{"data":{"id":"us-nc/n.c.-gen.-stat.-58-10-10","jurisdiction":"us-nc","citation":"N.C. Gen. Stat. § 58-10-10","heading":"Mutual to stock insurer conversion.","body":"(a)\tA domestic mutual insurer may convert to a domestic stock insurer under a plan that is approved in advance by the Commissioner.\n(b)\tThe Commissioner shall not approve the plan unless:\n(1)\tIt is fair and equitable to the insurer's policyholders.\n(2)\tIt is adopted by the insurer's board of directors in accordance with the insurer's bylaws and approved by a vote of not less than two-thirds of the insurer's members voting on it in person, by proxy, or by mail at a meeting called for the purpose of voting on the plan, pursuant to reasonable notice and procedure as approved by the Commissioner. If the company is a life insurer, the right to vote may be limited, as its bylaws provide, to members whose policies are other than term or group policies and have been in effect for more than one year.\n(3)\tEach policyholder's equity in the insurer is determinable under a fair and reasonable formula approved by the Commissioner. The equity shall be based upon the insurer's entire statutory surplus after deducting certificates of contribution, guaranty capital certificates, and similar evidences of indebtedness included in an insurer's statutory surplus.\n(4)\tThe policyholders entitled to vote on the plan and participate in the purchase of stock and distribution of assets include all policyholders on the date the plan was adopted by the insurer's board of directors.\n(5)\tThe plan provides that each policyholder specified in subdivision (4) of this subsection receives a preemptive right to acquire a proportionate part of all of the proposed capital stock of the insurer or of all of the stock of a corporation affiliated with the insurer within a designated reasonable period as the part is determinable under the plan of conversion; and to apply toward the purchase of the stock the amount of the policyholder's equity in the insurer under subdivision (3) of this subsection. The plan must provide for an equitable distribution of fractional interests.\n(6)\tThe plan provides for payment to each policyholder of the policyholder's entire equity in the insurer; with that payment to be applied toward the purchase of stock to which the policyholder is entitled preemptively or to be made in cash, or both. The cash payment may not exceed fifty percent (50%) of each policyholder's equity. The stock purchased, together with the cash payment, if any, shall constitute full payment and discharge of the policyholder's equity as an owner of the mutual insurer.\n(7)\tShares are to be offered to policyholders at a price not greater than that of shares to be subsequently offered to others.\n(8)\tThe Commissioner finds that the insurer's management has not, through reduction of volume of new business written, through policy cancellations, or through any other means, sought to (i) reduce, limit, or affect the number or identity of the insurer's members entitled to participate in the plan or (ii) secure for the individuals constituting management any unfair advantage through the plan.\n(9)\tThe plan, when completed, provides that the insurer's capital and surplus are not less than the minimum required of a domestic stock insurer transacting the same kinds of insurance, are reasonable in relation to the insurer's outstanding liabilities, and are adequate to meet its financial needs.\n(c)\tWith respect to an insurer with a guaranty capital, the conversion plan shall be approved by a vote of not less than two-thirds of the insurer's guaranty capital shareholders and policyholders as provided for in subdivision (b)(2) of this section. The plan may provide for the issuance of stock in exchange for outstanding guaranty capital shares at their redemption value subject to the conditions in subsection (b) of this section.\n(d)\tThe Commissioner may schedule a public hearing on the proposed conversion plan.\n(e)\tThe Commissioner may retain, at the mutual insurer's expense, any attorneys, actuaries, economists, accountants, or other experts not otherwise a part of the Commissioner's staff as may be reasonably necessary to assist the Commissioner in reviewing the proposed conversion plan.\n(f)\tThe corporate existence of the mutual company continues in the stock company created under this section. All assets, rights, franchises, and interests of the former mutual insurer, in and to real or personal property, are deemed to be transferred to and vested in the stock insurer, without any other deed or transfer; and the stock insurer simultaneously assumes all of the obligations and liabilities of the former mutual insurer.\n(g)\tNo director, officer, or employee of the insurer shall receive:\n(1)\tAny fee, commission, compensation, or other valuable consideration for aiding, promoting, or assisting in the conversion of the mutual insurer to a domestic stock insurer, other than compensation paid to any director, officer, or employee of the insurer in the ordinary course of business; or\n(2)\tAny distribution of the assets, surplus, or capital of the insurer as part of a conversion.\n(h)\tThe Commissioner may adopt rules to carry out the provisions of this section. (1999-369, s. 6; 2001-223, s. 9.5.)","path":["Chapter 58. Insurance.","Article 10. Miscellaneous Insurer Financial Provisions.","Part 1. Conversion of Stock and Mutual Insurers."],"source_url":"https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_58/GS_58-10-10.html","current_through":"S.L. 2026-30","vintage":"","retrieved_at":"2026-08-27T18:06:53Z","sha256":"fe334d213ce730f6f1ee4225b78ab5625c58ef386a89f06f7aafcd5654865faa","source_id":"us-nc","stale":false,"prev":"us-nc/n.c.-gen.-stat.-58-10-5","next":"us-nc/n.c.-gen.-stat.-58-10-12"},"notice":"GroundRules: Original legal text. Not legal advice."}