33-3-216. Converting mutual insurer to stock insurer. (1) A mutual insurer may become a stock insurer under a plan and procedure as may be approved by the commissioner after a hearing.

(2) The commissioner may not approve any plan or procedure unless:

(a) it is equitable to the insurer's members;

(b) it is subject to approval by vote of not less than three-fourths of the insurer's current members voting on the plan or procedure in person, by proxy, or by mail at a meeting of members called for the purpose pursuant to reasonable notice and procedure that may be approved by the commissioner. If the insurer is a life insurer, the 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 1 year.

(c) the equity of each policyholder in the insurer is determinable under a fair formula approved by the commissioner, which equity must be 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 in all nonadmitted assets;

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

(e) the plan gives to each policyholder of the insurer, as specified in subsection (2)(d), 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 upon the purchase of the stock the amount of the policyholder's equity in the insurer as determined under subsection (2)(c);

(f) shares are offered to policyholders at a price not greater than the price to be offered to others but at not more than double the par value of the shares;

(g) the plan provides for payment to each policyholder not electing to apply the policyholder's 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 50% of the amount of the 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

(h) 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 the required capital.