Ch. 35

1997 LAWS OF MARYLAND

(B) STANDARDS FOR APPROVAL OF PLAN.

THE COMMISSIONER MAY NOT APPROVE A PLAN FOR MERGER OR
CONVERSION UNLESS:

(1) THE PLAN IS EQUITABLE TO SUBSCRIBERS; AND

(2) FOR CONVERSION TO A STOCK INSURER, THE PLAN GIVES EACH
SUBSCRIBER:

(I) PREFERENTIAL RIGHT TO ACQUIRE STOCK OF THE PROPOSED
STOCK INSURER PROPORTIONATE TO THE SUBSCRIBER'S INTEREST IN THE
RECIPROCAL INSURER; AND

(II) A REASONABLE LENGTH OF TIME TO EXERCISE THE
PREFERENTIAL RIGHT,

(C) EFFECT OF CONVERSION.

IF A DOMESTIC RECIPROCAL INSURER CONVERTS TO A STOCK INSURER OR
MUTUAL INSURER, THE SUCCESSOR STOCK INSURER OR MUTUAL INSURER IS
SUBJECT TO THE SAME CAPITAL OR SURPLUS REQUIREMENTS AND HAS THE SAME
RIGHTS AS A LIKE DOMESTIC INSURER THAT TRANSACTS LIKE KINDS OF INSURANCE

BUSINESS.

REVISOR'S NOTE: This section is new language derived without substantive
change from former Art. 48A, § 300.

Defined terms: "Commissioner" § 1-101
"Domestic insurer" § 1-101
"Insurance business" § 1-101
"Mutual insurer" § 1-101
"Reciprocal insurer" § 1-101
"Stock insurer" § 1-101
"Subscriber" § 3-201

3-222. IMPAIRED RECIPROCAL INSURERS.

(A) INSUFFICIENT ASSETS.

IF THE ASSETS OF A RECIPROCAL INSURER AT ANY TIME ARE INSUFFICIENT TO
MAINTAIN THE REQUIRED SURPLUS AND TO DISCHARGE ITS LIABILITIES, OTHER
THAN A LIABILITY ON ACCOUNT OF MONEY CONTRIBUTED BY THE ATTORNEY IN
FACT OR ANOTHER PERSON, THE ATTORNEY IN FACT OF A RECIPROCAL INSURER
IMMEDIATELY SHALL:

(1) MAKE UP THE DEFICIENCY; OR

(2) SUBJECT TO THE LIMITATIONS SET FORTH IN THE POWER OF
ATTORNEY OR SUBSCRIBERS' POLICIES, LEVY AN ASSESSMENT ON THE
SUBSCRIBERS FOR THE AMOUNT NEEDED TO CURE THE DEFICIENCY.

(B) INSOLVENCY.

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