Bill Text

Bill Information

Add To My Favorites | print page

AB-1955 Life insurers: nonprofit mutual benefit corporations.(2003-2004)

SHARE THIS:share this bill in Facebookshare this bill in Twitter
AB1955:v94#DOCUMENT

Assembly Bill No. 1955
CHAPTER 376

An act to add Section 1140.1 to the Insurance Code, relating to life insurance.

[ Filed with Secretary of State  August 30, 2004. Approved by Governor  August 27, 2004. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 1955, Vargas. Life insurers: nonprofit mutual benefit corporations.
Existing law provides that incorporated insurers are subject to specified provisions of law relating to for-profit corporations. Existing law authorizes the existence of domestic mutual life insurers, and provides that these insurers are subject to the provisions of law relating to for-profit corporations.
This bill would allow domestic incorporated life insurers to be organized, instead, under provisions of law relating to nonprofit mutual benefit corporations, and would allow existing domestic incorporated life insurers, with the submission of a filing fee and the consent of the Insurance Commissioner, to be converted to insurers organized under these provisions of law. It would provide that an insurer so organized shall have the same powers held by, and shall be subject to all provisions of law regarding insurance applicable to, a domestic incorporated stock life insurer, except as specified. The bill would set forth minimum surplus requirements for an insurer organized as a nonprofit mutual benefit corporation, and would require that an insurer so organized have at least one member.

The people of the State of California do enact as follows:


SECTION 1.

 Section 1140.1 is added to the Insurance Code, to read:

1140.1.
 (a) A domestic incorporated life insurer may be organized under the Nonprofit Mutual Benefit Corporation Law. With the prior consent of the commissioner, an existing domestic incorporated life insurer organized under the general corporation law may be converted to a domestic incorporated life insurer under the Nonprofit Mutual Benefit Corporation Law pursuant to Section 911 of the Corporations Code. The consent shall be obtained by filing an application accompanied by any information that the commissioner may require, and by submitting a filing fee of seven thousand dollars ($7,000).
(b) Except as otherwise provided in this code, a domestic incorporated life insurer organized under the Nonprofit Mutual Benefit Corporation Law shall be subject to that law in the same manner as other corporations organized under that law. In the case of a conflict between the Insurance Code and the Nonprofit Mutual Benefit Corporation Law, the provisions of the Insurance Code shall prevail.
(c) A life insurer organized under the Nonprofit Mutual Benefit Corporation Law shall have the same powers held by, and shall be subject to all provisions of this code applicable to, a domestic incorporated stock life insurer, except for Section 1140. An insurer so organized shall have a surplus (in lieu of paid-in capital and surplus) at least equal to the sum of the paid-in capital and surplus required of a stock insurer admitted for the same classes. In addition, an insurer so organized shall be subject to the same premium tax obligations as a stock insurer.
(d) Officers, directors, and other managers of domestic life insurers organized under the Nonprofit Mutual Benefit Corporation Law shall not be entitled to any rights, preferences, or privileges that are not allowed for the officers, directors, or managers of an insurer of the same class organized under the general corporation law.
(e) For a life insurer organized under the Nonprofit Mutual Benefit Corporation Law, all references in this code to “shareholders” shall be interpreted to mean “members,” and all references to “shares,” “stocks,” or “securities” shall mean “memberships,” as defined in the Nonprofit Mutual Benefit Corporation Law.
(f) The issuance of memberships to policyholders that are not natural persons shall be subject to the provisions of Article 8 (commencing with Section 820) of Chapter 1 of Part 2 of Division 1. A domestic incorporated life insurer organized under the Nonprofit Mutual Benefit Corporation Law shall have at least one member. The redemption of memberships, other than for policyholders that are not natural persons, shall be subject to the same rules as those applicable to the payment of dividends by a domestic incorporated stock life insurer.