26-24-146. Converting mutual insurer to stock insurer.

(a) A mutual insurer may become a stock insurer under any plan and procedure the commissioner approves after a hearing thereon.

(b) The commissioner shall not approve any plan or procedure unless:

(i) It is equitable to the insurer's members;

(ii) It is subject to approval by vote of not less than three-fourths (3/4) of the insurer's current members voting thereon in person, by proxy or by mail at a meeting of members called for the purpose pursuant to a reasonable notice and procedure the commissioner approves, except if the insurer is a life insurer, right to vote may be limited to members who hold policies other than term or group policies, and whose policies have been in force for not less than one (1) year;

(iii) The equity of each policyholder in the insurer is determinable under a fair formula which the commissioner approves, and the equity is based upon not less than the insurer's entire surplus, after deducting contributed or borrowed surplus funds, plus a reasonable present equity in its reserves and all nonadmitted assets;

(iv) The policyholders entitled to participate in the purchase of stock or distribution of assets shall include all current policyholders and all existing persons who had been policyholders of the insurer within three (3) years prior to the date the plan was submitted to the commissioner;

(v) The plan gives to each policyholder of the insurer as specified in paragraph (iv) of this subsection, a preemptive right to acquire his proportionate part of all of the insurer's proposed capital stock, within a designated reasonable period, and to apply upon the purchase thereof the amount of his equity in the insurer as determined under paragraph (iii) of this subsection;

(vi) Shares are so offered to policyholders at a price not greater than to be thereafter offered to others;

(vii) The plan provides for payment to each policyholder not electing to apply his equity in the insurer for or upon the purchase price of stock to which preemptively entitled, of cash in the amount of not less than fifty percent (50%) of the amount of his equity not used for the purchase of stock, and which cash payment together with stock purchased, if any, constitutes full payment and discharge of the policyholder's equity as an owner of the mutual insurer; and

(viii) The plan, when completed, provides for the converted insurer paid-in capital stock and surplus in an amount not less than the minimum paid-in capital stock and maintained surplus required of a domestic stock insurer transacting like kinds of insurance, together with expendable surplus funds in an amount not less than one-half (1/2) of the required capital stock and maintained surplus.