Chapter 26.1-07 Consolidation or Reinsurance of Domestic Companies

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CONSOLIDATION OR REINSURANCE OF DOMESTIC COMPANIES CHAPTER 26.1-07 26.1-07-01. Domestic companies - Consolidation - Reinsurance

As used in this chapter, "consolidate" includes consolidation and merger and "reinsurance" includes only those obligations ceded or assumed by an assumption agreement. An "assumption agreement" is one that transfers all of the direct insurer's obligations under policies of insurance to another insurer and relieves the transferring insurer of any obligations under the policies. A domestic insurance company organized on the stock, mutual, stipulated premium, or assessment plan may not consolidate with any other company, or reinsure its risks or any part thereof with any other company, or assume or reinsure the whole or any portion of the risks of any other company, except in the manner provided by this chapter

26.1-07-02. Petition for allowance of consolidation or reinsurance

When any company described in section 26.1-07-01 proposes to consolidate with any other company, or to enter into any contract of reinsurance, it must file its petition with the commissioner setting forth the terms and conditions of the proposed consolidation or reinsurance contract and asking for approval or modification as provided by this chapter. The company shall file as an exhibit to the petition the proposed consolidation or reinsurance contract

26.1-07-03. Profit by officer or employee prohibited

An officer of a company petitioning for the right to consolidate or to reinsure and an officer or employee of the state may not receive any compensation or gratuity, either directly or indirectly, for aiding, promoting, or in any manner assisting in the consolidation or reinsurance

26.1-07-04. Notice of petition for consolidation or reinsurance

When a petition is filed, the commissioner, within thirty days after filing of the petition, shall issue an order requiring notice by mail to each policyholder of the domestic company if any of its policyholders are being reinsured or it is proposing to consolidate with another company, of the pendency of the petition and of the time when and place where a hearing on the petition will be held. The hearing must be scheduled not more than ninety days from the date of the order. The commissioner shall publish the order of notice and the petition in five newspapers, one of which must be a daily newspaper published at the state capital, at least two weeks before the hearing upon the petition. By mutual agreement between the petitioning company and the commissioner, the time frame set forth in this section may be modified, changed, or extended

26.1-07-05. Commissioner to hear petition - General duties

Repealed by S.L. 1995, ch. 280, § 5

26.1-07-05.1. Hearing on petition - General duties of commissioner

The commissioner shall hold a hearing on the petition and determine whether the consolidation or reinsurance will be allowed. The hearing must be conducted under chapter 28-32. Within sixty days of the close of the hearing, the commissioner shall enter findings of fact, conclusions of law, and an order either approving or disapproving any petition. The commissioner in making the determination shall consider the following: 1. Whether the proposed consolidation or reinsurance contract is inequitable to the policyholders of any domestic insurance company involved; 2. Whether the proposed consolidation or reinsurance contract would materially reduce the financial security of policyholders of the domestic insurer in this state or elsewhere; and 3. Whether the competence, experience, and integrity of the persons of a foreign insurance company who would control the operation of the consolidated insurance company or the reinsuring company are such that it would not be in the interest of the policyholders of the company to permit the consolidation or reinsurance contract

Page No. 1 The findings of fact, conclusions of law, and order entered by the commissioner are subject to appeal under chapter 28-32. The commissioner may waive the hearing if the companies involved and all the policyholders of the domestic companies involved consent to waiving the hearing

26.1-07-06. Commissioner may compel attendance of witnesses - Policyholders and stockholders may appear

The commissioner may summon and compel the attendance and testimony of witnesses and the production of evidence. Any policyholder or stockholder of a company petitioning for consolidation or for the right to reinsure may appear before the commissioner and be heard with reference thereto

26.1-07-07. Expenses paid by petitioner

All actual expenses and costs incident to proceedings under this chapter must be paid by the company filing the petition. An itemized statement of the expenses and costs must be filed with the commissioner with a certified copy of the decision of the commissioner

26.1-07-08. Insurance companies subject to dissolution provisions