(a) A stock insurer other than a title insurer may become a mutual insurer under the plan and procedure that may be approved by the director after a hearing.

(b) The director may not approve a plan, procedure, or mutualization unless

(1) it is equitable to stockholders and policyholders;

(2) it is subject to approval by the holders of not less than three-fourths of the insurer's outstanding capital stock having voting rights and by not less than two-thirds of the insurer's policyholders who vote on the plan in person, by proxy, or by mail under the notice and procedure which may be approved by the director;

(3) if a life insurer, the right to vote on it is limited to holders of policies other than term or group policies, and whose policies have been in force for more than one year;

(4) mutualization will result in retirement of shares of the insurer's capital stock at a price not in excess of the fair market value as determined by competent disinterested appraisers;

(5) the plan provides for the purchase of the shares of a nonconsenting stockholder in the same manner and subject to the same applicable conditions as provided by the general corporation law of the state, as to rights of nonconsenting stockholders, with respect to consolidation or merger of private corporations;

(6) the plan provides for definite conditions to be fulfilled by a designated early date upon which the mutualization will be considered effective;

(7) the mutualization leaves the insurer with surplus funds reasonably adequate for the security of its policyholders and to enable it to continue successfully in business in the state in which it is then authorized to transact insurance, and for the kinds of insurance included in its certificates of authority in those states.

(c) This section does not apply to mutualization ordered by a court to rehabilitate or reorganize an insurer under AS 21.78.