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STATE OF MAINE
INTRODUCTION AND BACKGROUND
Pursuant to Notice dated September 26, 1997, a hearing was conducted on October 29, 1997 in accordance with 24-A Maine Revised Statutes §§222, 3476 and 3477 to consider (i) the proposal of Patrons-Oxford Mutual Insurance Company ("Patrons Oxford") to convert from a mutual insurance company to a stock insurance company, and (ii) the application of Quincy Mutual Fire Insurance Company ("Quincy Mutual") to acquire control of Patrons Oxford after such conversion. The hearing was conducted by an Adjudicatory Panel comprised of Alessandro A. Iuppa, Acting Superintendent of Insurance, Maine Bureau of Insurance (the "Acting Superintendent"); Linda M. Pistner, Esq., Chief Deputy Attorney General, Maine Department of the Attorney General; Richard E. Johnson, Property Casualty Actuary, Maine Bureau of Insurance; Joel Thomsen, CPA, Director of Financial Analysis and Self-Insurance, Maine Bureau of Insurance; and Lisa Bosse, Senior Insurance Examiner, Maine Bureau of Insurance. The Acting Superintendent served as the Hearing Officer in this matter, and Ms. Pistner served as counsel to the Adjudicatory Panel. The purpose of the hearing was to take evidence relevant to a determination whether the proposed conversion and acquisition satisfy all applicable requirements pertinent thereto, including 24-A Maine Revised Statutes §§222, 3476 and 3477, and Maine Bureau of Insurance Rules, Chapter 180.
Patrons Oxford and Quincy Mutual intend to effect the proposed conversion and acquisition pursuant to an Agreement and Plan of Reorganization (the "Reorganization Agreement") dated as of August 31, 1997, including the Plan of Recapitalization and Conversion (the "Conversion Plan") that is attached thereto. The Reorganization Agreement and the Conversion Plan are collectively attached as Exhibit A to the Form A, Statement Regarding the Acquisition of Control of or Merger With a Domestic Insurer (the "Form A") that Quincy Mutual filed with the Acting Superintendent on August 29, 1997 pursuant to the requirements of 24-A Maine Revised Statutes §222(4-A). In addition to the Reorganization Agreement and the Conversion Plan, the exhibits to the Form A include a proposed Reinsurance Pooling Agreement and a proposed Management Agreement between Patrons Oxford and Quincy Mutual, a business plan for Patrons Oxford, and other materials. The Acting Superintendent ordered that the business plan be accorded confidential treatment pursuant to a Protective Order dated October 2, 1997.
The designated parties to the hearing were Patrons Oxford, Quincy Mutual and a Maine Bureau of Insurance Advocacy Panel. The Advocacy Panel was appointed by the Acting Superintendent, and was comprised of Donald W. Sirois, CPA, CFE, Director of Financial Affairs & Solvency, Maine Bureau of Insurance; Lisa M. Nelson, CFE, Managing Examiner, Maine Bureau of Insurance; and Judith Shaw Chamberlain, Esq., Assistant Attorney General, Maine Department of the Attorney General. Each party was represented by counsel at the hearing: James B. Zimpritch, Esq. and Daniel H. Roberts, Esq. of Pierce Atwood, Portland, Maine, represented Patrons Oxford; James J. Moran, Jr., Esq. and Barnett D. Ovrut, Esq. of Morrison, Mahoney & Miller, Boston, Massachusetts, represented Quincy Mutual; and Ms. Chamberlain represented the Advocacy Panel. No person petitioned to intervene as a party to the hearing, whether prior to or at the time of the hearing.
Patrons Oxford and Quincy Mutual submitted pre-filed, direct written testimony and exhibits for Walter C. Smythe, President, Chief Executive Officer and Director of Patrons Oxford; Sharon L. Buckley, Vice President-Corporate Finance and Treasurer of Patrons Oxford; Joseph F. Barone, President of Insurance Financial Services, Inc. ("IFS"); and K. Douglas Briggs, President, Treasurer and Director of Quincy Mutual. Each of the foregoing individuals appeared at the hearing, adopted his or her pre-filed, direct written testimony under oath, and provided oral testimony, including testimony in response to questions presented by members of the Advocacy Panel and members of the Adjudicatory Panel. Oral testimony was presented at the hearing on behalf of Patrons Oxford by Thomas L. Ghezzi, FCAS, MAAA, Consulting Actuary, Tillinghast-Towers Perrin, by Richard I. Fein, Ph.D., FCAS, MAAA, Principal, Coopers & Lybrand L.L.P., and by Paul J. Obie, Vice President-Information Technology of Patrons Oxford; and on behalf of Quincy Mutual by Thomas A. Harris, Vice President-Finance of Quincy Mutual. The Advocacy Panel did not submit any pre-filed written testimony, and did not call any witness to testify at the hearing. No other witnesses presented testimony at the hearing.
SUMMARY OF TESTIMONY
The testimony provided by Mr. Smythe demonstrated that Patrons Oxford has determined that it lacks sufficient capital to effectively complete in Maine's insurance market. After exploring and considering alternatives for remedying this situation, Patrons Oxford's Board of Directors concluded that the transactions set forth in the Reorganization Agreement and the Conversion Plan represented the most desirable and viable course of action available to Patrons Oxford in terms of (i) providing Patrons Oxford with necessary additional capital, (ii) maintaining Patrons Oxford's existence as a locally-managed and operated domestic insurance company, (iii) the amount of Patrons Oxford's equity that would be distributed to its policyholders, and (iv) the strategic and operational fit that an affiliation with Quincy Mutual would provide. Mr. Smythe further testified that the proposed conversion and acquisition would result in Patrons Oxford becoming a financially-stronger insurance company, thereby furthering the interests of Patrons Oxford's policyholders, agents and employees, and of Maine's general public.
Testimony provided by both Mr. Smythe and Mr. Briggs demonstrated that Quincy Mutual is proposing to acquire control of Patrons Oxford through a two-step process. The first step involves the conversion of Patrons Oxford from a mutual insurance company to a stock insurance company. The terms and conditions for the conversion are described in the Conversion Plan. As part of this transaction, Patrons Oxford will file Amended and Restated Articles of Incorporation with the Maine Secretary of State that will authorize Patrons Oxford to issue 5,000,000 shares of common stock having a par value of $1.00 per share. Assuming that the conversion has received all required approvals -- including approval by Patrons Oxford's policyholders at a special meeting that will be conducted for this purpose -- the second step will involve the acquisition by Quincy Mutual of 2,500,000 shares of such stock for a total purchase price of $5,000,000. Patrons Oxford will then make an aggregate cash distribution to those of its current and former policyholders who, according to the terms and conditions of the Conversion Plan, are eligible to share in its equity. Mr. Smythe testified that Patrons Oxford's management will share in the distribution of the company's equity on the same basis as its policyholders, and that Patrons Oxford has not engaged in any action that would reduce, limit or affect the number or identity of its policyholders who are entitled to participate in its conversion. The membership interests of such policyholders in the company will be extinguished upon payment of such amount. The distributable amount will be equal to Patrons Oxford's surplus at June 30, 1997 of $2,132,342, as determined by its independent accountants according to Generally Accepted Accounting Principles (which amount represents the going-concern value of Patrons Oxford), minus (i) the expenses Patrons Oxford incurs in connection with the proposed conversion and acquisition, and (ii) the outstanding unpaid interest that has accrued on all Surplus Notes issued by Patrons Oxford to Quincy Mutual. The aggregate amount of the distribution will not, in any event, be less than $1,732,345. As detailed in Exhibit C to Mr. Smythe's pre-filed written testimony, Patrons Oxford estimates that its total expenses in connection with these transactions will be approximately $360,000, including the accrued and unpaid interest on the Surplus Notes. Patrons Oxford agreed that it would submit a "final" report to the Bureau of all expenses incurred in connection with the proposed conversion and acquisition subsequent to the consummation of those transactions.
Mr. Smythe testified that he and Patrons Oxford's Board of Directors were of the opinion that the proposed distribution to Patrons Oxford's policyholders and the method for determining that amount were fair and reasonable. Ms. Buckley's testimony expressed the same opinion, and described how Patrons Oxford determined the total amount to be distributed. Their opinions were supported by Mr. Barone's testimony: as stated in the "fairness" opinion letter that is Exhibit B to Mr. Barone's testimony, IFS has concluded on the basis of its due diligence analysis that the financial terms of the proposed conversion and acquisition, including the amount to be distributed to Patrons Oxford's policyholders, are fair and equitable, from a financial point of view, to those policyholders.
Messrs. Ghezzi and Fein provided testimony concerning Patrons Oxford's loss and loss adjustment expense reserves as of June 30, 1997. Both testified that, based on the analyses performed by their respective companies, it was their expert opinion that the $5,218,000 of reserves net of reinsurance carried by Patrons Oxford at such date was within a range of reasonableness. No testimony or evidence was presented to refute such conclusion.
Mr. Smythe and Mr. Briggs both testified that the Conversion Plan does not provide a preemptive right to Patrons Oxford's policyholders to acquire a proportionate share of Patrons Oxford's capital stock. Both stated, in this respect, that Quincy Mutual is unwilling to invest in Patrons Oxford if there will be any minority shareholders. Moreover, they respectively testified that because of the large number of Patrons Oxford policyholders, a conversion that involves a preemptive right to acquire stock would constitute a public offering under federal law. Due to the costs and time that a public stock offering would involve, Messrs. Smythe and Briggs concluded that the interests of Patrons Oxford's policyholders would be best served by providing each policyholder with his or her proportionate share in Patrons Oxford's equity in the form of a monetary payment. Mr. Smythe testified that the monetary distribution proposed in the Conversion Plan will provide each policyholder with 100% of his or her equity interest in Patrons Oxford. Mr. Barone testified in this respect that IFS estimated that a public stock offering by Patrons Oxford would cost between $745,000 and $800,000; would likely delay consummation of the proposed conversion for at least nine months; would require ongoing reporting and filing obligation that would result in expenses of approximately $638,000 per year; and would result in the issuance of a large number of small blocks of stock that, because of their size, would trade at a substantial discount, be burdened by disproportionately high brokerage fees, and be difficult to sell. Given these expenses, Patrons Oxford's current financial condition, the deterioration to Patrons Oxford's surplus that would result from a delay in effecting the company's conversion, and his belief that a public offering would not be successful and thus not in the best interests of Patrons Oxford's policyholders, Mr. Barone concluded that a preemptive rights stock offering as part of the conversion was not a viable option.
Messrs. Smythe and Briggs testified that Quincy Mutual will pay Patrons Oxford $5,000,000 for the stock it acquires. This amount was determined by arms-length negotiations, and will be paid to Patrons Oxford in the following manner: Quincy Mutual will (i) surrender all Surplus Notes that it has been issued by Patrons Oxford, and will (ii) make a cash payment to Patrons Oxford in the amount of the purchase price less the principal and the interest that has accrued thereon of all such Surplus Notes. Such payment will result in Patrons Oxford having paid-in capital in an amount not less than $2,500,000 and expendable surplus in an amount not less than $1,250,000 on such date.
As of the date of the hearing, Patrons Oxford had issued Surplus Notes to Quincy Mutual dated June 30, 1997 in the principal amount of $180,000, and dated September 23, 1997 in the principal amount of $380,000. Quincy Mutual has, pursuant to a Surplus Commitment Agreement dated as of August 31, 1997, committed to purchasing additional Surplus Notes from Patrons Oxford in an aggregate amount not to exceed $1,500,000 (including the Notes issued as of the date of the hearing) to enable Patrons Oxford to maintain its statutory surplus at $2,500,000.
Mr. Briggs' testimony outlined Quincy Mutual's financial condition, indicating that the company is currently rated "A+" by A.M. Best Company, Inc., had policyholders' surplus at June 30, 1997 of $393.2 million, and had a written premium to surplus ratio of 0.4 to 1 at December 31, 1996. Mr. Briggs testified that the proposed acquisition will provide Quincy Mutual with an opportunity to increase its book of business in Maine through an affiliation with an established domestic insurer, and will strengthen Patrons Oxford's financial situation.
Mr. Briggs' testimony also discussed the plans and proposals that Quincy Mutual has concerning Patrons Oxford's future business operations and management. He stated that Quincy Mutual will transfer its personal lines business in Maine to Patrons Oxford; Patrons Oxford will facilitate this transfer by appointing those Quincy Mutual insurance agents who are not currently agents of Patrons Oxford, and will assume the business in question as individual policies expire. Quincy Mutual and Patrons Oxford also intend to enter into the Reinsurance Pooling Agreement that is attached as Exhibit C to the Form A. Under that agreement, Patrons Oxford will cede and transfer to Quincy Mutual the premiums, incurred losses, loss adjustment expenses, and underwriting and administrative expenses that arise out of its insurance operations; Quincy Mutual will assume and reinsure these amounts, and will then retrocede a portion of such amounts and a portion of the premiums, incurred losses, loss adjustment expenses, and underwriting and administrative expenses that arise out of its homeowners and private passenger automobile insurance business. The principal purpose of this arrangement is to permit Quincy Mutual's A.M. Best rating to be attributed to Patrons Oxford. The Agreement will not take effect unless and until such approvals as may be required under Maine and Massachusetts law have respectively been obtained from the Bureau of Insurance and the Massachusetts Division of Insurance.
Mr. Briggs further testified that the Reorganization Agreement contemplates a change in the composition of Patrons Oxford's Board of Directors. In this respect, Patrons Oxford will obtain the written resignations of four members of its current Board at the time the proposed acquisition is effected. For a period of ten years immediately following the acquisition, or for such shorter period of time as Quincy Mutual directly or indirectly owns a majority of Patrons Oxford's capital stock, Quincy Mutual will cause Patrons Oxford's Board of Directors to consist of nine Directors. Five of the Directors will be nominees of Quincy Mutual; each of the individuals Quincy Mutual will initially nominate is currently a Quincy Mutual Director. Four of the Directors will either be individuals who are Directors of Patrons Oxford immediately prior to the acquisition or those persons who have been nominated to such positions by the four continuing Directors or their successors. For at least five years following the acquisition, the Chairman of the Board of Directors will be one of Patrons Oxford's continuing Directors or one of their successors.
Mr. Briggs additionally testified that Quincy Mutual and Patrons Oxford intend to enter into the Management Agreement that is attached as Exhibit D to the Form A. This Agreement -- which will not take effect without such regulatory approvals and authorizations as may be required under Maine and Massachusetts law -- will provide Quincy Mutual with responsibility for managing, administering and performing Patrons Oxford's data processing, reinsurance and investment functions, and such other services to which Quincy Mutual and Patrons Oxford may from time-to-time agree. The performance of Patrons Oxford's underwriting, marketing, claims and customer services will continue to be the responsibility of Patrons Oxford. In this respect, Mr. Briggs testified that the Reorganization Agreement requires Quincy Mutual to cause the continued employment of each current Patrons Oxford employee upon substantially similar rates of compensation, benefits, terms and conditions for a period of one year from the date that the proposed acquisition is effected, unless termination is warranted for reasons of cause.
Finally, Mr. Briggs testified that if the proposed acquisition is approved, Quincy Mutual does not have any plan or proposal to (i) make any change in Patrons Oxford's corporate structure, (ii) adversely change Patrons Oxford's contractual obligations or future ability to service its policyholders or the public, or (iii) declare any extraordinary dividend with respect to Patrons Oxford, sell Patrons Oxford's assets, or merge Patrons Oxford with any other insurance company.
No evidence was presented that would demonstrate that the proposed change in control of Patrons Oxford would (i) lessen competition in insurance in Maine, (ii) create a monopoly in the business of insurance in Maine, or (iii) not be in the best interests of Patrons Oxford, of Patrons Oxford's policyholders, or of the general public.
Based upon the testimony and the evidence introduced into the record of this hearing, the Adjudicatory Panel finds as follows:
1. The testimony and evidence presented by Patrons Oxford establishes that the conversion of Patrons Oxford is being sought to further legitimate business objectives. As Mr. Smythe testified, Patrons Oxford has been suffering from a continued decline in its financial condition. This is evidenced by the decision of A.M. Best Company, Inc. to lower the company's "Best's rating," among other things. Patrons Oxford's conversion to a stock company will facilitate its ability to attract capital and consummate its affiliation with Quincy Mutual. In the view of Patrons Oxford's Board of Directors and management, the acquisition by Quincy Mutual will provide greater opportunities for Patrons Oxford to improve its book of business, upgrade its Best's rating, and stabilize its financial situation, all of which are laudable goals and in the best interests of Patrons Oxford, its policyholders, and the general public.
The terms and conditions of the Conversion Plan were carefully negotiated by management and Patrons Oxford's Board of Directors with the assistance of professional consultants. The business objectives of Patrons Oxford and the interests of its policyholders guided the negotiations. The terms and conditions of the proposed conversion as set forth in the resulting Conversion Plan are fair and equitable.
2. In its preparation of a plan of conversion, Patrons Oxford was required to establish the pool of policyholders that would share in the distribution of its equity, as well as define those policyholders eligible to vote on the plan. The definition provided in the Conversion Plan of policyholders eligible to share in Patrons Oxford's distributable equity is reasonable. The Conversion Plan was filed with the Acting Superintendent on August 31, 1997. Patrons Oxford proposes that those policyholders who owned Patrons Oxford policies on August 31, 1997, as well as all persons who owned Patrons Oxford policies at any time within three years prior to that date, be eligible to receive an equity distribution. The classification of policyholders selected by Patrons Oxford is consistent with the language of 24-A Maine Revised Statutes §3477(2)(E), and is fair and reasonable.
Prior to implementing any plan of conversion approved by the Acting Superintendent, Patrons Oxford must obtain the approval of two-thirds of its policyholders voting on such plan. Patrons Oxford has defined voting policyholders to be those persons who were policyholders of the company one year prior to August 31, 1997 and remain policyholders on the special meeting record date. This definition comports with the requirements of 24-A Maine Revised Statutes §3477(2)(B). Further, the selection of the special meeting record date as the second benchmark affords an opportunity to vote to the greatest number of Patrons Oxford's policyholders.
3. In developing the Conversion Plan, Patrons Oxford has taken care to assure that the interests of its policyholders are of paramount importance. It has done so by employing a formula that uses "GAAP" value rather than statutory surplus as its starting point, and also by deducting therefrom only those costs that are necessary and incidental to the conversion. Patrons Oxford has assured a reasonable distribution to its policyholders by essentially capping the transaction costs by virtue of the floor established for total member equity. That is, the Conversion Plan establishes that, irrespective of the ultimate transaction costs for the conversion, in no event will the aggregate distribution to policyholders be less than $1,732,345.
The formula for determining the equity share of Patrons Oxford's policyholders as set forth in the Conversion Plan is based upon Patrons Oxford's financial statement for the quarter ending June 30, 1997. This statement was entered into the hearing record and was filed as an exhibit to the pre-filed direct written testimony of Ms. Buckley. The formula represents the going-concern value of Patrons Oxford, and is fair and reasonable.
4. The provisions of 24-A Maine Revised Statutes §3477(2)(D) require any plan of conversion to afford each policyholder "a preemptive right to acquire his proportionate part of all of the proposed capital stock of the insurer." The Conversion Plan does not provide for preemptive rights, though it does provide that each Patrons Oxford policyholder eligible to share in the distributable equity of Patrons Oxford will receive 100% of his or her proportionate share of that amount in the form of a monetary payment. As Messrs. Smythe and Barone both testified, providing preemptive rights would result in unreasonable delay and expense prior to, as well as following, the conversion. The point was made that given the number of potential shareholders and the less than stellar financial outlook of Patrons Oxford, the offering of preemptive rights could result in numerous odd lots that might trade at less than any brokerage fee imposed to effect such sales.
Mr. Barone testified that a preemptive right offering would be deemed to be a public offering. This would obligate Patrons Oxford to file a registration statement with the Securities Exchange Commission, resulting in additional transaction costs of $745,000 to $800,000 and a possible delay of nine months. Further ongoing annual expenses to Patrons Oxford for operating as a public stock company were estimated at $638,000. Given the small size of the offering and the financial situation of Patrons Oxford, Mr. Barone was of the opinion that there would not be an active market for the stock. Mr. Barone accordingly concluded that Patrons Oxford's policyholders would be better off with a cash distribution rather than the issuance of stock.
A plan of conversion may exclude preemptive rights for policyholders who "reside in jurisdictions in which the issuance of stock is impossible, would involve unreasonable delay or would require the insurer to bear unreasonable costs, provided that any such member shall receive 100% of his equity share in the insurer in the form of a cash payment." 24-A Maine Revised Statutes §3477(2)(D). There is no evidence in the record to indicate that it would be impossible for Patrons Oxford to provide preemptive rights to its policyholders. Nonetheless, given the uncertain financial future of Patrons Oxford, the additional expense and delay of a public offering would prove unreasonable for this company to undertake. The provision of a preemptive right to shares of stock in Patrons Oxford after it has been converted to a stock insurance company would involve such unreasonable delay and would cause Patrons Oxford to bear such unreasonable costs and expenses as not to be in the best interests of Patrons Oxford and its policyholders. Accordingly, Patrons Oxford will not be required to provide preemptive rights to its policyholders.
5. Patrons Oxford has provided draft proxy materials and proposed special meeting and proxy procedures to the Acting Superintendent for review and comment. It is imperative that materials provided to policyholders describe clearly, accurately, and objectively the consequences of the conversion, the rights of the policyholders, and all other information policyholders might consider material in deciding how to vote on the plan. The purpose is to inform policyholders without being misleading or directing the policyholder's vote. Both the proxy materials and the special meeting and proxy procedures satisfy the need for adequate disclosure and for a meaningful process for voting on the Conversion Plan.
6. The Conversion Plan provides that after Patrons Oxford has been converted to a stock insurance company it will have paid-in capital stock in an amount that is not less than the minimum paid-in capital stock required of a new domestic stock insurance company upon initial authorization to transact like kinds of insurance, together with expendable surplus funds in an amount that is not less than one-half of such required capital stock.
7. Patrons Oxford's management has not, through reduction in volume of new business written, through cancellation of insurance policies, or through any other means sought to reduce, limit or affect the number or identity of Patrons Oxford's policyholders who are entitled to participate in the conversion of Patrons Oxford to a stock insurance company, or to secure for the individuals comprising Patrons Oxford's management any unfair advantage through such conversion.
8. Patrons Oxford will, after the proposed change of control has been effected, satisfy the requirements under Maine law for the issuance of a Certificate of Authority to transact the types of insurance that it intends to transact in Maine.
9. Quincy Mutual's acquisition of Patrons Oxford will not have the effect of substantially lessening competition in insurance in Maine, will not tend to create a monopoly in the business of insurance in Maine, and will not violate the laws of the State of Maine or of the United States relating to monopolies or restraints of trade.
10. Quincy Mutual's financial condition will not jeopardize the financial stability of Patrons Oxford or prejudice the interests of its policyholders.
11. Quincy Mutual does not have any plans or proposals to liquidate Patrons Oxford, sell its assets, merge it with any person, or make any other major change in its business, corporate structure or management that would be unfair or prejudicial to Patrons Oxford's policyholders.
12. The competence, experience and integrity of those persons who will control Patrons Oxford's business operations after Patrons Oxford has been acquired by Quincy Mutual are such that the interests of Patrons Oxford's policyholders and of the public will not be prejudiced or adversely affected.
13. Quincy Mutual's acquisition of Patrons Oxford will not adversely affect the contractual obligations of Patrons Oxford or its ability and tendency to render service in the future to Patrons Oxford's policyholders and to the public.
14. The proposed Reinsurance Pooling Agreement and the proposed Management Agreement that are respectively attached as Exhibits C and D to the Form A satisfy the requirements set forth 24-A Maine Revised Statutes §222 and in Maine Bureau of Insurance Rules, Chapter 180.
For the foregoing reasons, and based upon the testimony and other evidence entered into the record of this hearing, the following is hereby ordered:
1. The conversion of Patrons Oxford from a mutual insurance company to a stock insurance company as provided in the Conversion Plan is hereby approved, subject to the following conditions:
(a) The Conversion Plan shall be approved at a special meeting of Patrons Oxford's policyholders called for such purpose by the affirmative vote of not less than two-thirds of the votes cast in person or by proxy by those Patrons Oxford policyholders who are, in accordance with the Conversion Plan, eligible to vote thereon;
(b) The special meeting of Patrons Oxford's policyholders shall be held not later than 120 days after the date of this Decision and Order;
(c) Patrons Oxford shall mail to each of its policyholders eligible to vote on the Conversion Plan, postage prepaid at his or her address as most recently reflected in the records of Patrons Oxford, each of the proxy materials that are set forth as Exhibit D to the pre-filed written testimony of Mr. Smythe, such mailing to include a copy of the Conversion Plan, a copy of this Decision and Order, and a copy of the fairness opinion of IFS that is attached as an exhibit to the pre-filed written testimony of Mr. Barone.
2. The acquisition of control of Patrons Oxford by Quincy Mutual, as provided in the Reorganization Agreement and the Form A, is hereby approved, subject to the following conditions:
(a) The acquisition shall not be effected until the conditions set forth above in paragraph 1 have been satisfied; and
(b) Immediately following such acquisition, Patrons Oxford shall have paid-in capital in an amount that is not less than $2,500,000 and expendable surplus in an amount that is not less than $1,250,000.
3. The Reinsurance Pooling Agreement and the Management Agreement that are respectively attached to the Form A as Exhibits C and D are hereby approved, subject to the following conditions:
(a) The Reinsurance Pooling Agreement and the Management Agreement that Patrons Oxford and Quincy Mutual execute shall conform to the copies of those agreements that are respectively attached to the Form A as Exhibits C and D, unless such revisions to those agreements that may be desired by Patrons Oxford and Quincy Mutual shall have been approved in writing by the Acting Superintendent or the successor thereof; and
(b) The Reinsurance Pooling Agreement and the Management Agreement that Patrons Oxford and Quincy Mutual execute shall not take effect unless and until such approvals and authorizations, if any, as may be required from the Massachusetts Division of Insurance shall have been received by Quincy Mutual in writing.
4. Quincy Mutual shall, at such time as Quincy Mutual acquires the capital stock of Patrons Oxford as authorized pursuant to this Decision and Order, surrender to Patrons Oxford the Surplus Note that Patrons Oxford issued to Quincy Mutual on June 30, 1997 in the principal amount of $180,000, the Surplus Note that Patrons Oxford issued to Quincy Mutual on September 23, 1997 in the principal amount of $380,000, and any other Surplus Note that Patrons Oxford may issue to Quincy Mutual subsequent to the date of this Decision and Order pursuant to the Surplus Commitment Agreement that Quincy Mutual and Patrons Oxford executed as of August 31, 1997, and Patrons Oxford shall cancel each such Surplus Note at that time.
NOTICE OF APPEAL RIGHTS
Any party to this proceeding may seek judicial review of this Decision and Order pursuant to 5 Maine Revised Statutes §11001-11008 and 24-A Maine Revised Statutes §236 by filing a petition for review in the Maine Superior Court within 30 days after such party's receipt of notice of this Decision and Order.
Any other person who is aggrieved by this Decision and Order may attempt to obtain judicial review, to the extent such review is permitted by law, pursuant to the statutory provisions cited in the immediately preceding sentence, by filing a petition for review in the Maine Superior Court within 40 days from the date of this Decision and Order.
PER ORDER OF
ALESSANDRO A. IUPPA
Last Updated: August 22, 2012
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