ORS 732.612
Consideration for membership interest in converting or reorganizing mutual insurer

  • kinds of consideration
  • allocation of consideration

(1)

In the case of a conversion or in the case of a reorganization that involves the organization of a stock holding company, consideration for the membership interests of the eligible members of a converting mutual insurer consists of one or any combination of the following:

(a)

Nontransferable subscription rights to purchase shares of capital stock of the issuer as described in subsection (2) of this section;

(b)

Shares of capital stock of the issuer as described in subsection (3) of this section;

(c)

Cash;

(d)

Premium credits;

(e)

In the case of a converting mutual insurer transacting primarily property or casualty insurance, or both, certificates of contribution that bear interest as established in the plan, that are repayable within 10 years or, if approved by the Director of the Department of Consumer and Business Services, within a longer period and that are repayable on terms set forth in the plan;

(f)

In the case of individual policies of life insurance, credits to policy account values or other enhancements in policy benefits; and

(g)

Any other form of consideration described in the plan and approved by the director.

(2)

A plan may provide for allocating to eligible members, without payment, nontransferable subscription rights to purchase shares of capital stock of the issuer. In addition, the plan must:

(a)

Allocate the subscription rights in whole shares among the eligible members. In the case of a converting mutual insurer transacting primarily life or health insurance, or both, the subscription rights must be allocated in accordance with subsection (6) of this section. In the case of a converting mutual insurer transacting primarily property or casualty insurance, or both, the subscription rights must be allocated in accordance with subsection (7) of this section.

(b)

Specify the expiration date of the subscription rights or authorize the board of directors of the converting mutual insurer to establish the expiration date. An eligible member may exercise the subscription rights, in whole or in part, in the manner described in the plan including, but not limited to, paying the subscription exercise price for the shares purchased. The plan may require an eligible member who exercises subscription rights to purchase a minimum number of shares unless the director determines that a minimum purchase requirement is unreasonable based on the interests of the eligible members, the converted stock insurer and the issuer. The proposed subscription exercise price per share must be set forth in the plan and must be less than the price at which shares of capital stock of the issuer will be first offered in accordance with paragraph (e) of this subsection. The boards of directors of the converting mutual insurer and the issuer shall determine the proposed subscription exercise price per share and the director must approve the proposed price based on the interests of the eligible members, the policyholders, the converted stock insurer and the issuer.

(c)

Provide that to the extent an eligible member does not exercise, in whole or in part, subscription rights allocated to the eligible member, the eligible member instead will receive one or more of the forms of consideration described in subsection (1) of this section that are specified in the plan.

(d)

Set the pro forma market value of the converted stock insurer, which is the value that is estimated to be necessary to attract full subscription for all shares offered by the issuer. The pro forma market value of the converted stock insurer must be determined by an independent valuation by a qualified person. The price per share at which the shares of capital stock of the issuer are first offered in accordance with paragraph (e) of this subsection must be equal to such pro forma market value of the converted stock insurer divided by the number of shares that would be issued if all subscription rights allocated to the eligible members are exercised.

(e)

Further provide that any shares of capital stock of the issuer for which subscription rights are allocated to the eligible members but that the eligible members do not purchase by exercising the members’ subscription rights must be sold in a public offering through an underwriter, unless the number of shares that the eligible members do not purchase is so small in number that the expense of a public offering is not warranted, in which case the plan may provide for the sale of the shares by private placement or through any other fair and equitable means approved by the director. If the director finds that market conditions or other circumstances may cause the interests of the eligible members to be adversely affected, the director may require the offering of shares to be postponed or the terms of the offering to be modified.

(3)

A plan may provide for allocating to the eligible members, without payment, shares of capital stock of the issuer. The plan must allocate the shares of capital stock of the issuer in whole shares among the eligible members. In the case of a converting mutual insurer transacting primarily life or health insurance, or both, the shares must be allocated in accordance with subsection (6) of this section. In the case of a converting mutual insurer transacting primarily property or casualty insurance, or both, the shares must be allocated in accordance with subsection (7) of this section. If shares of capital stock of the issuer constitute the only consideration the eligible members will receive and the plan does not provide for selling additional shares of capital stock or other securities of the issuer, the plan does not need to include the valuation of the converting mutual insurer. If the plan provides for allocating to the eligible members, without payment, shares of capital stock of the issuer, the plan may establish a reasonable period within which the eligible members to whom such shares are issued may not dispose of such shares.

(4)

If shares of capital stock of the issuer are issued in accordance with subsection (2) or (3) of this section, the issuer must use the issuer’s best efforts to encourage and assist in establishing a public market for the shares unless the director finds that a public market is not feasible or is not in the best interests of the eligible members, the converted stock insurer and the issuer. The director may provide that subscription rights or shares of capital stock of the issuer do not need to be allocated under subsection (2) or (3) of this section to eligible members who reside in a foreign country or other jurisdiction if a small number of eligible members reside in the foreign country or other jurisdiction and any registration, qualification, filing or other compliance matters under the laws of the foreign country or other jurisdiction with respect to the shares of capital stock of the issuer would be impracticable or unduly burdensome upon the issuer.

(5)

Regardless of the form of consideration for the membership interests of the eligible members of a converting mutual insurer, the plan may provide for selling additional shares of capital stock or other securities of the issuer to persons other than the eligible members. The issuer shall offer such additional shares or other securities at a price and on terms determined by the boards of directors of the converting mutual insurer and the issuer.

(6)

For a converting mutual insurer that transacts primarily life or health insurance, or both, the consideration specified in subsection (1) of this section must be allocated among the eligible members in accordance with a fair and equitable formula. The formula for allocating the consideration among the eligible members must either:

(a)

Allocate a fixed component of consideration per capita among the eligible members and allocate a variable component of consideration among the eligible members in proportion to the cash value of policies the eligible members hold; or

(b)

Allocate the consideration among the eligible members in any other manner approved by the director.

(7)

For a converting mutual insurer transacting primarily property or casualty insurance, or both, the consideration specified in subsection (1) of this section must be allocated among the eligible members in accordance with a fair and equitable formula. The formula for allocating the consideration among the eligible members must either:

(a)

Allocate the consideration among the eligible members in the proportion that the aggregate premiums the converting mutual insurer earns on the eligible member’s policies in force during a specified period before the record date described in ORS 732.611 (Eligible member of domestic mutual insurer or mutual holding company) (1) bear to the aggregate premiums that the converting mutual insurer earns during the same period on all eligible members’ policies in force. The specified period must be 36 months unless the plan specifies another period.

(b)

Allocate the consideration among the eligible members in any other manner approved by the director.

(8)

The form of consideration to be given to a class or category of eligible members may differ from the form of consideration to be given to another class or category of eligible members. The choice of the form of consideration to be given to a class or category of eligible members may take into account the type of policy, size of policy, tax status of the eligible members and other factors that the director determines are appropriate.

(9)

In the case of a conversion or in the case of a reorganization that involves the organization of a stock holding company, a member of the converting mutual insurer who is not an eligible member is not entitled to receive any consideration for the member’s membership interest.

(10)

In the case of a reorganization that involves the organization of a mutual holding company, the membership interests of the members of the converting mutual insurer, whether or not the members are eligible members, must be merged into the mutual holding company, and consequently the membership interests of the members of the converting mutual insurer must become membership interests in the mutual holding company. [1997 c.771 §6; 2013 c.370 §33]

Source: Section 732.612 — Consideration for membership interest in converting or reorganizing mutual insurer; kinds of consideration; allocation of consideration, https://www.­oregonlegislature.­gov/bills_laws/ors/ors732.­html.

732.005
Application of private corporation law
732.015
Permit to organize insurer required
732.025
Application for permit to organize stock insurer
732.035
Application for permit to organize insurer without capital stock
732.045
Investigation of applications to organize insurers
732.055
Approval or disapproval of application for permit
732.065
Reporting of changes in information in application
732.075
Revoking or suspending permit to organize insurer
732.085
Incorporators
732.095
Articles of incorporation
732.105
Filing articles of incorporation and surety bond, letter of credit or deposit
732.115
Approval of articles, documents and bond, letter of credit or deposit
732.125
Registration of securities subsequent to issuance of organization permit and certificate of incorporation
732.135
Soliciting subscriptions and applications
732.145
Stipulations required in subscriptions and applications
732.155
Organization to be completed within two years
732.165
Liability of directors and incorporators
732.175
Liability for acting as corporate insurer without authority
732.205
General powers of insurers
732.210
Assertion of lack of capacity or power
732.215
Management contracts prohibited
732.220
Exclusive agency contracts
732.225
Impairment of required capitalization prohibited
732.230
Order to cure impairment
732.235
Voluntary dissolution of insurer
732.240
Trusts of life insurance proceeds
732.245
Home office
732.250
Continuity of management in event of national emergency
732.305
Board of directors
732.320
Supporting documents for expenditures
732.325
Certain transactions and compensation between insurers and directors, trustees, officers, agents or employees prohibited
732.405
Authorized shares
732.410
Right to acquire own shares
732.415
Stock insurer’s proxies
732.420
“Equity security” defined
732.425
Application of insider trading regulation
732.430
Filing statement of security ownership with director
732.435
Suit to recover insider profits
732.440
Prohibited sales of securities
732.445
Establishing or maintaining primary or secondary market in securities
732.450
Arbitrage transactions exempt
732.455
Rules
732.460
Annual report to shareholders or members
732.465
Members of domestic mutual insurers
732.470
Voting rights of members of mutual insurer
732.475
Members’ meetings and procedures of domestic mutual and reciprocal insurers
732.480
Copy of bylaws of domestic mutual insurer to be provided to director
732.517
Purpose of ORS 732.517 to 732.546
732.518
Definitions for ORS 732.517 to 732.546
732.521
Activities that are prohibited unless specified procedures followed
732.523
Procedure for acquiring controlling interest of capital stock
732.526
Hearing on proposed activity
732.527
Approval of acquisition by chief insurance regulatory officials of two or more jurisdictions
732.528
Approval of proposed activity
732.529
Procedures following approval by director of proposed activity
732.531
Acquisition of assets or insurance of mutual or reciprocal insurers
732.533
Statement of acquisition
732.536
Compliance with foreign or alien laws
732.537
Application of ORS 732.527, 732.539, 732.542 and 732.544 to change of control of insurer
732.538
Effect of merger or consolidation
732.539
Notification of acquisition
732.541
Jurisdiction over person obtaining or attempting to obtain control
732.542
Monopoly or substantial diminishment of competition
732.544
Director’s order
732.546
Severability
732.547
Remedies for violation of ORS 732.517 to 732.546
732.548
Definitions for ORS 732.517 to 732.596
732.549
Subsidiaries
732.551
Registration of insurer members of holding company systems
732.552
Registration statement
732.553
Certain information not required to be disclosed
732.554
Changes in registration information
732.556
Requirement that certain persons provide information to insurers
732.558
Termination of registration by director
732.562
Consolidated registration
732.564
Registration for affiliated insurers
732.566
Exemption from ORS 732.517 to 732.596 by director
732.567
Presumption of control
732.568
Disclaimer of affiliation
732.569
Annual enterprise risk report
732.571
Supervisory college for domestic insurer
732.572
Rulemaking authority for ORS 732.517 to 732.596
732.574
Standards for transactions within holding company
732.576
Dividends and distributions
732.578
Liability of officers and directors of insurer that is subject to registration
732.582
Determination of reasonableness and adequacy of capital and surplus
732.584
Examinations
732.586
Confidentiality of information
732.588
Supervision, rehabilitation or liquidation
732.592
Recovery from parent corporation or holding company if domestic insurer ordered into liquidation or rehabilitation
732.594
Director’s determination or acknowledgment of appropriate group-wide supervisor for internationally active insurance group
732.596
Request by insurance holding company system for determination or acknowledgement of group-wide supervisor
732.600
Definitions for ORS 732.600 to 732.630
732.602
Intent of ORS 732.600 to 732.630
732.604
Permissible actions of domestic mutual insurer
732.606
Plan for conversion or reorganization
732.608
Waiver of requirements of ORS 732.606
732.610
Contents of plan
732.611
Eligible member of domestic mutual insurer or mutual holding company
732.612
Consideration for membership interest in converting or reorganizing mutual insurer
732.614
Effect of conversion
732.616
Reorganization involving organization of stock holding company
732.618
Reorganization involving organization of mutual holding company
732.620
Status of mutual holding company as corporation
732.622
Restructuring of mutual holding company
732.624
Approval by Director of Department of Consumer and Business Services of mutual holding company restructuring plan
732.626
Plan review and approval
732.628
Limitations on ownership of shares in companies resulting from conversion, reorganization or restructuring
732.630
Dissenters’ rights
732.650
Definitions
732.653
Scope
732.656
Risk management framework
732.659
Own risk and solvency assessment in accordance with manual
732.662
Own risk and solvency summary report
732.666
Exemptions
732.669
Documentation and supporting information
732.672
Confidentiality
732.680
Submission of corporate governance annual disclosure
732.683
Discretion as to form and content of responses to inquiries in corporate governance annual disclosure
732.686
Maintenance of confidentiality and privilege
732.689
Retention of consultant to assist director’s review of corporate governance annual disclosure
732.810
Definitions for ORS 732.810 to 732.814
732.811
Application of ORS 732.810 to 732.814
732.812
Filing of financial statements
732.813
Notice to prospective insured
732.814
Authority of director over controlling producer and controlled insurer
732.820
Interstate Insurance Product Regulation Compact
732.825
State member of Interstate Insurance Product Regulation Commission
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