0001| SENATE BILL 280 | 0002| 42ND LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, | 0003| 1996 | 0004| INTRODUCED BY | 0005| JOSEPH A. FIDEL | 0006| | 0007| | 0008| | 0009| | 0010| | 0011| AN ACT | 0012| RELATING TO INSURANCE; AMENDING SECTIONS OF THE INSURANCE | 0013| HOLDING COMPANY LAW TO INCLUDE HEALTH MAINTENANCE ORGANIZATIONS | 0014| IN AN INSURER'S PAYMENT OF DIVIDENTS OR DISTRIBUTIONS. | 0015| | 0016| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0017| Section 1. Section 59A-37-2 NMSA 1978 (being Laws 1984, | 0018| Chapter 127, Section 617, as amended) is amended to read: | 0019| "59A-37-2. DEFINITIONS.--As used in Chapter 59A, Article | 0020| 37 NMSA 1978: | 0021| A. "acquire" means to come into possession or | 0022| control of, and "acquisition" means any agreement, arrangement | 0023| or activity the consummation of which results in a person | 0024| acquiring directly or indirectly the control of another person | 0025| and includes but is not limited to the acquisition of voting | 0001| securities or assets, bulk reinsurance and mergers; | 0002| B. "affiliate" means a person that directly or | 0003| indirectly is controlled by, is under common control with or | 0004| controls another person; | 0005| C. "control" means the possession of the power to | 0006| direct or cause the direction of the management and policies of | 0007| a person, whether directly or indirectly, through the ownership | 0008| of voting securities, by contract other than a commercial | 0009| contract for goods or nonmanagement services, or otherwise, | 0010| unless the power is the result of an official position with or | 0011| corporate office held by an individual. Control shall be | 0012| presumed to exist if any person, directly or indirectly, owns, | 0013| controls, holds with the power to vote or holds ten or more | 0014| percent of the voting securities of any other person. This | 0015| presumption may be rebutted by a showing, in the manner provided | 0016| by Section 59A-37-19 NMSA 1978, that control does not in fact | 0017| exist. The superintendent may determine, after furnishing all | 0018| persons in interest notice and an opportunity to be heard, that | 0019| control exists in fact, notwithstanding the absence of a | 0020| presumption to that effect, provided that the determination is | 0021| based on specific findings of fact in its support; | 0022| D. "insurance holding company" is a person which | 0023| controls an insurer; "insurance holding company system" means a | 0024| combination of two or more affiliated persons, at least one of | 0025| which is an insurer; | 0001| E. "insurer" means a person which undertakes, under | 0002| contract, to indemnify a person against loss, damage or | 0003| liability arising from an unknown or contingent future event. | 0004| The term does not include agencies, authorities or | 0005| instrumentalities of the United States, its possessions or | 0006| territories, the commonwealth of Puerto Rico, the District of | 0007| Columbia, a state or any of its political subdivisions, a | 0008| fraternal benefit society or a nonprofit medical and hospital | 0009| service association; | 0010| F. "person" means an individual, corporation, | 0011| association, partnership, joint stock company, trust, | 0012| unincorporated organization or any similar entity or combination | 0013| of entities; | 0014| G. "securityholder" means the owner of any security | 0015| of a person, including common stock, preferred stock, debt | 0016| obligations and any other security convertible into or | 0017| evidencing the right to acquire any of the foregoing; | 0018| H. "subsidiary" means an affiliate of a person | 0019| controlled by the person either directly or indirectly through | 0020| one or more intermediaries; [and] | 0021| I. "voting security" means a certificate evidencing | 0022| the ownership or indebtedness of a person, to which is attached | 0023| a right to vote on the management or policymaking of that person | 0024| and includes any security convertible into or evidencing a right | 0025| to acquire such a voting security; and | 0001| J. "health maintenance organization" means any | 0002| person which undertakes to provide or arrange for the delivery | 0003| of basic health care services to enrollees on a prepaid basis, | 0004| except for enrollee responsibility for co-payments or | 0005| deductibles." | 0006| Section 2. Section 59A-37-22 NMSA 1978 (being Laws 1984, | 0007| Chapter 127, Section 637, as amended) is amended to read: | 0008| "59A-37-22. DIVIDENDS AND OTHER DISTRIBUTIONS.-- | 0009| A. No domestic stock insurer shall declare or | 0010| distribute any dividend to shareholders, other than a pro rata | 0011| distribution of any class of the insurer's own securities, | 0012| except out of earned surplus. For purposes of this section, | 0013| "earned surplus" means the portion of the surplus that | 0014| represents the net earnings, gains or profits, after deduction | 0015| of all losses, that have not been distributed to the | 0016| shareholders as dividends or transferred to stated capital or | 0017| capital surplus or applied to other purposes permitted by law, | 0018| but does not include twenty-five percent of the unrealized | 0019| appreciation of assets. | 0020| B. No domestic insurer shall pay an extraordinary | 0021| dividend or make any other extraordinary distribution to its | 0022| shareholders until: | 0023| (1) thirty days after the superintendent has | 0024| received notice of the declaration thereof and has not within | 0025| such period disapproved such payment; or | 0001| (2) the superintendent shall have approved such | 0002| payment within the thirty-day period. | 0003| C. For the purposes of Sections 59A-37-20 through | 0004| 59A-37-22 NMSA 1978, an extraordinary dividend or distribution | 0005| includes any dividend or distribution of cash or other property, | 0006| whose fair market value together with that of other dividends or | 0007| distributions made within the preceding twelve months exceeds | 0008| the lesser of ten percent of the insurer's surplus as regards | 0009| policyholders as of December 31 next preceding or the net gain | 0010| from operations of the insurer, if the insurer is either a | 0011| life insurer or a health maintenance organization, or the net | 0012| investment income, if the insurer is not a life insurer or a | 0013| health maintenance organization, not including realized capital | 0014| gains, for the twelve-month period ending December 31 next | 0015| preceding, but shall not include pro rata distributions of any | 0016| class of the insurer's own securities. | 0017| D. In determining whether a dividend or distribution | 0018| is extraordinary: | 0019| (1) an insurer other than a life insurer or a | 0020| health maintenance organization may carry forward net income | 0021| from the previous three calendar years that has not already been | 0022| paid out as dividends, which carry-forward shall be computed by | 0023| taking the net income from the second, third and fourth | 0024| preceding calendar years, not including realized capital gains, | 0025| less dividends paid in the third, second and immediate preceding | 0001| calendar years; and | 0002| (2) a life insurer or a health maintenance | 0003| organization may carry forward net gains from operations not | 0004| including realized capital gains from the previous two calendar | 0005| years that have not already been paid out as dividends, which | 0006| carry-forward shall be computed by taking the net gain from the | 0007| second and third preceding calendar years, not including | 0008| realized capital gains, less dividends paid in the second and | 0009| immediate preceding calendar years. | 0010| E. Notwithstanding any other provision of law, an | 0011| insurer may declare an extraordinary dividend or distribution | 0012| which is conditioned upon the superintendent's approval thereof, | 0013| and such a declaration shall confer no rights upon shareholders | 0014| until: | 0015| (1) the superintendent has approved the payment | 0016| of the dividend or distribution; or | 0017| (2) the superintendent has not disapproved the | 0018| payment within thirty days after he has received notice of the | 0019| declaration." | 0020|  | 0021| | 0022| | 0023| | 0024| | 0025| | 0001| FORTY-SECOND LEGISLATURE | 0002| SECOND SESSION, 1996 | 0003| | 0004| | 0005| JANUARY 31, 1996 | 0006| | 0007| Mr. President: | 0008| | 0009| Your COMMITTEES' COMMITTEE, to whom has been referred | 0010| | 0011| SENATE BILL 280 | 0012| | 0013| has had it under consideration and finds same to be GERMANE, PURSUANT | 0014| TO SENATE EXECUTIVE MESSAGE NUMBER TWENTY, and thence referred to the | 0015| PUBLIC AFFAIRS COMMITTEE. | 0016| | 0017| Respectfully submitted, | 0018| | 0019| | 0020| | 0021| | 0022| __________________________________ | 0023| SENATOR MANNY M. ARAGON, Chairman | 0024| | 0025| | 0001| | 0002| Adopted_______________________ Not Adopted_______________________ | 0003| (Chief Clerk) (Chief Clerk) | 0004| | 0005| | 0006| Date ________________________ | 0007| | 0008| | 0009| | 0010| S0280CC1 | 0011| | 0012| FORTY-SECOND LEGISLATURE | 0013| SECOND SESSION, 1996 | 0014| | 0015| | 0016| February 5, 1996 | 0017| | 0018| Mr. President: | 0019| | 0020| Your PUBLIC AFFAIRS COMMITTEE, to whom has been referred | 0021| | 0022| SENATE BILL 280 | 0023| | 0024| has had it under consideration and reports same with recommendation that | 0025| it DO PASS, and thence referred to the CORPORATIONS & | 0001| TRANSPORTATION COMMITTEE. | 0002| | 0003| Respectfully submitted, | 0004| | 0005| | 0006| | 0007| __________________________________ | 0008| Shannon Robinson, Chairman | 0009| | 0010| | 0011| | 0012| Adopted_______________________ Not Adopted_______________________ | 0013| (Chief Clerk) (Chief Clerk) | 0014| | 0015| | 0016| Date ________________________ | 0017| | 0018| | 0019| The roll call vote was 5 For 0 Against | 0020| Yes: 5 | 0021| No: None | 0022| Excused: E. Jennings, Naranjo, Wiener | 0023| Absent: none | 0024| | 0025| | 0001| S0280PA1 | 0002| | 0003| | 0004| | 0005| FORTY-SECOND LEGISLATURE | 0006| SECOND SESSION, 1996 | 0007| | 0008| | 0009| February 9, 1996 | 0010| | 0011| Mr. President: | 0012| | 0013| Your CORPORATIONS & TRANSPORTATION COMMITTEE, to whom | 0014| has been referred | 0015| | 0016| SENATE BILL 280 | 0017| | 0018| has had it under consideration and reports same with recommendation that | 0019| it DO PASS. | 0020| | 0021| Respectfully submitted, | 0022| | 0023| | 0024| | 0025| __________________________________ | 0001| Roman M. Maes, III, Chairman | 0002| | 0003| | 0004| | 0005| Adopted_______________________ Not Adopted_______________________ | 0006| (Chief Clerk) (Chief Clerk) | 0007| | 0008| | 0009| | 0010| Date ________________________ | 0011| | 0012| | 0013| The roll call vote was 5 For 0 Against | 0014| Yes: 5 | 0015| No: 0 | 0016| Excused: Kidd, Maloof, McKibben, Reagan | 0017| Absent: None | 0018| | 0019| | 0020| S0280CT1 | 0021| SB0 State of New Mexico | 0022| House of Representatives | 0023| | 0024| FORTY-SECOND LEGISLATURE | 0025| SECOND SESSION, 1996 | 0001| | 0002| | 0003| February 13, 1996 | 0004| | 0005| | 0006| Mr. Speaker: | 0007| | 0008| Your BUSINESS AND INDUSTRY COMMITTEE, to whom has been | 0009| referred | 0010| | 0011| SENATE BILL 280 | 0012| | 0013| has had it under consideration and reports same with | 0014| recommendation that it DO PASS. | 0015| | 0016| Respectfully submitted, | 0017| | 0018| | 0019| | 0020| | 0021| Fred Luna, Chairman | 0022| | 0023| | 0024| Adopted Not Adopted | 0025| (Chief Clerk) (Chief Clerk) | 0001| | 0002| Date | 0003| | 0004| The roll call vote was 9 For 0 Against | 0005| Yes: 9 | 0006| Excused: Varela | 0007| Absent: Macko, J.G. Taylor | 0008| | 0009| | 0010| | 0011| S0280BI1 |