Mergers, Consolidations, Conversions, Mutualizations, Bulk Reinsurance, Subsidiaries

V.S.A. tit. 8, ch. 101, subch. 3

in effect

8 V.S.A. § 3421 Mutualization of stock insurer

3421. Mutualization of stock insurer (a) A domestic stock insurer may become a mutual insurer under such plan and procedure as may be approved by the Commissioner after a hearing held substantially in accordance with the provisions of section 3305 of this title. (b) The Commissioner shall not approve any such plan or mutualization unless: (1) It is equitable to its stockholders and policyholders. (2) It is subject to approval by the holders of not less than a majority of the insurer’s outstanding capital stock having voting rights present at a duly called regular or special meeting thereof, and by not less than a majority of the insurer’s policyholders who vote on such plan in person, by proxy or by mail pursuant to such notice and procedure as may be approved by the Commissioner. (3) If a life insurer, the right to vote thereon is limited to holders of policies other than term or group policies, and whose policies have been in force for more than one year. (4) Mutualization will result in retirement of shares of the insurer’s capital stock at a price not in excess of the fair market value thereof as determined by competent disinterested appraisers. (5) The plan provides for the purchase of the shares of any nonconsenting stockholder in substantially the same manner and subject to the same rights and conditions as are accorded a dissenting shareholder under section 3428 of this title. (6) The plan provides for definite conditions to be fulfilled by a designated early date upon which such mutualization will be deemed effective and for notices substantially in accordance with section 3424 of this title. (7) The mutualization leaves the insurer with surplus funds reasonably adequate for the security of its policyholders and to enable it to continue successfully in business in states in which it is then authorized to transact business, and for the kinds of insurance included in its certificates of authority in such states. (c) No director, officer, agent, or employee of the insurer, nor any other person, shall receive any fee, commission, or other valuable consideration whatsoever for in any manner aiding, promoting, or assisting therein except as set forth in the plan of mutualization as approved by the Commissioner. (d) This section shall not apply to mutualization under order of court pursuant to rehabilitation or reorganization of an insurer. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 4, § 1).

8 V.S.A. § 3422 Mutual insurers—Prohibitions

3422. Mutual insurers—Prohibitions A domestic mutual insurer shall not merge or consolidate with a stock insurer where the surviving corporation will be a stock insurer. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 4, § 2); amended 1993, No. 28, § 1, eff. May 21, 1993.

8 V.S.A. § 3423 Converting mutual insurer or mutual insurance holding company

3423. Converting mutual insurer or mutual insurance holding company (a) A mutual insurer may become a stock insurer or a mutual insurance holding company may become a stock company or reorganize under such reasonable plan and procedure as may be approved by the Commissioner after a hearing thereon of which notice was given to the eligible members, all of whom shall have the right to appear at the hearing. (b) The Commissioner shall not approve any such plan or procedure unless: (1) Its terms and conditions are fair and equitable. (2) The plan shall have been duly adopted by action of not less than three-fourths of the members of the board of directors or trustees of the mutual insurer or mutual insurance holding company, as the case may be. (3) It is subject to approval by vote of not less than three-fourths of the eligible members actually voting thereon in person, by proxy, or by mail at a meeting of members called for the purpose, for which at least 30 days’ notice has been provided to eligible members, pursuant to such reasonable notice and procedure as may be approved by the Commissioner. (4) The plan provides the method by which the aggregate value of eligible members’ interests will be determined. The method specified must be acceptable to the Commissioner and shall be based on the market value of the converted company, unless another method for determining this value is approved by the Commissioner. (5) The plan provides for each eligible member to receive a fixed component of consideration or a variable component of consideration, or both, or any other component of consideration acceptable to the Commissioner. Any component shall reflect, based upon fair and equitable formulas, methods and assumptions, factors such as estimated proportionate contributions of classes, or groupings of policies and contracts to the aggregate component of consideration being distributed to eligible members, or other factors the Commissioner may approve. (6) The plan specifies the consideration to the eligible members entitled thereto, which consideration may consist of cash, securities of the reorganized insurer or securities of another institution or institutions, subscription rights to purchase securities of the reorganized insurer or securities of another institution or institutions, a certificate of contribution, surplus notes, additional insurance or annuity benefits, policy credits, increased dividends, or other consideration, or any combination of such forms of consideration as the Commissioner may approve. The form or forms of consideration to be distributed to any class or category of member need not be the same as the consideration to be distributed to any other class or category of member. The choice of the form or forms of consideration to be distributed may take into account such factors as the class or category of policy with respect to what consideration is being distributed, the country of residence or tax status of eligible members, the reasonableness of the cost of providing a particular form of consideration in relation to its value, or other appropriate factors. If the plan provides for the sale of securities to members, the securities shall be offered to members at a price not greater than that to be offered under the plan to others. (7) If the plan relates to the conversion of a mutual life insurer, the plan shall provide for the reasonable expectations of policyholders through the establishment of a closed block or other method acceptable to the Commissioner. Any provision for dividend expectations may be limited to participating individual life insurance policies and participating individual annuity contracts in force or deemed to be in force by the plan of conversion on the effective date of the plan for which the insurer has an experience-based dividend scale due, paid or accrued by action of the board of directors of the mutual insurer in the year in which the plan is adopted; provided, however, that other categories of policies and benefits may be included or excluded, subject to approval of the Commissioner. (8) If the plan relates to the conversion of a mutual insurer, the plan, when completed, would provide for the converted insurer paid-in capital stock in an amount not less than the minimum paid-in capital stock required of a domestic stock insurer upon initial authorization to transact like kinds of insurance, together with an amount of surplus that is no less than the amount that the Commissioner deems to be reasonably necessary for the insurer’s future solvency. (9) If the plan relates to the conversion or reorganization of a mutual insurance holding company, the plan shall provide for: (A) the conversion of the mutual insurance holding company to a stock company followed by a merger or consolidation of the converted stock company with another stock company, which may include a subsidiary of the mutual insurance holding company; (B) a sale of an intermediate stock holding company or stock insurer with shares or other consideration being distributed to members of the mutual insurance holding company, followed by the liquidation or dissolution of the mutual insurance holding company; (C) a liquidation or dissolution of the mutual insurance holding company; or (D) any combination of the foregoing or other reorganization or transfer of assets and assumption of liabilities approved by the Commissioner. (10) The Commissioner finds that the insurer’s management has not, through reduction in volume of new business written, or cancellation or through any other means sought to reduce, limit, or affect the number or identity of the insurer’s members to be entitled to participate in such plan, in order to secure for the individuals comprising management any unfair financial advantage through such plan, or intentionally engaged in any other conduct designed to secure for the individuals comprising management any unfair financial advantage through such plan. (c) Subsection (b) of this section shall not be deemed to prohibit the inclusion in the demutualization plan of provisions under which the individuals comprising the insurer’s management or mutual insurance holding company’s management, as the case may be, and employee group may receive employee benefit and compensation arrangements, including arrangements through the use of stock of the reorganized insurer or stock of its parent corporation or other entity, that are to become effective simultaneously with the plan of reorganization or, subsequently, provided such provisions are approved by the Commissioner. If the plan provides for the distribution or sale to members of capital stock of the converted company, nothing in subsection (b) of this section shall be deemed to prohibit the inclusion in the plan of provisions under which the converting company’s directors, officers, agents, or employees shall be entitled to purchase for cash at the same price as offered to the insurer’s members, shares of stock not taken by members in accordance with such terms and reasonable classifications of such individuals as may be included in the plan and approved by the Commissioner. (d) No director, officer, agent, or employee of the insurer, the mutual insurance holding company, or any other person shall receive any fee, commission, or other valuable consideration whatsoever, other than their usual regular salaries and compensation, for in any manner aiding, promoting, or assisting in such conversion except as set forth in the plan approved by the Commissioner. This provision shall not be deemed to prohibit the payment of reasonable fees and compensation to attorneys at law, accountants, and actuaries for services performed in the independent practice of their professions, even though also directors of the insurer. (e) Upon the effective date of the plan, the rights of members in the mutual insurer or mutual insurance holding company shall be extinguished. All policies of a mutual insurer in force on the effective date of the plan shall remain in force under the terms of those policies, except for any terms affected by the extinguishment of those membership rights. (f) If a plan provides for the distribution of common stock, but does not provide for registration and public trading of the common stock of the converted insurer or the parent corporation or the converted mutual insurance holding company or other entity as of the effective date of the plan, the plan shall require the appropriate entity or entities to use good faith efforts to encourage and assist in the establishment of a market for such stock as soon as reasonably possible and, in any event, not later than two years after the effective date of the reorganization unless otherwise approved by the Commissioner. Within two years after the effective date of the reorganization unless otherwise approved by the Commissioner, the converted insurer or the parent corporation or the converted mutual insurance holding company or other entity shall make available to each eligible policyholder or member who received and retained shares of common stock with minimal aggregate value upon reorganization, a procedure to dispose of shares of stock at market value without brokerage commissions or similar fees under a plan approved by the Commissioner. (g) At the option of the mutual insurer or mutual insurance holding company, as the case may be, any common shares or other securities of the converted stock company or of any other institution, included in the members’ consideration, other than those acquired as a result of a member exercising any subscription rights, may be placed in a trust or other entity existing for the exclusive benefit of the members, and established solely for the purpose of effectuating the reorganization to which such common shares or other securities are issued by the issuer on the effective date of the reorganization, such consideration to be distributed to members during a process specified in the plan and approved by the Commissioner. (h) Except as otherwise specifically provided in the plan of conversion, prior to and for a period of five years following the effective date of such plan, no person other than the converted stock insurer or an institution controlling the converted stock insurer or a converted mutual insurance holding company or institutions controlling the converted mutual insurance holding company shall, directly or indirectly, offer to acquire or acquire in any manner the beneficial ownership of five percent or more of any class of a voting security of the new stock insurer or of an institution that owns a majority or all of the voting securities of the new stock insurer or converted mutual insurance holding company, without the prior approval of the Commissioner, of an application for acquisition filed by such person with the Commissioner. The Commissioner shall not approve an application for acquisition unless the Commissioner finds, after a public hearing, that the acquisition would not frustrate the plan of conversion as approved by the policyholders or members and the Commissioner, would be consistent with the purposes of this statute, and would be on terms and conditions that are fair and equitable to the policyholders or members, as the case may be. No security that is acquired or is to be acquired in contravention of this section or of any rule, regulation, or order of the Commissioner may be voted at any shareholders meeting. If the new stock insurer or converted mutual insurance holding company or any institution that owns a majority or all of the voting securities of the new stock insurer or converted mutual insurance holding company or the Commissioner believes that any voting securities have been or are about to be acquired in contravention of this section or of any rule, regulation, or order of the Commissioner, he or she may apply to any court of competent jurisdiction in the State of Vermont for an order to enjoin any offer or acquisition made or any voting of any security so acquired, or to void the vote of any such security in contravention of this section or any rule, regulation, or order of the Commissioner, and for such other equitable relief as may be appropriate. (i) A failure by a mutual insurer or a mutual insurance company to provide a member or members with the notice required by this section shall not impair the validity of any action taken under this section, if such mutual insurer or mutual insurance holding company has complied substantially and in good faith with all notice requirements, as determined by the Commissioner. (j) Documents submitted to the Commissioner by the mutual insurer or mutual insurance holding company in connection with obtaining approval of the plan of conversion shall be public documents, except that financial data, actuarial memoranda, and any other information that the Commissioner determines could result in harm to the mutual entity or the converted entity or to its members if disclosed, shall be considered confidential. This confidentiality shall not extend to information provided by the mutual entity that the Commissioner deems necessary to be provided to members to evaluate the plan of conversion. (k) Any aggrieved party to a plan, within the meaning of section 77 of this title, may appeal an order of the Commissioner, pursuant to the provisions of such section, within 30 days after the issuance of an order of the Commissioner approving or disapproving such plan. Any review by the court shall be confined to the record before the Commissioner. (l) As used in this section: (1) “Eligible member” means, in the case of a mutual insurer, a person who owns or, pursuant to the terms of the plan, is deemed to own a policy that was in force as of the record date or, in the case of a mutual insurance holding company, a person who was or, pursuant to the terms of the plan, is deemed to have been a member as of the record date. For this purpose, the record date is the date when the mutual company’s board of directors first adopts the plan of conversion, unless another date is specified in the plan of conversion and approved by the Commissioner. In the case of a mutual life insurance company or a mutual insurance holding company, the membership of which is derived from the purchase of contracts from a life insurance company, eligibility may be limited to members holding contracts that have been in force not less than one year. (2) “Fair and equitable” means that any action undertaken, pursuant to this section, with respect to a plan of conversion, provides for full and proper consideration of the aggregate membership interests and corresponding values of eligible members, in no manner discriminates improperly among eligible members, and appropriately protects the interests of eligible members before and subsequent to the conversion. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 4, § 2a); amended 1999, No. 86 (Adj. Sess.), § 1, eff. April 27, 2000.

8 V.S.A. § 3424 Procedure for merger

3424. Procedure for merger Any domestic insurer subject to the prohibitions of section 3422 of this title may merge with any other insurer in the following manner: (1) The board of directors of each insurer shall, by a resolution adopted by a majority vote of the members of such board, approve a joint agreement of merger setting forth: (A) The names of the insurers proposed to merge, and the name of the insurer into which they propose to merge, which is hereafter designated as the surviving company. (B) The terms and conditions of the proposed merger and the mode of carrying the same into effect. (C) The manner and basis of converting the shares of capital stock of stock insurers, if applicable, other than the surviving insurer into shares or other securities or obligations of the surviving insurer. (D) A restatement of such provisions of the articles of incorporation of the surviving insurer as may be deemed necessary or advisable to give effect to the proposed merger. (E) Such other provisions with respect to the proposed merger as are deemed necessary or desirable. (2) The resolution of the board of directors of each insurer approving the agreement shall direct that the agreement be submitted to a vote of the shareholders, members, or policyholders, as the case may be, of such insurer entitled to vote in respect thereof at a designated meeting thereof, which may be an annual meeting of shareholders, members, or policyholders entitled to vote in respect thereof. If the designated meeting of any insurer at which the agreement is to be submitted is an annual meeting, notice of the submission of the agreement shall be included in the notice of such annual meeting. If the designated meeting of any insurer at which the agreement is to be submitted is a special meeting of the shareholders, members, or policyholders, entitled to vote in respect thereof, such special meeting shall be called by the resolution designating the meeting, and notice of such meeting shall be given as provided in the bylaws or charter, as the case may be, of each insurer. (3) The agreement of merger so approved shall be submitted to a vote of the shareholders, members, or policyholders, as the case may be, of each insurer entitled to vote in respect thereof at the meeting directed by the resolution of the board of directors of such company approving the agreement, and the agreement shall be adopted by such insurer upon receiving the affirmative vote of such proportion of the shareholders, members, or policyholders as provided in section 3427 of this title. (4) Following the adoption of the agreement by any insurer, the clerk or secretary thereof, within such time and in such manner as shall be approved by the Commissioner, shall give notice of the adoption of the agreement to each shareholder, member, or policyholder, as the case may be, of record of such insurer entitled to vote who was not present in person or represented by proxy at the meeting at which the agreement was adopted. The insurer shall file an affidavit with the Commissioner, signed by the clerk or secretary of such insurer, that such notice was given. (5) Any shareholder, member, or policyholder, as the case may be, of any such insurer, who did not vote in favor of the adoption of the agreement of merger, may object to such merger in the manner and with the effect provided in sections 3428 and 3429 of this title. (6) As soon as practicable after the expiration of a period of 30 days after the adoption of the agreement of merger by the shareholders, members, or policyholders, as the case may be, of that one of the merging insurers that is the last, in point of time, to adopt the same, the agreement shall again be considered by the board of directors of each insurer a party thereto, at a regular or special meeting of such board, and if the board of directors of each such insurer, by a majority vote of the members of such board, shall again approve the agreement and shall authorize the execution thereof, the agreement shall be signed on behalf of each such insurer by its president or a vice president and its clerk or secretary or an assistant clerk or secretary and shall have the corporate seal of each such insurer thereto affixed. (7) Articles of merger shall be adopted in the following manner: (A) Upon the execution of the agreement of merger by all of the insurers parties thereto, there shall be executed and filed, in the manner hereafter provided, articles of merger setting forth the agreement of merger, the signatures of the several insurers parties thereto, the manner of its adoption and the vote by which adopted by each of such insurers. (B) The articles of merger shall be signed on behalf of each insurer by its president or a vice president and its clerk or secretary or an assistant clerk or secretary, and acknowledged before a notary public by the officers signing the same, in such multiple copies as shall be required to enable the insurers to comply with the provisions of this subchapter with respect to filing and recording the articles of merger, and shall then be presented to the Commissioner. (C) The Commissioner shall approve the articles of merger if he or she finds that the merger will promote the general good of the State in conformity with those standards set forth in section 3305 of this title. If he or she approves the articles of merger, he or she shall indorse his or her approval thereon and shall present the same to the Secretary of State of the State of Vermont at his or her office. (8) Upon the presentation of the articles of merger, the Secretary of State, if he or she finds that they conform to law, shall indorse his or her approval on each of the multiple copies of the articles, and, when all fees have been paid as required by law, shall file one copy of the articles of merger in his or her office and issue a certificate of merger, and shall return the remaining copies of the articles bearing the indorsement of his or her approval, together with the certificate of merger, to the surviving insurer, or its representatives. (9) The surviving insurer shall obtain a certified copy of the certificate of merger from the Secretary of State and file the same with the Commissioner, accompanied by a copy of the articles of merger bearing the indorsement and approval of the Secretary of State. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 4, § 3).

8 V.S.A. § 3425 Procedure for consolidation

3425. Procedure for consolidation Any domestic insurer, subject to the prohibitions of section 3422 of this title, may consolidate with any other insurer or insurers in the following manner: (1) The board of directors of each insurer shall, by a resolution adopted by a majority vote of the members of such board, approve a joint agreement of consolidation setting forth: (A) the names of the insurers proposing to consolidate, and the name of the new insurer into which they propose to consolidate, which is hereinafter designated as the new insurer; (B) the terms and conditions of the proposed consolidation and the mode of carrying the same into effect; (C) the manner and basis of converting the shares of capital stock of stock insurers into shares or other securities or obligations of the new insurer; (D) with respect to the new insurer, such provisions as are required to be set forth in original articles of incorporation for insurers formed under this part; (E) such other provisions with respect to the proposed consolidation as are deemed necessary or desirable. (2) The agreement of consolidation shall then be submitted to a vote of the shareholders, members, or policyholders, as the case may be, entitled to vote in respect thereof of each insurer in the same manner as provided in section 3424 of this title and this agreement shall be adopted by such insurer upon receiving the affirmative vote of such proportion of the shareholders, members, or policyholders, as provided in section 3427 of this title, and the adoption thereof by directors and by the shareholders, members, or policyholders shall be followed by the same notice to shareholders, members, or policyholders, as the case may be, as provided in section 3424 of this title. (3) Any shareholder, member, or policyholder, as the case may be, of any such insurer who did not vote in favor of the adoption of the agreement of consolidation, may object to such consolidation in the manner and with the effect provided in sections 3428 and 3429 of this title. (4) Upon the adoption of the agreement of consolidation it shall again be considered by the board of directors of each insurer a party to the agreement, and, if again approved and the execution of the agreement authorized by such board, the agreement shall be executed all in the same manner and within the same time as provided in subdivision 3424(6) of this title. (5) Upon the execution of the agreement of consolidation by all of the insurers and parties thereto, articles of consolidation shall be executed and filed, accompanied by the fees prescribed by law in the same manner and form and in such multiple copies as provided in subdivision 3424(7) of this title and shall then be presented to the Commissioner for approval and presentation to the Secretary of State in the manner provided in said subdivision 3424(7) of this title. (6) Upon the presentation of the articles of consolidation, the Secretary of State, if he or she finds that they conform to law, shall indorse his or her approval on each of the multiple copies of the articles, and, when all fees have been paid as required by law, shall file one copy of the articles of consolidation in his or her office and issue a certificate of consolidation and shall return the remaining copies of the articles bearing the indorsement of his or her approval, together with the certificate of consolidation, to the new insurer, or its representatives. (7) The new insurer shall obtain a certified copy of the certificate of consolidation and incorporation from the Secretary of State and file the same with the Commissioner, accompanied by a copy of the articles of consolidation bearing the indorsement of the approval of the Secretary of State. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 4, § 4).

8 V.S.A. § 3426 Effective date of merger or consolidation

3426. Effective date of merger or consolidation Upon the issuance of a certificate of merger or a certificate of consolidation by the Secretary of State, the merger or consolidation, as the case may be, shall be effected, subject to the rights of dissenting shareholders, members or policyholders, as provided in sections 3428 and 3429 of this title. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 4, § 5).

8 V.S.A. § 3427 Voting

3427. Voting At any meeting of the shareholders, members, or policyholders, as the case may be, held pursuant to the resolution of the board of directors for the purpose of adopting an agreement of merger or consolidation, as provided for in sections 3424 and 3425 of this title, the shareholders, members, or policyholders, as the case may be, entitled to vote in respect thereof may vote in person or by proxy and shall have such votes as they are entitled to pursuant to the charter and bylaws of the insurer or as may otherwise be provided by law. Two-thirds of the votes cast at the meeting in person or by proxy shall be necessary for the adoption of such proposed articles of merger or consolidation. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 4, § 6).

8 V.S.A. § 3428 Rights of dissenting shareholders

3428. Rights of dissenting shareholders (a) If any shareholder of any insurer, a party to a merger or consolidation, who did not vote in favor of such merger or consolidation at the meeting at which the agreement of merger or consolidation was adopted by the shareholders of such insurer shall, at any time within 30 days after the filing of the affidavit of notice of the adoption of the agreement of merger or consolidation as provided for in sections 3424 and 3425 of this title, object thereto in writing and demand payment of the value of his or her shares, the surviving or new insurer shall, in the event that the merger or consolidation shall be made effective, pay to such shareholder upon surrender of his or her certificates therefor, the value of such shares at the effective date of the merger or consolidation. If within 30 days after such effective date, the value of such shares is agreed upon between the shareholder and the surviving or new insurer, as the case may be, payment therefor may be made within 90 days after the effective date. If, within 30 days after such effective date, the surviving or new insurer, as the case may be, and the shareholder do not so agree, either such insurer or the shareholder may, within 90 days after such effective date, petition the Superior Court of the county in which the principal office of the insurer is located, to appraise the value of such shares; and payment of the appraised value thereof shall be made within 60 days after the entry of the judgment or order finding such appraised value. The practice, procedure, and judgment in the Superior Court upon such petition shall be the same, so far as practicable, as that under the eminent domain laws in this State. (b) Upon the effective date of the merger or consolidation, any shareholder who has made such objection and demand shall cease to be a shareholder and shall have no rights with respect to such shares except the right to receive payment therefor. Every shareholder who did not vote in favor of such merger or consolidation and who does not object in writing and demand payment of the value of his or her shares at the time and in the manner aforesaid, shall be conclusively presumed to have assented to such merger or consolidation. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 4, § 7).

8 V.S.A. § 3429 Rights of dissenting members or policyholders

3429. Rights of dissenting members or policyholders If not less than five percent of the members or policyholders in a mutual insurer, who did not vote in favor of such merger or consolidation at the meeting at which the agreement of merger or consolidation was adopted by the members or policyholders of such insurer, shall at any time within 30 days after the filing of the affidavit of notice of the adoption of the agreement of merger or consolidation as provided for in sections 3424 and 3425 of this title, file a petition with the Commissioner for a hearing upon the adoption of such agreement of merger or consolidation, the Commissioner shall order a hearing upon said petition and give notice fixing the time and place of such hearing, to the insurers that are parties to the merger or consolidation 15 days before the date of such hearing. The insurer whose policyholders file such petition shall give notice by mail to each member or policyholder of such insurer, at least 10 days before such hearing. At the time and place fixed in such notice, or at the time or times and place or places to which such hearing shall be adjourned, the Commissioner shall proceed with the hearing and make or order such examination into the affairs and condition of each of such insurers as he or she may deem proper. The Commissioner shall have the power to summon and compel the attendance and testimony of witnesses and the production of books and papers before him or her at such hearing. Any member or policyholder, as the case may be, of the insurer so petitioning may appear before the Commissioner and be heard with reference to said contract. If, upon such hearing being had, the Commissioner is not satisfied that the interests of the members or policyholders, as the case may be, of such insurer are properly protected, or if he or she finds that any reasonable objection exists to such contract, he or she shall revoke the approval already given, and the said agreement of merger or consolidation shall thereupon become null and void. The Commissioner shall have like power to revoke any approval of any such agreement of merger or consolidation if any officer, director, or employee of any insurer party to such agreement of merger or consolidation shall, after reasonable notice, fail or refuse to attend and testify at such hearing, or to produce any books or papers called for by said Commissioner. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 4, § 8).

8 V.S.A. § 3430 Effect of merger or consolidation

3430. Effect of merger or consolidation When such merger or consolidation has been effected as hereinabove provided; (1) The several insurers parties to the agreement of merger or consolidation shall be a single insurer that shall be: (A) in case of a merger, the surviving insurer a party to the agreement of merger into which it has been agreed the other insurers parties to the agreement shall be merged, which surviving insurer shall survive the merger; or (B) in case of a consolidation, the new insurer into which it has been agreed the insurers parties to the agreement of consolidation shall be consolidated. (2) The separate existence of all of the insurers parties to the agreement of merger or consolidation, except the surviving insurer in the case of a merger, shall cease. (3) Such single insurer shall have all of the rights, privileges, immunities, and powers and shall be subject to all of the duties and liabilities of an insurer organized under this part. (4) Such single insurer shall thereupon and thereafter possess all the rights, privileges, immunities, powers, and franchises of a public as well as of a private nature of each of the insurers so merged or consolidated; and all property, real, personal, and mixed, and all debts due on whatever account, including subscriptions to shares of capital stock, and all other choses in action and all and every other interest, of or belonging to or due to each of the insurers so merged or consolidated shall be taken and deemed to be transferred to and vested in such single insurer without further act or deed; and the title to any real estate, or any interest therein, under the laws of this State vested in any of such insurers shall not revert or be in any way impaired by reason of such merger or consolidation. (5) Such single insurer shall thenceforth be responsible and liable for all the liabilities and obligations of each of the insurers so merged or consolidated in the same manner and to the same extent as if such single insurer had itself incurred the same or contracted therefor; and any claim existing or action or proceeding pending by or against any of such insurers may be prosecuted to judgment as if such merger or consolidation had not taken place. Neither the rights of creditors nor any liens upon the property of any such insurers shall be impaired by such merger or consolidation, but such liens shall be limited to the property upon which they were liens immediately prior to the time of such merger or consolidation, unless otherwise provided in the agreement of merger or consolidation. (6) In case of a merger, the articles of incorporation of the surviving insurer shall be supplanted and superseded to the extent, if any, that any provision or provisions of such articles shall be restated in the agreement of merger as provided in section 3424 of this title, and such articles of incorporation shall be deemed to be thereby and to that extent amended; and in case of a consolidation, the statements set forth in the agreement of consolidation as provided in section 3425 of this title shall be deemed to be articles of incorporation of the new insurer formed by such consolidation. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 4, § 9).

8 V.S.A. § 3431 Merger or consolidation between domestic and foreign insurers—Requirements

3431. Merger or consolidation between domestic and foreign insurers—Requirements (a) In case of a merger or consolidation between a domestic and a foreign insurer, the articles of merger or consolidation shall be regarded as executed by the proper officers of said foreign insurer when such officers are duly authorized to execute same through such action on the part of the directors, shareholders, members, or policyholders, as the case may be, of said foreign insurer as may be required by the laws of the state where the same is incorporated; and upon execution, the articles of merger or consolidation shall be submitted to the Commissioner of Financial Regulation or other officer at the head of the insurance department of the state where such foreign insurer is incorporated. No such merger or consolidation shall take effect until it shall have been approved by the insurance official of the state where said foreign insurer is incorporated nor until a certificate of his or her approval has been filed with the Commissioner of Financial Regulation for the State of Vermont; provided, that such submission to and approval by the proper official of such other state shall not be required unless the same are required by the laws of such foreign state. Provided, further, that the domestic insurer involved in such merger or consolidation shall not through anything contained in this section be relieved of any of the procedural requirements enumerated in the preceding sections of this subchapter. (b) No merger, consolidation, or reinsurance between a domestic and a foreign insurer shall take effect, unless and until the surviving, new, or accepting insurer, if such is a foreign insurer, shall file with the Department a power of attorney appointing the Secretary of State and his or her successors in office, the attorney for service of said foreign insurer, upon whom all lawful process against said insurers may be served. Said power of attorney shall be irrevocable so long as said foreign insurer has outstanding in this State any contract of insurance, or other obligation whatsoever, and shall by its terms so provide. Service upon the Secretary of State shall be deemed sufficient service upon the insurer. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 4, § 10); amended 1989, No. 225 (Adj. Sess.), § 25(b); 1995, No. 180 (Adj. Sess.), § 38(a); 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012.

8 V.S.A. § 3432 Transfer of deposits

3432. Transfer of deposits If the state in which a foreign, new, surviving, or accepting insurer is incorporated or organized shall require the maintenance with any official of such state of a deposit of the legal reserve on the policies so assumed and such foreign insurer shall maintain such deposit, then the State Treasurer is authorized to deliver to the proper custodian of such funds in the state in that the said foreign insurer is incorporated or organized, such deposits as he or she may hold pertaining to the policies so assumed by the new, surviving, or accepting insurer. If a surviving, new, or accepting domestic insurer assumes all or a substantial number of the risks of a foreign insurer incorporated in a state that requires the maintenance with a state official of a deposit of the legal reserve on policies so assumed, then the State Treasurer is hereby authorized to receive from such official such deposits as he or she may hold pertaining to the policies so assumed. The amount of deposit to be maintained from time to time for each policy on which liability is assumed shall be at least equal to the amount that would be required in the state where such deposit has theretofore been maintained. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 4, § 11).

8 V.S.A. § 3433 Certificates of fees and commissions paid

3433. Certificates of fees and commissions paid Whenever articles of merger, consolidation, or reinsurance are filed with the Commissioner, there shall also be filed a certificate, executed by the president or a vice president and attested by the clerk or secretary, and under the corporate seal of each of the insurers parties to the agreement of merger, consolidation, and reinsurance, verified by the affidavits of all such officers, setting forth all fees, commissions, or other compensations, or valuable considerations paid or to be paid, directly or indirectly, to any person or persons, firm or firms, corporation or corporations whomsoever, which in any manner secured, aided, promoted, or assisted in any such merger, consolidation, or reinsurance. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 4, § 12).

8 V.S.A. § 3434 Fees—Penalty for receiving

3434. Fees—Penalty for receiving (a) No director, officer, or member of any such insurer or insurers except as fully expressed in the affidavits, described in section 3433 of this title, shall receive any fee, commission, other compensation, or valuable consideration whatever, direct or indirect, for in any manner aiding, promoting, or assisting in such merger, consolidation, or reinsurance. (b) Any person violating the provisions of this section shall be deemed guilty of a misdemeanor, and upon conviction thereof, shall be punished by a fine of not less than $5,000.00 and not more than $15,000.00. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 4, § 13); amended 1995, No. 167 (Adj. Sess.), § 2.

8 V.S.A. § 3437 Redomestication; approval as a domestic insurer

3437. Redomestication; approval as a domestic insurer Any foreign or alien insurer may become a domestic insurer by complying with all of the requirements of law relative to the organization and licensing of a domestic insurer of the same type, and by filing with the Secretary of State its articles of association, charter, or other organization document, together with appropriate amendments thereto adopted in accordance with the laws of this State bringing such articles of association, charter, or other organizational document into compliance with the laws of this State, along with a certificate of general good issued by the Commissioner. Said domestic insurer shall be entitled to the necessary or appropriate certificates and licenses to continue its business and to transact business in this State, and shall be subject to the authority and jurisdiction of this State. In connection with any such redomestication, the Commissioner may waive any and all requirements for public hearings, including those relating to the amendment of an insurer’s articles of association and that required by section 3305 of this title. No insurer redomesticating into this State need merge, consolidate, transfer assets, or otherwise engage in any other reorganization, other than as specified in this section. Added 1991, No. 41, § 1.

8 V.S.A. § 3438 Redomestication; conversion to foreign insurer

3438. Redomestication; conversion to foreign insurer Any domestic insurer may, upon the approval of and compliance with such conditions as may be imposed by the Commissioner, transfer its domicile, in accordance with the laws thereof, to any other state or jurisdiction, and upon such a transfer shall cease to be a domestic insurer, and its corporate or other legal existence in this State shall cease upon the filing of proof of such redomestication with the Secretary of State and upon payment to the Secretary of State of a filing fee in the amount of $100.00. Such insurer shall be admitted to this State if qualified as a foreign or alien insurer, upon compliance with the qualification requirements for foreign or alien insurers to the extent not waived by the Commissioner. Added 1991, No. 41, § 2.

8 V.S.A. § 3439 Effects of redomestication

3439. Effects of redomestication Upon redomestication in accordance with section 3437 of this title, the foreign or alien insurer shall become a domestic insurer organized under the laws of this State and have all the rights, privileges, immunities, and powers, and be subject to all applicable laws, duties, and liabilities, of domestic insurers of the same type. Such domestic insurer shall thereupon and thereafter possess all rights that obtained prior to the redomestication to the extent permitted by the laws of this State, and thenceforth be responsible and liable for all the liabilities and obligations that obtained prior to the redomestication. The certificate of authority, agents, appointments and licenses, rates, and other items that the Commissioner of insurance allows, in his or her discretion, that are in existence at the time any insurer licensed to transact the business of insurance in this State transfers its corporate domicile to this or any other state or jurisdiction by redomestication, shall continue in full force and effect upon such transfer if such insurer remains duly qualified to transact the business of insurance in this State. All transferring insurers qualified in this State shall notify the Commissioner of the transfer of domicile and shall provide the Commissioner such information and documentation as the Commissioner may request. All outstanding policies of any transferring insurer shall remain in full force and effect. Added 1991, No. 41, § 3.

8 V.S.A. § 3440 Redomestication; fees

3440. Redomestication; fees An insurer becoming a domestic insurer through the redomestication procedure specified in section 3437 of this title shall pay to the Commissioner such fees as would be payable by a like domestic insurer organizing and becoming licensed or transacting business in this State. An insurer becoming a domestic insurer pursuant to section 3437 shall pay to the Secretary of State a filing fee in the amount of $300.00 for the filing required under section 3437. Added 1991, No. 41, § 4.

Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/08/101Fetched: 10/21/2026