SECTIONS 4090-4096 - California Statutes

INSURANCE CODE

SECTION 4090-4096

4090. By following the procedure specified in this article, any
domestic mutual insurer described in this article may merge,
consolidate, or otherwise unite with or become a part of, or may
reinsure all of its policies with and, upon assumption of all of its
liabilities, may transfer all of its assets to, another insurer,
domestic or foreign. Chapter 13 (commencing with Section 1300) of
Division 1 of Title 1 of the Corporations Code and Article 1
(commencing with Section 11535) of Chapter 14 of Part 2 of Division 2
do not apply to any such transaction.

4091. The plan and agreement by which any such transaction is to be
effected shall be approved by a resolution of the majority of the
board of directors of each domestic mutual insurer reciting the
reasons for and the purposes of the proposed transaction and the
manner in which the transaction is expected to benefit and serve the
best interests of the domestic mutual insurer and its members. The
plan and agreement shall thereafter be submitted to the commissioner,
who shall examine the same and require such provisions to be
inserted in the agreement and such actions to be taken in connection
with the transaction including, but not limited to the following:
(a) The terms and conditions of the transaction.
(b) Any fee, commission, or other valuable consideration
whatsoever, other than regular salary and compensation paid to any
director, officer, agent, or employee of the domestic mutual insurer
in connection with the transaction.
(c) At the expense of the applicant, an opinion as to the fairness
of the terms of the plan and an appraisal of the fair value of each
insurer, together with the respective equity interests of the members
therein, by one or more qualified disinterested persons appointed by
the domestic mutual insurer with the approval of the commissioner
unless the commissioner finds that such an opinion or appraisal is
not necessary to protect the interests of current members of the
domestic mutual insurer.
(d) The contents of the notice of the vote on the transaction by
the members of each domestic mutual insurer that is a party thereto.
(e) The manner and form of voting thereon by the members of each
such domestic mutual insurer.
(f) Any other change as the commissioner may deem necessary in
order that the transaction may be fair, just, and equitable to the
parties to the transaction and their respective policyholders,
owners, creditors, and the public.

4092. When any such plan and agreement shall have been approved by
the commissioner, with any changes required by him, the same shall be
approved in the case of each domestic mutual insurer that is a party
to the transaction by not less than two-thirds of the votes cast by
the members thereof represented in person or by proxy at a meeting
called to consider the same. At least 30 days before the day fixed
for the meeting, notice of such meeting and its purpose shall be
given to the members at their addresses appearing on the books
maintained at the home office of the insurer. With respect to members
whose addresses do not appear on such books of the insurer, notice
shall be deemed to have been given if published at least once in some
newspaper of general circulation in the county in which the
principal office of the insurer is located. At such meeting the
presence in person or by proxy of 10 percent of such members of such
insurer shall constitute a quorum. In the absence of a quorum the
members present at the meeting in person or by proxy may adjourn the
meeting to a later date. No further notice need be given of the date
to which the meeting is adjourned.

4093. If the vote is in the affirmative, a certified copy of all
proceedings relating to the proposed transaction shall be filed with
the commissioner. If one of the insurers that is a party to the
transaction is a foreign corporation there shall also be filed with
the commissioner evidence of such approval, consent, or authorization
as may be required by the laws of the state of incorporation of the
foreign insurer. If the commissioner finds that the proceedings have
been in accordance with the law and the commissioner's requirements,
he or she shall issue a certificate approving the plan and agreement
and the transaction shall become effective when the certificate, the
agreement, and any other documents required by law have been filed
with the Secretary of State.
The fee for issuing the certificate approving the transaction
shall be four thousand two hundred fifty dollars ($4,250), payable in
advance with the filing with the commissioner of the first papers
relating to proposed transaction; five dollars ($5) shall be charged
for each signed and sealed or certified copy thereof issued as part
of the same transaction in which the original certificate is issued.

4094. Any plan of merger, consolidation, or other unification under
this article shall provide that all rights and properties of the
parties to the plan of merger, consolidation or other unification
shall accrue to and become the rights and properties of the surviving
or consolidated or continuing corporation which shall succeed to and
assume all the obligations and liabilities of the merged,
consolidating, or transferring corporation in the same manner as if
incurred or contracted by the surviving, consolidated, or continuing
corporation.

4095. In the event a mutual insurer is merged, consolidated, or
part of a reorganization under the procedures specified in this
article, and the surviving, consolidated, or continuing company is an
incorporated stock insurer, the plan shall provide for the manner of
converting or exchanging the equity interests of current members in
the domestic mutual insurer into shares, subscription rights,
warrants, options, cash, dividends, premium credits, certificates of
contribution, or any other interests that may be provided in the
plan. However, notwithstanding the foregoing, the equity interest of
a policyholder in the mutual insurer may be converted or exchanged
solely into premium credits if the plan and agreement shall so
provide, but only at the policyholder's election. Any person holding
a subscription note or other debt instrument evidencing a capital
contribution to the domestic mutual insurer shall be entitled upon
demand to have the note or debt instrument redeemed for cash or
securities as provided in the plan. The plan may provide for
additional securities to be sold to directors, officers, employees,
and former members of the domestic mutual insurer in accordance with
the provisions of Article 8 (commencing with Section 820) of Chapter
1 of Part 2 of Division 1. Nothing in this section shall preclude the
issuance of different securities, subject to the approval of the
commissioner, provided that comparable securities shall be issued at
prices not less than the conversion or exchange values of any such
securities distributed to current policyholders. Notwithstanding any
other provision of law, conversion or exchange constitutes full
payment and discharge of the members' property interest in the
domestic mutual insurer and the members have no other rights with
respect thereto, except for rights relating to a continuing debt or
equity interest that a former member holds in the surviving insurer.

4096. In the event a domestic mutual insurer is merged,
consolidated, or a part of a reorganization under the procedures
specified in this article, and the surviving, consolidated, or
continuing company is a nonadmitted insurer, the plan of merger shall
provide either for that insurer to be admitted to transact insurance
in California or for any nonsurviving insurer admitted in California
to withdraw from the state.