A stock captive insurer may become a mutual captive insurer under the plan or procedure as may be approved by the commissioner. The commissioner shall not approve any such plan, procedure, or mutualization unless:

(1) It is equitable to stockholders and policyholders;
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Terms Used In Alabama Code 27-31B-26

  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
  • person: includes a corporation as well as a natural person. See Alabama Code 1-1-1
  • state: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Alabama Code 1-1-1
(2) It is subject to approval by the holders of a majority of the insurer’s outstanding capital stock having voting rights and by a majority of the insurer’s policyholders who vote on such plan in person, by proxy, by mail, or e-mail pursuant to such notice and procedure as included in the plan or procedures approved by the commissioner. For purposes of this section a majority vote is one where, based on the number of votes returned, there are more votes for approval of the mutualization than there are for denial;
(3) Mutualization will result in retirement of shares of the insurer’s capital stock at a reasonable price as specified in the plan;
(4) The plan provides for the purchase of the shares of any nonconsenting stockholder in the same manner and subject to the same applicable conditions as provided by the general corporation laws of the state as to rights of nonconsenting stockholders with respect to consolidation or merger of private corporations;
(5) The plan provides for definite conditions to be fulfilled by a designated early date upon which such mutualization will be deemed effective; and
(6) The mutualization leaves the insurer with surplus funds reasonably adequate for the security of its policyholders and to enable it to continue successfully under an approved plan of operation.
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