§ 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.