To amend chapter 375, RSMo, by adding five new sections relating to the reorganization of mutual insurance companies.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF MISSOURI,

AS FOLLOWS:

Section A. Chapter 375, RSMo, is amended by adding thereto five new sections, to be known as sections 375.1325, 375.1329, 375.1335, 375.1340 and 375.1345, to read as follows:

375.1325. A domestic mutual insurance company organized and operating under chapter 376 or 379, RSMo, may reorganize by forming an insurance holding company based upon a mutual plan or by merging its policyholders' membership into such a mutual insurance holding company, and continuing the corporate existence of the reorganizing mutual insurance company either at the time of the reorganization or at some later time as a stock insurance company, as a joint stock and mutual insurance company, or as a mutual insurance company. This authority is in addition to powers granted under chapter 382, RSMo.

375.1329. 1. A mutual insurance company proposing to reorganize under sections 375.1325 to 375.1345 shall form a mutual insurance holding company, hereafter referred to in sections 375.1325 to 375.1345 as a "mutual holding company", and shall file an application with the director which shall contain such insurer's plan of reorganization. The director shall review the application, and may retain such consultants as needed, conduct an adequate review to assure that policyholders' interests are protected, and may conduct a public hearing. The director shall approve formation of the mutual holding company and the plan of reorganization unless the director finds that the plan is not fair and equitable to the policyholders. The director may condition such approval on the adoption of such modifications to the plan as the director finds necessary for the protection of the policyholders' interests.

2. All of the shares of the capital stock of the reorganized insurance company, if any, shall be issued to the mutual holding company, which shall at all times own a majority of the voting shares of the capital stock of the reorganized insurance company, except that either at the time of the reorganization or at some later time, the mutual holding company may create a stock holding company under chapter 351, RSMo, for the purpose of owning all of the stock of the reorganized insurance company, so long as the mutual holding company shall at all times own a majority of the voting shares of the capital stock of the stock holding company.

375.1335. 1. The membership interests of the policyholders of a reorganized insurance company shall become membership interests in the mutual holding company. Policyholders of the reorganized insurance company shall be members of the mutual holding company in accordance with the articles of incorporation and bylaws of the mutual holding company and the applicable provisions of chapters 375 and 379, RSMo, relating to mutual insurance companies.

2. No member of a mutual holding company may transfer membership or any right arising therefrom.

3. A member of a mutual holding company is not, as such, personally liable for the acts, debts, liabilities, or obligations of the company.

4. No assessments of any kind may be imposed upon the members of a mutual holding company by the directors, or members, or because of any liability of any company owned or controlled by the mutual holding company, or because of any act, debt, or liability of the mutual holding company itself.

5. A membership interest in a domestic mutual holding company shall not constitute a security under the laws of this state.

375.1340. 1. Sections 382.040, 382.060 and 382.095, RSMo, are not applicable to a reorganization or merger pursuant to sections 375.1325 to 375.1345.

2. A mutual holding company organized under sections 375.1325 to 375.1345 shall be incorporated pursuant to chapter 376 or 379, RSMo, as applicable, and this requirement shall supersede any conflicting provisions of sections 375.1325 to 375.1345. The articles of incorporation and any amendments to such articles of the mutual holding company shall be subject to approval of the director and, if required by law, the attorney general in the same manner as those of a mutual insurance company.

3. A mutual holding company shall have the same powers granted to domestic insurance companies under chapter 382, RSMo, relating to insurance holding company systems and shall be subject to its requirements and provisions. Neither the mutual holding company or any stock holding company created pursuant to sections 375.1325 to 375.1345 shall be an insurer or may engage in the business of insurance. A mutual holding company may enter into an affiliation agreement or a merger agreement with any mutual insurance company authorized to do business in this state. Any such merger agreement may authorize participating policyholders of the mutual insurance company to become members of the mutual holding company. Any such affiliation agreement or merger agreement is subject to the insurance laws of this state relating to such transactions entered into by a domestic mutual insurance company.

375.1345. 1. A mutual holding company is subject to supervision of the director in the same manner as an insurer subject to the provisions of this chapter and shall automatically be a party to any proceeding under sections 375.1150 to 375.1246 involving an insurance company which, as a result of a reorganization pursuant to sections 375.1325 to 375.1345, is a subsidiary of the mutual holding company. In a proceeding under sections 375.1325 to 375.1345 involving the reorganized insurance company, the assets of the mutual holding company are deemed to be assets of the estate of the reorganized insurance company for purposes of satisfying the claims of the reorganized company's policyholders. A mutual holding company shall not dissolve or liquidate without the approval of the director or as ordered by the court pursuant to sections 375.1150 to 375.1246.

2. Sections 375.201, 375.206, 375.216, 375.221 and 375.226 are applicable to a demutualization of a mutual holding company as if it were a mutual insurance company.