Appeal from the Order of the Insurance Commissioner in case of In Re: Frankford Union Mutual Insurance Company, 309 Old York Road, Jenkintown, Pa., Docket No. C76-11-10.
John F. Gough, with him William O. Evans, and White and Williams, for petitioner.
Joseph Kenneth Hegedus, Assistant Attorney General, with him John H. Isom, Assistant Attorney General, for respondent.
Judges Crumlish, Jr., Wilkinson, Jr. and Mencer, sitting as a panel of three. Opinion by Judge Mencer.
[ 42 Pa. Commw. Page 271]
This is a case of first impression involving the interpretation and application of Sections 3 and 4 of the Act of December 10, 1970, P.L. 884 (Act), 40 P.S. §§ 1010.3-.4, which regulate the conditions under which the Insurance Commissioner (Commissioner) may approve the conversion of a mutual insurance company
[ 42 Pa. Commw. Page 272]
to a stock insurance company. Unfortunately, in making his decision to approve the conversion of Frankford Union Mutual Insurance Company (Frankford), the Commissioner improperly relied upon documents which had never been introduced into evidence at the hearing held pursuant to Section 4 and which are not part of the record before us on appeal. We must therefore vacate his order and remand the case for further consideration.
Section 3 of the Act provides that any mutual insurance company intending to convert to a stock company must file with the Commissioner a plan of conversion containing, inter alia, a list of "owners" as that term is defined in Section 1, 40 P.S. § 1010.1. Section 4 of the Act provides as follows:
The commissioner after making an examination of the company and holding a hearing shall determine whether or not:
(1) The plan of conversion filed pursuant to section 3 of this act is fair to the owners and creditors of the company and complies with the requirements of said section 3; and
(2) He has any reason to believe that after such conversion the company will not continue to comply in all respects with the laws and regulations of ...