Maryland holding companies may convert insurer systems into mutual insurers

A mutual insurance holding company may convert its system into a mutual insurer under an approved conversion plan. The company must directly or indirectly own all the stock of a reorganized stock insurer. A majority of the holding company's board and any intermediate holding company's board must approve the plan. At least 75% of members who vote must approve it. The Commissioner must approve a plan that follows the law and is fair to members and policyholders, and may add conditions. The plan must be submitted with required company documents and information. The plan must be submitted to the Commissioner at least 60 days before the planned conversion. Unless disapproved, it is approved 60 days after the complete filing, or earlier on written notice.

The conversion plan must set out changes to membership, policies, company shares, and the companies' structure. These requirements apply when an eligible mutual insurance holding company converts its system into a mutual insurer. Existing policies must remain in effect, though they may be endorsed. The converted insurer must have enough surplus funds to reasonably protect policyholders. Existing holding company members receive nontransferable membership interests in the converted insurer, and its future policyholders become members. The plan must retire the reorganized insurer's shares and dissolve the holding companies. Membership interests take effect, and the reorganized insurer's shares are retired, on the conversion's effective date.