Title XXV, Business and Financial Institutions

As used in KRS 304.24-600 to 304.24-625, unless the context requires otherwise: (1) "Converting mutual" means a domestic mutual insurer that adopts a plan of conversion under KRS 304.24-603 that will result in the insurer converting into a domestic stock insurer. (2) "Eligible me…

(1) The board of directors of the converting mutual shall adopt a resolution proposing the amendment of its articles of incorporation in accordance with KRS 304.24-080 and proposing a plan of conversion. (2) The plan of conversion shall: (a) Describe the manner in which the propo…

(1) The converting mutual shall file with the commissioner an application for approval of the plan of conversion. (2) The application shall consist of the following: (a) The plan of conversion; (b) A certificate of the secretary of the converting mutual regarding the adoption of …

-- Approval or disapproval. (1) The commissioner shall have ninety (90) days to review the plan of conversion after it is filed. Upon completion of the review, the commissioner shall schedule a public hearing on the plan of conversion. (2) The commissioner shall hold a hearing up…

-- Deposits in anticipation of expenses -- Commissioner may consider effect of insurer's past actions. (1) The commissioner shall approve the plan of conversion if the commissioner finds, following the hearing, that the plan of conversion: (a) Complies with the provisions of this…

members -- Notice of right to vote and accompanying materials -- Voting by proxy. (1) The plan of conversion and the proposed amendment to the articles of incorporation of the converting mutual shall be submitted to a vote of the members of the converting mutual, as provided in t…

(1) Upon the effective date of the plan of conversion: (a) The converting mutual shall be converted from a domestic mutual insurer to a domestic stock insurer, and the former mutual shall have all the rights, privileges, immunities, and powers and shall be subject to all the duti…

(1) The total aggregate consideration to be distributed to the eligible members shall be determined under a fair formula. The total aggregate consideration shall not be less than the converting mutual's total surplus or surplus as regards policyholders; plus the value of all nona…

In determining whether the method or formula in the plan of conversion is fair and equitable, the commissioner may consider the following factors: (1) Voting rights; (2) Number of eligible members; (3) Length of membership in the converting mutual; (4) Premiums paid by members; (…

(1) No dividend preservation provisions shall provide in any way or substitute for the distribution of consideration to eligible members upon extinguishing their membership interests. (2) Any dividend preservation provision may be limited to participating individual life insuranc…

(1) The provisions of this section apply if a closed block is used for the preservation of the reasonable dividend expectations of eligible members and other policyholders. (2) The converting mutual shall prepare a written plan of operation for the closed block, consistent with t…

conversion. (1) Except as specifically provided in the plan of conversion, for a period of five (5) years following the effective date of the conversion, no person or persons acting in concert, other than the former mutual, any affiliate, any employee benefit plans, or trusts spo…

During the one (1) year period following the effective date of the plan of conversion, neither the former mutual nor any affiliate company shall sell or issue, or adopt any plan or benefit program providing for the sale or issuance of, any stock or other equity security except: (…

Enemy attack could seriously disrupt the management functions of an insurance organization. Prompt resumption of insurance operations following attack is in the public interest and requires provision for the continuity of management. It is essential that advance corporate action …

(1) When used in this subtitle, the following terms shall mean and include the following: (a) Acting director. Acting director means an acting director elected or appointed in accordance with this subtitle; (b) Acting officer. Acting officer means an acting officer appointed in a…

(1) With the approval of the commissioner, any domestic organization may, at any time, adopt, in the same manner as in the case of ordinary bylaws, emergency bylaws to become operative during a period of acute emergency. Emergency bylaws may contain provisions with respect to the…

(1) Notwithstanding any provision of its charter, any domestic insurance organization, without complying with any provision of law requiring approval, or application for approval, of a change of location of its principal office may, from time to time, change the location thereof …

(1) Designate additional acting directors. If at any time during an acute emergency, the number of directors or acting directors of a domestic insurance organization who are capable of acting shall be less than three (3), as determined by the commissioner after a reasonable inves…

(1) Presumption. In any action or proceeding it shall be presumed that an acute emergency existing within this state constitutes an acute emergency affecting every insurance organization doing business within this state. (2) Powers of board. During an acute emergency the board of…

The Governor of this state, or his successor in office, alone shall have the power to proclaim and declare the fact that a period of "acute emergency" exists at any time or times, as such term is defined in this subtitle.

This subtitle shall apply only with respect to securities issued by domestic stock insurers.

The term "equity security" when used in this subtitle means: (1) Any stock or similar security; or (2) Any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or (3) Any such warr…

concerning equity securities with commissioner. Every person who is directly or indirectly the beneficial owner of more than ten percent (10%) of any class of any equity security of a domestic stock insurer, or who is a director or an officer of such insurer, shall: (1) File in t…

- Sale of equity securities recoverable by insurer -- Limitation of actions -- Exceptions. (1) For the purpose of preventing the unfair use of information which may have been obtained by such beneficial owner, director, or officer by reason of his or her relationship to such insu…

officer. (1) It is unlawful for any such beneficial owner, director, or officer, directly or indirectly, to sell any equity security of such insurer if the person selling the security or his or her principal: (a) Does not own the security sold; or (b) If the owner of the security…

(1) The provisions of KRS 304.26-040 do not apply to any purchase and sale, or sale and purchase, and the provisions of subsection (1) of KRS 304.26-050 do not apply to any sale, of an equity security of a domestic stock insurer not then or theretofore held by him or her in an in…

The provisions of KRS 304.26-030 and 304.26-040 and subsection (1) of KRS 304.26- 050, do not apply to foreign or domestic arbitrage transactions unless made in contravention of such rules and regulations as the commissioner may adopt in order to carry out the purposes of this su…

securities of domestic stock insurers. The provisions of KRS 304.26-030 to 304.26-050, inclusive, do not apply to equity securities of a domestic stock insurer if: (1) Such securities are registered, or are required to be registered, pursuant to Section 12 of the Securities Excha…

-- Acts done or omitted in good faith. (1) The commissioner shall have the power to make such rules and regulations as may be necessary for the execution of the functions vested in him or her by KRS 304.26- 030 to 304.26-080, inclusive, and may for such purpose classify domestic …

"Reciprocal insurance" is that resulting from an inter-exchange among persons, known as "subscribers," of reciprocal agreements of indemnity, the inter-exchange being effectuated through an "attorney-in-fact" common to all such persons.

(1) All authorized reciprocal insurers shall be governed by those sections of this subtitle not expressly made applicable to domestic reciprocals. (2) Existing authorized reciprocal insurers shall after June 18, 1970, comply with the provisions of this subtitle, and shall make su…

(1) A reciprocal insurer may, upon qualifying therefor as provided for by this code, transact any kind or kinds of insurance defined by this code, other than life, title, or mortgage guaranty insurances. (2) Such an insurer may purchase reinsurance upon the risk of any subscriber…

A reciprocal insurer: (1) Shall have and use a business name. The name shall include the word "reciprocal," or "interinsurer," or "interinsurance," or "exchange," or "underwriters," or "underwriting," or "association." (2) May sue and be sued in its own name.

(1) "Attorney," as used in this subtitle, refers to the attorney-in-fact of a reciprocal insurer. The attorney may be an individual, firm or corporation. (2) The attorney of a foreign reciprocal insurer, which insurer is duly authorized to transact insurance in this state, shall …

(1) Twenty-five (25) or more persons domiciled in this state may organize a domestic reciprocal insurer and make application to the commissioner for a certificate of authority to transact insurance. (2) The proposed attorney shall fulfill the requirements of and shall execute and…

(1) The certificate of authority of a reciprocal insurer shall be issued to its attorney in the name of the insurer. (2) The commissioner may refuse, suspend or revoke the certificate of authority, in addition to other grounds therefor, including those provided in Subtitles 2 and…

(1) The rights and powers of attorney of a reciprocal insurer shall be as provided in the power of attorney given it by the subscribers. (2) The power of attorney must set forth: (a) The powers, duties and compensation of the attorney; (b) That the attorney is empowered to accept…

Modification of the terms of the subscribers' agreement or of the power of attorney of a domestic reciprocal insurer shall be made jointly by the attorney and the subscribers' advisory committee. No such modification shall be effective retroactively, nor as to any insurance contr…

(1) Concurrently with the filing of the declaration provided for in KRS 304.27-060, the attorney of a domestic reciprocal insurer shall file with the commissioner a bond in favor of this state for the benefit of all persons damaged as a result of breach by the attorney of the con…

In lieu of such bond, the attorney may maintain on deposit with the commissioner a like amount in cash or in value of securities qualified under this code as insurer's investments, and subject to the same conditions as the bond.

Action on the attorney's bond or to recover against any such deposit made in lieu thereof may be brought at any time by one (1) or more subscribers suffering loss through a violation of its conditions, or by a receiver or liquidator of the insurer. Amounts recovered on the bond s…

(1) Legal process shall be served upon a domestic reciprocal insurer by serving the insurer's attorney at his principal offices or by serving the Secretary of State as the insurer's process agent, as provided in KRS 304.3-230. (2) Any judgment based upon legal process so served s…

The attorney or other parties may advance to a domestic reciprocal insurer upon reasonable terms such funds as it may require from time to time in its operations. Sums so advanced shall not be treated as a liability of the insurer, and except upon liquidation of the insurer, shal…

(1) The annual statement of a reciprocal insurer shall be made and filed by its attorney. (2) The statement shall be supplemented by such information as may be required by the commissioner relative to the affairs and transactions of the attorney.

In determining the financial condition of a reciprocal insurer the commissioner shall apply the following rules: (1) The commissioner shall charge as liabilities the same reserves as are required of incorporated insurers issuing nonassessable policies on a reserve basis; (2) The …

(1) Individuals, partnerships and corporations of this state may make application, enter into an agreement for, and hold policies or contracts in or with, and be a subscriber of any domestic, foreign or alien reciprocal insurer. Any corporation organized under the laws of this st…