CHAPTER 829. CONVERSION OF RECIPROCAL OR INTERINSURANCE EXCHANGE TO STOCK COMPANY THROUGH CREATION OF A MUTUAL HOLDING COMPANY - Texas Statutes

INSURANCE CODE

TITLE 6. ORGANIZATION OF INSURERS AND RELATED ENTITIES

SUBTITLE B. ORGANIZATION OF REGULATED ENTITIES

CHAPTER 829. CONVERSION OF RECIPROCAL OR INTERINSURANCE EXCHANGE

TO STOCK COMPANY THROUGH CREATION OF A MUTUAL HOLDING COMPANY

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 829.001. DEFINITIONS. In this chapter:

(1) "Attorney in fact" has the meaning assigned by Section

942.001.

(2) "Board of directors" means, as to an exchange, the board of

directors, board of trustees, subscriber advisory committee, or

other governing body appointed or elected by the subscribers of

an exchange.

(3) "Conversion plan" means a plan adopted under this chapter to

convert an exchange to a stock insurance company and form a

mutual holding company to hold, directly or indirectly, shares of

the resulting company.

(4) "Converting exchange" means an exchange that is converting

to a stock insurance company under this chapter.

(5) "Eligible member" means a member of a converting exchange

whose policy is in force on the date that the converting

exchange's board of directors adopts a conversion plan.

(6) "Effective date" means the effective date of a conversion

plan in accordance with Section 829.108.

(7) "Exchange" has the meaning assigned by Section 942.001.

(8) "Intermediate holding company" means a holding company

organized under the laws of this or another state that:

(A) is a subsidiary of a mutual holding company formed to

reorganize an exchange; and

(B) directly or through a subsidiary intermediate holding

company, owns at least a majority of the voting shares of the

capital stock of the resulting company.

(9) "Member" means, as to an exchange, a subscriber of an

exchange.

(10) "Mutual holding company" means a holding company based on a

mutual plan and formed in connection with the conversion of an

exchange to a stock insurance company under this chapter.

(11) "Participating policy" means a policy issued by an exchange

that grants the policyholder the right to receive policy

dividends if declared by the exchange.

(12) "Resulting company" means a stock insurance company

resulting from the conversion of an exchange under this chapter.

(13) "Subscriber" has the meaning assigned by Section 942.001.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.002. AUTHORITY TO CONVERT THROUGH CREATION OF A MUTUAL

HOLDING COMPANY. (a) An exchange may reorganize by converting

to a stock insurance company and forming a mutual holding company

to hold, directly or indirectly, shares of the resulting company

or intermediate holding company in accordance with this chapter.

(b) A converting exchange may not engage in the business of

insurance as a stock insurance company until it complies with the

requirements of this chapter.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.003. RIGHTS AND PRIVILEGES OF RESULTING COMPANY; LAWS

APPLICABLE. Except as provided by this chapter, the resulting

company:

(1) may exercise only the rights and privileges of a stock

insurance company; and

(2) is subject to:

(A) all of the requirements and rules imposed on stock insurance

companies organized under this code; and

(B) the laws of this state relating to the regulation or

supervision of insurance companies.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.004. MUTUAL HOLDING COMPANY; LAWS APPLICABLE. (a)

Except as provided by this chapter, a mutual holding company is

considered an insurer subject to this chapter and Chapter 883.

(b) The commissioner has jurisdiction over a mutual holding

company organized under this chapter to ensure that member

interests are protected.

(c) The mutual holding company is automatically a party to a

delinquency proceeding under Subtitle C, Title 4, involving an

insurance company that, as a result of a reorganization under

this chapter, is a direct or indirect subsidiary of the mutual

holding company. In any proceeding described by this subsection

involving the resulting company, the assets of the mutual holding

company are considered assets of the resulting company for

purposes of satisfying the claims of the resulting company's

policyholders.

(d) A mutual holding company that results from a reorganization

of an exchange must be organized under Sections 883.051, 883.052,

883.054, and 883.056. The articles of incorporation of the

mutual holding company, and any amendments to those articles, are

subject to approval of the commissioner in the same manner as

those of a mutual insurance company.

(e) The mutual holding company may not dissolve or liquidate

without the approval of the commissioner.

(f) A mutual holding company formed under a conversion plan is

not subject to:

(1) Article 2.11B, Texas Non-Profit Corporation Act (Article

1396-2.11B, Vernon's Texas Civil Statutes);

(2) Section B, Article 2.23, Texas Non-Profit Corporation Act

(Article 1396-2.23, Vernon's Texas Civil Statutes);

(3) Section C, Article 2.23A, Texas Non-Profit Corporation Act

(Article 1396-2.23A, Vernon's Texas Civil Statutes); or

(4) Sections 22.158, 22.351, and 22.353(b), Business

Organizations Code.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.005. CONFLICT OF INTEREST. (a) Except as provided by

a conversion plan approved by the commissioner or by this

section, the following individuals may not receive a fee,

commission, stock distribution, stock subscription rights, or

other consideration, other than that individual's usual salary or

compensation for aiding, promoting, assisting, or participating

in a conversion under this chapter:

(1) a director, officer, agent, or employee of a converting

exchange or the exchange's attorney in fact; or

(2) the attorney in fact if the attorney in fact is an

individual.

(b) Subsection (a) does not apply to consideration received in

the individual's capacity as a member.

(c) This section does not prohibit the payment of reasonable

fees and compensation to an attorney, accountant, or actuary for

professional services performed by that person, without regard to

whether the person is also a director or officer of the

converting exchange or its attorney in fact.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.006. LIMITATION ON ACTIONS. (a) Except as provided by

Subsection (b), an action challenging the validity of or arising

out of acts taken or proposed to be taken regarding a conversion

plan under this chapter must be commenced not later than the 30th

day after the date the conversion plan is approved by the

commissioner.

(b) An action challenging the validity of or arising out of acts

taken or proposed to be taken regarding a conversion plan that

contemplates a public offering of debt or equity registered under

the federal Securities Act of 1933 (15 U.S.C. Section 77a et

seq.), or a similar law of a foreign jurisdiction, must be

commenced not later than the 60th day after the date the

conversion plan is approved by the commissioner.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.007. SALE OF SECURITIES. (a) A sale, issuance, or

offering of securities under this chapter is exempt from the

registration and licensing provisions of The Securities Act

(Article 581-1 et seq., Vernon's Texas Civil Statutes).

(b) An officer, director, or employee of an exchange, an

intermediate holding company, a mutual holding company, or a

resulting company who participates in a conversion under this

chapter is exempt from the registration and licensing provisions

of The Securities Act (Article 581-1 et seq., Vernon's Texas

Civil Statutes). A person may not receive compensation, other

than that person's usual salary or compensation, for services

performed under the exemption provided by this subsection.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

SUBCHAPTER B. MUTUAL HOLDING COMPANY STRUCTURE

Sec. 829.051. CAPITAL STOCK HELD BY MUTUAL HOLDING COMPANY. (a)

In this section, "majority of the voting shares of the capital

stock" means shares of the capital stock of a company that carry

the right to cast a majority of the votes entitled to be cast by

all of the outstanding shares of the capital stock of the company

on all matters submitted to a vote of the shareholders of the

company.

(b) All of the initial shares of the capital stock of the

resulting company shall be issued to the mutual holding company

or to an intermediate holding company.

(c) The mutual holding company shall at all times own a majority

of the voting shares of the capital stock of the resulting

company or of an intermediate holding company. The requirements

of this subsection may be satisfied by indirect ownership through

one or more intermediate holding companies in a corporate

structure approved by the commissioner.

(d) Except with the consent of the commissioner, the mutual

holding company or intermediate holding company may not convey,

transfer, assign, pledge, subject to a security interest or lien,

encumber, or otherwise hypothecate or alienate the majority of

the voting shares of the capital stock that is required to be

owned under Subsection (c).

(e) An act of the mutual holding company or intermediate holding

company that violates Subsection (d) is void in inverse

chronological order from the date of the conveyance or activity

as to the shares necessary to constitute a majority of the voting

shares of the capital stock.

(f) The remaining minority portion of the voting shares of

capital stock of the resulting company, or of an intermediate

holding company, may not be assigned, transferred, or pledged to

any officer, director or employee of the converting exchange, or

persons acting in concert with such persons, without also

offering a similar opportunity to participate to all eligible

members as required by Section 829.053(g).

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.052. LIMITATION ON ACQUISITION OF CAPITAL STOCK. (a)

The conversion plan must provide that a person or group of

persons acting in concert, other than the mutual holding company

or an intermediate holding company, may not acquire, in a public

or private offering or through an exercise of stock subscription

rights, more than 10 percent of the capital stock of the

resulting company unless the acquisition of the stock or stock

subscription rights is approved in advance by the commissioner.

(b) Subsection (a) does not apply to an entity that purchases

and retains at all times a majority of the voting shares of the

capital stock of the resulting company as part of the conversion

plan approved by the commissioner.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.053. DIRECTORS AND OFFICERS. (a) Except as otherwise

provided by this section, the conversion plan must provide that a

director or officer of the converting exchange, or a person

acting in concert with the director or officer, may not acquire,

without the permission of the commissioner, any shares of the

capital stock of the resulting company, or the shares of the

capital stock of another corporation that is participating in the

conversion plan, before the third anniversary of the effective

date of the conversion. This subsection does not prohibit the

director or officer from:

(1) acquiring capital stock through a broker-dealer;

(2) making purchases through the exercise of stock subscription

rights received under the conversion plan; or

(3) participating in a stock benefit plan permitted by Section

829.054 or approved by the eligible members under Section

829.107.

(b) A conversion plan may provide that the directors and

officers of the converting exchange may receive, without payment,

nontransferable subscription rights to purchase shares of the

capital stock of the resulting company or the shares of the

capital stock of another corporation that is participating in the

conversion plan.

(c) The aggregate number of shares that may be purchased by

directors and officers under Subsection (b) may not exceed:

(1) 35 percent of the total number of shares to be issued for

the resulting company if the total assets of the converting

exchange are less than $50 million;

(2) 25 percent of the total number of shares to be issued for

the resulting company if the total assets of the converting

exchange are more than $500 million;

(3) five percent of the total number of shares to be issued for

the resulting company if the total assets of the converting

exchange are more than $1 billion; or

(4) one percent of the total number of shares to be issued for

the resulting company if the total assets of the converting

exchange are more than $10 billion.

(d) For a converting exchange with total assets between $50

million and $500 million, inclusive, the maximum percentage of

the total number of shares that may be purchased shall be

interpolated from amounts provided under Subsection (c).

(e) A conversion plan must provide that a director or officer of

the converting exchange may not sell stock purchased under the

conversion plan before the first anniversary of the effective

date of the conversion.

(f) Notwithstanding Subsection (e), a conversion plan may

provide for the purchase or redemption of stock in the event that

a director or officer no longer serves as a director or officer

of, or no longer is associated with, the resulting company during

the period described by Subsection (e).

(g) If, as part of the conversion, any director or officer of

the converting exchange, the mutual holding company, or an

intermediate holding company receives more than one percent of

the shares of the capital stock of the resulting company, or

other valuable consideration, which is paid from the surplus of

the converting exchange, each eligible member also is entitled to

receive an amount of the converting exchange's surplus on hand on

the effective date of the conversion computed in the same manner

as the amount received by the director or officer, or as

otherwise provided in the conversion plan approved by the

commissioner.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.054. SUBSCRIPTION RIGHTS; TAX-QUALIFIED EMPLOYEE

BENEFIT PLAN. The conversion plan may allocate to a

tax-qualified employee benefit plan nontransferable subscription

rights to purchase not more than 10 percent of the capital stock

of the resulting company.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

SUBCHAPTER C. PLAN ADOPTION AND APPROVAL

Sec. 829.101. PLAN ADOPTION. (a) To convert under this chapter

an exchange must adopt a conversion plan consistent with this

chapter by the affirmative vote of at least two-thirds of the

members of its board of directors or, if the exchange does not

have a board of directors, by approval of the attorney in fact.

The proposed articles of incorporation of the resulting company

and the mutual holding company must be exhibits to the conversion

plan.

(b) For a conversion plan to take effect:

(1) the commissioner must approve the conversion plan; and

(2) the eligible members must approve the conversion plan and

adopt the articles of incorporation of the resulting company and

the mutual holding company.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.102. AMENDMENTS; WITHDRAWAL OF PLAN. Before a

conversion plan takes effect, a converting exchange may amend or

withdraw the plan by the affirmative vote of at least two-thirds

of the members of its board of directors or, if the exchange does

not have a board of directors, by approval of the attorney in

fact. The written consent of the commissioner is required for

any amendment to a conversion plan adopted after the commissioner

has approved the plan under Section 829.106.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.103. FILING OF PLAN AND RELATED DOCUMENTS WITH

COMMISSIONER; COMMISSIONER'S POWERS AND DUTIES. (a) Not later

than the 90th day after the date on which a converting exchange's

board of directors adopts a conversion plan, the converting

exchange shall file with the commissioner:

(1) a copy of the conversion plan;

(2) the form of notices required by Section 829.104;

(3) the form of proxy to be solicited from eligible members

under Section 829.107(a);

(4) the form of notice required by Section 829.153 to persons

whose policies are issued after adoption of the conversion plan

but before the effective date of the conversion plan; and

(5) the proposed articles of incorporation of the resulting

company and the mutual holding company.

(b) The converting exchange shall promptly provide any other

information requested by the commissioner that the commissioner

considers necessary to consider the conversion plan.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.104. NOTICE TO ELIGIBLE MEMBERS; COMMENTS. (a) The

converting exchange shall give eligible members at least 30 days'

written notice of the members' meeting to vote on the conversion

plan and advising of the members' right to comment on the plan to

the commissioner and the converting exchange, including a

description of the procedure to be used in making comments.

Notice to the members of the proposed vote on the conversion plan

must provide clear and conspicuous language apart from other

meeting materials and provide a disclosure statement of the

distribution of surplus or stock to directors and officers of the

converting exchange, if any.

(b) If the commissioner determines to hold a hearing on the

plan, the commissioner must approve the notice of hearing and

notify the converting exchange not later than the 45th day

following the first day on which all the documents required under

Section 829.103 are filed with the commissioner. The converting

exchange shall send to eligible members the commissioner's notice

of the hearing at least 30 days before the date set for the

hearing. The commissioner must approve the content and print

layout of the hearing notice before the converting exchange sends

notice of the hearing to eligible members. Notice of the hearing

may be made through publication in the Texas Register.

(c) The notices required by Subsections (a) and (b) may be

combined in a single mailing. The notice or notices must be sent

to the member's last known address, as shown on the converting

exchange's records. The notice of the members' meeting must:

(1) describe the proposed conversion plan; and

(2) inform the member of the member's right to vote on the

conversion plan.

(d) If the notice of the meeting to vote on the conversion plan

is combined with a notice of the converting exchange's annual

meeting of members, the notice of the proposed vote on the

conversion plan must be clear and conspicuous and set apart from

other meeting materials. A notice that is approved in advance by

the commissioner is deemed to be in full compliance with the

requirements of this subsection.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.105. SUBSTANTIAL COMPLIANCE WITH NOTICE REQUIREMENTS.

If the converting exchange in good faith substantially complies

with the notice requirements of this chapter, the converting

exchange's failure to send a member the required notice does not

impair the validity of an action taken under this chapter.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.106. APPROVAL OF PLAN BY COMMISSIONER. (a) The

commissioner shall approve a conversion plan if the commissioner

determines that:

(1) the plan complies with this chapter;

(2) the plan's method of allocating stock subscription rights,

stock transfers, or other value, if any, is fair and equitable;

and

(3) the resulting company would satisfy the requirements

applicable to a domestic stock insurance company for a

certificate of authority on the date of the determination.

(b) Except as otherwise provided by this section, the

commissioner shall approve or disapprove a conversion plan not

later than the 90th day after the first day on which all the

documents required under Section 829.103 are filed with the

commissioner.

(c) The commissioner may extend the time for decision by an

additional 30 days on written notice to the converting exchange.

Except as provided under Subsection (e) or (f), the commissioner

may not extend the time for decision beyond that 30-day period.

(d) The commissioner shall immediately give written notice to

the converting exchange of the commissioner's decision and, if

the commissioner disapproves the plan, a detailed statement of

the reasons for the disapproval.

(e) The commissioner may retain, at the converting exchange's

expense, a qualified expert who is not a member of the

commissioner's staff to assist the commissioner in reviewing

whether the conversion plan meets the requirements for approval

by the commissioner or the value of the distribution of surplus

of the resulting company to the officers and directors of the

converting exchange, if any. If the commissioner retains a

qualified expert under this subsection, the commissioner may

extend the period for decision by an additional 90 days beyond

the initial 90-day period specified in Subsection (b).

(f) If the conversion plan contemplates a public offering of

debt or equity registered under the federal Securities Act of

1933 (15 U.S.C. Section 77a et seq.), or a similar law of a

foreign jurisdiction, the commissioner may extend the period of

time to approve the conversion plan by an additional 180 days

beyond the initial 90-day period specified in Subsection (b).

(g) After giving written notice to the converting exchange, the

commissioner may hold a hearing on whether the conversion plan

complies with this chapter. The converting exchange has the

right to appear at the hearing. Other interested persons have

the right to attend the hearing and comment on the conversion

plan. Notice of the hearing may be made through publication in

the Texas Register in accordance with Section 829.104(b).

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.107. APPROVAL OF PLAN BY ELIGIBLE MEMBERS. (a) After

notice that complies with this chapter, the converting exchange

may convene a meeting to consider the conversion plan, and any

eligible member entitled to vote on the proposed conversion plan

may vote in person or by proxy at the meeting. Except as

otherwise provided in the bylaws of the converting exchange, each

eligible member may cast one vote.

(b) Adoption of the conversion plan requires the affirmative

vote of at least two-thirds of the votes cast by eligible

members.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.108. FILING OF MINUTES, ARTICLES OF INCORPORATION, AND

BYLAWS; EFFECTIVE DATE OF CONVERSION. (a) The converting

exchange shall file with the commissioner:

(1) the minutes of the meeting at which the plan was approved;

and

(2) the articles of incorporation and bylaws of the resulting

company and the mutual holding company.

(b) The converting exchange shall make the filing required by

Subsection (a) not later than the 30th day after the later of:

(1) the date on which the eligible members approve the

conversion plan; or

(2) the date on which the commissioner approves the conversion

plan.

(c) The conversion plan approved by the commissioner takes

effect on the date specified in the articles of incorporation of

the resulting company and the mutual holding company.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

SUBCHAPTER D. EFFECT OF PLAN; RIGHTS OF MEMBERS

Sec. 829.151. CORPORATE EXISTENCE. (a) On the effective date:

(1) the legal existence of the converting exchange continues in

the resulting company;

(2) all assets, rights, franchises, and interests of the

converting exchange in and to property and any accompanying thing

in action are vested in the resulting company without a deed or

transfer;

(3) the resulting company assumes all the obligations and

liabilities of the converting exchange; and

(4) the power of attorney or other appropriate authorization

granting the attorney in fact the authority to act for the

subscribers of the converting exchange is terminated.

(b) Except as otherwise specified by the conversion plan:

(1) the directors and officers of the converting exchange

serving on the effective date serve as directors and officers of

the resulting company until new directors and officers are

elected under the articles of incorporation and bylaws of the

resulting company; and

(2) the directors of the converting exchange serving on the

effective date serve as directors of the mutual holding company

until new directors are elected under the articles of

incorporation and bylaws of the mutual holding company.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.152. MEMBERSHIP INTERESTS. (a) The membership

interests of the policyholders of the resulting company become

membership interests in the mutual holding company. Members of

the converting exchange become members of the mutual holding

company in accordance with the articles of incorporation and

bylaws of the mutual holding company.

(b) A membership interest in a mutual holding company does not

constitute a security as defined by Section 4, The Securities Act

(Article 581-4, Vernon's Texas Civil Statutes).

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.153. RIGHTS OF MEMBERS WHOSE POLICIES ARE ISSUED AFTER

ADOPTION OF CONVERSION PLAN BUT BEFORE EFFECTIVE DATE. (a) On

issuance of a policy after a conversion plan has been adopted by

the board of directors but before the effective date of the

conversion plan, the converting exchange shall send to each

member to whom a policy is issued a written notice regarding the

conversion plan.

(b) Except as provided by Subsection (c), each member insured

under a property or casualty insurance policy is entitled to

notice under Subsection (a) and shall be advised in a clear and

conspicuous manner of the member's right to:

(1) cancel the policy; and

(2) receive a pro rata refund of unearned premiums.

(c) A member who has made or filed a claim under the insurance

policy is not entitled to a refund under Subsection (b). A

member who has exercised a right provided by Subsection (b) may

not make or file a claim under the insurance policy.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.

Sec. 829.154. EFFECT OF CONVERSION ON POLICIES; SUBSCRIBER

ACCOUNTS. (a) Each policy in effect on the effective date

remains in effect under the terms of that policy, except that the

following rights, to the extent they existed in the converting

exchange in favor of policyholders or members, are extinguished

on the effective date:

(1) any membership and voting rights;

(2) except as provided by Subsection (b) or in the conversion

plan approved by the commissioner, a right to share in the

surplus or profits of the converting exchange; and

(3) any assessment provisions.

(b) The holder of a participating policy in effect on the

effective date of the conversion continues to have a right to

receive dividends as provided by the participating policy.

(c) On the renewal date of a participating policy, the resulting

company may issue to the insured a nonparticipating policy as a

substitute for the participating policy.

(d) All the costs and expenses connected with a conversion plan

shall be paid or reimbursed by the converting exchange or the

resulting company.

(e) If a converting exchange maintains subscriber accounts as

surplus, the subscriber accounts shall continue as surplus in the

resulting company, unless otherwise provided in a conversion plan

approved by the commissioner. Subject to Subsection (f), the

balances of the subscriber accounts are payable to the members to

the extent and in the manner as is provided in the conversion

plan.

(f) The board of directors of the resulting company may reduce

the balances of the subscriber accounts without payment to

members of the mutual holding company who were members of the

converting exchange if the board of directors of the resulting

company determines in the board's discretion that the amounts are

necessary to support the operations of the resulting company.

The board of directors of the resulting company may not, without

the approval of the commissioner, reduce the balance of a

subscriber account under this subsection before the third

anniversary of the effective date.

Added by Acts 2007, 80th Leg., R.S., Ch.

412, Sec. 1, eff. June 15, 2007.