STOCK AND MUTUAL INSURERS: ORGANIZATION AND CORPORATE PROCEDURES
(ss. 628.011-628.535)
PART II
ASSESSABLE MUTUAL INSURERS
(ss. 628.6011-628.6018)
PART III
MUTUAL INSURANCE HOLDING COMPANIES
(ss. 628.701-628.733)
PART IV
INSURANCE HOLDING COMPANIES
(ss. 628.801-628.805)
PART V
CAPTIVE INSURERS
(ss. 628.901-628.920)
PART I
STOCK AND MUTUAL INSURERS: ORGANIZATION AND CORPORATE PROCEDURES
628.011 Scope of part.
628.021 “Stock insurer” defined.
628.031 “Mutual insurer” defined.
628.041 Applicability of general corporation statutes.
628.051 Application for permit to form insurer; contents; fee.
628.061 Investigation of proposed organization.
628.071 Granting, denial of permit.
628.081 Incorporation of domestic insurer.
628.091 Filing, approval of articles of incorporation.
628.101 Amendment of certificate of incorporation; stock insurer.
628.111 Amendment of articles of incorporation; mutual insurer.
628.121 Capital stock; amount; payment.
628.131 Limitation on organization and stock sales expenses.
628.151 Insurance business exclusive.
628.152 Domestic stock insurers; proxies, consents, and authorizations with respect to any voting security.
628.161 Initial qualifications; mutuals.
628.171 Formation of mutual insurer; bond.
628.221 Bylaws of mutual insurer.
628.231 Directors.
628.251 Management and exclusive agency contracts.
628.255 Person with effective control cannot receive commission unless contract approved; penalties.
628.261 Notice of change of director or officer.
628.271 Office and records; penalty for unlawful removal of records.
628.281 Exceptions to requirement that office, records, and assets be maintained in this state.
628.291 Unauthorized transactions in other states.
628.301 Membership in mutual insurer.
628.341 Nonassessable policies; mutual insurers.
628.351 Nonassessable policies; revocation of authority of mutual insurer.
628.361 Participating policies.
628.371 Dividends to stockholders.
628.381 Dividends to mutual policyholders.
628.391 Illegal dividends; penalty.
628.401 Borrowed surplus.
628.411 Impairment of capital or assets.
628.421 Assessment of stockholders or members.
628.431 Mutualization of stock insurers.
628.441 Converting mutual insurer.
628.451 Merger or share exchange of stock insurers and other entities.
628.461 Acquisition of controlling stock.
628.4615 Specialty insurers; acquisition of controlling stock, ownership interest, assets, or control; merger or consolidation.
628.471 Mergers; mutual insurers.
628.481 Bulk reinsurance; stock insurers.
628.491 Mergers and consolidations; mutual insurers; agreement of bulk reinsurance.
628.501 Mutual member’s share of assets on liquidation.
628.511 Ownership or transfer of securities without physical delivery of certificates.
628.520 Change of domicile of a foreign insurer.
628.525 Change of domicile of a domestic insurer.
628.530 Effects of redomestication.
628.535 Authority to adopt rules.
628.011 Scope of part.—This part applies only to domestic insurers, mutual insurers, and captive insurers, except that s. 628.341(2) applies also as to foreign and alien insurers.
628.031 “Mutual insurer” defined.—A “mutual insurer” is an incorporated insurer without permanent capital stock, the governing body of which is elected in accordance with this part.
628.041 Applicability of general corporation statutes.—The applicable statutes of this state relating to the powers and procedures of domestic private corporations formed for profit shall apply to domestic stock insurers and to domestic mutual insurers, except:
(1) As to any domestic mutual insurers incorporated pursuant to chapter 617, which chapter shall govern such insurers when in conflict with part I of chapter 607; and
(2) When in conflict with the express provisions of this code.
628.051 Application for permit to form insurer; contents; fee.—
(1) No domestic insurer shall be formed unless the persons so proposing have received a permit from the office.
(2) Written application for such permit shall be filed with the office. Such application and filing shall include:
(a) The name, type, and purpose of insurer.
(b) The name, residence address, business background, and qualifications of each person associated or to be associated in the formation or financing of the insurer. Each such person with an ownership interest of 10 percent or more, or who will hold a position as an officer or director, must furnish on forms adopted by the commission and supplied by the office a sworn biographical statement, legible copies of fingerprints, and authority for release of information in regard to the investigation of such person’s background.
(c) A full disclosure of the terms of all understandings and agreements existing or proposed among persons so associated relative to the insurer, or the formation or financing thereof, accompanied by a copy of each such agreement or understanding.
(d) A full disclosure of the terms of all understandings and agreements existing or proposed for management or exclusive agency contracts.
(e) A copy of all proposed articles or certificates of incorporation and proposed bylaws of the proposed insurer.
(f) A copy of all articles or certificates of incorporation of involved corporations, if a copy of the same is not already on file in the office.
(g) A copy of all syndicate, association, firm, partnership, organization, or other similar agreements, by whatever name called, involved in the formation of the proposed insurer or its financing.
(h) If the applicant is a reciprocal insurer, a copy of the power of attorney and of other agreements existing or proposed as affecting investors, subscribers, the attorney in fact, or the applicant.
(i) A copy of any security, or of any proposed document evidencing any right or interest, proposed to be offered.
(j) Such other pertinent information and documents as reasonably requested by the commission or office.
(3) The application shall be accompanied by the filing fee specified in s. 624.501.
628.061 Investigation of proposed organization.—In connection with any proposal to organize or incorporate a domestic insurer, the office shall make an investigation of:
(1) The character, reputation, financial standing, and motives of the organizers, incorporators, and subscribers organizing the proposed insurer or any attorney in fact.
(2) The character, financial responsibility, insurance experience, and business qualifications of its proposed officers, members of its subscribers’ advisory committee, or officers of its attorney in fact.
(3) The character, financial responsibility, business experience, and standing of the proposed stockholders and directors, including the stockholders and directors of any attorney in fact.
(1) The office shall expeditiously examine and investigate the application for a permit as referred to in s. 628.051. If the office finds that:
(a) The application is complete;
(b) The documents therewith filed are in compliance with law;
(c) None of the stockholders, organizers, incorporators, subscribers, and other persons who directly or indirectly exercise or have the ability to exercise effective control of the proposed insurer or who will be involved in its management have been found guilty of, or have pleaded guilty or nolo contendere to, a felony or a crime punishable by imprisonment of 1 year or more under the law of the United States or any state thereof, or under the law of any other country, which involves moral turpitude, without regard to whether a judgment of conviction has been entered by the court having jurisdiction of such cases;
(d) The proposed financial structure is adequate; and
(e) All stockholders, organizers, incorporators, subscribers, and other persons who directly or indirectly exercise or have the ability to exercise effective control of the proposed insurer or who will be involved in management of the proposed insurer possess the financial standing and business experience to form an insurer;
it shall issue to the applicant a permit to form the proposed insurer.
(2) If the office does not so find, or finds that the insurer if formed or financed would not be able to qualify for or retain a certificate of authority by reason of the provisions of s. 624.404(3), a permit shall not be granted.
(3) A permit granted under the provisions of this section shall be valid for 1 year from the date of issue, and during any extension of such period, not to exceed an additional year, as may be authorized by the office upon cause shown. The articles of incorporation and all other proceedings thereunder shall become void 1 year from the issue date of such permit or upon the expiration of such extended period, unless the formation of the proposed insurer has been completed and a certificate of authority has been issued by the office.
(1) Five or more individuals, none of whom is less than 18 years of age, may incorporate a stock insurer; 10 or more individuals, none of whom is less than 18 years of age, may incorporate a mutual insurer. At least a majority of the incorporators shall be citizens of the United States.
(2) The incorporators shall execute articles of incorporation in triplicate. At least three of them shall acknowledge execution before an officer authorized to take acknowledgments.
(3) The articles of incorporation shall state the purpose for which the corporation is formed and shall state and show:
(a) The name of the corporation.
(b) The duration of its existence, which may be perpetual.
(c) The kinds of insurance which the corporation is formed to transact.
(d) If a stock corporation, its authorized capital stock, the number of shares of stock into which divided, and the par value of each such share, which par value shall be at least $1 but not more than $100.
(e) If a mutual corporation, the maximum contingent liability of its members, other than as to nonassessable policies, for payment of losses and expenses incurred; such liability shall be as stated in the articles of incorporation but shall not be less than 3 nor more than 10 times the premium for the member’s policy at the annual premium rate for a term of 1 year.
(f) The number of directors, not less than five, who shall constitute the board of directors and conduct the affairs of the corporation. The term of office of initial directors shall not be for more than 1 year after the date of incorporation.
(g) The name of the county, and the city, town, or place within the county, in which its principal office or principal place of business is to be located in this state.
(h) Such other provisions, not inconsistent with law, deemed appropriate by the incorporators.
(i) The name and residence address of each incorporator and the citizenship of each incorporator who is not a citizen of the United States.
628.091 Filing, approval of articles of incorporation.—
(1) No domestic stock or mutual insurer shall be formed unless its articles of incorporation are approved by the office prior to filing the same with and approval by the Department of State as provided by law.
(2) The incorporators shall file the triplicate originals of the articles of incorporation with the office, accompanied by the filing fee specified in s. 624.501.
(3) The office shall promptly examine the articles of incorporation. If it finds that the articles of incorporation conform to law, and that a permit has been or will be issued, it shall endorse its approval on each of the triplicate originals of the articles of incorporation, retain one copy for its files, and return the remaining copies to the incorporators for filing with the Department of State.
(4) If the office does not so find, it shall refuse to approve the articles of incorporation and shall return the originals.
628.101 Amendment of certificate of incorporation; stock insurer.—A domestic stock insurer shall not amend its certificate of incorporation until a copy of the proposed amendment has been filed with and approved by the office. The office shall promptly examine any such proposed amendment and shall approve the same unless it finds that the proposed amendment does not comply with law.
628.111 Amendment of articles of incorporation; mutual insurer.—
(1) A domestic mutual insurer may amend its articles of incorporation by vote of a majority of those members present or represented by proxy at a lawful meeting of its members, if the notice given members included due notice of the proposal to amend.
(2)(a) Upon adoption of the amendment, the insurer shall make in triplicate under its corporate seal a certificate thereof, setting forth the amendment and the date and manner of the adoption thereof, which certificate shall be executed by the insurer’s president or vice president and secretary or assistant secretary and acknowledged before an officer authorized to take acknowledgments. The insurer shall deliver the triplicate originals of the certificate to the office, together with the filing fee specified in s. 624.501.
(b) The office shall promptly examine the certificate of amendment; and, if it finds that the certificate and the amendment comply with law, it shall endorse its approval upon each of the triplicate originals, place one on file in its office, and return the remaining sets to the insurer. The insurer shall forthwith file such endorsed certificates of amendment with the Department of State. The amendment shall be effective when filed with and approved by the Department of State.
(3) If the office finds that the proposed amendment or certificate does not comply with the law, it shall not approve the same, and shall return the triplicate certificate of amendment to the insurer.
(1) The articles of incorporation of a stock insurer shall provide for authorized capital in an amount not less than that required under this code.
(2) In the sale of the insurer’s capital stock, an amount not less than the minimum paid-in capital stock required under this code shall be paid in with money of the United States or in equivalent United States Government securities. Any additional sums paid for stock or any stock sold after the minimum required capital has been so paid in in money may be in the form of any type of securities in which the insurer is authorized to invest its funds under part II of chapter 625.
628.131 Limitation on organization and stock sales expenses.—
(1) The total expense involved in the incorporation and financing of a new domestic stock insurer, including incorporation fees, underwriting fees and costs, attorneys’ fees, printing costs, and other services and costs, shall not exceed 15 percent of the funds actually received by or on behalf of the corporation from the sale of its securities.
(2) No president, vice president, secretary, treasurer, director, or other executive officer of any such insurer shall participate, either directly or indirectly, in the commissions of any person selling or negotiating the sale of any security of such an insurer.
(1) No domestic insurer shall engage directly or indirectly in any business other than the insurance business and business activities reasonably and necessarily incidental to such insurance business.
(2) A title insurer may also engage in business as an escrow agent; and any insurer may also engage in the business of making, acquiring, selling, dealing in, and servicing of real estate mortgage loans and loans incidental thereto.
(3) A business trust whose declaration of trust was filed with the Secretary of State of Florida prior to January 1, 1959, and which, at the time of the adoption of this code, held a certificate of authority as a title insurer may qualify as an insurer for lawyers’ professional liability insurance by complying with the applicable provisions of this code.
628.152 Domestic stock insurers; proxies, consents, and authorizations with respect to any voting security.—
(1) The commission may, by rule, prescribe the form, content, and manner of solicitation of any proxy, consent, or authorization with respect to any voting security issued by a domestic stock insurer, as may be necessary or appropriate in the public interest or for the proper protection of investors in the voting securities issued by such insurer or to ensure the fair dealing in such voting securities.
(2) No person and no domestic stock insurer or any director, officer, or employee of such insurer shall solicit or permit the use of his or her name to solicit, by mail or otherwise, any person to give any proxy, consent, or authorization with respect to any voting security in contravention of any such rule.
(3) Any proxy or consent obtained in violation of this section is void. The domestic stock insurer, any stockholder of record, or the office may enforce compliance with this section, by an appropriate civil action.
(4) This section shall not apply to voting securities registered pursuant to s. 12 of the Securities Exchange Act of 1934, as amended.
(5) “Voting security” means any instrument which, in law or by contract, gives the holder the right to vote, consent to, or authorize any corporate action.
(1) When newly organized, a mutual insurer may be authorized to transact any of the kinds of insurance listed in the schedule contained in subsection (2).
(2)(a) When applying for an initial certificate of authority, the mutual insurer must have unencumbered surplus as to policyholder funds in the amount set out below as minimum initial surplus as to policyholders:
1. With respect to health insurance, $300,000.
2. With respect to property insurance, $200,000.
3. With respect to casualty insurance, $300,000.
4. With respect to any combination of health, property, or casualty insurance, $400,000.
5. With respect to life insurance, $2.5 million.
(b) Thereafter, the mutual insurer must maintain the maintenance level surplus as to policyholders set out below:
1. With respect to health insurance, $200,000.
2. With respect to property insurance, $150,000.
3. With respect to casualty insurance, $200,000.
4. With respect to any combination of health, property, or casualty insurance, $250,000.
5. With respect to life insurance, $1.5 million.
(3) The mutual insurer shall make an initial deposit with the department and thereafter maintain such deposit in an amount equal to one-half the minimum initial surplus as required in paragraph (2)(a), except that with respect to life insurance, the deposit shall be in the amount of $200,000.
(4) Unless a mutual insurer maintains the minimum surplus as to policyholders required by s. 624.408, the mutual insurer must be organized as an assessable mutual insurer subject to the requirements of part II of this chapter.
(5) Deposits required by this section shall be made in compliance with part III of chapter 625. This deposit requirement is in lieu of the requirements of s. 624.411.
(6) A self-insured fund organized under s. 624.4621 and holding a certificate of authority as a self-insurer’s fund on December 31, 1993, may become a mutual insurer under this part, pursuant to a plan of reorganization approved by the office. A plan of reorganization must be approved by the office if:
(a) The self-insurer’s fund has sufficient financial resources to satisfy all of its obligations under all policies and coverages afforded by the fund before the reorganization and has sufficient financial resources to satisfy all of its other liabilities;
(b) The self-insurer’s fund has a minimum of $5 million of surplus;
(c) The self-insurer’s fund submits a plan that demonstrates its ability to satisfy the requirements of this chapter pertaining to mutual insurers on an ongoing basis; and
(d) The mutual insurer resulting from the reorganization of the self-insurer’s fund retains ownership of all of the assets of the self-insurer’s fund, retains all of the liabilities of the self-insurer’s fund, and agrees to hold all fund members harmless from any assessment for liabilities of the self-insurer’s fund before the date of reorganization.
Upon approval of the plan by the office, any contingent liability of the members or former members of the self-insurer’s fund for assessment for losses of the self-insurer’s fund is considered satisfied, and all liability for any such contingent assessment is extinguished as of the date the self-insurer’s fund becomes an authorized mutual insurer and retains all of the assets and liabilities of the self-insurer’s fund.
628.171 Formation of mutual insurer; bond.—The incorporators of the proposed insurer shall file with the office a copy of a fidelity bond or insurance policy providing coverage in an amount equal to not less than 10 percent of the funds handled annually and issued in the name of the insurer covering its directors, employees, administrator, or other individuals managing or handling the funds or assets of the insurer. In no case may such bond or policy be less than $1,000 or more than $500,000.
(1) The initial board of directors of a domestic mutual insurer shall adopt original bylaws, subject to the approval of the insurer’s members at the next succeeding meeting. The members shall have power to make, modify, and revoke bylaws.
(2) The bylaws shall provide:
(a) That each member is entitled to one vote upon each matter coming to a vote at meetings of members, or to more votes in accordance with a reasonable classification of members as set forth in the bylaws and based upon the amount of insurance in force, or upon the amount of the premiums paid by such member, or upon other reasonable factors. A member shall have the right to vote in person or by his or her written proxy. No such proxy shall be made irrevocable or for longer than a reasonable period of time;
(b) For the election of directors by the members and the number, qualifications, terms of office, and powers of the directors;
(c) The time, notice, quorum, and conduct of annual and special meetings of members and voting thereat. The bylaws may provide that the annual meeting shall be held at a place, date, and time to be set forth in the policy and without giving other notice of such meeting;
(d) The number, designation, election, terms, and powers and duties of the respective corporate officer;
(e) For deposit, custody, and disbursement of and accounting for corporate funds;
(f) That a quorum at all annual and special meetings of members will consist of all members present and voting in person or by proxy, after due notice of such meeting;
(g) For any other reasonable provisions customary, necessary, or convenient for the management or regulation of its corporate affairs and not inconsistent with law.
(3) The insurer shall promptly file with the office a copy, certified by the insurer’s secretary, of its bylaws and of every modification thereof or addition thereto. The office shall disapprove any bylaw provision deemed by it to be unlawful, unreasonable, inadequate, unfair, or detrimental to the proper interests or protection of the insurer’s members or any class thereof. The insurer shall not, after receiving written notice of such disapproval and during the existence thereof, effectuate any bylaw provision so disapproved.
(1) The affairs of every domestic insurer shall be managed by not less than five directors.
(2) Directors must be elected by the members or stockholders of a domestic insurer at the annual meeting of stockholders or members. Directors may be elected for terms of not more than 3 years each and until their successors are elected and have qualified; and, if to be elected for terms of more than 1 year, the insurer’s bylaws shall provide for a staggered-terms system under which the terms of a proportionate part of the members of the board of directors will expire on the date of each annual meeting of stockholders or members.
(3) A majority of the directors must be citizens of the United States.
(4) If so provided in a stock insurer’s bylaws, a director of such stock insurer shall be a stockholder thereof; and, if so provided in a mutual insurer’s bylaws, a director of such mutual insurer shall be a policyholder thereof.
(5) In discharging his or her duties, a director may consider such factors as the directors deem relevant, including, but not limited to, the long-term prospects and interests of the corporation and its shareholders, the social, economic, legal, or other effects of any action on the employees, suppliers, or policyholders of the corporation or its subsidiaries, the communities and society in which the corporation or its subsidiaries operate, and the economy of the state and the nation. The director may also consider the short-term and long-term interests of the insurer, including, but not limited to, benefits that may accrue to the insured from the insurer’s long-term plans, the possibility that such interests may be best served by the continued independence of the insurer, the resources, intent, and past, present, and potential conduct of any person seeking to acquire control of the insurer, and any other relevant factors.
628.251 Management and exclusive agency contracts.—
(1) No domestic mutual insurer or stock insurer shall make any contract whereby any person is granted or is to enjoy in fact the management of the insurer to the substantial exclusion of its board of directors or to have the controlling or preemptive right to produce substantially all insurance business for the insurer, unless the contract is filed with and approved by the office.
(2) Any such contract shall provide that any such manager or producer of its business shall within 90 days after expiration of each calendar year furnish the insurer’s board of directors a written statement of amounts received under or on account of the contract and amounts expended thereunder during such calendar year, including the emoluments received therefrom by the respective directors, officers, and other principal management personnel of the manager or producer, and with such classification of items and further detail as the insurer’s board of directors may reasonably require.
(3) The office shall disapprove any such contract if it finds that it:
(a) Subjects the insurer to excessive charges;
(b) Is to extend for an unreasonable length of time;
(c) Does not contain fair and adequate standards of performance; or
(d) Contains other inequitable provision or provisions which impair the proper interests of policyholders or members of the insurer.
628.255 Person with effective control cannot receive commission unless contract approved; penalties.—
(1) No director, officer, or other person having effective control of a domestic insurer shall receive, and no such insurer shall pay to such person, a commission or other compensation with respect to particular risks insured by the insurer, unless such commission or other compensation is paid pursuant to a contract filed with and approved by the office.
(2) This section shall not be deemed to require approval of the contract or to prohibit payment of commissions to such an officer or director with respect to business written by him or her as an agent of the insurer prior to becoming such an officer or director and vested under the agency contract which was in force at the time such business was originally written.
(3) For the purposes of this section, “effective control” means ownership of 10 percent or more of company stock or receipt of $25,000 or more cumulatively in compensation in 1 calendar year other than commissions resulting from insurance business produced by an agent.
(4) Violation of this section shall subject the insurer to loss of its certificate of authority as provided in s. 624.418 and the agent to loss of his or her license as provided in s. 626.621. Willful violation of this section shall, in addition to the above prescribed penalties, constitute a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
628.261 Notice of change of director or officer.—An insurer shall give the office written notice of any change of personnel among the directors or principal officers of the insurer within 45 days of such change. The written notice shall include all information necessary to allow the office to determine that the insurer will be in compliance with s. 624.404(3) and at a minimum shall contain the information required by s. 628.051(2)(b), (c), and (d).
628.271 Office and records; penalty for unlawful removal of records.—
(1) Every domestic insurer shall have an office in this state and shall keep therein complete records of its assets, transactions, and affairs, specifically including:
(a) Financial records;
(b) Corporate records;
(c) Reinsurance documents;
(d) Access to all accounting transactions and access in this state, upon demand by the office, to all original accounting documents;
(e) Claim files; and
(f) Payment of claims,
in accordance with such methods and systems as are customary or suitable as to the kind or kinds of insurance transacted.
(2) Every domestic insurer shall have and maintain its assets in this state, except as to:
(a) Real property and personal property appurtenant thereto lawfully owned by the insurer and located outside this state, and
(b) Such property of the insurer as may be customary, necessary, and convenient to enable and facilitate the operation of its branch offices, regional home offices, and operations offices, located outside this state as referred to in s. 628.281.
(3) The removal of all or a material part of the records or assets of a domestic insurer from this state except pursuant to a plan of merger or consolidation approved by the office under this code or for such reasonable purposes and periods of time as may be approved by the office in writing in advance of such removal, or the concealment of such records or assets or material part thereof from the office, is prohibited. Any person who removes or attempts to remove such records or assets or such material part thereof from the home office or other place of business or of safekeeping of the insurer in this state with the intent to remove the same from this state, or who conceals or attempts to conceal the same from the office, in violation of this subsection, is guilty of a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. Upon any removal or attempted removal of such records or assets or upon retention of such records or assets or material part thereof outside this state, beyond the period therefor specified in the consent of the office under which consent the records were so removed thereat, or upon concealment of or attempt to conceal records or assets in violation of this section, the office may institute delinquency proceedings against the insurer pursuant to the provisions of chapter 631.
(4) This section is subject to the exceptions provided for in s. 628.281.
628.281 Exceptions to requirement that office, records, and assets be maintained in this state.—
(1) The provisions of s. 628.271 shall not be deemed to prohibit or prevent an insurer from:
(a) Establishing and maintaining branch offices or regional home offices in other states where necessary or convenient to the transaction of its business and keeping therein the detailed records and assets customary and reasonably necessary for the servicing of its insurance in force and affairs in the territory served by such an office, as long as such records and assets are made readily available at such office for examination by the Office of Insurance Regulation at its request.
(b) Having, depositing, or transmitting funds and assets of the insurer in or to jurisdictions outside this state as required by other jurisdictions as a condition of transacting insurance in such jurisdictions reasonably and customarily required in the regular course of its business.
(c) Establishing and maintaining its principal operations offices, its usual operations records, and such of its assets as may be necessary or convenient for the purpose, in another state in which the insurer is authorized to transact insurance in order that general administration of its affairs may be combined with that of an affiliated insurer or insurers, but subject to the following conditions:
1. That the office consent in writing to the removal of offices, records, and assets from this state upon evidence satisfactory to it that the same will facilitate and make more economical the operations of the insurer and will not unreasonably diminish the service or protection thereafter to be given the insurer’s policyholders in this state and elsewhere;
2. That the insurer will continue to maintain in this state its principal corporate office or place of business, and maintain therein available to the inspection of the office complete records of its corporate proceedings and a copy of each financial statement of the insurer current within the preceding 5 years, including a copy of each interim financial statement prepared for the information of the insurer’s officers or directors;
3. That, upon the written request of the office, the insurer will with reasonable promptness provide the office remote electronic access to or produce at its principal corporate offices in this state for examination or for subpoena its records or copies thereof relative to a particular transaction or transactions of the insurer as designated by the office in its request; and
4. That, if at any time the office finds that the conditions justifying the maintenance of the offices, records, and assets outside this state no longer exist, or that the insurer has willfully and knowingly violated any of the conditions stated in subparagraphs 2. and 3., the office may order the return of the offices, records, and assets to this state within such reasonable time, not less than 6 months, as may be specified in the order; and that for failure to comply with the order, as thereafter modified or extended, if any, the office shall suspend or revoke the insurer’s certificate of authority.
(2) Section 628.271 does not apply as to domestic insurers which, as of immediately prior to the effective date of this code, had lawfully established, and which thereafter maintain, their principal offices, records, and assets in another state.
628.291 Unauthorized transactions in other states.—
(1) No domestic insurer shall enter into a contract of insurance upon the life or person of a resident of a reciprocal state or covering property or risks located in a reciprocal state, unless the insurer is authorized pursuant to the laws of such reciprocal state to do business therein, subject to the following exceptions:
(a) Contracts entered into when the prospective insured is personally present and signs the application in the state in which the insurer is authorized to do business;
(b) Issuance of certificates under any lawfully transacted group life or group health policy if the master policy is entered into in a state in which the insurer is authorized to do business;
(c) Contracts made pursuant to a pension or retirement plan of an employer when such contracts are applied for in a state where the employer is personally present or doing business and the insurer is authorized to do business; and
(d) The renewal, reinstatement, conversion, or continuance in force with or without modification of contracts otherwise lawfully entered into and which were not originally entered into in violation of this section.
(2) The term “reciprocal state” as used in this section means a state the laws of which prohibit an insurer organized under the laws of that state from insuring the lives or property of persons resident or located in this state, unless such insurer is authorized pursuant to the laws of this state to do business in this state.
(1) Each policyholder of a domestic mutual insurer, other than of a reinsurance contract, is a member of the insurer with all rights and obligations of such membership; and the policy shall so specify. Group certificateholders may also be members of the insurer if so specified in the bylaws.
(2) Any person, public or private corporation, board, association, firm, estate, trustee, or fiduciary may be a member of a domestic mutual insurer. Any officer, stockholder, trustee, or legal representative of any such corporation, board, association, or estate may be recognized as acting for or on its behalf for the purpose of such membership and shall not be personally liable upon any contract of insurance for acting in such representative capacity. A mutual insurer may issue policies of insurance covering property of this state, or of any county or municipality of this state, without contingent liability, when such policy contains a provision that the state or any such county or municipality insured under it may not participate in the profits of such insurer.
(1) While possessing surplus funds in amount not less than the paid-in capital stock required of a domestic stock insurer transacting like kinds of insurance, a domestic mutual insurer may, upon receipt of the order of the office so authorizing, extinguish the contingent liability of its members as to all its policies in force and may omit provisions imposing contingent liability in all its policies currently issued so long as such surplus funds meet such requirement as to amount.
(2) A foreign or alien mutual insurer may issue nonassessable policies to its members in this state pursuant to its articles of incorporation and the laws of its domicile.
628.351 Nonassessable policies; revocation of authority of mutual insurer.—The office shall revoke the authority of a domestic mutual insurer to issue policies without contingent liability if at any time the insurer’s assets are less than the sum of its liabilities and the surplus required for such authority, or if the insurer, by resolution of its board of directors approved by a majority of its members, requests that the authority be revoked. During the absence of such authority, the insurer shall not issue any policy without providing therein for the contingent liability of the policyholder, nor renew any policy which is renewable at the option of the insurer without endorsing the same to provide for such contingent liability. Such renewal or endorsement shall bear conspicuously on its face the provision for contingent liability of the policyholder.
(1) If provided in its certificate of incorporation, a domestic stock or domestic mutual insurer may issue any or all of its policies with or without participation in profits, savings, or unabsorbed portions of premiums, may classify policies issued on a participating and nonparticipating basis, and may determine the right to participate and the extent of participation of any class or classes of policies. Any such classification or determination shall be reasonable and shall not unfairly discriminate as between policyholders within the same such classification. A life insurer may issue both participating and nonparticipating policies only if the right or absence of right to participate is reasonably related to the premium charged.
(2) No dividend, otherwise earned, shall be made contingent upon the payment of renewal premium on any policy.
(1) A domestic stock insurer shall not pay any dividend or distribute cash or other property to stockholders except out of that part of its available and accumulated surplus funds which is derived from realized net operating profits on its business and net realized capital gains.
(2) Dividend payments or distributions to stockholders, without prior written approval of the office, shall not exceed the larger of:
(a) The lesser of 10 percent of surplus or net gain from operations (life and health companies) or net income (property and casualty companies), not including realized capital gains, plus a 2-year carryforward for property and casualty companies;
(b) Ten percent of surplus, with dividends payable constrained to unassigned funds minus 25 percent of unrealized capital gains;
(c) The lesser of 10 percent of surplus or net investment income (net gain before capital gains for life and health companies) plus a 3-year carryforward (2-year carryforward for life and health companies) with dividends payable constrained to unassigned funds minus 25 percent of unrealized capital gains.
(3) In lieu of the provisions in subsection (2), an insurer may pay a dividend or make a distribution without the prior written approval of the office when:
(a) The dividend is equal to or less than the greater of:
1. Ten percent of the insurer’s surplus as to policyholders derived from realized net operating profits on its business and net realized capital gains; or
2. The insurer’s entire net operating profits and realized net capital gains derived during the immediately preceding calendar year; and
(b) The insurer will have surplus as to policyholders equal to or exceeding 115 percent of the minimum required statutory surplus as to policyholders after the dividend or distribution is made; and
(c) The insurer has filed notice with the office at least 10 business days prior to the dividend payment or distribution, or such shorter period of time as approved by the office on a case-by-case basis. Such notice shall not create a right in the office to approve or disapprove a dividend otherwise properly payable hereunder; and
(d) The notice includes a certification by an officer of the insurer attesting that after payment of the dividend or distribution the insurer will have at least 115 percent of required statutory surplus as to policyholders.
(4) The office shall not approve a dividend or distribution in excess of the maximum amount allowed in subsection (1) unless, considering the following factors, it determines that the distribution or dividend would not jeopardize the financial condition of the insurer:
(a) The liquidity, quality, and diversification of the insurer’s assets and the effect on its ability to meet its obligations.
(b) Reduction of investment portfolio and investment income.
(c) Effects on the written premium to surplus ratios as required by the Florida Insurance Code.
(d) Industrywide financial conditions.
(e) Prior dividend distributions of the insurer.
(f) Whether the dividend is only a “pass-through” dividend from a subsidiary of the insurer.
(5) A dividend or distribution by a not-for-profit insurance company subsidiary to its mutual insurance holding company, directly or indirectly through one or more intermediate holding companies, pursuant to part III of this chapter, which meets the requirements of this section and which applies to a stock insurer, is permitted under this section.
(1) The directors of a domestic mutual insurer may from time to time apportion and pay or credit to its members dividends only out of that part of its surplus funds which represents net realized savings and net realized earnings in excess of the surplus required by law to be maintained.
(2) A dividend otherwise proper may be payable out of such savings and earnings even though the insurer’s total surplus is then less than the aggregate of its contributed surplus.
(1) Any director of a domestic stock or mutual insurer who knowingly votes for or concurs in declaration or payment of a dividend to stockholders or members other than as authorized under s. 628.371 or s. 628.381 is guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083, and shall be jointly and severally liable, together with other such directors likewise voting for or concurring, for any loss thereby sustained by creditors of the insurer to the extent of such dividend.
(2) Any stockholder receiving such an illegal dividend shall be liable in the amount thereof to the insurer.
(3) The office may revoke or suspend the certificate of authority of an insurer which has declared or paid such an illegal dividend.
(1) A domestic stock or mutual insurer may borrow money to defray the expenses of its organization, to provide itself with surplus funds, or for any purpose of its business, upon a written agreement that such money is required to be repaid only out of the insurer’s surplus in excess of that stipulated in such agreement. Any interest provided for shall or shall not constitute a liability of the insurer as to its funds other than such excess of surplus, as stipulated in the agreement. No commission or promotion expense shall be paid in connection with any such loan.
(2) Money so borrowed, together with the interest thereon if so stipulated in the agreement, shall not form a part of the insurer’s legal liabilities, except as to its surplus in excess of the amount thereof stipulated in the agreement, or be the basis of any setoff; but until repaid, financial statements filed or published by the insurer shall show as a footnote thereto the amount thereof then unpaid together with any interest thereon accrued but unpaid.
(3) Any such loan to a domestic stock or mutual insurer shall be subject to the approval of the office for the issue and the rate of interest to be paid. The insurer shall, in advance of the loan, file with the office a statement of the purpose of the loan and a copy of the proposed loan agreement. The office shall disapprove any proposed loan or agreement if it finds that the loan is unnecessary or excessive for the purpose intended; that the terms of the loan agreement are not fair and equitable to the parties and to other similar lenders, if any, to the insurer; or that the information so filed by the insurer is inadequate.
(4) Any such loan to a domestic stock or mutual insurer, or a substantial portion thereof, shall be repaid by the insurer when no longer reasonably necessary for the purpose originally intended. No repayment of such a loan shall be made by a domestic stock or mutual insurer unless approved in advance by the office.
(5) This section does not apply to loans obtained by the insurer in the ordinary course of business from banks and other financial institutions, nor to loans secured by pledge or mortgage of assets.
(1) If a domestic stock insurer’s capital, as represented by the aggregate par value of its outstanding capital stock, becomes impaired, or if the assets of a mutual insurer are less than the sum of its liabilities and the minimum amount of surplus required to be maintained by it, the office shall at once determine the amount of deficiency and serve notice upon the insurer to make good the deficiency within 90 days after service of such notice.
(2) The deficiency may be made good in cash or in assets eligible for the investment of the insurer’s funds; or by amendment of the insurer’s certificate of authority to cover only such kind or kinds of insurance thereafter for which the insurer has sufficient paid-in capital, if a stock insurer, or surplus, if a mutual insurer, under this code; or, if a stock insurer, by reduction of the insurer’s authorized capital stock through amendment of its certificate of incorporation, to an amount of paid-in capital stock not below the minimum required for the kinds of insurance thereafter to be transacted.
(3) After any such reduction of authorized capital stock the insurer shall have the right to require the return of the original certificate of stock held by each stockholder in exchange for new certificates to be issued in lieu thereof for such number of shares as the stockholder is entitled to in the proportion that the reduced capital bears to the original capital.
(4) If the deficiency is not made good and proof thereof filed with the office within such 90-day period, the insurer shall be deemed insolvent and the office shall institute delinquency proceedings against it under chapter 631; except that if such deficiency exists because of increased loss reserves required by the office, or because of disallowance by the office of certain assets or reduction of the value at which carried in the insurer’s accounts, the office may, in its discretion and upon application and good cause shown, and if it finds that the establishment or maintenance of such inadequate reserves or overvalued assets was not willful on the part of the insurer, extend for not more than an additional 60 days the period within which such deficiency may be so made good and such proof thereof so filed.
(1) Any insurer receiving the notice of the office mentioned in s. 628.411(1):
(a) If a stock insurer, by resolution of its board of directors and subject to any limitations upon assessment contained in its certificate of incorporation, may assess its stockholders for amounts necessary to cure the deficiency and provide the insurer with a reasonable amount of surplus in addition. If any stockholder fails to pay a lawful assessment after notice given to him or her in person or by advertisement in such time and manner as approved by the office, the insurer may require the return of the original certificate of stock held by the stockholder and, in cancellation and in lieu thereof, issue a new certificate for such number of shares as the stockholder may then be entitled to, upon the basis of the stockholder’s proportionate interest in the amount of the insurer’s capital stock as determined by the office to be remaining at the time of determination of the amount of impairment under s. 628.411, after deducting from such proportionate interest the amount of such unpaid assessment. The insurer may pay for or issue fractional shares under this subsection.
(b) If a mutual insurer, shall levy such an assessment upon members as is provided for under 1s. 628.321.
(2) Neither this section nor s. 628.411 shall be deemed to prohibit the insurer from curing any such deficiency through any lawful means other than those referred to in such sections.
(1) A stock insurer other than a title insurer may become a mutual insurer under such plan and procedure as may be approved by the office.
(2) The office shall not approve any such plan, procedure, or mutualization unless:
(a) It is equitable to stockholders and policyholders;
(b) It is subject to approval by the holders of not less than three-fourths of the insurer’s outstanding capital stock having voting rights and by not less than two-thirds 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 office;
(c) 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 1 year;
(d) 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;
(e) The plan provides for the purchase of the shares of any nonconsenting stockholder in the same manner and subject to the same applicable conditions as provided by 1s. 607.247, as to rights of nonconsenting stockholders, with respect to consolidation or merger of private corporations;
(f) The plan provides for definite conditions to be fulfilled by a designated early date upon which such mutualization will be deemed effective; and
(g) 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 the states in which it is then authorized to transact insurance, and for the kinds of insurance included in its certificates of authority in such states.
(3) This section does not apply to mutualization under order of court pursuant to rehabilitation or reorganization of an insurer under chapter 631.
(1) A mutual insurer may become a stock insurer under such plan and procedure as may be approved by the office.
(2) The office shall not approve any such plan or procedure unless:
(a) It is equitable to the insurer’s members;
(b) It is subject to approval by vote of not less than three-fourths of the insurer’s current members voting thereon in person, by proxy, or by mail at a meeting of members called for the purpose pursuant to such reasonable notice and procedure as may be approved by the office; if a life insurer, the right to vote may be limited to members who hold policies other than term or group policies, and whose policies have been in force for not less than 1 year;
(c) The corporate equity of each policyholder in the insurer, other than as to unearned premiums, nonforfeiture rights, and benefit claims under his or her policy, is determinable under a fair formula approved by the office, which equity shall be based upon not less than the insurer’s entire surplus, after deducting contributed or borrowed surplus funds, plus a reasonable present equity in its reserves and in all nonadmitted assets;
(d) The policyholders entitled to participate in the purchase of stock or distribution of assets shall include all current policyholders and all existing persons who had been policyholders of the insurer within 3 years prior to the date such plan was submitted to the office;
(e) The plan gives to each policyholder of the insurer as specified in paragraph (d) a preemptive right to acquire his or her proportionate part of all of the proposed capital stock of the insurer, within a designated reasonable period, and to apply upon the purchase thereof the amount of his or her equity in the insurer as determined under paragraph (c);
(f) Shares are so offered to policyholders at a price not greater than to be thereafter offered to others;
(g) The plan provides for payment of cash to each policyholder not electing to apply his or her equity in the insurer toward the purchase price of stock to which he or she is preemptively entitled. The amount so paid shall be not less than 50 percent of the amount of the policyholder’s equity not so used for the purchase of stock. Such cash payment together with stock so purchased, if any, shall constitute full payment and discharge of the policyholder’s corporate equity in such mutual insurer; and
(h) 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 domestic stock insurer transacting like kinds of insurance, together with surplus funds in amounts not less than one-half of such required capital.
628.451 Merger or share exchange of stock insurers and other entities.—
(1) Notwithstanding general limitations on the ability of corporations to merge with other types of entities, a merger may be effected between or among one or more domestic or foreign stock insurers authorized to transact insurance in this state and one or more other entities authorized to transact insurance and self-insurance in this state, including a self-insurance trust fund existing pursuant to s. 627.357, provided, in the case of a merger of a stock insurer with a self-insurance trust fund, that the stock insurer is the surviving entity after the merger, by compliance with the applicable provisions of the statutes of this state governing the merger or share exchange of stock corporations formed for profit and the applicable provisions of the statutes and regulations of this state governing the merger or share exchange of other entities, including self-insurance trust funds, formed pursuant to the laws of this state, but subject to the special provisions of this section:
(a) A merger or share exchange may be initially proposed at any meeting of the board of directors of a domestic stock insurer by the affirmative vote of two-thirds of the total number of directors of the corporation, or at any meeting of the stockholders of the corporation by the affirmative vote of a majority of the total number of shares of stock outstanding and entitled to vote, provided the notice of such meeting sets forth such proposal.
(b) The plan of merger or share exchange, proposed as required by paragraph (a), shall be submitted to a duly called meeting of the stockholders of record of each domestic stock insurer and may become effective only if adopted at such meeting by the affirmative vote of 75 percent of the total number of shares of stock outstanding and entitled to vote. The notice of such meeting shall set forth in full the proposed plan of merger or share exchange.
(2) No such merger or share exchange shall be effectuated unless in advance thereof the plan and agreement therefor have been filed with the office and approved by it. The office shall give such approval provided it finds such plan or agreement:
(a) Is in compliance with law;
(b) Is fair to the stockholders of or other holders of interests in any insurer or self-insurer involved; and
(c) Would not substantially reduce the security of and service to be rendered to policyholders of the domestic insurer in this state or elsewhere.
(3) No director, officer, agent, or employee of any insurer party to such merger or share exchange shall receive any fee, commission, compensation, or other valuable consideration whatsoever for in any manner aiding, promoting, or assisting therein except as set forth in such plan or agreement.
(4) Any plan or proposal through which a stock insurer proposes to acquire a controlling stock interest in another stock insurer or other insurance or self-insurance entity through an exchange of stock of the first insurer, issued by the insurer for the purpose, for such controlling stock of or other interests in the second insurer or self-insurer is deemed to be a plan or proposal of merger of the second insurer or self-insurer into the first insurer for the purposes of this section and is subject to the applicable provisions hereof.
(1) A person may not, individually or in conjunction with any affiliated person of such person, acquire directly or indirectly, conclude a tender offer or exchange offer for, enter into any agreement to exchange securities for, or otherwise finally acquire 10 percent or more of the outstanding voting securities of a domestic stock insurer or of a controlling company, unless:
(a) The person or affiliated person has filed with the office and sent to the insurer and controlling company a letter of notification regarding the transaction or proposed transaction within 5 days after any form of tender offer or exchange offer is proposed, or within 5 days after the acquisition of the securities if no tender offer or exchange offer is involved. The notification must be provided on forms prescribed by the commission containing information determined necessary to understand the transaction and identify all purchasers and owners involved;
(b) The person or affiliated person has filed with the office the statement as specified in subsection (3). The statement must be completed and filed within 30 days after:
1. Any definitive acquisition agreement is entered;
2. Any form of tender offer or exchange offer is proposed; or
3. The acquisition of the securities, if no definitive acquisition agreement, tender offer, or exchange offer is involved; and
(c) The office has approved the tender or exchange offer, or acquisition if no tender offer or exchange offer is involved, and approval is in effect.
A filing required under this subsection must be made for any acquisition that equals or exceeds 10 percent of the outstanding voting securities.
(2) This section does not apply to any acquisition of voting securities of a domestic stock insurer or of a controlling company by any person who, on July 1, 1976, is the owner of a majority of such voting securities or who, on or after July 1, 1976, becomes the owner of a majority of such voting securities with the approval of the office under this section. The person or affiliated person filing the notice required by paragraph (1)(a) may request, in writing, the office to waive the requirements of paragraph (1)(b) if there is no change in the ultimate controlling shareholder or ownership percentages of the ultimate controlling shareholders and no unaffiliated parties acquire any direct or indirect interest in the insurer. The office may waive the filing if it determines that in fact there is no change in the ultimate controlling shareholder or ownership percentages of the ultimate controlling shareholders and no unaffiliated parties will acquire any direct or indirect interest in the insurer.
(3) The statement to be filed with the office under subsection (1) and furnished to the insurer and controlling company must contain all the following information and any additional information that the office deems necessary to determine the character, experience, ability, and other qualifications of the person or affiliated person of such person for the protection of the policyholders and shareholders of the insurer and the public:
(a) The identity of, and the background information specified in subsection (4) on, each natural person by whom, or on whose behalf, the acquisition is to be made; and, if the acquisition is to be made by, or on behalf of, a corporation, association, or trust, as to the corporation, association, or trust and as to any person who controls, directly or indirectly, the corporation, association, or trust, the identity of, and the background information specified in subsection (4) on, each director, officer, trustee, or other natural person performing duties similar to those of a director, officer, or trustee for the corporation, association, or trust.
(b) The source and amount of the funds or other consideration used, or to be used, in making the acquisition.
(c) Any plans or proposals that such persons may have made to liquidate such insurer, to sell any of its assets or merge or consolidate it with any person, or to make any other major change in its business or corporate structure or management; and any plans or proposals that such persons may have made to liquidate any controlling company of such insurer, to sell any of its assets or merge or consolidate it with any person, or to make any other major change in its business or corporate structure or management.
(d) The number of shares or other securities that the person or affiliated person of such person proposes to acquire, the terms of the proposed acquisition, and the manner in which the securities are to be acquired.
(e) Information as to any contract, arrangement, or understanding with any party with respect to any of the securities of the insurer or controlling company, including, but not limited to, information relating to the transfer of any of the securities, option arrangements, puts or calls, or the giving or withholding of proxies, which information names the party with whom the contract, arrangement, or understanding has been entered into and gives the details thereof.
(f) Effective January 1, 2015, an agreement by the person required to file the statement that the person will provide the annual report specified in s. 628.801(2) if control exists.
(g) Effective January 1, 2015, an acknowledgment by the person required to file the statement that the person and all subsidiaries within the person’s control in the insurance holding company system will provide, as necessary, information to the office upon request to evaluate enterprise risk to the insurer.
(4)(a) The information as to the background and identity of each person, which information is required to be furnished pursuant to paragraph (3)(a), shall include:
1. The person’s occupations, positions of employment, and offices held during the past 10 years.
2. The principal business and address of any business, corporation, or other organization in which each such office of the person was held or in which each such occupation or position of employment was carried on.
3. Whether the person was, at any time during such 10-year period, convicted of any crime other than a traffic violation.
4. Whether the person has been, during such 10-year period, the subject of any proceeding for the revocation of any license and, if so, the nature of the proceeding and the disposition of the proceeding.
5. Whether, during the 10-year period, the person has been the subject of any proceeding under the federal 1Bankruptcy Act or whether, during the 10-year period, any corporation, partnership, firm, trust, or association in which the person was a director, officer, trustee, partner, or other official has been subject to any such proceeding, either during the time in which the person was a director, officer, trustee, partner, or other official or within 12 months thereafter.
6. Whether, during the 10-year period, the person has been enjoined, either temporarily or permanently, by a court of competent jurisdiction from violating any federal or state law regulating the business of insurance, securities, or banking, or from carrying out any particular practice or practices in the course of the business of insurance, securities, or banking, together with details as to any such event.
(b) Any corporation, association, or trust filing the statement required by this section shall give all required information that is within the knowledge of the directors, officers, or trustees (or others performing functions similar to those of a director, officer, or trustee) of the corporation, association, or trust making the filing and of any person controlling either directly or indirectly such corporation, association, or trust. A copy of the statement and any amendments to the statement shall be sent by registered mail to the insurer at its principal office within the state and to any controlling company at its principal office. If any material change occurs in the facts set forth in the statement filed with the office and sent to such insurer or controlling company pursuant to this section, an amendment setting forth such changes shall be filed immediately with the office and sent immediately to such insurer and controlling company.
(5)(a) The acquisition of voting securities shall be deemed approved unless the office disapproves the proposed acquisition within 90 days after the statement required by subsection (1) has been filed. The office may on its own initiate, or if requested to do so in writing by a substantially affected party shall conduct, a proceeding to consider the appropriateness of the proposed filing. The 90-day time period shall be tolled during the pendency of the proceeding. Any written request for a proceeding must be filed with the office within 10 days of the date notice of the filing is given. During the pendency of the proceeding or review period by the office, any person or affiliated person complying with the filing requirements of this section may proceed and take all steps necessary to conclude the acquisition so long as the acquisition becoming final is conditioned upon obtaining office approval. The office shall, however, at any time that it finds an immediate danger to the public health, safety, and welfare of the domestic policyholders exists, immediately order, pursuant to s. 120.569(2)(n), the proposed acquisition temporarily disapproved and any further steps to conclude the acquisition ceased.
(b) During the pendency of the office’s review of any acquisition subject to the provisions of this section, the acquiring person shall not make any material change in the operation of the insurer or controlling company unless the office has specifically approved the change nor shall the acquiring person make any material change in the management of the insurer unless advance written notice of the change in management is furnished to the office. A material change in the operation of the insurer is a transaction which disposes of or obligates 5 percent or more of the capital and surplus of the insurer. A material change in the management of the insurer is any change in management involving officers or directors of the insurer or any person of the insurer or controlling company having authority to dispose of or obligate 5 percent or more of the insurer’s capital or surplus. The office shall approve a material change in operation if it finds the applicable provisions of subsection (7) have been met. The office may disapprove a material change in management if it finds that the applicable provisions of subsection (7) have not been met and in such case the insurer shall promptly change management as acceptable to the office.
(c) If a request for a proceeding is filed, the proceeding shall be conducted within 60 days after the date the written request for a proceeding is received by the office. A recommended order shall be issued within 20 days of the date of the close of the proceedings. A final order shall be issued within 20 days of the date of the recommended order or, if exceptions to the recommended order are filed, within 20 days of the date the exceptions are filed.
(6) The office may disapprove any acquisition subject to the provisions of this section by any person or any affiliated person of such person who:
(a) Willfully violates this section;
(b) In violation of an order of the office issued pursuant to subsection (10), fails to divest himself or herself of any stock obtained in violation of this section, or fails to divest himself or herself of any direct or indirect control of such stock, within 25 days after such order; or
(c) In violation of an order issued by the office pursuant to subsection (10), acquires additional stock of the domestic insurance company or controlling company, or direct or indirect control of such stock, without complying with this section.
(7) The person or persons filing the statement required by subsection (1) shall have the burden of proof. The office shall approve any such acquisition if it finds, on the basis of the record made during any proceeding or on the basis of the filed statement if no proceeding is conducted, that:
(a) Upon completion of the acquisition, the domestic stock insurer will be able to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed;
(b) The financial condition of the acquiring person or persons will not jeopardize the financial stability of the insurer or prejudice the interests of its policyholders or the public;
(c) Any plan or proposal which the acquiring person has, or acquiring persons have, made:
1. To liquidate the insurer, sell its assets, or merge or consolidate it with any person, or to make any other major change in its business or corporate structure or management; or
2. To liquidate any controlling company, sell its assets, or merge or consolidate it with any person, or to make any major change in its business or corporate structure or management which would have an effect upon the insurer,
is fair and free of prejudice to the policyholders of the domestic stock insurer or to the public;
(d) The competence, experience, and integrity of those persons who will control directly or indirectly the operation of the domestic stock insurer indicate that the acquisition is in the best interest of the policyholders of the insurer and in the public interest;
(e) The natural persons for whom background information is required to be furnished pursuant to this section have such backgrounds as to indicate that it is in the best interests of the policyholders of the domestic stock insurer, and in the public interest, to permit such persons to exercise control over such domestic stock insurer;
(f) The officers and directors to be employed after the acquisition have sufficient insurance experience and ability to assure reasonable promise of successful operation;
(g) The management of the insurer after the acquisition will be competent and trustworthy and will possess sufficient managerial experience so as to make the proposed operation of the insurer not hazardous to the insurance-buying public;
(h) The management of the insurer after the acquisition will not include any person who has directly or indirectly through ownership, control, reinsurance transactions, or other insurance or business relations unlawfully manipulated the assets, accounts, finances, or books of any insurer or otherwise acted in bad faith with respect thereto;
(i) The acquisition is not likely to be hazardous or prejudicial to the insurer’s policyholders or the public; and
(j) The effect of the acquisition of control would not substantially lessen competition in insurance in this state or would not tend to create a monopoly therein.
(8) No vote by the stockholder of record, or by any other person, of any security acquired in contravention of the provisions of this section is valid. Any acquisition of any security contrary to the provisions of this section is void. Upon the petition of the domestic stock insurer or controlling company, the circuit court for the county in which the principal office of such domestic stock insurer is located may, without limiting the generality of its authority, order the issuance or entry of an injunction or other order to enforce the provisions of this section. There shall be a private right of action in favor of the domestic stock insurer or controlling company to enforce the provisions of this section. No demand upon the office that it perform its functions shall be required as a prerequisite to any suit by the domestic stock insurer or controlling company against any other person, and in no case shall the office be deemed a necessary party to any action by such domestic stock insurer or controlling company to enforce the provisions of this section. Any person who makes or proposes an acquisition requiring the filing of a statement pursuant to this section, or who files such a statement, shall be deemed to have thereby designated the Chief Financial Officer, or his or her assistant or deputy or another person in charge of his or her office, as such person’s agent for service of process under this section, and shall thereby be deemed to have submitted himself or herself to the administrative jurisdiction of the office and to the jurisdiction of the circuit court.
(9) Any approval by the office under this section does not constitute a recommendation by the office for an acquisition, tender offer, or exchange offer. It is unlawful for a person to represent that the office’s approval constitutes a recommendation. A person who violates the provisions of this subsection is guilty of a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. The statute-of-limitations period for the prosecution of an offense committed under this subsection is 5 years.
(10) Upon notification to the office by the domestic stock insurer or a controlling company that any person or any affiliated person of such person has acquired 10 percent or more of the outstanding voting securities of the domestic stock insurer or controlling company without complying with the provisions of this section, the office shall order that the person and any affiliated person of such person cease acquisition of any further securities of the domestic stock insurer or controlling company; however, the person or any affiliated person of such person may request a proceeding, which proceeding shall be convened within 7 days after the rendering of the order for the sole purpose of determining whether the person, individually or in connection with any affiliated person of such person, has acquired 10 percent or more of the outstanding voting securities of a domestic stock insurer or controlling company. Upon the failure of the person or affiliated person to request a hearing within 7 days, or upon a determination at a hearing convened pursuant to this subsection that the person or affiliated person has acquired voting securities of a domestic stock insurer or controlling company in violation of this section, the office may order the person and affiliated person to divest themselves of any voting securities so acquired.
(11)(a) The office shall, if necessary to protect the public interest, suspend or revoke the certificate of authority of any insurer or controlling company:
1. The control of which is acquired in violation of this section;
2. That is controlled, directly or indirectly, by any person or any affiliated person of such person who, in violation of this section, has obtained control of a domestic stock insurer or controlling company; or
3. That is controlled, directly or indirectly, by any person who, directly or indirectly, controls any other person who, in violation of this section, acquires control of a domestic stock insurer or controlling company.
(b) If any insurer is subject to suspension or revocation pursuant to paragraph (a), the insurer shall be deemed to be in such condition, or to be using or to have been subject to such methods or practices in the conduct of its business, as to render its further transaction of insurance presently or prospectively hazardous to its policyholders, creditors, or stockholders or to the public.
(12)(a) A person may rebut a presumption of control by filing a disclaimer of control with the office on a form prescribed by the office. The disclaimer must fully disclose all material relationships and bases for affiliation between the person and the insurer as well as the basis for disclaiming the affiliation. In lieu of such form, a person or acquiring party may file with the office a copy of a Schedule 13G filed with the Securities and Exchange Commission pursuant to rules 13d-1(b) or 13d-1(c) under the Securities Exchange Act of 1934, as amended. After a disclaimer has been filed, the insurer is relieved of any duty to register or report under this section which may arise out of the insurer’s relationship with the person unless the office disallows the disclaimer.
(b) A controlling person of a domestic insurer who seeks to divest the person’s controlling interest in the domestic insurer in any manner shall file with the office, with a copy provided to the insurer, confidential notice, not subject to public inspection as provided under s. 624.4212, of the person’s proposed divestiture at least 30 days before the cessation of control. The office shall determine those instances in which the party seeking to divest or to acquire a controlling interest in an insurer must file for and obtain approval of the transaction. The information remains confidential until the conclusion of the transaction unless the office, in its discretion, determines that confidential treatment interferes with enforcement of this section. If the statement referred to in subsection (1) is otherwise filed, this paragraph does not apply.
(13) The commission may adopt rules that are necessary to administer this section.
628.4615 Specialty insurers; acquisition of controlling stock, ownership interest, assets, or control; merger or consolidation.—
(1) For the purposes of this section, the term “specialty insurer” means any person holding a license or certificate of authority as:
(a) A motor vehicle service agreement company authorized to issue motor vehicle service agreements as those terms are defined in s. 634.011;
(b) A home warranty association authorized to issue “home warranties” as those terms are defined in s. 634.301;
(c) A service warranty association authorized to issue “service warranties” as those terms are defined in s. 634.401(13) and (14);
(d) A prepaid limited health service organization authorized to issue prepaid limited health service contracts, as those terms are defined in chapter 636;
(e) An authorized health maintenance organization operating pursuant to s. 641.21;
(f) An authorized prepaid health clinic operating pursuant to s. 641.405;
(g) A legal expense insurance corporation authorized to engage in a legal expense insurance business pursuant to s. 642.021;
(h) A provider that is licensed to operate a facility that undertakes to provide continuing care as those terms are defined in s. 651.011;
(i) A multiple-employer welfare arrangement operating pursuant to ss. 624.436-624.446;
(j) A premium finance company authorized to finance insurance premiums pursuant to s. 627.828;
(k) A corporation authorized to accept donor annuity agreements pursuant to s. 627.481; or
(l) A viatical settlement provider authorized to do business in this state under part X of chapter 626.
(2) A person may not, individually or in conjunction with any affiliated person of such person, directly or indirectly, conclude a tender offer or exchange offer for, enter into any agreement to exchange securities for, or otherwise finally acquire, 10 percent or more of the outstanding voting securities of a specialty insurer which is a stock corporation or of a controlling company of a specialty insurer which is a stock corporation; or conclude an acquisition of, or otherwise finally acquire, 10 percent or more of the ownership interest of a specialty insurer which is not a stock corporation or of a controlling company of a specialty insurer which is not a stock corporation, unless:
(a) The person or affiliated person has filed with the office and sent by registered mail to the principal office of the specialty insurer and controlling company a letter of notification regarding the transaction or proposed transaction no later than 5 days after any form of tender offer or exchange offer is proposed, or no later than 5 days after the acquisition of the securities or ownership interest if no tender offer or exchange offer is involved. The notification must be provided on forms prescribed by the commission containing information determined necessary to understand the transaction and identify all purchasers and owners involved;
(b) The person or affiliated person has filed with the office an application signed under oath and prepared on forms prescribed by the commission which contains the information specified in subsection (4). The application must be completed and filed within 30 days after any form of tender offer or exchange offer is proposed, or after the acquisition of the securities if no tender offer or exchange offer is involved; and
(c) The office has approved the tender offer or exchange offer, or acquisition if no tender offer or exchange offer is involved.
(3) This section does not apply to any acquisition of voting securities or ownership interest of a specialty insurer or of a controlling company by any person who, on July 9, 1986, is the owner of a majority of such voting securities or ownership interest or who, on or after July 9, 1986, becomes the owner of a majority of such voting securities or ownership interest with the approval of the office under this section. The person or affiliated person filing the required notice in paragraph (2)(a) may request the office to waive the requirements of paragraph (2)(b) if there is no change in the ultimate controlling shareholder or ownership percentages of the ultimate controlling shareholders and no unaffiliated parties acquire any direct or indirect interest in the specialty insurer. The office may waive the filing if it determines that in fact there is no change in the ultimate controlling shareholder or ownership percentages of the ultimate controlling shareholders and no unaffiliated parties will acquire any direct or indirect interest in the specialty insurer.
(4) The application to be filed with the office and furnished to the specialty insurer and controlling company shall contain the following information and any additional information as the office deems necessary to determine the character, experience, ability, and other qualifications of the person or affiliated person of such person for the protection of the insureds of the insurer and of the public:
(a)1. The identity of, and the background information specified in subsection (5) on, each natural person by whom, or on whose behalf, the acquisition is to be made; and,
2. If the acquisition is to be made by, or on behalf of, a person other than a natural person and as to any person who controls, either directly or indirectly, such other person, the identity of, and the background information specified in subsection (5) on:
a. Each director, officer, or trustee, if a corporation, or
b. Each partner, owner, manager, or joint venturer, or other person performing duties similar to those of persons in the aforementioned positions, if not a corporation,
for the person.
(b) The source and amount of the funds or other consideration used, or to be used, in making the acquisition.
(c) Any plans or proposals which such persons may have made to liquidate the specialty insurer, to sell any of its assets or merge or consolidate it with any person, or to make any other major change in its business or corporate structure or management; and any plans or proposals which such persons may have made to liquidate any controlling company of the specialty insurer, to sell any of its assets or merge or consolidate it with any person, or to make any other major change in its business or corporate structure or management.
(d) The nature and the extent of the controlling interest which the person or affiliated person of such person proposes to acquire, the terms of the proposed acquisition, and the manner in which the controlling interest is to be acquired of a specialty insurer or controlling company which is not a stock corporation.
(e) The number of shares or other securities which the person or affiliated person of such person proposes to acquire, the terms of the proposed acquisition, and the manner in which the securities are to be acquired.
(f) Information as to any contract, arrangement, or understanding with any party with respect to any of the securities of the specialty insurer or controlling company, including, but not limited to, information relating to the transfer of any of the securities, option arrangements, puts or calls, or the giving or withholding of proxies, which information names the party with whom the contract, arrangement, or understanding has been entered into and gives the details thereof.
(5)(a) The information as to the background and identity of each natural person, which information is required to be furnished pursuant to paragraph (4)(a), shall include:
1. The natural person’s occupations, positions of employment, and offices held during the past 10 years.
2. The principal business and address of any business, corporation, or organization in which each such office of the natural person was held, or in which each such occupation or position of employment was carried on.
3. Whether the natural person was, at any time during such 10-year period, convicted of any crime other than a traffic violation.
4. Whether the natural person has been, during such 10-year period, the subject of any proceeding for the revocation of any license and, if so, the nature of the proceeding and the disposition of the proceeding.
5. Whether, during the 10-year period, the natural person has been the subject of any proceeding under the federal 1Bankruptcy Act; or whether, during the 10-year period, any person or other business or organization in which the natural person was a director, officer, trustee, partner, owner, manager, or other official has been subject to any such proceeding, either during the time in which the natural person was a director, officer, or trustee, if a corporation, or a partner, owner, manager, joint venturer, or other official, if not a corporation, or within 12 months thereafter.
6. Whether, during the 10-year period, the natural person has been enjoined, either temporarily or permanently, by a court of competent jurisdiction from violating any federal or state law regulating the business of insurance, securities, or banking, or from carrying out any particular practice or practices in the course of the business of insurance, securities, or banking, together with details as to any such event.
7. Fingerprints of each person referred to in subsection (4).
(b) Any person filing the statement required by this section shall give all required information that is within the knowledge of:
1. The directors, officers, or trustees, if a corporation, or
2. The partners, owners, managers, or joint venturers, or others performing functions similar to those of a director, officer, or trustee, if not a corporation,
of the person making the filing and of any person controlling either directly or indirectly such person. If any material change occurs in the facts set forth in the application filed with the office pursuant to this section, an amendment setting forth such changes shall be filed immediately with the office, and a copy of the amendment shall be sent by registered mail to the principal office of the specialty insurer and to the principal office of the controlling company.
(6)(a) The acquisition application shall be reviewed in accordance with chapter 120. The office may on its own initiate, or, if requested to do so in writing by a substantially affected person, shall conduct, a proceeding to consider the appropriateness of the proposed filing. Time periods for purposes of chapter 120 shall be tolled during the pendency of the proceeding. Any written request for a proceeding must be filed with the office within 10 days of the date notice of the filing is given. During the pendency of the proceeding or review period by the office, any person or affiliated person complying with the filing requirements of this section may proceed and take all steps necessary to conclude the acquisition so long as the acquisition becoming final is conditioned upon obtaining office approval. The office shall, however, at any time it finds an immediate danger to the public health, safety, and welfare of the insureds exists, immediately order, pursuant to s. 120.569(2)(n), the proposed acquisition disapproved and any further steps to conclude the acquisition ceased.
(b) During the pendency of the office’s review of any acquisition subject to the provisions of this section, the acquiring person shall not make any material change in the operation of the specialty insurer or controlling company unless the office has specifically approved the change nor shall the acquiring person make any material change in the management of the specialty insurer unless advance written notice of the change in management is furnished to the office. A material change in the operation of the specialty insurer is a transaction which disposes of or obligates 5 percent or more of the capital and surplus of the specialty insurer. A material change in the management of the specialty insurer is any change in management involving officers or directors of the specialty insurer or any person of the specialty insurer or controlling company having authority to dispose of or obligate 5 percent or more of the specialty insurer’s capital or surplus. The office shall approve a material change in operations if it finds the applicable provisions of subsection (8) have been met. The office may disapprove a material change in management if it finds that the applicable provisions of subsection (8) have not been met and in such case the specialty insurer shall promptly change management as acceptable to the office.
(c) If a request for a proceeding is filed, the proceeding shall be conducted within 60 days after the date the written request for a proceeding is received by the office. A recommended order shall be issued within 20 days of the date of the close of the proceedings. A final order shall be issued within 20 days of the date of the recommended order or, if exceptions to the recommended order are filed, within 20 days of the date the exceptions are filed.
(7) The office may disapprove any acquisition subject to this section by any person or any affiliated person of such person who:
(a) Willfully violates this section;
(b) In violation of an order of the office issued pursuant to subsection (12), fails to divest himself or herself of any stock or ownership interest obtained in violation of this section or fails to divest himself or herself of any direct or indirect control of such stock or ownership interest, within 25 days after such order; or
(c) In violation of an order issued by the office pursuant to subsection (12), acquires an additional stock or ownership interest in a specialty insurer or controlling company or direct or indirect control of such stock or ownership interest, without complying with this section.
(8) The person or persons filing the application required by subsection (2) shall have the burden of proof. The office shall approve any such acquisition if it finds, on the basis of the record made during any proceeding or on the basis of the filed application if no proceeding is conducted, that:
(a) Upon completion of the acquisition, the specialty insurer will be able to satisfy the requirements for the issuance of a license or certificate to write the line of insurance for which it is presently licensed or certificated.
(b) The financial condition of the acquiring person or persons will not jeopardize the financial stability of the specialty insurer or prejudice the interests of its insureds or the public.
(c) Any plan or proposal which the acquiring person has, or acquiring persons have, made:
1. To liquidate the specialty insurer, sell its assets, or merge or consolidate it with any person, or to make any other major change in its business or corporate structure or management, or
2. To liquidate any controlling company, sell its assets, or merge or consolidate it with any person, or to make any major change in its business or corporate structure or management which would have an effect upon the specialty insurer,
is fair and free of prejudice to the insureds of the specialty insurer or to the public.
(d) The competence, experience, and integrity of those persons who will control directly or indirectly the operation of the specialty insurer indicate that the acquisition is in the best interest of the insureds of the insurer and in the public interest.
(e) The natural persons for whom background information is required to be furnished pursuant to this section have such backgrounds as to indicate that it is in the best interests of the insureds of the specialty insurer and in the public interest to permit such persons to exercise control over the specialty insurer.
(f) The directors and officers, if such specialty insurer or controlling company is a stock corporation, or the trustees, partners, owners, managers, or joint venturers or other persons performing duties similar to those of persons in the aforementioned positions, if such specialty insurer or controlling company is not a stock corporation, to be employed after the acquisition have sufficient insurance experience and ability to assure reasonable promise of successful operation.
(g) The management of the specialty insurer after the acquisition will be competent and trustworthy, and will possess sufficient managerial experience so as to make the proposed operation of the specialty insurer not hazardous to the insurance-buying public.
(h) The management of the specialty insurer after the acquisition shall not include any person who has directly or indirectly through ownership, control, reinsurance transactions, or other insurance or business relations unlawfully manipulated the assets, accounts, finances, or books of any insurer or otherwise acted in bad faith with respect thereto.
(i) The acquisition is not likely to be hazardous or prejudicial to the insureds of the insurer or to the public.
(j) The effect of the acquisition would not substantially lessen competition in the line of insurance for which the specialty insurer is licensed or certified in this state or would not tend to create a monopoly therein.
(9) No vote by the stockholder of record, or by any other person, of any security acquired in contravention of the provisions of this section is valid. Any acquisition contrary to the provisions of this section is void. Upon the petition of the specialty insurer or the controlling company, the circuit court for the county in which the principal office of the specialty insurer is located may, without limiting the generality of its authority, order the issuance or entry of an injunction or other order to enforce the provisions of this section. There shall be a private right of action in favor of the specialty insurer or controlling company to enforce the provisions of this section. No demand upon the office that it perform its functions shall be required as a prerequisite to any suit by the specialty insurer or controlling company against any other person, and in no case shall the office be deemed a necessary party to any action by the specialty insurer or controlling company to enforce the provisions of this section. Any person who makes or proposes an acquisition requiring the filing of an application pursuant to this section, or who files such an application, shall be deemed to have thereby designated the Chief Financial Officer, or his or her assistant or deputy or another person in charge of his or her office, as such person’s agent for service of process under this section and shall thereby be deemed to have submitted himself or herself to the administrative jurisdiction of the office and to the jurisdiction of the circuit court.
(10) Any approval by the office under this section does not constitute a recommendation by the office of the tender offer or exchange offer, or acquisition, if no tender offer or exchange offer is involved. It is unlawful for a person to represent that the office’s approval constitutes a recommendation. A person who violates the provisions of this subsection commits a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. The statute-of-limitations period for the prosecution of an offense committed under this subsection is 5 years.
(11) A person may rebut a presumption of control by filing a disclaimer of control with the office on a form prescribed by the commission. The disclaimer must fully disclose all material relationships and bases for affiliation between the person and the specialty insurer as well as the basis for disclaiming the affiliation. In lieu of such form, a person or acquiring party may file with the office a copy of a Schedule 13G filed with the Securities and Exchange Commission pursuant to Rule 13d-1(b) or (c), 17 C.F.R. s. 240.13d-1, under the Securities Exchange Act of 1934, as amended. After a disclaimer has been filed, the specialty insurer is relieved of any duty to register or report under this section which may arise out of the specialty insurer’s relationship with the person unless the office disallows the disclaimer.
(12) If the office determines that any person or any affiliated person of such person has acquired 10 percent or more of the outstanding voting securities of a specialty insurer or controlling company which is a stock corporation, or 10 percent or more of the ownership interest of a specialty insurer or controlling company which is not a stock corporation, without complying with the provisions of this section, the office may order that the person and any affiliated person of such person cease acquisition of the specialty insurer or controlling company and, if appropriate, divest itself of any stock or ownership interest acquired in violation of this section.
(13)(a) The office shall, if necessary to protect the public interest, suspend or revoke the certificate of authority of any specialty insurer or controlling company acquired in violation of this section.
(b) If any specialty insurer is subject to suspension or revocation pursuant to paragraph (a), the specialty insurer shall be deemed to be in such condition, or to be using or to have been subject to such methods or practices in the conduct of its business, as to render its further transaction of insurance presently or prospectively hazardous to its insureds, creditors, or stockholders or to the public.
(14)(a) For the purpose of this section, the term “acquisition” includes:
1. A tender offer or exchange offer for securities, assets, or other ownership interest;
2. An agreement to exchange securities for other securities, assets, or other ownership interest;
3. A merger of a person or affiliated person into a specialty insurer or a merger of any person with a specialty insurer;
4. A consolidation; or
5. Any other form of change of control
whereby any person or affiliated person acquires or attempts to acquire, directly or indirectly, 10 percent or more of the ownership interest or assets of a specialty insurer or of a controlling company. However, in the case of a health maintenance organization organized as a for-profit corporation, the provisions of s. 628.451 shall govern with respect to any merger or consolidation, and, in the case of a health maintenance organization organized as a not-for-profit corporation, the provisions of s. 628.471 shall govern with respect to any merger or consolidation.
(b) For the purpose of this section, the term “affiliated person” of another person includes:
1. The spouse of such other natural person;
2. The parents of such other natural person and their lineal descendants and the parents of such other natural person’s spouse and their lineal descendants;
3. Any person who directly or indirectly owns or controls, or holds with power to vote, 10 percent or more of the outstanding voting securities of such other person;
4. Any person who directly or indirectly owns 10 percent or more of the outstanding voting securities which are directly or indirectly owned or controlled, or held with power to vote, by such other person;
5. Any person or group of persons who directly or indirectly control, are controlled by, or are under common control with such other person;
6. Any director, officer, trustee, partner, owner, manager, joint venturer, or employee, or other person performing duties similar to those of persons in the aforementioned positions, of such other person;
7. If such other person is an investment company, any investment adviser of such company or any member of an advisory board of such company;
8. If such other person is an unincorporated investment company not having a board of directors, the depositor of such company; or
9. Any person who has entered into an agreement, written or unwritten, to act in concert with such other person in acquiring, or limiting the disposition of, securities of a specialty insurer or controlling company which is a stock corporation or in acquiring, or limiting the disposition of, an ownership interest of a specialty insurer or controlling company which is not a stock corporation.
(c) For the purposes of this section, the term “controlling company” means any corporation, trust, or association owning, directly or indirectly, 25 percent or more of the voting securities of one or more specialty insurance companies which are stock corporations, or 25 percent or more of the ownership interest of one or more specialty insurance companies which are not stock corporations.
(d) For the purpose of this section, the term “natural person” means an individual.
(e) For the purpose of this section, the term “person” includes a natural person, corporation, association, trust, general partnership, limited partnership, joint venture, firm, proprietorship, or any other entity which may hold a license or certificate as a specialty insurer.
(15) The commission may adopt, amend, or repeal rules that are necessary to implement the provisions of this section, pursuant to chapter 120.
(1) A domestic mutual insurer shall not merge with a stock insurer.
(2) A domestic mutual insurer may merge with another mutual insurer under the applicable procedures prescribed by the statutes of this state applying to corporations formed for profit, except as hereinbelow provided.
(3) The plan and agreement for merger shall be submitted to and approved by at least two-thirds of the members of each mutual insurer voting thereon at meetings called for the purpose pursuant to such reasonable notice and procedure as has been approved by the office. If a life insurer, the right to vote may be limited to members whose policies are other than term and group policies and have been in effect for more than 1 year.
(4) No such merger shall be effectuated unless in advance thereof the plan and agreement therefor have been filed with the office and approved by it. The office shall give such approval unless it finds such plan or agreement:
(a) Is inequitable to the policyholders of any domestic insurer involved; or
(b) Would substantially reduce the security of and service to be rendered to policyholders of the domestic insurer in this state and elsewhere.
(1) A domestic stock insurer may reinsure all or substantially all of its insurance in force or a major class thereof, with another insurer by an agreement of bulk reinsurance; but no such agreement shall become effective unless filed with the office and approved by it in writing.
(2) The office shall approve such agreement unless it finds that it is inequitable to the stockholders of the domestic insurer or it would substantially reduce the protection or service to its policyholders.
628.491 Mergers and consolidations; mutual insurers; agreement of bulk reinsurance.—
(1) A domestic mutual insurer may reinsure all or substantially all its business in force, or all or substantially all of a major class thereof, with another insurer, stock or mutual, by an agreement of bulk reinsurance after compliance with this section. No such agreement shall become effective unless filed with the office and approved by it.
(2) The office shall approve such agreement if it finds it to be fair and equitable to each domestic insurer involved, and that such reinsurance if effectuated would not substantially reduce the protection or service to its policyholders.
(3) The plan and agreement for such reinsurance must be approved by vote of not less than two-thirds of each domestic mutual insurer’s members voting thereon at meetings of members called for the purpose, pursuant to such reasonable notice and procedure as the office may approve. If a life insurer, the right to vote may be limited to members whose policies are other than term or group policies and have been in effect for more than 1 year.
(4) If for reinsurance of a mutual insurer in a stock insurer, the agreement must provide for payment in cash to each member of the insurer entitled thereto, as upon conversion of such insurer pursuant to s. 628.441, of his or her equity in the business reinsured as determined under a fair formula approved by the office, which equity shall be based upon such member’s equity in the reserves, assets (whether or not admitted assets), and surplus, if any, of the mutual insurer to be taken over by the stock insurer.
628.501 Mutual member’s share of assets on liquidation.—
(1) Upon any liquidation of a domestic mutual insurer, its assets remaining after discharge of its indebtedness, policy obligations, repayment of contributed or borrowed surplus, if any, and expenses of administration, shall be distributed to existing persons who were its members at any time within 5 years next preceding the date such liquidation was authorized or ordered, or date of last termination of the insurer’s certificate of authority, whichever date is the earlier; except, that if the office has reason to believe that those in charge of the management of the insurer have caused or encouraged the reduction of the number of members of the insurer in anticipation of liquidation and for the purpose of reducing thereby the number of persons who may be entitled to share in distribution of the insurer’s assets, it may enlarge the 5 years’ qualification period above provided for by such additional period as it may deem to be reasonable.
(2) The distributive share of each such member shall be in the proportion that the aggregate premiums earned by the insurer on the policies of the member during the combined periods of his or her membership bear to the aggregate of all premiums so earned on the policies of all such members. The insurer may, and if a life insurer shall, make a reasonable classification of its policies so held by such members, and a formula based upon such classification, for determining the equitable distributive share of each such member. Such classification and formula shall be subject to the approval of the office.
628.511 Ownership or transfer of securities without physical delivery of certificates.—
(1) The purpose of this section is to authorize domestic insurers to use modern systems for holding and transferring securities without physical delivery of securities certificates, subject to appropriate rules of the commission.
(2) The following terms are defined for use in this section:
(a) “Securities” means instruments as defined in s. 678.1021.
(b) “Clearing corporation” means a clearing corporation as defined in s. 678.1021 and includes the Treasury/Reserve Automated Debt Entry System or Treasury Direct book-entry securities systems as established pursuant to 31 U.S.C. chapter 31, 12 U.S.C. s. 391, and 5 U.S.C. s. 301.
(c) “Custodian” means a national bank, state bank, trust company, broker, or dealer that participates in a clearing corporation.
(3) Notwithstanding any other provision of law, a domestic insurer may deposit or arrange for the deposit of securities held in or purchased for its general account and its separate accounts in a clearing corporation. When securities are deposited with a clearing corporation, certificates representing securities of the same class of the same issuer may be merged and held in bulk in the name of the nominee of such clearing corporation with any other securities deposited with such clearing corporation by any person, regardless of the ownership of such securities, and certificates representing securities of small denominations may be merged into one or more certificates of larger denominations. The records of any custodian through which an insurer holds securities in a clearing corporation shall at all times show that such securities are held for such insurer and for which accounts thereof. Ownership of, and other interests in, such securities may be transferred by bookkeeping entry on the books of such clearing corporation without physical delivery of certificates representing such securities.
(4) The commission may adopt rules governing the deposit by insurers of securities with clearing corporations.
628.520 Change of domicile of a foreign insurer.—Any insurer which is organized under the laws of any other state for the purpose of writing insurance 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 designating its principal place of business at a place in this state upon approval by the office. Such domestic insurer shall be entitled to like certificates and licenses to transact business in this state and shall be subject to the authority and jurisdiction of this state.
628.525 Change of domicile of a domestic insurer.—Any domestic insurer may, upon the approval of the office, transfer its domicile to any other state in which it is admitted to transact the business of insurance; upon such a transfer it shall cease to be a domestic insurer and shall be admitted to this state, if qualified, as a foreign insurer. The office shall approve any such proposed transfer unless it shall determine that such transfer is not in the interest of the policyholders of this state.
628.530 Effects of redomestication.—The certificate of authority, agents appointments and licenses, rates, and other items which the office or department allows, in its discretion, which 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 by merger, consolidation, merger pursuant to s. 607.1101(7), or any other lawful method 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 outstanding policies of any transferring insurer shall remain in full force and effect and need not be endorsed as to the new name of the company or its new location unless so ordered by the office. Every transferring insurer shall file new policy forms with the office on or before the effective date of the transfer, but may use existing policy forms with appropriate endorsements if allowed by, and under such conditions as are approved by, the office. However, every such transferring insurer shall notify the office of the details of the proposed transfer and shall file promptly any resulting amendments to corporate documents filed or required to be filed with the office.
628.6013 Converted self-insurance fund; trade association; board of directors.
628.6014 Annual reports.
628.6015 Tax on premiums, contributions, and assessments of assessable mutual insurers.
628.6016 Applicability of related laws.
628.6017 Converting assessable mutual insurer.
628.6018 Assessments.
628.6011 Assessable mutual insurers.—
(1) An “assessable mutual insurer” is an insurer incorporated in Florida without permanent capital stock which has only policyholders, insureds, or risks located in Florida and which transacts insurance only within Florida. An assessable mutual insurer may be formed only in accordance with part I. Members of the assessable mutual have a contingent liability for discharge of its liabilities as provided in this part. An assessable mutual may be authorized to offer only property, health, and casualty insurance.
(2) The assessable mutual shall not participate in the Florida Insurance Guaranty Association or the Florida Life and Health Insurance Guaranty Association.
628.6012 Premiums written; restrictions.—Assessable mutual insurers shall be subject to a cap on net annual premiums on the same basis and in the same manner as provided in former s. 624.469 as to commercial self-insurance funds. For an assessable mutual that has converted from a commercial self-insurance fund, the first 6 full calendar years of its operation as set forth in former s. 624.469 shall be computed from the date of its certificate of authority as a commercial self-insurance fund.
628.6013 Converted self-insurance fund; trade association; board of directors.—
(1) Any self-insurance fund regulated under the insurance code other than a commercial self-insurance fund may, with the approval of a majority of the members of the fund and after written notice to the sponsoring association and approved by the office, elect to convert to an assessable mutual insurer in accordance with part I.
(2) An assessable mutual insurer formed by the conversion of a commercial self-insurance fund pursuant to former s. 624.463 or by the conversion of a group self-insurer’s fund organized under s. 624.4621 shall be endorsed at the time of conversion by a statewide not-for-profit trade association, industry association, or professional association of employers or professionals which has a constitution or bylaws, which is incorporated under the laws of this state, and which has been organized for purposes other than that of obtaining or providing insurance and operated in good faith for a continuous period of 1 year. The association shall not be liable for any actions of the insurer, nor shall it require the establishment or enforcement of any policy of the insurer. Fees, services, and other aspects of the relationship between the association and the insurer must be reasonable and are subject to contractual agreement.
(3) Neither the endorsing association nor any of its officers or directors may have any direct financial interest in the insurer’s management company.
(4) The board of directors of the assessable mutual insurer shall:
(a) Be responsible to members of the insurer;
(b) Appoint independent certified public accountants and actuaries, as needed;
(c) Approve payment of dividends to members;
(d) Approve changes in corporate structure; and
(e) Adopt a plan submitted by the management company establishing requirements for membership in the insurer, including, but not limited to, loss prevention, claims experience, billing, underwriting criteria and qualifications, including dues paid by members of the insurer for membership in the endorsing association, and the credit worthiness of membership applicants, termination, and reinstatement.
(5) The board of directors of the assessable mutual insurer may contract with an authorized management company which, except as specifically provided in this part, shall be solely responsible for managing and administering the affairs of the insurer, including, but not limited to, marketing, underwriting, billing, collection, claims administration, termination, reinstatement, safety and loss prevention, reinsurance, policy issuance, accounting, regulatory reporting, investment, and general administration. The fees or compensation for services under such contract shall be comparable to the costs for similar services incurred by insurers writing the same lines of insurance, or, where available, such expenses as filed by boards, bureaus, and associations designated by insurers to file such data.
(6) At least one director, but less than a majority of the directors, must be an officer or director of the management company and must be appointed by the management company. The remaining directors must be elected by the membership, and must be owners, partners, officers, or directors of members of the insurer. Except for directors of the insurer who are officers or directors of the management company, no two directors of the insurer may be owners, partners, officers, or directors of the same member of the insurer.
(7) If the board of directors contracts with a management company, no person may serve as an officer of the assessable mutual insurer unless he or she is an officer or director of the management company.
(8) If the board of directors contracts with a management company, a member of the board of directors is not personally liable for monetary damages to any person for any statement, vote, decision, or failure to act, regarding the management or policy of the fund, by a director, unless:
(a) The director breached or failed to perform his or her duties as a director; and
(b) The director’s breach of, or failure to perform, his or her duties constitutes:
1. A violation of the criminal law, unless the director had reasonable cause to believe his or her conduct was lawful or had no reasonable cause to believe his or her conduct was unlawful. A judgment or other final adjudication against a director in any criminal proceeding for violation of the criminal law estops that director from contesting the fact that his or her breach, or failure to perform, constitutes a violation of the criminal law; but does not estop the director from establishing that he or she had reasonable cause to believe that his or her conduct was lawful or had no reasonable cause to believe that his or her conduct was unlawful.
2. A transaction from which the director derived an improper personal benefit, either directly or indirectly; or
3. Recklessness or an act or omission which was committed in bad faith or with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety, or property. For purposes of this section, the term “recklessness” means the acting, or omission to act, in conscious disregard of a risk:
a. Known, or so obvious that it should have been known, to the director; and
b. Known to the director, or so obvious that it should have been known, to be so great as to make it highly probable that harm would follow from such action or omission.
(9) A management company may be authorized by the office to manage and operate an assessable mutual insurer only if its owners, partners, stockholders, officers, or directors, and other persons who directly or indirectly exercise or have the ability to exercise effective control of the management company, possess the competency and business experience to manage and operate an assessable mutual insurer.
(10) As used in this section, the term “management company” includes the servicing company, if any, which administered the day-to-day affairs of the commercial self-insurance fund or group self-insurers fund before its conversion to an assessable mutual insurer.
(1) An assessable mutual shall file a financial statement within 90 days of the end of its accounting year. The requirements of s. 624.470 shall apply, except an entry for future investment income, reported on or after January 1, 1998, may only be reflected as an aggregate write-in asset on the balance sheet of the annual and quarterly financial statements. Future investment income shall be calculated as the sum of the admitted asset value of Line 1 (Bonds) plus the admitted asset value of Line 6 (Cash and Short-Term Investments) as reported on page 2 in the annual or quarterly financial statement, times the 3-year treasury note yield as of the date of the financial statement, times 3.
(2) For financial statements filed on or after January 1, 1998, future investment income may only be reported as an admitted asset by an assessable mutual which reported future investment income in financial statements filed with the former Department of Insurance prior to December 31, 1996.
628.6015 Tax on premiums, contributions, and assessments of assessable mutual insurers.—Premiums, contributions, and assessments received by an assessable mutual insurer are subject to ss. 624.509(1) and (2) and 624.5092, except that the tax rate shall be 1.6 percent of the gross amount of such premiums, contributions, and assessments.
History.—ss. 76, 188, ch. 91-108; s. 4, ch. 91-429.
628.6016 Applicability of related laws.—In addition to other provisions of the code cited in ss. 628.6011-628.6018:
(1) Sections 624.155, 624.308, 624.414, 624.415, and 624.416(4); ss. 624.418-624.4211, except s. 624.418(2)(f); ss. 624.464, 624.468(1), (2), (4), (6), and (11), 624.472-624.474, 624.480, 624.482, 624.484, 624.486, and 624.501;
(2) Part II of chapter 625;
(3) Applicable sections of part VI of chapter 626; s. 626.9541(1)(a)-(f), (h)-(o), (q), (u), (w), and (x); and ss. 626.9561-626.9641;
(4) Sections 627.291, 627.413, 627.4132, 627.416, 627.418, 627.420, 627.421, 627.425-627.427, 627.702, and 627.706; part XI of chapter 627; ss. 627.912, 627.913, and 627.918; and
(5) Relevant sections of part I of chapter 628 that are not in conflict with the express provisions of this part;
apply to assessable mutual insurers; however, ss. 628.255, 628.411, and 628.421 do not apply. No section of the code not expressly and specifically cited in ss. 628.6011-628.6018 applies to assessable mutual insurers. The term “assessable mutual insurer” shall be substituted for the term “commercial self-insurer” as appropriate.
(1) An assessable mutual insurer may become a stock insurer by filing an application which complies with s. 628.051 and by submitting a plan of conversion which is approved by the office. The office shall not approve any such plan unless the plan:
(a) Is equitable to the insurer’s members.
(b) Is subject to approval by vote of not less than two-thirds of the insurer’s current members voting thereon in person, by proxy, or by mail at a meeting of members called for the purpose pursuant to such reasonable notice and procedure as may be approved by the office. In no event shall the failure to vote constitute a vote for approval.
(c) Provides for the determination of the membership interests of each policyholder in the insurer, taking into account the relative corporate equity of the policyholder, other than as to unearned premiums and benefit claims under the policy, under a fair formula approved by the office.
(d) Provides for the payment of consideration to each policyholder in return for his or her membership interests in the assessable mutual insurer.
(e) Provides for the payment of consideration to be given in exchange for the policyholders’ membership interests in cash, securities of the reorganized insurer, securities of another company, surplus notes or other evidence of borrowed surplus, additional insurance, premium credits, additional benefits, increased dividends, cancellation of future assessment obligations, or other consideration or any combination of any such forms of consideration.
(f) Provides that persons who had been policyholders of the insurer within 3 years prior to the date such plan was submitted to the office shall participate in the distribution of consideration to policyholders.
When the plan of reorganization becomes effective, the assessable mutual insurer shall become a stock insurer and the stock insurer shall be deemed to be a continuation of the corporate existence of the assessable mutual insurer. The provisions of s. 628.441 do not apply to the conversion of an assessable mutual insurer into a stock insurer. The provisions of s. 628.441 shall not apply to the conversion of an assessable mutual insurer to a stock insurer.
(2) An assessable mutual insurer may become a nonassessable mutual pursuant to s. 628.341 if the assessable mutual insurer’s ratio of actual annual written premiums, as adjusted in accordance with subsection (3), to current surplus as to policyholders does not exceed 10 to 1 for gross written premiums and does not exceed 4 to 1 for net written premiums.
(3) For the purposes of this section, premiums shall be calculated as the product of the actual or projected premiums and the following:
(a) For property insurance, 0.90.
(b) For casualty insurance, 1.25.
(c) For health insurance, 0.80.
(d) For all other kinds of insurance, 1.00.
(4) An assessable mutual insurer becoming a stock insurer or a nonassessable mutual insurer is not subject to s. 627.215 or s. 627.351(5) for 5 years following authorization of the conversion by the office. However, the converted stock insurer or nonassessable mutual insurer must file all necessary data required by s. 627.215. Such amounts otherwise subject to s. 627.215(8) must be maintained as surplus as to policyholders and are not available for dividends for 5 years.
(5) Neither the Florida Insurance Guaranty Association nor the Florida Life and Health Insurance Guaranty Association shall be liable for any liability of an assessable mutual insurer except for claims incurred on policies issued on or after the date on which the assessable mutual insurer became a stock insurer or a nonassessable mutual insurer.
(1) Any assessment made by an insurer under this part is prima facie correct. The amount of such assessment to be paid by each member as determined by the insurer is likewise prima facie correct.
(2) The insurer shall notify each member of the amount of the assessment to be paid by written notice mailed to the address of the member last of record with the insurer. The failure of the member to receive the notice so mailed, within the time specified therein for the payment of the assessment or at all, shall be no defense in any action to collect the assessment.
(3) If a member fails to pay the assessment within the period specified in the notice, which period shall not be less than 20 days after mailing, the insurer may institute suit to collect the same.
(a) A holding company that is a subsidiary of a mutual insurance holding company, and which directly or through a subsidiary intermediate holding company owns a majority of the voting shares of the capital stock of one or more subsidiary insurance companies; or
(b) A holding company that is a not-for-profit corporation and a subsidiary of a mutual insurance holding company, of which a majority of the voting membership interests entitled to elect the board of directors of such corporation are owned, directly or through a subsidiary intermediate holding company, by the mutual insurance holding company.
(2) “Mutual insurance holding company” means an incorporated entity without permanent capital stock which is organized under this part and whose members are determined in accordance with this part.
(3) “Nonprofit health care plan” means a not-for-profit domestic or foreign hospital or medical and surgical service plan or corporation that is licensed in one or more states, issues no capital stock, and is engaged in the business of providing prepaid indemnity or health care benefits.
(4) “Paid premiums” means all premiums paid for insurance by a member of a mutual insurance holding company to a subsidiary insurance company.
(5) “Subsidiary insurance company” means:
(a) A stock insurance company, of which the majority of the voting shares of the capital stock are at all times owned by a mutual insurance holding company. As used in this part, the term “majority of the voting shares of the capital stock” means the shares of the capital stock of such company which carry the right to cast a majority of the votes entitled to be cast by all of the outstanding shares of the capital stock for the election of directors. The ownership of a majority of the voting shares of the capital stock of a former mutual reorganized insurance company which are required by this part to be at all times owned by a mutual insurance holding company includes indirect ownership through one or more intermediate holding companies. However, indirect ownership through one or more intermediate holding companies may not result in a mutual insurance holding company owning less than the equivalent of a majority of the voting shares of the capital stock of the former mutual reorganized insurance company; or
(b) A not-for-profit insurance company or nonprofit health care plan, of which the majority of the voting membership interests are at all times owned by a mutual insurance holding company, which entitles the mutual insurance holding company to elect the board of directors of the not-for-profit insurance company or nonprofit health care plan. This also applies to the indirect ownership of the not-for-profit insurance company or nonprofit health care plan through one or more intermediate holding companies. A not-for-profit insurance company subsidiary resulting from reorganization into a not-for-profit mutual insurance company under this part, or which is subsequently organized as an additional subsidiary insurance company of the holding company, is subject to the Florida Insurance Code, and chapter 617 applies to the organization of such company.
(1) The voting shares of the capital stock of a subsidiary insurance company, which are required by this part in order to maintain a majority of the voting shares, are to be at all times owned by a mutual insurance holding company or one or more intermediate holding companies and the voting shares of the capital stock of any intermediate holding company, which are necessary to satisfy such ownership requirement through indirect ownership, shall not be conveyed, transferred, assigned, pledged, subjected to a security interest or lien, encumbered, or otherwise hypothecated or alienated by the mutual insurance holding company or any intermediate holding company. Any conveyance, transfer, assignment, pledge, security interest, lien, encumbrance, or hypothecation or alienation of, in, or on such voting shares of capital stock is in violation of this section and shall be void in inverse chronological order of the date of such conveyance, transfer, assignment, pledge, security interest, lien, encumbrance, or hypothecation or alienation, as to such shares of capital stock. The shares of the capital stock of the surviving or new company resulting from a merger or consolidation of two or more subsidiary insurance companies or two or more intermediate holding companies which were subsidiaries of the same mutual insurance holding company are subject to the same requirements, restrictions, and limitations as provided in this section to which the shares of the merging or consolidating former mutual reorganized insurance companies or intermediate holding companies were subject by this section prior to the merger or consolidation.
(2) Voting shares of the capital stock of a subsidiary insurance company or the intermediate holding company may not be acquired by any affiliated member of the holding company system except where the affiliated member of the mutual holding company system is the majority shareholder. A number of shares equal to 5 percent of the outstanding voting shares of the capital stock of one corporate member of the Mutual Insurance Holding Company System selected by the mutual insurance holding company may be issued or sold to directors and officers as part of a plan of compensation, and such shares shall not be considered part of the majority shares to be owned by the mutual insurance company under subsection (1). A number of shares equal to an additional 5 percent of the outstanding voting shares of the capital stock of one corporate member of the Mutual Insurance Holding Company System selected by the mutual insurance holding company may be issued or sold to employees, which may not include any officer or director, as part of an employee stock dividend or benefit plan, and such shares shall not be considered part of the majority shares to be owned by the mutual insurance company under subsection (1). Prior to issuance of shares in excess of the authorized 5 percent to either officers and directors or employees, pursuant to this section, a fairness opinion shall be rendered by an independent authority acceptable to the office to assure that the long term interests of the shareholders and policyholders are adequately protected. The office shall approve or disapprove the transaction within 30 days after receipt of the fairness opinion. Nothing in this section prohibits any officer or director from purchasing shares of stock at market value which are not part of a plan of compensation, in accordance with the requirements of s. 628.461, and, if such stock is not regularly traded on a national stock exchange, the officer or director purchasing the shares of stock is responsible for establishing its market value.
628.707 Applicability of general corporation statutes.—The applicable statutes of this state relating to the powers and procedures of domestic private corporations formed for profit shall apply to domestic mutual insurance holding companies, except:
(1) A mutual insurance holding company shall be organized exclusively under this act and shall be a mutual company without capital stock.
(2) The articles of incorporation of the mutual insurance holding company, and any amendment to such articles or restatement of such articles shall be subject to the approval of the office for compliance with the provisions of this act prior to filing with the Department of State, and shall contain the name of the mutual insurance holding company, which shall include the word “Mutual.”
(3) The provisions of chapter 617 shall be deemed to be incorporated into this part to govern a mutual insurance holding company to the extent that this act and the insurance code are silent with respect to the articles of incorporation, bylaws, organization, members, directors, or other matters relating to a mutual insurance holding company.
(4) Nothing in this part shall be construed to require that a mutual insurance holding company be governed by part II of chapter 625.
(5) In the case of the reorganization of a mutual insurance company organized as a not-for-profit corporation under chapter 617, a mutual insurance holding company organized under this part shall be deemed to be a not-for-profit corporation.
628.709 Formation of a mutual insurance holding company.—
(1) A domestic mutual insurance company, other than a mutual insurer that issued assessable policies as a mutual insurer and which held a certificate of authority in this state on July 1, 1997, may, pursuant to a plan of reorganization, reorganize as a mutual insurance holding company system that must consist of a mutual insurance holding company and one or more controlled subsidiaries and which may consist of one or more intermediate stock holding companies and other subsidiaries. The reorganization may be effected by the organization of one or more companies, amendment or restatement of the articles of incorporation and bylaws of one or more companies, transfer of assets and liabilities among two or more companies, issuance, acquisition or transfer of capital stock of one or more companies, or merger or consolidation of two or more companies. On and after the effective date of a plan of reorganization, the mutual insurance holding company shall at all times have the power, directly or indirectly, to cast at least a majority of the votes for the election of the board of directors of each controlled subsidiary and any intermediate stock holding company.
(2) All of the initial shares of the capital stock of the insurance company which reorganized as a subsidiary insurance company shall be issued either to the mutual insurance holding company, or to an intermediate holding company which is wholly owned by the mutual insurance holding company. This restriction does not preclude the subsequent issuance of additional shares of stock by the subsidiary insurance company so long as the mutual insurance holding company at all times owns directly or through one or more intermediate holding companies, a majority of the voting shares of the capital stock of the subsidiary insurance company. The membership interests of the policyholders of the subsidiary insurance company shall become membership interests in the mutual insurance holding company. Policyholders of the subsidiary insurance company which was formerly the mutual insurer shall be members of the mutual insurance holding company in accordance with the articles of incorporation and bylaws of the mutual insurance holding company. At the time of formation, policyholders of any other subsidiary insurance company of the mutual insurance holding company shall not be members of the mutual insurance holding company unless:
(a) They are policyholders of a subsidiary which was a mutual insurer which merged with the holding company pursuant to s. 628.715; or
(b) They are policyholders of an affiliated stock insurance company, provided such policyholders were members of the mutual insurance company at the time the mutual insurance company policies were assumed by the affiliated stock insurance company and the assumption occurred in connection with the conversion.
Subsequent to formation, membership shall be governed by s. 628.727.
(1) A plan of reorganization shall include the following provisions:
(a) A description of the structure of the mutual insurance holding company system consistent with the requirements therefor set forth in this act.
(b) A description of the qualifications for membership in and the rights of members of the mutual insurance holding company consistent with the requirements therefor set forth in this act.
(c) A description of the transactions, and parties to such transactions, that will effect the reorganization, including, but not limited to, transfer and assumption of policies, contracts, assets, and liabilities.
(d) A description of corporate restructuring and other corporate transactions that will effect the reorganization, including, but not limited to, organization of companies, amendment or restatement of articles of incorporation or bylaws, and mergers and consolidations.
(e) A description of those persons who shall serve as directors and officers of the mutual insurance holding company, its intermediate stock holding companies, if any, its controlled subsidiaries, and other subsidiaries as of the effective date of the reorganization. The initial directory shall be the directors of the mutual insurance company who shall have terms concurrent with the terms as directors of the reorganized mutual insurance company unless otherwise specified in the plan.
(f) A representation that, following the reorganization, the material terms and conditions of indemnification or coverage of policyholders of the mutual insurance company shall remain in full force and effect under policies transferred to and assumed by one or more subsidiaries of the mutual insurance holding company or retained by a mutual insurance company that has reorganized either as a mutual insurance holding company that elects to write insurance or a stock subsidiary.
(g) A representation that, following the reorganization, the material terms and conditions of subordinated surplus notes and other contractual obligations, other than those arising under policies described in paragraph (f), of the mutual insurance company shall, subject to the rights of the mutual insurance company under applicable law, and to the extent such obligations are not otherwise satisfied or terminated in accordance with their terms or retained by a mutual insurance holding company or controlled subsidiary, remain in full force and effect upon the transfer of such obligations to, and assumption of such obligations by, one or more subsidiaries of the mutual insurance holding company.
(2) A plan of reorganization must be adopted by the board of directors of the mutual insurance company or, in the case of the formation of any intermediate stock insurance holding company that is not concurrent with the formation of the mutual insurance holding company, by the board of directors of the mutual insurance holding company.
(3) Following the adoption of a plan of reorganization, and prior to the meeting of the mutual insurance company members to approve the plan, the mutual insurance company shall submit to the office the following:
(a) The plan of reorganization, as adopted.
(b) The form of notice to be sent to the mutual insurance company members, informing them of their right to vote on the plan of reorganization.
(c) The form of proxy statement to be sent to the mutual insurance company members, informing them of their right to vote by proxy on the plan of reorganization, and describing the plan.
(d) The form of proxy to be sent to the mutual insurance company members to solicit their vote on the plan of reorganization.
(e) Proposed articles of incorporation, merger, or consolidation, restatements of or amendments to articles of incorporation or bylaws, and plans of merger or consolidation, with respect to each entity to be organized, reorganized, or otherwise subject to such action under the plan of reorganization.
(f) A proposed business plan for the 3 years following the date of the reorganization.
(g) An audited financial statement prepared on a statutory basis consistent with the Florida Insurance Code, including an actuarial opinion for the most recent calendar year ended, or a copy thereof, if the statement was previously filed with the office.
(4) The office may hold a public hearing to allow public comment on the plan of reorganization. Any hearing must be held within 30 days after receipt by the office of a completed plan of reorganization. The office may not approve a plan of reorganization unless it finds that it is fair and equitable to the members of the mutual insurance company. Ninety days after filing, the plan of reorganization shall be deemed approved unless it has previously been approved or disapproved by the office. The office shall inform the mutual insurer of the specific reasons for the disapproval of any plan of reorganization.
(5)(a) A plan of reorganization adopted by the board of directors of the applicant may be:
1. Amended by the board of directors of the applicant in response to the comments or recommendations of the office, or any other state or federal agency or governmental entity, before any solicitation of proxies from members of the mutual insurance company to vote on the plan of reorganization, or at any time with the consent of the office, except that any material amendment after the members’ approval shall require the members’ approval; or
2. Terminated by the board of directors of the applicant at any time before members of the mutual insurance company vote on the plan of reorganization and, otherwise, at any time with the consent of the office.
(b) The plan of reorganization is approved upon the affirmative vote of at least a majority of the votes cast by members of the mutual insurance company, notwithstanding quorum or voting action requirements otherwise applicable to the mutual insurance company to the contrary.
(c) Within 30 days after members have approved the plan of reorganization, the applicant must file with the office the minutes of the meeting at which the plan of reorganization was approved.
628.713 Dividends.—A mutual insurance holding company shall not be authorized to pay dividends or make distributions to mutual insurance holding company members except as may be expressly approved by the office. Neither the adoption nor the implementation of a plan of reorganization shall be deemed to give rise to any obligation by or on behalf of a mutual insurance company to make any distribution or payment to any member or policyholder, or to any other person, fund, or entity of any nature whatsoever, in connection with the ownership, control, benefits, policies, purpose, or nature of the mutual insurance company or otherwise, including, but not limited to, requirements imposed by the conversion and bulk reinsurance provisions of ss. 628.441 and 628.491.
628.715 Merger and acquisitions.—Subject to applicable requirements of this chapter, a mutual insurance holding company may:
(1)(a) Merge or consolidate with, or acquire the assets of, a mutual insurance holding company licensed pursuant to this part or any similar entity organization pursuant to laws of any other state;
(b) Either alone or together with one or more intermediate holding companies, or other subsidiaries, directly or indirectly acquire the stock of a stock insurance company or a mutual insurance company that reorganizes under this part or the law of its state of organization;
(c) Together with one or more of its subsidiaries, acquire the assets of a stock insurance company or a mutual insurance company, or the membership interests of a not-for-profit insurance company or nonprofit health care plan;
(d) Acquire a stock insurance company through the merger of the stock insurance subsidiary with a stock insurance company or interim stock insurance company subsidiary of the mutual insurance holding company, or acquire a not-for-profit insurance company or nonprofit health care plan through the merger of such entities with a mutual insurance company, or with a not-for-profit insurance company subsidiary of the mutual insurance holding company or intermediate holding company;
(e) Acquire the stock or assets of any other person to the same extent as would be permitted for any not-for-profit corporation under chapter 617 or, if the mutual insurance holding company writes insurance, a mutual insurance company;
(f) Jointly, with a domestic or foreign mutual insurance company that redomesticates pursuant to s. 628.520, file an application with the office, pursuant to this part, to merge the domestic or foreign mutual insurance company policyholder’s membership interests into the mutual insurance holding company. The reorganizing mutual insurance company may merge with the mutual insurance holding company’s stock subsidiary or continue its corporate existence as a domestic stock insurance company subsidiary. The members of the foreign mutual insurance company may approve in a contemporaneous vote both the redomestication plan and the agreement for merger and reorganization; or
(g) Merge or consolidate with, or acquire the assets of, a domestic or foreign reciprocal insurance company, a group self-insurance fund, or any other similar entity.
(2) A reorganization pursuant to this section is subject to the applicable procedures prescribed by the laws of this state applying to corporations formed for profit, except as otherwise provided in this subsection.
(a) The plan and agreement for merger shall be submitted to and approved by a majority of the members, policyholders, or subscribers of each domestic mutual insurance holding company, mutual insurance company, stock insurance company, or domestic or foreign reciprocal insurance company, involved in the merger who vote either in person or by proxy thereon at meetings called for the purposes pursuant to such reasonable notice and procedure as has been approved by the office.
(b) No such merger shall be effectuated unless in advance thereof, the plan and agreement therefor have been filed with the office and approved by it after a public hearing, which shall be held within 90 days after receipt by the office of such plan and agreement. The office may retain outside consultants to evaluate the merger. The domestic mutual insurance holding company shall pay reasonable costs associated with retaining such consultants. Such payments shall be made directly to the consultant. The office shall give such approval unless it finds such plan or agreement:
1. Is inequitable to the policyholders of any domestic insurer involved in the merger or the members of any domestic mutual insurance holding company involved in the merger; or
2. Would substantially reduce the security of and service to be rendered to policyholders of a domestic insurer in this state.
(c) All of the initial shares of the capital stock of the reorganized subsidiary insurance company shall be issued either to the mutual insurance holding company, or to an intermediate holding company which is wholly owned by the mutual insurance holding company. The membership interests of the policyholders of the reorganized insurance company shall become membership interests in the mutual insurance holding company. Policyholders of the reorganized insurance company shall be members of the mutual insurance holding company in accordance with the articles of incorporation and bylaws of the mutual insurance holding company. The mutual insurance holding company shall at all times own a majority of the voting shares of the capital stock of the reorganized subsidiary insurance company.
(d) For property and casualty insurers, the rights of the members of the merging entities under s. 628.729, for a period of 3 years after the merger, shall be the proportionate share of the total surplus of the merging entities as determined by the percentage of the surplus contributed by each of the merging entities to the total surplus of the surviving entity on the date of the merger.
(1) No mutual insurance holding company shall be formed unless its articles of incorporation are approved by the office prior to filing the same with and approval by the Department of State as provided by law.
(2) The office shall promptly examine the articles of incorporation; and, if it finds that the articles of incorporation comply with law, the office shall endorse its approval upon each of the originals, place one on file in its office, and return the remaining sets to the incorporators. The incorporators shall promptly file such endorsed articles of incorporation with the Department of State. The articles of incorporation shall be effective when filed with and approved by the Department of State.
(1) A domestic mutual insurance holding company may amend its articles of incorporation by vote of a majority of those members present or represented by proxy at a lawful meeting of its members, if the notice given members included due notice of the proposal to amend.
(2)(a) Upon adoption of an amendment, the mutual insurance holding company shall make under its corporate seal a certificate thereof, setting forth the amendment and the date and manner of the adoption thereof, which certificate shall be executed by the mutual insurance holding company’s president or vice president and secretary or assistant secretary and acknowledged before an officer authorized to take acknowledgments. The mutual insurance holding company shall deliver the originals of the certificate to the office.
(b) The office shall promptly examine the certificate of amendment, and, if the office finds that the certificate and the amendment comply with law, the office shall endorse its approval upon each of the originals, place one on file in its office, and return the remaining sets to the mutual insurance holding company. The mutual insurance holding company shall promptly file such endorsed certificates of amendment with the Department of State. The amendment shall be effective when filed with and approved by the Department of State.
(1) The initial board of directors of a mutual insurance holding company shall adopt original bylaws, subject to the approval of the company’s members at the next succeeding meeting.
(2) The bylaws shall provide:
(a) That each member is entitled to one vote upon each matter coming to a vote at meetings of members, or to more votes in accordance with a reasonable classification of members as set forth in the bylaws and based upon the amount of insurance in force with the mutual insurance holding company’s subsidiaries, or upon the amount of the premiums paid to the mutual insurance holding company’s subsidiaries by such member, or upon other reasonable factors. If a person’s membership is based upon that person holding an insurance policy from a life insurer, the right to vote may be limited to those members whose policies are other than term and group policies and have been in effect for more than 1 year. A member has the right to vote in person or by her or his written proxy. No such proxy shall be made irrevocable or for longer than a reasonable period of time.
(b) For the election of directors by the members and the number, qualifications, terms of office, and powers of the directors.
(c) The time, notice, quorum, and conduct of annual and special meetings of members and voting thereat. The bylaws may provide that the annual meeting shall be held at a place, date, and time to be set forth in the policy and without giving other notice of such meeting.
(d) The number, designation, election, terms, and powers and duties of the respective corporate officers.
(e) For deposit, custody, and disbursement of and accounting for corporate funds.
(f) That a quorum at all annual and special meetings of members will consist of all members present and voting in person or by proxy, after due notice of such meeting.
(g) For any other reasonable provisions customary, necessary, or convenient for the management or regulation of the company’s corporate affairs, not inconsistent with law.
(3) The mutual insurance holding company shall file within 30 days with the office a copy, certified by the mutual insurance holding company’s secretary, of its bylaws and of every modification thereof or addition thereto. The office shall promptly disapprove any bylaw provision deemed by it to be unlawful, unreasonable, inadequate, unfair, or detrimental to the proper interests or protection of the mutual insurance holding company’s members or any class thereof. The insurer shall not, after receiving written notice of such disapproval and during the existence thereof, effectuate any bylaw provision disapproved.
(1) The affairs of every mutual insurance holding company shall be managed by not less than five directors.
(2) Directors must be elected by the members of the mutual insurance holding company at the annual meeting of members. Directors may be elected for terms of not more than 5 years each and until their successors are elected and have qualified, and, if to be elected for terms of more than 1 year, the mutual insurance holding company’s bylaws shall provide for a staggered-terms system under which the terms of a proportionate part of the members of the board of directors will expire on the date of each annual meeting of members.
(3) A majority of the directors must be citizens of the United States.
(4) If so provided in a mutual insurance holding company’s bylaws, a director of such mutual insurance holding company must be a policyholder thereof.
(5) In discharging his or her duties, a director may consider such factors as the directors deem relevant, including, but not limited to, the long-term prospects and interests of the corporation and its shareholders, the social, economic, legal, or other effects of any action on the employees, suppliers, or policyholders of the corporation or its subsidiaries, the communities and society in which the corporation or its subsidiaries operate, and the economy of the state and the nation. The director may also consider the short-term and long-term interests of the insurer, including, but not limited to, benefits that may accrue to the insured from the insurer’s long-term plans, the possibility that such interests may be best served by the continued independence of the insurer, the resources, intent, and past, present, and potential conduct of any person seeking to acquire control of the insurer, and any other relevant factors.
628.725 Notice of change of director or officer.—A mutual insurance holding company shall give the office written notice of any change of personnel among the directors or principal officers of the mutual insurance holding company within 45 days after such change. The written notice shall include all information necessary to allow the office to determine that the mutual insurance holding company’s subsidiary stock insurers will be in compliance with s. 624.404(3) and, at a minimum, shall contain information similar to the information required by s. 628.051(2)(b), (c), and (d) for directors of insurance companies.
(1) Membership in a mutual insurance holding company shall be determined in accordance with the mutual insurance holding company’s articles of incorporation and bylaws and be based upon each member holding a policy of insurance with a subsidiary insurance company or a health maintenance contract with a subsidiary health maintenance organization. Group certificateholders may also be members of the mutual insurance holding company if specified in the bylaws. The articles of incorporation and bylaws may provide for one or more classes of members and may restrict the voting or other rights of a class of policyholders of a nonprofit health care plan from receiving distributions pursuant to this chapter if the assets of the nonprofit health care plan may not be treated as assets available for distribution.
(2) Any person, public or private corporation, board, association, firm, estate, trustee, or fiduciary may be a member of a mutual insurance holding company. However, the state or any county or municipality may not participate as a member in the profits of any mutual insurance holding company.
(3) No member of a mutual insurance holding company may transfer membership or any right arising therefrom.
(4) A member of a mutual insurance holding company is not, as such, personally liable for the acts, debts, liabilities, or obligations of the company and may not be assessed by the directors of such company.
(5) A membership interest in a mutual insurance holding company shall not constitute a security as defined by s. 517.021.
628.729 Member’s share of assets on voluntary dissolution.—
(1) Upon any voluntary dissolution of a domestic mutual insurance holding company, its assets remaining after discharge of its indebtedness, if any, and expenses of administration, shall be distributed to existing persons who were its members at any time within the 3-year period preceding the date such liquidation was authorized or ordered, or date of last termination of the insurer’s certificate of authority, whichever date is earlier; except, if the office has reason to believe that those in charge of the management of the mutual insurance holding company have caused or encouraged the reduction of the number of members of the insurer in anticipation of liquidation and for the purpose of reducing thereby the number of persons who may be entitled to share in distribution of the insurer’s assets, the office may enlarge the 3-year qualification period by such additional time as the office may deem to be reasonable.
(2) The distributive share of each such member shall be determined:
(a) For domestic mutual insurance holding companies owning solely life and health insurance subsidiaries, by a formula based upon such reasonable classifications of members as the department may approve.
(b) For all other domestic insurance holding companies, based upon the ratio that the total amount of paid premiums paid by such member for policies of insurance during the 3-year period or part of such period specified in subsection (1) during which such recipient was a member bears to the total amount of paid premiums paid by all members entitled to receive a distributive share as a result of such dissolution during such entire 3-year period and upon such reasonable classifications of members as the department may approve, unless the domestic mutual insurance holding company submits another fair formula that is approved by the department.
628.730 Merger with intermediate holding company.—
(1) A mutual insurance holding company may, pursuant to a plan and agreement of merger approved by the office, in accordance with s. 628.715(2)(b), merge into its intermediate holding company. The surviving intermediate holding company shall assume all of the assets and liabilities of the mutual insurance holding company, and all of the stock of the intermediate holding company owned by the mutual insurance holding company immediately prior to the merger shall be distributed to existing persons who were members of the mutual insurance holding company at any time within the 3-year period preceding the date of such merger.
(2) The distributive share of each such member shall be determined:
(a) For domestic mutual insurance holding companies owning solely life and health insurance subsidiaries, by a formula based upon such reasonable classifications of members as the office may approve.
(b) For all other domestic insurance holding companies, based upon the ratio that the total amount of paid premiums paid by such member for policies of insurance during the 3-year period or part of such period preceding the date of such merger during which such recipient was a member bears to the total amount of paid premiums paid by all members entitled to receive a distributive share as a result of such merger during such entire 3-year period and upon such reasonable classifications of members as the department may approve, unless the domestic mutual insurance holding company submits another fair formula that is approved by the department.
(3) For purposes of creating a public market for the shares of the intermediate holding company, the mutual insurance holding company may, immediately prior to the merger, sell or cause the intermediate holding company to sell to the public up to 25 percent of its capital stock representing no more than 25 percent of the voting stock of the intermediate holding company.
(4) The office shall hold a public hearing to allow public comment on the plan and agreement of merger. The hearing must be held within 90 days after receipt of the office of the proposed plan and agreement of merger.
(5) The plan and agreement of merger shall be submitted to the members of the mutual holding company for their approval and shall take effect only if approved by a majority of the members of the mutual insurance holding company who vote either in person or by proxy on such merger at a meeting called for the purpose of voting on such merger, pursuant to reasonable notice and procedures as approved by the office.
628.731 Application of holding company statutes and regulations.—Each reorganized subsidiary insurance company shall be subject to the applicable laws and rules of this state relating to insurance holding company systems. A mutual insurance holding company shall not be subject to provisions of this chapter or rules adopted thereunder with respect to the writing of insurance or required capital or surplus. A mutual insurance holding company system shall be considered an insurance holding company system but shall not require separate approval under this chapter for an acquisition of controlling stock, ownership interest, assets, or control, or for a merger or consolidation, share exchange, organization, or reorganization of insurance companies, or other transaction with respect to any action approved pursuant to the provisions of this part.
(1) A mutual insurance holding company may become a stock holding company under such plan and procedure as may be approved by the office.
(2) The office shall not approve any such plan and procedure unless:
(a) The plan and procedure is subject to approval by vote of not less than a majority of the company’s current members voting thereon in person, by proxy, or by mail at a meeting of members called for the purpose pursuant to such reasonable notice and procedure as may be approved by the office.
(b) The corporate equity of each member is determinable:
1. For domestic mutual insurance holding companies owning solely life and health insurance subsidiaries, under a fair formula approved by the office, which equity shall be based upon not more than the company’s net assets.
2. For all other domestic insurance holding companies, based upon the ratio that the total amount of paid premiums paid by such member for policies of insurance during the 3-year period or part of such period specified in paragraph (c) during which such recipient was a member bears to the total amount of premiums paid by all members entitled to receive equity as a result of such conversion during such entire 3-year period and upon such reasonable classifications of members as the department may approve, unless the domestic mutual insurance holding company submits another fair formula that is approved by the department. Such equity shall be based upon not more than the company’s net assets.
(c) The persons entitled to participate in the distribution of stock shall include all current members and all existing persons who had been members within 3 years prior to the date such plan was submitted to the office.
(d) The plan calls for the distribution to each person as specified in paragraph (c) of capital stock or other property of the stock holding company, using each person’s equity as determined under paragraph (b).
(e) The plan gives to each member as specified in paragraph (c) a preemptive right to acquire his or her proportionate part of all of the proposed capital stock of the new stock holding company, within a designated reasonable period, and to apply upon the purchase thereof the amount of his equity as determined under paragraph (b).
(f) Shares are so offered to policyholders at a price not greater than to be thereafter offered to others.
(g) The plan provides for payment of cash to each member not electing to apply his or her equity towards the purchase price of stock to which he or she is preemptively entitled. The amount so paid shall be not less than 50 percent of the amount of his or her equity not so used for the purchase of stock. Such cash payment together with stock so purchased, if any, shall constitute full payment and discharge of the member’s corporate equity in such mutual insurance holding company.
(1) An insurer that is authorized to do business in this state and that is a member of an insurance holding company shall, on or before April 1 of each year, register with the office and file a registration statement and be subject to regulation with respect to its relationship to the holding company as provided by law or rule. The commission shall adopt rules establishing the information and statement form required for registration and the manner in which registered insurers and their affiliates are regulated. The rules apply to domestic insurers, foreign insurers, and commercially domiciled insurers, except for foreign insurers domiciled in states that are currently accredited by the NAIC. Except to the extent of any conflict with this code, the rules must include all requirements and standards of the Insurance Holding Company System Model Regulation and ss. 4 and 5 of the Insurance Holding Company System Regulatory Act of the NAIC, as adopted in December 2020. The commission may adopt subsequent amendments thereto if the methodology remains substantially consistent. The rules may include a prohibition on oral contracts between affiliated entities. Material transactions between an insurer and its affiliates must be filed with the office as provided by rule.
(2) The ultimate controlling person of every insurer subject to registration shall also file an annual enterprise risk report on or before April 1. As used in this subsection, the term “ultimate controlling person” means a person who is not controlled by any other person. The report must, to the best of the ultimate controlling person’s knowledge and belief, identify the material risks within the insurance holding company system that could pose enterprise risk to the insurer. The report must be filed with the lead state office of the insurance holding company system as determined by the procedures within the Financial Analysis Handbook adopted by the NAIC and is confidential and exempt from public disclosure as provided in s. 624.4212.
(a) An insurer may satisfy this requirement by providing the office with the most recently filed parent corporation reports that have been filed with the Securities and Exchange Commission which provide the appropriate enterprise risk information.
(b) The term “enterprise risk” means an activity, circumstance, event, or series of events involving one or more affiliates of an insurer which, if not remedied promptly, are likely to have a materially adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole, including anything that would cause the insurer’s risk-based capital to fall into company action level as set forth in s. 624.4085 or would cause the insurer to be in a hazardous financial condition.
(c) The office may adopt rules for filing the annual enterprise risk report in accordance with the Insurance Holding Company System Regulatory Act and the Insurance Holding Company System Model Regulation of the NAIC, as adopted in December 2020.
(3) In addition to the powers which the office has under chapter 624 relating to the examination of insurers, the office may examine any insurer registered under this section and its affiliates to ascertain the financial condition of the insurer, including the enterprise risk to the insurer by the ultimate controlling party, or by any entity or combination of entities within the insurance holding company system, or by the insurance holding company system on a consolidated basis.
(a) The office may require any insurer registered under this section to produce such records, books, or other information and papers in the possession of the insurer or its affiliates as are reasonably necessary.
(b) The office may retain at the registered insurer’s expense such attorneys, actuaries, accountants, and other experts not otherwise a part of the office’s staff as shall be reasonably necessary to assist in the conduct of the examination under this subsection. Any persons so retained shall be under the direction and control of the office and shall act in a purely advisory capacity.
(c) Each registered insurer producing for examination records, books, and papers pursuant to this subsection is liable for and shall pay the expense of examination in accordance with s. 624.320.
(d) The office shall have the power to examine the affiliates of the registered insurer. The scope of the examination of an insurer’s affiliates under this subsection must be limited to information reasonably necessary. An examination of an insurer’s affiliate under this section, unless reasonably necessary to ascertain the financial condition of the insurer, may not extend to the passive investors of affiliates in the holding company system which do not provide services directly or indirectly to the insurer or have direct or indirect relationships with the insurer.
(4) The filings and related documents filed pursuant to this section are confidential and exempt as provided in s. 624.4212 and are not subject to subpoena or discovery directly from the office. A waiver of any applicable privilege or claim of confidentiality in the filings and related documents may not occur as a result of any disclosure to the office under this section or any other section of the insurance code as authorized under s. 624.4212. Neither the office nor any person who received the filings and related documents while acting under the authority of the office or with whom such information is shared pursuant to s. 624.4212 is permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to s. 624.4212. However, the department or office may use the confidential and exempt information in the furtherance of any regulatory or legal action brought against an insurer as a part of the official duties of the department or office.
(5) The failure to file a registration statement, or a summary of the registration statement, or the enterprise risk filing report required by this section within the time specified for filing is a violation of this section.
(6) Upon request, the office may waive the filing requirements of this section:
(a) If the insurer is a domestic insurer that is the subsidiary of an insurer that is in full compliance with the insurance holding company registration laws of its state of domicile, which state is accredited by the NAIC; or
(b) If the insurer is a domestic insurer that writes only in this state and has annual direct written and assumed premium of less than $300 million, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, and demonstrates that compliance with this section would not provide substantial regulatory or consumer benefit. In evaluating a waiver request made under this paragraph, the office may consider various factors including, but not limited to, the type of business entity, the volume of business written, the ownership or organizational structure of the entity, or whether the company is in runoff.
A waiver granted pursuant to this subsection is valid for 2 years unless sooner withdrawn due to a change in the circumstances under which the waiver was granted.
628.8015 Own-risk and solvency assessment; corporate governance annual disclosure.—
(1) DEFINITIONS.—As used in this section, the term:
(a) “Corporate governance annual disclosure” means a report filed by an insurer or insurance group in accordance with this section.
(b) “Insurance group” means insurers and affiliates included within an insurance holding company system.
(c) “Insurer” has the same meaning as in s. 624.03. However, the term does not include agencies, authorities, instrumentalities, possessions, or territories of the United States, the Commonwealth of Puerto Rico, or the District of Columbia; or agencies, authorities, instrumentalities, or political subdivisions of a state.
(d) “Own-risk and solvency assessment” or “ORSA” means an internal assessment, appropriate to the nature, scale, and complexity of an insurer or insurance group, conducted by that insurer or insurance group, of the material and relevant risks associated with the business plan of an insurer or insurance group and the sufficiency of capital resources to support those risks.
(e) “ORSA guidance manual” means the own-risk and solvency assessment guidance manual developed and adopted by the National Association of Insurance Commissioners.
(f) “ORSA summary report” means a high-level ORSA summary of an insurer or insurance group, consisting of a single report or combination of reports.
(g) “Senior management” means any corporate officer responsible for reporting information to the board of directors at regular intervals or providing information to shareholders or regulators and includes, but is not limited to, the chief executive officer, chief financial officer, chief operations officer, chief risk officer, chief procurement officer, chief legal officer, chief information officer, chief technology officer, chief revenue officer, chief visionary officer, or any other executive performing one or more of these functions.
(2) OWN-RISK AND SOLVENCY ASSESSMENT.—
(a) Risk management framework.—An insurer shall maintain a risk management framework to assist in identifying, assessing, monitoring, managing, and reporting its material and relevant risks. An insurer may satisfy this requirement by being a member of an insurance group with a risk management framework applicable to the operations of the insurer.
(b) ORSA requirement.—Subject to paragraph (c), an insurer, or the insurance group of which the insurer is a member, shall regularly conduct an ORSA consistent with and comparable to the process in the ORSA guidance manual. The ORSA must be conducted at least annually and whenever there have been significant changes to the risk profile of the insurer or the insurance group of which the insurer is a member.
(c) ORSA summary report.—
1.a. A domestic insurer or insurer member of an insurance group of which the office is the lead state, as determined by the procedures in the most recent National Association of Insurance Commissioners Financial Analysis Handbook, shall:
(I) Submit an ORSA summary report to the office once every calendar year.
(II) Notify the office of its proposed annual submission date by December 1, 2016.
b. An insurer not required to submit an ORSA summary report pursuant to sub-subparagraph a. shall:
(I) Submit an ORSA summary report at the request of the office, but not more than once per calendar year.
(II) Notify the office of the proposed submission date within 30 days after the request of the office.
2. An insurer may comply with sub-subparagraph 1.a. or sub-subparagraph 1.b. by providing the most recent and substantially similar ORSA summary report submitted by the insurer, or another member of an insurance group of which the insurer is a member, to the chief insurance regulatory official of another state or the supervisor or regulator of a foreign jurisdiction. For purposes of this subparagraph, a “substantially similar” ORSA summary report is one that contains information comparable to the information described in the ORSA guidance manual as determined by the commissioner of the office. If the report is in a language other than English, it must be accompanied by an English translation.
3. The chief risk officer or chief executive officer of the insurer or insurance group responsible for overseeing the enterprise risk management process must sign the ORSA summary report attesting that, to the best of his or her knowledge and belief, the insurer or insurance group applied the enterprise risk management process described in the ORSA summary report and provided a copy of the report to the board of directors or the appropriate board committee.
4. The ORSA summary report must be prepared in accordance with the ORSA guidance manual. Documentation and supporting information must be maintained by the insurer and made available upon examination pursuant to s. 624.316 or upon the request of the office.
5. The ORSA summary report must include a brief description of material changes and updates since the prior year report.
6. The office’s review of the ORSA summary report must be conducted, and any additional requests for information must be made, using procedures similar to those used in the analysis and examination of multistate or global insurers and insurance groups.
(d) Exemption.—
1. An insurer is exempt from the requirements of this subsection if:
a. The insurer has annual direct written and unaffiliated assumed premium, including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and the National Flood Insurance Program, of less than $500 million; or
b. The insurer is a member of an insurance group and the insurance group has annual direct written and unaffiliated assumed premium, including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and the National Flood Insurance Program, of less than $1 billion.
2. If an insurer is:
a. Exempt under sub-subparagraph 1.a., but the insurance group of which the insurer is a member is not exempt under sub-subparagraph 1.b., the ORSA summary report must include every insurer within the insurance group. The insurer may satisfy this requirement by submitting more than one ORSA summary report for any combination of insurers if any combination of reports includes every insurer within the insurance group.
b. Not exempt under sub-subparagraph 1.a., but the insurance group of which it is a member is exempt under sub-subparagraph 1.b., the insurer must submit to the office the ORSA summary report applicable only to that insurer.
3. The office may require an exempt insurer to maintain a risk management framework, conduct an ORSA, and file an ORSA summary report:
a. Based on unique circumstances, including, but not limited to, the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests;
b. If the insurer has risk-based capital for a company action level event pursuant to s. 624.4085(3), meets one or more of the standards of an insurer deemed to be in hazardous financial condition under s. 624.805, or exhibits qualities of an insurer in hazardous financial condition as determined by the office; or
c. If the office determines it is in the best interest of the state.
4. If an exempt insurer becomes disqualified for an exemption because of changes in premium as reported on the most recent annual statement of the insurer or annual statements of the insurers within the insurance group of which the insurer is a member, the insurer must comply with the requirements of this section effective 1 year after the year in which the insurer exceeded the premium thresholds.
(e) Waiver.—An insurer that does not qualify for an exemption under paragraph (d) may request a waiver from the office based upon unique circumstances. If the insurer is part of an insurance group with insurers domiciled in more than one state, the office must coordinate with the lead state and with the other domiciliary regulators in deciding whether to grant a waiver. In deciding whether to grant a waiver, the office may consider:
1. The type and volume of business written by the insurer.
2. The ownership and organizational structure of the insurer.
3. Any other factor the office considers relevant to the insurer or insurance group of which the insurer is a member.
A waiver granted pursuant to this paragraph is valid until withdrawn by the office.
(3) CORPORATE GOVERNANCE ANNUAL DISCLOSURE.—
(a) Scope.—This section does not prescribe or impose corporate governance standards and internal procedures beyond those required under applicable state corporate law or limit the authority of the office, or the rights or obligations of third parties, under s. 624.316.
(b) Disclosure requirement.—
1.a. An insurer, or insurer member of an insurance group, of which the office is the lead state regulator, as determined by the procedures in the most recent National Association of Insurance Commissioners Financial Analysis Handbook, shall submit a corporate governance annual disclosure to the office by June 1 of each calendar year.
b. An insurer or insurance group not required to submit a corporate governance annual disclosure under sub-subparagraph a. shall do so at the request of the office, but not more than once per calendar year. The insurer or insurance group shall notify the office of the proposed submission date within 30 days after the request of the office.
2. The chief executive officer or corporate secretary of the insurer or the insurance group must sign the corporate governance annual disclosure attesting that, to the best of his or her knowledge and belief, the insurer has implemented the corporate governance practices and provided a copy of the disclosure to the board of directors or the appropriate board committee.
3.a. Depending on the structure of its system of corporate governance, the insurer or insurance group may provide corporate governance information at one of the following levels:
(I) The ultimate controlling parent level;
(II) An intermediate holding company level; or
(III) The individual legal entity level.
b. The insurer or insurance group may make the corporate governance annual disclosure at:
(I) The level used to determine the risk appetite of the insurer or insurance group;
(II) The level at which the earnings, capital, liquidity, operations, and reputation of the insurer are collectively overseen and the supervision of those factors is coordinated and exercised; or
(III) The level at which legal liability for failure of general corporate governance duties would be placed.
An insurer or insurance group must indicate the level of reporting used and explain any subsequent changes in the reporting level.
4. The review of the corporate governance annual disclosure and any additional requests for information shall be made through the lead state as determined by the procedures in the most recent National Association of Insurance Commissioners Financial Analysis Handbook.
5. An insurer or insurance group may comply with this paragraph by cross-referencing other existing relevant and applicable documents, including, but not limited to, the ORSA summary report, Holding Company Form B or F filings, Securities and Exchange Commission proxy statements, or foreign regulatory reporting requirements, if the documents contain information substantially similar to the information described in paragraph (c). The insurer or insurance group shall clearly identify and reference the specific location of the relevant and applicable information within the corporate governance annual disclosure and attach the referenced document if it has not already been filed with, or made available to, the office.
6. Each year following the initial filing of the corporate governance annual disclosure, the insurer or insurance group shall file an amended version of the previously filed corporate governance annual disclosure indicating changes that have been made. If changes have not been made in the previously filed disclosure, the insurer or insurance group should so indicate.
(c) Preparation of the corporate governance annual disclosure.—
1. The corporate governance annual disclosure must be prepared in a manner consistent with this subsection. Documentation and supporting information must be maintained and made available upon examination pursuant to s. 624.316 or upon the request of the office.
2. The corporate governance annual disclosure must be as descriptive as possible and include any attachments or example documents used in the governance process.
3. The insurer or insurance group has discretion in determining the appropriate format of the corporate governance annual disclosure in communicating the required information and responding to inquiries, provided that the corporate governance annual disclosure includes material and relevant information sufficient to enable the office to understand the corporate governance structure, policies, and practices used by the insurer or insurance group.
4. The corporate governance annual disclosure must describe the:
a. Corporate governance framework and structure of the insurer or insurance group.
b. Policies and practices of the most senior governing entity and significant committees.
c. Policies and practices for directing senior management.
d. Processes by which the board, its committees, and senior management ensure an appropriate amount of oversight to the critical risk areas that have an impact on the insurer’s business activities.
(4) CONFIDENTIALITY.—The required filings and related documents submitted pursuant to subsections (2) and (3) are privileged such that they may not be produced in response to a subpoena or other discovery directed to the office, and any such filings and related documents are not admissible in evidence in any private civil action. However, the department or office may use these filings and related documents in the furtherance of any regulatory or legal action brought against an insurer as part of the official duties of the department or office. A waiver of any applicable claim of privilege in these filings and related documents may not occur because of a disclosure to the office under this section, because of any other provision of the Insurance Code, or because of sharing under s. 624.4212. The office or a person receiving these filings and related documents, while acting under the authority of the office, or with whom such filings and related documents are shared pursuant to s. 624.4212, is not permitted or required to testify in any private civil action concerning any such filings or related documents.
(5) USE OF THIRD-PARTY CONSULTANTS.—The office may retain third-party consultants at the expense of the insurer or insurance group for the purpose of assisting it in the performance of its regulatory responsibilities under this section, including, but not limited to, the risk management framework, the ORSA, the ORSA summary report, and the corporate governance annual disclosure. The NAIC or a third-party consultant must agree, in writing, to:
(a) Adhere to confidentiality standards and requirements applicable to the office governing the sharing and use of such filings and related documents as evidenced by specific procedures and protocols for maintaining the confidentiality and security of information shared with the NAIC or a third-party consultant pursuant to this section.
(b) Verify to the office, with notice to the insurer, that the consultant is free of any conflict of interest.
(c) Monitor compliance with applicable confidentiality and conflict of interest standards pursuant to a system of internal procedures.
(d) Not store the information shared pursuant to this section in a permanent database after the underlying analysis is complete.
(e) Provide prompt notice to the office and to the insurer or insurance group regarding any subpoena, request for disclosure, or request for production of the insurer’s filings and related documents submitted pursuant to subsections (2) and (3).
(f) Intervention by an insurer in any judicial or administrative action in which the NAIC or a third-party consultant may be required to disclose confidential information about the insurer shared within the NAIC or a third-party consultant pursuant to this section.
(6) RULE ADOPTION.—The commission may adopt rules to administer this section.
(1) Whenever it appears to the office that any insurer or any director, officer, or employee thereof, or appears to the department that any agent thereof has committed or is about to commit a violation of this part or of any rule or order issued by the commission, office, or department pursuant to this part, the office or department may apply to the circuit court in and for Leon County for an order enjoining the insurer, director, officer, employee, or agent from violating or continuing to violate this part or the rule or order and for other equitable relief as the nature of the case and the interest of the insurer’s policyholders, creditors, and shareholders or the public may require.
(2) Notwithstanding any other provision of law, for the purposes of this part the situs of the ownership of the securities of domestic insurers shall be deemed to be in this state.
(1) Any company failing, without just cause, to file any registration statement or certificate of exemption required to be filed pursuant to commission rules relating to this part or to submit an ORSA summary report or a corporate governance annual disclosure required pursuant to s. 628.8015 shall, in addition to other penalties prescribed under the Florida Insurance Code, be subject to pay a penalty of $100 for each day’s delay, not to exceed a total of $10,000.
(2) Every director or officer of an insurance holding company system who knowingly violates or participates in, or who knowingly directs any of the officers or agents of the company to engage in transactions or make investments which have not been properly filed or approved or which violate commission rules relating to this part, shall pay, in their individual capacity, a civil forfeiture of not more than $5,000 per violation. In determining the amount of the civil forfeiture, the office shall take into account the appropriateness of the forfeiture with respect to the gravity of the violation, and the history of previous violations.
(3) Whenever it appears to the office that any insurer subject to this part or any director, officer, employee, or agent thereof has engaged in any transaction or entered into a contract which violates commission rules relating to this part, the office may order the insurer to cease and desist immediately any further activity under that transaction or contract. The office may also order the insurer to void any such transaction or contract and restore the status quo if this action is in the best interest of the policyholders, creditors, or public.
(4) If the office determines that any person violated s. 628.461, s. 628.801, or s. 628.8015, the violation may serve as an independent basis for disapproving dividends or distributions and for placing the insurer under an order of supervision in accordance with part VI of chapter 624.
(5) Any officer, director, or employee of an insurance holding company system who willfully and knowingly subscribes to, or makes or causes to be made, any false statements, false reports, or false filings with the intent to deceive the office in the performance of its duties under this part is guilty of a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
628.804 Groupwide supervision for international insurance groups.—
(1) As used in this section:
(a) “Groupwide supervisor” means the chief insurance regulatory official for the jurisdiction who is determined by the office to have significant contacts with the international insurance group sufficient to conduct and coordinate groupwide supervision activities.
(b) “International insurance group” means an insurance group operating internationally which includes an insurer.
(2) The office may act as the groupwide supervisor for an international insurance group in which the ultimate controlling person of the group is domiciled in this state.
(3)(a) If the ultimate controlling person is domiciled outside this state, the office, in cooperation with other groupwide supervisors, may:
1. Determine that the office is the appropriate groupwide supervisor for an international insurance group with substantial operations concentrated in this state or in insurance operations conducted by subsidiary insurance companies domiciled in this state; or
2. Acknowledge that another chief insurance regulatory official is the appropriate groupwide supervisor for the international insurance group.
(b) Before issuing a determination, the office must notify the insurer and the ultimate controlling person within the international insurance group and provide the international insurance group with at least 30 days to submit information pertinent to the pending determination.
(4) The commission may adopt rules to administer this section, including rules establishing the criteria for making a determination under paragraph (3)(a), such as the extent of insurance operations in this state and nation; the location of the executive offices, assets and liabilities, and business operations of the international insurance group; the domicile of the ultimate controlling person of the international insurance group; and the similarity of the regulatory systems of other jurisdictions acting or seeking to act as lead groupwide supervisor.
628.805 Supervisory colleges.—In order to assess the business strategy, financial position, legal and regulatory position, risk exposure, risk management, and governance processes, and as part of the examination of individual insurers in accordance with ss. 624.316 and 628.801, the office may participate in a supervisory college with other regulators charged with supervision of the insurer or its affiliates, including other state, federal, and international regulatory agencies. In accordance with s. 624.4212 regarding confidential information sharing, the office may enter into agreements that provide the basis for cooperation between the office and the other regulatory agencies and the activities of the supervisory college. This section does not delegate to the supervisory college the office’s authority to regulate or supervise the insurer or its affiliates under its jurisdiction.
(1) With respect to participation in a supervisory college, the office may:
(a) Initiate the establishment of a supervisory college.
(b) Clarify the membership and participation of other supervisors in the supervisory college.
(c) Clarify the functions of the supervisory college and the role of other regulators, including the establishment of a groupwide supervisor.
(d) Coordinate the ongoing activities of the supervisory college, including planning meetings, supervisory activities, and processes for information sharing.
(e) Establish a crisis management plan.
(2) With respect to an insurer registered under s. 628.801, and in accordance with this section, the office may participate in a supervisory college for any domestic insurer that is part of an insurance holding company system that has international operations in order to determine the insurer’s compliance with this chapter.
(3) Each registered insurer subject to this section is liable for and shall pay reasonable expenses for the office’s participation in a supervisory college, including reasonable travel expenses. A supervisory college may be convened as a temporary or permanent forum for communication and cooperation between the regulators charged with the supervision of the insurer or its affiliates, and the office may impose a regular assessment on the insurer for the payment of these expenses.
628.906 Application requirements; restrictions on eligibility of officers and directors.
628.907 Minimum capital and net assets requirements; restriction on payment of dividends.
628.908 Surplus requirements; restriction on payment of dividends.
628.909 Applicability of other laws.
628.910 Incorporation options and requirements.
628.911 Reports and statements.
628.912 Discounting of loss and loss adjustment expense reserves.
628.913 Captive reinsurance companies.
628.914 Minimum capitalization or reserves for captive reinsurance companies.
628.9141 Incorporation of a captive reinsurance company.
628.9142 Reinsurance; effect on reserves.
628.915 Exemption from compulsory association.
628.917 Insolvency and liquidation.
628.918 Management of assets of captive reinsurance company.
628.919 Standards to ensure risk management control by parent company.
628.920 Eligibility of licensed captive insurance company for certificate of authority to act as insurer.
628.901 Definitions.—As used in this part, the term:
(1) “Affiliated company” means a company in the same corporate system as a parent, an industrial insured, or a member organization by virtue of common ownership, control, operation, or management.
(2) “Captive insurance company” means a domestic insurer established under this part. A captive insurance company includes a pure captive insurance company, special purpose captive insurance company, or industrial insured captive insurance company formed and licensed under this part.
(3) “Captive reinsurance company” means a reinsurance company that is formed and licensed under this part and is wholly owned by a qualifying reinsurance parent company. A captive reinsurance company is a stock corporation and may not directly insure risks. A captive reinsurance company may reinsure only risks.
(4) “Consolidated debt to total capital ratio” means the ratio of the sum of all debts and hybrid capital instruments as described in paragraph (a) to total capital as described in paragraph (b).
(a) Debts and hybrid capital instruments include, but are not limited to, all borrowings from banks, all senior debt, all subordinated debts, all trust preferred shares, and all other hybrid capital instruments that are not included in the determination of consolidated GAAP net worth issued and outstanding.
(b) Total capital consists of all debts and hybrid capital instruments as described in paragraph (a) plus owners’ equity determined in accordance with GAAP for reporting to the United States Securities and Exchange Commission.
(5) “Consolidated GAAP net worth” means the consolidated owners’ equity determined in accordance with generally accepted accounting principles for reporting to the United States Securities and Exchange Commission.
(6) “Controlled unaffiliated business” means a company:
(a) That is not in the corporate system of a parent and affiliated companies;
(b) That has an existing contractual relationship with a parent or affiliated company; and
(c) Whose risks are managed by a captive insurance company in accordance with s. 628.919.
(7) “GAAP” means generally accepted accounting principles.
(8) “Industrial insured” means an insured that:
(a) Has gross assets in excess of $50 million;
(b) Procures insurance through the use of a full-time employee of the insured who acts as an insurance manager or buyer or through the services of a person licensed as a property and casualty insurance agent, broker, or consultant in such person’s state of domicile;
(c) Has at least 100 full-time employees; and
(d) Pays annual premiums of at least $200,000 for each line of insurance purchased from the industrial insured captive insurance company or at least $75,000 for any line of coverage in excess of at least $25 million in the annual aggregate. The purchase of umbrella or general liability coverage in excess of $25 million in the annual aggregate shall be deemed to be the purchase of a single line of insurance.
(9) “Industrial insured captive insurance company” means a company that provides insurance only to the industrial insureds that are its stockholders or members, and affiliates thereof, or to the stockholders, and affiliates thereof, of its parent corporation. An industrial insured captive insurance company can also provide reinsurance to insurers only on risks written by such insurers for the industrial insureds that are the stockholders or members, and affiliates thereof, of the industrial insured captive insurance company, or the stockholders, and affiliates thereof, of the parent corporation of the industrial insured captive insurance company.
(10) “Office” means the Office of Insurance Regulation.
(11) “Parent” means any corporation, limited liability company, partnership, or individual that directly or indirectly owns, controls, or holds with power to vote more than 50 percent of the outstanding voting interests of a captive insurance company.
(12) “Pure captive insurance company” means a company that insures risks of its parent, affiliated companies, controlled unaffiliated businesses, or a combination thereof.
(13) “Qualifying reinsurer parent company” means a reinsurer that currently holds a certificate of authority or qualifies for credit for reinsurance under s. 624.610(3) and possesses a consolidated GAAP net worth of at least $500 million and a consolidated debt to total capital ratio of not greater than 0.50.
(14) “Special purpose captive insurance company” means a captive insurance company that is formed or licensed under this chapter that does not meet the definition of any other type of captive insurance company defined in this section.
(15) “Treasury rates” means the United States Treasury STRIPS asked yield as published in the Wall Street Journal as of a balance sheet date.
(1) A captive insurance company, if permitted by its charter or articles of incorporation, may apply to the office for a license to do any and all insurance authorized under the insurance code, other than workers’ compensation and employer’s liability, life, health, personal motor vehicle, and personal residential property insurance, except that:
(a) A pure captive insurance company may not insure any risks other than those of its parent, affiliated companies, controlled unaffiliated businesses, or a combination thereof.
(b) An industrial insured captive insurance company may not insure any risks other than those of the industrial insureds that comprise the industrial insured group and their affiliated companies, or its stockholders or members, and affiliates thereof, of the industrial insured captive, or the stockholders or affiliates of the parent corporation of the industrial insured captive insurance company.
(c) A special purpose captive insurance company may insure only the risks of its parent.
(d) A captive insurance company may not accept or cede reinsurance except as provided in this part.
(e) An industrial insured captive insurance company with unencumbered capital and surplus of at least $20 million may be licensed to provide workers’ compensation and employer’s liability insurance in excess of $25 million in the annual aggregate. An industrial insured captive insurance company must maintain unencumbered capital and surplus of at least $20 million to continue to write such excess workers’ compensation insurance in Florida.
(2) To conduct insurance business in this state, a captive insurance company must:
(a) Obtain from the office a license authorizing it to conduct insurance business in this state;
(b) Hold at least one board of directors’ meeting each year in this state;
(c) Maintain its principal place of business in this state; and
(d) Appoint a resident registered agent to accept service of process and to otherwise act on its behalf in this state. In the case of a captive insurance company formed as a corporation or a nonprofit corporation, if the registered agent cannot with reasonable diligence be found at the registered office of the captive insurance company, the Chief Financial Officer of this state must be an agent of the captive insurance company upon whom any process, notice, or demand may be served.
(3) Before receiving a license, a captive insurance company formed as a corporation or a nonprofit corporation must file with the office a certified copy of its articles of incorporation and bylaws, a statement under oath of its president and secretary showing its financial condition, and any other statements or documents required by the office. In addition, an applicant captive insurance company must file with the office evidence of:
(a) The amount and liquidity of the proposed captive insurance company’s assets relative to the risks to be assumed;
(b) The adequacy of the expertise, experience, and character of the person or persons who will manage the company;
(c) The overall soundness of the company’s plan of operation;
(d) The adequacy of the loss prevention programs of the company’s parent, member organizations, or industrial insureds, as applicable; and
(e) Any other factors considered relevant by the office in ascertaining whether the company will be able to meet its policy obligations.
(4) A captive insurance company or captive reinsurance company must pay to the office a nonrefundable fee of $1,500 for processing its application for license.
(a) A captive insurance company or captive reinsurance company must also pay an annual renewal fee of $1,000.
(b) The office may charge a fee of $5 for any document requiring certification of authenticity or the signature of a representative of the office.
(5) If the office is satisfied that the documents and statements filed by the captive insurance company comply with this chapter, the office may grant a license authorizing the company to conduct insurance business in this state until the next succeeding March 1, at which time the license may be renewed.
(6) Upon approval of the office, a foreign or alien captive insurance company may become a domestic captive insurance company by complying with all of the requirements of law relative to the organization and licensing of a domestic captive insurance company of the same or equivalent type in this state and by filing with the Secretary of State its charter or other organizational documents, together with any appropriate amendments that have been adopted in accordance with the laws of this state to bring the charter or other organizational documents into compliance with the laws of this state, along with a certificate of good standing issued by the office. The captive insurance company is then entitled to the necessary or appropriate certificates and licenses to continue transacting business in this state and is subject to the authority and jurisdiction of this state. In connection with this redomestication, the office may waive any requirements for public hearings. It is not necessary for a captive insurance company redomesticating into this state to merge, consolidate, transfer assets, or otherwise engage in any other reorganization, other than as specified in this section.
(7) An industrial insured captive insurance company need not be incorporated in this state if it has been validly incorporated under the laws of another jurisdiction.
628.906 Application requirements; restrictions on eligibility of officers and directors.—
(1) To evidence competence and trustworthiness of its officers and directors, the application for a license to act as a captive insurance company or captive reinsurance company shall include, but not be limited to, background investigations, biographical affidavits, and fingerprints for all officers and directors. Fingerprints must be taken by a law enforcement agency or other entity approved by the office, be accompanied by the fingerprint processing fee specified in s. 624.501, and processed in accordance with s. 624.34.
(2) The office may deny, suspend, or revoke the license to transact captive insurance or captive reinsurance in this state if any person who was an officer or director of an insurer, reinsurer, captive insurance company, captive reinsurance company, financial institution, or financial services business doing business in the United States, any state, or under the law of any other country and who served in that capacity within the 2-year period prior to the date the insurer, reinsurer, captive insurance company, captive reinsurance company, financial institution, or financial services business became insolvent, serves as an officer or director of a captive insurance company or officer or director of a captive reinsurance company licensed in this state unless the officer or director demonstrates that his or her personal actions or omissions were not a contributing cause to the insolvency or unless the officer or director is immediately removed from the captive insurance company or captive reinsurance company.
(3) The office may deny, suspend, or revoke the license to transact insurance or reinsurance in this state of a captive insurance company or captive reinsurance company if any officer or director, any stockholder that owns 10 percent or more of the outstanding voting securities of the captive insurance company or captive reinsurance company, or incorporator has been found guilty of, or has pleaded guilty or nolo contendere to, any felony or crime involving moral turpitude, including a crime of dishonesty or breach of trust, punishable by imprisonment of 1 year or more under the law of the United States or any state thereof or under the law of any other country without regard to whether a judgment of conviction has been entered by the court having jurisdiction in such case. However, in the case of a captive insurance company or captive reinsurance company operating under a subsisting license, the captive insurance company or captive reinsurance company shall remove any such person immediately upon discovery of the conditions set forth in this subsection when applicable to such person or upon the order of the office, and the failure to so act shall be grounds for revocation or suspension of the captive insurance company’s or captive reinsurance company’s license.
628.907 Minimum capital and net assets requirements; restriction on payment of dividends.—
(1) A captive insurance company may not be issued a license unless it possesses and thereafter maintains unimpaired paid-in capital of:
(a) In the case of a pure captive insurance company, at least $100,000;
(b) In the case of an industrial insured captive insurance company incorporated as a stock insurer, at least $200,000; and
(c) In the case of a special purpose captive insurance company, an amount determined by the office after giving due consideration to the company’s business plan, feasibility study, and pro forma financial statements and projections, including the nature of the risks to be insured.
(2) The office may not issue a license to a captive insurance company incorporated as a nonprofit corporation unless the company possesses and maintains unrestricted net assets of:
(a) In the case of a pure captive insurance company, at least $250,000.
(b) In the case of a special purpose captive insurance company, an amount determined by the office after giving due consideration to the company’s business plan, feasibility study, and pro forma financial statements and projections, including the nature of the risks to be insured.
(3) Contributions to a captive insurance company incorporated as a nonprofit corporation must be in the form of cash, cash equivalent, or an irrevocable letter of credit issued by a bank chartered by this state or a member bank of the Federal Reserve System with a branch office in this state, or as approved by the office.
(4) For purposes of this section, the office may issue a license expressly conditioned upon the captive insurance company providing to the office satisfactory evidence of possession of the minimum required unimpaired paid-in capital. Until this evidence is provided, the captive insurance company may not issue any policy, assume any liability, or otherwise provide coverage. The office may revoke the conditional license if satisfactory evidence of the required capital is not provided within a maximum period of time, not to exceed 1 year, to be established by the office at the time the conditional license is issued.
(5) The office may prescribe additional capital or net assets based upon the type, volume, and nature of insurance business transacted. Contributions in connection with these prescribed additional net assets or capital must be in the form of:
(a) Cash;
(b) Cash equivalent;
(c) An irrevocable letter of credit issued by a bank chartered by this state or a member bank of the Federal Reserve System with a branch office in this state, or as approved by the office; or
(d) Securities invested as provided in part II of chapter 625.
(6) A captive insurance company may not pay a dividend out of, or other distribution with respect to, capital or surplus in excess of the limitations set forth in this chapter without the prior approval of the office. Approval of an ongoing plan for the payment of dividends or other distributions must be conditioned upon the retention, at the time of each payment, of capital or surplus in excess of amounts specified by, or determined in accordance with formulas approved by, the office.
(7) An irrevocable letter of credit that is issued by a financial institution other than a bank chartered by this state or a member bank of the Federal Reserve System must meet the same standards as an irrevocable letter of credit that has been issued by a bank chartered by this state or a member bank of the Federal Reserve System.
628.908 Surplus requirements; restriction on payment of dividends.—
(1) The office may not issue a license to a captive insurance company unless the company possesses and maintains unimpaired surplus of:
(a) In the case of a pure captive insurance company, at least $150,000.
(b) In the case of an industrial insured captive insurance company incorporated as a stock insurer, at least $300,000.
(c) In the case of an industrial insured captive insurance company incorporated as a mutual insurer, at least $500,000.
(d) In the case of a special purpose captive insurance company, an amount determined by the office after giving due consideration to the company’s business plan, feasibility study, and pro forma financial statements and projections, including the nature of the risks to be insured.
(2) For purposes of this section, the office may issue a license expressly conditioned upon the captive insurance company providing to the office satisfactory evidence of possession of the minimum required unimpaired surplus. Until this evidence is provided, the captive insurance company may not issue any policy, assume any liability, or otherwise provide coverage. The office may revoke the conditional license if satisfactory evidence of the required surplus is not provided within a maximum period of time, not to exceed 1 year, to be established by the office at the time the conditional license is issued.
(3) A captive insurance company may not pay a dividend out of, or other distribution with respect to, capital or surplus in excess of the limitations set forth in this chapter without the prior approval of the office. Approval of an ongoing plan for the payment of dividends or other distribution must be conditioned upon the retention, at the time of each payment, of capital or surplus in excess of amounts specified by, or determined in accordance with formulas approved by, the office.
(4) An irrevocable letter of credit that is issued by a financial institution other than a bank chartered by this state or a member bank of the Federal Reserve System must meet the same standards as an irrevocable letter of credit that has been issued by a bank chartered by this state or a member bank of the Federal Reserve System.
(1) The Florida Insurance Code does not apply to captive insurance companies or industrial insured captive insurance companies except as provided in this part and subsections (2) and (3).
(2) The following provisions of the Florida Insurance Code apply to captive insurance companies who are not industrial insured captive insurance companies to the extent that such provisions are not inconsistent with this part:
(a) Chapter 624, except for ss. 624.407, 624.408, 624.4085, 624.40851, 624.4095, 624.411, 624.425, and 624.426.
(b) Chapter 625, part II.
(c) Chapter 626, part IX.
(d) Sections 627.730-627.7405, when no-fault coverage is provided.
(e) Chapter 628.
(3) The following provisions of the Florida Insurance Code shall apply to industrial insured captive insurance companies to the extent that such provisions are not inconsistent with this part:
(a) Chapter 624, except for ss. 624.407, 624.408, 624.4085, 624.40851, 624.4095, 624.411, 624.425, 624.426, and 624.609(1).
(b) Chapter 625, part II, if the industrial insured captive insurance company is incorporated in this state.
(c) Chapter 626, part IX.
(d) Sections 627.730-627.7405 when no-fault coverage is provided.
(e) Chapter 628, except for ss. 628.341, 628.351, and 628.6018.
(a) Incorporated as a stock insurer with its capital divided into shares and held by the stockholders; or
(b) Incorporated as a public benefit, mutual benefit, or religious nonprofit corporation with members in accordance with the Florida Not For Profit Corporation Act.
(2) An industrial insured captive insurance company may be:
(a) Incorporated as a stock insurer with its capital divided into shares and held by the stockholders; or
(b) Incorporated as a mutual insurer without capital stock, the governing body of which is elected by its members.
(3) A captive insurance company may not have fewer than three incorporators of whom not fewer than two must be residents of this state.
(4) In the case of a captive insurance company formed as a corporation or a nonprofit corporation, before the articles of incorporation are transmitted to the Secretary of State, the incorporators shall file the articles of incorporation in triplicate with the office. The office shall promptly examine the articles of incorporation. If it finds that the articles of incorporation conform to law, it shall endorse its approval on each of the triplicate originals of the articles of incorporation, retain one copy for its files, and return the remaining copies to the incorporators for filing with the Department of State.
(5) The articles of incorporation, the certificate issued pursuant to this section, and the organization fees required by the Florida Business Corporation Act or the Florida Not For Profit Corporation Act, as applicable, must be transmitted to the Secretary of State, who must record the articles of incorporation and the certificate.
(6) The capital stock of a captive insurance company incorporated as a stock insurer must be issued at par value of not less than $1 or more than $100 per share.
(7) In the case of a captive insurance company formed as a corporation or a nonprofit corporation, at least one of the members of the board of directors of a captive insurance company incorporated in this state must be a resident of this state.
(8) A captive insurance company formed as a corporation or a nonprofit corporation, pursuant to the provisions of this chapter, has the privileges and is subject to the provisions of the general corporation law, including the Florida Not For Profit Corporation Act for nonprofit corporations, as applicable, as well as the applicable provisions contained in this chapter. If a conflict occurs between a provision of the general corporation law, including the Florida Not For Profit Corporation Act for nonprofit corporations, as applicable, and a provision of this chapter, the latter controls. The provisions of this title pertaining to mergers, consolidations, conversions, mutualizations, and redomestications apply in determining the procedures to be followed by a captive insurance company in carrying out any of the transactions described in such provisions, except that the office may waive or modify the requirements for public notice and hearing in accordance with rules the office may adopt addressing categories of transactions. If a notice of public hearing is required, but no one requests a hearing, the office may cancel the hearing.
(9) The articles of incorporation or bylaws of a captive insurance company may authorize a quorum of a board of directors to consist of no fewer than one-third of the fixed or prescribed number of directors as provided for by the Florida Business Corporation Act or the Florida Not For Profit Corporation Act.
(1) A captive insurance company may not be required to make any annual report except as provided in this part.
(2) Annually no later than March 1, a captive insurance company or a captive reinsurance company shall submit to the office a report of its financial condition verified by oath of two of its executive officers. Except as provided in this part, a captive insurance company or a captive reinsurance company must report using generally accepted accounting principles, unless the office approves the use of statutory accounting principles, with useful or necessary modifications or adaptations required or approved or accepted by the office for the type of insurance and kinds of insurers to be reported upon, and as supplemented by additional information required by the office. The Financial Services Commission may adopt by rule the form in which captive insurance companies shall report.
(3) A captive insurance company may make written application for filing the required report on a fiscal year end that is consistent with the parent company’s fiscal year. If an alternative reporting date is granted, the annual report is due 60 days after the fiscal year end.
628.912 Discounting of loss and loss adjustment expense reserves.—
(1) A captive reinsurance company may discount its loss and loss adjustment expense reserves at treasury rates applied to the applicable payments projected through the use of the expected payment pattern associated with the reserves.
(2) A captive reinsurance company must file annually an actuarial opinion on loss and loss adjustment expense reserves provided by an independent actuary. The actuary may not be an employee of the captive reinsurance company or its affiliates.
(3) The office may disallow the discounting of reserves if a captive reinsurance company violates a provision of this part.
(1) A captive reinsurance company, if permitted by its articles of incorporation or charter, may apply to the office for a license to write reinsurance covering property and casualty insurance or reinsurance contracts. A captive reinsurance company authorized by the office may write reinsurance contracts covering risks in any state; however, a captive reinsurance company authorized by the office may not directly insure risks.
(2) To conduct business in this state, a captive reinsurance company must:
(a) Obtain from the office a license authorizing it to conduct business as a captive reinsurance company in this state;
(b) Hold at least one board of directors’ meeting each year in this state;
(c) Maintain its principal place of business in this state; and
(d) Appoint a registered agent to accept service of process and act otherwise on its behalf in this state.
(3) Before receiving a license, a captive reinsurance company must file with the office:
(a) A certified copy of its charter and bylaws;
(b) A statement under oath of its president and secretary showing its financial condition; and
(c) Other documents required by the office.
(4) In addition to the information required by this section, the captive reinsurance company must file with the office evidence of:
(a) The amount and liquidity of the captive reinsurance company’s assets relative to the risks to be assumed;
(b) The adequacy of the expertise, experience, and character of the person who manages the company;
(c) The overall soundness of the company’s plan of operation; and
(d) Other overall factors considered relevant by the office in ascertaining if the company would be able to meet its policy obligations.
628.914 Minimum capitalization or reserves for captive reinsurance companies.—
(1) The office may not issue a license to a captive reinsurance company unless the company possesses and maintains capital or unimpaired surplus of at least the greater of $300 million or 10 percent of reserves. The surplus may be in the form of cash or securities as permitted by part II of chapter 625.
(2) The office may prescribe additional capital or surplus based upon the type, volume, and nature of the insurance business transacted.
(3) A captive reinsurance company may not pay a dividend out of, or other distribution with respect to, capital or surplus in excess of the limitations without the prior approval of the office. Approval of an ongoing plan for the payment of dividends or other distributions must be conditioned upon the retention, at the time of each payment, of capital or surplus in excess of amounts specified by, or determined in accordance with formulas approved by, the office.
628.9141 Incorporation of a captive reinsurance company.—
(1) A captive reinsurance company must be incorporated as a stock insurer with its capital divided into shares and held by its shareholders.
(2) A captive reinsurance company may not have fewer than three incorporators of whom at least two must be residents of this state.
(3) Before the articles of incorporation are transmitted to the Secretary of State, the incorporators must comply with all the requirements of s. 628.091.
(4) The capital stock of a captive reinsurance company must be issued at par value of not less than $1 or more than $100 per share.
(5) At least one of the members of the board of directors of a captive reinsurance company incorporated in this state must be a resident of this state.
(1) A captive insurance company may provide reinsurance, as authorized in this part, on risks ceded by any other insurer.
(2) A captive insurance company may take credit for reserves on risks or portions of risks ceded to authorized insurers or reinsurers and unauthorized insurers or reinsurers complying with s. 624.610. A captive insurance company may not take credit for reserves on risks or portions of risks ceded to an unauthorized insurer or reinsurer if the insurer or reinsurer is not in compliance with s. 624.610.
(1) No captive insurance company shall be permitted to join or contribute financially to any joint underwriting association or guaranty fund in this state; nor shall any captive insurance company, its insured, or its parent or any affiliated company receive any benefit from any such joint underwriting association or guaranty fund for claims arising out of the operations of such captive insurer.
(2) No industrial insured captive insurance company shall be permitted to join or contribute financially to any joint underwriting association or guaranty fund in this state; nor shall any industrial insured captive insurance company, its industrial insured, or its parent or any affiliated company receive any benefit from any such joint underwriting association or guaranty fund for claims arising out of the operations of such industrial insured captive insurance company.
628.917 Insolvency and liquidation.—In the event that a captive insurance company is insolvent as defined in chapter 631, the office shall liquidate the captive insurance company pursuant to the provisions of part I of chapter 631; except that the office shall make no attempt to rehabilitate such insurance company.
628.918 Management of assets of captive reinsurance company.—At least 35 percent of the assets of a captive reinsurance company must be managed by an asset manager domiciled in this state.
628.919 Standards to ensure risk management control by parent company.—A pure captive insurance company shall submit to the office for approval standards to ensure that a parent or affiliated company is able to exercise control of the risk management function of any controlled unaffiliated business to be insured by the pure captive insurance company.
628.920 Eligibility of licensed captive insurance company for certificate of authority to act as insurer.—A licensed captive insurance company that meets the necessary requirements of this part imposed upon an insurer must be considered for issuance of a certificate of authority to act as an insurer in this state.
