20-730. Conversion of mutual insurer to stock insurer
A. A domestic mutual insurer may become a domestic stock insurer pursuant to such plan or procedure as is approved in advance by the director.
B. The director shall not approve any such plan or procedure unless:
1. It is equitable to the insurer's members.
2. It is subject to approval by vote of not less than three-fourths 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 such notice and procedure as may be approved by the director. If a life insurer, the right to vote may be limited to members whose policies have face amounts of not less than $1, 000 and have been in force one year or more.
3. The equity of each policyholder in the insurer is determinable under a fair formula approved by the director, which shall be based on not less than the insurer's entire surplus, after deducting contributed or borrowed surplus funds, plus a reasonable present equity in its reserves and in all nonadmitted assets.
4. The policyholders entitled to participate in the purchase of stock or distribution of assets include all current policyholders and all existing persons who had been a policyholder of the insurer within three years before the date such plan was submitted to the director.
5. The plan gives to each policyholder of the insurer as specified in paragraph 4 of this subsection a preemptive right to acquire the policyholder's proportionate part of all of the proposed capital stock of the insurer, within a designated reasonable period, and to apply on the purchase thereof the amount of the policyholder's equity in the insurer as determined under paragraph 3 of this subsection.
6. Shares are so offered to policyholders at a price not greater than that thereafter offered to others nor at more than double the par value of the shares.
7. The plan provides for payment to each policyholder not electing to apply the policyholder's equity in the insurer for or on the purchase price of stock to which preemptively entitled, of cash in the amount of not less than fifty percent of the amount of the policyholder's equity not so used for the purchase of stock, and which cash payment together with stock so purchased, if any, shall constitute full payment and discharge of the policyholder's equity as an owner of such mutual insurer.
8. The plan, when completed, would provide for the converted insurer paid-in capital stock in an amount not less than the minimum paid-in capital required of a domestic stock insurer transacting like kinds of insurance, together with surplus funds in amount not less than one-half of such required capital.