NY Ins L § 7309 (2021)
2021 New York Laws ISC - Insurance Article 73 - Conversion to Different Type of Insurer 7309 - Conversion of Domestic Reciprocal Insurers Into Mutual Property/casualty Insurance Companies.

§  7309.  Conversion  of  domestic  reciprocal  insurers  into  mutual property/casualty insurance companies. Any domestic  reciprocal  insurer doing  business  under the provisions of this article which has in force contracts  of  insurance,   of   the   kinds   which   domestic   mutual property/casualty   insurance  companies  may  be  authorized  to  make, covering not less than three hundred separate risks  and  on  which  the premiums  in  force  aggregate  not less than one hundred fifty thousand dollars, may be  converted  into  and  licensed  as  a  domestic  mutual property/casualty  insurance  company,  in the manner prescribed in this section and subject to any other requirements  of  law.  The  successive steps shall be as follows:  (a)  Not  less  than  a majority of the advisory committee of any such reciprocal insurer proposing so to  convert  shall  adopt  a  resolution approving the proposed conversion and appointing a committee of not less than  three  from  its  membership  to  prepare  a  draft  of a proposed declaration, charter and by-laws.  (b) Such committee shall prepare a proposed declaration,  charter  and by-laws,  which shall be submitted with an appropriate resolution to the advisory committee for approval.  (c) Not less than a majority of the advisory committee, at any regular or special meeting thereof,  shall  approve  by  resolution  a  proposed declaration,   charter   and   by-laws,   which  shall  conform  to  the requirements of this chapter relative to the contents  of  charters  and by-laws   of   domestic  mutual  property/casualty  insurance  companies hereafter organized to do the  kinds  of  business  transacted  by  such reciprocal  insurer,  with  such additions thereto as the superintendent shall approve, in order  to  make  provision  on  account  of  insurance contracts  then  in  force.  Such  resolution  shall  also  instruct the attorney-in-fact of such  reciprocal  insurer  to  give  notice  of  the meeting  at  which  the proposed conversion is to be voted upon and of a hearing of the subscribers before the superintendent.   A copy  of  such resolution,  together  with  copies of those required in subsections (a) and (b) of this section, a copy of the proposed declaration, charter and by-laws and a suitable proxy form approved by the superintendent,  shall accompany  such  notice,  which  notice  shall  be  mailed, with postage prepaid, to all subscribers at their post office addresses shown on  the records  of  the  reciprocal  insurer, at least thirty days prior to the date of the meeting. At the hearing, the superintendent shall pass  upon the  fairness of the terms and conditions of the proposed conversion and of the issuance of certificates  of  interest  in  the  surplus  of  the corporation and he shall approve or disapprove the proposed conversion.  (d)  At least two-thirds of the votes of subscribers at any reciprocal insurer, voting at such meeting, either in person or  by  proxy  on  the form  furnished  the  subscriber,  if the subscriber's agreement at such reciprocal insurer provides for a vote by proxy, shall be cast in  favor of  the  proposed  conversion  and  of  the  adoption  of  the  proposed declaration, charter  and  by-laws.  A  resolution  shall  be  similarly adopted  authorizing thirteen persons, who shall be either members of an advisory committee of a reciprocal insurer  proposing  to  convert,  the attorney-in-fact,  if an individual, officers of the attorney-in-fact if a corporation, or subscribers  at  a  reciprocal  insurer  proposing  to convert,    to    execute    the   declaration   and   authorizing   the attorney-in-fact, if an individual, or the president or a vice-president and one other officer of the  attorney-in-fact,  if  a  corporation,  to execute  or  certify  and  file  all  necessary  papers  and instruments incident to the proposed conversion.  (e) The  proposed  declaration  executed  as  aforesaid  and  proposed charter  with proof of mailing of notice of the subscribers' meeting and  copies of all other papers and instruments referred to in this  section, together  with  a certificate of their adoption, subscribed and affirmed as true under the penalties of perjury, as provided  for  in  subsection (d) of this section, shall be submitted to the superintendent.  (f)   If,   after  examination,  the  superintendent  finds  that  the proceedings for the change to a mutual insurance corporation  have  been regularly  taken  in conformity with law and the declaration and charter conform to all requirements of  paragraph  five  of  subsection  (a)  of section  one thousand two hundred one of this chapter, he shall file the declaration and charter in his office and issue a certified copy thereof to  the  proposed  incorporators.  If   requested   by   such   proposed incorporators, the superintendent shall also issue to them a certificate of incorporation executed by him in the name of the people of the state. Upon  the  issuance  of  such  certified  copy, such incorporators shall become a body corporate, and shall then have power to receive payment of subscriptions to its surplus as set forth  in  subsection  (g)  of  this section, but such corporation shall not be authorized to do the business of insurance until it shall have obtained a license therefor.  (g)  Those  subscribers  who  have voted in person or by proxy for the conversion and any other subscribers who thereafter agree  to  subscribe to  the surplus of the corporation shall be deemed to have subscribed to the surplus of the corporation to an amount  equal  to  their  operating reserve  accumulations at the reciprocal insurer, and such subscriptions shall be paid by a transfer of their operating reserve accumulations  to the  corporation.    Certificates  of  interest in said surplus shall be issued  to  such  subscribers  in  amounts  equal  to  their  respective operating reserve accumulations at the time when the proposal to convert is  adopted  by  the subscribers. Such certificates of interest shall be issued upon the agreement  set  forth  in  section  one  thousand  three hundred seven of this chapter.  (h)  If,  after  examination,  the  superintendent  finds that the new corporation meets  the  requirements  of  this  chapter,  including  the requirements as to initial surplus and reserves applicable under section four  thousand one hundred seven of this chapter, he may issue a license to the insurer to do business under  the  provisions  of  this  chapter. Thereupon,  the  remaining  assets  of  the  reciprocal insurer shall be transferred to the corporation and the reciprocal insurer shall cease to have authority to do business as such and shall be deemed  extinguished. Every  such  corporation  resulting  from  conversion  shall  assume and succeed to all of the obligations  and  liabilities  of  the  reciprocal insurer and shall be held liable to pay and discharge all such debts and liabilities  in  the  same  manner  as  if  they  had  been  incurred or contracted by the corporation, but the  subscribers  of  the  reciprocal insurer  shall  continue  subject  to  all  the  liabilities, claims and demands which shall then exist, or which may thereafter  accrue  against them,  or  any of them, by reason of any obligations incurred by them or on their behalf as such subscribers before the date  of  conversion  and such subscribers who become subscribers to the surplus shall be entitled to  recoup  from  the  corporation  any  payment  made by reason of such liabilities, claims or demands.  (i) No action or proceeding, pending at the time of the conversion  to which  the  reciprocal  insurer  may  be  a  party,  shall  be abated or discontinued  by  reason  of  such  conversion,  but  the  same  may  be prosecuted to final judgment in the same manner as if the conversion had not  taken place, or the corporation may be substituted in place of such reciprocal insurer by  order  of  the  court  in  which  the  action  or proceeding may be pending.  (j)  Upon  such  conversion  the  accumulated  operating  reserves  of subscribers who  shall  not  have  subscribed  to  the  surplus  of  the corporation,  held on deposit with the reciprocal insurer as of the date of the conversion shall be held by the corporation for  the  benefit  of such subscribers until all the obligations incurred on their behalf have been  extinguished. When all of such obligations have been discharged or terminated, and the superintendent shall have  so  certified,  the  said subscribers'  deposits or the balances thereof remaining to their credit shall  be  released  and  returned,  whereupon   the   powers   of   the attorney-in-fact relating thereto shall cease and terminate.