Office of House Bill AnalysisS.B. 1598
By: Wentworth


Under current law, a non-life mutual insurance company is allowed to
convert to a stock insurance company or a mutual holding company.  A mutual
holding company is a procedure for reorganization for a mutual insurance
company that allows the policyholders to own the stock in a mutual holding
company and the mutual insurance company becomes a stock insurance company.
A mutual life insurance company is currently authorized to convert only to
a stock insurance company. Reorganizing as a mutual holding company may
benefit such companies by increasing capital and surplus as necessary to
ensure the financial viability of the company for its policyholders.
Senate Bill 1598 authorizes a mutual life insurance company to reorganize
as a mutual holding company.   


It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 


Senate Bill 1598 amends the Insurance Code to authorize a mutual life
insurance company to reorganize by forming an insurance holding company
based on a mutual plan and continuing the corporate existence of the
reorganizing mutual life insurance company as a stock insurance company if
the commissioner of insurance (commissioner) determines that the
reorganization is fair and equitable to the policyholders of the company
and approves the proposed plan of reorganization.  The commissioner is
required to retain jurisdiction over a company that is reorganized.   

A mutual holding company that results from a reorganization of a domestic
mutual life insurance company must be incorporated pursuant to the
Insurance Code and the Texas Non-Profit Corporation Act.  The articles of
incorporation of the mutual holding company and any amendments to the
articles are subject to approval by the commissioner.  A sale, issuance, or
offering of securities is exempt from the registration and licensing
provisions of The Securities Act.  An officer, director, or employee who
participates in a reorganization is exempt from the registration and
licensing provisions of The Securities Act.  The bill prohibits a person
from being compensated for services performed under these exemptions.   


September 1, 2001.