H.F. 2455 Section 1. NEW SECTION . 521I.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Assets” means property whether real, personal, mixed, 4 tangible, or intangible and any right or interest therein, 5 including all rights under a contract or other agreement. 6 2. “Capital” means the capital stock component of a 7 statutory surplus as defined in the latest edition of the 8 national association of insurance commissioners’ accounting 9 practices and procedures manual. 10 3. “Commissioner” means the commissioner of insurance. 11 4. “Divide” or “division” means a transaction in which 12 a domestic stock insurer splits into two or more resulting 13 domestic stock insurers. 14 5. “Dividing insurer” means a domestic stock insurer that 15 approves a plan of division. 16 6. “Domestic stock insurer” means a stock insurer domiciled 17 and organized under the law of this state other than a company 18 qualified and authorized by the commissioner to transact the 19 business of insurance in this state by certificate issued 20 pursuant to chapter 508, 512B, 514, 514B, 515, 5l5E, or 520. 21 7. “Liability” means a secured or contingent debt or 22 obligation arising in any manner. 23 8. “Resulting insurer” means a dividing domestic stock 24 insurer that survives a division or a new domestic stock 25 insurer that is created by a division. 26 9. “Shareholder” means the person in whose name shares are 27 registered in the records of a corporation or the beneficial 28 owner of shares to the extent of the rights granted by a 29 nominee certificate on file with a corporation. 30 10. “Surplus” means total statutory surplus less capital 31 stock calculated in accordance with the latest edition of the 32 national association of insurance commissioners’ accounting 33 practices and procedures manual. 34 11. “Transfer” includes an assignment, assumption, 35 -1- LSB 5520HV (3) 87 ko/rj 1/ 20

H.F. 2455 conveyance, sale, lease, encumbrance, security interest, gift, 1 or transfer by operation of law. 2 Sec. 2. NEW SECTION . 521I.2 Plan of division —— general 3 requirements. 4 A domestic stock insurer’s plan of division shall include 5 all of the following: 6 1. The name of the domestic stock insurer seeking to divide. 7 2. The name of each resulting insurer created by the 8 proposed division and for each resulting insurer a copy of all 9 of the following: 10 a. Proposed articles of incorporation. 11 b. Proposed bylaws. 12 3. The manner of allocating assets and liabilities, 13 including policy liabilities, between or among all resulting 14 insurers. 15 4. The manner of distributing shares in the resulting 16 insurers to the dividing insurer or the dividing insurer’s 17 shareholders. 18 5. A reasonable description of all liabilities and all 19 assets that the dividing insurer proposes to allocate to each 20 resulting insurer, including the manner by which the dividing 21 insurer proposes to allocate all reinsurance contracts. 22 6. All terms and conditions required by the laws of this 23 state and the articles and bylaws of the dividing insurer. 24 7. All other terms and conditions of the division. Terms of 25 a plan of division may be made dependent on facts objectively 26 ascertainable outside of the plan of division. 27 Sec. 3. NEW SECTION . 521I.3 Plan of division —— dividing 28 insurer to survive division. 29 If a dividing insurer will survive a division, the plan 30 of division shall include, in addition to the requirements 31 pursuant to section 521I.2, all of the following: 32 1. All proposed amendments to the dividing insurer’s 33 articles of incorporation and bylaws. 34 2. If the dividing insurer intends to cancel some but not 35 -2- LSB 5520HV (3) 87 ko/rj 2/ 20

H.F. 2455 all shares in the dividing insurer, the manner in which the 1 dividing insurer intends to cancel such shares. 2 3. If the dividing insurer intends to convert some but 3 not all shares in the dividing insurer into securities, 4 obligations, money, other property, rights to acquire shares or 5 securities, or any combination thereof, a statement disclosing 6 the manner in which the dividing insurer intends to convert 7 such shares. 8 Sec. 4. NEW SECTION . 521I.4 Plan of division —— dividing 9 insurer not to survive division. 10 If a dividing insurer will not survive a division, the plan 11 of division shall include, in addition to the requirements 12 pursuant to section 521I.2, the manner in which the dividing 13 insurer will cancel or convert shares in the dividing insurer’s 14 shares into shares, securities, obligations, money, other 15 property, rights to acquire shares or securities, or any 16 combination thereof. 17 Sec. 5. NEW SECTION . 521I.5 Amending plan of division. 18 1. A dividing insurer may amend the dividing insurer’s 19 plan of division in accordance with any procedures set forth 20 in the plan of division, or if no such procedures are set 21 forth in the plan of division, in a manner determined by the 22 board of directors of the dividing insurer. A shareholder 23 that is entitled to vote on or consent to approval of the plan 24 of division shall be entitled to vote on or consent to an 25 amendment of the plan of division that will affect any of the 26 following: 27 a. The amount or kind of shares, securities, obligations, 28 money, other property, rights to acquire shares or securities, 29 or any combination thereof to be received by any of the 30 shareholders of the dividing insurer under the plan of 31 division. 32 b. The articles of incorporation or bylaws of any resulting 33 insurer that become effective when the division becomes 34 effective except for changes that do not require approval of 35 -3- LSB 5520HV (3) 87 ko/rj 3/ 20

H.F. 2455 the shareholders of the resulting insurer under such articles 1 of incorporation or bylaws. 2 c. Any other terms or conditions of the plan of division 3 if the change may adversely affect the shareholders in any 4 material respect. 5 2. A dividing insurer shall not amend the dividing insurer’s 6 plan of division after the plan of division becomes effective. 7 Sec. 6. NEW SECTION . 521I.6 Abandoning plan of division. 8 1. A dividing insurer may abandon the dividing insurer’s 9 plan of division in any of the following circumstances: 10 a. After the dividing insurer has approved the plan 11 of division without any action by the shareholders and in 12 accordance with any procedures set forth in the plan of 13 division, or if no such procedures are set forth in the plan of 14 division, in a manner determined by the board of directors of 15 the dividing insurer. 16 b. After the dividing insurer has filed a certificate 17 of division with the secretary of state pursuant to section 18 521I.10, the dividing insurer may file a signed certificate of 19 abandonment with the secretary of state and file a copy with 20 the commissioner. The certificate of abandonment shall be 21 effective on the date the certificate of abandonment is filed 22 with the secretary of state. 23 2. A dividing insurer shall not abandon the dividing 24 insurer’s plan of division after the plan of division becomes 25 effective. 26 Sec. 7. NEW SECTION . 521I.7 Approval of plan of division —— 27 articles of incorporation and bylaws. 28 1. A dividing insurer shall not file a plan of division with 29 the commissioner until such plan of division has been approved 30 in accordance with all provisions of the dividing insurer’s 31 articles of incorporation and bylaws. If the dividing 32 insurer’s articles of incorporation and bylaws do not provide 33 for approval of a plan of division, the dividing insurer shall 34 not file the plan of division with the commissioner unless 35 -4- LSB 5520HV (3) 87 ko/rj 4/ 20

H.F. 2455 such plan of division has been approved in accordance with all 1 provisions of the dividing insurer’s articles of incorporation 2 and bylaws that provide for approval of a merger. 3 2. If a provision of a dividing insurer’s articles of 4 incorporation or bylaws adopted before the effective date of 5 this Act requires that a specific number of or a percentage 6 of the board of directors or shareholders propose or adopt a 7 plan of merger or impose other procedures for the proposal or 8 adoption of a plan of merger, the dividing insurer shall adhere 9 to such provision in proposing or adopting a plan of division. 10 If any such provision of the articles of incorporation or 11 bylaws is amended on or after the effective date of this Act, 12 such provision shall apply to a division thereafter only in 13 accordance with its express terms. 14 Sec. 8. NEW SECTION . 521I.8 Commissioner approval of plan 15 of division. 16 1. After a dividing insurer approves a plan of division 17 pursuant to section 521I.7, the dividing insurer shall file the 18 plan of division with the commissioner. Within ten business 19 days of filing the plan of division with the commissioner, the 20 dividing insurer shall provide notice of the filing to each 21 reinsurer that is a party to a reinsurance contract allocated 22 in the plan of division. 23 2. A division shall not become effective until approved by 24 the commissioner after reasonable notice and a public hearing. 25 Notice and public hearing required under this section shall be 26 conducted as a contested case pursuant to chapter 17A. 27 3. The commissioner may approve a plan of division if the 28 commissioner finds that all of the following apply: 29 a. The interest of the policyholders, creditors, or 30 shareholders of the dividing insurer will be adequately 31 protected and the plan of division is not unfair or 32 unreasonable to the policyholders of the dividing insurer and 33 is not contrary to the public interest. 34 b. The financial condition of the resulting insurers will 35 -5- LSB 5520HV (3) 87 ko/rj 5/ 20

H.F. 2455 not jeopardize the financial stability of a dividing insurer 1 or the resulting insurers or prejudice the interests of the 2 policyholders of such insurers. 3 c. All resulting insurers created by the proposed division 4 will be qualified and eligible to receive a certificate of 5 authority to transact the business of insurance in this state. 6 d. The proposed division does not violate a provision of 7 chapter 684. In a division in which the dividing insurer 8 will survive, the commissioner shall apply chapter 684 to the 9 dividing insurer in its capacity as a resulting insurer. In 10 applying the provisions of chapter 684 to a resulting insurer, 11 the commissioner shall do all of the following: 12 (1) Treat the resulting insurer as a debtor. 13 (2) Treat a liability allocated to the resulting insurer as 14 a liability incurred by a debtor. 15 (3) Treat the resulting insurer as receiving unequal value 16 in exchange for incurring allocated obligations. 17 (4) Treat assets allocated to the resulting insurer as 18 remaining assets. 19 e. The proposed division is not being made for the purpose 20 of hindering, delaying, or defrauding any policyholders or 21 other creditors of the dividing insurer. 22 f. All resulting insurers will be solvent when the division 23 becomes effective. 24 g. The remaining assets of a resulting insurer will not be 25 unreasonably small in relation to the business and transactions 26 such resulting insurer has been engaged in or will engage in 27 after completion of the division. 28 4. In determining if the standards set forth in subsection 29 3, paragraphs “c” through “g” are satisfied, the commissioner 30 may consider all proposed assets of the resulting insurer 31 including without limitation reinsurance agreements, parental 32 guarantees, support agreements, keepwell agreements, and 33 capital maintenance of contingent capital agreements regardless 34 of whether such qualify as an admitted asset under state law. 35 -6- LSB 5520HV (3) 87 ko/rj 6/ 20

H.F. 2455 5. All expenses incurred by the commissioner in connection 1 with proceedings under this section including expenses 2 for attorneys, actuaries, accountants, and other experts 3 not otherwise a part of the commissioner’s staff as may be 4 reasonably necessary to assist the commissioner in reviewing 5 a proposed plan of division shall be paid by the dividing 6 insurer filing such plan. A dividing insurer may allocate such 7 expense in a plan of division in the same manner as any other 8 liability. 9 6. If the commissioner approves a plan of division the 10 commissioner shall issue an order which shall be accompanied 11 by findings of fact and conclusions of law. The commissioner 12 shall also issue a certificate of authority authorizing the 13 resulting insurers to transact the business of insurance in 14 this state. 15 7. The conditions in this section for freeing one or more 16 of the resulting insurers from the liabilities of the dividing 17 insurer and for allocating some or all of the liabilities of 18 the dividing insurer shall be deemed to have been satisfied if 19 the plan of division is approved by the commissioner in a final 20 order. 21 Sec. 9. NEW SECTION . 521I.9 Confidentiality. 22 All information and documents submitted to, obtained by, or 23 disclosed to the commissioner in connection with a dividing 24 insurer’s plan of division shall be confidential and shall not 25 be available for public inspection until notice of a public 26 hearing is provided pursuant to section 521I.8, subsection 27 1. After issuance of a notice of such hearing, the dividing 28 insurer may submit a written request to the commissioner 29 requesting that confidentiality be maintained regarding 30 all business, financial, and actuarial information. If the 31 commissioner grants the dividing insurer’s request, such 32 confidential information shall not be available for public 33 inspection and shall not be subject to chapter 22. The plan 34 of division and any materials incorporated by reference into 35 -7- LSB 5520HV (3) 87 ko/rj 7/ 20

H.F. 2455 or otherwise made a part of such plan of division shall not be 1 confidential and shall be available for public inspection. 2 Sec. 10. NEW SECTION . 521I.10 Certificate of division. 3 1. If the commissioner approves a dividing insurer’s plan 4 of division pursuant to section 521I.8, an officer or duly 5 authorized representative of the dividing insurer shall sign a 6 certificate of division that sets forth all of the following: 7 a. The name of the dividing insurer. 8 b. A statement disclosing whether the dividing insurer 9 survived the division. If the dividing insurer survived 10 the division, the certificate of division shall include any 11 amendments to the dividing insurer’s articles of incorporation 12 or bylaws as approved as part of the plan of division. 13 c. The name of each resulting insurer that is created by 14 the division. 15 d. The date on which the division is effective. 16 e. A statement that the division was approved by the 17 commissioner under section 521I.8. 18 f. A statement that the dividing insurer provided reasonable 19 notice to each reinsurer that is a party to a reinsurance 20 contract allocated in the plan of division. 21 g. The resulting insurer’s articles of incorporation and 22 bylaws for each resulting insurer created by the division. The 23 articles of incorporation and bylaws of each resulting insurer 24 must comply with the applicable requirements of the laws of 25 this state. The articles of incorporation and bylaws may state 26 the name or address of an incorporator, may be signed, and may 27 include any provision that is not required in a restatement of 28 the articles of incorporation or bylaws. 29 h. A reasonable description of the capital, surplus, other 30 assets and liabilities, including policy liabilities, of the 31 dividing insurer that are to be allocated to each resulting 32 insurer. 33 2. A dividing insurer’s certificate of division is 34 effective on the date the dividing insurer files the 35 -8- LSB 5520HV (3) 87 ko/rj 8/ 20

H.F. 2455 certificate with the secretary of state and provides a 1 concurrent copy to the commissioner, or on another date 2 as specified in the plan of division, whichever is later. 3 However, the certificate of division shall become effective 4 not later than ninety calendar days after it is filed with the 5 secretary of state. A division shall be effective when the 6 relevant certificate of division is effective. 7 Sec. 11. NEW SECTION . 521I.11 Division effective. 8 1. On the effective date of a division pursuant to section 9 521I.10, the following apply: 10 a. If the dividing insurer survives, all of the following 11 apply: 12 (1) The dividing insurer shall continue to exist. 13 (2) The articles of incorporation of the dividing insurer 14 shall be amended, if at all, if provided for in the plan of 15 division. 16 (3) The bylaws of the dividing insurer shall be amended, if 17 at all, if provided for in the plan of division. 18 b. If the dividing insurer does not survive, the dividing 19 insurer’s separate existence shall cease to exist and any 20 resulting insurer created by the plan of division shall come 21 into existence. 22 c. Each resulting insurer shall hold any capital, surplus, 23 and other assets allocated to such resulting insurer by the 24 plan of division as a successor to the dividing insurer by 25 operation of law, and not by transfer, whether directly or 26 indirectly. The articles of incorporation and bylaws, if any, 27 of each resulting insurer shall be effective when the resulting 28 insurer comes into existence. 29 d. (1) All capital, surplus, and other assets of the 30 dividing insurer that are allocated by the plan of division 31 shall vest in the applicable resulting insurer as provided in 32 the plan of division or shall remain vested in the dividing 33 insurer as provided in the plan of division. 34 (2) All capital, surplus, and other assets of the dividing 35 -9- LSB 5520HV (3) 87 ko/rj 9/ 20

H.F. 2455 insurer that are not allocated by the plan of division shall 1 remain vested in the dividing insurer if the dividing insurer 2 survives the division and shall be allocated to and vest pro 3 rata in the resulting insurers individually if the dividing 4 insurer does not survive the division. 5 (3) All capital, surplus, and other assets of the dividing 6 insurer otherwise vest as provided in this section without 7 transfer, reversion, or impairment. 8 e. A resulting insurer to which a cause of action is 9 allocated may be substituted or added in any pending action or 10 proceeding to which the dividing insurer is a party when the 11 division becomes effective. 12 f. All liabilities of a dividing insurer are allocated 13 between or among any resulting insurers as provided in section 14 521I.10 and each resulting insurer to which liabilities are 15 allocated is liable only for those liabilities, including 16 policy liabilities, allocated as a successor to the dividing 17 insurer by operation of law. 18 g. Any shares in the dividing insurer that are to be 19 converted or canceled in the division are converted or canceled 20 and the shareholders of those shares are entitled only to 21 the rights provided to such shareholders under the plan of 22 division and any appraisal rights that such shareholders may 23 have pursuant to section 521I.13. 24 2. Except as provided in the dividing insurer’s articles 25 of incorporation or bylaws, the division does not give rise 26 to any rights that a shareholder, director of a domestic 27 stock insurer, or third party would have upon a dissolution, 28 liquidation, or winding up of the dividing insurer. 29 3. The allocation to a resulting insurer of capital, 30 surplus, or other asset that is collateral covered by an 31 effective financing statement shall not be effective until a 32 new effective financing statement naming the resulting insurer 33 as a debtor is effective under the uniform commercial code. 34 4. Unless otherwise provided in the plan of division, 35 -10- LSB 5520HV (3) 87 ko/rj 10/ 20

H.F. 2455 the shares in and any securities of each resulting insurer 1 shall be distributed to the dividing insurer if it survives 2 the division, or pro rata to the shareholders of the dividing 3 insurer that do not assert any appraisal rights pursuant to 4 section 521I.13. 5 Sec. 12. NEW SECTION . 521I.12 Resulting insurers liability 6 for allocated assets, debts, and liabilities. 7 1. Except as expressly provided in this section, when a 8 division becomes effective, by operation of law all of the 9 following apply: 10 a. A resulting insurer is individually liable for the 11 liabilities, including policy liabilities, that the resulting 12 insurer issues, undertakes, or incurs in its own name after the 13 division. 14 b. A resulting insurer is individually liable for the 15 liabilities, including policy liabilities, of the dividing 16 insurer that are allocated to or remain the liability of the 17 resulting insurer to the extent specified in the plan of 18 division. 19 c. The dividing insurer remains responsible for the 20 liabilities, including policy liabilities, of the dividing 21 insurer that are not allocated by the plan of division if the 22 dividing insurer survives the division. 23 d. A resulting insurer is liable pro rata individually for 24 the liabilities, including policy liabilities, of the dividing 25 insurer that are not allocated by the plan of division if the 26 dividing insurer does not survive the division. 27 2. Except as otherwise expressly provided in this section, 28 when a division becomes effective a resulting insurer is not 29 responsible for and shall not have liability for any of the 30 following: 31 a. Any liabilities, including policy liabilities, that 32 another resulting insurer issues, undertakes, or incurs in such 33 resulting insurer’s own name after the division. 34 b. Any liabilities, including policy liabilities, of the 35 -11- LSB 5520HV (3) 87 ko/rj 11/ 20

H.F. 2455 dividing insurer that are allocated to or remain the liability 1 of another resulting insurer under the plan of division. 2 3. If a provision of any evidence of indebtedness, whether 3 secured or unsecured, or a provision of any contract other than 4 an insurance policy, annuity, or reinsurance agreement that was 5 issued, incurred, or executed by the dividing insurer before 6 the effective date of this Act, requires the consent of the 7 obligee to a merger of the dividing insurer, or treats such a 8 merger as a default, such provision shall apply to a division 9 of the dividing insurer as if such division were a merger. 10 4. If a division breaches a contractual obligation of 11 the dividing insurer, all resulting insurers are jointly 12 and severally liable for the breach. The validity and 13 effectiveness of the division shall not be affected by the 14 breach. 15 5. A direct or indirect allocation of capital, surplus, 16 assets, or liabilities, including policy liabilities, shall 17 occur automatically, by operation of law, and shall not be 18 treated as a distribution or transfer for any purpose with 19 respect to either the dividing insurer or any resulting 20 insurer. 21 6. Liens, security interests, and other charges on the 22 capital, surplus, or other assets of the dividing insurer 23 shall not be impaired by the division, notwithstanding any 24 otherwise enforceable allocation of liabilities, including 25 policy liabilities, of the dividing insurer. 26 7. If the dividing insurer is bound by a security agreement 27 governed by chapter 554 or article 9 of the uniform commercial 28 code as enacted in any other jurisdiction, and the security 29 agreement provides that the security interest attaches to 30 after-acquired collateral, a resulting insurer shall be bound 31 by the security agreement. 32 8. Unless provided in the plan of division and specifically 33 approved by the commissioner, an allocation of a policy or 34 other liability is prohibited from doing any of the following: 35 -12- LSB 5520HV (3) 87 ko/rj 12/ 20

H.F. 2455 a. Affecting the rights that a policyholder or creditor 1 has under any other law with respect to such policy or other 2 liability, except that such rights shall be available only 3 against a resulting insurer responsible for the policy or 4 liability under this section. 5 b. Releasing or reducing the obligation of a reinsurer, 6 surety, or guarantor of the policy or liability. 7 9. A resulting insurer shall only be liable for the 8 liabilities allocated to the resulting insurer in accordance 9 with the plan of division and this section and shall not be 10 liable for any other liabilities under the common law doctrine 11 of successor liability or any other theory of liability 12 applicable to transferees or assignees of assets. 13 Sec. 13. NEW SECTION . 521I.13 Shareholder appraisal rights. 14 If a dividing insurer does not survive a division, an 15 objecting shareholder of the dividing insurer is entitled to 16 appraisal rights and to obtain payment of the fair value of 17 such shareholder’s shares in the same manner and to the extent 18 provided for a corporation as a party to a merger pursuant to 19 section 490.1302. 20 Sec. 14. NEW SECTION . 521I.14 Rules. 21 The commissioner shall adopt rules pursuant to chapter 17A 22 to administer this chapter. 23 Sec. 15. NEW SECTION . 521I.15 Enforcement. 24 The commissioner may take any action under the 25 commissioner’s authority to enforce compliance with this 26 chapter. 27 Sec. 16. Section 490.120, subsection 12, paragraph c, 28 subparagraph (2), Code 2018, is amended to read as follows: 29 (2) “Plan” means a plan of merger or , a plan of share 30 exchange , or a plan of division pursuant to chapter 521I . 31 Sec. 17. Section 490.1302, subsection 1, Code 2018, is 32 amended by adding the following new paragraph: 33 NEW PARAGRAPH . g. Consummation of a division pursuant 34 to chapter 521I to which the corporation is a party if the 35 -13- LSB 5520HV (3) 87 ko/rj 13/ 20

H.F. 2455 corporation does not survive such division. 1 Sec. 18. Section 521.1, Code 2018, is amended by adding the 2 following new subsections: 3 NEW SUBSECTION . 5. “Dividing insurer” means the same as 4 defined in section 521I.1. 5 NEW SUBSECTION . 6. “Resulting insurer” means the same as 6 defined in section 521I.1. 7 Sec. 19. NEW SECTION . 521.19 Merger or consolidation 8 effective with division. 9 A dividing insurer and the dividing insurer’s officers, 10 directors, and shareholders shall have the authority to adopt 11 and execute a plan of merger or consolidation on behalf of a 12 resulting insurer, to execute and deliver documents, plans, 13 certificates, and resolutions, and to make any filings on 14 behalf of such resulting insurer. If provided in a plan of 15 merger or consolidation, the merger or consolidation shall be 16 effective simultaneously with the effectiveness of a division 17 pursuant to 521I.10. 18 EXPLANATION 19 The inclusion of this explanation does not constitute agreement with 20 the explanation’s substance by the members of the general assembly. 21 This bill relates to the division of a domestic stock insurer 22 into two or more domestic stock insurers. 23 The bill defines a dividing insurer as a domestic stock 24 insurer that approves a plan of division. A resulting insurer 25 is defined as a dividing insurer that survives a division, or a 26 new domestic stock insurer that is created by a division. 27 The bill requires a dividing insurer to develop a plan 28 of division that identifies the dividing insurer’s name, the 29 proposed resulting insurers and their articles of incorporation 30 and bylaws, the allocation of the dividing insurer’s assets, 31 liabilities, and reinsurance contracts to the resulting 32 insurers, and the manner in which the shares in the resulting 33 insurers will be distributed to the dividing insurer or its 34 shareholders. The plan of division must also comply with all 35 -14- LSB 5520HV (3) 87 ko/rj 14/ 20

H.F. 2455 terms of the dividing insurer’s articles of incorporation and 1 bylaws. 2 If the dividing insurer will survive the division, the plan 3 of division must also include any proposed amendments to the 4 dividing insurer’s articles of incorporation and bylaws and 5 the manner in which the dividing insurer proposes to cancel or 6 convert some of its shares. If the dividing insurer will not 7 survive the division, the plan of division must include details 8 on how the dividing insurer will cancel or convert its shares 9 into securities, obligations, other property, or rights to 10 acquire shares or securities. 11 The bill allows a dividing insurer to amend or cancel a plan 12 of division, and allows a shareholder to vote or consent to an 13 amendment, under certain conditions as detailed in the bill. 14 The bill requires that prior to filing a plan of division 15 with the commissioner, a dividing insurer must obtain approval 16 in accordance with all provisions of the dividing insurer’s 17 articles of incorporation and bylaws. If the articles of 18 incorporation and bylaws do not provide for approval of a plan 19 of division, the dividing insurer must obtain approval in 20 accordance with all provisions of such that apply to approval 21 of a merger. 22 The bill provides that a division shall not become effective 23 until approved by the commissioner after reasonable notice 24 and a public hearing. The commissioner may approve a plan of 25 division if the commissioner determines that the interests of 26 the policyholders, creditors, or shareholders of the dividing 27 insurer are adequately protected and the proposed division is 28 not unfair or unreasonable to the policyholders of the dividing 29 insurer; that the division is not contrary to public policy; 30 that the financial condition of the resulting insurers will 31 not jeopardize the financial stability of a dividing insurer 32 or the resulting insurers or prejudice the interests of the 33 policyholders of such insurers; that all resulting insurers 34 created by the proposed division are qualified and eligible to 35 -15- LSB 5520HV (3) 87 ko/rj 15/ 20

H.F. 2455 receive a certificate of authority to transact the business 1 of insurance in this state; that the proposed division does 2 not violate the state’s voidable transactions statute; that 3 the proposed division is not for the purpose of hindering, 4 delaying, or defrauding any policyholders or other creditors 5 of the dividing insurer; that all resulting insurers will be 6 solvent; and that the remaining assets of a resulting insurer 7 will not be unreasonably small in relation to the business and 8 transactions in which such resulting insurer has been engaged 9 in or will engage in after completion of the division. 10 The bill requires the commissioner to issue an order, 11 including findings of fact and conclusions of law, to approve 12 a plan of division. The commissioner is required to issue a 13 certificate of authority to the resulting insurers. If the 14 plan of division has been approved by the commissioner in a 15 final order, any conditions required to remove liabilities of 16 the dividing insurer from the resulting insurer, or to allocate 17 some or all of the liabilities of the dividing insurer to the 18 resulting insurers, are deemed satisfied. 19 All information and documents submitted to, obtained by, or 20 disclosed to the commissioner in connection with a dividing 21 insurer’s plan of division are confidential and not available 22 for public inspection until the commissioner has provided 23 notice of a public hearing. After issuance of such notice, 24 the dividing insurer may submit a written request to the 25 commissioner to continue treating all business, financial, 26 and actuarial information as confidential. The bill requires 27 that the plan of division and any materials incorporated by 28 reference into or otherwise made a part of such plan shall not 29 be confidential and shall be available for public inspection. 30 If the commissioner approves a dividing insurer’s plan 31 of division, an officer of the dividing insurer shall sign 32 a certificate of division that sets forth information, as 33 detailed in the bill, related to the dividing insurer’s 34 post-division status and any resulting insurer’s post-division 35 -16- LSB 5520HV (3) 87 ko/rj 16/ 20

H.F. 2455 status. A dividing insurer’s certificate of division 1 is effective on the date the dividing insurer files the 2 certificate with the secretary of state or on another date 3 as specified in the plan of division, whichever is later. 4 However, the certificate of division shall become effective 5 not later than 90 days after it is filed with the secretary of 6 state. 7 When a division becomes effective and the dividing insurer 8 survives, the bill provides that the dividing insurer continues 9 to exist and that the articles of incorporation and the bylaws 10 of the dividing insurer must be amended as provided in the 11 plan of division. If the dividing insurer does not survive, 12 the dividing insurer’s separate existence ceases to exist and 13 any resulting insurers created by the plan of division come 14 into existence. The bill provides that all resulting insurers 15 shall hold any capital, surplus, and other assets allocated 16 to each as a successor to the dividing insurer by operation 17 of law, and not by transfer. All capital, surplus, and other 18 assets of the dividing insurer that are allocated by the plan 19 of division either vest in the applicable resulting insurer 20 or remain vested in the dividing insurer as provided in the 21 plan of division. All capital, surplus, and other assets that 22 are not allocated by the plan of division remain vested in the 23 dividing insurer if the dividing insurer survives the division, 24 are allocated to the resulting insurers individually if the 25 dividing insurer does not survive the division, or vest as 26 otherwise provided in the bill. 27 A resulting insurer to which a cause of action is allocated 28 may be substituted or added in any pending action to which 29 the dividing insurer is a party when the division becomes 30 effective. All liabilities of a dividing insurer are allocated 31 between or among any resulting insurers and each resulting 32 insurer to which liabilities are allocated is liable only for 33 those liabilities, including policy liabilities, allocated as a 34 successor to the dividing insurer. 35 -17- LSB 5520HV (3) 87 ko/rj 17/ 20

H.F. 2455 The bill also provides that when a division becomes 1 effective any shares in the dividing insurer that are to 2 be converted or canceled in the division are converted or 3 canceled, and the shareholders of those shares are entitled 4 only to the rights provided to such shareholders under the 5 plan of division and per any appraisal rights they may have 6 as detailed in the bill. Except as provided in the dividing 7 insurer’s articles of incorporation or bylaws, the division 8 does not give any rights to a shareholder, director, or third 9 party that such would have upon a dissolution, liquidation, or 10 winding up of the domestic stock insurer. 11 Unless otherwise provided in the plan of division, the 12 shares and securities of each resulting insurer are distributed 13 to the dividing insurer if it survives the division, or pro 14 rata to any shareholders of the dividing insurer that do not 15 assert appraisal rights. 16 The bill provides that when a division becomes effective, 17 each resulting insurer is individually liable for all 18 liabilities that such resulting insurer issues, undertakes, 19 or incurs in its own name after the division; each resulting 20 insurer is individually liable for the liabilities of 21 the dividing insurer that are allocated to or remain the 22 liability of such resulting insurer as specified in the plan 23 of division; and the dividing insurer remains responsible for 24 all liabilities of the dividing insurer that are not allocated 25 by the plan of division if the dividing insurer survives 26 the division. If the dividing insurer does not survive the 27 division, each resulting insurer is pro rata individually 28 liable for all liabilities of the dividing insurer that are not 29 allocated by the plan of division. 30 The bill also provides that when a division becomes 31 effective, no resulting insurer is liable for any liabilities 32 that another resulting insurer issues, undertakes, or incurs in 33 its own name after the division, or for any liabilities of the 34 dividing insurer that are allocated to or remain the liability 35 -18- LSB 5520HV (3) 87 ko/rj 18/ 20

H.F. 2455 of another resulting insurer per the plan of division. If 1 any provision of any evidence of indebtedness or a provision 2 of any contract other than an insurance policy, annuity, or 3 reinsurance agreement that was issued, incurred, or executed 4 by the dividing insurer before the effective date of the bill 5 requires the consent of the obligee to a merger of the dividing 6 insurer, or treats such a merger as a default, such provision 7 applies to a division of the dividing insurer as if such 8 division were a merger. 9 If a division breaches a contractual obligation of the 10 dividing insurer, all resulting insurers are liable, jointly 11 and severally, for the breach. The validity and effectiveness 12 of the division are not affected by the breach. 13 In a division, a direct or indirect allocation of capital, 14 surplus, assets, or liabilities, including policy liabilities, 15 occurs automatically by operation of law and shall not be 16 treated as a distribution or transfer for any purpose with 17 respect to either the dividing insurer or any of the resulting 18 insurers. Liens, security interests, and other charges on the 19 capital, surplus, or other assets of the dividing insurer are 20 not impaired by the division. 21 Except as provided in the plan of division and as 22 specifically approved by the commissioner, an allocation of a 23 policy or other liability does not affect the rights that a 24 policyholder or creditor has under any other law with respect 25 to such policy or other liability, except that such rights are 26 available only against a resulting insurer responsible for the 27 policy or liability. A reinsurer, surety, or guarantor of the 28 policy or liability is not released from their obligations 29 under the policy or other liability. 30 If a dividing insurer does not survive a division, an 31 objecting shareholder of the dividing insurer is entitled to 32 appraisal rights and to obtain payment of the fair value of 33 such shareholder’s shares. 34 The bill requires the commissioner to adopt rules pursuant 35 -19- LSB 5520HV (3) 87 ko/rj 19/ 20

H.F. 2455 to Code chapter 17A to administer the requirements of the 1 bill and allows the commissioner to take any action under the 2 commissioner’s authority to enforce compliance with the bill. 3 The bill amends Code section 490.120 to add a plan of 4 division to the definition of plan. The bill amends Code 5 section 490.1302 to provide for shareholder appraisal rights 6 for a division to which a corporation is a party, if the 7 corporation does not survive such division. The bill amends 8 Code chapter 521 to allow a dividing insurer to adopt and 9 execute a plan of merger or consolidation on behalf of a 10 resulting insurer and if provided for in the plan of merger or 11 consolidation, the merger or consolidation shall be effective 12 simultaneously with the effectiveness of a division under the 13 bill. 14 -20- LSB 5520HV (3) 87 ko/rj 20/ 20