House File 2455 H-8173 Amend House File 2455 as follows: 1 1. By striking everything after the enacting clause and 2 inserting: 3 < Section 1. NEW SECTION . 521I.1 Definitions. 4 As used in this chapter, unless the context otherwise 5 requires: 6 1. “Assets” means property whether real, personal, mixed, 7 tangible, or intangible and any right or interest therein, 8 including all rights under a contract or other agreement. 9 2. “Capital” means the capital stock component of a 10 statutory surplus as defined in the latest edition of the 11 national association of insurance commissioners’ accounting 12 practices and procedures manual. 13 3. “Commissioner” means the commissioner of insurance. 14 4. “Divide” or “division” means a transaction in which 15 a domestic stock insurer splits into two or more resulting 16 domestic stock insurers. 17 5. “Dividing insurer” means a domestic stock insurer that 18 approves a plan of division. 19 6. “Domestic stock insurer” means a stock insurer domiciled 20 and organized under the law of this state other than a company 21 qualified and authorized by the commissioner to transact the 22 business of insurance in this state by certificate issued 23 pursuant to chapter 508, 512B, 514, 514B, 515, 5l5E, or 520. 24 7. “Liability” means a secured or contingent debt or 25 obligation arising in any manner. 26 8. “Resulting insurer” means a dividing domestic stock 27 insurer that survives a division or a new domestic stock 28 insurer that is created by a division. 29 9. “Shareholder” means the person in whose name shares are 30 registered in the records of a corporation or the beneficial 31 owner of shares to the extent of the rights granted by a 32 nominee certificate on file with a corporation. 33 10. “Surplus” means total statutory surplus less capital 34 stock calculated in accordance with the current national 35 -1- HF2455.4338 (3) 87 (amending this HF 2455 to CONFORM to SF 2316) ko/rj 1/ 14 #1.

association of insurance commissioners’ accounting practices 1 and procedures manual. 2 11. “Transfer” includes an assignment, assumption, 3 conveyance, sale, lease, encumbrance, security interest, gift, 4 or transfer by operation of law. 5 Sec. 2. NEW SECTION . 521I.2 Plan of division —— general 6 requirements. 7 A domestic stock insurer’s plan of division shall include 8 all of the following: 9 1. The name of the domestic stock insurer seeking to divide. 10 2. The name of each resulting insurer created by the 11 proposed division and for each resulting insurer a copy of all 12 of the following: 13 a. Proposed articles of incorporation. 14 b. Proposed bylaws. 15 3. The manner of allocating assets and liabilities, 16 including policy liabilities, between or among all resulting 17 insurers. 18 4. The manner of distributing shares in the resulting 19 insurers to the dividing insurer or the dividing insurer’s 20 shareholders. 21 5. A reasonable description of all liabilities and all 22 assets that the dividing insurer proposes to allocate to each 23 resulting insurer, including the manner by which the dividing 24 insurer proposes to allocate all reinsurance contracts. 25 6. All terms and conditions required by the laws of this 26 state and the articles and bylaws of the dividing insurer. 27 7. All other terms and conditions of the division. Terms of 28 a plan of division may be made dependent on facts objectively 29 ascertainable outside of the plan of division. 30 Sec. 3. NEW SECTION . 521I.3 Plan of division —— dividing 31 insurer to survive division. 32 If a dividing insurer will survive a division, the plan 33 of division shall include, in addition to the requirements 34 pursuant to section 521I.2, all of the following: 35 -2- HF2455.4338 (3) 87 (amending this HF 2455 to CONFORM to SF 2316) ko/rj 2/ 14

1. All proposed amendments to the dividing insurer’s 1 articles of incorporation and bylaws. 2 2. If the dividing insurer intends to cancel some but not 3 all shares in the dividing insurer, the manner in which the 4 dividing insurer intends to cancel such shares. 5 3. If the dividing insurer intends to convert some but 6 not all shares in the dividing insurer into securities, 7 obligations, money, other property, rights to acquire shares or 8 securities, or any combination thereof, a statement disclosing 9 the manner in which the dividing insurer intends to convert 10 such shares. 11 Sec. 4. NEW SECTION . 521I.4 Plan of division —— dividing 12 insurer not to survive division. 13 If a dividing insurer will not survive a division, the plan 14 of division shall include, in addition to the requirements 15 pursuant to section 521I.2, the manner in which the dividing 16 insurer will cancel or convert shares in the dividing insurer’s 17 shares into shares, securities, obligations, money, other 18 property, rights to acquire shares or securities, or any 19 combination thereof. 20 Sec. 5. NEW SECTION . 521I.5 Amending plan of division. 21 1. A dividing insurer may amend the dividing insurer’s 22 plan of division in accordance with any procedures set forth 23 in the plan of division, or if no such procedures are set 24 forth in the plan of division, in a manner determined by the 25 board of directors of the dividing insurer. A shareholder 26 that is entitled to vote on or consent to approval of the plan 27 of division shall be entitled to vote on or consent to an 28 amendment of the plan of division that will affect any of the 29 following: 30 a. The amount or kind of shares, securities, obligations, 31 money, other property, rights to acquire shares or securities, 32 or any combination thereof to be received by any of the 33 shareholders of the dividing insurer under the plan of 34 division. 35 -3- HF2455.4338 (3) 87 (amending this HF 2455 to CONFORM to SF 2316) ko/rj 3/ 14

b. The articles of incorporation or bylaws of any resulting 1 insurer that become effective when the division becomes 2 effective except for changes that do not require approval of 3 the shareholders of the resulting insurer under such articles 4 of incorporation or bylaws. 5 c. Any other terms or conditions of the plan of division 6 if the change may adversely affect the shareholders in any 7 material respect. 8 2. A dividing insurer shall not amend the dividing insurer’s 9 plan of division after the plan of division becomes effective. 10 Sec. 6. NEW SECTION . 521I.6 Abandoning plan of division. 11 1. A dividing insurer may abandon the dividing insurer’s 12 plan of division in any of the following circumstances: 13 a. After the dividing insurer has approved the plan 14 of division without any action by the shareholders and in 15 accordance with any procedures set forth in the plan of 16 division, or if no such procedures are set forth in the plan of 17 division, in a manner determined by the board of directors of 18 the dividing insurer. 19 b. After the dividing insurer has filed a certificate 20 of division with the secretary of state pursuant to section 21 521I.10, the dividing insurer may file a signed certificate of 22 abandonment with the secretary of state and file a copy with 23 the commissioner. The certificate of abandonment shall be 24 effective on the date the certificate of abandonment is filed 25 with the secretary of state. 26 2. A dividing insurer shall not abandon the dividing 27 insurer’s plan of division after the plan of division becomes 28 effective. 29 Sec. 7. NEW SECTION . 521I.7 Approval of plan of division —— 30 articles of incorporation and bylaws. 31 1. A dividing insurer shall not file a plan of division with 32 the commissioner until such plan of division has been approved 33 in accordance with all provisions of the dividing insurer’s 34 articles of incorporation and bylaws. If the dividing 35 -4- HF2455.4338 (3) 87 (amending this HF 2455 to CONFORM to SF 2316) ko/rj 4/ 14

insurer’s articles of incorporation and bylaws do not provide 1 for approval of a plan of division, the dividing insurer shall 2 not file the plan of division with the commissioner unless 3 such plan of division has been approved in accordance with all 4 provisions of the dividing insurer’s articles of incorporation 5 and bylaws that provide for approval of a merger. 6 2. If a provision of a dividing insurer’s articles of 7 incorporation or bylaws adopted before the effective date of 8 this Act requires that a specific number of or a percentage 9 of the board of directors or shareholders propose or adopt a 10 plan of merger or impose other procedures for the proposal or 11 adoption of a plan of merger, the dividing insurer shall adhere 12 to such provision in proposing or adopting a plan of division. 13 If any such provision of the articles of incorporation or 14 bylaws is amended on or after the effective date of this Act, 15 such provision shall apply to a division thereafter only in 16 accordance with its express terms. 17 Sec. 8. NEW SECTION . 521I.8 Commissioner approval of plan 18 of division. 19 1. After a dividing insurer approves a plan of division 20 pursuant to section 521I.7, the dividing insurer shall file the 21 plan of division with the commissioner. Within ten business 22 days of filing the plan of division with the commissioner, the 23 dividing insurer shall provide notice of the filing to each 24 reinsurer that is a party to a reinsurance contract allocated 25 in the plan of division. 26 2. A division shall not become effective until approved by 27 the commissioner after reasonable notice and a public hearing. 28 Notice and public hearing required under this section shall be 29 conducted as a contested case pursuant to chapter 17A. 30 3. The commissioner may approve a plan of division if the 31 commissioner finds that all of the following apply: 32 a. The interest of the policyholders, creditors, or 33 shareholders of the dividing insurer will be adequately 34 protected and the plan of division is not unfair or 35 -5- HF2455.4338 (3) 87 (amending this HF 2455 to CONFORM to SF 2316) ko/rj 5/ 14

unreasonable to the policyholders of the dividing insurer and 1 is not contrary to the public interest. 2 b. The financial condition of the resulting insurers will 3 not jeopardize the financial stability of a dividing insurer 4 or the resulting insurers or prejudice the interests of the 5 policyholders of such insurers. 6 c. All resulting insurers created by the proposed division 7 will be qualified and eligible to receive a certificate of 8 authority to transact the business of insurance in this state. 9 d. The proposed division does not violate a provision of 10 chapter 684. In a division in which the dividing insurer 11 will survive, the commissioner shall apply chapter 684 to the 12 dividing insurer in its capacity as a resulting insurer. In 13 applying the provisions of chapter 684 to a resulting insurer, 14 the commissioner shall do all of the following: 15 (1) Treat the resulting insurer as a debtor. 16 (2) Treat a liability allocated to the resulting insurer as 17 a liability incurred by a debtor. 18 (3) Treat the resulting insurer as receiving unequal value 19 in exchange for incurring allocated obligations. 20 (4) Treat assets allocated to the resulting insurer as 21 remaining assets. 22 e. The proposed division is not being made for the purpose 23 of hindering, delaying, or defrauding any policyholders or 24 other creditors of the dividing insurer. 25 f. All resulting insurers will be solvent when the division 26 becomes effective. 27 g. The remaining assets of a resulting insurer will not be 28 unreasonably small in relation to the business and transactions 29 such resulting insurer has been engaged in or will engage in 30 after completion of the division. 31 4. In determining if the standards set forth in subsection 32 3, paragraphs “c” through “g” are satisfied, the commissioner 33 may consider all proposed assets of the resulting insurer 34 including without limitation reinsurance agreements, parental 35 -6- HF2455.4338 (3) 87 (amending this HF 2455 to CONFORM to SF 2316) ko/rj 6/ 14

guarantees, support agreements, keepwell agreements, and 1 capital maintenance of contingent capital agreements regardless 2 of whether such qualify as an admitted asset under state law. 3 5. All expenses incurred by the commissioner in connection 4 with proceedings under this section including expenses 5 for attorneys, actuaries, accountants, and other experts 6 not otherwise a part of the commissioner’s staff as may be 7 reasonably necessary to assist the commissioner in reviewing 8 a proposed plan of division shall be paid by the dividing 9 insurer filing such plan. A dividing insurer may allocate such 10 expense in a plan of division in the same manner as any other 11 liability. 12 6. If the commissioner approves a plan of division the 13 commissioner shall issue an order which shall be accompanied 14 by findings of fact and conclusions of law. The commissioner 15 shall also issue a certificate of authority authorizing the 16 resulting insurers to transact the business of insurance in 17 this state. 18 7. The conditions in this section for freeing one or more 19 of the resulting insurers from the liabilities of the dividing 20 insurer and for allocating some or all of the liabilities of 21 the dividing insurer shall be deemed to have been satisfied if 22 the plan of division is approved by the commissioner in a final 23 order. 24 Sec. 9. NEW SECTION . 521I.9 Confidentiality. 25 All information and documents submitted to, obtained by, or 26 disclosed to the commissioner in connection with a dividing 27 insurer’s plan of division shall be confidential and shall not 28 be available for public inspection until notice of a public 29 hearing is provided pursuant to section 521I.8, subsection 30 1. After issuance of a notice of such hearing, the dividing 31 insurer may submit a written request to the commissioner 32 requesting that confidentiality be maintained regarding 33 all business, financial, and actuarial information. If the 34 commissioner grants the dividing insurer’s request, such 35 -7- HF2455.4338 (3) 87 (amending this HF 2455 to CONFORM to SF 2316) ko/rj 7/ 14

confidential information shall not be available for public 1 inspection and shall not be subject to chapter 22. The plan 2 of division and any materials incorporated by reference into 3 or otherwise made a part of such plan of division shall not be 4 confidential and shall be available for public inspection. 5 Sec. 10. NEW SECTION . 521I.10 Certificate of division. 6 1. If the commissioner approves a dividing insurer’s plan 7 of division pursuant to section 521I.8, an officer or duly 8 authorized representative of the dividing insurer shall sign a 9 certificate of division that sets forth all of the following: 10 a. The name of the dividing insurer. 11 b. A statement disclosing whether the dividing insurer 12 survived the division. If the dividing insurer survived 13 the division, the certificate of division shall include any 14 amendments to the dividing insurer’s articles of incorporation 15 or bylaws as approved as part of the plan of division. 16 c. The name of each resulting insurer that is created by 17 the division. 18 d. The date on which the division is effective. 19 e. A statement that the division was approved by the 20 commissioner under section 521I.8. 21 f. A statement that the dividing insurer provided reasonable 22 notice to each reinsurer that is a party to a reinsurance 23 contract allocated in the plan of division. 24 g. The resulting insurer’s articles of incorporation and 25 bylaws for each resulting insurer created by the division. The 26 articles of incorporation and bylaws of each resulting insurer 27 must comply with the applicable requirements of the laws of 28 this state. The articles of incorporation and bylaws may state 29 the name or address of an incorporator, may be signed, and may 30 include any provision that is not required in a restatement of 31 the articles of incorporation or bylaws. 32 h. A reasonable description of the capital, surplus, other 33 assets and liabilities, including policy liabilities, of the 34 dividing insurer that are to be allocated to each resulting 35 -8- HF2455.4338 (3) 87 (amending this HF 2455 to CONFORM to SF 2316) ko/rj 8/ 14

insurer. 1 2. A dividing insurer’s certificate of division is 2 effective on the date the dividing insurer files the 3 certificate with the secretary of state and provides a 4 concurrent copy to the commissioner, or on another date 5 as specified in the plan of division, whichever is later. 6 However, the certificate of division shall become effective 7 not later than ninety calendar days after it is filed with the 8 secretary of state. A division shall be effective when the 9 relevant certificate of division is effective. 10 Sec. 11. NEW SECTION . 521I.11 Division effective. 11 1. On the effective date of a division pursuant to section 12 521I.10, the following apply: 13 a. If the dividing insurer survives, all of the following 14 apply: 15 (1) The dividing insurer shall continue to exist. 16 (2) The articles of incorporation of the dividing insurer 17 shall be amended, if at all, if provided for in the plan of 18 division. 19 (3) The bylaws of the dividing insurer shall be amended, if 20 at all, if provided for in the plan of division. 21 b. If the dividing insurer does not survive, the dividing 22 insurer’s separate existence shall cease to exist and any 23 resulting insurer created by the plan of division shall come 24 into existence. 25 c. Each resulting insurer shall hold any capital, surplus, 26 and other assets allocated to such resulting insurer by the 27 plan of division as a successor to the dividing insurer by 28 operation of law, and not by transfer, whether directly or 29 indirectly. The articles of incorporation and bylaws, if any, 30 of each resulting insurer shall be effective when the resulting 31 insurer comes into existence. 32 d. (1) All capital, surplus, and other assets of the 33 dividing insurer that are allocated by the plan of division 34 shall vest in the applicable resulting insurer as provided in 35 -9- HF2455.4338 (3) 87 (amending this HF 2455 to CONFORM to SF 2316) ko/rj 9/ 14

the plan of division or shall remain vested in the dividing 1 insurer as provided in the plan of division. 2 (2) All capital, surplus, and other assets of the dividing 3 insurer that are not allocated by the plan of division shall 4 remain vested in the dividing insurer if the dividing insurer 5 survives the division and shall be allocated to and vest pro 6 rata in the resulting insurers individually if the dividing 7 insurer does not survive the division. 8 (3) All capital, surplus, and other assets of the dividing 9 insurer otherwise vest as provided in this section without 10 transfer, reversion, or impairment. 11 e. A resulting insurer to which a cause of action is 12 allocated may be substituted or added in any pending action or 13 proceeding to which the dividing insurer is a party when the 14 division becomes effective. 15 f. All liabilities of a dividing insurer are allocated 16 between or among any resulting insurers as provided in section 17 521I.10 and each resulting insurer to which liabilities are 18 allocated is liable only for those liabilities, including 19 policy liabilities, allocated as a successor to the dividing 20 insurer by operation of law. 21 g. Any shares in the dividing insurer that are to be 22 converted or canceled in the division are converted or canceled 23 and the shareholders of those shares are entitled only to 24 the rights provided to such shareholders under the plan of 25 division and any appraisal rights that such shareholders may 26 have pursuant to section 521I.13. 27 2. Except as provided in the dividing insurer’s articles 28 of incorporation or bylaws, the division does not give rise 29 to any rights that a shareholder, director of a domestic 30 stock insurer, or third party would have upon a dissolution, 31 liquidation, or winding up of the dividing insurer. 32 3. The allocation to a resulting insurer of capital, 33 surplus, or other asset that is collateral covered by an 34 effective financing statement shall not be effective until a 35 -10- HF2455.4338 (3) 87 (amending this HF 2455 to CONFORM to SF 2316) ko/rj 10/ 14

new effective financing statement naming the resulting insurer 1 as a debtor is effective under the uniform commercial code. 2 4. Unless otherwise provided in the plan of division, 3 the shares in and any securities of each resulting insurer 4 shall be distributed to the dividing insurer if it survives 5 the division, or pro rata to the shareholders of the dividing 6 insurer that do not assert any appraisal rights pursuant to 7 section 521I.13. 8 Sec. 12. NEW SECTION . 521I.12 Resulting insurers liability 9 for allocated assets, debts, and liabilities. 10 1. Except as expressly provided in this section, when a 11 division becomes effective, by operation of law all of the 12 following apply: 13 a. A resulting insurer is individually liable for the 14 liabilities, including policy liabilities, that the resulting 15 insurer issues, undertakes, or incurs in its own name after the 16 division. 17 b. A resulting insurer is individually liable for the 18 liabilities, including policy liabilities, of the dividing 19 insurer that are allocated to or remain the liability of the 20 resulting insurer to the extent specified in the plan of 21 division. 22 c. The dividing insurer remains responsible for the 23 liabilities, including policy liabilities, of the dividing 24 insurer that are not allocated by the plan of division if the 25 dividing insurer survives the division. 26 d. A resulting insurer is liable pro rata individually for 27 the liabilities, including policy liabilities, of the dividing 28 insurer that are not allocated by the plan of division if the 29 dividing insurer does not survive the division. 30 2. Except as otherwise expressly provided in this section, 31 when a division becomes effective a resulting insurer is not 32 responsible for and shall not have liability for any of the 33 following: 34 a. Any liabilities, including policy liabilities, that 35 -11- HF2455.4338 (3) 87 (amending this HF 2455 to CONFORM to SF 2316) ko/rj 11/ 14

another resulting insurer issues, undertakes, or incurs in such 1 resulting insurer’s own name after the division. 2 b. Any liabilities, including policy liabilities, of the 3 dividing insurer that are allocated to or remain the liability 4 of another resulting insurer under the plan of division. 5 3. If a provision of any evidence of indebtedness, whether 6 secured or unsecured, or a provision of any contract other than 7 an insurance policy, annuity, or reinsurance agreement that was 8 issued, incurred, or executed by the dividing insurer before 9 the effective date of this Act, requires the consent of the 10 obligee to a merger of the dividing insurer, or treats such a 11 merger as a default, such provision shall apply to a division 12 of the dividing insurer as if such division were a merger. 13 4. If a division breaches a contractual obligation of 14 the dividing insurer, all resulting insurers are jointly 15 and severally liable for the breach. The validity and 16 effectiveness of the division shall not be affected by the 17 breach. 18 5. A direct or indirect allocation of capital, surplus, 19 assets, or liabilities, including policy liabilities, shall 20 occur automatically, by operation of law, and shall not be 21 treated as a distribution or transfer for any purpose with 22 respect to either the dividing insurer or any resulting 23 insurer. 24 6. Liens, security interests, and other charges on the 25 capital, surplus, or other assets of the dividing insurer 26 shall not be impaired by the division, notwithstanding any 27 otherwise enforceable allocation of liabilities, including 28 policy liabilities, of the dividing insurer. 29 7. If the dividing insurer is bound by a security agreement 30 governed by chapter 554 or article 9 of the uniform commercial 31 code as enacted in any other jurisdiction, and the security 32 agreement provides that the security interest attaches to 33 after-acquired collateral, a resulting insurer shall be bound 34 by the security agreement. 35 -12- HF2455.4338 (3) 87 (amending this HF 2455 to CONFORM to SF 2316) ko/rj 12/ 14

8. Unless provided in the plan of division and specifically 1 approved by the commissioner, an allocation of a policy or 2 other liability is prohibited from doing any of the following: 3 a. Affecting the rights that a policyholder or creditor 4 has under any other law with respect to such policy or other 5 liability, except that such rights shall be available only 6 against a resulting insurer responsible for the policy or 7 liability under this section. 8 b. Releasing or reducing the obligation of a reinsurer, 9 surety, or guarantor of the policy or liability. 10 9. A resulting insurer shall only be liable for the 11 liabilities allocated to the resulting insurer in accordance 12 with the plan of division and this section and shall not be 13 liable for any other liabilities under the common law doctrine 14 of successor liability or any other theory of liability 15 applicable to transferees or assignees of assets. 16 Sec. 13. NEW SECTION . 521I.13 Shareholder appraisal rights. 17 If a dividing insurer does not survive a division, an 18 objecting shareholder of the dividing insurer is entitled to 19 appraisal rights and to obtain payment of the fair value of 20 such shareholder’s shares in the same manner and to the extent 21 provided for a corporation as a party to a merger pursuant to 22 section 490.1302. 23 Sec. 14. NEW SECTION . 521I.14 Rules. 24 The commissioner shall adopt rules pursuant to chapter 17A 25 to administer this chapter. 26 Sec. 15. NEW SECTION . 521I.15 Enforcement. 27 The commissioner may take any action under the 28 commissioner’s authority to enforce compliance with this 29 chapter. 30 Sec. 16. Section 490.120, subsection 12, paragraph c, 31 subparagraph (2), Code 2018, is amended to read as follows: 32 (2) “Plan” means a plan of merger or , a plan of share 33 exchange , or a plan of division pursuant to chapter 521I . 34 Sec. 17. Section 490.1302, subsection 1, Code 2018, is 35 -13- HF2455.4338 (3) 87 (amending this HF 2455 to CONFORM to SF 2316) ko/rj 13/ 14

amended by adding the following new paragraph: 1 NEW PARAGRAPH . g. Consummation of a division pursuant 2 to chapter 521I to which the corporation is a party if the 3 corporation does not survive such division. 4 Sec. 18. Section 521.1, Code 2018, is amended by adding the 5 following new subsections: 6 NEW SUBSECTION . 5. “Dividing insurer” means the same as 7 defined in section 521I.1. 8 NEW SUBSECTION . 6. “Resulting insurer” means the same as 9 defined in section 521I.1. 10 Sec. 19. NEW SECTION . 521.19 Merger or consolidation 11 effective with division. 12 A dividing insurer and the dividing insurer’s officers, 13 directors, and shareholders shall have the authority to adopt 14 and execute a plan of merger or consolidation on behalf of a 15 resulting insurer, to execute and deliver documents, plans, 16 certificates, and resolutions, and to make any filings on 17 behalf of such resulting insurer. If provided in a plan of 18 merger or consolidation, the merger or consolidation shall be 19 effective simultaneously with the effectiveness of a division 20 pursuant to 521I.10. > 21 ______________________________ PETTENGILL of Benton -14- HF2455.4338 (3) 87 (amending this HF 2455 to CONFORM to SF 2316) ko/rj 14/ 14