Michigan-2017-SB1029-Engrossed

SB-1029, As Passed Senate, June 12, 2018

SUBSTITUTE FOR

SENATE BILL NO. 1029

A bill to amend 1956 PA 218, entitled

"The insurance code of 1956,"

by amending section 7604 (MCL 500.7604), as amended by 1994 PA 226,

and by adding chapter 55.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

CHAPTER 55

DOMESTIC STOCK INSURER DIVISION

Sec. 5500. As used in this chapter:

(a) "Assets" means property, whether real, personal, mixed,

tangible, or intangible, and any right or interest in the property,

including all rights under contracts and other agreements.

(b) "Capital" means the capital stock component of statutory

surplus, as defined in the National Association of Insurance

Commissioners Accounting Practices and Procedures Manual, version

effective January 1, 2001, and subsequent revisions.

by which a domestic stock insurer divides into 2 or more resulting

insurers in accordance with a plan of division and this chapter.

(d) "Dividing insurer" means a domestic stock insurer that

approves a plan of division pursuant to section 5505.

(e) "Domestic stock insurer" means a domestic stock insurer

organized or created under the laws of this state.

(f) "Insurer" means a corporation engaged or attempting to

engage in the business of making insurance or surety contracts.

(g) "Liability" means any liability or obligation of any kind,

character, or description, whether known or unknown, absolute or

contingent, accrued or unaccrued, disputed or undisputed,

liquidated or unliquidated, secured or unsecured, joint or several,

due or to become due, determined, determinable, or otherwise.

(h) "New insurer" means a domestic stock insurer that is

created by a division occurring on or after the effective date of

the amendatory act that added this chapter.

(i) "Plan of division" means a plan of division approved by a

dividing insurer in accordance with section 5505.

(j) "Resulting insurer" means a domestic stock insurer created

by a division or a dividing insurer that survives a division.

(k) "Shareholder" means the person in whose name a share is

registered in the records of a corporation or the beneficial owner

of a share to the extent of the rights granted by a nominee

certificate on file with a corporation.

(l) "Sign" or "signature" includes a manual, facsimile,

conformed, or electronic signature.

(m) "Surplus" means total statutory surplus less capital,

calculated in accordance with the National Association of Insurance

Commissioners Accounting Practices and Procedures Manual, version

effective January 1, 2001, and subsequent revisions.

(n) "Transfer" includes an assignment, assumption, conveyance,

sale, lease, encumbrance, including a mortgage or security

interest, gift, or transfer by operation of law.

Sec. 5503. (1) A domestic stock insurer may, in accordance

with the requirements of this chapter, divide into 2 or more

resulting insurers pursuant to a plan of division.

(2) Each plan of division must include all of the following:

(a) The name of the domestic stock insurer seeking to divide.

(b) The name of each resulting insurer that will be created by

the proposed division.

division, a copy of both of the following:

(i) Its proposed articles of incorporation.

(ii) Its proposed bylaws.

(d) The manner of allocating between or among the resulting

insurers both of the following:

(i) The assets of the domestic stock insurer that will not be

owned by, if the dividing insurer survives the division, the

dividing insurer, or, if the dividing insurer does not survive the

division, all of the resulting insurers as tenants in common under

section 5511.

(ii) The liabilities of the domestic stock insurer, including

policy liabilities, to which not all of the resulting insurers will

become jointly and severally liable under section 5513(1)(c).

(e) The manner of distributing shares in the new insurers to

the dividing insurer or its shareholders.

(f) A reasonable description of the liabilities, including

policy liabilities, and items of capital, surplus, or other assets,

in each case, that the domestic stock insurer proposes to allocate

to each resulting insurer, including the manner by which each

reinsurance contract is to be allocated.

(g) All terms and conditions required by the laws of this

state or the articles of incorporation and bylaws of the domestic

stock insurer.

(h) All other terms and conditions of the division.

(3) If the domestic stock insurer will survive the division,

the plan of division must include, in addition to the information

required by subsection (2), all of the following:

(a) All proposed amendments to the dividing insurer's articles

of incorporation and bylaws, if any.

(b) If the dividing insurer desires to cancel some, but fewer

than all, shares in the dividing insurer, the manner in which it

will cancel the shares.

than all, shares in the dividing insurer into shares, securities,

obligations, money, other property, rights to acquire shares or

securities, or any combination thereof, a statement disclosing the

manner in which it will convert the shares.

(4) If the domestic stock insurer will not survive the

proposed division, the plan of division must contain, in addition

to the information required by subsection (2), the manner in which

the dividing insurer will cancel or convert shares in the dividing

insurer into shares, securities, obligations, money, other

property, rights to acquire shares or securities, or any

combination thereof.

(5) A dividing insurer may amend a plan of division in

accordance with any procedures set forth in the plan of division

or, if no procedures are set forth in the plan of division, in any

manner determined by the board of directors of the dividing

insurer, except that a shareholder that was entitled to vote on or

consent to approval of the plan of division is entitled to vote on

or consent to any amendment of the plan of division that will

change any of the following:

(a) The amount or kind of shares, securities, obligations,

money, other property, rights to acquire shares or securities, or

any combination thereof, to be received by any of the shareholders

of the dividing insurer under the plan of division.

(b) The articles of incorporation or bylaws of any resulting

insurer that will be in effect when the division becomes effective,

except for changes that do not require approval of the shareholders

of the resulting insurer under its articles of incorporation or

bylaws.

the change would adversely affect the shareholders in any material

respect.

(6) A dividing insurer may abandon a plan of division after it

has approved the plan of division without any action by the

shareholders and in accordance with any procedures set forth in the

plan of division or, if no procedures are set forth in the plan of

division, in a manner determined by the board of directors of the

dividing insurer.

(7) A dividing insurer may abandon a plan of division after it

has filed a certificate of division with the department by filing

with the department a notice of abandonment signed by the dividing

insurer. The notice of abandonment is effective on the date it is

filed with the department and the dividing insurer is considered to

have abandoned its plan of division on that date.

(8) A dividing insurer shall not abandon or amend its plan of

division once the division becomes effective.

Sec. 5505. (1) A domestic stock insurer shall not file a plan

of division with the director of the department unless the plan of

division has been approved in accordance with all provisions of its

articles of incorporation and bylaws and by the board of directors

and shareholders of the dividing insurer.

(2) If a provision of the articles of incorporation or bylaws

of a domestic stock insurer adopted before the effective date of

the amendatory act that added this chapter requires that a specific

number or percentage of the board of directors or shareholders

approve the proposal or adoption of a plan of merger, or imposes

other special procedures for the proposal or adoption of a plan of

merger, the domestic stock insurer shall adhere to the provision in

proposing or adopting a plan of division. If a provision of the

articles of incorporation or bylaws of a domestic stock insurer is

amended on or after the effective date of the amendatory act that

added this chapter, the provision applies to a division only in

accordance with its express terms.

Sec. 5507. (1) A division does not become effective until it

is approved by the director of the department after reasonable

notice and a public hearing. A hearing conducted under this section

must be conducted as a contested case subject to the administrative

procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

(2) Subject to subsection (12), the director of the department

shall approve a plan of division unless the director of the

department finds any of the following:

(a) The interest of the policyholders of the dividing insurer

that may become policyholders of a resulting insurer will not be

adequately protected by the resulting insurer or acquiring party of

a resulting insurer, if any.

(b) After the division, any resulting insurer would not be

able to satisfy the requirements for the issuance of a certificate

of authority.

insurance in this state or tend to create a monopoly in this state.

(d) The financial condition of an acquiring party of a

resulting insurer, if any, is such that it might jeopardize the

financial stability of the insurer, or prejudice the interest of

its policyholders or the interests of a remaining shareholder that

is unaffiliated with the acquiring party.

(e) The terms of the plan of division are unfair and

unreasonable to the dividing insurer's policyholders or

shareholders.

(f) An acquiring party of a resulting insurer, if any, has

plans or proposals to liquidate the resulting insurer, sell its

assets, or consolidate or merge the resulting insurer with a

person, or to make any other material change in its business or

corporate structure or management, that are unfair and unreasonable

to the resulting insurer's policyholders, and not in the public

interest.

(g) The competence, experience, and integrity of the persons

who would control the operation of a resulting insurer are such

that it would not be in the interest of the resulting insurer's

policyholders or the general public to permit the division.

(h) The division is likely to be hazardous or prejudicial to

the insurance-buying public.

(i) The proposed division violates the uniform voidable

transactions act, 1998 PA 434, MCL 566.31 to 566.45.

(j) The division is being made for purposes of hindering,

delaying, or defrauding any policyholders or other creditors of the

dividing insurer.

(k) One or more resulting insurers will not be solvent on the

consummation of the division.

(l) The assets allocated to 1 or more resulting insurers will

be, on consummation of a division, unreasonably small in relation

to the business and transactions in which the resulting insurer was

engaged or is about to engage.

(3) If a division is undertaken in conjunction with the

divestiture of 1 of the resulting insurers, the director shall not

approve the division until the potential acquiring party has

received the necessary approvals under section 1315 or 7604, as

applicable.

(4) In determining whether the standards set forth in

subsection (2)(i) have been satisfied, the director of the

department shall only apply the uniform voidable transactions act,

1998 PA 434, MCL 566.31 to 566.45, to a dividing insurer in its

capacity as a resulting insurer and shall not apply the uniform

voidable transactions act, 1998 PA 434, MCL 566.31 to 566.45, to

any dividing insurer that is not proposed to survive the division.

(5) In determining whether the standards set forth in

subsection (2)(i), (j), (k), and (l) have been satisfied, the

director of the department may consider, among other things, all

assets, liabilities, and cash flows.

(6) In determining whether the standards set forth in

subsection (2)(i) have been satisfied, with respect to each

resulting insurer, the director of the department shall, in

applying the uniform voidable transactions act, 1998 PA 434, MCL

566.31 to 566.45, do all of the following:

(a) Treat the resulting insurer as a debtor.

(b) Treat liabilities allocated to the resulting insurer as

obligations incurred by a debtor.

reasonably equivalent value in exchange for incurring the

obligations.

(d) Treat assets allocated to the resulting insurer as

remaining property.

(7) All information, documents, materials, and copies of

documents and materials submitted to, obtained by, or disclosed to

the director of the department in connection with a plan of

division or in contemplation of a plan of division, including any

information, documents, materials, or copies provided by or on

behalf of a domestic stock insurer in advance of its adoption or

submission of a plan of division, are confidential and are subject

to the same protection and treatment in accordance with section

1355 as information and documents disclosed to or obtained by the

director of the department in the course of an examination or

investigation made under sections 1351 and 1357 until the time, if

any, that a notice of the hearing contemplated by subsection (1) is

issued.

(8) From and after the issuance of a notice of the hearing

contemplated by subsection (1), all business, financial, and

actuarial information for which the domestic stock insurer requests

confidential treatment, other than the plan of division and any

materials incorporated by reference into or otherwise made a part

of the plan of division that must not be eligible for confidential

treatment after the issuance of a notice of the hearing, continues

to be confidential and is not available for public inspection and

must be subject to the same protection and treatment in accordance

with section 1355 as information and documents disclosed to or

obtained by the director of the department in the course of an

examination or investigation made under sections 1351 and 1357.

However, if the director of the department determines that the

interest of the public in making the information available for

public inspection outweighs the interest of the dividing insurer in

keeping the information confidential, the director of the

department may, after notice and an opportunity to be heard, make

the information available to public inspection in accordance with

the freedom of information act, 1976 PA 442, MCL 15.231 to 15.246.

(9) All expenses incurred by the director of the department in

connection with proceedings under this section, including expenses

for the services of any attorneys, actuaries, accountants, and

other experts not otherwise a part of the director's staff as may

be reasonably necessary to assist the director in reviewing the

proposed division, must be paid by the dividing insurer filing the

plan of division. A dividing insurer may allocate expenses

described in this subsection in a plan of division in the same

manner as any other liability.

(10) If the director of the department approves a plan of

division, the director of the department shall issue an order

approving the plan of division that must be accompanied by findings

of fact and conclusions of law.

(11) The conditions in this section for freeing 1 or more of

the resulting insurers from the liabilities of the dividing insurer

and for allocating some or all of the liabilities of the dividing

insurer are conclusively satisfied if the plan of division has been

approved by the director of the department in a final order, after

all relevant appeals relating to the final order have been

exhausted.

(12) The director may establish any additional procedures

necessary or appropriate in connection with his or her review of a

plan of division.

Sec. 5509. (1) After a plan of division has been adopted and

approved under sections 5503 to 5507, an officer or duly authorized

representative of the dividing insurer shall sign a certificate of

division. The certificate of division is a public document.

(2) The certificate of division must set forth all of the

following:

(a) The name of the dividing insurer.

(b) A statement disclosing whether the dividing insurer will

survive the division.

division.

(d) The date on which the division is to be effective, which

must not be more than 90 days after the dividing insurer has filed

the certificate of division with the department.

(e) A statement that the division was approved by the director

of the department in accordance with section 5507.

(3) The articles of incorporation and bylaws of each new

insurer must satisfy the requirements of the laws of this state.

(4) A certificate of division is effective when filed with the

department as provided in this section or on another date specified

in the plan of division, whichever is later. However, a certificate

of division must become effective not more than 90 days after the

related plan of division has been approved by the department. A

division is effective when the relevant certificate of division is

effective.

Sec. 5511. (1) When a division becomes effective under section

5509(4), all of the following apply:

(a) If the dividing insurer has survived the division:

(i) It continues to exist.

(ii) Its articles of incorporation must be amended, if at all,

as provided in the plan of division.

(iii) Its bylaws must be amended, if at all, as provided in

the plan of division.

(b) If the dividing insurer has not survived the division, its

separate existence ceases to exist, subject to satisfying the other

requirements of this state relating to the surrender of a

certificate of authority to the extent applicable.

(i) It comes into existence.

(ii) It shall hold any capital, surplus, and other assets

allocated to the new insurer by the plan of division as a successor

to the dividing insurer, automatically, by operation of law and not

by transfer, whether directly or indirectly.

(iii) Its articles of incorporation, if any, and bylaws, if

any, are effective.

(iv) The director of the department shall issue a certificate

of authority, subject to satisfying the other requirements of this

state relating to the formation and licensure of new domestic stock

insurers to the extent applicable.

(d) Capital, surplus, and other assets of the dividing insurer

are vested as follows:

(i) If it is allocated by the plan of division, it vests in

the applicable resulting insurer as provided in the plan of

division.

(ii) If it is not allocated by the plan of division, it vests,

if the dividing insurer survives the division, in the dividing

insurer or, if the dividing insurer does not survive the division,

equally in the resulting insurers as tenants in common.

(iii) Otherwise it vests as provided in this section without

transfer, reversion, or impairment.

(e) A resulting insurer to which a cause of action is

allocated as provided in subdivision (d) may be substituted or

added in any pending action or proceeding to which the dividing

insurer is a party when the division becomes effective.

(f) The liabilities, including policy liabilities, of the

dividing insurer are allocated between or among the resulting

insurers as provided in section 5513 and each resulting insurer to

which liabilities are allocated is liable only for those

liabilities, including policy liabilities, so allocated as

successors to the dividing insurer, automatically, by operation of

law, and not by transfer or assumption, whether directly or

indirectly.

(g) The shares in the dividing insurer that are to be

converted or canceled in the division are converted or canceled,

and the shareholders of those shares are entitled only to the

rights provided to them under the plan of division and any

appraisal rights that they may have under section 5515.

(2) Except as provided in the articles of incorporation or

bylaws of the dividing insurer, the division does not give rise to

any rights that a shareholder, director of domestic stock insurer,

or third party would have on a dissolution, liquidation, or winding

up of the dividing insurer.

(3) The allocation to a new insurer of capital, surplus, or

other assets that is collateral covered by an effective financing

statement is not effective until a new financing statement naming

the new insurer as a debtor is effective under the uniform

commercial code, 1962 PA 174, MCL 440.1101 to 440.9994.

(4) Unless otherwise provided in the plan of division, the

shares in and any securities of each new insurer must be

distributed to either of the following:

(a) The dividing insurer, if it survives the division.

(b) Shareholders of the dividing insurer that do not assert

any appraisal rights that they may have under section 5515, pro

rata.

(5) A division that becomes effective under section 5509(4) is

not an assignment of any insurance policy, annuity, or reinsurance

agreement or any other type of contract.

Sec. 5513. (1) Except as otherwise expressly provided in this

section, when a division becomes effective, each resulting insurer

is responsible, automatically, by operation of law, for all of the

following:

(a) Individually, the liabilities, including policy

liabilities, that the resulting insurer issues, undertakes, or

incurs in its own name after the division.

(b) Individually, the liabilities, including policy

liabilities, of the dividing insurer that are allocated to the

resulting insurer to the extent specified in the plan of division.

the liabilities, including policy liabilities, of the dividing

insurer that are not allocated by the plan of division.

(2) Except as otherwise expressly provided in this section,

when a division becomes effective, a resulting insurer is not

responsible for and does not have any liability or obligation in

respect of either of the following:

(a) Any liabilities, including policy liabilities, that

another resulting insurer issues, undertakes, or incurs in its own

name after the division.

(b) Any liabilities, including policy liabilities, of the

dividing insurer that are allocated to another resulting insurer in

accordance with the plan of division.

(3) If a provision of any debt security, note, or similar

evidence of indebtedness for money borrowed, whether secured or

unsecured, indenture, or other contract relating to indebtedness,

or a provision of any other type of contract other than an

insurance policy, annuity, or reinsurance agreement, that was

issued, incurred, or executed by the domestic stock insurer before

the effective date of the amendatory act that added this chapter

requires the consent of the obligee to a merger of the dividing

insurer or treats the merger as a default and does not provide that

a division of the insurer does not require the consent of the

obligee, as applicable, that provision applies to a division of the

dividing insurer as if the division were a merger.

(4) If, after the approval of a plan of division, it is found

that the act of undertaking a division itself breached a

contractual obligation of the dividing insurer when the division

became effective, all of the resulting insurers are liable, jointly

and severally, for the contractual breach, but the validity and

effectiveness of the division, including, without limitation, the

allocation of liabilities in accordance with the plan of division,

is not affected by the contractual breach.

(5) A direct or indirect allocation of capital, surplus,

assets, or liabilities, including policy liabilities, in a division

must occur automatically, by operation of law, and is not treated

as a distribution or transfer for any purpose with respect to

either the dividing insurer or any of the resulting insurers.

(6) Liens, security interests, and other charges on the

capital, surplus, or other assets of the dividing insurer are not

impaired by the division, notwithstanding any otherwise enforceable

allocation of liabilities, including policy liabilities, of the

dividing insurer.

(7) If the dividing insurer is bound by a security agreement

under article 9 of the uniform commercial code, 1962 PA 174, MCL

440.9101 to 440.9994, or the substantial equivalent enacted in any

other jurisdiction, and the security agreement provides that the

security interest attaches to after-acquired collateral, each

resulting insurer is bound by the security agreement.

(8) An allocation of a policy or other liability does not do

either of the following:

(a) Except as provided in the plan of division and

specifically approved by the director, affect the rights that a

policyholder or creditor has under other law in respect of the

policy or other liability, except that those rights are available

only against a resulting insurer responsible for the policy or

liability under this section.

(b) Release or reduce the obligation of a reinsurer, surety,

or guarantor of the policy or liability.

(9) A resulting insurer is only liable for the liabilities

allocated to it in accordance with the plan of division and this

section and is not liable for any other liabilities under the

common law doctrine of successor liability or any similar theory of

liability applicable to transferees or assignees of property.

Sec. 5515. If the dividing insurer does not survive the

division, a record shareholder of a dividing insurer is entitled to

dissent from and obtain payment of the fair value of that

shareholder's shares, in the same manner and to the extent provided

for under sections 1762 to 1774 of the business corporation act,

1972 PA 284, MCL 450.1762 to 450.1774.

Sec. 5517. (1) A shareholder of a dividing insurer is entitled

to dissent from, and obtain payment of the fair value of the

shareholder's shares in connection with, a division under this

chapter in which the dividing insurer does not survive the

division, unless the shares are converted into or canceled solely

for 1 or more of the following:

(a) Cash.

(b) Shares that are listed on a national securities exchange

or designated as a national market system security on an

interdealer quotation system by the National Association of

Securities Dealers, on the record date fixed to vote on the plan of

division.

(2) Section 1762 of the business corporation act, 1972 PA 284,

MCL 450.1762, applies to a shareholder exercising the rights in the

same manner as would be applicable to a merger of a domestic

corporation.

Sec. 7604. (1) An insurer organized under the laws of this

state and transacting business under this act may consolidate or

merge with or reinsure all or any part of its outstanding risks for

the purpose of effecting a merger or consolidating with an insurer

of generally like character authorized to transact business in this

state under terms that are reasonable and just. "Consolidation" and

"merger", as used in this chapter, include a transaction ~~where~~ in

which an authorized insurer ~~authorized to transact business in this~~

~~state, which~~ that is a wholly-owned subsidiary of a controlling

corporation, which need not be an insurer, distributes shares of

the capital stock of the controlling corporation in merging another

insurer into the subsidiary or in merging the subsidiary into

another insurer. If an insurer proposes to consolidate or merge

with, or reinsure all of its outstanding risk with, another insurer

for the purpose of effecting a merger or consolidation, the

following procedure ~~shall~~ must be followed:

(a) The insurers shall petition the ~~commissioner,~~ director,

setting forth the terms and conditions of the proposed

consolidation, merger, or agreement of reinsurance, to which the

~~commissioner~~ director may ~~in his or her discretion~~ grant

preliminary, tentative, or conditional approval.

(b) After securing the approval from the ~~commissioner,~~

director, the insurers shall give notice, either personally or

through mailing at least 21 days before the time fixed for the

meeting, to the last known postal address of each stockholder,

subscriber, or member, that the question of the consolidation,

merger, or reinsurance will be voted ~~upon~~ on at a regular or

special meeting of the stockholders, subscribers, or members, which

notice ~~shall~~ must fairly but briefly describe the proposed

procedure.

the purpose of effecting a merger or consolidation ~~shall~~ must be

approved at the regular or special meeting held in pursuance of the

call and notice, by the affirmative vote of not less than a

majority of the members or subscribers voting in person or by proxy

if it is a mutual or a cooperative or assessment corporation or a

reciprocal or interinsurance exchange, or not less than a majority

of the outstanding capital stock, if it is a stock company.

(d) The consolidation or merger agreement or contract of

reinsurance for the purpose of effecting a merger or consolidation,

together with proper proof that it has been approved by the

stockholders, subscribers, or members as provided in this section,

~~shall~~ must be submitted to the ~~commissioner~~ director for final

approval. This contract ~~shall~~ is not ~~become~~ effective until the

~~commissioner,~~ director, in his or her discretion, issues a

certificate of final approval to the petitioner. If the terms of

the consolidation or merger or reinsurance contract for the purpose

of effecting a the merger or consolidation provide that securities

~~shall~~ must pass to an insurer assuming the liabilities for which

the securities are held, a public official, or other person or

company holding the securities, shall, ~~upon~~ on the written order of

the ~~commissioner~~ director, deliver the securities to or credit the

securities to the account of the corporation, corporations, person,

or persons entitled to the securities by the terms of the contract

and the order of the ~~commissioner.~~director.

(2) To facilitate the merger of any resulting insurer with and

into another company simultaneously with the effectiveness of a

division authorized by this act, a dividing insurer, including its

officers, directors, and shareholders, may adopt and execute a plan

of merger or consolidation on behalf of a resulting insurer and may

execute and deliver documents, plans, certificates, and

resolutions, and may make any filings, in each case, on behalf of

the resulting insurer. If provided in a plan of merger or

consolidation described in this subsection, the merger or

consolidation is effective simultaneously with the effectiveness of

a division authorized by this act. On request of the dividing

insurer, the director may waive the other requirements of this

section with respect to any merger or consolidation involving only

domestic stock insurers and may issue its final approval of the

merger or consolidation as part of its approval of a plan of

division under this act.

(3) ~~(2)~~ Consolidation, merger, or reinsurance for the purpose

of effecting a merger or consolidation of all of the insurance risk

of any membership corporation under this section, ~~shall act~~ acts as

a dissolution of the corporation except ~~in the case of~~ for a stock

company, which ~~shall~~ must be dissolved in accordance with the

business corporation act, ~~Act No. 284 of the Public Acts of 1972,~~

~~being sections~~ 1972 PA 284, MCL 450.1101 to 450.2098. ~~of the~~

~~Michigan Compiled Laws.~~ All liability ~~upon~~ on a stock company's

certificates or contracts ~~shall cease upon~~ ceases on the expiration

of 5 days ~~following~~ after the consolidation, merger, or reinsurance

for the purpose of effecting a merger or consolidation, but its

officers may thereafter perform any act or acts necessary to close

its affairs with the approval of the ~~commissioner.~~director.

(4) ~~(3)~~ This section ~~shall~~ does not ~~be construed to~~ prohibit

an insurer from reinsuring a fractional part or all of an

individual risk in the usual or incidental conduct of its business.

(5) ~~(4)~~ Consolidation, merger, or reinsurance for the purpose

of effecting a merger or consolidation of all or a substantial

portion of the risks of a fraternal benefit society ~~shall be~~ is

governed by this section insofar as not otherwise regulated by

chapter 81a, specifically governing fraternal benefit societies.

(6) ~~(5)~~ This section ~~shall~~ does not ~~be construed to~~ prohibit a

title insurance corporation from acquiring by merger, exchange of

stock, or otherwise, if permitted by and ~~pursuant to Act No. 284 of~~

~~the Public Acts of 1972,~~ under the business corporation act, 1972

PA 284, MCL 450.1101 to 450.2098, a corporation engaged in the

general abstract business or the assets of ~~such~~ a corporation

engaged in the general abstract business.

(7) ~~(6)~~ Notwithstanding subsection (1), ~~when~~ if a farmers

mutual insurer organized under chapter 68 proposes to merge with

any other mutual insurer, the surviving insurer may give notice to

its members by publication as provided in section 5214(2).