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.