HRS §431:4-503
Mutual insurers cannot convert to stock companies
A domestic mutual insurer cannot change into a stock corporation. It can be fully reinsured by another insurer if the insurance commissioner approves the deal in advance. The deal must pay policyholders fair compensation for their ownership interest.
The statute, as written — Conversion or reinsurance of mutual insurer
(a) No domestic mutual insurer shall be converted, changed, or reorganized as a stock corporation. (b) Such an insurer may be wholly reinsured in, its assets transferred to, and its liabilities assumed by another mutual or stock insurer under such terms and conditions as are approved by the commissioner in advance of such reinsurance. (c) The commissioner shall not approve any such reinsurance agreement which does not determine the amount of and make adequate provision for paying to policyholders of the mutual insurer, reasonable compensation for their equities as owners of the insurer, such compensation to be apportioned to policyholders as identified and in the manner prescribed in section 431:4-326.
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