Elements of the conversion plan

Any plan of conversion filed pursuant to this chapter must include at least all of the following: 1. Identification of the membership interests held or owned by the members of the converting insurer; 2. Identification of the class or classes of persons who have an ownership interest in the converting insurer as of the record date. If an ownership interest is held by any person who is not as of the record date an eligible member, the conversion plan must determine what percentage of the ownership interest in the converting insurer is held by eligible members in the aggregate, and what percentage of the ownership interest is held by each of any other classes of persons and by any other entity who holds such interest, such determinations to be made as of the record date; 3. A fair and reasonable formula, approved by the commissioner, for exchanging the equitable share of each eligible member for securities or other consideration, or both, of the converted insurer and the disposition of any unclaimed shares. Each eligible member must be entitled to receive in exchange for the eligible member's equitable share, without additional payment, consideration payable in voting common shares of the converted insurer or other consideration, or both. If the equitable share of the eligible member entitles the eligible member to receive a fractional share of stock, the eligible member must have the option to receive the value of the fractional share in cash or to purchase a full share by paying the balance in cash; 4. The allocation of the consideration mentioned in subsection 3 must take into account: a. The value of the voting rights of each eligible member, if any; b. The estimated proportionate contribution of each class of participating policies and contracts of insurance to the aggregate consideration being given to eligible members; and c. Such other factors that the commissioner finds must be included in order for the allocation to be fair and equitable to eligible members and other owners; 5. If the conversion plan of the converting insurer includes or contemplates a public or private offering of stock or other securities of the converted insurer: a. The number and characteristics of each class or type of share or other security to be authorized; b. The maximum percentage of issued or outstanding stock or other securities to be sold; c. A detailed description of the company's proposed capital structure; d. The proposed method and timing of any such sale; e. The anticipated effect of such sale on the value of the consideration distributed to eligible members in accordance with the conversion plan and this chapter; and f. A description of how the board of directors anticipates eligible members would be treated in any such sale, including a description of any plans for initial sale of stock or other securities to third parties, the process to be used in offering the stock or other securities, and setting the initial sale price for the stock or other securities; 6. The manner in which the conversion plan, when completed, would provide for the converted insurer paid-in capital and surplus in an amount not less than the minimum paid-in capital and surplus required of a domestic stock insurer upon initial authorization to transact like kinds of insurance; and 7. A description of any plans by the converting insurer to provide any stock options or other financial incentives to any member of management or any director as part of, or following, the demutualization.