SRC-MWN C.S.S.B. 1598 77(R)BILL ANALYSIS


Senate Research CenterC.S.S.B. 1598
77R9748 AJA-DBy: Wentworth
Business & Commerce
4/17/2001
Committee Report (Substituted)


DIGEST AND PURPOSE 

Currently, a mutual life insurance company is authorized to convert to a
stock company under the provisions of Article 11.01, Section 1(c), Texas
Insurance Code. C.S.S.B. 1598 adds additional language that allows a mutual
life insurance company to reorganize through the use of a mutual holding
company.  

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Article 11.01, Insurance Code, by adding Section 3, as
follows: 

Sec. 3.(a) Authorizes a mutual life insurance company organized or
operating under the provisions of this chapter, subject to Article 15.22 of
this code, 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. 

(b) Requires the commissioner to retain jurisdiction over a company that is
reorganized under this section. 

(c) Requires a mutual holding company that results from a reorganization of
a domestic mutual life insurance company organized under this chapter to be
incorporated under the provisions of this code and the Texas Non-Profit
Corporation Act (Article 13961.01 et seq., V.T.C.S.). Provides that the
articles of incorporation of the mutual holding company and any amendments
to the articles of incorporation are subject to approval by the
commissioner. 
 
(d) Provides that a sale, issuance, or offering of securities under this
section is exempt from the registration and licensing provisions of The
Securities Act (Article 581-1 et seq., V.T.C.S.). Provides that an officer,
director, or employee who participates in a reorganization under this
section is exempt from the registration and licensing provisions of The
Securities Act (Article 581-1 et seq., V.T.C.S.). Prohibits a person from
being compensated for services performed under the exemption provided by
this section. 

SECTION 2. Effective date: September 1, 2001.

SUMMARY OF COMMITTEE CHANGES

 SECTION 1. Amends As Filed S.B. 1598, Article 11.01, Insurance Code, by
adding Section 3.