A state mutual fire insurance company organized under this chapter may become a state stock fire insurance company operating under chapter 23 of this title pursuant to a plan and procedure that is approved in advance by the commissioner. The commissioner shall not approve any such plan or procedure unless:

(1) The plan or procedure is equitable to the insurer’s policyholders;

Terms Used In Tennessee Code 56-21-131

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Commissioner: means the commissioner of commerce and insurance. See Tennessee Code 56-1-102
  • 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: means any association, aggregate of individuals, business, company, corporation, individual, joint-stock company, Lloyds-type organization, organization, partnership, receiver, reciprocal or interinsurance exchange, trustee or society. See Tennessee Code 56-16-102
  • 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 Tennessee Code 1-3-105
(2) The plan or procedure is subject to approval by vote of not less than three fourths (3/4) of the votes cast in person, by proxy, or by mail at a meeting of policyholders called for the purpose pursuant to the notice and procedure as may be approved by the commissioner;
(3) The equity of each policyholder in the insurer is determinable under a fair formula approved by the commissioner, which equity shall be based upon not less than the insurer’s entire surplus, after deducting contributed or borrowed surplus funds and any outstanding guaranty capital securities, plus a reasonable present equity in its reserves and in all nonadmitted assets;
(4) The policyholders entitled to receive stock upon conversion and to participate in the purchase of additional stock, if any, include all policyholders having policies in force on the date of conversion;
(5) The plan provides that each policyholder of the insurer specified in subdivision (4) shall receive a proportionate part of the capital stock to be issued in respect to the policyholders’ equity, and further gives to each such policyholder a nontransferable preemptive right to acquire a proportionate part of any additional capital stock to be issued and sold by the insurer, within a designated reasonable period. In addition to the issuance of shares in respect of the policyholders’ equity, in the event the insurer has outstanding guaranty capital securities, the plan shall require the sale of a sufficient number of shares (at the same price per share as all other shares issued under the plan) to retire the guaranty capital securities; and to the extent each policyholder specified in subdivision (4) does not exercise the preemptive right to purchase a pro rata number of shares to retire the guaranty capital securities, the holders of the guaranty capital securities shall have the right to convert the securities, including all accrued interest, into shares of capital stock at such price;
(6) Shares are so offered to policyholders at a price not greater than that thereafter offered to others nor at more than five (5) times the par value of the shares; and
(7) 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 required of a state stock insurer organized under chapter 23 of this title; provided, that this provision does not apply to any converting mutual companies that were qualified and authorized under this chapter prior to May 7, 1969.
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