38.2-1005.1:4 - Contents of plan of MHC conversion
§ 38.2-1005.1:4. Contents of plan of MHC conversion.
A plan of MHC conversion shall:
A. Include:
1. The reasons for the proposed conversion; and
2. The effect of the proposed conversion on the mutual company's existingpolicies.
B. Provide that:
1. All policies of the converted company in force on the effective date ofthe conversion shall continue in force under the terms of those policies,except that all voting and other membership rights of the policyholdersprovided for under the policies or under the laws of this Commonwealth andany provisions for contingent liability of members shall be extinguished onthe effective date of the plan of MHC conversion.
2. The holders of participating policies in force on the date of conversionshall continue to have the right to receive dividends as provided in suchpolicies, if any. However, except in the case of a mutual company's lifeinsurance policies, guaranteed renewable accident and sickness insurancepolicies, and non-cancelable accident and sickness insurance policies, ifany, a plan may provide that the converted stock company will issue theinsured a nonparticipating policy as a substitute for the participatingpolicy on the renewal date of the participating policy next following thedate the plan becomes effective.
3. If a mutual life insurance company has participating life insurancepolicies in force on the effective date of the plan of conversion, theconverted company will maintain such participating life policies as a closedblock of business for dividend purposes, except that any or all classes ofgroup participating policies may be excluded from the closed block. The planshall provide for the establishment of one or more segregated accounts inconnection with the closed block of business and shall allocate to suchsegregated accounts sufficient assets of the mutual company so that theassets so allocated, together with the revenue for the closed block ofbusiness, are sufficient to support the closed block including, but notlimited to, the payment of claims, expenses, taxes and any dividends that areprovided for under the terms of the participating policies with appropriateadjustments in the dividends for experience changes. The plan shall beaccompanied by an opinion of a qualified actuary or appointed actuary whomeets the standards provided in this title or the Commission's regulationsfor the submission of actuarial opinions as to the adequacy of reserves orassets. The actuarial opinion shall relate to the adequacy of the assetsallocated to the segregated accounts of the closed block and shall be basedon methods of analysis deemed appropriate for such purposes by the ActuarialStandards Board. The amount of assets allocated to the segregated accounts ofthe closed block shall be based upon the mutual company's most recent annualstatement updated to the effective date of the conversion. After theeffective date of the conversion, the converted company shall keep a separateaccounting for the closed block and shall make and include in each annualstatement to be filed with the Commission a separate statement showing gains,losses and expenses properly attributable to the closed block. With theCommission's prior approval, assets allocated to the closed block of businessthat are in excess of the amount of assets necessary to support the policiesthen remaining in the closed block shall revert to the benefit of theconverted company. Notwithstanding the provisions of this subdivision, theCommission may waive the requirement for the establishment of a closed blockof participating policies when it deems a waiver to be in the best interestsof the participating policyholders of the mutual company.
C. Include the requirements for granting membership interest to persons whobecome policyholders of the converted company subsequent to the effectivedate of the conversion.
D. Include information sufficient to demonstrate that the financial conditionof the converted company will not be diminished by the plan of MHC conversion.
E. Include a description of any current proposal to issue shares of theconverted company or an intermediate holding company to the public or toother persons or entities who are not direct or indirect subsidiaries of themutual holding company.
F. Include the identity of each of the proposed directors and officers of themutual holding company and each intermediate holding company, if any,together with such biographical information the Commission may require.
G. Include such other information as the Commission considers appropriate forinclusion in the plan of MHC conversion.
(2001, c. 726.)