Subchapter III. Reciprocal Insurance Company Conversion.

§ 31–751. Definitions.

For the purposes of this subchapter, the term:

(1) “Reciprocal insurance company” includes an interinsurance exchange but shall not include a risk retention group as defined in § 31-4101(12).

(2) “Voting shares” means shares entitling the holder to vote for the election of directors of the issuer except that shares which can be voted only in the case of the occurrence of an event or an extraordinary action are not voting shares.

§ 31–752. Formation of a mutual insurance holding company from a reciprocal insurance company.

(a) Upon approval of the Commissioner, a domestic reciprocal insurance company may form a mutual insurance holding company that directly or indirectly owns the insurance company, based upon a conversion plan. The reorganized insurance company shall continue, without interruption, its existence as a stock insurance company subsidiary of the mutual insurance holding company or as a stock insurance company subsidiary to an intermediate holding company which is a subsidiary of the mutual insurance holding company.

(b) The Commissioner, after a public hearing as provided in § 31-703(g)(1), if satisfied that the interests of the policyholders are properly protected and that the conversion plan is fair and equitable to the policyholders, shall approve the proposed conversion plan and may require as a condition of approval such modifications of the proposed conversion plan as the Commissioner finds necessary for the protection of the policyholders’ interests. The Commissioner may retain consultants as provided in § 31-703(g)(3). A conversion pursuant to this section shall be subject to § 31-703(a), (b), and (c). The Commissioner shall retain jurisdiction over a mutual insurance holding company organized pursuant to this section to assure that policyholder interests are protected.

(c) All of the initial shares of the capital stock of the reorganized insurance company shall be issued to the mutual insurance holding company. The membership interests of the policyholders of the reorganized insurance company shall become membership interests in the mutual insurance holding company.

§ 31–753. Merger of policyholder membership interests.

(a) Upon approval of the Commissioner, a domestic or foreign reciprocal or mutual insurance company may merge its policyholders’ membership interests into a mutual insurance holding company formed pursuant to this section and continue, without interruption, the existence of the insurance company as a stock insurance company subsidiary of the mutual insurance holding company or as a stock insurance company subsidiary of an intermediate holding company which is a subsidiary of the mutual insurance holding company.

(b) The Commissioner, after a public hearing as provided in § 31-703(g)(1), if satisfied that the interests of the policyholders are properly protected and that the merger is fair and equitable to the policyholders, shall approve the proposed merger and may require as a condition of approval such modifications of the proposed merger as the Commissioner finds necessary for the protection of the policyholders’ interests. The Commissioner may retain consultants as provided in § 31-703(g)(3). A merger pursuant to this section shall be subject to § 31-703(a), (b), and (c). The Commissioner shall retain jurisdiction over the mutual insurance holding company organized pursuant to this section to assure that policyholder interests are protected.

(d) Policyholders of the reorganized insurance company shall be members of the mutual insurance holding company in accordance with the articles of incorporation and bylaws of the mutual insurance holding company. The mutual insurance holding company shall at all times directly or indirectly own a majority of the voting shares of the capital stock of the reorganized insurance company. A merger of policyholders’ membership interests in a reciprocal or mutual insurance company into a mutual insurance holding company shall be deemed to be a merger of insurance companies pursuant to § 31-703 which shall be applicable.

§ 31–754. Incorporation of holding company.

A mutual insurance holding company resulting from a conversion of a domestic reciprocal insurance company shall be incorporated pursuant to Chapter 3 of Title 29 and shall be subject to Chapters 1, 2, and 3 of Title 29 to the extent that those provisions are not in conflict with this subchapter. The articles of incorporation and any amendments to such articles of incorporation of the mutual insurance holding company shall be subject to approval of the Commissioner and Corporation Counsel of the District in the same manner as those of an insurance company.

§ 31–755. Insurers rehabilitation and liquidation.

(a) A mutual insurance holding company shall be deemed to be an insurer subject to Chapter 13 of this title (“Insurers Rehabilitation and Liquidation Act”), and shall automatically be a party to any proceeding under the Insurers Rehabilitation and Liquidation Act involving an insurance company, which as a result of a conversion or merger pursuant to § 31-702 or § 31-703 is directly or indirectly a subsidiary of the mutual insurance holding company. In any proceeding under the Insurers Rehabilitation and Liquidation Act involving the converted or merged insurance company, the assets of the mutual insurance holding company shall be deemed to be assets of the estate of the converted or merged insurance company for purposes of satisfying the claims of the converted or merged insurance company’s policyholders.

(b) A mutual insurance holding company shall not dissolve or liquidate without the approval of the Commissioner or as ordered by a District of Columbia court pursuant to the Insurers Rehabilitation and Liquidation Act.

§ 31–756. Applicability; membership interest; powers.

(a) A membership interest in a mutual insurance holding company shall not constitute an equity security as defined in § 31-603.

(b) A mutual insurance holding company created under this subchapter shall have the same powers to borrow or assume liability as a reciprocal insurance company organized under District law.

§ 31–757. Failure to give notice.

If the reciprocal insurance company complies substantially and in good faith with the notice requirements of this subchapter, the reciprocal insurance company’s failure to give any member or members any required notice shall not impair the validity of any action taken under this subchapter.

§ 31–758. Limitations of actions.

Any action challenging the validity of, or arising out of acts taken or proposed to be taken under, this subchapter shall be commenced within 30 days after the effective date of any plan submitted for approval pursuant to this subchapter.

§ 31–759. Conversion of mutual insurance holding company.

Chapter 9 of this title shall be applicable to the conversion of a mutual insurance holding company formed under this subchapter to a stock company as if the mutual insurance holding company were a mutual insurance company.

§ 31–760. Rulemaking.

The Mayor, pursuant to subchapter I of Chapter 5 of Title 2 may issue rules and regulations to implement the provisions of this subchapter.