PARRIS N. GLENDENING, Governor                                   Ch. 36

In subsection (c)(5) of this section, the word "stock" is substituted for the
former word "shares" and the reference to "objecting" stockholders is
substituted for the former reference to "nonconsenting" stockholders to
conform to language used in the Corporations and Associations Article.

Also in subsection (c)(5) of this section, the former word "private", which
modified "corporations", is deleted as surplusage.

Defined terms: "Certificate of authority" § 1-101
"Commissioner" § 1-101
"Insurance" § 1-101
"Insurance business" § 1-101
"Insurer" § 1-101
"Life insurer" § 1-101
"Mutual insurer" § 1-101
"Policy" § 1-101
"State" § 1-101
"Stock insurer" § 1-101

3-121. CONVERSION OF MUTUAL INSURER TO STOCK INSURER.

(A)     AUTHORIZED.

A DOMESTIC MUTUAL INSURER MAY BECOME A STOCK INSURER UNDER A
PLAN AND PROCEDURE THAT IS APPROVED BY THE COMMISSIONER AFTER A
HEARING.

(B)     STANDARDS FOR APPROVAL.

THE COMMISSIONER MAY NOT APPROVE A PLAN OR PROCEDURE FOR
CONVERSION OF A MUTUAL INSURER TO A STOCK INSURER UNLESS:

(1)      THE PLAN OR PROCEDURE IS EQUITABLE TO THE INSURER'S
MEMBERS;

(2)      THE PLAN IS SUBJECT TO APPROVAL BY VOTE OF AT LEAST
THREE-FOURTHS OF THE INSURER'S CURRENT MEMBERS WHO VOTE ON THE PLAN
IN PERSON, BY PROXY, OR BY MAIL AT A MEETING OF MEMBERS CALLED FOR THAT
PURPOSE UNDER REASONABLE NOTICE AND PROCEDURE APPROVED BY THE
COMMISSIONER;

(3)      FOR A LIFE INSURER, THE RIGHT TO VOTE MAY BE LIMITED TO
MEMBERS WHO HOLD POLICIES, OTHER THAN TERM OR GROUP POLICIES, THAT
HAVE BEEN IN FORCE FOR AT LEAST 1 YEAR;

(4)      THE EQUITY OF EACH POLICYHOLDER IN THE INSURER:

(I)       IS DETERMINABLE UNDER A FAIR FORMULA APPROVED BY
THE COMMISSIONER; AND

(II)     IS BASED ON NOT LESS THAN THE INSURER'S ENTIRE SURPLUS,
MINUS CONTRIBUTED OR BORROWED SURPLUS FUNDS, PLUS A REASONABLE
PRESENT EQUITY IN RESERVES AND IN ALL NONADMITTED ASSETS;

- 813 -