SB2634 Summary

• Amends Section 59.1 of the Illinois Insurance Code to regulate the conversion of mutual insurance companies to stock companies, requiring approval from both the company's board of directors (by two-thirds vote) and the Director of Insurance.

• Requires that eligible members receive notice and voting rights on conversion plans, with meetings scheduled at least 30 days after notice is mailed and approval requiring affirmative votes of at least two-thirds of votes cast by eligible members.

• Mandates that each eligible member receive nontransferable subscription rights to purchase capital stock of the converted company without payment, allocated using a fair and equitable formula.

• Establishes protections for policyholders including continuance of existing policies under original terms, preservation of dividend rights for participating policies, and creation of a "closed block" of participating life policies for Class 1 mutual companies to ensure adequate asset allocation.

• Limits acquisition of control by restricting any one person or group from acquiring more than 5% of converted company stock for 5 years without Director approval, and caps director and officer stock purchases at 35% of total shares for companies under $50 million in assets and 25% for companies over $500 million in assets.