(a) This section does not apply to mutualization under a court order in connection with the rehabilitation or reorganization of an insurer under Title 9, Subtitle 2 of this article.
(b) A domestic stock insurer, other than a title insurer, may become a mutual insurer under a plan and procedure that is approved by the Commissioner after a hearing.
(c) The Commissioner may not approve a plan or procedure for mutualization unless:
(1) the plan or procedure is equitable to stockholders and policyholders;
(2) the plan is subject to approval by vote of the holders of at least three-fourths of the insurer’s outstanding capital stock with voting rights and by vote of at least two-thirds of the insurer’s policyholders who vote on the plan in person, by proxy, or by mail under the notice and procedure approved by the Commissioner;
(3) for a life insurer, the right to vote under item (2) of this subsection is limited to holders of policies, other than term or group policies, that have been in force for more than 1 year;
(4) mutualization will result in retirement of shares of the insurer’s capital stock at a price not exceeding the fair market value of the stock as determined by competent disinterested appraisers;
(5) the plan provides for the purchase of the stock of an objecting stockholder in the same manner and subject to the same applicable conditions provided by Title 3, Subtitle 2 of the Corporations and Associations Article for the rights of objecting stockholders with respect to consolidation or merger of corporations;
(6) the plan provides for definite conditions to be fulfilled by a designated early date on which the mutualization will be considered effective; and
(7) the mutualization leaves the insurer with surplus funds that are reasonably adequate for the security of its policyholders and to enable the insurer to continue successfully in business in the states where it is then authorized to transact insurance business for the kinds of insurance included in its certificates of authority in those states.
Structure Maryland Statutes
Subtitle 1 - Stock Insurers and Mutual Insurers
Section 3-101 - Scope of Subtitle
Section 3-102 - Applicability of General Corporation Statutes and Insurance Article
Section 3-103 - Formation of Domestic Insurers
Section 3-104 - Approval of Articles of Incorporation and Charter
Section 3-105 - Prerequisites to Solicitation by Prospective Mutual Insurer
Section 3-106 - Assets Required for Mutual Insurer -- in General
Section 3-107 - Assets Required for Mutual Insurer -- Engaging in Business on Assessable Basis
Section 3-108 - Engaging in Additional Kinds of Insurance Business
Section 3-109 - Impairment of Required Surplus
Section 3-110 - Contingent Liability of Members
Section 3-111 - Levy of Assessment
Section 3-112 - Enforcement of Contingent Liability
Section 3-113 - Issuance of Nonassessable Policies
Section 3-114 - Participating Policies
Section 3-116 - Loans to Insurers
Section 3-117 - Loans to and Guarantees of Obligations of Directors and Officers
Section 3-118 - Agreements to Pay Expenses of Management
Section 3-119 - Restrictions on Purchase and Sale of Equity Securities of Domestic Stock Insurers
Section 3-120 - Conversion of Stock Insurer to Mutual Insurer
Section 3-121 - Conversion of Mutual Insurer to Stock Insurer
Section 3-122 - Consolidations, Mergers, and Share Exchanges of Stock Insurers
Section 3-123 - Consolidations and Mergers of Mutual Insurers
Section 3-123.1 - Mutual Insurers Forming a Business Combination
Section 3-124 - Bulk Reinsurance -- Stock Insurers
Section 3-125 - Bulk Reinsurance -- Mutual Insurers
Section 3-126 - Changes in Domicile of Insurers