Chapter 644

644.11(2)(c)1. 1. The board of the existing domestic mutual holding company into which the converting insurance company’s policyholders’ membership interests are proposed to be merged under this subsection shall adopt a resolution approving the proposed plan of merger and directing that it be submitted to the commissioner for approval and to its members for a vote at a regular or special meeting. The existing domestic mutual holding company shall provide written notice of the meeting to each member in the manner provided under s. 644.07 (8) for notice to policyholders of a meeting for a vote on approval of a mutual holding company plan.

644.11(2)(c)2. 2. The commissioner may hold a hearing on the plan of merger prior to the meeting at which a vote of the members will be taken. A hearing under this subdivision may be combined with the hearing required under par. (b). The existing domestic mutual holding company shall provide written notice of the hearing to each member in the manner provided under s. 644.07 (6) (b) 1. for notice to policyholders of the hearing under s. 644.07 (6).

644.11(2)(c)3. 3. The commissioner shall approve the proposed plan of merger unless he or she finds that the plan is not fair and equitable to members or is contrary to the interests of members.

644.11(2)(c)4. 4. The proposed plan of merger shall be approved by the members of the existing domestic mutual holding company upon the affirmative vote of not less than a majority of those members voting in person or by proxy at the meeting required under subd. 1.

644.11(2)(d) (d) Commissioner issues new certificate of authority if approved. If under par. (b) the policyholders of the converting insurance company approve the plan of restructuring and under par. (c) the members of the existing domestic mutual holding company approve the plan of merger, the commissioner shall issue a new certificate of authority to the converting insurance company. The issuance of the certificate of authority shall be conclusive evidence of compliance with this subsection.

644.11(2)(e) (e) Effect of restructuring. On the effective date of the restructuring described in this subsection, all of the following shall occur:

644.11(2)(e)1. 1. The converting insurance company shall at once become a stock corporation organized and operating under ch. 611 and is no longer a mutual.

644.11(2)(e)2. 2. All membership interests and rights in surplus of the converting insurance company shall be extinguished and the members of the converting insurance company shall become members of the existing domestic mutual holding company in accordance with this chapter and the articles of incorporation and bylaws of the existing domestic mutual holding company.

644.11(2)(e)3. 3. All shares of the voting stock of the converting insurance company shall be acquired and retained by the existing domestic mutual holding company or any intermediate stock holding company, 51 percent or more of whose voting stock is owned by the existing domestic mutual holding company.

644.11(2)(e)4. 4. The converted insurance company shall be considered to have been organized at the time that the converting insurance company was organized.

644.11(2)(e)5. 5. Except as otherwise provided in the plan, the trustees, directors, officers, agents and employees of the converting insurance company shall continue in like capacity with the converted insurance company.

644.11(3) (3) Foreign mutual reorganization. A foreign mutual insurance company organized under the laws of any other state that, if a domestic corporation, would be organized under ch. 611 may restructure by merging its policyholders’ membership interests into an existing domestic mutual holding company in accordance with rules promulgated by the commissioner and in compliance with the requirements of any other law or regulation that is applicable to the foreign mutual. The restructuring shall continue the corporate existence of the converting insurance company as a foreign stock insurance company subsidiary of the existing domestic mutual holding company or as a foreign stock insurance company subsidiary of an intermediate stock holding company. The restructuring foreign mutual insurance company may remain a foreign insurer after the restructuring and may be admitted to do business in this state if it meets the applicable requirements of ch. 618. A foreign mutual insurance company that is a party to the restructuring may at the same time redomesticate to this state by complying with the applicable requirements of this state and its state of domicile.

644.11 History History: 1997 a. 227.

644.12 644.12 Transfers of a mutual holding company’s place of domicile to this state.

644.12(1) (1) A mutual holding company that is domiciled in another state and that desires to become a domestic mutual holding company may submit to the commissioner an application for a certificate of incorporation. The application shall comply with rules promulgated under sub. (2) and shall include or have attached any other relevant documents or information that the commissioner reasonably requires. Upon review of the application, the commissioner may issue a certificate of incorporation if the commissioner determines that all the following are satisfied:

644.12(1)(a) (a) The applicant is in compliance with the provisions of this chapter that apply to domestic mutual holding companies.

644.12(1)(b) (b) The directors and officers of the applicant are trustworthy and competent and collectively have the competence and experience to engage in the business proposed.

644.12(1)(c) (c) The applicant’s insurance company subsidiary that converted from a mutual has become a domestic insurer under s. 611.223.

644.12(2) (2) The commissioner shall by rule specify the required contents and form of an application under sub. (1). In determining the required contents, the commissioner shall consider the information and documents that will permit the commissioner to determine whether the requirements of sub. (1) (a) to (c) are satisfied.

644.12 History History: 1997 a. 227.

644.13 644.13 Restrictions on ownership.

644.13(1) (1) In this section:

644.13(1)(a) (a) “Beneficial ownership”, with respect to any voting stock, has the same meaning as provided by the rules administering section 16 of the Securities Exchange Act of 1934.

644.13(1)(b) (b) “Offer” means any of the following:

644.13(1)(b)1. 1. An offer to buy or acquire voting stock, or an interest in voting stock, for value.

644.13(1)(b)2. 2. A solicitation of an offer to sell voting stock, or an interest in voting stock, for value.

644.13(1)(b)3. 3. A tender offer for voting stock, or an interest in voting stock, for value.

644.13(1)(b)4. 4. A request or invitation for tenders of voting stock, or an interest in voting stock, for value.

644.13(2) (2) 

644.13(2)(a) (a) Before the date that is one year after the initial sale to 3rd parties in a public offering of voting stock of the converted insurance company or any intermediate stock holding company, the directors, officers and other members of management of the mutual holding company, any intermediate stock holding company and the converted insurance company are prohibited from acquiring or offering to acquire, in any manner, the legal or beneficial ownership of any class of voting stock of the converted insurance company or intermediate stock holding company, except that this paragraph shall not in any way limit the rights of the directors, officers or other members of management to exercise subscription rights generally accorded to members of the mutual holding company.

644.13(2)(b) (b) Except as otherwise provided by the commissioner by rule, beginning on the date that is one year after the initial sale to 3rd parties of voting stock of the converted insurance company or any intermediate stock holding company, the directors, officers and other members of management of the mutual holding company, any intermediate stock holding company and the converted insurance company may not do any of the following:

644.13(2)(b)1. 1. Acting individually, directly or indirectly acquire or offer to acquire, in any manner, the legal or beneficial ownership of more than 5 percent of any class of voting stock of the converted insurance company or intermediate stock holding company.

644.13(2)(b)2. 2. In the aggregate, directly or indirectly acquire or offer to acquire, in any manner, the legal or beneficial ownership of more than 10 percent of any class of voting stock of the converted insurance company or intermediate stock holding company.

644.13(3) (3) 

644.13(3)(a) (a) In the event of any violation of sub. (2), or of any action which, if consummated, might constitute such a violation, all voting stock of any intermediate stock holding company or the converted insurance company that is acquired by any person in excess of the maximum amount permitted to be acquired by such person under sub. (2) shall be considered to be nonvoting stock of any such intermediate stock holding company or converted insurance company, as the case may be.

644.13(3)(b) (b) In addition to the result specified in par. (a), the violation or action is subject to the enforcement procedures under s. 601.64.

644.13 History History: 1997 a. 227.

644.14 644.14 Member rights.

644.14(1) (1) Communication to members; member voting. Subject to this section, ss. 611.41, 611.42 (1), (1e), (1m), (2), (3), (4) (a) and (5), 611.43 and 611.53 (2) apply to mutual holding companies.

644.14(2) (2) Notice of regular meetings and elections. Notice of the time and place of regular meetings or elections may be given to a member by printing such time and place conspicuously on each policy under which the member derives a membership interest, or in such other reasonable manner as the commissioner approves or requires.

644.14 History History: 1997 a. 227; 1999 a. 30.

644.15 644.15 Sale of voting stock; subscription rights; dividends.

644.15(1) (1) 

644.15(1)(a) (a) No solicitation for the initial sale to 3rd parties of the voting stock of the converted insurance company or any intermediate stock holding company may be made without the approval of the commissioner under s. 611.31 (2) and without the approval of the commissioner and the members of the mutual holding company as follows:

644.15(1)(a)1. 1. If the mutual holding company plan includes a plan for the initial sale of voting stock, such approval shall be given at the time that the mutual holding company plan is approved under s. 644.07 (7) and (8).

644.15(1)(a)2. 2. If the mutual holding company plan does not include a plan for the initial sale of voting stock of the converted insurance company or any intermediate stock holding company, the board of the converted insurance company or any intermediate stock holding company, following the procedures under s. 644.07 (2) to (8), may adopt a plan for the initial sale of voting stock to 3rd parties at any future date.

644.15(1)(b) (b) Prior to every issue of voting stock of the converted insurance company and any intermediate stock holding company, the commissioner, in addition to the approval required under s. 611.31 (2), shall approve the price of the stock, or the procedure for setting and determining the price of the stock, as fair and equitable to the company issuing the stock.

644.15(2) (2) No initial public offering of voting stock of the converted insurance company or any intermediate stock holding company may be conducted unless the persons who were members of the mutual holding company at the time such offering was approved by resolution of the board are afforded subscription rights in conjunction with the stock offering.

644.15(3) (3) If the converted insurance company is a life insurance company, before any approval for the initial sale of voting stock is granted the commissioner shall find the dividend plan fair and equitable to policyholders.

644.15(4) (4) Dividends and other distributions to the shareholders of the converted insurance company or any intermediate stock holding company of a converted insurance company may not be made except in compliance with ss. 617.22 and 617.225.

644.15 History History: 1997 a. 227.

644.16 644.16 Board of directors, committees and records.

644.16(1) (1) Board of directors. Subject to this section, ss. 181.0801 (1) and (2), 181.0802, 181.0811, 611.51 (2), (3), (5) and (8) and 611.53 (1) and (3) apply to mutual holding companies. Section 181.0824 applies to the board of a mutual holding company except as modified by s. 611.10. The board shall manage the business and affairs of the corporation and may not delegate its power or responsibility to do so, except to the extent authorized by ss. 181.0825 and 181.0841.

644.16(2) (2) Committees of directors. Section 181.0825 applies to mutual holding companies.

644.16(3) (3) Records.

644.16(3)(a) (a) Section 611.51 (9) (am) and (b) applies to mutual holding companies.

644.16(3)(b) (b) Any provision of this chapter or of the articles or bylaws of a mutual holding company that requires the keeping of records concerning the names and addresses of members entitled to vote shall be considered complied with by the keeping of a record of the names of policyholders of, and the names and addresses of insureds or persons paying premiums on the policies of, the converted insurance company. Any provision of this chapter or of the articles or bylaws of a mutual holding company that requires the mailing or sending of notices, reports, proposals, ballots or other materials to a member shall be considered complied with if such mailing is made to the insured or the person paying premiums on the policy of the converted insurance company, for delivery to the policyholder.

644.16(4) (4) Director conflicts of interest. Section 611.60 applies to mutual holding companies.

644.16 History History: 1997 a. 227; 1999 a. 30.

644.17 644.17 Removal of officers. Sections 181.0843 and 181.0844 apply to mutual holding companies.

644.17 History History: 1997 a. 227; 1999 a. 30.

644.18 644.18 Directors’ and officers’ liability and indemnification.

644.18(1) (1) Liability. Sections 181.0850 to 181.0855, except s. 181.0855 (2) (c), apply to mutual holding companies.

644.18(2) (2) Indemnification. Sections 181.0871 to 181.0881 and 181.0889 apply to mutual holding companies.

644.18(3) (3) Insurance. Section 181.0883 applies to mutual holding companies.

644.18(4) (4) Derivative actions. Sections 181.0740 to 181.0747 apply to mutual holding companies.

644.18 History History: 1997 a. 227; 1999 a. 30.

644.19 644.19 Executive compensation.

644.19(1) (1) General. Section 611.63 (4) and (5) applies to mutual holding companies.

644.19(2) (2) Approval by members. A benefit plan or amendment to a benefit plan that proposes to provide benefits in the form of stock or stock options of a converted insurance company or any intermediate stock holding company to the directors or officers of the converted insurance company, intermediate stock holding company or mutual holding company may not take effect unless it is submitted to a vote of the members of the mutual holding company and approved by a majority of the members voting. Notice of a meeting at which a vote under this subsection will be taken shall be given in accordance with s. 644.14 (1) or (2).

644.19(3) (3) Notice to commissioner. The commissioner may by rule require that any action taken by the board of a mutual holding company, or the board of any intermediate stock holding company, on any of the subjects specified in s. 181.0302 (11) to (14) be reported to the commissioner within 30 days after the action is taken.

644.19 History History: 1997 a. 227; 1999 a. 30.

644.20 644.20 Management contract services. A mutual holding company may not be a party to a contract that has the effect of delegating to a person, to the substantial exclusion of the board, the authority to exercise any management control of the mutual holding company or of any of its major corporate functions.

644.20 History History: 1997 a. 227.

644.21 644.21 Annual report of domestic mutual holding company. Each mutual holding company domiciled in this state shall file such annual report as may be prescribed by the commissioner by rule.

644.21 History History: 1997 a. 227.

644.22 644.22 Securities regulation. A membership interest in a domestic mutual holding company shall not constitute a security, as defined in s. 551.102 (28).

644.22 History History: 1997 a. 227; 2007 a. 196.

644.23 644.23 Authority to issue mutual bonds and contribution notes. Section 611.33 (2) (a), (b), (c) and (e) applies to mutual holding companies. In the event of dissolution under this chapter, unpaid amounts of principal and interest on contribution notes shall be subordinated to the payment of principal and interest on any mutual bonds issued by the mutual holding company at any time.

644.23 History History: 1997 a. 227.

644.24 644.24 Subsequent restructuring. A mutual holding company, in conjunction with the converted insurance company and any intermediate stock holding company, may merge together and convert into a mutual insurance company if the requirements of ss. 611.72 and 611.75 are met and the members of the mutual holding company vote to approve the merger and conversion into a mutual insurance company.

644.24 History History: 1997 a. 227.

644.25 644.25 Conversion of domestic mutual holding company into a stock corporation.

644.25(1) (1) Conversion permitted and procedures. A mutual holding company formed by a converted insurance company under this chapter may convert into a stock corporation organized under ch.180. Subject to this section, s. 611.76 (1) to (3) and (5) to (11) applies to mutual holding companies.

644.25(2) (2) Plan of conversion.

644.25(2)(a) (a) In this subsection, “net premium” means gross premium less return premium and dividends paid.

644.25(2)(b) (b) The board of a domestic mutual holding company may adopt a plan of conversion that specifies all of the following:

644.25(2)(b)1. 1. The number of shares proposed to be authorized for the new stock corporation, their par value and the price at which they will be offered to members, which price may not exceed 50 percent of the median equitable share of all members under subd. 2.

644.25(2)(b)2. 2. That each member who has been a policyholder of a converted insurance company and has paid premiums within 5 years prior to the resolution passed by the board related to the conversion under this section shall be entitled without additional payment to so much common stock of the new stock corporation as his or her equitable share of the value of the converting mutual holding company will purchase.