USA Statutes : nevada
Title : Title 57 - INSURANCE
Chapter : CHAPTER 693A - CORPORATE POWERS AND PROCEDURES OF DOMESTIC STOCK AND MUTUAL INSURERS


      1.  Except as provided in subsection 2, this chapter applies only
to domestic stock insurers and domestic mutual insurers.

      2.  Subsection 3 of NRS 693A.050 also applies to foreign and alien insurers
whose principal United States offices are located in this state; and
subsection 5 of NRS 693A.250 applies
to the issuance of nonassessable policies by foreign mutual insurers.

      (Added to NRS by 1971, 1797)

 Domestic stock and mutual insurers shall be governed by the applicable
provisions of the general statutes of this state relating to private
corporations as such statutes are constituted on January 1, 1972, or may
thereafter be constituted, except where such general statutes are in
conflict with the express provisions of this Code and the reasonable
implications of such provisions, in which case the provisions of this
Code shall govern.

      (Added to NRS by 1971, 1798)


      1.  Except as otherwise provided in subsections 2, 3 and 4, a
domestic insurer formed before, on or after January 1, 1972, shall not
engage in any business other than the insurance business and in business
activities reasonably and necessarily incidental to the insurance
business.

      2.  A title insurer may also engage in business as an escrow agent.

      3.  Any insurer may also engage in business activities reasonably
related to the management, supervision, servicing of and protection of
its interests as to its lawful investments, and to the full utilization
of its facilities.

      4.  An insurer may own subsidiaries which may engage in such
businesses as are provided for in NRS 682A.130 .

      (Added to NRS by 1971, 1798; A 1997, 1628)


      1.  Except as provided in subsection 2, every domestic insurer
shall have and maintain its principal office and principal place of
business in this state.

      2.  The Commissioner for good cause shown may permit an insurer to
have and maintain such office or place of business in another state if
found by the Commissioner to be in the best interests of the insurer and
its policyholders and reasonably convenient to the Commissioner in his
supervision of the insurer, all subject to such reasonable terms and
conditions as the Commissioner shall, by his order granting such
permission, establish.

      (Added to NRS by 1971, 1798)


      1.  Every domestic insurer shall keep at its principal place of
business its books, records, documents, accounts and vouchers in such a
manner that its financial condition can be ascertained and that its
financial statements filed with the Commissioner can readily be verified
and its compliance with the law determined.

      2.  No insurer shall make any disbursement of $25 or more, unless
evidenced by a voucher or other document correctly describing the
consideration for the payment and supported by a check or receipt
endorsed or signed by or on behalf of the person receiving the money. If
the disbursement is for services and reimbursement, the voucher or other
document, or some other writing referred to therein, shall describe the
services and itemize the expenditures. If the disbursement is in
connection with any matter pending before any Legislature or public body
or before any public officer, the voucher or other document shall also
correctly describe the nature of the matter and the nature of the
insurer’s interest therein.

      3.  All such books, records, documents, accounts and vouchers of a
domestic insurer, or of any principal United States office of a foreign
or alien insurer located in this State, shall be preserved and kept
available for the purposes of examination and until authority to destroy
or otherwise dispose of such records is secured from the Commissioner.

      4.  Any director, officer, agent or employee of any insurer who
destroys any such books, records or documents without the authority of
the Commissioner in violation of this section is guilty of a gross
misdemeanor.

      (Added to NRS by 1971, 1798)


      1.  Every domestic insurer shall keep its assets within the State
of Nevada, except where requisite for the normal transaction of its
business.

      2.  This section does not apply to:

      (a) Assets maintained at the insurer’s principal place of business
located outside this State with the Commissioner’s permission granted
under NRS 693A.040 ;

      (b) Securities on deposit with or through the insurance supervisory
officer of another state, province or country as a condition to authority
for the transaction of insurance business by the insurer in that state,
province or country; and

      (c) Negotiable securities held in book entry form through the
United States banking system and recorded in the name of the domestic
insurer or its nominee by the authorized transfer agency or trustee of
the security.

      (Added to NRS by 1971, 1799; A 1991, 647)


      1.  A person shall not remove all or any material part of the
records or assets of a domestic insurer from this State except pursuant
to a plan of merger, consolidation or bulk reinsurance approved by the
Commissioner under this Code, or for such other reasonable purposes and
periods of time as may be permissible under NRS 693A.050 and 693A.060 , or as may have been approved by the
Commissioner in writing in advance of such removal.

      2.  A person shall not conceal any such records or assets from the
Commissioner.

      3.  A person who unlawfully removes or attempts to remove such
records or assets or such material part thereof from the principal place
of business of the insurer or place of safekeeping thereof, or who
unlawfully conceals or attempts to conceal the same from the
Commissioner, is guilty of a category D felony and shall be punished as
provided in NRS 193.130 .

      4.  Upon any unlawful removal or attempted removal of such records
or assets, or upon retention of such records or assets or material part
thereof outside this State in violation of the terms of the applicable
consent of the Commissioner, or upon any unlawful concealment of or
attempt to conceal records or assets, the Commissioner may, in his
discretion, institute delinquency proceedings against the insurer
pursuant to chapter 696B of NRS
(conservation, rehabilitation and liquidation).

      (Added to NRS by 1971, 1799; A 1995, 1319)


      1.  This section and NRS 693A.090 and 693A.100 apply to all domestic stock insurers except:

      (a) A domestic stock insurer having of record less than 100 holders
of any class of equity securities; but if 95 percent or more of the
insurer’s equity securities are owned or controlled by a parent or an
affiliated insurer, this section and NRS 693A.090 and 693A.100 do not apply to such insurer unless its
remaining securities are held of record by 500 or more persons; and

      (b) Domestic stock insurers which, relative to the voting or other
securities involved, file with the Securities and Exchange Commission
forms of proxies, consents and authorizations pursuant to the Securities
Exchange Act of 1934, as amended.

      2.  The Commissioner shall have authority to make and promulgate
reasonable rules and regulations for the effectuation of this section and
NRS 693A.090 and 693A.100 , and in so doing shall give due
consideration to rules and regulations promulgated for similar purposes
by the insurance supervisory officers of other states.

      (Added to NRS by 1971, 1800)
 Every insurer to which this
section and NRS 693A.080 and 693A.100
apply shall seasonably furnish to its
stockholders, in advance of stockholder meetings, information in writing
reasonably adequate to inform them relative to all matters to be
presented by the insurer’s management for consideration of stockholders
at such meeting.

      (Added to NRS by 1971, 1800)


      1.  No person shall solicit a proxy, consent or authorization in
respect of any stock or other voting security of such an insurer unless
he furnishes the person so solicited with written information reasonably
adequate as to:

      (a) The material matters in regard to which the powers so solicited
are proposed to be used; and

      (b) The person or persons on whose behalf the solicitation is made,
and the interest of such person or persons in relation to such matters.

      2.  No person shall so furnish to another information which the
informer knows or has reason to believe is false or misleading as to any
material fact, or which fails to state any material fact reasonably
necessary to prevent any other statement made from being misleading.

      3.  The form of all such proxies shall:

      (a) Conspicuously state on whose behalf the proxy is solicited;

      (b) Provide for dating the proxy;

      (c) Impartially identify each matter or group of related matters
intended to be acted upon;

      (d) Provide means for the principal to instruct the vote of his
shares as to approval or disapproval of each matter or group, other than
election to office; and

      (e) Be legibly printed, with context suitably organized,

Ê but a proxy may confer discretionary authority as to matters as to
which a choice is not specified pursuant to paragraph (d), if the form
conspicuously states how it is intended to vote the proxy or
authorization in each such case, and may confer discretionary authority
as to other matters which may come before the meeting but unknown for a
reasonable time prior to the solicitation by the persons on whose behalf
the solicitation is made.

      4.  No proxy shall confer authority to:

      (a) Vote for the election of any person to any office for which a
bona fide nominee is not named in the proxy statement; or

      (b) Vote in any annual meeting (or adjournment thereof) other than
the annual meeting next following the date on which the proxy statement
and form were furnished stockholders.

      5.  Any proxy, consent or authorization obtained in violation of,
or which violates, this section or the lawful rules and regulations of
the Commissioner relating thereto is void.

      (Added to NRS by 1971, 1800)


      1.  After January 1, 1972, a domestic insurer shall not make any
contract whereby any person is granted or is to enjoy in fact the
management of the insurer to the material exclusion of its board of
directors or to have the controlling or preemptive right to produce
substantially all insurance business for the insurer, or, if an officer,
director or otherwise part of the insurer’s management, is to receive any
commission, bonus or compensation based upon the volume of the insurer’s
business or transactions, unless the contract is filed with and not
disapproved by the Commissioner. The contract must become effective in
accordance with its terms unless disapproved by the Commissioner within
20 days after the date of filing, subject to such reasonable extension of
time as the Commissioner may require by notice given within such 20 days.
Any disapproval must be delivered to the insurer in writing stating the
grounds therefor.

      2.  Any such contract must provide that any such manager, producer
of its business or contract holder 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 the previous calendar year, with
specification of 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 Commissioner shall disapprove any such contract if he 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 stockholders or members of the insurer.

      4.  The Commissioner may, after a hearing held thereon, disapprove
any such contract theretofore permitted to become effective, if he finds
that the contract should be disapproved on any of the grounds specified
in subsection 3.

      5.  This section does not apply to contracts entered into before
January 1, 1972, or to extensions or amendments of such contracts.

      6.  The Commissioner may adopt regulations governing the management
and agency contracts of insurers.

      (Added to NRS by 1971, 1801; A 1995, 1777)


      1.  Any officer or director, or any member of any committee or an
employee of a domestic insurer, having the duty or power of investing or
handling the insurer’s funds, shall not:

      (a) Deposit or invest such funds except in the insurer’s name;

      (b) Borrow the fund of the insurer, or be pecuniarily interested in
any loan, pledge, deposit, security, investment, sale, purchase,
exchange, reinsurance or other similar transaction or property of the
insurer except as a stockholder, member, employee or director, unless the
transaction is authorized or approved by the insurer’s board of
directors, with the knowledge and recording of such pecuniary interest,
by an affirmative vote of not less than two-thirds of the directors; and

      (c) Take or receive to his own use any fee, brokerage, commission,
gift or other similar consideration for or on account of any such
transaction made by or on behalf of the insurer.

      2.  No insurer shall guarantee the financial obligation of any of
its officers or directors.

      3.  This section does not prohibit:

      (a) Such a director, officer, member of a committee or employee
from becoming a policyholder of the insurer and enjoying the usual rights
of a policyholder or from participating as beneficiary in any pension
trust, deferred compensation plan, profit-sharing plan, stock option plan
or similar plan authorized by the insurer and to which he may be
eligible; or

      (b) Any director or member of a committee from receiving a
reasonable fee for lawful services actually rendered to the insurer.

      4.  The Commissioner may, by regulation from time to time, define
and permit additional exceptions to the prohibitions contained in
subsection 1 solely to enable payment of reasonable compensation to a
director who is not otherwise an officer or employee of the insurer, or
to a corporation or firm in which a director is interested, for necessary
services performed or sales or purchases made to or for the insurer in
the ordinary course of the insurer’s business and in the usual private,
professional or business capacity of such director, corporation or firm.

      (Added to NRS by 1971, 1802)
 No director, trustee, officer or agent of any insurer
shall be subject to personal liability by reason of any payment or any
determination not to contest or seek recovery of any payment made
subsequent to June 4, 1944, by or on behalf of such insurer on account of
any tax, license, fee, deposit or other charge paid pursuant to the terms
of any statute, law or ordinance of this or any other state, county, city
or taxing authority, unless prior to such payment or determination such
statute, law or ordinance has been expressly held invalid by the state
court having final appellate jurisdiction in the premises or by the
Supreme Court of the United States.

      (Added to NRS by 1971, 1803)


      1.  A domestic stock insurer shall not pay any cash dividend to
stockholders except out of that part of its available and accumulated
surplus money otherwise unrestricted and derived from realized net
operating profits and realized and unrealized capital gains.

      2.  A stock dividend may be paid out of any available surplus. Upon
payment of such a dividend the insurer shall transfer to its paid-in
capital stock accounts money equal to the aggregate of the par values of
the shares so distributed.

      3.  A domestic stock insurer may declare and distribute a dividend
otherwise prohibited by this section if:

      (a) Following the payment of the dividend, the insurer’s surplus as
regards policyholders is reasonable in relation to its outstanding
liabilities and adequate to its financial needs, as determined pursuant
to NRS 692C.370 ; and

      (b) The Commissioner approves the dividend before its payment.

      (Added to NRS by 1971, 1803; A 1995, 1778)


      1.  If provided for in its articles of incorporation or charter, a
stock insurer or mutual insurer may:

      (a) Issue any or all of its policies or contracts with or without
participation in profits, savings, unabsorbed portions of premiums or
surplus;

      (b) Classify policies issued and perils insured on a participating
and nonparticipating basis; and

      (c) Determine the right to participate and the extent of
participation of any class or classes of policies.

Ê Any such classification or determination shall be reasonable, and shall
not unfairly discriminate as between policies so classified.

      2.  A life insurer may issue both participating and
nonparticipating policies or contracts if the right or absence of the
right to participate is reasonably related to the premium charged.

      3.  After the first policy year, no dividend, otherwise earned,
shall be made contingent upon the payment of the renewal premium on any
policy or contract; but a participating life or health insurance policy
providing for participation at the end of the first or second policy year
or the first and second policy year may provide that such dividend or
dividends will be paid subject to payment of the premium for the next
ensuing year.

      (Added to NRS by 1971, 1803)


      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, net
realized earnings and net realized capital gains, all in excess of the
surplus required by law to be maintained by the insurer.

      2.  Subject to NRS 688A.380
(participating, nonparticipating policies; accounting, allocations,
dividends), a domestic stock insurer may pay dividends to holders of its
participating policies out of its available surplus.

      3.  No such dividend shall be paid which is inequitable, or which
unfairly discriminates between classifications of policies or policies
within the same classification.

      (Added to NRS by 1971, 1804)
 A domestic
insurer shall have the right to purchase or acquire shares of its own
stock only as follows:

      1.  For elimination of fractional shares.

      2.  Incidental to the enforcement of rights of the insurer with
respect to lawful transactions previously entered into in good faith for
purposes other than the acquisition of such shares.

      3.  For the purposes of a general savings and investment plan for
employees of the insurer.

      4.  For mutualization of the insurer, as provided in NRS 693A.290
.

      5.  For purposes as stated under a plan for such acquisition
submitted to and approved in writing by the Commissioner. The
Commissioner shall not approve a plan unless found by him to be for
proper purposes, to be reasonable, fair and equitable as to the remaining
stockholders of the insurer, and not materially adverse to the protection
of the insurer’s policyholders.

      6.  As the result of a gift or bequest of the shares to the insurer.

      7.  By call for redemption and cancellation of a callable class of
stock in accordance with provisions of the insurer’s articles of
incorporation.

      (Added to NRS by 1971, 1804)


      1.  A domestic stock or mutual insurer may without pledge of assets
borrow money to defray expenses of its organization, provide 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. The agreement may provide
for interest not exceeding 6 percent per annum, which interest 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, except that if a public offering and sale is made of the loan
securities the insurer may pay the reasonable costs thereof approved by
the Commissioner.

      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 shall be subject to the Commissioner’s approval.
The insurer shall, in advance of the loan, file with the Commissioner a
statement of the purpose of the loan and a copy of the proposed loan
agreement. The loan and agreement shall be deemed approved unless within
15 days after the date of such filing the insurer is notified of the
Commissioner’s disapproval and the reasons therefor. The Commissioner
shall disapprove any proposed loan or agreement if he finds the loan is
unnecessary or excessive for the purpose intended, or 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 mutual insurer or 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 mutual insurer unless approved in advance by the
Commissioner.

      5.  This section does not apply to other kinds of loans obtained by
the insurer in the ordinary course of business, or to loans secured by a
pledge or mortgage of assets.

      (Added to NRS by 1971, 1805)
 A
domestic mutual insurer after being authorized to transact one kind of
insurance may be authorized to transact such additional kinds of
insurance as are permitted under NRS 680A.120 , if otherwise complying with this Code and
maintaining unimpaired surplus funds in an amount not less than the
amount of paid-in capital stock and surplus required to be maintained by
a domestic stock insurer transacting like kinds of insurance. When first
so authorized to transact an additional kind of insurance, the domestic
mutual insurer shall be subject to the additional expendable surplus
requirements of NRS 680A.120
applicable to a stock insurer.

      (Added to NRS by 1971, 1805)


      1.  Each policyholder of a domestic mutual insurer, other than a
policyholder of a reinsurance contract, is a member of the insurer during
the period of the insurance with all the rights and obligations of such
membership, and the policy shall so specify.

      2.  Any person, government or governmental agency or institution,
estate, trustee or fiduciary may be a member of a mutual insurer.

      (Added to NRS by 1971, 1806)
 Every domestic mutual
insurer shall promptly file with the Commissioner a copy, certified by
the insurer’s secretary, of its bylaws and of every modification thereof
or addition thereto. The bylaws and modifications thereof shall be
subject to the Commissioner’s approval. The Commissioner shall not
disapprove any such bylaw or modification unless found by him, after a
hearing held thereon, to be unlawful, unreasonable, inadequate, unfair or
injurious 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.

      (Added to NRS by 1971, 1806)


      1.  Except as otherwise provided in NRS 693A.250 with respect to nonassessable policies, each
member of a domestic mutual insurer shall have a contingent liability,
pro rata and not one for another, for the discharge of its obligations
incurred while such member was a policyholder of the insurer, which
contingent liability shall be in such maximum amount, not less than one
nor more than six times the premium for the member’s policy at the annual
premium rate, as shall be specified in the insurer’s articles of
incorporation.

      2.  Every policy issued by the insurer shall contain a statement of
the contingent liability.

      3.  Termination of the policy of any such member shall not relieve
the member of contingent liability for his proportion of the obligations
of the insurer which accrued while the policy was in force.

      4.  Unrealized contingent liability of members does not constitute
an asset of the insurer in any determination of its financial condition.

      (Added to NRS by 1971, 1806)


      1.  If at any time the assets of a domestic mutual insurer are less
than its liabilities and the minimum amount of surplus required to be
maintained by it under this Code for authority to transact the kinds of
insurance being transacted, and the deficiency is not cured from other
sources, its directors may, if the same is approved by the Commissioner
as being reasonable and in the best interests of the insurer and its
members, levy an assessment only on its members who held policies
providing for contingent liability at any time within the 12 months next
preceding the date the levy was authorized by the board of directors, and
such members shall be liable to the insurer for the amount so assessed.

      2.  The levy of assessment shall be for such an amount as is
required to cure such deficiency and to provide a reasonable amount of
working funds above such minimum amount of surplus, but such working
funds so provided shall not exceed 5 percent of the sum of the insurer’s
liabilities and such minimum required surplus as of the date of the levy.

      3.  As to the respective policies subject to the levy, the
assessment shall be computed upon the basis of the premium earned during
the period covered by the levy.

      4.  No member shall have an offset against any assessment for which
he is liable, on account of any claim for unearned premium or loss
payable.

      5.  As to life insurance, any part of such an assessment upon a
member which remains unpaid following a notice of assessment, demand for
payment and lapse of a reasonable waiting period as specified in such
notice may, if approved by the Commissioner as being in the best
interests of the insurer and its members, be secured by placing a lien
upon the cash surrender values and accumulated dividends held or to be
held by the insurer to the credit of the member’s policy.

      (Added to NRS by 1971, 1806)


      1.  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. 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.

      2.  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.

      (Added to NRS by 1971, 1807)


      1.  A domestic mutual insurer, by depositing through the
Commissioner and thereafter maintaining unimpaired surplus funds not less
in amount than the minimum paid-in capital stock and surplus required of
a domestic stock insurer for authority to transact the same kind or kinds
of insurance, may, upon receipt of the Commissioner’s order so
authorizing, extinguish the contingent liability to assessment of its
members as to all its policies in force and, so long as such surplus and
deposit are maintained, may omit provisions imposing contingent liability
in all policies currently issued. Any deposit of the insurer made through
the Commissioner as a prerequisite to its certificate of authority may be
included as part of the deposit required under this section.

      2.  The Commissioner shall not authorize a domestic insurer to
extinguish the contingent liability of any of its members or in any of
its policies to be issued, unless it qualifies to and does extinguish
such liability of all its members and in all such policies for all kinds
of insurance transacted by it.

      3.  The Commissioner shall revoke the authority of a domestic
mutual insurer to issue policies without contingent liability if:

      (a) The insurer’s assets are less than the sum of its liabilities
and the surplus required for such authority and such deficiency is not
cured within 30 days after written notice thereof to the insurer by the
Commissioner; or

      (b) The insurer, by resolution of its board of directors approved
by a majority of its members, requests that the authority be revoked.

      4.  During the absence of such authority the insurer shall not
issue any policy without providing therein for the contingent liability
of the policyholder, or renew any policy which is then in force without
endorsing the same to provide for such contingent liability.

      5.  A foreign mutual insurer may issue nonassessable policies to
its members in this state as authorized by its charter and the laws of
the state or country of its domicile, if the requirements for issuance of
such policies are substantially equal to or higher than those applicable
to domestic insurers under this Code.

      (Added to NRS by 1971, 1807)


      1.  If at any time the amount of assets of a domestic stock or
mutual insurer are less than the sum of its liabilities plus its paid-in
capital stock and minimum surplus required to be maintained (in the case
of a stock insurer), or the minimum surplus required to be maintained (in
the case of a mutual insurer), under this Code for authority to transact
the kinds of insurance being transacted, the Commissioner shall at once
determine the amount of the deficiency and give written notice to the
insurer of the amount of impairment and require that the impairment be
cured and proof thereof filed with him within such period, not less than
30 days nor more than 90 days from date of the notice, as he may
designate.

      2.  If the impairment of assets is 10 percent or less of the
combined required paid-in capital stock and surplus (as to a stock
insurer) or surplus (as to a mutual insurer), and the Commissioner
believes that the impairment might be made good by an extension of time,
he may extend the time within which the impairment may be cured by not to
exceed an additional 90 days.

      3.  The Commissioner shall require such restriction of, or
arrangements as to, operations of the insurer while the impairment exists
as he deems advisable for the protection of policyholders, the insurer or
the public.

      (Added to NRS by 1971, 1808)


      1.  A deficiency referred to in NRS 693A.260 may be made good in whole or in part in cash
or in assets eligible under chapter 682A of
NRS (investments) for 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 stock and surplus (if a stock insurer) or surplus (if a
mutual insurer) under this Code, or, if a stock insurer, by reduction of
its capital stock to an amount of authorized and unimpaired paid-in
capital stock not below the minimum thereof required for the kinds of
insurance thereafter to be transacted.

      2.  If the deficiency is not made good and proof thereof filed with
the Commissioner within the period required under NRS 693A.260 , the insurer shall be deemed insolvent and
the Commissioner shall institute delinquency proceedings against it under
chapter 696B of NRS.

      (Added to NRS by 1971, 1809)
 If, while any such deficiency exists any
officer, director, representative or employee of the insurer knowingly
violates or fails to comply with any restriction or requirement placed
upon the insurer and its operation by the Commissioner pursuant to NRS
693A.260 , he shall be punished by a
fine of not less than $500 nor more than $5,000 for each offense.

      (Added to NRS by 1971, 1809)


      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
Commissioner after a hearing thereon.

      2.  The Commissioner 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
two-thirds 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 the plan in person, by proxy or by mail pursuant to such
notice and procedure as may be approved by the Commissioner;

      (c) If a life insurer, the right to vote thereon is limited to
holders of policies other than term or group policies, 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 under a fair and reasonable formula approved by the
Commissioner or, if so ordered, by an examination of the insurer and all
of its controlled affiliates or by an appraisal committee, consisting of
at least three qualified persons, to be appointed by the Commissioner;

      (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 the general corporation law of the
state 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 become
effective; and

      (g) The mutualization leaves the insurer with a surplus 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.  No director, officer, agent or employee of the insurer, or any
other person, may receive any fee, commission or other valuable
consideration whatsoever, other than his customary salary or other
regular compensation, for in any manner aiding, promoting or assisting in
the mutualization, except as set forth in the plan of mutualization as
approved by the Commissioner.

      4.  This section does not apply to mutualization under an order of
court pursuant to rehabilitation or reorganization of an insurer under
chapter 696B of NRS.

      (Added to NRS by 1971, 1809; A 2001, 2247 )


      1.  A domestic stock insurer may convert to a Nevada ordinary
business corporation through the following procedures:

      (a) The insurer must give the Commissioner written notice of its
intent to convert to an ordinary business corporation.

      (b) The insurer must bulk reinsure all of its insurance in force,
if any, with another authorized insurer under a bulk reinsurance
agreement approved by the Commissioner as provided in NRS 693A.370 . The agreement of bulk reinsurance may be
made contingent upon approval of the stockholders as provided in
paragraph (d).

      (c) The insurer must set aside in a special reserve funds in such
amount and subject to such administration as may be found by the
Commissioner to be adequate and reasonable for the purpose, for payment
of all obligations, if any, of the insurer incurred by it under its
insurance contracts prior to the effective date of such bulk reinsurance,
and remaining unpaid, or make other reasonable disposition satisfactory
to the Commissioner for such payment.

      (d) The proposed conversion must be approved by an affirmative vote
of not less than two-thirds of each class of the outstanding securities
of the insurer having voting rights, at a special meeting of holders of
such securities called for the purpose, and at such meeting and by a like
vote the articles of incorporation of the corporation must be amended to
remove therefrom the power to transact an insurance business as an
insurer and to provide for such new powers and purposes as may be
consistent with the purposes for which the corporation is thereafter to
exist.

      (e) Security holders of the corporation who dissent from such
proposed conversion shall have the same applicable rights as exist under
the general corporation laws of this state with respect to a dissent from
a proposed merger of the corporation.

      (f) Upon compliance with paragraphs (a) to (d), inclusive, and upon
filing of the amendment of the articles of incorporation as required by
law, the conversion shall thereupon become effective.

      2.  An insurer which has once converted to an ordinary business
corporation shall not have the power thereafter to convert to an insurer.

      (Added to NRS by 1971, 1810)


      1.  A domestic stock insurer shall not acquire a controlling
interest in the shares of another stock insurer by an exchange of
securities or partly in exchange for securities and partly for cash or
property, unless the insurer has first submitted the plan for such
acquisition and exchange to the Commissioner and the Commissioner has
approved the same.

      2.  The Commissioner shall not so approve unless he finds the plan
for such acquisition and the terms and conditions thereof to be fair and
equitable to all parties concerned therein, after a hearing at which all
persons to whom it is proposed to issue securities in such exchange shall
have the right to appear.

      3.  Notice and conduct of such hearing shall be as provided in NRS
679B.310 to 679B.370 , inclusive.

      (Added to NRS by 1971, 1811)


      1.  Any person proposing to acquire the controlling capital stock
of any domestic stock insurer and thereby to change the control of the
insurer, other than through merger or consolidation or affiliation as
provided for in NRS 693A.310 and
693A.330 , must first apply to the
Commissioner in writing for approval of the proposed change of control.
The application must state the names and addresses of the proposed new
owners of the controlling stock and contain such additional information
as the Commissioner may reasonably require.

      2.  The Commissioner shall not approve the proposed change of
control if he finds that:

      (a) The proposed new owners are not qualified by character,
experience and financial responsibility to control and operate the
insurer, or cause the insurer to be operated, in a lawful and proper
manner;

      (b) As a result of the proposed change of control the insurer may
not be qualified for a certificate of authority under the provisions of
NRS 680A.090 ;

      (c) The interests of the insurer or other stockholders of the
insurer or policyholder would be materially harmed through the proposed
change of control; or

      (d) The proposed change of control would tend materially to lessen
competition, or to create any monopoly, in a business of insurance in
this state or elsewhere.

      3.  If the Commissioner does not by affirmative action approve or
disapprove the proposed change of control within 60 days after the date
the application was so filed with him, the proposed change may be made
without his approval, but if the Commissioner gives notice to the parties
of a hearing to be held by him with respect to the proposed change of
control, and the hearing is held within the 30 days or on a date mutually
acceptable to the Commissioner and the parties, the Commissioner has 10
days after the conclusion of the hearing within which to so approve or
disapprove the proposed change. If not so approved or disapproved, the
change may thereafter be made without the Commissioner’s approval.

      4.  If the Commissioner disapproves the proposed change, he shall
give written notice thereof to the parties, setting forth in detail the
reasons for disapproval.

      5.  The Commissioner shall suspend or revoke the certificate of
authority of any insurer the control of which has been changed in
violation of this section.

      6.  The Commissioner may retain at the acquiring party’s expense
attorneys, actuaries, accountants and other experts not otherwise a part
of his staff as may be necessary only for the review of the proposed
acquisition of control. Such a review may be conducted only if the
parties fail to provide sufficient information to the Commissioner.
Expenses chargeable to the acquiring party pursuant to this subsection
must not exceed 1 percent of the acquired insurer’s net revenue during
the year immediately preceding the year in which the application for
change of control is filed with the Commissioner pursuant to subsection 1.

      (Added to NRS by 1971, 1811; A 1995, 1779; 2001, 2248 )


      1.  Subject to subsections 2 and 3, a domestic stock insurer may
merge or consolidate with one or more domestic or foreign stock insurers,
by complying with the applicable provisions of the statutes of this state
governing the merger or consolidation of stock corporations formed for
profit. A domestic stock insurer shall not merge or consolidate with any
corporation not formed for the purpose of transacting insurance as an
insurer.

      2.  No such merger or consolidation shall be effectuated unless in
advance thereof the plan and agreement therefor have been filed with the
Commissioner and approved in writing by him after a hearing thereon after
notice to the stockholders of each insurer involved. The Commissioner
shall give such approval within a reasonable time after such filing
unless he finds such plan or agreement:

      (a) Is contrary to law;

      (b) Unfair or inequitable to the stockholders of any insurer
involved;

      (c) Would substantially reduce the security of and service to be
rendered to policyholders of the domestic insurer in this state or
elsewhere;

      (d) Would materially tend to lessen competition in the insurance
business in this state or elsewhere as to the kinds of insurance
involved, or would materially tend to create a monopoly as to such
business; or

      (e) Is subject to other material and reasonable objections.

      3.  No director, officer, agent or employee of any insurer party to
such merger or consolidation shall receive any fee, commission, special
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.  If the Commissioner does not approve any such plan or
agreement, he shall so notify the insurer in writing specifying his
reasons therefor.

      (Added to NRS by 1971, 1812)


      1.  In any merger or consolidation of a foreign stock or mutual
insurer into or with a domestic insurer under NRS 693A.330 or 693A.350 , and if so provided in accordance with this
section, the continuing Nevada corporation shall for all purposes be
deemed to be a continuation of the corporate existence of the foreign
corporation, with Nevada as the adoptive state of domicile and with date
of corporate origin the same as the original date of incorporation of the
foreign insurer in its original domiciliary state or country, subject to
the following conditions:

      (a) The plan and agreement for merger or consolidation shall
provide for such continuation of corporate existence through designation
of Nevada as the state of domicile of the foreign corporation by
adoption, and shall specify the original date of incorporation of the
foreign corporation in its original domiciliary state or country as being
the date of incorporation of the Nevada corporation pursuant to this
section.

      (b) The articles of incorporation of the Nevada corporation shall
provide, or be amended to provide, that the corporation is a continuance
of the corporate existence, through adoption of the State of Nevada as
the corporate domicile, of the foreign corporation, and shall specify the
original date of incorporation of the foreign corporation in its original
domiciliary state or country as being the date of incorporation of the
Nevada corporation pursuant to this section.

      2.  The continuing Nevada corporation shall have all the rights and
obligations of, and be given recognition in all respects as, a
corporation formed under the laws of this state as of the date of
incorporation of the foreign corporation in its original domiciliary
state or country. This provision shall not be deemed to impose upon the
continuing Nevada corporation any liability or obligation with respect to
filings, fees, taxes or otherwise which might have accrued prior to the
effective date of the merger or consolidation.

      3.  This section shall not be deemed in any manner to preserve,
after the effective date of such merger or consolidation, the corporate
existence of such foreign corporation as a corporation of its original
domiciliary state or country.

      (Added to NRS by 1971, 1812)


      1.  A domestic mutual insurer shall not merge or consolidate with a
stock insurer.

      2.  Except as provided in this section, a domestic mutual insurer
may merge or consolidate with another mutual insurer under the applicable
procedures prescribed by the laws of this State governing ordinary
business corporations.

      3.  If the insurer is then unimpaired, the plan and agreement for
merger or consolidation must 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 reasonable notice and
procedure. The plan and agreement may provide for giving that notice to
members by publishing the notice once a week for 2 successive weeks in
any two of the four cities of greatest population in each state in which
the insurer is authorized, or by depositing the notice in the United
States mail, postage prepaid, addressed to the member at his address last
of record with the insurer, or by personal delivery. For 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 or consolidation may be effectuated unless in
advance thereof the plan and agreement therefor have been filed with the
Commissioner and approved by him in writing. If the insurer is not then
impaired the Commissioner shall not act upon the plan and agreement until
after a hearing thereon. The Commissioner shall give his approval within
a reasonable time after the filing unless he finds the plan or agreement:

      (a) Inequitable to the policyholders of any domestic insurer
involved;

      (b) Would substantially reduce the security of and service to be
rendered to policyholders of the domestic insurer in this State and
elsewhere;

      (c) Would materially tend to lessen competition in the insurance
business in this State or elsewhere as to the kinds of insurance
involved, or would materially tend to create any monopoly as to that
business; or

      (d) Is subject to other material and reasonable objections.

      5.  If the Commissioner does not approve the plan or agreement he
shall so notify the insurers in writing specifying his reasons therefor.

      6.  No director, officer, agent or employee of any insurer party to
such merger or consolidation, or any other person, shall receive any fee,
commission or other special valuable consideration whatsoever for in any
manner aiding, promoting or assisting therein except as set forth in the
plan and agreement approved by the Commissioner.

      (Added to NRS by 1971, 1813; A 1979, 557)


      1.  A domestic property or casualty insurer with less than
$3,000,000 in surplus as regards policyholders shall not, without the
written approval of the Commissioner, assume reinsurance on any risk that
it otherwise is permitted to assume, except if the reinsurance is
required by law or regulation.

      2.  The provisions of this section are applicable to a contract of
reinsurance executed or renewed on or after October 1, 1991.

      3.  The provisions of this section do not invalidate any
reinsurance contract between the parties to the contract.

      (Added to NRS by 1991, 2034)


      1.  A domestic insurer shall not reinsure with another insurer all
or substantially all of its business in force, or of a major class
thereof, or during a period of 6 consecutive months reinsure with another
insurer over 20 percent of its insurance in force exclusive of individual
risks currently reinsured in the ordinary course of business, except
under an agreement of bulk reinsurance and in compliance with this
section. No such agreement may become effective unless filed with the
Commissioner and approved by him in writing.

      2.  The Commissioner shall approve the agreement within a
reasonable time after filing if he finds that:

      (a) The plan and agreement are fair and equitable to each insurer
and to the policyholders involved;

      (b) The reinsurance, if effectuated, would not substantially reduce
the protection or service to the policyholders of any domestic insurer
involved;

      (c) The agreement embodies adequate provisions by which the
reinsuring insurer becomes liable to the original insureds for any loss
or damage occurring under the policies reinsured in accordance with the
original terms of those policies;

      (d) The assuming reinsurer is authorized to transact that insurance
in this State, or is qualified for that authorization and will appoint
the Commissioner and his successors as its irrevocable attorney for
service of process, so long as any policy so reinsured or claim
thereunder remains in force or outstanding;

      (e) The reinsurance would not materially tend to lessen competition
in the insurance business in this State or elsewhere as to the kinds of
insurance involved, and would not materially tend to create any monopoly
as to that business; and

      (f) The proposed bulk reinsurance is free of other reasonable
objections.

      3.  If the Commissioner does not so approve he shall forthwith
notify each insurer involved in writing, specifying his reasons therefor.

      4.  If for reinsurance of all or substantially all of the business
in force of a mutual insurer at a time when the insurer’s surplus is not
impaired, the plan and agreement for reinsurance must be approved by a
vote of not less than two-thirds of the mutual insurer’s members voting
thereon at a meeting of members called for the purpose, pursuant to such
reasonable notice and procedure as is provided for in the agreement. The
agreement may provide for giving notice to members of a mutual insurer by
publishing the notice once a week for 2 successive weeks in any two of
the four cities of greatest population in each state in which the insurer
is authorized, or by depositing the notice in the United States mail,
postage prepaid, addressed to the member at his address last of record
with the insurer, or by personal delivery. For 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.

      (Added to NRS by 1971, 1816; A 1979, 558)


      1.  At the time of filing the agreement of bulk reinsurance with
the Commissioner as provided in NRS 693A.370 , the parties shall also file with the
Commissioner a certificate or certificates under oath of a principal
officer of each insurer involved, as to fees, commissions and other
valuable considerations paid or to be paid to any person directly or
indirectly in connection with the agreement or the proposed bulk
reinsurance. This subsection does not apply to fees of attorneys,
accountants, actuaries and other independently contracting persons
rendering similar technical services in connection with the bulk
reinsurance, or to regular salaried compensation received or to be
received by employees in the ordinary course of business.

      2.  No director or officer of any insurer party to such bulk
reinsurance shall, except as fully expressed in the bulk reinsurance
agreement, receive any fee, commission or other special or valuable
consideration whatever, directly or indirectly, for in any manner aiding,
promoting or assisting in the negotiation or effectuation of such
reinsurance.

      3.  Any person violating the provisions of subsection 2 is guilty
of a gross misdemeanor.

      (Added to NRS by 1971, 1817)


      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 currently existing persons who had
been members of the insurer for at least 1 year and who were its members
at any time within 36 months next preceding the date such liquidation was
authorized or ordered, or the date of the last termination of the
insurer’s certificate of authority whichever date is the earlier; but if
the Commissioner 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 the distribution of the insurer’s assets, he may enlarge the
36-month qualification period as he may deem to be reasonable.

      2.  The 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 Commissioner.

      (Added to NRS by 1971, 1817)

CONVERSION OF MUTUAL INTO STOCK INSURER
 As used in NRS 693A.400 to 693A.540 , inclusive, unless the context otherwise
requires, the words and terms defined in NRS 693A.405 to 693A.430 , inclusive, have the meanings ascribed to
them in those sections.

      (Added to NRS by 2001, 2232 )
 “Closed block” means an
allocation of assets of the converting mutual sufficient to maintain
payments of guaranteed benefits and the continuation of the current
dividends for eligible members.

      (Added to NRS by 2001, 2232 )
 “Consideration” means cash,
stock or other valuable compensation approved by the Commissioner.

      (Added to NRS by 2001, 2232 )
 “Converting mutual”
means a domestic mutual insurance company or a mutual insurance holding
company that has adopted a plan of conversion to a domestic stock
insurance company pursuant to NRS 693A.400 to 693A.540 , inclusive.

      (Added to NRS by 2001, 2232 )
 “Eligible member” means a
person who has a membership interest in the converting mutual on the date
on which the board of directors of the converting mutual adopts a
resolution proposing a plan of conversion and an amendment to its
articles of incorporation.

      (Added to NRS by 2001, 2232 )
 “New stock insurer”
means the domestic stock insurer that is created when the Commissioner
issues a certificate of authority to a converting mutual pursuant to NRS
693A.470 .

      (Added to NRS by 2001, 2232 )
 “Policyholder” means a
person who holds a policy issued by the converting mutual on the day on
which the plan of conversion is initially approved by the board of
directors of the converting mutual.

      (Added to NRS by 2001, 2232 )
 A domestic mutual insurer
or a mutual insurance holding company may amend its articles of
incorporation to become a domestic stock insurer by complying with NRS
693A.400 to 693A.540 , inclusive, and obtaining a certificate of
authority from the Commissioner.

      (Added to NRS by 2001, 2232 )


      1.  The board of directors of a domestic mutual insurer or a mutual
insurance holding company may adopt a resolution proposing a plan of
conversion and an amendment to its articles of incorporation. The
resolution must be approved by a vote of not less than two-thirds of the
members of the board.

      2.  The plan of conversion must:

      (a) Require the distribution of consideration equal to not less
than the fair market value of the surplus of the converting mutual to the
eligible members in exchange for the extinguishment of their membership
interests in the converting mutual.

      (b) Describe the manner in which the fair market value of the
converting mutual and its surplus has been or will be determined.

      (c) Require the distribution of consideration to the eligible
members upon extinguishment of their membership interests in the
converting mutual.

      (d) Provide that membership interests in the converting mutual are
extinguished as of the effective date of conversion.

      (e) Specify the structure and form of the proposed consideration,
including, without limitation, the projected range of the number of
shares of capital stock to be:

             (1) Issued to policyholders by the new stock insurer or the
holding company of the new stock insurer; and

             (2) Sold or reserved for sale to investors by the new stock
insurer or the holding company of the new stock insurer, or to the trust
established pursuant to this section.

      (f) If the distribution of consideration will not be made
immediately following the final order of the Commissioner approving the
conversion, provide for the establishment of a trust for the exclusive
benefit of policyholders into which shares of the capital stock of the
new stock insurer or the holding company of the new stock insurer must be
placed pending distribution to the policyholders. The terms of the trust
are subject to the approval of the Commissioner. Such a trust may exist
only for a period of 6 months after the final approval of the conversion,
during which time the distribution of consideration to eligible
policyholders and other persons must be completed.

      (g) Provide for the determination of the reasonable dividend
expectations of eligible members and other policyholders of policies that
provide for distribution of policy dividends and the preservation of such
expectations through the establishment of a closed block of assets.

      (h) Provide for such other proposed conditions and provisions as
the board of directors of the converting mutual determines are necessary
and are not inconsistent with the provisions of NRS 693A.400 to 693A.540 , inclusive.

      (Added to NRS by 2001, 2232 )
 A converting mutual shall file with the Commissioner an
application to convert to a domestic stock insurer. The application must
be accompanied by a nonrefundable fee of $2,450. The application must
include, without limitation:

      1.  The plan of conversion adopted by the board of directors.

      2.  A certification that the plan of conversion was duly adopted by
a vote of not less than two-thirds of the members of the board of
directors of the converting mutual.

      3.  A certification that the plan of conversion is fair and
equitable to the policyholders. This certification must be adopted by a
vote of not less than two-thirds of the members of the board of directors
of the converting mutual.

      4.  A statement of the reasons for the proposed conversion and why
the conversion is in the best interest of the converting mutual,
including, without limitation, a:

      (a) Detailed analysis of the risks and benefits of the proposed
conversion to the converting mutual and its members; and

      (b) Comparison of the risks and benefits of the conversion with the
risks and benefits of a reasonable alternative to the conversion.

      5.  A written opinion addressed to the board of directors of the
converting mutual from a qualified, independent financial adviser
attesting that the:

      (a) Consideration to be provided to the membership of the
converting mutual is fair to the eligible members as a group; and

      (b) Total consideration to be provided to the membership is equal
to or greater than the surplus of the converting mutual.

      6.  An opinion from a qualified actuary attesting that all
methodologies and formulas used to allocate the consideration among
eligible members are reasonable.

      7.  Certified copies of the proposed amendments to the articles of
incorporation and bylaws to effect the conversion.

      8.  A copy of the form of the trust agreement of any trust to be
used in connection with the conversion.

      9.  A plan of operation for a closed block to preserve the
reasonable dividend expectations of eligible members and other
policyholders of policies that provide for the distribution of policy
dividends.

      10.  A form of the proposed notice to be mailed by the converting
mutual to its policyholders as required by NRS 693A.460 .

      11.  A 5-year business plan and at least 2 years of financial
projections for the new stock insurer and a parent company, if any.

      12.  A list of natural persons who are or have been selected to
become directors or officers of the new stock insurer and the following
information concerning each person on the list, unless the information is
already on file with the Commissioner:

      (a) Occupation;

      (b) Criminal convictions, other than traffic violations, during the
immediately preceding 7 years;

      (c) Personal bankruptcy of the person or the spouse of the person
during the immediately preceding 7 years;

      (d) Information regarding any consent decree entered into by the
person; and

      (e) Whether the person has been refused a fidelity or other bond
during the immediately preceding 7 years.

      13.  Any plans that the new stock insurer or its parent company, if
any, may have to:

      (a) Raise additional capital through the issuance of stock or
otherwise;

      (b) Sell or issue stock to any person;

      (c) Liquidate or dissolve any company or sell any material assets;

      (d) Merge, consolidate or pursue any other form of reorganization
with any person; or

      (e) Make any material change in its investment policy, business,
corporate structure or management.

      14.  Copies of proposed articles of incorporation and any proposed
bylaws of the new stock insurer.

      15.  Such additional information as the Commissioner may by
regulation prescribe as necessary or appropriate for the protection of
policyholders and security holders of the converting mutual, or for the
protection of the public interest.

      (Added to NRS by 2001, 2233 )
 The Commissioner
shall conduct a public hearing not later than 120 days after the date on
which the application is filed unless, for good cause, he extends this
time. Any interested person may appear or otherwise be heard at the
public hearing. The Commissioner may continue the hearing for a
reasonable period, not to exceed 60 days. The converting mutual shall
give such reasonable notice of the hearing as the Commissioner requires.
The hearing must be conducted pursuant to NRS 679B.320 to 679B.370 , inclusive.

      (Added to NRS by 2001, 2235 )


      1.  The Commissioner shall issue an order making an initial
determination of approval or disapproval of the application not later
than 30 days after the public hearing.

      2.  The Commissioner shall not approve the application unless he
finds that the:

      (a) Plan of conversion is fair and equitable to the policyholders;

      (b) Plan of conversion does not deprive the policyholders of their
property rights or due process of law;

      (c) New stock insurer meets the minimum requirements for a
certificate of authority to transact the business of insurance in this
state; and

      (d) Continued operation of the new stock insurer is not hazardous
to future policyholders and the public.

      3.  For the purposes of this section, the Commissioner may consider
any relevant factor, including, without limitation:

      (a) The capital requirements of the new stock insurer;

      (b) Whether a sufficient portion of the surplus of the converting
mutual was contributed by persons or entities whose policies or contracts
were not in force on the date on which the plan of conversion was
initially approved by the board of directors of the converting mutual to
require the reduction of the consideration to policyholders to an amount
equal to less than the surplus;

      (c) Whether the plan of conversion includes preemptive rights for
policyholders to purchase securities offered in the initial sale of
securities by the new stock insurer;

      (d) Whether the plan of conversion includes establishment of a
preference account from which the payment of any shareholder dividends,
including a regular, special or liquidation dividend, would be prohibited
for such a reasonable period as the Commissioner may require;

      (e) The suitability of the trustees of any trust created to effect
the conversion; and

      (f) Whether the utilization of a trust, if included in the plan of
conversion, has a material adverse effect on policyholders, other than
delaying the receipt of shares of capital stock.

      4.  If the Commissioner makes a determination to disapprove the
application, the Commissioner shall issue a final order setting forth
specific findings for the disapproval.

      (Added to NRS by 2001, 2235 )


      1.  Unless the Commissioner for good cause establishes a different
time, the converting mutual shall, not less than 45 days after the date
of the initial determination of approval by the Commissioner, hold a
meeting of its policyholders at a reasonable time and place to vote upon
the plan of conversion.

      2.  The converting mutual shall give notice not less than 30 days
before the meeting, by first-class mail to the last known address of each
policyholder, that the plan of conversion will be voted upon at a regular
or special meeting of the policyholders. The notice must include, without
limitation, a:

      (a) Brief description of the plan of conversion;

      (b) Statement that the Commissioner has initially approved the plan
of conversion; and

      (c) Written proxy permitting the policyholder to vote for or
against the plan of conversion.

      3.  The Commissioner shall supervise and direct the conducting of
the vote on the plan of conversion as necessary to ensure that the vote
is fair and consistent with the requirements of this section. Each
policyholder is entitled to only one vote regardless of the number of
policies owned by the policyholder.

      4.  A plan of conversion is approved only if not less than
two-thirds of the policyholders voting in person or by proxy at the
meeting vote in favor of the plan of conversion.

      5.  For the purposes of notice and voting, the policyholder of a
policy of group insurance is the entity to which the group policy is
issued and not any person covered under the group policy.

      (Added to NRS by 2001, 2235 )
 A converting
mutual may, by not less than a two-thirds vote of the members of its
board of directors and with the approval of the Commissioner, abandon the
plan of conversion at any time before the issuance of the certificate of
authority by the Commissioner pursuant to NRS 693A.470 . Upon abandonment, all rights and
obligations arising out of the plan of conversion terminate and the
converting mutual shall continue to conduct its business as a domestic
mutual insurer or a mutual insurance holding company as though no plan of
conversion had ever been adopted.

      (Added to NRS by 2001, 2236 )


      1.  The Commissioner shall:

      (a) Enter a final order approving the application to convert to a
stock insurer within 10 days after receiving a valid certification from
the converting mutual setting forth the vote and certifying that the plan
of conversion was approved by not less than two-thirds of the
policyholders voting in person or by proxy on the plan of conversion; and

      (b) Publish notification of the issuance of the final order in a
newspaper of general circulation in Carson City and in the county of
domicile of the converting mutual if different from Carson City.

      2.  Except as otherwise provided in NRS 693A.465 , the Commissioner shall issue a certificate
of authority to the new stock insurer when the converting mutual files a
certificate with the Commissioner stating that all the conditions set
forth in the plan of conversion have been satisfied.

      3.  The conversion is effective upon the issuance of the
certificate of authority by the Commissioner.

      4.  Upon issuance of the certificate of authority, the articles of
incorporation of the insurer shall be deemed to be amended in compliance
with NRS 692B.030 .

      (Added to NRS by 2001, 2236 )
 In determining
whether a plan of conversion meets the requirements of NRS 693A.400
to 693A.540 , inclusive, or with regard to any other
matters relating to the development of a plan of conversion, the
Commissioner may engage the services of experts. All reasonable costs
related to the review of a plan of conversion or such other matters,
including those costs attributable to the use of experts, must be paid by
the converting mutual filing the application or initiating discussions
with the Commissioner about such matters.

      (Added to NRS by 2001, 2237 )


      1.  Except as otherwise provided in subsection 2, all information
and documents obtained by or disclosed to the Commissioner or any other
person in the course of preparing, filing and processing an application
of a converting mutual, other than information and documents distributed
to policyholders in connection with the meeting of policyholders pursuant
to NRS 693A.460 or filed or submitted
as evidence in connection with the public hearing pursuant to NRS
693A.450 , are confidential and not
subject to subpoena, and must not be made public by the Commissioner, the
National Association of Insurance Commissioners or any other person,
except to insurance departments of other states, without the prior
written consent of the insurer to which such information and documents
pertain.

      2.  If the Commissioner, after giving the insurer and its
affiliates who would be affected notice and opportunity to be heard,
determines that the interests of policyholders, shareholders or the
public will be best served by the publication of such information and
documents, the Commissioner may publish all or any part thereof in such a
manner as he determines appropriate.

      (Added to NRS by 2001, 2237 )
 The corporate existence of a converting mutual pursuant to NRS
693A.400 to 693A.540 , inclusive, does not terminate, and the new
stock insurer shall be deemed to be a continuation of the converting
mutual and to have been organized on the date the converting mutual was
originally organized.

      (Added to NRS by 2001, 2237 )
 The provisions of NRS 693A.400 to 693A.540 , inclusive, do not prohibit the inclusion in
the plan of conversion of provisions under which members of the board of
directors, officers, employees or agents of the new stock insurer, and
persons acting as trustees of employee stock ownership plans or other
employee benefit plans may be entitled to purchase for cash capital stock
of the new stock insurer at the same price initially issued by the new
stock insurer under the plan of conversion, except that no such purchase
may be made while any shares of capital stock are held in a trust
established pursuant to the plan of conversion.

      (Added to NRS by 2001, 2237 )


      1.  No director, officer, employee or agent of the converting
mutual, or any other person, may receive any fee, commission or other
valuable consideration, other than his usual regular salary and
compensation, for aiding, promoting or assisting in a plan of conversion
except as set forth in the plan of conversion approved by the
Commissioner.

      2.  Subsection 1 does not prohibit a management or employee
incentive compensation program that is contained in the plan of
conversion and approved by the Commissioner to be adopted upon conversion
to the new stock insurer or prohibit such a program to be adopted later
by the new stock insurer.

      3.  Subsection 1 does not prohibit the payment of reasonable fees
and compensation to attorneys, accountants, actuaries and investment
bankers for services performed in the independent practice of their
professions if the person is also a member of the board of directors of
the converting mutual.

      (Added to NRS by 2001, 2238 ; A 2003, 3330 )


      1.  Except as otherwise specifically provided in the plan of
conversion, before and for a period of 5 years after the issuance of a
certificate of authority to a new stock insurer pursuant to NRS 693A.470
, no person other than the new stock
insurer may directly or indirectly offer to acquire or acquire in any
manner the beneficial ownership of 5 percent or more of any class of a
voting security of the new stock insurer or of any institution that owns
a majority of the voting securities of the new stock insurer without the
prior approval by the Commissioner of an application for acquisition.

      2.  The Commissioner shall not approve an application for
acquisition filed pursuant to subsection 1 unless he finds that:

      (a) The acquisition will not frustrate the plan of conversion as
approved by the policyholders and the Commissioner;

      (b) The board of directors of the new stock insurer has approved
the acquisition or extraordinary circumstances not contemplated in the
plan of conversion have arisen which would warrant approval of the
acquisition; and

      (c) The acquisition is consistent with the purpose of NRS 693A.400
to 693A.540 , inclusive, to permit conversions on terms
and conditions that are fair and equitable to the policyholders.

      3.  An application for acquisition filed pursuant to subsection 1
must describe in sufficient detail all information necessary for the
approval of the application.

      4.  If any material change occurs in the facts set forth in an
application for acquisition filed pursuant to subsection 1, an amendment
setting forth the change, together with copies of all documents and other
material relevant to the change, must be filed with the Commissioner.

      5.  The Commissioner may hold a public hearing on an application
for acquisition filed pursuant to subsection 1. If the Commissioner
decides to hold a public hearing, the hearing must be held not later than
30 days after the person seeking to acquire securities files an
application for acquisition with the Commissioner pursuant to subsection
1. The Commissioner shall give at least 20 days’ notice of the hearing to
the person filing the application for acquisition. The person filing the
application for acquisition shall give not less than 7 days’ notice of
the hearing to the new stock insurer and to such other persons as may be
designated by the Commissioner. In connection with the hearing, the
person filing the application for acquisition, the new stock insurer, any
other person to whom notice of the hearing was given, and any other
person whose interest may be affected may conduct discovery proceedings
in the same manner as is allowed in the district court. All discovery
proceedings must be concluded not later than 3 days before the
commencement of the hearing. At the hearing, the person filing the
application for acquisition, the new stock insurer, any other person to
whom notice of the hearing was given, and any other person whose interest
may be affected may present evidence, examine and cross-examine
witnesses, and offer oral and written arguments. If any acquisition
referred to in the application for acquisition is proposed by means of a
registration statement under the Securities Act of 1933, 15 U.S.C. §§ 77a
et seq., in circumstances requiring the disclosure of similar information
under the Securities Exchange Act of 1934, 15 U.S.C. §§ 78a et seq., or
under a state law requiring similar registration or disclosure, the
person required to file the statement may utilize such documents in
furnishing the information required by the application for acquisition.
The person filing the application shall serve the new stock insurer and
any institution that owns a majority of the voting securities of the new
stock insurer with a copy of the application for acquisition and any
amendments thereto on the day the documents are filed with the
Commissioner.

      6.  The new stock insurer and any institution that owns a majority
of the voting securities of the new stock insurer must be permitted to
become parties to the hearing upon request.

      7.  The Commissioner may retain, at the expense of the person
filing an application for acquisition pursuant to subsection 1, any
attorneys, actuaries, accountants and other experts who are not employees
of the Division as may be reasonably necessary to assist the Commissioner
in reviewing the application.

      (Added to NRS by 2001, 2238 )


      1.  No security which is the subject of any agreement or
arrangement regarding acquisition, or which is acquired or to be
acquired, in contravention of NRS 693A.500 or of any regulation or order of the
Commissioner may be voted at any shareholders’ meeting or may be counted
for quorum purposes, and any action of the shareholders requiring the
affirmative vote of a percentage of shares may be taken as though such
securities were not issued and outstanding, but no action taken at any
such meeting may be invalidated by the voting of such securities unless:

      (a) The action would materially affect control of the new stock
insurer or an institution that owns a majority of the voting securities
of the new stock insurer; or

      (b) A court of competent jurisdiction has so ordered.

      2.  If a new stock insurer or the Commissioner has reason to
believe that any security of the new stock insurer or an institution that
owns a majority of the voting securities of the new stock insurer has
been or is about to be acquired in contravention of NRS 693A.400 to 693A.540 , inclusive, or of any regulation or order of
the Commissioner, the new stock insurer or the Commissioner may apply to
the First Judicial District Court in and for Carson City for an order to
enjoin any offer or acquisition made in contravention of NRS 693A.500
or any regulation or order of the
Commissioner to enjoin the voting of any security so acquired, to void
any vote of such a security already cast at any shareholders’ meeting,
and for such other equitable relief as the nature of the case and the
interest of the policyholders, creditors and shareholders of the new
stock insurer, or the public, may require.

      (Added to NRS by 2001, 2239 )
 In any case where a person has acquired or
is proposing to acquire any voting securities in violation of NRS
693A.400 to 693A.540 , inclusive, or any regulation or order of
the Commissioner, the First Judicial District Court in and for Carson
City may, upon the application of the Commissioner or the new stock
insurer, and on such notice as the court determines appropriate, seize or
sequester any voting securities of the new stock insurer or an
institution that owns a majority of the voting securities of the new
stock insurer owned directly or indirectly by such a person and issue any
order with respect thereto as the court determines appropriate to
effectuate the provisions of NRS 693A.400 to 693A.540 , inclusive. Notwithstanding any other
provision of law, for the purposes of NRS 693A.400 to 693A.540 , inclusive, the situs of the ownership of
such securities shall be deemed to be in this state.

      (Added to NRS by 2001, 2240 )
 A person who offers to acquire or
acquires a security in violation of subsection 1 of NRS 693A.500 may be required by the Commissioner, after
notice and hearing, to pay an administrative penalty of $100 for each day
that the person remains in violation, except that the aggregate penalty
pursuant to this section may not exceed $10,000.

      (Added to NRS by 2001, 2240 )
 Any director
or officer of a person, or an agent of the person, who knowingly violates
or assents to or permits any officer or agent of the person to violate
the requirements of NRS 693A.500 may
be required by the Commissioner, after notice and hearing, to pay, in his
individual capacity, an administrative penalty of not more than $5,000
per violation. In determining the amount of the penalty, the Commissioner
shall take into account the appropriateness of the penalty with respect
to the gravity of the violation, the history of previous violations, and
such other matters as the Commissioner determines are required in the
interest of justice.

      (Added to NRS by 2001, 2240 )


      1.  If the Commissioner has reason to believe that any person or
any director, officer, employee or agent of the person is engaged in any
conduct in violation of NRS 693A.500 ,
the Commissioner may order the person to cease and desist immediately
from engaging in any further such conduct. The order is permanent unless
the person, not later than 20 days after receipt of the order, files a
written request for a hearing with the Commissioner.

      2.  If, after a hearing pursuant to subsection 1, the Commissioner
determines that such action is in the best interest of the policyholders,
the creditors or the public, the Commissioner may also order the person
to void any contract entered into in violation of NRS 693A.500 .

      3.  An order of the Commissioner pursuant to this section is a
final decision in a contested case for the purpose of judicial review
pursuant to chapter 233B of NRS.

      (Added to NRS by 2001, 2240 )
 The
Commissioner may adopt such regulations and issue such orders as he
determines are necessary to carry out the provisions of NRS 693A.400
to 693A.540 , inclusive.

      (Added to NRS by 2001, 2241 )
 Any
person aggrieved by a final order of the Commissioner issued pursuant to
NRS 693A.400 to 693A.540 , inclusive, may petition for judicial review
in the manner provided by chapter 233B of
NRS.

      (Added to NRS by 2001, 2237 )
 Whenever
it appears to the Commissioner that any person or any director, officer,
employee or agent of the person has committed or is about to commit a
violation of any provision of NRS 693A.400 to 693A.540 , inclusive, or of any regulation or order of
the Commissioner relating thereto, the Commissioner may apply to the
First Judicial District Court in and for Carson City for an order
enjoining the person, director, officer, employee or agent from violating
or continuing to violate any provision of NRS 693A.400 to 693A.540 , inclusive, or any such regulation or order,
and for such other equitable relief as the nature of the case and the
interest of the policyholders, creditors and shareholders of the insurer,
or the public, may require.

      (Added to NRS by 2001, 2237 )

REORGANIZATION OF MUTUAL INTO STOCK INSURER
 As used in NRS 693A.550 to 693A.665 , inclusive, unless the context otherwise
requires, the words and terms defined in NRS 693A.555 to 693A.570 , inclusive, have the meanings ascribed to
them in those sections.

      (Added to NRS by 2001, 2241 )

 “Intermediate stock holding company” means a holding company of which at
least a majority of the voting securities are owned by a mutual insurance
holding company and which directly owns all the voting securities of a
reorganized stock insurer.

      (Added to NRS by 2001, 2241 )
 “Mutual
insurance holding company” means a holding company based on a mutual plan
which at all times owns a majority of the voting securities of a single
intermediate stock holding company or, if no such intermediate stock
holding company exists, which owns a majority of the voting securities of
a reorganized stock insurer.

      (Added to NRS by 2001, 2241 )
 “Reorganized
stock insurer” means a stock insurer subsidiary that results from a
reorganization of a domestic mutual insurer pursuant to NRS 693A.550
to 693A.665 , inclusive.

      (Added to NRS by 2001, 2241 )
 “Voting securities”
means securities of any class or any ownership interest having voting
power for the election of directors, trustees or management, other than
securities having voting power only because of the occurrence of a
contingency.

      (Added to NRS by 2001, 2241 )
 A domestic mutual
insurer may, by complying with NRS 693A.550 to 693A.665 , inclusive, and obtaining the approval of
the Commissioner, reorganize by:

      1.  Merging the membership interests of its policyholders into:

      (a) A mutual insurance holding company formed for the purpose of
the reorganization; or

      (b) An existing mutual insurance holding company; and

      2.  Continuing the corporate existence of the mutual insurer as a
stock insurer subsidiary of the mutual insurance holding company.

      (Added to NRS by 2001, 2241 )
 A domestic mutual insurer shall file with the Commissioner
for review and approval a proposed plan of reorganization that has been
approved by a vote of not less than two-thirds of the members of the
board of directors of the domestic mutual insurer. The proposed plan of
reorganization must be accompanied by a nonrefundable fee of $2,450. The
plan of reorganization must include:

      1.  An analysis of the benefits and risks of the proposed
reorganization, including, without limitation, the rationale and
comparative benefits and risks of converting to a domestic stock insurer
pursuant to NRS 693A.400 to 693A.540
, inclusive;

      2.  A statement of how the plan is fair and equitable to the
policyholders;

      3.  Information sufficient to demonstrate that the financial
condition of the mutual insurer will not be diminished upon
reorganization;

      4.  Provisions to ensure immediate membership in the mutual
insurance holding company for all existing policyholders of the mutual
insurer;

      5.  Provisions for membership interests for future policyholders of
the reorganized stock insurer;

      6.  Provisions to ensure that, in the event of proceedings for
rehabilitation or liquidation involving a stock insurer subsidiary of the
mutual insurance holding company, the assets of the mutual insurance
holding company will be available to satisfy the obligations of the stock
insurer subsidiary to policyholders;

      7.  Provisions for the periodic distribution of the accumulated
earnings of the mutual insurance holding company;

      8.  Certified copies of the proposed articles of incorporation and
bylaws of the mutual insurance holding company, intermediate stock
holding company and reorganized stock insurer, or proposed amendments
thereto as necessary to carry out the reorganization;

      9.  A certification that the plan of reorganization has been duly
adopted by a vote of not less than two-thirds of the members of the board
of directors of the mutual insurer;

      10.  A certification adopted by not less than two-thirds of the
members of the board of directors of the mutual insurer that the plan of
reorganization is fair and equitable to the policyholders;

      11. The names, addresses and occupations of all persons who are or
have been selected to become directors or officers of the mutual
insurance holding company;

      12.  A description of the nature and content of the annual report
and financial statement to be sent by the mutual insurance holding
company to each policyholder;

      13.  The number of members of the board of directors of the mutual
insurance holding company who are required to be policyholders;

      14. A description of any plans for the initial sale of stock of
the intermediate stock holding company or reorganized stock insurer;

      15. A form of the proposed notice to be mailed by the mutual
insurer to its policyholders as required by NRS 693A.595 ; and

      16.  Such additional information as the Commissioner may by
regulation prescribe as necessary or appropriate for the protection of
policyholders and security holders of the domestic mutual insurer or for
the protection of the public interest.

      (Added to NRS by 2001, 2241 )
 Unless the
Commissioner, for good cause, extends the time, the Commissioner shall
conduct a public hearing regarding a proposed plan of reorganization not
later than 120 days after the date on which the completed proposed plan
of reorganization is filed pursuant to NRS 693A.580 . Any interested person may appear or
otherwise be heard at the public hearing. The Commissioner may continue
the public hearing for a reasonable period, not to exceed 60 days. The
mutual insurer shall give such reasonable notice of the public hearing as
the Commissioner requires.

      (Added to NRS by 2001, 2242 )


      1.  The Commissioner shall issue an order approving or disapproving
a proposed plan of reorganization not later than 30 days after the public
hearing required by NRS 693A.585 .

      2.  The Commissioner shall not approve a proposed plan of
reorganization unless he finds that the:

      (a) Plan of reorganization is fair and equitable to the
policyholders;

      (b) Plan of reorganization does not deprive the policyholders of
their property rights or due process of law;

      (c) Reorganized stock insurer meets the minimum requirements for a
certificate of authority to transact the business of insurance in this
state; and

      (d) Continued operation of the reorganized stock insurer is not
hazardous to future policyholders and the public.

      3.  If the Commissioner approves a plan of reorganization, the
Commissioner shall publish notification of the issuance of the order in a
newspaper of general circulation in Carson City and in the county of
domicile of the mutual insurer if different from Carson City.

      4.  If the Commissioner approves a plan of reorganization, the
approval expires if the reorganization is not completed within 180 days
after the date of approval, unless the period is extended by the
Commissioner for good cause.

      5.  If the Commissioner disapproves a plan of reorganization, the
Commissioner shall issue an order setting forth specific findings for the
disapproval.

      (Added to NRS by 2001, 2242 )


      1.  Within 45 days after the date of the Commissioner’s approval of
a plan of reorganization pursuant to NRS 693A.590 , unless extended by the Commissioner for
good cause, the mutual insurer shall hold a meeting of its policyholders
at a reasonable time and place to vote upon the plan of reorganization.
The mutual insurer shall give notice not less than 30 days before the
meeting, by first-class mail to the last known address of each
policyholder, that the plan of reorganization will be voted upon at a
regular or special meeting of the policyholders. The notice must include
a brief description of the plan of reorganization, a statement that the
Commissioner has approved the plan of reorganization, and a written proxy
permitting the policyholder to vote for or against the plan of
reorganization. For the purposes of notice and voting, the policyholder
of a policy of group insurance is the entity to which the group policy is
issued and not any person covered under the group policy. A plan of
reorganization is approved only if not less than two-thirds of the
policyholders voting in person or by proxy at the meeting vote in favor
of the plan of reorganization. Each policyholder is entitled to only one
vote regardless of the number of policies owned by the policyholder. The
Commissioner shall supervise and direct the conducting of the vote on the
plan of reorganization as necessary to ensure that the vote is fair and
consistent with the requirements of this section.

      2.  If a mutual insurer complies substantially and in good faith
with the notice requirements of this section, the mutual insurer’s
failure to give any policyholder the required notice does not impair the
validity of any action taken pursuant to this section.

      3.  If the meeting of policyholders to vote upon the plan of
reorganization is held coincident with the mutual insurer’s annual
meeting of policyholders, only one combined notice of meeting is required.

      4.  The form of any proxy must be filed with and approved by the
Commissioner.

      5.  For the purposes of notice and voting, a person is not a
policyholder unless he was a policyholder of the mutual insurer on the
date on which the plan of reorganization was initially approved by the
board of directors of the mutual insurer.

      (Added to NRS by 2001, 2243 )
 A mutual
insurer may, by not less than a two-thirds vote of the members of its
board of directors and with the approval of the Commissioner, abandon a
plan of reorganization at any time before the issuance of the certificate
of authority by the Commissioner pursuant to NRS 693A.605 . Upon abandonment, all rights and
obligations arising out of the plan of reorganization terminate and the
mutual insurer shall continue to conduct its business as a domestic
mutual insurer as though no plan of reorganization had ever been adopted.

      (Added to NRS by 2001, 2244 )


      1.  The Commissioner shall issue a certificate of authority to a
reorganized stock insurer when the mutual insurer files with the
Commissioner a:

      (a) Certificate stating that all the conditions set forth in the
plan of reorganization have been satisfied, so long as the board of
directors of the mutual insurer has not abandoned the plan of
reorganization pursuant to NRS 693A.600 .

      (b) Certificate from the mutual insurer setting forth the vote and
certifying that the plan of reorganization was approved by not less than
two-thirds of the policyholders voting in person or by proxy on the plan
of reorganization.

      2.  The reorganization is effective upon the issuance of a
certificate of authority by the Commissioner.

      3.  Upon issuance of the certificate of authority, the articles of
incorporation of the mutual insurer shall be deemed to be amended in
compliance with NRS 692B.030 .

      (Added to NRS by 2001, 2244 )
 In
determining whether a plan of reorganization meets the requirements of
the provisions of NRS 693A.550 to
693A.665 , inclusive, or with regard
to any other matters relating to the development of a plan of
reorganization, the Commissioner may engage the services of experts. All
reasonable costs related to the review of a plan of reorganization or
such other matters, including those costs attributable to the use of
experts, must be paid by the mutual insurer filing the application or
initiating discussions with the Commissioner about such matters.

      (Added to NRS by 2001, 2244 )


      1.  Except as otherwise provided in subsection 2, all information
and documents obtained by or disclosed to the Commissioner or any other
person in the course of preparing, filing and processing an application
to reorganize pursuant to NRS 693A.580 , other than information and documents
distributed to policyholders in connection with the meeting of
policyholders pursuant to NRS 693A.595 or filed or submitted as evidence in
connection with the public hearing pursuant to NRS 693A.585 , are confidential and not subject to
subpoena, and must not be made public by the Commissioner, the National
Association of Insurance Commissioners or any other person, except to
insurance departments of other states, without the prior written consent
of the insurer to which such information and documents pertain.

      2.  If the Commissioner, after giving the insurer and its
affiliates who would be affected notice and opportunity to be heard,
determines that the interests of policyholders, shareholders or the
public will be best served by the publication of such information and
documents, the Commissioner may publish all or any part thereof in such a
manner as he determines appropriate.

      (Added to NRS by 2001, 2244 )
 The corporate existence of a mutual insurer reorganizing
pursuant to NRS 693A.550 to 693A.665
, inclusive, does not terminate, and
the reorganized stock insurer shall be deemed to be a continuation of the
mutual insurer and to have been organized on the date on which the mutual
insurer was originally organized.

      (Added to NRS by 2001, 2245 )


      1.  All the initial shares of the capital stock of a reorganized
stock insurer must be issued to the mutual insurance holding company or
to one or more intermediate stock holding companies.

      2.  Policyholders of a domestic mutual insurer that has been
reorganized are members of the mutual insurance holding company, and
their voting rights must be determined in accordance with the articles of
incorporation and bylaws of the mutual insurance holding company. The
mutual insurance holding company shall provide its members with the same
membership rights as were provided to policyholders of the mutual insurer
immediately before reorganization. The reorganization must not reduce,
limit or otherwise affect the number or identity of the policyholders who
may become members of the mutual insurance holding company or secure for
managerial personnel any unfair advantage through or connected with the
reorganization.

      3.  A mutual insurance holding company or an intermediate stock
holding company formed pursuant to NRS 693A.550 to 693A.665 , inclusive:

      (a) Must not be authorized to transact the business of insurance;

      (b) Is subject to the jurisdiction of the Commissioner, who shall
ensure that policyholder interests are protected; and

      (c) Shall be deemed to be an insurer for the purposes of chapter
696B of NRS.

      4.  An intermediate stock holding company formed pursuant to NRS
693A.550 to 693A.665 , inclusive, shall be deemed to be a mutual
insurance holding company subject to the provisions of NRS 693A.400
to 693A.540 , inclusive.

      5.  A mutual insurance holding company formed pursuant to NRS
693A.550 to 693A.665 , inclusive:

      (a) Shall not issue stock.

      (b) Shall invest in insurers not less than 50 percent of its net
worth as determined by generally accepted accounting practices.

      6.  The aggregate pledges and encumbrances of the assets of a
mutual insurance holding company must not affect more than 49 percent of
the mutual insurance holding company’s stock in an intermediate stock
holding company or a reorganized stock insurer.

      7.  If any proceeding under chapter 696B of NRS is brought against a reorganized stock
insurer, the mutual insurance holding company and each intermediate stock
holding company must be named parties to the proceeding. All the assets
of the mutual insurance holding company and each intermediate stock
holding company shall be deemed assets of the estate of the reorganized
stock insurer to the extent necessary to satisfy claims against the
reorganized stock insurer.

      8.  No distribution to members of a mutual insurance holding
company may occur without the prior written approval of the Commissioner.
The Commissioner may give such approval only if he is satisfied that the
distribution is fair and equitable to policyholders as members of the
mutual insurance holding company.

      9.  No solicitation for the sale of the stock of an intermediate
stock holding company or a reorganized stock insurer may be made without
the prior written approval of the Commissioner.

      10.  A mutual insurance holding company or an intermediate stock
holding company may not voluntarily dissolve without the approval of the
Commissioner.

      (Added to NRS by 2001, 2245 ; A 2003, 3330 )
 Nothing contained in
NRS 693A.550 to 693A.665 , inclusive, prohibits a mutual insurance
holding company from converting to a domestic stock insurance company
pursuant to NRS 693A.400 to 693A.540
, inclusive.

      (Added to NRS by 2001, 2246 )
 A membership interest in a mutual insurance
holding company does not constitute a security under the laws of this
state.

      (Added to NRS by 2001, 2246 )


      1.  No director, officer, employee or agent of the mutual insurer,
or any other person, may receive any fee, commission or other valuable
consideration, other than his usual regular salary and compensation, for
aiding, promoting or assisting in a plan of reorganization except as set
forth in the plan of reorganization approved by the Commissioner.

      2.  Subsection 1 does not prohibit a management or employee
incentive compensation program that is contained in the plan of
reorganization and approved by the Commissioner to be adopted upon
reorganization to the reorganized stock insurer or prohibit such a
program to be adopted later by the reorganized stock insurer.

      3.  Subsection 1 does not prohibit the payment of reasonable fees
and compensation to attorneys, accountants, actuaries and investment
bankers for services performed in the independent practice of their
professions if the person is also a member of the board of directors of
the mutual insurer.

      (Added to NRS by 2001, 2246 ; A 2003, 3331 )


      1.  A mutual insurance holding company shall file with the
Commissioner, by March 1 of each year, an annual statement consisting of
an income statement, balance sheet and cash flows prepared in accordance
with generally accepted accounting practices and a confidential statement
disclosing any intention to pledge, borrow against, alienate, hypothecate
or in any way encumber the assets of the mutual insurance holding company.

      2.  A mutual insurance holding company shall, on or before June 1
of each year, file with the Commissioner in a form approved by the
Commissioner a financial statement as of December 31 of the preceding
calendar year that is certified by a certified public accountant.

      (Added to NRS by 2001, 2246 )
 The Commissioner may
order the production of any records, books or other information and
papers in the possession of a mutual insurance holding company or its
affiliates as is reasonably necessary to ascertain the financial
condition of the reorganized stock insurer or to determine compliance
with this title.

      (Added to NRS by 2001, 2246 )
 The
Commissioner may adopt such regulations and issue such orders as he
determines are necessary to carry out the provisions of NRS 693A.550
to 693A.665 , inclusive.

      (Added to NRS by 2001, 2247 )
 Any
person aggrieved by a final order of the Commissioner issued pursuant to
the provisions of NRS 693A.550 to
693A.665 , inclusive, may petition for
judicial review in the manner provided by chapter 233B of NRS.

      (Added to NRS by 2001, 2244 )
 Whenever
it appears to the Commissioner that any person or any director, officer,
employee or agent of the person has committed or is about to commit a
violation of any provision of NRS 693A.550 to 693A.665 , inclusive, or of any regulation or order of
the Commissioner relating thereto, the Commissioner may apply to the
First Judicial District Court in and for Carson City for an order
enjoining the person, director, officer, employee or agent from violating
or continuing to violate any provision of NRS 693A.550 to 693A.665 , inclusive, or any such regulation or order,
and for such other equitable relief as the nature of the case and the
interest of the policyholders, creditors and shareholders of the insurer,
or the public, may require.

      (Added to NRS by 2001, 2246 )