HBA-TBM H.B. 3326 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3326 By: Averitt Insurance 4/8/2001 Introduced BACKGROUND AND PURPOSE Under current law, a non-life mutual insurance company is allowed to convert to a stock insurance company or a mutual holding company. A mutual holding company is a procedure for reorganization for a mutual insurance company that allows the policyholders to own the stock in a mutual holding company and the mutual insurance company becomes a stock insurance company. A mutual life insurance company is currently authorized to convert only to a stock insurance company. Reorganizing as a mutual holding company may benefit such companies by increasing capital and surplus as necessary to ensure the financial viability of the company for its policyholders. House Bill 3326 authorizes a mutual life insurance company to reorganize as a mutual holding company. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 3326 amends the Insurance Code to authorize any mutual life insurance company to reorganize by forming an insurance holding company based on a mutual plan and continuing the corporate existence of the reorganizing insurance company as a stock insurance company. If satisfied that the reorganization is fair and equitable to members, the commissioner of insurance (commissioner) is required to approve the proposed reorganization. The commissioner is required to retain jurisdiction over a mutual holding company to assure that member interests are protected. A mutual holding company resulting from the reorganization of a domestic mutual insurance company is required to be incorporated pursuant to this code and the Texas Non-Profit Corporation Act. The articles of incorporation and any amendments to such articles of the mutual holding company are required to be subject to approval of the commissioner in the same manner as those of a mutual insurance company. The bill prohibits a membership interest in a mutual holding company from constituting a security as defined in The Securities Act. EFFECTIVE DATE September 1, 2001.