Senate Bill 247 Alabama 2026 Session

Summary

Primary Sponsor

Andrew JonesSenator

Republican

Session

2026 Regular Session

Title

Insurance; to allow reorganization of a nonprofit health care service corporation under the control of a nonprofit holding company

Summary

SB247 would let a health care service corporation reorganize under the ultimate control of a nonprofit holding corporation, with new asset transfer rules, governance requirements, and reporting obligations.

What This Bill Does

SB247 would authorize a health care service corporation to reorganize so that a nonprofit holding corporation becomes its ultimate controlling entity. It allows an initial transfer of cash, investments, or equity from the health care service corporation to the nonprofit holding corporation, but limits the total value transferred to 25% of the health care service corporation's admitted assets and requires meeting department capital requirements. It requires notices and financial documentation to be filed with the Department of Insurance and treats the reorganization as an internal restructuring that does not change the health care service corporation's legal status or contracts, while establishing new governance and reporting rules for the nonprofit holding corporation and its subsidiaries.

Who It Affects

• Health care service corporations (HCSCs) that choose to reorganize under a nonprofit holding corporation; they would experience new transfer rules, governance changes, and ongoing reporting to regulators.
• Nonprofit holding corporations and their boards/executives; they would gain ultimate controlling interest in HCSCs and face governance requirements (board composed of HCSC directors), capital reporting, and regulatory oversight.

Key Provisions

• Authorize formation of a nonprofit holding corporation by reorganizing a health care service corporation to hold all membership interests in the reorganized health care service corporation.
• Treat a reorganization as an internal restructuring that does not change control of the health care service corporation and does not require separate filings beyond specified notices.
• Allow the health care service corporation to transfer to the nonprofit holding corporation cash, investments, or ownership interests, up to 25 percent of admitted assets, subject to risk-based capital rules.
• Require notice of completion to the Department of Insurance with a description of transactions, amended formation documents, and pro forma financial statements for both entities.
• Require the nonprofit holding corporation to be formed under Chapter 3A and to have a board comprised solely of HCSC directors; prohibit equity ownership in the nonprofit holding corporation by executives or HCSC directors.
• Post-reorganization, allow the nonprofit holding corporation to organize, acquire, hold, operate, and invest in other persons, including insurers, subject to applicable chapters and laws.
• Require an annual group capital calculation to be filed with the Department by June 1 each year.
• Maintain that subscriber contracts and certificates remain in force and that the HCSC’s certificate of authority to do business is unchanged, with limited other effects.
• Provide that the HCSC may merge with a domestic or foreign nonprofit if the HCSC is the surviving entity, subject to required filings.
• Effective date for the act is October 1, 2026.

AI-generated summary using openai/gpt-5-nano on Feb 12, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Businesses & Financial Institutions