SB-1174, As Passed House, April 22, 2010

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 1174

     A bill to amend 1956 PA 218, entitled

"The insurance code of 1956,"

by amending section 1311 (MCL 500.1311), as amended by 1994 PA 227.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 1311. (1) A person other than the issuer shall not make a

tender offer for or a request or invitation for tenders of, or

enter into any agreement to exchange securities for, seek to

acquire or acquire, in the open market or otherwise, any voting

security of a domestic insurer if, after the consummation thereof,

the person directly or indirectly, or by conversion or by exercise

of any right to acquire, would be in control of the insurer. A

person shall not enter into an agreement to merge with or otherwise

to acquire control of a domestic insurer or any person controlling

a domestic insurer unless, at the time an offer, request, or

invitation is made or an agreement is entered into, or prior to the

Senate Bill No. 1174 (H-1) as amended April 22, 2010

acquisition of the securities if no offer or agreement is involved,

the person has filed with the commissioner and has sent to the

insurer which has sent to its shareholders, a statement containing

the information required by this chapter and the offer, request,

invitation, agreement, or acquisition has been approved by the

commissioner in the manner prescribed in this chapter.

     (2) [Until May 1, 2012,] If a domestic property and casualty

 insurer has 200

employees or fewer, directly or indirectly through an affiliate

transacting the insurer's business, any proposal to enter into an

agreement to merge with or otherwise acquire control of the

domestic insurer or any person controlling the domestic insurer,

or, for the purpose of obtaining control, that seeks the election

of 2 or more members of the board of directors of the domestic

insurer or any person controlling the domestic insurer, shall, in

addition to the requirements of subsection (1), require the

approval of 66.67% of the outstanding voting securities if the

proposal is not supported by a majority of the domestic insurer's

board of directors. This subsection only applies to a domestic

insurer that, on the effective date of the amendatory act that

added this sentence, generates 100% of its premiums from sales in

this state.

(3) (2) The person who proposes to enter into an agreement to

merge with or otherwise acquire control of a domestic insurer shall

file a notification with the commissioner, in such form and

containing the information prescribed by applicable rule

promulgated or order issued by the commissioner.

(4) (3) For purposes of this section through section 1319, a

domestic insurer shall include any person controlling a domestic

insurer and any foreign insurer whose written insurance premium in

this state for each of the most recent 3 years exceeds the premiums

written in its state of domicile and whose written premium in this

state was 20% or more of its total written premium in each of the

most recent 3 years.