H.B. 7 78(2)    BILL ANALYSIS


H.B. 7
By: Swinford
Government Reform
Committee Report (Unamended)



BACKGROUND AND PURPOSE 

Insurance companies owned by policyholders are called "mutual" companies.
Sometimes these mutual companies convert themselves to shareholder
ownership, a process called "demutualization." Demutualization gives
policyholders two interests in the company: the value of their policies
and their shares in the company's capital stock.  Companies may have sold
policies to some holders many years before the demutualization making it
difficult to locate them in order to distribute their shares or equity
because they have moved or may even be deceased.  This "abandoned" or
"unclaimed" equity value is reported to the state as unclaimed property
after a three-year dormancy period that begins on the date of
demutualization.  

Unclaimed and abandoned properties whose owners are unknown or cannot be
found are placed under the custodianship of the state.  This unclaimed
property is held by the state in perpetuity and never becomes state
property, however the state can use the money for other purposes until it
is claimed.  

House Bill 7 would amend the Property Code to provide that property
distributable from the demutualization, rehabilitation or reorganization
of an insurance company is presumed abandoned on the first anniversary of
the date it becomes distributable under certain conditions.  HB 7 would
make these funds reportable and due sooner and could result in additional
funds to general revenue. 


RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
rulemaking authority to a state officer, department, agency, or
institution. 

ANALYSIS

SECTION 1:  Amends Section 72.101 of the Property Code by adding
Subsections (c) and (d) as follows: 

Subsection (c) provides that property distributable from the
demutualization, rehabilitation, or related reorganization of an insurance
company is presumed abandoned on the first anniversary of the date it
became distributable if:  at the time of the first distribution, the last
known address of the owner is known to be incorrect or  the distribution
or related statements are returned by the post office as undeliverable and
the owner has not communicated with the holder regarding the interest. 

Subsection (d) provides that property distributable from the
demutualization, rehabilitation, or reorganization of an insurance company
that is not subject to Subsection (c) is presumed abandoned as provided by
Section 72.101 of the Property Code. 

SECTION 2:  Effective Date.


EFFECTIVE DATE

This Act takes effect immediately with two-thirds vote of each house, or
otherwise December 1, 2003.