CHAPTER 628

628.011 Scope of part. This part applies only to domestic insurers, mutual insurers, and captive insurers, except that s. 628.341(2) applies also as to foreign and alien insurers. History. — s. 621, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 631, 665, 809(1st), ch. 82-243; s. 3, ch. 85-214; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 9, ch. 2024-182. 628.021 “Stock insurer” defined. A “stock insurer” is an incorporated insurer with its capital divided into shares and owned by its stockholders. History. — s. 622, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429. 628.031 “Mutual insurer” defined. A “mutual insurer” is an incorporated insurer without permanent capital stock, the governing body of which is elected in accordance with this part. History. — s. 623, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243; s. 4, ch. 85-214; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429. 628.041 Applicability of general corporation statutes. The applicable statutes of this state relating to the powers and procedures of domestic private corporations formed for profit shall apply to domestic stock insurers and to domestic mutual insurers, except: (1) As to any domestic mutual insurers incorporated pursuant to chapter 617, which chapter shall govern such insurers when in conflict with part I of chapter 607; and (2) When in conflict with the express provisions of this code. History. — s. 624, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 633, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 55, ch. 2014-209. 628.051 Application for permit to form insurer; contents; fee. (1) No domestic insurer shall be formed unless the persons so proposing have received a permit from the office. (2) Written application for such permit shall be filed with the office. Such application and filing shall include: (a) The name, type, and purpose of insurer. (b) The name, residence address, business background, and qualifications of each person associated or to be associated in the formation or financing of the insurer. Each such person with an ownership interest of 10 percent or more, or who will hold a position as an officer or director, must furnish on forms adopted by the commission and supplied by the office a sworn biographical statement, legible copies of fingerprints, and authority for release of information in regard to the investigation of such person’s background. (c) A full disclosure of the terms of all understandings and agreements existing or proposed among persons so associated relative to the insurer, or the formation or financing thereof, accompanied by a copy of each such agreement or understanding. (d) A full disclosure of the terms of all understandings and agreements existing or proposed for management or exclusive agency contracts. (e) A copy of all proposed articles or certificates of incorporation and proposed bylaws of the proposed insurer. (f) A copy of all articles or certificates of incorporation of involved corporations, if a copy of the same is not already on file in the office. (g) A copy of all syndicate, association, firm, partnership, organization, or other similar agreements, by whatever name called, involved in the formation of the proposed insurer or its financing. (h) If the applicant is a reciprocal insurer, a copy of the power of attorney and of other agreements existing or proposed as affecting investors, subscribers, the attorney in fact, or the applicant. (i) A copy of any security, or of any proposed document evidencing any right or interest, proposed to be offered. (j) Such other pertinent information and documents as reasonably requested by the commission or office. (3) The application shall be accompanied by the filing fee specified in s. 624.501. History. — s. 625, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 634, 665, 809(1st), ch. 82-243; ss. 67, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1258, ch. 2003-261. 628.061 Investigation of proposed organization. In connection with any proposal to organize or incorporate a domestic insurer, the office shall make an investigation of: (1) The character, reputation, financial standing, and motives of the organizers, incorporators, and subscribers organizing the proposed insurer or any attorney in fact. (2) The character, financial responsibility, insurance experience, and business qualifications of its proposed officers, members of its subscribers’ advisory committee, or officers of its attorney in fact. (3) The character, financial responsibility, business experience, and standing of the proposed stockholders and directors, including the stockholders and directors of any attorney in fact. History. — s. 626, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 635, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1259, ch. 2003-261; s. 10, ch. 2024-182. 628.071 Granting, denial of permit. (1) The office shall expeditiously examine and investigate the application for a permit as referred to in s. 628.051. If the office finds that: (a) The application is complete; (b) The documents therewith filed are in compliance with law; (c) None of the stockholders, organizers, incorporators, subscribers, and other persons who directly or indirectly exercise or have the ability to exercise effective control of the proposed insurer or who will be involved in its management have been found guilty of, or have pleaded guilty or nolo contendere to, a felony or a crime punishable by imprisonment of 1 year or more under the law of the United States or any state thereof, or under the law of any other country, which involves moral turpitude, without regard to whether a judgment of conviction has been entered by the court having jurisdiction of such cases; (d) The proposed financial structure is adequate; and (e) All stockholders, organizers, incorporators, subscribers, and other persons who directly or indirectly exercise or have the ability to exercise effective control of the proposed insurer or who will be involved in management of the proposed insurer possess the financial standing and business experience to form an insurer; it shall issue to the applicant a permit to form the proposed insurer. (2) If the office does not so find, or finds that the insurer if formed or financed would not be able to qualify for or retain a certificate of authority by reason of the provisions of s. 624.404(3), a permit shall not be granted. (3) A permit granted under the provisions of this section shall be valid for 1 year from the date of issue, and during any extension of such period, not to exceed an additional year, as may be authorized by the office upon cause shown. The articles of incorporation and all other proceedings thereunder shall become void 1 year from the issue date of such permit or upon the expiration of such extended period, unless the formation of the proposed insurer has been completed and a certificate of authority has been issued by the office. History. — s. 627, ch. 59-205; s. 1, ch. 63-18; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; ss. 2, 3, ch. 81-318; ss. 636, 665, 809(1st), ch. 82-243; s. 122, ch. 83-216; s. 37, ch. 88-166; s. 48, ch. 89-360; ss. 184, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1260, ch. 2003-261. 628.081 Incorporation of domestic insurer. (1) Five or more individuals, none of whom is less than 18 years of age, may incorporate a stock insurer; 10 or more individuals, none of whom is less than 18 years of age, may incorporate a mutual insurer. At least a majority of the incorporators shall be citizens of the United States. (2) The incorporators shall execute articles of incorporation in triplicate. At least three of them shall acknowledge execution before an officer authorized to take acknowledgments. (3) The articles of incorporation shall state the purpose for which the corporation is formed and shall state and show: (a) The name of the corporation. (b) The duration of its existence, which may be perpetual. (c) The kinds of insurance which the corporation is formed to transact. (d) If a stock corporation, its authorized capital stock, the number of shares of stock into which divided, and the par value of each such share, which par value shall be at least $1 but not more than $100. (e) If a mutual corporation, the maximum contingent liability of its members, other than as to nonassessable policies, for payment of losses and expenses incurred; such liability shall be as stated in the articles of incorporation but shall not be less than 3 nor more than 10 times the premium for the member’s policy at the annual premium rate for a term of 1 year. (f) The number of directors, not less than five, who shall constitute the board of directors and conduct the affairs of the corporation. The term of office of initial directors shall not be for more than 1 year after the date of incorporation. (g) The name of the county, and the city, town, or place within the county, in which its principal office or principal place of business is to be located in this state. (h) Such other provisions, not inconsistent with law, deemed appropriate by the incorporators. (i) The name and residence address of each incorporator and the citizenship of each incorporator who is not a citizen of the United States. History. — s. 628, ch. 59-205; s. 3, ch. 76-168; s. 58, ch. 77-121; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 637, 665, 809(1st), ch. 82-243; ss. 68, 187, 188, ch. 91-108; s. 4, ch. 91-429. 628.091 Filing, approval of articles of incorporation. (1) No domestic stock or mutual insurer shall be formed unless its articles of incorporation are approved by the office prior to filing the same with and approval by the Department of State as provided by law. (2) The incorporators shall file the triplicate originals of the articles of incorporation with the office, accompanied by the filing fee specified in s. 624.501. (3) The office shall promptly examine the articles of incorporation. If it finds that the articles of incorporation conform to law, and that a permit has been or will be issued, it shall endorse its approval on each of the triplicate originals of the articles of incorporation, retain one copy for its files, and return the remaining copies to the incorporators for filing with the Department of State. (4) If the office does not so find, it shall refuse to approve the articles of incorporation and shall return the originals. History. — s. 629, ch. 59-205; ss. 10, 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; ss. 2, 3, ch. 81-318; ss. 638, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1261, ch. 2003-261. 628.101 Amendment of certificate of incorporation; stock insurer. A domestic stock insurer shall not amend its certificate of incorporation until a copy of the proposed amendment has been filed with and approved by the office. The office shall promptly examine any such proposed amendment and shall approve the same unless it finds that the proposed amendment does not comply with law. History. — s. 630, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 639, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1262, ch. 2003-261. 628.111 Amendment of articles of incorporation; mutual insurer. (1) A domestic mutual insurer may amend its articles of incorporation by vote of a majority of those members present or represented by proxy at a lawful meeting of its members, if the notice given members included due notice of the proposal to amend. (2)(a) Upon adoption of the amendment, the insurer shall make in triplicate under its corporate seal a certificate thereof, setting forth the amendment and the date and manner of the adoption thereof, which certificate shall be executed by the insurer’s president or vice president and secretary or assistant secretary and acknowledged before an officer authorized to take acknowledgments. The insurer shall deliver the triplicate originals of the certificate to the office, together with the filing fee specified in s. 624.501. (b) The office shall promptly examine the certificate of amendment; and, if it finds that the certificate and the amendment comply with law, it shall endorse its approval upon each of the triplicate originals, place one on file in its office, and return the remaining sets to the insurer. The insurer shall forthwith file such endorsed certificates of amendment with the Department of State. The amendment shall be effective when filed with and approved by the Department of State. (3) If the office finds that the proposed amendment or certificate does not comply with the law, it shall not approve the same, and shall return the triplicate certificate of amendment to the insurer. History. — s. 631, ch. 59-205; ss. 10, 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; ss. 2, 3, ch. 81-318; ss. 640, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1263, ch. 2003-261. 628.121 Capital stock; amount; payment. (1) The articles of incorporation of a stock insurer shall provide for authorized capital in an amount not less than that required under this code. (2) In the sale of the insurer’s capital stock, an amount not less than the minimum paid-in capital stock required under this code shall be paid in with money of the United States or in equivalent United States Government securities. Any additional sums paid for stock or any stock sold after the minimum required capital has been so paid in in money may be in the form of any type of securities in which the insurer is authorized to invest its funds under part II of chapter 625. History. — s. 632, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 641, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429. 628.131 Limitation on organization and stock sales expenses. (1) The total expense involved in the incorporation and financing of a new domestic stock insurer, including incorporation fees, underwriting fees and costs, attorneys’ fees, printing costs, and other services and costs, shall not exceed 15 percent of the funds actually received by or on behalf of the corporation from the sale of its securities. (2) No president, vice president, secretary, treasurer, director, or other executive officer of any such insurer shall participate, either directly or indirectly, in the commissions of any person selling or negotiating the sale of any security of such an insurer. History. — s. 633, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 642, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429. 628.151 Insurance business exclusive. (1) No domestic insurer shall engage directly or indirectly in any business other than the insurance business and business activities reasonably and necessarily incidental to such insurance business. (2) A title insurer may also engage in business as an escrow agent; and any insurer may also engage in the business of making, acquiring, selling, dealing in, and servicing of real estate mortgage loans and loans incidental thereto. (3) A business trust whose declaration of trust was filed with the Secretary of State of Florida prior to January 1, 1959, and which, at the time of the adoption of this code, held a certificate of authority as a title insurer may qualify as an insurer for lawyers’ professional liability insurance by complying with the applicable provisions of this code. History. — s. 635, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 644, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429. 628.152 Domestic stock insurers; proxies, consents, and authorizations with respect to any voting security. (1) The commission may, by rule, prescribe the form, content, and manner of solicitation of any proxy, consent, or authorization with respect to any voting security issued by a domestic stock insurer, as may be necessary or appropriate in the public interest or for the proper protection of investors in the voting securities issued by such insurer or to ensure the fair dealing in such voting securities. (2) No person and no domestic stock insurer or any director, officer, or employee of such insurer shall solicit or permit the use of his or her name to solicit, by mail or otherwise, any person to give any proxy, consent, or authorization with respect to any voting security in contravention of any such rule. (3) Any proxy or consent obtained in violation of this section is void. The domestic stock insurer, any stockholder of record, or the office may enforce compliance with this section, by an appropriate civil action. (4) This section shall not apply to voting securities registered pursuant to s. 12 of the Securities Exchange Act of 1934, as amended. (5) “Voting security” means any instrument which, in law or by contract, gives the holder the right to vote, consent to, or authorize any corporate action. History. — s. 1, ch. 65-213; ss. 13, 35, ch. 69-106; s. 2, ch. 71-87; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 645, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 380, ch. 97-102; s. 1264, ch. 2003-261. 628.161 Initial qualifications; mutuals. (1) When newly organized, a mutual insurer may be authorized to transact any of the kinds of insurance listed in the schedule contained in subsection (2). (2)(a) When applying for an initial certificate of authority, the mutual insurer must have unencumbered surplus as to policyholder funds in the amount set out below as minimum initial surplus as to policyholders: 1. With respect to health insurance, $300,000. 2. With respect to property insurance, $200,000. 3. With respect to casualty insurance, $300,000. 4. With respect to any combination of health, property, or casualty insurance, $400,000. 5. With respect to life insurance, $2.5 million. (b) Thereafter, the mutual insurer must maintain the maintenance level surplus as to policyholders set out below: 1. With respect to health insurance, $200,000. 2. With respect to property insurance, $150,000. 3. With respect to casualty insurance, $200,000. 4. With respect to any combination of health, property, or casualty insurance, $250,000. 5. With respect to life insurance, $1.5 million. (3) The mutual insurer shall make an initial deposit with the department and thereafter maintain such deposit in an amount equal to one-half the minimum initial surplus as required in paragraph (2)(a), except that with respect to life insurance, the deposit shall be in the amount of $200,000. (4) Unless a mutual insurer maintains the minimum surplus as to policyholders required by s. 624.408, the mutual insurer must be organized as an assessable mutual insurer subject to the requirements of part II of this chapter. (5) Deposits required by this section shall be made in compliance with part III of chapter 625. This deposit requirement is in lieu of the requirements of s. 624.411. (6) A self-insured fund organized under s. 624.4621 and holding a certificate of authority as a self-insurer’s fund on December 31, 1993, may become a mutual insurer under this part, pursuant to a plan of reorganization approved by the office. A plan of reorganization must be approved by the office if: (a) The self-insurer’s fund has sufficient financial resources to satisfy all of its obligations under all policies and coverages afforded by the fund before the reorganization and has sufficient financial resources to satisfy all of its other liabilities; (b) The self-insurer’s fund has a minimum of $5 million of surplus; (c) The self-insurer’s fund submits a plan that demonstrates its ability to satisfy the requirements of this chapter pertaining to mutual insurers on an ongoing basis; and (d) The mutual insurer resulting from the reorganization of the self-insurer’s fund retains ownership of all of the assets of the self-insurer’s fund, retains all of the liabilities of the self-insurer’s fund, and agrees to hold all fund members harmless from any assessment for liabilities of the self-insurer’s fund before the date of reorganization. Upon approval of the plan by the office, any contingent liability of the members or former members of the self-insurer’s fund for assessment for losses of the self-insurer’s fund is considered satisfied, and all liability for any such contingent assessment is extinguished as of the date the self-insurer’s fund becomes an authorized mutual insurer and retains all of the assets and liabilities of the self-insurer’s fund. History. — s. 636, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 646, 665, 809(1st), ch. 82-243; ss. 69, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 107, ch. 93-415; s. 1265, ch. 2003-261. 628.171 Formation of mutual insurer; bond. The incorporators of the proposed insurer shall file with the office a copy of a fidelity bond or insurance policy providing coverage in an amount equal to not less than 10 percent of the funds handled annually and issued in the name of the insurer covering its directors, employees, administrator, or other individuals managing or handling the funds or assets of the insurer. In no case may such bond or policy be less than $1,000 or more than $500,000. History. — s. 637, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 647, 665, 809(1st), ch. 82-243; ss. 70, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1266, ch. 2003-261. 628.221 Bylaws of mutual insurer. (1) The initial board of directors of a domestic mutual insurer shall adopt original bylaws, subject to the approval of the insurer’s members at the next succeeding meeting. The members shall have power to make, modify, and revoke bylaws. (2) The bylaws shall provide: (a) That each member is entitled to one vote upon each matter coming to a vote at meetings of members, or to more votes in accordance with a reasonable classification of members as set forth in the bylaws and based upon the amount of insurance in force, or upon the amount of the premiums paid by such member, or upon other reasonable factors. A member shall have the right to vote in person or by his or her written proxy. No such proxy shall be made irrevocable or for longer than a reasonable period of time; (b) For the election of directors by the members and the number, qualifications, terms of office, and powers of the directors; (c) The time, notice, quorum, and conduct of annual and special meetings of members and voting thereat. The bylaws may provide that the annual meeting shall be held at a place, date, and time to be set forth in the policy and without giving other notice of such meeting; (d) The number, designation, election, terms, and powers and duties of the respective corporate officer; (e) For deposit, custody, and disbursement of and accounting for corporate funds; (f) That a quorum at all annual and special meetings of members will consist of all members present and voting in person or by proxy, after due notice of such meeting; (g) For any other reasonable provisions customary, necessary, or convenient for the management or regulation of its corporate affairs and not inconsistent with law. (3) The insurer shall promptly file with the office a copy, certified by the insurer’s secretary, of its bylaws and of every modification thereof or addition thereto. The office shall disapprove any bylaw provision deemed by it to be unlawful, unreasonable, inadequate, unfair, or detrimental to the proper interests or protection of the insurer’s members or any class thereof. The insurer shall not, after receiving written notice of such disapproval and during the existence thereof, effectuate any bylaw provision so disapproved. History. — s. 642, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 650, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 381, ch. 97-102; s. 1267, ch. 2003-261. 628.231 Directors. (1) The affairs of every domestic insurer shall be managed by not less than five directors. (2) Directors must be elected by the members or stockholders of a domestic insurer at the annual meeting of stockholders or members. Directors may be elected for terms of not more than 3 years each and until their successors are elected and have qualified; and, if to be elected for terms of more than 1 year, the insurer’s bylaws shall provide for a staggered-terms system under which the terms of a proportionate part of the members of the board of directors will expire on the date of each annual meeting of stockholders or members. (3) A majority of the directors must be citizens of the United States. (4) If so provided in a stock insurer’s bylaws, a director of such stock insurer shall be a stockholder thereof; and, if so provided in a mutual insurer’s bylaws, a director of such mutual insurer shall be a policyholder thereof. (5) In discharging his or her duties, a director may consider such factors as the directors deem relevant, including, but not limited to, the long-term prospects and interests of the corporation and its shareholders, the social, economic, legal, or other effects of any action on the employees, suppliers, or policyholders of the corporation or its subsidiaries, the communities and society in which the corporation or its subsidiaries operate, and the economy of the state and the nation. The director may also consider the short-term and long-term interests of the insurer, including, but not limited to, benefits that may accrue to the insured from the insurer’s long-term plans, the possibility that such interests may be best served by the continued independence of the insurer, the resources, intent, and past, present, and potential conduct of any person seeking to acquire control of the insurer, and any other relevant factors. History. — s. 643, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 651, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 2, ch. 2000-273. 628.251 Management and exclusive agency contracts. (1) No domestic mutual insurer or stock insurer shall make any contract whereby any person is granted or is to enjoy in fact the management of the insurer to the substantial exclusion of its board of directors or to have the controlling or preemptive right to produce substantially all insurance business for the insurer, unless the contract is filed with and approved by the office. (2) Any such contract shall provide that any such manager or producer of its business shall within 90 days after expiration of each calendar year furnish the insurer’s board of directors a written statement of amounts received under or on account of the contract and amounts expended thereunder during such calendar year, including the emoluments received therefrom by the respective directors, officers, and other principal management personnel of the manager or producer, and with such classification of items and further detail as the insurer’s board of directors may reasonably require. (3) The office shall disapprove any such contract if it finds that it: (a) Subjects the insurer to excessive charges; (b) Is to extend for an unreasonable length of time; (c) Does not contain fair and adequate standards of performance; or (d) Contains other inequitable provision or provisions which impair the proper interests of policyholders or members of the insurer. History. — s. 645, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; ss. 2, 3, ch. 81-318; ss. 653, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1268, ch. 2003-261. 628.255 Person with effective control cannot receive commission unless contract approved; penalties. (1) No director, officer, or other person having effective control of a domestic insurer shall receive, and no such insurer shall pay to such person, a commission or other compensation with respect to particular risks insured by the insurer, unless such commission or other compensation is paid pursuant to a contract filed with and approved by the office. (2) This section shall not be deemed to require approval of the contract or to prohibit payment of commissions to such an officer or director with respect to business written by him or her as an agent of the insurer prior to becoming such an officer or director and vested under the agency contract which was in force at the time such business was originally written. (3) For the purposes of this section, “effective control” means ownership of 10 percent or more of company stock or receipt of $25,000 or more cumulatively in compensation in 1 calendar year other than commissions resulting from insurance business produced by an agent. (4) Violation of this section shall subject the insurer to loss of its certificate of authority as provided in s. 624.418 and the agent to loss of his or her license as provided in s. 626.621. Willful violation of this section shall, in addition to the above prescribed penalties, constitute a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. History. — s. 1, ch. 70-319; s. 651, ch. 71-136; s. 162, ch. 71-355; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 654, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 382, ch. 97-102; s. 91, ch. 2003-1; s. 1269, ch. 2003-261. 628.261 Notice of change of director or officer. An insurer shall give the office written notice of any change of personnel among the directors or principal officers of the insurer within 45 days of such change. The written notice shall include all information necessary to allow the office to determine that the insurer will be in compliance with s. 624.404(3) and at a minimum shall contain the information required by s. 628.051(2)(b), (c), and (d). History. — s. 646, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 655, 665, 809(1st), ch. 82-243; s. 3, ch. 86-140; ss. 184, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1270, ch. 2003-261. 628.271 Office and records; penalty for unlawful removal of records. (1) Every domestic insurer shall have an office in this state and shall keep therein complete records of its assets, transactions, and affairs, specifically including: (a) Financial records; (b) Corporate records; (c) Reinsurance documents; (d) Access to all accounting transactions and access in this state, upon demand by the office, to all original accounting documents; (e) Claim files; and (f) Payment of claims, in accordance with such methods and systems as are customary or suitable as to the kind or kinds of insurance transacted. (2) Every domestic insurer shall have and maintain its assets in this state, except as to: (a) Real property and personal property appurtenant thereto lawfully owned by the insurer and located outside this state, and (b) Such property of the insurer as may be customary, necessary, and convenient to enable and facilitate the operation of its branch offices, regional home offices, and operations offices, located outside this state as referred to in s. 628.281. (3) The removal of all or a material part of the records or assets of a domestic insurer from this state except pursuant to a plan of merger or consolidation approved by the office under this code or for such reasonable purposes and periods of time as may be approved by the office in writing in advance of such removal, or the concealment of such records or assets or material part thereof from the office, is prohibited. Any person who removes or attempts to remove such records or assets or such material part thereof from the home office or other place of business or of safekeeping of the insurer in this state with the intent to remove the same from this state, or who conceals or attempts to conceal the same from the office, in violation of this subsection, is guilty of a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. Upon any removal or attempted removal of such records or assets or upon retention of such records or assets or material part thereof outside this state, beyond the period therefor specified in the consent of the office under which consent the records were so removed thereat, or upon concealment of or attempt to conceal records or assets in violation of this section, the office may institute delinquency proceedings against the insurer pursuant to the provisions of chapter 631. (4) This section is subject to the exceptions provided for in s. 628.281. History. — s. 647, ch. 59-205; ss. 13, 35, ch. 69-106; s. 652, ch. 71-136; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 656, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1271, ch. 2003-261. 628.281 Exceptions to requirement that office, records, and assets be maintained in this state. (1) The provisions of s. 628.271 shall not be deemed to prohibit or prevent an insurer from: (a) Establishing and maintaining branch offices or regional home offices in other states where necessary or convenient to the transaction of its business and keeping therein the detailed records and assets customary and reasonably necessary for the servicing of its insurance in force and affairs in the territory served by such an office, as long as such records and assets are made readily available at such office for examination by the Office of Insurance Regulation at its request. (b) Having, depositing, or transmitting funds and assets of the insurer in or to jurisdictions outside this state as required by other jurisdictions as a condition of transacting insurance in such jurisdictions reasonably and customarily required in the regular course of its business. (c) Establishing and maintaining its principal operations offices, its usual operations records, and such of its assets as may be necessary or convenient for the purpose, in another state in which the insurer is authorized to transact insurance in order that general administration of its affairs may be combined with that of an affiliated insurer or insurers, but subject to the following conditions: 1. That the office consent in writing to the removal of offices, records, and assets from this state upon evidence satisfactory to it that the same will facilitate and make more economical the operations of the insurer and will not unreasonably diminish the service or protection thereafter to be given the insurer’s policyholders in this state and elsewhere; 2. That the insurer will continue to maintain in this state its principal corporate office or place of business, and maintain therein available to the inspection of the office complete records of its corporate proceedings and a copy of each financial statement of the insurer current within the preceding 5 years, including a copy of each interim financial statement prepared for the information of the insurer’s officers or directors; 3. That, upon the written request of the office, the insurer will with reasonable promptness provide the office remote electronic access to or produce at its principal corporate offices in this state for examination or for subpoena its records or copies thereof relative to a particular transaction or transactions of the insurer as designated by the office in its request; and 4. That, if at any time the office finds that the conditions justifying the maintenance of the offices, records, and assets outside this state no longer exist, or that the insurer has willfully and knowingly violated any of the conditions stated in subparagraphs 2. and 3., the office may order the return of the offices, records, and assets to this state within such reasonable time, not less than 6 months, as may be specified in the order; and that for failure to comply with the order, as thereafter modified or extended, if any, the office shall suspend or revoke the insurer’s certificate of authority. (2) Section 628.271 does not apply as to domestic insurers which, as of immediately prior to the effective date of this code, had lawfully established, and which thereafter maintain, their principal offices, records, and assets in another state. History. — s. 648, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; ss. 2, 3, ch. 81-318; ss. 657, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1272, ch. 2003-261; s. 4, ch. 2006-64. 628.291 Unauthorized transactions in other states. (1) No domestic insurer shall enter into a contract of insurance upon the life or person of a resident of a reciprocal state or covering property or risks located in a reciprocal state, unless the insurer is authorized pursuant to the laws of such reciprocal state to do business therein, subject to the following exceptions: (a) Contracts entered into when the prospective insured is personally present and signs the application in the state in which the insurer is authorized to do business; (b) Issuance of certificates under any lawfully transacted group life or group health policy if the master policy is entered into in a state in which the insurer is authorized to do business; (c) Contracts made pursuant to a pension or retirement plan of an employer when such contracts are applied for in a state where the employer is personally present or doing business and the insurer is authorized to do business; and (d) The renewal, reinstatement, conversion, or continuance in force with or without modification of contracts otherwise lawfully entered into and which were not originally entered into in violation of this section. (2) The term “reciprocal state” as used in this section means a state the laws of which prohibit an insurer organized under the laws of that state from insuring the lives or property of persons resident or located in this state, unless such insurer is authorized pursuant to the laws of this state to do business in this state. History. — s. 649, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 658, 665, 809(1st), ch. 82-243; s. 5, ch. 90-248; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429. 628.301 Membership in mutual insurer. (1) Each policyholder of a domestic mutual insurer, other than of a reinsurance contract, is a member of the insurer with all rights and obligations of such membership; and the policy shall so specify. Group certificateholders may also be members of the insurer if so specified in the bylaws. (2) Any person, public or private corporation, board, association, firm, estate, trustee, or fiduciary may be a member of a domestic mutual insurer. Any officer, stockholder, trustee, or legal representative of any such corporation, board, association, or estate may be recognized as acting for or on its behalf for the purpose of such membership and shall not be personally liable upon any contract of insurance for acting in such representative capacity. A mutual insurer may issue policies of insurance covering property of this state, or of any county or municipality of this state, without contingent liability, when such policy contains a provision that the state or any such county or municipality insured under it may not participate in the profits of such insurer. History. — s. 650, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 659, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429. 628.341 Nonassessable policies; mutual insurers. (1) While possessing surplus funds in amount not less than the paid-in capital stock required of a domestic stock insurer transacting like kinds of insurance, a domestic mutual insurer may, upon receipt of the order of the office so authorizing, extinguish the contingent liability of its members as to all its policies in force and may omit provisions imposing contingent liability in all its policies currently issued so long as such surplus funds meet such requirement as to amount. (2) A foreign or alien mutual insurer may issue nonassessable policies to its members in this state pursuant to its articles of incorporation and the laws of its domicile. History. — s. 654, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1273, ch. 2003-261. 628.351 Nonassessable policies; revocation of authority of mutual insurer. The office shall revoke the authority of a domestic mutual insurer to issue policies without contingent liability if at any time the insurer’s assets are less than the sum of its liabilities and the surplus required for such authority, or if the insurer, by resolution of its board of directors approved by a majority of its members, requests that the authority be revoked. During the absence of such authority, the insurer shall not issue any policy without providing therein for the contingent liability of the policyholder, nor renew any policy which is renewable at the option of the insurer without endorsing the same to provide for such contingent liability. Such renewal or endorsement shall bear conspicuously on its face the provision for contingent liability of the policyholder. History. — s. 655, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1274, ch. 2003-261. 628.361 Participating policies. (1) If provided in its certificate of incorporation, a domestic stock or domestic mutual insurer may issue any or all of its policies with or without participation in profits, savings, or unabsorbed portions of premiums, may classify policies issued on a participating and nonparticipating basis, and may determine the right to participate and the extent of participation of any class or classes of policies. Any such classification or determination shall be reasonable and shall not unfairly discriminate as between policyholders within the same such classification. A life insurer may issue both participating and nonparticipating policies only if the right or absence of right to participate is reasonably related to the premium charged. (2) No dividend, otherwise earned, shall be made contingent upon the payment of renewal premium on any policy. History. — s. 656, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429. 628.371 Dividends to stockholders. (1) A domestic stock insurer shall not pay any dividend or distribute cash or other property to stockholders except out of that part of its available and accumulated surplus funds which is derived from realized net operating profits on its business and net realized capital gains. (2) Dividend payments or distributions to stockholders, without prior written approval of the office, shall not exceed the larger of: (a) The lesser of 10 percent of surplus or net gain from operations (life and health companies) or net income (property and casualty companies), not including realized capital gains, plus a 2-year carryforward for property and casualty companies; (b) Ten percent of surplus, with dividends payable constrained to unassigned funds minus 25 percent of unrealized capital gains; (c) The lesser of 10 percent of surplus or net investment income (net gain before capital gains for life and health companies) plus a 3-year carryforward (2-year carryforward for life and health companies) with dividends payable constrained to unassigned funds minus 25 percent of unrealized capital gains. (3) In lieu of the provisions in subsection (2), an insurer may pay a dividend or make a distribution without the prior written approval of the office when: (a) The dividend is equal to or less than the greater of: 1. Ten percent of the insurer’s surplus as to policyholders derived from realized net operating profits on its business and net realized capital gains; or 2. The insurer’s entire net operating profits and realized net capital gains derived during the immediately preceding calendar year; and (b) The insurer will have surplus as to policyholders equal to or exceeding 115 percent of the minimum required statutory surplus as to policyholders after the dividend or distribution is made; and (c) The insurer has filed notice with the office at least 10 business days prior to the dividend payment or distribution, or such shorter period of time as approved by the office on a case-by-case basis. Such notice shall not create a right in the office to approve or disapprove a dividend otherwise properly payable hereunder; and (d) The notice includes a certification by an officer of the insurer attesting that after payment of the dividend or distribution the insurer will have at least 115 percent of required statutory surplus as to policyholders. (4) The office shall not approve a dividend or distribution in excess of the maximum amount allowed in subsection (1) unless, considering the following factors, it determines that the distribution or dividend would not jeopardize the financial condition of the insurer: (a) The liquidity, quality, and diversification of the insurer’s assets and the effect on its ability to meet its obligations. (b) Reduction of investment portfolio and investment income. (c) Effects on the written premium to surplus ratios as required by the Florida Insurance Code. (d) Industrywide financial conditions. (e) Prior dividend distributions of the insurer. (f) Whether the dividend is only a “pass-through” dividend from a subsidiary of the insurer. (5) A dividend or distribution by a not-for-profit insurance company subsidiary to its mutual insurance holding company, directly or indirectly through one or more intermediate holding companies, pursuant to part III of this chapter, which meets the requirements of this section and which applies to a stock insurer, is permitted under this section. History. — s. 657, ch. 59-205; s. 1, ch. 70-68; s. 1, ch. 70-439; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243; s. 6, ch. 85-214; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 5, ch. 93-401; s. 1275, ch. 2003-261; s. 4, ch. 2013-125. 628.381 Dividends to mutual policyholders. (1) The directors of a domestic mutual insurer may from time to time apportion and pay or credit to its members dividends only out of that part of its surplus funds which represents net realized savings and net realized earnings in excess of the surplus required by law to be maintained. (2) A dividend otherwise proper may be payable out of such savings and earnings even though the insurer’s total surplus is then less than the aggregate of its contributed surplus. History. — s. 658, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429. 628.391 Illegal dividends; penalty. (1) Any director of a domestic stock or mutual insurer who knowingly votes for or concurs in declaration or payment of a dividend to stockholders or members other than as authorized under s. 628.371 or s. 628.381 is guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083, and shall be jointly and severally liable, together with other such directors likewise voting for or concurring, for any loss thereby sustained by creditors of the insurer to the extent of such dividend. (2) Any stockholder receiving such an illegal dividend shall be liable in the amount thereof to the insurer. (3) The office may revoke or suspend the certificate of authority of an insurer which has declared or paid such an illegal dividend. History. — s. 659, ch. 59-205; ss. 13, 35, ch. 69-106; s. 653, ch. 71-136; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1276, ch. 2003-261. 628.401 Borrowed surplus. (1) A domestic stock or mutual insurer may borrow money to defray the expenses of its organization, to provide itself with surplus funds, or for any purpose of its business, upon a written agreement that such money is required to be repaid only out of the insurer’s surplus in excess of that stipulated in such agreement. Any interest provided for shall or shall not constitute a liability of the insurer as to its funds other than such excess of surplus, as stipulated in the agreement. No commission or promotion expense shall be paid in connection with any such loan. (2) Money so borrowed, together with the interest thereon if so stipulated in the agreement, shall not form a part of the insurer’s legal liabilities, except as to its surplus in excess of the amount thereof stipulated in the agreement, or be the basis of any setoff; but until repaid, financial statements filed or published by the insurer shall show as a footnote thereto the amount thereof then unpaid together with any interest thereon accrued but unpaid. (3) Any such loan to a domestic stock or mutual insurer shall be subject to the approval of the office for the issue and the rate of interest to be paid. The insurer shall, in advance of the loan, file with the office a statement of the purpose of the loan and a copy of the proposed loan agreement. The office shall disapprove any proposed loan or agreement if it finds that the loan is unnecessary or excessive for the purpose intended; that the terms of the loan agreement are not fair and equitable to the parties and to other similar lenders, if any, to the insurer; or that the information so filed by the insurer is inadequate. (4) Any such loan to a domestic stock or mutual insurer, or a substantial portion thereof, shall be repaid by the insurer when no longer reasonably necessary for the purpose originally intended. No repayment of such a loan shall be made by a domestic stock or mutual insurer unless approved in advance by the office. (5) This section does not apply to loans obtained by the insurer in the ordinary course of business from banks and other financial institutions, nor to loans secured by pledge or mortgage of assets. History. — s. 660, ch. 59-205; ss. 13, 35, ch. 69-106; s. 1, ch. 73-165; s. 3, ch. 76-168; s. 1, ch. 77-13; s. 1, ch. 77-457; s. 21, ch. 78-95; ss. 1, 2, ch. 80-19; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1277, ch. 2003-261. 628.411 Impairment of capital or assets. (1) If a domestic stock insurer’s capital, as represented by the aggregate par value of its outstanding capital stock, becomes impaired, or if the assets of a mutual insurer are less than the sum of its liabilities and the minimum amount of surplus required to be maintained by it, the office shall at once determine the amount of deficiency and serve notice upon the insurer to make good the deficiency within 90 days after service of such notice. (2) The deficiency may be made good in cash or in assets eligible for the investment of the insurer’s funds; or by amendment of the insurer’s certificate of authority to cover only such kind or kinds of insurance thereafter for which the insurer has sufficient paid-in capital, if a stock insurer, or surplus, if a mutual insurer, under this code; or, if a stock insurer, by reduction of the insurer’s authorized capital stock through amendment of its certificate of incorporation, to an amount of paid-in capital stock not below the minimum required for the kinds of insurance thereafter to be transacted. (3) After any such reduction of authorized capital stock the insurer shall have the right to require the return of the original certificate of stock held by each stockholder in exchange for new certificates to be issued in lieu thereof for such number of shares as the stockholder is entitled to in the proportion that the reduced capital bears to the original capital. (4) If the deficiency is not made good and proof thereof filed with the office within such 90-day period, the insurer shall be deemed insolvent and the office shall institute delinquency proceedings against it under chapter 631; except that if such deficiency exists because of increased loss reserves required by the office, or because of disallowance by the office of certain assets or reduction of the value at which carried in the insurer’s accounts, the office may, in its discretion and upon application and good cause shown, and if it finds that the establishment or maintenance of such inadequate reserves or overvalued assets was not willful on the part of the insurer, extend for not more than an additional 60 days the period within which such deficiency may be so made good and such proof thereof so filed. History. — s. 661, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 660, 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1278, ch. 2003-261. 628.421 Assessment of stockholders or members. (1) Any insurer receiving the notice of the office mentioned in s. 628.411(1): (a) If a stock insurer, by resolution of its board of directors and subject to any limitations upon assessment contained in its certificate of incorporation, may assess its stockholders for amounts necessary to cure the deficiency and provide the insurer with a reasonable amount of surplus in addition. If any stockholder fails to pay a lawful assessment after notice given to him or her in person or by advertisement in such time and manner as approved by the office, the insurer may require the return of the original certificate of stock held by the stockholder and, in cancellation and in lieu thereof, issue a new certificate for such number of shares as the stockholder may then be entitled to, upon the basis of the stockholder’s proportionate interest in the amount of the insurer’s capital stock as determined by the office to be remaining at the time of determination of the amount of impairment under s. 628.411, after deducting from such proportionate interest the amount of such unpaid assessment. The insurer may pay for or issue fractional shares under this subsection. (b) If a mutual insurer, shall levy such an assessment upon members as is provided for under 1 s. 628.321. (2) Neither this section nor s. 628.411 shall be deemed to prohibit the insurer from curing any such deficiency through any lawful means other than those referred to in such sections. History. — s. 662, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 383, ch. 97-102; s. 1279, ch. 2003-261. 1 Note. — Repealed by s. 185, ch. 91-108. 628.431 Mutualization of stock insurers. (1) A stock insurer other than a title insurer may become a mutual insurer under such plan and procedure as may be approved by the office. (2) The office shall not approve any such plan, procedure, or mutualization unless: (a) It is equitable to stockholders and policyholders; (b) It is subject to approval by the holders of not less than three-fourths of the insurer’s outstanding capital stock having voting rights and by not less than two-thirds of the insurer’s policyholders who vote on such plan in person, by proxy, or by mail pursuant to such notice and procedure as may be approved by the office; (c) If a life insurer, the right to vote thereon is limited to holders of policies other than term or group policies, and whose policies have been in force for more than 1 year; (d) Mutualization will result in retirement of shares of the insurer’s capital stock at a price not in excess of the fair market value thereof as determined by competent disinterested appraisers; (e) The plan provides for the purchase of the shares of any nonconsenting stockholder in the same manner and subject to the same applicable conditions as provided by 1 s. 607.247, as to rights of nonconsenting stockholders, with respect to consolidation or merger of private corporations; (f) The plan provides for definite conditions to be fulfilled by a designated early date upon which such mutualization will be deemed effective; and (g) The mutualization leaves the insurer with surplus funds reasonably adequate for the security of its policyholders and to enable it to continue successfully in business in the states in which it is then authorized to transact insurance, and for the kinds of insurance included in its certificates of authority in such states. (3) This section does not apply to mutualization under order of court pursuant to rehabilitation or reorganization of an insurer under chapter 631. History. — s. 663, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; s. 12, ch. 79-9; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1280, ch. 2003-261. 1 Note. — Repealed by s. 189, ch. 90-179. 628.441 Converting mutual insurer. (1) A mutual insurer may become a stock insurer under such plan and procedure as may be approved by the office. (2) The office shall not approve any such plan or procedure unless: (a) It is equitable to the insurer’s members; (b) It is subject to approval by vote of not less than three-fourths of the insurer’s current members voting thereon in person, by proxy, or by mail at a meeting of members called for the purpose pursuant to such reasonable notice and procedure as may be approved by the office; if a life insurer, the right to vote may be limited to members who hold policies other than term or group policies, and whose policies have been in force for not less than 1 year; (c) The corporate equity of each policyholder in the insurer, other than as to unearned premiums, nonforfeiture rights, and benefit claims under his or her policy, is determinable under a fair formula approved by the office, which equity shall be based upon not less than the insurer’s entire surplus, after deducting contributed or borrowed surplus funds, plus a reasonable present equity in its reserves and in all nonadmitted assets; (d) The policyholders entitled to participate in the purchase of stock or distribution of assets shall include all current policyholders and all existing persons who had been policyholders of the insurer within 3 years prior to the date such plan was submitted to the office; (e) The plan gives to each policyholder of the insurer as specified in paragraph (d) a preemptive right to acquire his or her proportionate part of all of the proposed capital stock of the insurer, within a designated reasonable period, and to apply upon the purchase thereof the amount of his or her equity in the insurer as determined under paragraph (c); (f) Shares are so offered to policyholders at a price not greater than to be thereafter offered to others; (g) The plan provides for payment of cash to each policyholder not electing to apply his or her equity in the insurer toward the purchase price of stock to which he or she is preemptively entitled. The amount so paid shall be not less than 50 percent of the amount of the policyholder’s equity not so used for the purchase of stock. Such cash payment together with stock so purchased, if any, shall constitute full payment and discharge of the policyholder’s corporate equity in such mutual insurer; and (h) The plan, when completed, would provide for the converted insurer paid-in capital stock in an amount not less than the minimum paid-in