(a) A mutual insurer may become a stock insurer under any plan and procedure as may be approved by the Commissioner.

(b) The Commissioner shall not approve the 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 60 percent of the insurer's current members who cast votes on such plan in person, by proxy, or by mail at a meeting of members called for the purpose pursuant to 20 days' notice and procedure as may be approved by the Commissioner;

(3) If a life insurer, the right to vote may be limited as the bylaws shall provide to members whose policies are other than term or group policies and have been in effect for more than one year;

(4) The equity of each policyholder in the insurer is determinable under a fair formula approved by the Commissioner, which equity shall be based upon not less than the insurer's entire statutory surplus after deducting contributed or borrowed surplus funds plus a reasonable present equity in its reserves and in all nonadmitted assets, less expenses of the conversion;

(5) The policyholders entitled to participate in the purchase of stock or distributing of assets shall include all current policyholders who own a policy for which all premiums due have been fully paid on the date the plan was adopted by the board of directors of the insurer;

(6) The plan, as elected by the insurer and voted upon by the members, gives to each policyholder of the insurer as specified in paragraph (5) of this subsection one of the following:

(A)(i) A preemptive right to acquire his or her proportionate part of all of the proposed capital stock of the insurer within a designated reasonable period and to apply upon the purchase price thereof the amount of his or her equity in the insurer as determined in paragraph (4) of this subsection.

(ii) Shares are so offered to policyholders at a price not greater than that to be thereafter offered to others.

(iii) The plan provides for payment, to each policyholder not electing to apply his or her 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 percent of the amount of his or her equity not so used for the purchase of stock, 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 the mutual insurer;

(B) Payment in cash to each policyholder of 100 percent of his or her equity in the insurer, as determined in paragraph (4) of this subsection; or

(C)(i) A preemptive right to acquire a percentage of his or her proportionate part of all of the proposed capital stock of the insurer within a designated reasonable period and to apply upon the purchase price thereof that same percentage amount of his or her equity in the insurer as determined in paragraph (4) of this subsection.

(ii) Shares are so offered to policyholders at a price not greater than that to be thereafter offered to others.

(iii) The plan provides for payment, to each policyholder not electing to apply his or her 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 percent of the amount of his or her equity not so used for the purchase of stock, 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 the mutual insurer; and

(7) 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 an amount required for the insurer under this title.

(c) The corporate existence of a mutual insurer converting to a stock insurer pursuant to this Code section shall not terminate upon such conversion, but the new stock insurer shall be deemed to be a continuation of the mutual insurer and to have been organized on the date the mutual insurer was originally organized.

(d) The insurer which has converted from a mutual to a stock company may continue to use its old name or may change its name pursuant to the laws of this state. In the event the converted insurer continues to use the word mutual in its name, then it shall include words after its name identifying the converted insurer as a stock insurer.

(e)(1) The Commissioner may approve any plan or procedure to become a stock insurer filed by a mutual insurer which at the time of the filing of such plan or procedure is insolvent or does not meet the minimum statutory surplus requirements, provided that such plan or procedure, on the date such plan or procedure is 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 an amount required for the insurer under this title. The mutual insurer may provide in the plan or procedure for the waiver of the requirement to give notice to policyholders, to obtain policyholder approval of the plan or procedure, or to make any distribution of the policyholders' equity in the mutual insurer to any policyholder where the value of the mutual insurer, due to its insolvency or its failure to meet minimum statutory surplus requirements, does not warrant any such notice, approval, or distribution under the circumstances, including the expense involved in such a distribution.

(2) A plan or procedure described in paragraph (1) of this subsection must include a description of how the mutual insurer will meet the statutory surplus and capital requirements on the date the plan or procedure is completed, which may involve the issuance and sale directly to one or more purchasers of the capital stock of the converted insurer or of a corporation which will own 100 percent of the converted insurer.