citation: INS § 4092

text: When any such plan and agreement shall have been approved by the commissioner, with any changes required by him, the same shall be approved in the case of each domestic mutual insurer that is a party to the transaction by not less than two-thirds of the votes cast by the members thereof represented in person or by proxy at a meeting called to consider the same. At least 30 days before the day fixed for the meeting, notice of such meeting and its purpose shall be given to the members at their addresses appearing on the books maintained at the home office of the insurer. With respect to members whose addresses do not appear on such books of the insurer, notice shall be deemed to have been given if published at least once in some newspaper of general circulation in the county in which the principal office of the insurer is located. At such meeting the presence in person or by proxy of 10 percent of such members of such insurer shall constitute a quorum. In the absence of a quorum the members present at the meeting in person or by proxy may adjourn the meeting to a later date. No further notice need be given of the date to which the meeting is adjourned.

history: (History: Added by Stats. 1975, Ch. 824.)


kind: section

code: INS

citation: INS § 4093

text:
If the vote is in the affirmative, a certified copy of all proceedings relating to the proposed transaction shall be filed with the commissioner. If one of the insurers that is a party to the transaction is a foreign corporation there shall also be filed with the commissioner evidence of an approval, consent, or authorization as may be required by the laws of the state of incorporation of the foreign insurer. If the commissioner finds that the proceedings have been in accordance with the law and the commissioner’s requirements, he or she shall issue a certificate approving the plan and agreement and the transaction shall become effective when the certificate, the agreement, and any other documents required by law have been filed with the Secretary of State.

The fee for issuing the certificate approving the transaction shall be six thousand three hundred fifty dollars ($6,350), payable in advance with the filing with the commissioner of the first papers relating to the proposed transaction; eight dollars ($8) shall be charged for each signed and sealed or certified copy thereof issued as part of the same transaction in which the original certificate is issued.

history: (History: Amended by Stats. 2017, Ch. 534, Sec. 53. (AB 1699) Effective January 1, 2018.)

division: 2. CLASSES OF INSURANCE

part: 1. FIRE AND MARINE INSURANCE

chapter: 4. General Mutual Insurers

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 4. General Mutual Insurers > 9. Merger, Consolidation, Reinsurance, or Transfer of Assets and Liabilities


citation: INS § 4094

text: Any plan of merger, consolidation, or other unification under this article shall provide that all rights and properties of the parties to the plan of merger, consolidation or other unification shall accrue to and become the rights and properties of the surviving or consolidated or continuing corporation which shall succeed to and assume all the obligations and liabilities of the merged, consolidating, or transferring corporation in the same manner as if incurred or contracted by the surviving, consolidated, or continuing corporation.

article: 9. Merger, Consolidation, Reinsurance, or Transfer of Assets and Liabilities


citation: INS § 4095

text: In the event a mutual insurer is merged, consolidated, or part of a reorganization under the procedures specified in this article, and the surviving, consolidated, or continuing company is an incorporated stock insurer, the plan shall provide for the manner of converting or exchanging the equity interests of current members in the domestic mutual insurer into shares, subscription rights, warrants, options, cash, dividends, premium credits, certificates of contribution, or any other interests that may be provided in the plan. However, notwithstanding the foregoing, the equity interest of a policyholder in the mutual insurer may be converted or exchanged solely into premium credits if the plan and agreement shall so provide, but only at the policyholder’s election. Any person holding a subscription note or other debt instrument evidencing a capital contribution to the domestic mutual insurer shall be entitled upon demand to have the note or debt instrument redeemed for cash or securities as provided in the plan. The plan may provide for additional securities to be sold to directors, officers, employees, and former members of the domestic mutual insurer in accordance with the provisions of Article 8 (commencing with Section 820) of Chapter 1 of Part 2 of Division 1. Nothing in this section shall preclude the issuance of different securities, subject to the approval of the commissioner, provided that comparable securities shall be issued at prices not less than the conversion or exchange values of any such securities distributed to current policyholders. Notwithstanding any other provision of law, conversion or exchange constitutes full payment and discharge of the members’ property interest in the domestic mutual insurer and the members have no other rights with respect thereto, except for rights relating to a continuing debt or equity interest that a former member holds in the surviving insurer.

history: (History: Added by Stats. 1995, Ch. 728, Sec. 7. Effective January 1, 1996.)


citation: INS § 4096

text: In the event a domestic mutual insurer is merged, consolidated, or a part of a reorganization under the procedures specified in this article, and the surviving, consolidated, or continuing company is a nonadmitted insurer, the plan of merger shall provide either for that insurer to be admitted to transact insurance in California or for any nonsurviving insurer admitted in California to withdraw from the state.

history: (History: Added by Stats. 1995, Ch. 728, Sec. 8. Effective January 1, 1996.)


citation: INS § 4097

text:
(a) A domestic incorporated medical malpractice mutual insurer, issuing nonassessable policies on a reserve basis may be converted into an incorporated stock insurer issuing, on a reserve basis, nonassessable policies either by demutualization or by establishing a mutual holding company. To that end, it may provide and carry out a plan for the conversion by complying with the requirements of this article.

(b) A mutual holding company may be converted into a stock corporation. To that end, it may provide and carry out a plan for the conversion by complying with the requirements of this article.

(c) As part of the conversion authorized in this section, a domestic incorporated medical malpractice mutual insurer may merge with an incorporated stock insurer, if the merging insurers comply with the provisions of Article 9 (commencing with Section 4090) applicable to their participation in the merger, or may transfer its domicile to any other state, if the insurer complies with Section 709.5.

history: (History: Added by Stats. 1998, Ch. 421, Sec. 4. Effective January 1, 1999.)

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 4. General Mutual Insurers > 10. Conversion of an Incorporated Medical Malpractice  Mutual Insurer into an Incorporated Stock Insurer


text:
The definitions in this section apply to the following terms when used in this article.

(a) “Adoption date” means the date the board of directors adopts the plan of conversion.

(b) “Converted company” means the converted insurer or converted mutual holding company, as the case may be.

(c) “Converted insurer” means the incorporated stock insurer into which a medical malpractice mutual insurer has been converted or merged or redomiciled in accordance with the provisions of this article.

(d) “Converted mutual holding company” means the stock corporation into which a mutual holding company has been converted in accordance with this article.

(e) “Converting mutual company” means, for a plan of conversion under this article, the medical malpractice mutual insurer or mutual holding company that is converting under the plan.

(f) “Demutualization” means the conversion of a medical malpractice mutual insurer into a stock insurer without the establishment of a mutual holding company or the conversion of a mutual holding company into a stock corporation.

(g) “Effective date” means, for the conversion of a medical malpractice mutual insurer, the date upon which the conversion of the mutual insurer is effective, as specified in the commissioner’s amendment to the mutual insurer’s certificate of authority issued in accordance with Section 4097.11, as a result of conversion proceedings under this article. For the conversion of a medical malpractice mutual holding company, “effective date” means the date upon which the conversion of a mutual holding company is effective, as specified in the amended articles of incorporation of the mutual holding company filed with the Secretary of State in accordance with Section 4097.11, as a result of conversion proceedings under this article.

(h) “Eligible members” means, for the conversion of a mutual insurer, members of the mutual insurer who are of record, fully paid-up and otherwise in good standing on the mutual insurer’s adoption date and on its effective date, but shall not include those persons covered solely under a reporting endorsement to a claims made policy on either date. For the conversion of a mutual holding company, “eligible members” means the members of the mutual holding company who are of record, fully paid-up with respect to policies in effect issued by the converted insurer and are otherwise in good standing on the mutual holding company’s adoption date and on its effective date.

(i) “Medical malpractice mutual insurer” means a mutual insurer organized under this chapter that writes predominantly medical malpractice insurance, as that class of insurance is defined in subdivision (d) of Section 108. A mutual insurer shall be considered to write predominantly medical malpractice insurance if, for each of the most recent five calender years, its direct written premiums for medical malpractice insurance, as reported in the annual statement filed with the commissioner pursuant to Section 900, is not less than 50 percent of its aggregate direct premiums for all classes of insurance.

(j) “Member” means a person who, by the records of the mutual company and by its articles of incorporation or bylaws, is deemed to be a holder of a membership interest in the mutual company. On and after the effective date of a plan of conversion that creates a mutual holding company, the term “member” means a member of a mutual holding company, as provided in Section 4097.12.

(k) “Membership interests” means the interests of members arising under this code and the articles of incorporation and bylaws of the mutual company or otherwise by law. Membership interests include the right to vote for directors of the mutual company and the right to vote on any plan of merger, consolidation, reinsurance, or transfer of assets and liabilities of the mutual company.

(l) “Mutual company” means, in the case of a plan of conversion, the medical malpractice mutual insurer or mutual holding company that is converting pursuant to the plan.

(m) “Mutual holding company” means a corporation organized under the laws of this state subject to the general corporation law as set forth in the Corporations Code. The articles of incorporation of a mutual holding company shall contain provisions stating the following:

(1) It is a mutual holding company organized under this article.

(2) One purpose of the mutual holding company is to hold not less than 51 percent of the voting stock of a stock holding company, which in turn holds all of the voting stock of a converted insurer. In addition, the mutual holding company shall own not less than 51 percent of the total stockholders’ equity of the stock holding company at all times.

(3) It is not authorized to issue voting stock.

(4) Its members have the rights specified in Section 4097.12 and in its articles of incorporation and bylaws.

(5) Its assets and liabilities are subject to inclusion in the estate of the converted insurer in any proceedings successfully prosecuted against the converted insurer under Article 14 (commencing with Section 1010) or Article 14.3 (commencing with Section 1064.1) of Chapter 1 of Part 2 of Division 1.

(n) “Mutual holding company independent director” means a member of the board of directors of the mutual holding company who does not own shares, options, or any other equity interests in the stock holding company.

(o) “Mutual insurer” means, in the case of a plan of conversion under this article, the medical malpractice mutual insurer that is converting pursuant to the plan.

(p) “Person” means an individual, partnership, firm, association, corporation, joint-stock company, limited liability company, trust, government or governmental agency, state or political subdivision of a state, public or private corporation, board, association, estate, trustee, or fiduciary, or any similar entity.

(q) “Plan of conversion” or “plan” means a plan adopted by a mutual company in compliance with this article.

(r) “Policy” means an individual or group policy of insurance issued by a mutual insurer or a converted insurer. If a policy takes a form other than an individual form but holders of certificates or other interests under the policy are treated by the mutual insurer as if they were holders of individual policies, the mutual insurer may provide in its plan of conversion under this article that such a certificate or other interest is deemed to be a policy and deem the holder of the certificate or other interest to be an owner of a policy. Such a provision shall be for the sole purpose of determining the rights, if any, of policyholders of the mutual insurer to vote upon and receive consideration under the plan of conversion and shall not affect the other voting rights and qualifications of members of the mutual insurer.

(s) “Policyholder” means the holder of a policy other than a reinsurance contract.

(t) “Rights in surplus,” for a mutual insurer, means rights of members of the insurer to a return of that portion of the surplus that has not been apportioned or declared by the board of directors for policyholder dividends. “Rights in surplus” includes rights of members of the insurer to a distribution of surplus in liquidation, conservation or demutualization of the insurer under this code, or in a dissolution or winding up. “Rights in surplus,” for a mutual holding company, means rights of members of the company to a return of any surplus that has not been apportioned or declared by its board of directors for member dividends. “Rights in surplus” includes rights of members of the mutual holding company to a distribution of surplus in liquidation, conservation, or demutualization of the insurer under this code, or in a dissolution or winding up. “Rights in surplus” does not include any right expressly conferred solely by the terms of an insurance policy.

(u) “Stock holding company” means a corporation authorized to issue one or more classes of capital stock, the corporate purposes of which include holding all of the voting stock in an insurer that has been converted from a mutual insurer to a stock insurer in proceedings under Section 4097.05 in which a mutual holding company is formed.

(v) “Voting stock” means securities of any class or any ownership interest having voting power for the election of directors, trustees, or management of a person, other than securities having voting power only because of the occurrence of a contingency. All references to a specified percentage of voting stock of any person mean securities having the specified percentage of the voting power in that person for the election of directors, trustees, or management of that person, other than securities having voting power only because of the occurrence of a contingency.

article: 10. Conversion of an Incorporated Medical Malpractice  Mutual Insurer into an Incorporated Stock Insurer


text:
The plan of conversion shall include appropriate proceedings for amending the mutual company’s articles of incorporation to give effect to the conversion from a nonstock corporation into a stock corporation. The plan shall be:

(a) Approved by a resolution of two-thirds of the board of directors. The resolution shall specify the reasons for and the purposes of the proposed conversion of the mutual company and the manner in which the conversion is expected to benefit and serve the best interests of the policyholders, for a mutual insurer, or members, for a mutual holding company.

(b) Submitted to the commissioner for consent in writing, subject to the provisions of Section 4097.06, by an application executed by an authorized officer of the mutual company and accompanied by the following documents, or true and correct copies of the documents:

(1) The proposed plan of conversion.

(2) The proposed articles of incorporation of each corporation that is a constituent corporation of the conversion.

(3) The proposed bylaws of each corporation that is a constituent corporation of the conversion.

(4) A list of officers and directors, together with their biographies in the form customarily required by the commissioner, of each corporation that is a constituent corporation of the conversion.

(5) The resolution of the board of directors of the mutual company, certified by the secretary of the board of directors, authorizing the conversion under this article, and a report of the percentage of directors approving the resolution.

(6) Financial statements, which may be prepared on a pro forma basis, in the form required by the commissioner.

(7) For a conversion of a mutual insurer, a plan of operations for the converted insurer.

(8) A summary of the plan of conversion and drafts of written materials to be mailed to members seeking their approval of the plan.

(9) If the plan provides for the establishment of a mutual holding company under Section 4097.05, it shall contain all of the following:

(A) An information statement containing, at a minimum, the information required under Section 4097.07.

(B) A description of any plans for an initial public offering, including a description of the maximum percentage of stock to be sold, the process to be used in offering the stock and setting the initial sale price for the stock, and how policyholders would be treated in an initial public offering.

(C) A description of any plans for the transfer of assets and liabilities, including any subsidiaries, to the mutual holding company.

(D) Any final rulings relating to the plan of reorganization obtained from any federal government agency, and all supporting documents submitted to the agency in connection with those rulings.

(10) A copy of the proposed form of notice of the special meeting sent to members pursuant to Section 4097.07.

(11) Other relevant information that the commissioner may require.

(c) Approved by two-thirds of the members of the mutual company voting at a meeting of the members called for that purpose, subject to the provisions of Section 4097.07.

(d) Filed in the office of the commissioner after receipt of the commissioner’s consent, and after having been approved as provided in Sections 4097.06 and 4097.07, respectively.


text: For the conversion of a medical malpractice mutual insurer, the plan of conversion shall provide for either a demutualization in compliance with Section 4097.04 or for a mutual holding company in compliance with Section 4097.05. For the conversion of a mutual holding company, the plan of conversion shall provide for demutualization in compliance with Section 4097.04.


text:
For the demutualization of a mutual insurer into a stock insurer or for the demutualization of a mutual holding company into a stock corporation, the plan for conversion shall include the following:

(a) A fair, just, and equitable formula, approved by the commissioner, for determining the rights in surplus of each eligible member in the mutual company. The formula shall take account of both the total premiums paid by each eligible member and the duration of his or her membership. The rights in surplus shall be based upon an appraisal of the fair value of the mutual company by one or more qualified disinterested persons appointed by the mutual company with the approval of the commissioner. Those persons shall consider the assets and liabilities of the mutual company and any factors bearing on the value of the mutual company.

(b) Each eligible member of the mutual company shall be given a preemptive right to acquire his or her proportionate part of all of the proposed capital stock of the converting mutual company, within a designated reasonable period, by applying upon the purchase of that part the amount of his or her rights in surplus as determined under the formula described in subdivision (a).

(c) Each member not applying his or her rights in surplus upon the purchase price of stock shall elect to receive either a cash payment or a certificate of contribution. The cash payment shall not be greater than 50 percent of his or her rights in surplus as determined by the formula in subdivision (a). The certificate of contribution shall be in an amount equal to 100 percent of his or her rights in surplus, as determined by the formula in subdivision (a), shall bear interest at the rate established in Section 10489.4 for minimum standard valuation of all life insurance policies of more than 20 years’ duration issued in the year, and shall be repayable within 10 years or, if necessary under the terms of the plan, later, only on written approval of the commissioner and only out of surplus in excess of an amount established in the plan. Any member not electing to receive cash or purchase stock shall be deemed to have elected to receive a certificate of contribution. The stock purchased, cash payment, or certificate of contribution shall constitute full payment and discharge of the member’s rights in surplus or property interest in the mutual company, and, notwithstanding any other provision of law, the member shall have no other rights with respect thereto.

(d) The number of shares to be authorized for the new stock insurer, their par value, and the method for determining the price at which the shares will be offered to eligible members, to the end that the plan, when completed, would satisfy the financial requirements for issuance of a license to transact insurance.

(e) Provision for the offering to others of shares not purchased by eligible members within the designated period referred to in subdivision (b) at a price not less than the offering price to members.


text: A plan of conversion adopted by a medical malpractice mutual insurer to establish a mutual holding company shall provide that the medical malpractice mutual insurer will become a stock insurer, that the members of the medical malpractice mutual insurer will become members of a mutual holding company, that the mutual holding company will acquire at least 51 percent of the voting stock of the stock holding company, and that the stock holding company will acquire all of the voting stock of the converted insurer.


text:
(a) The commissioner shall examine the plan submitted pursuant to subdivision (b) of Section 4097.02. If the plan provides for the establishment of a mutual holding company under Section 4097.05, the mutual insurer shall demonstrate that the issuance of stock:

(1) Will not require members to pay additional funds to retain their rights in surplus, but nothing herein is intended to prohibit or restrict a mutual insurer that is converting to a stock insurer by establishing a mutual holding company from offering to its members subscription rights that are in addition to the rights in surplus to be held in the mutual holding company.

(2) Issued to officers, directors, employees, or employee benefit plans for their benefit, if any, will be fair, just and equitable and not hazardous to policyholders, stockholders, or creditors.

(3) Provides sufficient means for the accumulated earnings, cash, and other non-operating assets held by the mutual holding company to inure to the exclusive benefit of its members.

(b) As part of the examination the commissioner shall order a public hearing on the plan after written notice of the hearing to the mutual company, its members, and the public. Members of the mutual company, their representatives, and the public shall have the right to appear at the public hearing and to submit written comments to the commissioner. The hearing shall occur before the policyholder vote. The commissioner may require as a condition of consent that the mutual company make modifications of the proposed plan that the commissioner finds necessary for the protection of policyholders. The commissioner shall consent to the plan if he or she finds all of the following:

(1) For the conversion of a mutual insurer, the plan is fair, just, and equitable to the insurer and its policyholders.

(2) For the conversion of a mutual holding company, the plan is fair, just, and equitable to the company, its members, and the policyholders of the converted insurer.

(3) The plan does not violate the law.

(4) The converted insurer will, after the conversion, satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed.

(c) For the conversion of a mutual company, the commissioner may appoint one or more actuarial, financial, or other consultants, including legal counsel, as the commissioner finds necessary to advise the commissioner in making the determination of whether the proposed plan of conversion meets the applicable requirements of this article. The mutual company is responsible for the reasonable fees and expenses of any actuarial, financial, or other consultants, including legal counsel, appointed, and for the mailing and publication of notices to the mutual company and its members.


text:
The meeting of members prescribed by subdivision (c) of Section 4097.02 shall be called by the board of directors, the chairperson of the board, or the president of the mutual company. Notice of the meeting shall be given to eligible members by mail at least 45 days prior to the date set for the meeting to members of the mutual company of record on the date the plan of conversion was adopted by the board of directors. In the event that a plan of reorganization provides for the establishment of a mutual holding company under Section 4097.05, the notice shall be accompanied by an information statement describing the proposed reorganization. The information statement shall include, at a minimum, the following items:

(a) A full copy and a summary of the plan of reorganization.

(b) A discussion addressing the reasons and purposes of the proposed restructuring, which shall include a comparison to a demutualization.

(c) An analysis of the benefits and risks associated with the proposed reorganization to the mutual company and its policyholders.

(d) An explanation of how the restructuring will benefit policyholders, as well as a description of any potential risks to policyholder interests and a description of how the policyholders’ rights differ at the mutual holding company level from those in the existing company.

(e) A description of any stock issuance, including any shares or options to be issued to directors, officers, agents, employees, or employee benefit plans, for their benefit, that will be made in conjunction with the plan of conversion, if any, and the guidelines and parameters which shall apply in the event stock is to be issued, including a detailed discussion of subscription rights that are to be granted to policyholders.

(f) Any proposed amendments to the mutual insurer’s articles of incorporation to address the restructuring from a mutual to a stock insurer.

(g) Any proposed articles and bylaws of the mutual holding company and any other entities to be created in the reorganization.

(h) Financial information.

(i) Any other information that the commissioner determines is necessary to make a complete and adequate disclosure to policyholders.

Voting shall be by ballot, in person or by proxy. A quorum shall consist of 10 percent of the members of the mutual company entitled to vote at the meeting.


text:
Nothing in this article shall be deemed to prohibit the inclusion in the plan of conversion of provisions under which the insurer’s officers, directors, employees, agents, and employee benefit plans for their benefit may be entitled, in accordance with reasonable classifications of those individuals and employee benefit plans as may be included in the plan, to purchase for cash, at the same price as offered to the public in the initial public offering, voting stock not purchased by members upon exercise of subscription rights. Nothing in this code shall be deemed to prohibit the establishment of stock option, incentive, and share ownership plans customary for publicly traded companies in the same and similar industries. The plan may not permit those persons to acquire any of the following:

(a) Greater than 25 percent of the voting stock issued pursuant to the plan for a medical malpractice mutual insurer having assets in excess of two hundred million dollars ($200,000,000) or 35 percent for a medical malpractice mutual insurer having assets of two hundred million dollars ($200,000,000) or less.

(b) Greater than 25 percent of the stockholders’ equity for a medical malpractice mutual insurer having assets in excess of two hundred million dollars ($200,000,000) or 35 percent for a medical malpractice mutual insurer having assets of less than two hundred million dollars ($200,000,000).

(c) Unexercised options that exceed 20 percent of the number of the issued and outstanding shares.


text: No director, officer, agent, or employee of the mutual company shall receive any fee, commission, or other valuable consideration whatsoever, other than regular salary and compensation, for in any manner aiding, promoting, or assisting in the conversion except as set forth in the plan approved by the commissioner. This provision shall not be deemed to prohibit the payment of reasonable fees and compensation to attorneys at law, accountants, and actuaries for services performed in the independent practice of their professions, even though they may also be directors of the mutual company.


text: At any time before that plan of conversion becomes effective as provided in Section 4097.11, the mutual company may, by resolution of at least two-thirds of the board of directors, amend the plan of conversion or withdraw the plan of conversion. Any plan amendment shall require the written consent of the commissioner. For a plan amendment, all references in this article to the plan of conversion shall be deemed to refer to the plan as amended, but no amendment shall be deemed to change the adoption date of the plan of conversion. No amendment may change the plan of conversion in a manner that the commissioner determines is materially disadvantageous to policyholders of the mutual insurer or members of the mutual holding company, unless a further public hearing is held on the plan as amended, if the amendment is made after the initial public hearing, or if the plan as amended is submitted for reconsideration by the members if the amendment is made after the plan has been approved by the members.


text:
(a) Upon consent by the commissioner to the plan of conversion of a mutual insurer and filing of the plan of conversion in accordance with the provisions of this article, the commissioner shall issue a new certificate of authority to the converted insurer. Upon issuance of the certificate of authority to a mutual insurer and subject to subdivision (a) of Section 110 of the Corporations Code, the Secretary of State shall accept for filing the articles of incorporation, certificate of amendment of articles of incorporation, or agreement of merger and officers’ certificates of the converted insurer for the conversion of a mutual insurer. For a plan of conversion that provides for the establishment of a mutual holding company in accordance with Section 4097.05, the Secretary of State shall accept for filing the articles of incorporation of the mutual holding company and the stock holding company. Upon consent to the plan of conversion of a mutual holding company and filing of the plan of conversion in accordance with the provisions of this article, the Secretary of State shall accept for filing the articles of incorporation or certificate of amendment of articles of incorporation of the converted mutual holding company. The plan is effective upon the filing of the articles of incorporation or certificate of amendment of articles of incorporation.

(b) Upon the effective date of the plan of conversion of a mutual insurer, the mutual insurer shall immediately become a stock corporation. The converted insurer shall be a continuation of the original mutual insurer, and the conversion shall in no way annul, modify, or change any of the original mutual insurer’s existing suits, rights, contracts, or liabilities except as provided in the approved conversion plan. The insurer, after conversion, shall exercise all the rights and powers and perform all the duties conferred or imposed by law upon insurers writing the classes of insurance written by it, and shall retain the rights and contracts existing prior to conversion, subject to the effect of the plan.

(c) Upon the effective date of the plan of conversion of a mutual holding company, all membership interests and rights in surplus are extinguished, members eligible to receive consideration under the plan of conversion are entitled to receive the consideration in exchange for their membership interests and liquidation of their rights in surplus, and the plan otherwise becomes effective in accordance with its terms. The conversion in no way annuls, modifies, or changes any of the converting mutual holding company’s existing suits, rights, contracts, or liabilities, except as provided in the approved plan of conversion.


text:
(a) Upon the effective date of a plan of conversion in accordance with Section 4097.05, the mutual insurer immediately becomes a stock corporation, the membership interests and rights in surplus of its members are extinguished, the members of the mutual insurer immediately become members of the mutual holding company and are granted rights in surplus in the mutual holding company equivalent to those rights in surplus previously held in the converted company, all of the voting stock initially issued by the converted insurer is owned by the stock holding company, and all of the voting stock initially issued by the stock holding company is owned by the mutual holding company. Except for the membership interests in the mutual insurer, which become membership interests in the mutual holding company, nothing herein is intended to, nor shall eliminate, curtail or otherwise diminish the contract rights of policyholders of a converted company. The stock holding company may thereafter, subject to compliance with Article 8 (commencing with Section 820) of Chapter 1 of Part 2 of Division 1, issue securities to other persons. After the effective date, owners of policies that are issued by a stock insurer that has been converted from a mutual insurer pursuant to proceedings under this article shall become members of the mutual holding company immediately upon issuance of the policies, except that owners of a reporting endorsements issued by the insurer that provide strictly tail coverage on expired claims made policies shall not be members of the mutual holding company. Any person may be a member of a mutual holding company.

(b) From the effective date, the mutual holding company shall hold at least 51 percent of the issued and outstanding voting stock of the stock holding company and the stock holding company thereafter shall at all times hold all of the issued and outstanding voting stock of the converted insurer. The stock holding company may issue additional voting stock, and securities convertible into voting stock, to the mutual holding company and to other persons if, in the aggregate, the voting stock of the stock holding company held by the mutual holding company is not less than 51 percent of the issued and outstanding voting stock of the stock holding company. For purposes of the 51 percent limitation, any issued and outstanding securities of the stock holding company that are convertible into voting stock are considered issued and outstanding voting stock.

(c) From the effective date, the mutual holding company’s equity interest in the stock holding company shall not be less than 51 percent of the total stockholders’ equity in the stock holding company. For purposes of the 51 percent limitation, any issued and outstanding securities of the stock holding company that are convertible into equity securities, whether voting or nonvoting, shall be considered stockholders’ equity. Debt securities that include a default contingency conversion interest shall not be considered stockholders’ equity for compliance with the foregoing limitation.

(d) The commissioner shall retain jurisdiction over the mutual holding company pursuant to this article. For purposes of Section 1215.5, the mutual holding company shall be considered as if it were an insurance company. The commissioner shall also retain jurisdiction over the issuance of debt securities by the mutual holding company in accordance with the protections provided in Article 8 (commencing with Section 820) of Chapter 1 of Part 2 of Division 1.

(e) If any proceedings under Article 14 (commencing with Section 1010), Article 14.3 (commencing with Section 1064.1), Article 14.5 (commencing with Section 1065.1), or Article 15.5 (commencing with Section 1077), of Chapter 1 of Part 2 of Division 1, are brought naming as a party a stock insurer created as a result of proceedings authorized by this article, the mutual holding company formed as part of the conversion automatically becomes a party to the proceedings. All of the assets of the mutual holding company, including, but not limited to, its interest in the stock holding company formed pursuant to this article, are deemed assets of the estate of the stock insurer to the extent necessary to satisfy claims of persons against the stock insurer who have claims falling within the priorities established in paragraphs (1) to (5), inclusive, of subdivision (a) of Section 1033. Claims of persons in their capacity as members of the mutual holding company shall be claims falling within the priority established in paragraph (6) of subdivision (a) of Section 1033. A mutual holding company may not dissolve, liquidate, or wind up and dissolve without the prior written approval of the commissioner or the court pursuant to proceedings brought pursuant to Article 15 (commencing with Section 1070) of Chapter 1 of Part 2 of Division 1.

(f) Except as provided in this code, a mutual holding company is subject to the provisions of the general corporation law in like manner with other corporations. However, provisions of that law referring to shareholders or members shall be applied as though those provisions referred to the members of a mutual holding company. With respect to the management, records, and affairs of a mutual holding company and except as otherwise provided in this chapter, a member of a mutual holding company has the same character of rights and relationship as a stockholder has toward a domestic stock insurer subject to the provisions of this code.

(g) Each member of a mutual holding company is entitled to one vote on each matter coming to a vote at any meeting of members, regardless of the number of policies that the member holds.

(h) Notice of all meetings of members of the mutual holding company, whether annual or special, shall be given in writing to the members entitled to vote. The notice shall be given by the secretary, assistant secretary, or other persons charged with that duty. If there is no officer so charged, or if he or she neglects or refuses this duty, notice may be given by any director. At the option of the converted insurer, the notice may be imprinted on premium notices or receipts or on both. A notice may be given to any member either personally, or by mail, or other means of written communication, charges prepaid, addressed to the member at his or her address appearing on the books of the insurer, or given by the member to the converted insurer for the purpose of notice. If a member gives no address, and if there is no address on the books of the insurer, notice shall be deemed to have been given the member if sent by mail or other means of written communication addressed to the place where the principal office of the converted insurer is situated, or if published at least once in a newspaper of general circulation in the county in which the office is located and in the newspaper that has the largest daily circulation in this state. Notice of any meeting of members shall be sent to each member entitled to notice not less than 14 days before a meeting. Notice of any meeting of members shall specify the place, the day, and the hour of the meeting and the general nature of the business to be transacted. For any member who gives no address and has no address on the books of the insurer, notice of an annual meeting to be held at the time and place specified is deemed adequate if published at least once in each of four successive weeks in a newspaper of general circulation in the county in which the principal office of the converted insurer is located and in the newspaper that has the largest daily circulation in this state. If the notice is so published, no other notice of the meeting is required.

(i) The presence in person or by proxy of 5 percent of the members of a mutual holding company entitled to vote at any meeting constitutes a quorum for the transaction of all business of the mutual holding company, including, but not limited to, the amendment of the articles of incorporation or bylaws of the mutual holding company.

(j) Any required member approval shall be by the affirmative vote of a majority of the members who vote, or a higher percentage of the members as may be required by law or the articles of incorporation, a quorum being present.

(k) The board of the mutual holding company shall be comprised of not less than 6 nor more than 18 directors. A majority of the mutual holding company directors shall be policyholders of the converted insurer. Unless the plan provides that at least a majority of the directors of the boards of the stock holding company and the converted insurer are also directors of the mutual holding company, the commissioner shall determine whether the proposed composition of the boards of directors of each of the constituent corporations of the mutual holding company system, as provided in the articles of incorporation and bylaws, facilitate the control of the converted insurer by the mutual holding company. No term shall continue longer than six years. In the absence of such provisions, each director shall be elected for a term of one year. All directors shall hold office for the term for which they are elected and until their successors are elected and qualified. The bylaws of the mutual holding company shall set forth a procedure for establishing mutual holding company independent directors in the event that the stock holding company issues securities. Not less than one of every six directors of the mutual holding company shall be so designated. A director may, but need not, be a member of the mutual holding company of which he or she is acting as director. Vacancies in the board of directors may be filled by a majority of the remaining directors, though less than a quorum. Each director so elected shall hold office until the next annual meeting.

(l) Membership interests in a mutual holding company are exempt from Article 8 (commencing with Section 820) of Chapter 1 of Part 2 of Division 1. A description of the membership interests and related factual disclosure shall not be considered to be an inducement to buy insurance in violation of Section 10430. Any promise of returns, profits, or distributions, or representations with regard to the benefits of membership, made as an inducement in connection with the issuance and delivery of a policy is subject to Section 10430 and the remedy provided in Section 10433.


text:
(a) Prior to, and for a period of five years following, the effective date of the plan of conversion, no person or group of persons acting in concert shall directly or indirectly offer to acquire or acquire in any manner the beneficial ownership of 5 percent or more of any class of voting securities of a converted insurer or of a person that controls, as defined by subdivision (c) of Section 1215, the converted insurer, without the prior consent of the commissioner. Any application for that approval shall contain information as the commissioner may require and shall be accompanied by a filing fee in an amount equal to the filing fee specified in Section 1215.2.

(b) In the event of any violation of this section, or of any action that, if consummated, would constitute a violation, all voting securities of the converted insurer or of the person acquired by any person in excess of the maximum amount permitted to be acquired by the person pursuant to this subdivision shall be deemed to be nonvoting securities of the converted insurer or of that person. The violation or action may be enforced or enjoined by an appropriate proceeding commenced by the converted insurer, a person, the commissioner, any policyholder or stockholder of the converted insurer, or the person on behalf of the converted insurer or the person in the superior court in the judicial district in which the converted insurer has its home office or in any other court having jurisdiction. The court may issue any order it finds necessary to cure the violation or to prevent the proposed action. In addition to the foregoing, whenever it appears to the commissioner that any person has committed a violation of this section, the commissioner may proceed as provided in Article 14 (commencing with Section 1010) of Chapter 1 of Part 2 of Division 1 to take possession of the property of the converted insurer and to conduct the business thereof.

(c) For the purposes of this section, “beneficial ownership,” with respect to voting securities, means the sole or shared power to vote, or direct the voting of, voting securities or the sole or shared power to dispose, or direct the disposition, of voting securities.

(d) For the purposes of this section, “voting security” includes voting stock as defined in Section 4097.01, any preorganization certificate or subscription, including subscription rights issued pursuant to a plan of conversion, or any security convertible, with or without consideration, into voting security, or carrying any warrant or right to subscribe for, or purchase any, voting security, or any such warrant or right.

(e) For the purposes of this section, “offer” includes an offer to buy or acquire, solicitation of an offer to sell, tender offer for, or request or invitation for tenders of a security or interest in a security for value.

history: (History: Amended by Stats. 2017, Ch. 417, Sec. 22. (AB 1696) Effective January 1, 2018.)


text: Unless otherwise provided in the plan of conversion, the directors and officers of the mutual company shall serve as directors and officers of the converted company until new directors and officers have been duly elected and qualified pursuant to the articles of incorporation and bylaws of the stock company.


text:
(a) Notwithstanding any other provision of law and except as otherwise provided in subdivision (b), actions concerning any plan of conversion, proposed plan of conversion, plan amendment, or proposed plan amendment under this article or any acts taken or proposed to be taken under this article shall be commenced within one year after the plan of conversion or plan amendment is filed in the office of the commissioner pursuant to subdivision (d) of Section 4097.02 or subdivision (a) of Section 4098.1, or six months from the effective date of the plan of conversion, whichever is later. If the plan of conversion is withdrawn, the actions or acts shall be commenced within six months from the date the board of directors approves a resolution to withdraw the plan. If an action concerns or arises out of a plan amendment or proposed plan amendment made under Section 4097.18, the applicable time period is measured from the filing, effective date, or approval of withdrawal of the plan amendment, whichever is later.

(b) Judicial review of any act of the commissioner or any other governmental body or officer concerning or arising out of any plan of conversion, proposed plan of conversion, plan amendment, or proposed plan amendment under this article may only be had by filing a petition for a writ of mandate within 30 days of the date of the act. However, any petition seeking judicial review shall be filed no later than 30 days from the effective date of the plan of conversion or plan amendment, whichever is the subject of the petition.


text: The offer or sale of securities, including any debt securities, issued pursuant to the plan of conversion developed and approved in accordance with the provisions of this article, shall be exempt from Article 8 (commencing with Section 820) of Chapter 1 of Part 2 of Division 1.


text: The commissioner shall have the authority from time to time, to make, amend, and rescind any rules and regulations as may be necessary to carry out the provisions of this article. The commissioner shall also have the authority to charge and collect from the insurer for the actual amount of expenses reasonably incurred by the state in discharge of the commissioner’s duties hereunder.


text: Upon completion of the act of conversion and issuance of the certificate of authority under Section 4097.11, the Secretary of State shall accept for filing a verified copy of the amended articles of incorporation.


text:
(a) The amended articles of incorporation of a converted company that have been adopted pursuant to a plan of conversion and filed with the Secretary of State in accordance with Section 4097.11 may be further amended after the effective date pursuant to applicable law. The plan of conversion may be amended in other respects after the effective date of the plan as specified in this section. The amendment shall take effect upon filing with the Secretary of State after compliance with the following:

(1) Approval by a resolution of at least two-thirds of the board of directors of the converted company. The resolution shall specify the reasons for and the purposes of the proposed amendment.

(2) Submission to the commissioner for consent in writing, subject to the provisions of Section 4097.06.

(3) For the conversion of a mutual insurer, approval by at least two-thirds of those current policyholders of the corporation who were members of the former mutual insurer and were entitled to vote on the original plan of conversion approved pursuant to subdivision (c) of Section 4097.02 and who vote at a meeting called for that purpose.

(4) For the demutualization of a mutual holding company, approval by at least two-thirds of those current members of the corporation who were members of the former mutual holding company and were entitled to vote on the original plan of conversion approved pursuant to subdivision (c) of Section 4097.02 and who vote at a meeting called for that purpose.

(5) Filed in the office of the commissioner after having been consented to and approved as contemplated by paragraphs (2), (3), and (4).

(b) If an amendment proposed under subdivision (a) would adversely affect the rights of one or more classes of members, but not all those members, then only the members of each class whose rights would be adversely affected by the proposed amendment are entitled to vote on the proposed plan amendment.

(c) A policyholder or member meeting prescribed by paragraph (3) or (4) of subdivision (a) shall be called by the board of directors, the chairperson of the board, or the president of the converted company. Notice of the meeting shall be given to policyholders or members entitled to vote at the meeting by mail at least 45 days prior to the date set for the meeting. Voting shall be by ballot, in person, or by proxy. A quorum consists of 10 percent of the policyholders or members of the converted company entitled to vote at the meeting.

(d) At any time before the plan amendment becomes effective, the converted company may, by resolution of two-thirds of the board of directors, amend the plan amendment or withdraw its plan amendment. For an amendment to a plan amendment, all references in this section to the plan amendment shall be deemed to refer to the plan amendment as amended. Any amendment of the plan amendment shall require the written consent of the commissioner. No amendment shall be deemed to change the date of adoption of the plan amendment. No amendment made after approval by the policyholders or members as provided in paragraph (3) or (4) of subdivision (a) may change the plan amendment in a manner that the commissioner determines is materially disadvantageous to any of the affected policyholders or members unless the plan amendment as amended is submitted for reconsideration under the procedures prescribed for the original plan amendment policyholder or member approval.


text: If the name of a mutual insurer converting to a stock insurer pursuant to this article includes the word “mutual,” the new stock insurer may continue to use the word “mutual” in its name if the name includes a word or words that identify the new stock insurer as a stock insurer and the commissioner finds that the continued use of the word “mutual” in its name is not likely to mislead or deceive the public.


citation: INS § 5050

text:
Two hundred fifty (250) or more persons residing in one county of this State may incorporate for the purpose of forming a mutual fire insurer upon all such persons agreeing to:

(a) Secure fire insurance from such insurer when organized through policies to be issued by such insurer having face amounts aggregating one million five hundred thousand dollars ($1,500,000) or more covering their property of the same or greater value. Such insurer shall retain net of reinsurance aggregate amounts on such policies at least equal to such amount.

(b) Pay the premium for such insurance immediately upon notification by such insurer that it is prepared to issue such policies providing such insurance.

(c) Pay to the insurer immediately upon its incorporation a special deposit of at least one dollar ($1) on each one hundred dollars ($100) of insurance applied for under (a) above, such special deposit to be applied to future premiums payable by such persons either after the expiration of three years or upon the commissioner determining that the insurer has a surplus earned by insurance operations in the amount of at least fifteen thousand dollars ($15,000), whichever occurs first.

history: (History: Amended by Stats. 1955, Ch. 1250.)

chapter: 5. County Mutual Fire Insurers

article: 1. Formation and Organization

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 5. County Mutual Fire Insurers > 1. Formation and Organization


text: If such persons have not performed all acts and secured all agreements necessary to complete the incorporation of such insurer within one year from the date of their first securing an agreement from any person, all proceedings and agreements in connection with such incorporation shall become null and void and all persons entering into such agreements shall be released therefrom.

history: (History: Added by Stats. 1955, Ch. 1250.)

article: 1. Formation and Organization


text: Any county mutual fire insurer heretofore or hereafter incorporated and doing business under the provisions of this chapter may, if it has issued an insurance policy against fire, and as long as it maintains an excess of admitted assets over liabilities of at least fifty thousand dollars ($50,000), endorse such policy to extend the coverage thereof to include insurance of the kinds included in Sections 107, 112, 120 and 122 (excluding liability insurance).

history: (History: Amended by Stats. 1961, Ch. 473.)

article: 1. Formation and Organization


citation: INS § 5051

text: Upon the payment in advance of seven thousand fifty-five dollars ($7,055) to the commissioner for all services to be rendered by him or her in the matter of organization of the insurer, those persons shall file with the commissioner a declaration of their intention to incorporate for the purposes expressed in Section 5050. The declaration shall be signed by all of those persons, and shall contain a copy of the articles of incorporation proposed to be adopted.

history: (History: Amended by Stats. 2017, Ch. 534, Sec. 54. (AB 1699) Effective January 1, 2018.)

article: 1. Formation and Organization


citation: INS § 5052

text: The commissioner shall examine the proposed articles of incorporation. If they conform to this chapter he shall deliver to such persons a certificate permitting them to incorporate such insurer. The certificate shall be directed to the clerk of the county in which such insurer is proposed to be organized and shall contain a copy of the proposed articles of incorporation.

history: (History: Enacted by Stats. 1935, Ch. 145.)

article: 1. Formation and Organization


citation: INS § 5053

text: The duly executed articles of incorporation and a copy of the certificate of the commissioner shall be filed with the Secretary of State in conformity with Section 200 of the Corporations Code. Upon organizing under the articles of incorporation and obtaining from the commissioner a certificate of authority, the county mutual fire insurer may carry on a fire insurance business as provided by this chapter. The term and nature of the certificate of authority, annual renewal fee therefor, the due date and delinquent date of the fee shall be the same as prescribed by Article 3 (commencing with Section 699) of Chapter 1 of Part 2 of Division 1 for stock and mutual insurers governed by that article.

history: (History: Amended by Stats. 2002, Ch. 221, Sec. 68. Effective January 1, 2003.)

article: 1. Formation and Organization


citation: INS § 5054

text: The articles of incorporation and certificate obtained by any county mutual fire insurer operating under the provisions of this chapter are subject to control and modification by the Legislature of this State.

article: 1. Formation and Organization


citation: INS § 5055

text: The by-laws and all amendments thereto shall be filed with the commissioner within sixty days after their adoption.

article: 1. Formation and Organization


citation: INS § 5056

text:
Such insurer shall have not less than seven, nor more than 11 directors, a majority of whom shall constitute a quorum to do business.

The by-laws or the articles may provide or be amended to provide for either concurrent terms of one year for all directors or staggered terms of not more than five years. If provision is made for staggered terms, such terms shall, except for the first directors elected for staggered terms, be uniform for all directors and so arranged that as nearly equal a number of directors as is feasible shall be elected each year.

The directors shall be elected by ballot from the members of the insurer. They shall hold office for the terms for which they were elected, and until their successors are elected and qualified.

history: (History: Amended by Stats. 1945, Ch. 95.)

article: 1. Formation and Organization


citation: INS § 5057

text: The annual meeting of the members of the insurer shall be held on the second Monday of February of each year, unless its board of directors fixes the time for the annual meeting in which event the board may select any day between the second and third Mondays of February.

history: (History: Amended by Stats. 1941, Ch. 117.)

article: 1. Formation and Organization


citation: INS § 5058

text: In the election of the first board of directors each member shall be entitled to one vote. At every subsequent election each member shall be entitled to as many votes as there are directors to be elected.

article: 1. Formation and Organization


citation: INS § 5059

text: A member may cast his votes in person or by proxy, distributing them among the directors to be elected, or among a less number of the directors, or cumulating them upon one candidate, as he sees fit.

article: 1. Formation and Organization


citation: INS § 5060

text: The directors shall elect, from their own number, a president and a vice president. They shall also elect a treasurer and a secretary, who need not be members of the insurer nor natural persons. All of such officers hold their office for one year from the date of their election, and until their successors are elected and qualified.

article: 1. Formation and Organization


citation: INS § 5061

text: The treasurer and secretary shall give bonds to the insurer for the faithful performance of their duties, in such amounts as are prescribed by the board of directors.

article: 1. Formation and Organization


citation: INS § 5062

text: No incorporators or persons acting in their behalf or other persons participating in the management of such insurer shall advance to or for the subscribers or members any premium, special deposit or assessment required to be paid. It is the intent of this chapter that no person shall have a proprietary interest in such insurer, except equally with all other members.

article: 1. Formation and Organization


citation: INS § 5063

text: No such insurer may enter into any general agency or management contract whereby it authorizes or delegates to a person the right to assume virtual control of its operations or of the production of business for it in this State or any specified portion thereof.

article: 1. Formation and Organization


citation: INS § 5080

text: Such insurer and its directors possess the usual powers, and are subject to the usual duties of corporations and directors.

article: 2. Powers

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 5. County Mutual Fire Insurers > 2. Powers


citation: INS § 5081

text: Such insurer may accumulate such surplus as its directors deem desirable for meeting contingencies, to cover the catastrophe hazard, and for general corporate purposes.

history: (History: Added by Stats. 1945, Ch. 96.)

article: 2. Powers


citation: INS § 5090

text: Any person having an insurable interest in property in the county in which any such insurer is formed or any person having such an interest in property in any adjoining county may become a member by insuring therein. Every member shall be entitled to all the rights and privileges appertaining to membership, except that at least a majority of the directors shall reside either in the county in which the insurer is formed or in any of the counties which were the original domicile of any of the constituent companies of a county mutual merged under Article 9.5 (commencing with Section 7040) of this chapter, and not more than one member from each of the adjoining counties in which it transacts insurance may become one of its directors. Whenever any public or private corporation, board or association in this State has entered into an agreement for and holds a policy in any county mutual insurer operating under this chapter, any officer, stockholder or trustee of any such corporation, board or association may be recognized as acting for or on its behalf for the purpose of such membership, but shall not be personally liable upon such contract of insurance by reason of acting in such representative capacity. The right of any corporation organized under the laws of this State to participate as a member of such county mutual insurer is hereby declared to be incidental to the purpose for which such corporation is organized and as much granted as the rights and powers expressly conferred.

history: (History: Amended by Stats. 1963, Ch. 1470.)

article: 3. Membership

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 5. County Mutual Fire Insurers > 3. Membership


text:
Not more than one person licensed as an insurance agent, broker or solicitor, or who is a member of an association or partnership or a stockholder or employee of a corporation which is so licensed is eligible to be a director of a county mutual insurer. If a director of the board is licensed as an insurance agent, broker or solicitor, or is a member of an association or partnership or a stockholder or employee of a corporation which is so licensed, neither he nor the association, partnership or corporation shall transact insurance with or for a county mutual insurer as an agent, broker or solicitor, or receive any commission from a county mutual insurer.

The secretary or other person who passes upon the risks and upon whose decisions or recommendations the application for insurance is accepted or rejected by the insurer, shall not receive, as any part of his compensation, a commission upon the premiums. His compensation shall be determined by the directors.

history: (History: Added by Stats. 1941, Ch. 117.)

article: 3. Membership


citation: INS § 5091

text: Any member of such insurer may commence to withdraw therefrom by surrendering his policy for cancellation, and by giving notice in writing to the secretary at any time during the life of the policy and while the insurer continues the business for which it was organized.

article: 3. Membership


citation: INS § 5092

text: The withdrawal may be completed by paying the member’s share, if any, under the terms of his policy, of all claims that exist against the insurer on the day of such completion.

article: 3. Membership


citation: INS § 5093

text: The insurer may cancel any policy by giving the insured 20 days’ written notice of cancellation with or without tender of the excess of paid premium above the pro rata premium for the expired time, which excess, if not tendered, shall be refunded on demand. Notice of cancellation shall state that the excess premium (if not tendered) will be refunded on demand. The notice may be served in person or by mail, addressed either to the member’s last post office address or, if this is not known, to the address given upon the application which is part of the policy.

history: (History: Amended by Stats. 2003, Ch. 148, Sec. 5. Effective January 1, 2004.)

article: 3. Membership


citation: INS § 5094

text: In case of cancellation by the insurer it shall also notify in the same manner any holder of a mortgage whose name appears, either on the signed application which is a part of the policy, or otherwise upon the policy and any party to whom loss, if any, is payable.

article: 3. Membership


citation: INS § 6010

text:
(a) The following is adopted as the standard form of county mutual fire insurer’s policy for this state: California Standard Form of County Fire Insurance Policy No.

(Space for insertion of name of company or companies issuing the policy and other matter permitted to be stated at the head of the policy.)

(Space for listing amounts of insurance, rates and premiums for the basic coverages insured under the standard form of policy and for additional coverages or perils insured under endorsements attached.)

In consideration of the provisions and stipulations herein or added hereto, of the obligations herein and in the application, and of ____ dollars premium this company, for the term of ________ from the day of , 20____⎱at 12:01 a.m.,to the day of , 20____⎰standard time,at location of property involved, to an amount not exceeding ____ dollars, does accept as a member and insure ____ and legal representatives, to the extent of the actual cash value of the property at the time of loss, but not exceeding the amount which it would cost to repair or replace the property with material of like kind and quality within a reasonable time after such loss, without allowance for any increased cost of repair or reconstruction by reason of any ordinance or law regulating construction or repair, and without compensation for loss resulting from interruption of business or manufacture, nor in any event for more than the interest of the insured, against all LOSS BY FIRE, LIGHTNING AND BY REMOVAL FROM PREMISES ENDANGERED BY THE PERILS INSURED AGAINST IN THIS POLICY, EXCEPT AS HEREINAFTER PROVIDED, to the property described hereinafter while located or contained as described in this policy, or pro rata for five days at each proper place to which any of the property shall necessarily be removed for preservation from the perils insured against in this policy, but not elsewhere.

For a more particular description, and as forming a part of this policy, reference is had to application No.___ on file in the office of this company.

This policy is made and accepted subject to the foregoing provisions and stipulations and those hereinafter stated, which are hereby made a part of this policy, together with such other provisions, stipulations and agreements as may be added hereto, as provided in this policy.

The charter and bylaws of this company are to be resorted to and used to explain the rights and obligations of the parties hereto in all cases not herein otherwise specially provided for, and are hereby made a part of this policy. This policy is made and accepted upon the above expressed condition.

IN WITNESS WHEREOF, this company has executed and attested these presents; but this policy shall not be valid unless countersigned by the duly authorized secretary of this company at ____.Secretary.President.Countersigned this day of , 20____. Secretary. Concealment, fraud This entire policy shall be void if, whether before or after a loss, the insured has willfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto. Uninsurable and excepted property This policy shall not cover accounts, bills, currency, deeds, evidences of debt, money or securities; nor, unless specifically named hereon in writing, bullion or manuscripts. Perils not included This company shall not be liable for loss by fire or other perils insured against in this policy caused, directly or indirectly, by: (a) enemy attack by armed forces, including action taken by military, naval or air forces in resisting an actual or an immediately impending enemy attack; (b) invasion; (c) insurrection; (d) rebellion; (e) revolution; (f) civil war; (g) usurped power; (h) order of any civil authority except acts of destruction at the time of and for the purpose of preventing the spread of fire; provided, that such fire did not originate from any of the perils excluded by this policy; (i) neglect of the insured to use all reasonable means to save and preserve the property at and after a loss, or when the property is endangered by fire in neighboring premises; (j) nor shall this company be liable for loss by theft. Other insurance Other insurance may be prohibited or the amount of insurance may be limited by endorsement attached hereto. Conditions suspending or restricting insurance Unless otherwise provided in writing added hereto this company shall not be liable for loss occurring (a) while the hazard is increased by any means within the control or knowledge of the insured; or (b) while a described building, whether intended for occupancy by owner or tenant, is vacant or unoccupied beyond a period of 60 consecutive days; or (c) as a result of explosion or riot, unless fire ensue, and in that event for loss by fire only. Other perils or subjects Any other peril to be insured against or subject of insurance to be covered in this policy shall be by endorsement in writing hereon or added hereto. Added provisions The extent of the application of insurance under this policy and of the contribution to be made by this company in case of loss, and any other provision or agreement not inconsistent with the provisions of this policy, may be provided for in writing added hereto, but no provision may be waived except such as by the terms of this policy or by statute is subject to change. Waiver provisions No permission affecting this insurance shall exist, or waiver of any provision be valid, unless granted herein or expressed in writing added hereto. No provision, stipulation or forfeiture shall be held to be waived by any requirement or proceeding on the part of this company relating to appraisal or to any examination provided for herein. Cancellation of policy This policy may be canceled and the insured as a member of this company may withdraw therefrom by the insured surrendering the policy for cancellation at any time during the life of the policy and while the company continues the business for which it was organized, by giving notice in writing to the company and by paying such obligations as may have accrued against the insured on the day of cancellation. This policy may be canceled at any time by this company by giving to the insured 20 days’ written notice of cancellation with or without tender of the excess of paid premium above the pro rata premium for the expired time, which excess, if not tendered, shall be refunded on demand. Notice of cancellation shall state that said excess premium (if not tendered) will be refunded on demand. If the reason for cancellation is nonpayment of premium, this policy may be canceled by this company by giving to the insured a 10 days’ written notice of cancellation. Assignment This company may give its consent in writing allowing the assignment of this policy upon the bona fide sale of the property insured herein; provided, within 30 days from the transfer of the title to the within property and upon the assignment thereof such purchaser or his or her agent signs an agreement becoming a member and accepting the conditions of the within policy; otherwise this policy to be null and void, except as to holders of a mortgage or deed of trust. Mortgagee interests and obligations If loss hereunder is made payable, in whole or in part, to a designated mortgagee not named herein as the insured, such interest in this policy may be canceled by giving to such mortgagee a 10 days’ written notice of cancellation.

If the insured fails to render proof of loss such mortgagee, upon notice, shall render proof of loss in the form herein specified within 60 days thereafter and shall be subject to the provisions hereof relating to appraisal and time of payment and of bringing suit. If this company shall claim that no liability existed as to the mortgagor or owner, it shall, to the extent of payment of loss to the mortgagee, be subrogated to all the mortgagee’s rights of recovery, but without impairing mortgagee’s right to sue; or it may pay off the mortgage debt and require an assignment thereof and of the mortgage. Other provisions relating to the interests and obligations of such mortgagee may be added hereto by agreement in writing. Pro rata liability This company shall not be liable for a greater proportion of any loss than the amount hereby insured shall bear to the whole insurance covering the property against the peril involved, whether collectible or not. Requirements in case loss occurs The insured shall give written notice to this company of any loss without unnecessary delay, protect the property from further damage, forthwith separate the damaged and undamaged personal property, put it in the best possible order, furnish a complete inventory of the destroyed, damaged and undamaged property, showing in detail quantities, costs, actual cash value and amount of loss claimed; and within 60 days after the loss, unless such time is extended in writing by this company, the insured shall render to this company a proof of loss, signed and sworn to by the insured, stating the knowledge and belief of the insured as to the following: The time and origin of the loss, the interest of the insured and of all others in the property, the actual cash value of each item thereof and the amount of loss thereto, all encumbrances thereon, all other contracts of insurance, whether valid or not, covering any of said property, any changes in the title, use, occupation, location, possession or exposures of said property since the issuing of this policy, by whom and for what purpose any building herein described and the several parts thereof were occupied at the time of loss and whether or not it then stood on leased ground, and shall furnish a copy of all the descriptions and schedules in all policies and, if required and obtainable, verified plans and specifications of any building, fixtures or machinery destroyed or damaged. The insured, as often as may be reasonably required, shall exhibit to any person designated by this company all that remains of any property herein described, and submit to examinations under oath by any person named by this company, and subscribe the same; and, as often as may be reasonably required, shall produce for examination all books of account, bills, invoices and other vouchers, or certified copies thereof if originals be lost, at such reasonable time and place as may be designated by this company or its representative, and shall permit extracts and copies thereof to be made. Appraisal In case the insured and this company shall fail to agree as to the actual cash value or the amount of loss, then, on the written demand of either, each shall select a competent and disinterested appraiser and notify the other of the appraiser selected within 20 days of such demand. The appraisers shall first select a competent and disinterested umpire; and failing for 15 days to agree upon such umpire, then, on request of the insured or this company, such umpire shall be selected by a judge of a court of record in the state in which the property covered is located. The appraisers shall then appraise the loss, stating separately actual cash value and loss to each item; and, failing to agree, shall submit their differences, only, to the umpire. An award in writing, so itemized, of any two when filed with this company shall determine the amount of actual cash value and loss. Each appraiser shall be paid by the party selecting him or her and the expenses of appraisal and umpire shall be paid by the parties equally. Company’s options It shall be optional with this company to take all, or any part, of the property at the agreed or appraised value, and also to repair, rebuild or replace the property destroyed or damaged with other of like kind and quality within a reasonable time, on giving notice of its intention so to do within 30 days after the receipt of the proof of loss herein required. Abandonment There can be no abandonment to this company of any property. When loss payable Except where assessment is required as hereinafter provided, the amount of loss for which this company may be liable shall be payable 60 days after proof of loss, as herein provided, is received by this company and ascertainment of the loss is made either by agreement between the insured and this company expressed in writing or by the filing with this company of an award as herein provided. Assessment for deficiency When the amount of any loss shall have been ascertained, which exceeds in amount the cash funds of the company, the president shall convene the directors of this company, who shall proceed in the manner provided by Article 8 (commencing with Section 7010) of Chapter 5 of Part 1 of Division 2 of the Insurance Code. Notice of assessment It shall be the duty of the secretary, whenever assessment shall have been made, to immediately notify every person holding a risk in this company, personally, by an agent, or by letter directed to the person’s usual post office address, of the amount of such loss, and the sum due from him or her, as his or her share thereof, and of the time and to whom such payment is made; but such time shall not be less than 30 days, nor more than 90 days from date of such notice. No assessment or assessments can be levied under this policy in excess of three times the premium named herein. Action for neglect or refusal to pay assessments An action may be brought against the member whose property is insured herein and this policy is automatically suspended if the insured shall not have paid, before it is delinquent, the insured’s portion of any assessment levied or other liability due this company for a period in excess of 90 days. The directors of this company who shall willfully refuse or neglect to perform the duties imposed upon them by law or the bylaws of the company, shall be liable in their individual capacity to the person sustaining such loss. An action may also be brought and maintained against this company by members thereof for losses sustained if payment is withheld after the amount of such losses have been determined and is due by the terms of the policy. Suit No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within 12 months next after inception of the loss. If the loss is related to a state of emergency, as defined in subdivision (b) of Section 8558 of the Government Code, the time limit to bring suit is extended to 24 months after inception of the loss. Subrogation This company may require from the insured an assignment of all right of recovery against any party for loss to the extent that payment therefor is made by this company. (b) The amendments to this section made by the act adding this subdivision shall govern a policy utilizing the form provided in subdivision (a) when that policy is originated or renewed on or after January 1, 2004.

(c) (1) The amendments to this section made by the act adding this subdivision govern a policy originated or renewed on or after the effective date of this act.

(2) Notwithstanding paragraph (1), an insurer shall incorporate the revisions to the standard form of county mutual fire insurer’s policy made by the act adding this subdivision on or before July 1, 2019.

history: (History: Amended by Stats. 2018, Ch. 639, Sec. 2. (AB 2594) Effective September 21, 2018.)

article: 4. The Policy

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 5. County Mutual Fire Insurers > 4. The Policy


text: The policy is not required to be used for reinsurance between insurers.

history: (History: Added by Stats. 1949, Ch. 697.)

article: 4. The Policy


citation: INS § 6011

text:
Either the blanks in the standard form or those in an endorsement attached thereto shall be appropriately filled. The first page of the policy or an endorsement attached thereto may be arranged to show in schedule form the amounts of insurance, rates and premiums for the basic coverages insured under the standard form of policy and additional coverages or perils insured under endorsements attached, and such other data as may be conveniently included for duplication on daily reports for office records.

If such a schedule clearly shows the amount at risk, the rate, and the premium in respect of fire insurance, the words, “the above specified” may be inserted in the blanks preceding the word “dollars” in the two places in which “dollars” appears in that portion of the standard form which precedes the countersignature clause, or in identical blanks in an endorsement attached to the standard form and containing the paragraph in the standard form in which the blanks appear.

history: (History: Amended by Stats. 1949, Ch. 697.)

article: 4. The Policy


text: In lieu of showing the term of coverage in the form set forth in Section 6010, the standard form policy may show the term in any form which clearly states the period during which the insurance is to continue. The period shall begin and end on specified dates at 12:01 a.m., standard time, at the location of the property involved. An example of permissible method of showing the term is: “ for the term offromAt 12:01 a.m.(Standard Time) toAt 12:01 a.m.(Standard Time)at location of property involved, ”

history: (History: Amended by Stats. 1972, Ch. 618.)

article: 4. The Policy


text:
In lieu of the attestation clause and official signatures in the form as set forth in Section 6010, the standard form policy may show, immediately following the policy provisions, the following:

“In witness whereof, this company has executed and attested these presents; but this policy shall not be valid unless countersigned by the duly authorized secretary of this company at ______.SecretaryPresident”

history: (History: Added by Stats. 1953, Ch. 460.)

article: 4. The Policy


citation: INS § 6012

text: By special agreement indorsed on the policy or added thereto, the provisions regarding appraisement or apportionment of loss may be waived and the valuations of all or any of the insured property in case of total loss may be agreed upon in advance of loss.

article: 4. The Policy


citation: INS § 6013

text: The standard form of policy shall be plainly printed. The type shall not be smaller than eight-point and in a style not less legible than Century and subheads shall be in type larger than eight-point and in a style not less legible than Century. The lines of the policy following the countersignature clause shall be numbered consecutively.

history: (History: Amended by Stats. 1953, Ch. 460.)

article: 4. The Policy


citation: INS § 6014

text: All county mutual fire insurance policies on subject matter in this State shall be on the county mutual standard form and, except as provided by this article, shall not contain additions thereto. Except as provided in Section 6017, no part of the standard form shall be omitted from the policy.

history: (History: Amended by Stats. 1945, Ch. 146.)

article: 4. The Policy


citation: INS § 6015

text: The insurer may add to the policy any matter relating to its financial condition, directors, officers, members and history, and the address of its home office and principal office in the State.

article: 4. The Policy


citation: INS § 6016

text: Clauses may be added to the policy providing for and defining the rights, duties and obligations of mortgagees, assignees, and other parties having an interest in, right to or lien upon the insured subject matter.

article: 4. The Policy


citation: INS § 6017

text: Insurers authorized to limit or eliminate their assessment liability in accordance with the terms of this chapter may make such changes in the standard form as will properly accomplish that purpose.

article: 4. The Policy


text: Insurers authorized to eliminate their assessment liability in accordance with the terms of this chapter may use the California standard form insurance policy in lieu of the standard form prescribed in this chapter.

history: (History: Added by Stats. 1959, Ch. 1553.)

article: 4. The Policy


citation: INS § 6018

text: No clause shall be inserted nor rider attached affecting the standard form liability of the insurer for loss or damage by fire occasioned either directly or indirectly by earthquake, hurricane, volcanic action or other disturbance of nature, unless such rider or clause is printed in red ink in type larger than pica or in capital letters measuring not less than eight one-hundredths (8/100's) of an inch in height, and unless there is printed at the head of the policy in red ink and in large bold-faced type the words: “This policy contains limitations of liability not permitted in the California standard form.”

article: 4. The Policy


citation: INS § 6019

text:
Clauses may be added to the policy:

(a) Covering property and risks not otherwise covered; provided that clauses covering loss or damage caused by nuclear reaction, nuclear radiation or radioactive contamination, all whether directly or indirectly resulting from an insured peril under the standard policy issued pursuant to Section 6010 may be insured under said policy only by a written endorsement providing such insurance, with such endorsement affixed to said standard policy.

(b) Assuming greater liability than is otherwise imposed on the insurer.

(c) Granting the insured permits and privileges not otherwise provided.

(d) Waivers of any of the matters voiding the policy or suspending the insurance.

(e) Waivers of any of the requirements imposed on the insured after loss.

history: (History: Amended by Stats. 1959, Ch. 1101.)

article: 4. The Policy


citation: INS § 6020

text: Except as otherwise provided by this article, clauses may be attached, by separate riders in type larger than pica or in capital letters measuring not less than eight one-hundredths (8/100's) of an inch in height, to the policy, imposing specified duties and obligations upon the insured and limiting the liability of the insurer.

article: 4. The Policy


citation: INS § 6021

text: It is a misdemeanor for any insurer or its agent to countersign or issue a county mutual fire insurance policy covering in whole or part subject-matter in this State in violation of this article. Any policy so issued shall notwithstanding be binding upon the issuing insurer.

history: (History: Enacted by Stats. 1935, Ch. 145.)

article: 4. The Policy


citation: INS § 6040

text: Such insurer may issue policies on dwellings, schoolhouses, churches, fraternal or lodge halls, community, creamery, or farm buildings and property contained in or on such premises or owned by the insured and stored in public or private warehouses.

history: (History: Amended by Stats. 1955, Ch. 1904.)

article: 5. Risks

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 5. County Mutual Fire Insurers > 5. Risks


text: Insurers authorized to eliminate their assessment liability in accordance with the terms of this chapter (commencing with Section 5050) shall not be restricted as to the type of risks they may insure by the provisions of Section 6040.

history: (History: Added by Stats. 1961, Ch. 464.)

article: 5. Risks


citation: INS § 6041

text: Insurance permitted by this chapter upon personal property owned by the insured, including automobiles and livestock, shall continue in full force and effect during the use or transportation of the property in the ordinary course of the insured’s affairs if the primary situs of the property is located at the time of loss within this State. Otherwise such insurance is governed by Section 6048.

history: (History: Amended by Stats. 1961, Ch. 463.)

article: 5. Risks


citation: INS § 6042

text: Policies may be executed for any time not exceeding five years and not extending beyond the time limited for the existence of the insurer.

article: 5. Risks


citation: INS § 6043

text: All members of such an insurer shall agree in writing to pay their pro rata share to the insurer of the necessary expense and loss sustained by any member thereof during the time for which their respective policies are in force. They shall also, at the time of effecting the insurance, pay the insurer such percentage of the estimated cost and such other charges as are required by law or the insurer’s rules and by-laws.

history: (History: Amended by Stats. 1939, Ch. 931.)

article: 5. Risks


citation: INS § 6044

text: All such insurers shall classify the subject matter insured by them at the time of issuing policies thereon. Such classification shall be under rates corresponding as nearly as practicable to the greater or less risk from loss attached to the several kinds of subject matter insured.

article: 5. Risks


citation: INS § 6045

text:
For the purpose of this chapter:

(a) “A city or town block” is an area of not more than one hundred sixty thousand square feet having at least one frontage in a closely built up district fronting on a used public highway, surrounded on all sides by a clear space at least equal in width to the clear space of such public highway.

(b) “Closely built up district” means territory abutting a public highway where for not less than a quarter of a mile the buildings average less than one hundred feet apart.

(c) “One risk” means one hazard under one or more policies, subject to one fire and relates to the amount named in the policy or policies.

(d) “Clear space” means space free from combustible material likely to communicate fire.

article: 5. Risks


citation: INS § 6047

text: Except as provided in this section, such insurer shall not issue policies to an amount in excess of six thousand dollars ($6,000) on any one risk, whether under one or more policies, without immediately reinsuring the excess amount in some other insurer. Any such insurer having more than ten million dollars ($10,000,000) direct insurance in force as shown by its books may, for each one million dollars ($1,000,000) in excess of ten million dollars ($10,000,000), write five hundred dollars ($500) additional insurance in excess of six thousand dollars ($6,000) on each such risk; provided, however, that any such insurer 90 percent of whose business in force is reinsurance assumed and which has more than ten million dollars ($10,000,000) gross insurance in force may, for each one million dollars ($1,000,000) in excess of ten million dollars ($10,000,000), write five hundred dollars ($500) additional insurance in excess of six thousand dollars ($6,000) on each such risk. Any such insurer issuing nonassessable policies as provided in Section 7015 (c) (3) hereof, may issue policies in accordance with Section 3080 of this code.

history: (History: Amended by Stats. 1953, Ch. 459.)

article: 5. Risks


citation: INS § 6048

text: Except as provided in Section 6041 such insurer shall insure only property within the limits of the county wherein it is organized, or in a county next adjoining the county of organization. In the event that no such insurer may, under the provisions of the preceding sentence, insure property in a county contiguous to the said next adjoining county, then such insurer may also insure property in the said contiguous county.

history: (History: Amended by Stats. 1955, Ch. 817.)

article: 5. Risks


citation: INS § 6049

text: Such an insurer shall not assume any risks on property situated within any one block of a closely built-up district or of territory within the limit of any incorporated city, unless on a single risk in such block it immediately reinsures all of the amount at risk which is in excess of the limit provided in this article or unless in the case of more than one risk in any such block it immediately reinsures all of the amount at risk which is in excess of one-quarter of 1 percent of its direct amount of insurance in force; provided, however, that any such insurer 90 percent of whose business in force is reinsurance assumed, and which has more than ten million dollars ($10,000,000) gross insurance in force, in the case of more than one risk in any such block, shall immediately reinsure all of the amount at risk which is in excess of one-quarter of 1 percent of its net amount of insurance in force.

history: (History: Amended by Stats. 1953, Ch. 1390.)

article: 5. Risks


citation: INS § 6050

text: Where the amount of insurance in policies already written equals the amount limited by the provisions of this article, no additional insurance shall be written by such insurer on country property within a radius of one hundred feet of an existing risk. Such radius shall continue at not less than seventy-five feet during the life of the policy, unless insurance within the radius is covered by reinsurance.

article: 5. Risks


citation: INS § 6070

text: Any such insurer may accept reinsurance under any agreement for reinsurance between two or more county mutual fire insurers or from any authorized insurer the stock of which is wholly owned by county mutual insurers. In any such case the reinsurance accepted by any one insurer shall not exceed the amount of risk retained by the insurer originating the business.

history: (History: Amended by Stats. 1953, Ch. 468.)

article: 6. Reinsurance

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 5. County Mutual Fire Insurers > 6. Reinsurance


citation: INS § 6071

text:
Any such insurer may cede reinsurance provided the amount retained by the originating insurer shall be not less than 10 percent nor less than five hundred dollars ($500); provided, however, that the minimum required hereunder shall never exceed six thousand dollars ($6,000).

The applicable provisions of Sections 922.1 to 922.8 inclusive shall govern for the purposes of testing the solvency and preparing the annual statement of the ceding insurer.

article: 6. Reinsurance


citation: INS § 6072

text: The restrictions imposed by this chapter upon any insurer as to original insurance shall apply to reinsurance written by it.

article: 6. Reinsurance


citation: INS § 6090

text: Every member of such insurer who sustains loss by any hazard covered by his policy shall immediately notify the insurer in accordance with the terms of his policy.

article: 7. Loss

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 5. County Mutual Fire Insurers > 7. Loss


citation: INS § 6091

text: An action may be brought and maintained against any such insurer by its members to recover for losses insured against by the insurer, if payment is withheld after the amount of such losses is determined, and is due by the terms of the policy.

article: 7. Loss


citation: INS § 7010

text: When any loss exceeds in amount the cash funds of the insurer and also exceeds one-eighth of one per cent of the total amount of the insurer’s insurance in force, its president shall convene its directors to make an assessment.

article: 8. Assessments

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 5. County Mutual Fire Insurers > 8. Assessments


citation: INS § 7011

text: Upon being convened for the purpose, the directors shall make an assessment upon all of the property insured in the insurer. Such assessment shall be in proportion to the amount for which each piece of property is insured, taken in connection with the rate of premium under which it is classified.

article: 8. Assessments


citation: INS § 7012

text: When the amount of such loss does not exceed one-eighth of one per cent of the total amount of insurance in force in the insurer, its directors may, by resolution in writing signed by two-thirds of all the directors while present at a meeting, borrow money in the name of the insurer and give its evidence of indebtedness therefor, in a total amount not exceeding one-eighth of one per cent of the total amount of insurance thus in force.

article: 8. Assessments