
of
division
with
30
the
commissioner
until
such
plan
of
division
has
been
approved
31
in
accordance
with
all
provisions
of
the
dividing
insurer’s
32
articles
of
incorporation
and
bylaws.
If
the
dividing
33
insurer’s
articles
of
incorporation
and
bylaws
do
not
provide
34
for
approval
of
a
plan
of
division,
the
dividing
insurer
shall
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not
file
the
plan
of
division
with
the
commissioner
unless
1
such
plan
of
division
has
been
approved
in
accordance
with
all
2
provisions
of
the
dividing
insurer’s
articles
of
incorporation
3
and
bylaws
that
provide
for
approval
of
a
merger.
4
2.
If
a
provision
of
a
dividing
insurer’s
articles
of
5
incorporation
or
bylaws
adopted
before
the
effective
date
of
6
this
Act
requires
that
a
specific
number
of
or
a
percentage
7
of
the
board
of
directors
or
shareholders
propose
or
adopt
a
8
plan
of
merger
or
impose
other
procedures
for
the
proposal
or
9
adoption
of
a
plan
of
merger,
the
dividing
insurer
shall
adhere
10
to
such
provision
in
proposing
or
adopting
a
plan
of
division.
11
If
any
such
provision
of
the
articles
of
incorporation
or
12
bylaws
is
amended
on
or
after
the
effective
date
of
this
Act,
13
such
provision
shall
apply
to
a
division
thereafter
only
in
14
accordance
with
its
express
terms.
15
Sec.
8.
NEW
SECTION
.
521I.8
Commissioner
approval
of
plan
16
of
division.
17
1.
After
a
dividing
insurer
approves
a
plan
of
division
18
pursuant
to
section
521I.7,
the
dividing
insurer
shall
file
the
19
plan
of
division
with
the
commissioner.
Within
ten
business
20
days
of
filing
the
plan
of
division
with
the
commissioner,
the
21
dividing
insurer
shall
provide
notice
of
the
filing
to
each
22
reinsurer
that
is
a
party
to
a
reinsurance
contract
allocated
23
in
the
plan
of
division.
24
2.
A
division
shall
not
become
effective
until
approved
by
25
the
commissioner
after
reasonable
notice
and
a
public
hearing.
26
Notice
and
public
hearing
required
under
this
section
shall
be
27
conducted
as
a
contested
case
pursuant
to
chapter
17A.
28
3.
The
commissioner
may
approve
a
plan
of
division
if
the
29
commissioner
finds
that
all
of
the
following
apply:
30
a.
The
interest
of
the
policyholders,
creditors,
or
31
shareholders
of
the
dividing
insurer
will
be
adequately
32
protected
and
the
plan
of
division
is
not
unfair
or
33
unreasonable
to
the
policyholders
of
the
dividing
insurer
and
34
is
not
contrary
to
the
public
interest.
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b.
The
financial
condition
of
the
resulting
insurers
will
1
not
jeopardize
the
financial
stability
of
a
dividing
insurer
2
or
the
resulting
insurers
or
prejudice
the
interests
of
the
3
policyholders
of
such
insurers.
4
c.
All
resulting
insurers
created
by
the
proposed
division
5
will
be
qualified
and
eligible
to
receive
a
certificate
of
6
authority
to
transact
the
business
of
insurance
in
this
state.
7
d.
The
proposed
division
does
not
violate
a
provision
of
8
chapter
684.
In
a
division
in
which
the
dividing
insurer
9
will
survive,
the
commissioner
shall
apply
chapter
684
to
the
10
dividing
insurer
in
its
capacity
as
a
resulting
insurer.
In
11
applying
the
provisions
of
chapter
684
to
a
resulting
insurer,
12
the
commissioner
shall
do
all
of
the
following:
13
(1)
Treat
the
resulting
insurer
as
a
debtor.
14
(2)
Treat
a
liability
allocated
to
the
resulting
insurer
as
15
a
liability
incurred
by
a
debtor.
16
(3)
Treat
the
resulting
insurer
as
receiving
unequal
value
17
in
exchange
for
incurring
allocated
obligations.
18
(4)
Treat
assets
allocated
to
the
resulting
insurer
as
19
remaining
assets.
20
e.
The
proposed
division
is
not
being
made
for
the
purpose
21
of
hindering,
delaying,
or
defrauding
any
policyholders
or
22
other
creditors
of
the
dividing
insurer.
23
f.
All
resulting
insurers
will
be
solvent
when
the
division
24
becomes
effective.
25
g.
The
remaining
assets
of
a
resulting
insurer
will
not
be
26
unreasonably
small
in
relation
to
the
business
and
transactions
27
such
resulting
insurer
has
been
engaged
in
or
will
engage
in
28
after
completion
of
the
division.
29
4.
In
determining
if
the
standards
set
forth
in
subsection
30
3,
paragraphs
“c”
through
“g”
are
satisfied,
the
commissioner
31
may
consider
all
proposed
assets
of
the
resulting
insurer
32
including
without
limitation
reinsurance
agreements,
parental
33
guarantees,
support
agreements,
keepwell
agreements,
and
34
capital
maintenance
of
contingent
capital
agreements
regardless
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of
whether
such
qualify
as
an
admitted
asset
under
state
law.
1
5.
All
expenses
incurred
by
the
commissioner
in
connection
2
with
proceedings
under
this
section
including
expenses
3
for
attorneys,
actuaries,
accountants,
and
other
experts
4
not
otherwise
a
part
of
the
commissioner’s
staff
as
may
be
5
reasonably
necessary
to
assist
the
commissioner
in
reviewing
6
a
proposed
plan
of
division
shall
be
paid
by
the
dividing
7
insurer
filing
such
plan.
A
dividing
insurer
may
allocate
such
8
expense
in
a
plan
of
division
in
the
same
manner
as
any
other
9
liability.
10
6.
If
the
commissioner
approves
a
plan
of
division
the
11
commissioner
shall
issue
an
order
which
shall
be
accompanied
12
by
findings
of
fact
and
conclusions
of
law.
The
commissioner
13
shall
also
issue
a
certificate
of
authority
authorizing
the
14
resulting
insurers
to
transact
the
business
of
insurance
in
15
this
state.
16
7.
The
conditions
in
this
section
for
freeing
one
or
more
17
of
the
resulting
insurers
from
the
liabilities
of
the
dividing
18
insurer
and
for
allocating
some
or
all
of
the
liabilities
of
19
the
dividing
insurer
shall
be
deemed
to
have
been
satisfied
if
20
the
plan
of
division
is
approved
by
the
commissioner
in
a
final
21
order.
22
Sec.
9.
NEW
SECTION
.
521I.9
Confidentiality.
23
A
dividing
insurer
may
submit
a
written
request
to
the
24
commissioner
that
confidentiality
be
maintained
regarding
25
all
business,
financial,
actuarial,
and
other
proprietary
26
information
submitted
to,
obtained
by,
or
disclosed
to
the
27
commissioner
in
connection
with
the
dividing
insurer’s
plan
28
of
division.
The
commissioner
shall
make
a
determination
29
regarding
the
dividing
insurer’s
request
prior
to
issuing
30
a
notice
of
a
public
hearing
pursuant
to
section
521I.8,
31
subsection
2.
If
the
commissioner
grants
the
dividing
32
insurer’s
request
in
whole
or
in
part,
such
information
as
the
33
commissioner
determines
shall
remain
confidential,
shall
not
be
34
available
for
public
inspection,
and
shall
not
be
subject
to
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chapter
22.
The
plan
of
division
shall
not
be
confidential
and
1
shall
be
available
for
public
inspection.
2
Sec.
10.
NEW
SECTION
.
521I.10
Certificate
of
division.
3
1.
If
the
commissioner
approves
a
dividing
insurer’s
plan
4
of
division
pursuant
to
section
521I.8,
an
officer
or
duly
5
authorized
representative
of
the
dividing
insurer
shall
sign
a
6
certificate
of
division
that
sets
forth
all
of
the
following:
7
a.
The
name
of
the
dividing
insurer.
8
b.
A
statement
disclosing
whether
the
dividing
insurer
9
survived
the
division.
If
the
dividing
insurer
survived
10
the
division,
the
certificate
of
division
shall
include
any
11
amendments
to
the
dividing
insurer’s
articles
of
incorporation
12
or
bylaws
as
approved
as
part
of
the
plan
of
division.
13
c.
The
name
of
each
resulting
insurer
that
is
created
by
14
the
division.
15
d.
The
date
on
which
the
division
is
effective.
16
e.
A
statement
that
the
division
was
approved
by
the
17
commissioner
under
section
521I.8.
18
f.
A
statement
that
the
dividing
insurer
provided
reasonable
19
notice
to
each
reinsurer
that
is
a
party
to
a
reinsurance
20
contract
allocated
in
the
plan
of
division.
21
g.
The
resulting
insurer’s
articles
of
incorporation
and
22
bylaws
for
each
resulting
insurer
created
by
the
division.
The
23
articles
of
incorporation
and
bylaws
of
each
resulting
insurer
24
must
comply
with
the
applicable
requirements
of
the
laws
of
25
this
state.
The
articles
of
incorporation
and
bylaws
may
state
26
the
name
or
address
of
an
incorporator,
may
be
signed,
and
may
27
include
any
provision
that
is
not
required
in
a
restatement
of
28
the
articles
of
incorporation
or
bylaws.
29
h.
A
reasonable
description
of
the
capital,
surplus,
other
30
assets
and
liabilities,
including
policy
liabilities,
of
the
31
dividing
insurer
that
are
to
be
allocated
to
each
resulting
32
insurer.
33
2.
A
dividing
insurer’s
certificate
of
division
is
34
effective
on
the
date
the
dividing
insurer
files
the
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certificate
with
the
secretary
of
state
and
provides
a
1
concurrent
copy
to
the
commissioner,
or
on
another
date
2
as
specified
in
the
plan
of
division,
whichever
is
later.
3
However,
the
certificate
of
division
shall
become
effective
4
not
later
than
ninety
calendar
days
after
it
is
filed
with
the
5
secretary
of
state.
A
division
shall
be
effective
when
the
6
relevant
certificate
of
division
is
effective.
7
Sec.
11.
NEW
SECTION
.
521I.11
Division
effective.
8
1.
On
the
effective
date
of
a
division
pursuant
to
section
9
521I.10,
the
following
apply:
10
a.
If
the
dividing
insurer
survives,
all
of
the
following
11
apply:
12
(1)
The
dividing
insurer
shall
continue
to
exist.
13
(2)
The
articles
of
incorporation
of
the
dividing
insurer
14
shall
be
amended,
if
at
all,
if
provided
for
in
the
plan
of
15
division.
16
(3)
The
bylaws
of
the
dividing
insurer
shall
be
amended,
if
17
at
all,
if
provided
for
in
the
plan
of
division.
18
b.
If
the
dividing
insurer
does
not
survive,
the
dividing
19
insurer’s
separate
existence
shall
cease
to
exist
and
any
20
resulting
insurer
created
by
the
plan
of
division
shall
come
21
into
existence.
22
c.
Each
resulting
insurer
shall
hold
any
capital,
surplus,
23
and
other
assets
allocated
to
such
resulting
insurer
by
the
24
plan
of
division
as
a
successor
to
the
dividing
insurer
by
25
operation
of
law,
and
not
by
transfer,
whether
directly
or
26
indirectly.
The
articles
of
incorporation
and
bylaws,
if
any,
27
of
each
resulting
insurer
shall
be
effective
when
the
resulting
28
insurer
comes
into
existence.
29
d.
(1)
All
capital,
surplus,
and
other
assets
of
the
30
dividing
insurer
that
are
allocated
by
the
plan
of
division
31
shall
vest
in
the
applicable
resulting
insurer
as
provided
in
32
the
plan
of
division
or
shall
remain
vested
in
the
dividing
33
insurer
as
provided
in
the
plan
of
division.
34
(2)
All
capital,
surplus,
and
other
assets
of
the
dividing
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insurer
that
are
not
allocated
by
the
plan
of
division
shall
1
remain
vested
in
the
dividing
insurer
if
the
dividing
insurer
2
survives
the
division
and
shall
be
allocated
to
and
vest
pro
3
rata
in
the
resulting
insurers
individually
if
the
dividing
4
insurer
does
not
survive
the
division.
5
(3)
All
capital,
surplus,
and
other
assets
of
the
dividing
6
insurer
otherwise
vest
as
provided
in
this
section
without
7
transfer,
reversion,
or
impairment.
8
e.
A
resulting
insurer
to
which
a
cause
of
action
is
9
allocated
may
be
substituted
or
added
in
any
pending
action
or
10
proceeding
to
which
the
dividing
insurer
is
a
party
when
the
11
division
becomes
effective.
12
f.
All
liabilities
of
a
dividing
insurer
are
allocated
13
between
or
among
any
resulting
insurers
as
provided
in
section
14
521I.10
and
each
resulting
insurer
to
which
liabilities
are
15
allocated
is
liable
only
for
those
liabilities,
including
16
policy
liabilities,
allocated
as
a
successor
to
the
dividing
17
insurer
by
operation
of
law.
18
g.
Any
shares
in
the
dividing
insurer
that
are
to
be
19
converted
or
canceled
in
the
division
are
converted
or
canceled
20
and
the
shareholders
of
those
shares
are
entitled
only
to
21
the
rights
provided
to
such
shareholders
under
the
plan
of
22
division
and
any
appraisal
rights
that
such
shareholders
may
23
have
pursuant
to
section
521I.13.
24
2.
Except
as
provided
in
the
dividing
insurer’s
articles
25
of
incorporation
or
bylaws,
the
division
does
not
give
rise
26
to
any
rights
that
a
shareholder,
director
of
a
domestic
27
stock
insurer,
or
third
party
would
have
upon
a
dissolution,
28
liquidation,
or
winding
up
of
the
dividing
insurer.
29
3.
The
allocation
to
a
resulting
insurer
of
capital,
30
surplus,
or
other
asset
that
is
collateral
covered
by
an
31
effective
financing
statement
shall
not
be
effective
until
a
32
new
effective
financing
statement
naming
the
resulting
insurer
33
as
a
debtor
is
effective
under
the
uniform
commercial
code.
34
4.
Unless
otherwise
provided
in
the
plan
of
division,
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the
shares
in
and
any
securities
of
each
resulting
insurer
1
shall
be
distributed
to
the
dividing
insurer
if
it
survives
2
the
division,
or
pro
rata
to
the
shareholders
of
the
dividing
3
insurer
that
do
not
assert
any
appraisal
rights
pursuant
to
4
section
521I.13.
5
Sec.
12.
NEW
SECTION
.
521I.12
Resulting
insurers
liability
6
for
allocated
assets,
debts,
and
liabilities.
7
1.
Except
as
expressly
provided
in
this
section,
when
a
8
division
becomes
effective,
by
operation
of
law
all
of
the
9
following
apply:
10
a.
A
resulting
insurer
is
individually
liable
for
the
11
liabilities,
including
policy
liabilities,
that
the
resulting
12
insurer
issues,
undertakes,
or
incurs
in
its
own
name
after
the
13
division.
14
b.
A
resulting
insurer
is
individually
liable
for
the
15
liabilities,
including
policy
liabilities,
of
the
dividing
16
insurer
that
are
allocated
to
or
remain
the
liability
of
the
17
resulting
insurer
to
the
extent
specified
in
the
plan
of
18
division.
19
c.
The
dividing
insurer
remains
responsible
for
the
20
liabilities,
including
policy
liabilities,
of
the
dividing
21
insurer
that
are
not
allocated
by
the
plan
of
division
if
the
22
dividing
insurer
survives
the
division.
23
d.
A
resulting
insurer
is
liable
pro
rata
individually
for
24
the
liabilities,
including
policy
liabilities,
of
the
dividing
25
insurer
that
are
not
allocated
by
the
plan
of
division
if
the
26
dividing
insurer
does
not
survive
the
division.
27
2.
Except
as
otherwise
expressly
provided
in
this
section,
28
when
a
division
becomes
effective
a
resulting
insurer
is
not
29
responsible
for
and
shall
not
have
liability
for
any
of
the
30
following:
31
a.
Any
liabilities,
including
policy
liabilities,
that
32
another
resulting
insurer
issues,
undertakes,
or
incurs
in
such
33
resulting
insurer’s
own
name
after
the
division.
34
b.
Any
liabilities,
including
policy
liabilities,
of
the
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dividing
insurer
that
are
allocated
to
or
remain
the
liability
1
of
another
resulting
insurer
under
the
plan
of
division.
2
3.
If
a
provision
of
any
evidence
of
indebtedness,
whether
3
secured
or
unsecured,
or
a
provision
of
any
contract
other
than
4
an
insurance
policy,
annuity,
or
reinsurance
agreement
that
was
5
issued,
incurred,
or
executed
by
the
dividing
insurer
before
6
the
effective
date
of
this
Act,
requires
the
consent
of
the
7
obligee
to
a
merger
of
the
dividing
insurer,
or
treats
such
a
8
merger
as
a
default,
such
provision
shall
apply
to
a
division
9
of
the
dividing
insurer
as
if
such
division
were
a
merger.
10
4.
If
a
division
breaches
a
contractual
obligation
of
11
the
dividing
insurer,
all
resulting
insurers
are
jointly
12
and
severally
liable
for
the
breach.
The
validity
and
13
effectiveness
of
the
division
shall
not
be
affected
by
the
14
breach.
15
5.
A
direct
or
indirect
allocation
of
capital,
surplus,
16
assets,
or
liabilities,
including
policy
liabilities,
shall
17
occur
automatically,
by
operation
of
law,
and
shall
not
be
18
treated
as
a
distribution
or
transfer
for
any
purpose
with
19
respect
to
either
the
dividing
insurer
or
any
resulting
20
insurer.
21
6.
Liens,
security
interests,
and
other
charges
on
the
22
capital,
surplus,
or
other
assets
of
the
dividing
insurer
23
shall
not
be
impaired
by
the
division,
notwithstanding
any
24
otherwise
enforceable
allocation
of
liabilities,
including
25
policy
liabilities,
of
the
dividing
insurer.
26
7.
If
the
dividing
insurer
is
bound
by
a
security
agreement
27
governed
by
chapter
554
or
article
9
of
the
uniform
commercial
28
code
as
enacted
in
any
other
jurisdiction,
and
the
security
29
agreement
provides
that
the
security
interest
attaches
to
30
after-acquired
collateral,
a
resulting
insurer
shall
be
bound
31
by
the
security
agreement.
32
8.
Unless
provided
in
the
plan
of
division
and
specifically
33
approved
by
the
commissioner,
an
allocation
of
a
policy
or
34
other
liability
is
prohibited
from
doing
any
of
the
following:
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a.
Affecting
the
rights
that
a
policyholder
or
creditor
1
has
under
any
other
law
with
respect
to
such
policy
or
other
2
liability,
except
that
such
rights
shall
be
available
only
3
against
a
resulting
insurer
responsible
for
the
policy
or
4
liability
under
this
section.
5
b.
Releasing
or
reducing
the
obligation
of
a
reinsurer,
6
surety,
or
guarantor
of
the
policy
or
liability.
7
9.
A
resulting
insurer
shall
only
be
liable
for
the
8
liabilities
allocated
to
the
resulting
insurer
in
accordance
9
with
the
plan
of
division
and
this
section
and
shall
not
be
10
liable
for
any
other
liabilities
under
the
common
law
doctrine
11
of
successor
liability
or
any
other
theory
of
liability
12
applicable
to
transferees
or
assignees
of
assets.
13
Sec.
13.
NEW
SECTION
.
521I.13
Shareholder
appraisal
rights.
14
If
a
dividing
insurer
does
not
survive
a
division,
an
15
objecting
shareholder
of
the
dividing
insurer
is
entitled
to
16
appraisal
rights
and
to
obtain
payment
of
the
fair
value
of
17
such
shareholder’s
shares
in
the
same
manner
and
to
the
extent
18
provided
for
a
corporation
as
a
party
to
a
merger
pursuant
to
19
section
490.1302.
20
Sec.
14.
NEW
SECTION
.
521I.14
Rules.
21
The
commissioner
shall
adopt
rules
pursuant
to
chapter
17A
22
to
administer
this
chapter.
23
Sec.
15.
NEW
SECTION
.
521I.15
Enforcement.
24
The
commissioner
may
take
any
action
under
the
25
commissioner’s
authority
to
enforce
compliance
with
this
26
chapter.
27
Sec.
16.
Section
490.120,
subsection
12,
paragraph
c,
28
subparagraph
(2),
Code
2019,
is
amended
to
read
as
follows:
29
(2)
“Plan”
means
a
plan
of
merger
or
,
a
plan
of
share
30
exchange
,
or
a
plan
of
division
pursuant
to
chapter
521I
.
31
Sec.
17.
Section
490.1302,
subsection
1,
Code
2019,
is
32
amended
by
adding
the
following
new
paragraph:
33
NEW
PARAGRAPH
.
g.
Consummation
of
a
division
pursuant
34
to
chapter
521I
to
which
the
corporation
is
a
party
if
the
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corporation
does
not
survive
such
division.
1
Sec.
18.
Section
521.1,
Code
2019,
is
amended
by
adding
the
2
following
new
subsections:
3
NEW
SUBSECTION
.
5.
“Dividing
insurer”
means
the
same
as
4
defined
in
section
521I.1.
5
NEW
SUBSECTION
.
6.
“Resulting
insurer”
means
the
same
as
6
defined
in
section
521I.1.
7
Sec.
19.
NEW
SECTION
.
521.19
Merger
or
consolidation
8
effective
with
division.
9
A
dividing
insurer
and
the
dividing
insurer’s
officers,
10
directors,
and
shareholders
shall
have
the
authority
to
adopt
11
and
execute
a
plan
of
merger
or
consolidation
on
behalf
of
a
12
resulting
insurer,
to
execute
and
deliver
documents,
plans,
13
certificates,
and
resolutions,
and
to
make
any
filings
on
14
behalf
of
such
resulting
insurer.
If
provided
in
a
plan
of
15
merger
or
consolidation,
the
merger
or
consolidation
shall
be
16
effective
simultaneously
with
the
effectiveness
of
a
division
17
pursuant
to
521I.10.
18
EXPLANATION
19
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
20
the
explanation’s
substance
by
the
members
of
the
general
assembly.
21
This
bill
relates
to
the
division
of
domestic
stock
22
insurers.
23
The
bill
defines
a
domestic
stock
insurer
as
a
stock
insurer
24
domiciled
and
organized
under
the
laws
of
this
state
pursuant
25
to
Code
chapter
508,
514B,
or
515,
including
domestic
stock
26
insurers
affiliated
with
a
mutual
insurance
holding
company
27
organized
pursuant
to
Code
section
521A.14,
and
including
those
28
insurers
which
confer
membership
rights
in
the
mutual
insurance
29
company.
A
dividing
insurer
is
defined
as
a
domestic
stock
30
insurer
that
approves
a
plan
of
division
(plan).
A
resulting
31
insurer
is
defined
as
a
dividing
insurer
that
survives
a
32
division,
or
a
new
domestic
stock
insurer
that
is
created
by
33
a
division.
34
The
bill
requires
a
dividing
insurer
to
develop
a
plan
that
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identifies
the
dividing
insurer’s
name,
the
proposed
resulting
1
insurers
and
their
articles
of
incorporation
and
bylaws,
the
2
allocation
of
the
dividing
insurer’s
assets,
liabilities,
3
and
reinsurance
contracts
to
the
resulting
insurers,
and
the
4
manner
in
which
the
shares
in
the
resulting
insurers
will
be
5
distributed
to
the
dividing
insurer
or
its
shareholders.
6
If
the
dividing
insurer
will
survive
the
division,
the
plan
7
must
also
include
any
proposed
amendments
to
the
dividing
8
insurer’s
articles
of
incorporation
and
bylaws
and
the
manner
9
in
which
the
dividing
insurer
proposes
to
cancel
or
convert
10
some
of
its
shares.
If
the
dividing
insurer
will
not
survive
11
the
division,
the
plan
of
division
must
include
details
on
how
12
the
dividing
insurer
will
cancel
or
convert
its
shares.
13
The
bill
allows
a
dividing
insurer
to
amend
or
cancel
a
plan
14
under
certain
conditions
as
detailed
in
the
bill.
15
The
bill
requires
that
prior
to
filing
a
plan
with
the
16
commissioner,
a
dividing
insurer
must
obtain
approval
in
17
accordance
with
its
articles
of
incorporation
and
bylaws.
If
18
the
articles
of
incorporation
and
bylaws
do
not
provide
for
19
such
approval,
the
dividing
insurer
must
obtain
approval
in
20
accordance
with
all
provisions
of
such
that
apply
to
approval
21
of
a
merger.
22
The
bill
provides
that
a
division
is
not
effective
until
23
approved
by
the
commissioner
after
reasonable
notice
and
24
a
public
hearing.
The
commissioner
may
approve
a
plan
25
if
the
commissioner
determines
that
the
interests
of
the
26
policyholders,
creditors,
or
shareholders
of
the
dividing
27
insurer
are
adequately
protected
and
the
proposed
division
is
28
not
unfair
or
unreasonable
to
the
policyholders
of
the
dividing
29
insurer;
that
the
division
is
not
contrary
to
public
policy;
30
that
the
financial
condition
of
the
resulting
insurers
will
31
not
jeopardize
the
financial
stability
of
a
dividing
insurer
32
or
the
resulting
insurers
or
prejudice
the
interests
of
the
33
policyholders
of
such
insurers;
that
all
resulting
insurers
34
created
by
the
proposed
division
are
qualified
and
eligible
to
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receive
a
certificate
of
authority
to
transact
the
business
1
of
insurance
in
this
state;
that
the
proposed
division
does
2
not
violate
the
state’s
voidable
transactions
statute;
that
3
the
proposed
division
is
not
for
the
purpose
of
hindering,
4
delaying,
or
defrauding
any
policyholders
or
other
creditors
5
of
the
dividing
insurer;
that
all
resulting
insurers
will
be
6
solvent;
and
that
the
remaining
assets
of
a
resulting
insurer
7
will
not
be
unreasonably
small
in
relation
to
the
business
and
8
transactions
in
which
such
resulting
insurer
has
been
engaged
9
in
or
will
engage
in
after
completion
of
the
division.
10
The
bill
requires
the
commissioner
to
issue
an
order,
11
including
findings
of
fact
and
conclusions
of
law,
to
approve
a
12
plan
of
division
and
to
issue
a
certificate
of
authority
to
the
13
resulting
insurers.
14
A
dividing
insurer
may
submit
a
written
request
to
the
15
commissioner
that
confidentiality
be
maintained
regarding
all
16
business
and
other
proprietary
information
submitted
to
the
17
commissioner
in
connection
with
the
dividing
insurer’s
plan
of
18
division.
The
commissioner
must
make
a
determination
regarding
19
the
dividing
insurer’s
request
prior
to
issuing
a
notice
of
20
a
public
hearing.
If
the
commissioner
grants
the
request,
21
any
information
the
commissioner
determines
shall
remain
22
confidential
is
not
available
for
public
inspection
and
shall
23
not
be
subject
to
Code
chapter
22.
The
plan
of
division
is
not
24
confidential
and
shall
be
available
for
public
inspection.
25
If
the
commissioner
approves
a
dividing
insurer’s
plan,
an
26
officer
of
the
dividing
insurer
must
sign
a
certificate
of
27
division
that
sets
forth
information,
as
detailed
in
the
bill,
28
related
to
the
dividing
insurer’s
post-division
status
and
any
29
resulting
insurer’s
post-division
status.
A
certificate
of
30
division
is
effective
on
the
date
the
dividing
insurer
files
31
the
certificate
with
the
secretary
of
state
as
specified
in
32
the
plan
of
division.
The
certificate
of
division
becomes
33
effective
not
later
than
90
days
after
it
is
filed.
34
When
a
division
becomes
effective
and
the
dividing
insurer
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survives,
the
bill
provides
that
the
dividing
insurer
continues
1
to
exist
and
that
the
articles
of
incorporation
and
the
bylaws
2
of
the
dividing
insurer
must
be
amended
as
provided
in
the
3
plan.
If
the
dividing
insurer
does
not
survive,
the
dividing
4
insurer’s
separate
existence
ceases
to
exist
and
any
resulting
5
insurers
created
by
the
plan
come
into
existence.
The
bill
6
provides
that
all
resulting
insurers
hold
any
capital,
surplus,
7
and
other
assets
allocated
to
each
as
a
successor
to
the
8
dividing
insurer
by
operation
of
law,
and
not
by
transfer.
All
9
capital,
surplus,
and
other
assets
of
the
dividing
insurer
10
that
are
allocated
by
the
plan
of
division
either
vest
in
the
11
applicable
resulting
insurer
or
remain
vested
in
the
dividing
12
insurer
as
provided
in
the
plan.
All
capital,
surplus,
and
13
other
assets
that
are
not
allocated
by
the
plan
remain
vested
14
in
the
dividing
insurer
if
the
dividing
insurer
survives
the
15
division,
are
allocated
to
the
resulting
insurers
individually
16
if
the
dividing
insurer
does
not
survive
the
division,
or
vest
17
as
otherwise
provided
in
the
bill.
18
A
resulting
insurer
to
which
a
cause
of
action
is
allocated
19
may
be
substituted
or
added
in
any
pending
action
to
which
20
the
dividing
insurer
is
a
party
when
the
division
becomes
21
effective.
All
liabilities
of
a
dividing
insurer
are
allocated
22
between
or
among
any
resulting
insurers
and
each
resulting
23
insurer
to
which
liabilities
are
allocated
is
liable
only
for
24
those
liabilities,
including
policy
liabilities,
allocated
as
a
25
successor
to
the
dividing
insurer.
26
The
bill
also
provides
that
when
a
division
becomes
27
effective
any
shares
in
the
dividing
insurer
that
are
converted
28
or
canceled
entitle
the
shareholders
of
those
shares
to
29
the
rights
provided
under
the
plan
of
division
and
per
any
30
appraisal
rights
they
may
have
as
detailed
in
the
bill.
31
Unless
otherwise
provided
in
the
plan,
the
shares
and
32
securities
of
each
resulting
insurer
are
distributed
to
the
33
dividing
insurer
if
it
survives
the
division,
or
pro
rata
to
34
any
shareholders
of
the
dividing
insurer
that
do
not
assert
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appraisal
rights.
1
The
bill
provides
that
after
a
division
becomes
effective,
2
each
resulting
insurer
is
individually
liable
for
all
3
liabilities
that
such
resulting
insurer
issues,
undertakes,
or
4
incurs
in
its
own
name;
each
resulting
insurer
is
individually
5
liable
for
the
liabilities
of
the
dividing
insurer
that
are
6
allocated
to
or
remain
the
liability
of
such
resulting
insurer
7
as
specified
in
the
plan;
and
the
dividing
insurer
remains
8
responsible
for
all
liabilities
of
the
dividing
insurer
that
9
are
not
allocated
by
the
plan
if
the
dividing
insurer
survives
10
the
division.
If
the
dividing
insurer
does
not
survive
the
11
division,
each
resulting
insurer
is
pro
rata
individually
12
liable
for
all
liabilities
of
the
dividing
insurer
that
are
not
13
allocated
by
the
plan.
14
If
a
division
breaches
a
contractual
obligation
of
the
15
dividing
insurer,
all
resulting
insurers
are
liable,
jointly
16
and
severally,
for
the
breach.
The
validity
and
effectiveness
17
of
the
division
are
not
affected
by
the
breach.
18
In
a
division,
a
direct
or
indirect
allocation
of
capital,
19
surplus,
assets,
or
liabilities,
including
policy
liabilities,
20
occurs
automatically
by
operation
of
law
and
is
not
treated
21
as
a
distribution
or
transfer
for
any
purpose
with
respect
to
22
either
the
dividing
insurer
or
any
of
the
resulting
insurers.
23
Except
as
provided
in
the
plan
and
as
approved
by
the
24
commissioner,
an
allocation
of
a
policy
or
other
liability
does
25
not
affect
the
rights
that
a
policyholder
or
creditor
has
under
26
any
other
law
with
respect
to
such
policy
or
other
liability,
27
except
that
such
rights
are
available
only
against
a
resulting
28
insurer
responsible
for
the
policy
or
liability.
A
reinsurer,
29
surety,
or
guarantor
of
the
policy
or
liability
is
not
released
30
from
their
obligations
under
the
policy
or
other
liability.
31
The
bill
requires
the
commissioner
to
adopt
rules
pursuant
32
to
Code
chapter
17A
to
administer
the
requirements
of
the
33
bill
and
allows
the
commissioner
to
take
any
action
under
the
34
commissioner’s
authority
to
enforce
compliance
with
the
bill.
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The
bill
amends
Code
section
490.120
to
add
a
plan
of
1
division
to
the
definition
of
plan.
The
bill
amends
Code
2
section
490.1302
to
provide
for
shareholder
appraisal
rights
3
for
a
division
to
which
a
corporation
is
a
party,
if
the
4
corporation
does
not
survive
such
division.
The
bill
amends
5
Code
chapter
521
to
allow
a
dividing
insurer
to
adopt
and
6
execute
a
plan
of
merger
or
consolidation
on
behalf
of
a
7
resulting
insurer
and
if
provided
for
in
the
plan
of
merger
or
8
consolidation,
the
merger
or
consolidation
shall
be
effective
9
simultaneously
with
the
effectiveness
of
a
division
under
the
10
bill.
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