SRC-LBB, MLC S.B. 202 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 202
78R2938 KCR-DBy: Wentworth
State Affairs
2/18/2003
As Filed


DIGEST AND PURPOSE 

Currently, a non-life mutual insurance company may convert to a stock
insurance company or to a mutual holding company. However, a  mutual life
insurance company is allowed to convert only to a stock insurance company.
A mutual holding company is owned by policyholders who have purchased
insurance from the company.  As proposed, S.B. 202 would authorize a
reorganization of a mutual life insurance company to a mutual holding
company as another alternative of reorganization.  This conversion would
allow existing policyholders to own the stock in the 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 Chapter 882, Insurance Code, as effective June 1, 2003,
by adding Subchapter P, as follows: 

SUBCHAPTER P.  REORGANIZATION OF CERTAIN MUTUAL LIFE INSURANCE
COMPANIES INTO INSURANCE HOLDING COMPANIES AND STOCK INSURANCE COMPANIES

Sec. 882.751.  AUTHORITY TO REORGANIZE.  (a) Authorizes a mutual life
insurance company organized or operating under this chapter to reorganize,
subject to Chapter 826 (Conversion of Mutual Insurance Company to Stock
Insurance Company), by forming an insurance holding company based on a
mutual plan and by forming the corporate existence of the reorganizing
mutual life insurance company as a stock insurance company if the
commissioner of insurance (commissioner) both determines that the
reorganization is fair and equitable to the policyholders of the
reorganizing company, and approves the proposed plan of reorganization. 

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

Sec. 882.752.  INCORPORATION REQUIREMENTS.  Requires a mutual holding
company that results from a reorganization of a domestic life insurance
company organized under this chapter to be incorporated under this code
rather than the Texas Non-Profit Corporation Act (Article 1396-1.01 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. 

Sec. 882.753.  SALE OF SECURITIES.  (a)  Exempts a sale, issuance, or
offering of securities under this section from the registration and
licensing provisions of The Securities Act (Article 581-1 et seq.,
V.T.C.S.).   
 
(b)  Exempts an officer, director, or employee who participates in a
reorganization under this section 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, 2003.