(1) A mutual insurance holding company may become a stock holding company under such plan and procedure as may be approved by the office.
(2) The office shall not approve any such plan and procedure unless:
(a) The plan and procedure is subject to approval by vote of not less than a majority of the company’s current members voting thereon in person, by proxy, or by mail at a meeting of members called for the purpose pursuant to such reasonable notice and procedure as may be approved by the office.
(b) The corporate equity of each member is determinable:
1. For domestic mutual insurance holding companies owning solely life and health insurance subsidiaries, under a fair formula approved by the office, which equity shall be based upon not more than the company’s net assets.
2. For all other domestic insurance holding companies, based upon the ratio that the total amount of paid premiums paid by such member for policies of insurance during the 3-year period or part of such period specified in paragraph (c) during which such recipient was a member bears to the total amount of premiums paid by all members entitled to receive equity as a result of such conversion during such entire 3-year period and upon such reasonable classifications of members as the department may approve, unless the domestic mutual insurance holding company submits another fair formula that is approved by the department. Such equity shall be based upon not more than the company’s net assets.
(c) The persons entitled to participate in the distribution of stock shall include all current members and all existing persons who had been members within 3 years prior to the date such plan was submitted to the office.
(d) The plan calls for the distribution to each person as specified in paragraph (c) of capital stock or other property of the stock holding company, using each person’s equity as determined under paragraph (b).
(e) The plan gives to each member as specified in paragraph (c) a preemptive right to acquire his or her proportionate part of all of the proposed capital stock of the new stock holding company, within a designated reasonable period, and to apply upon the purchase thereof the amount of his equity as determined under paragraph (b).
(f) Shares are so offered to policyholders at a price not greater than to be thereafter offered to others.
(g) The plan provides for payment of cash to each member not electing to apply his or her equity towards the purchase price of stock to which he or she is preemptively entitled. The amount so paid shall be not less than 50 percent of the amount of his or her equity not so used for the purchase of stock. Such cash payment together with stock so purchased, if any, shall constitute full payment and discharge of the member’s corporate equity in such mutual insurance holding company.