NY Ins L § 7312 (2021)
2021 New York Laws ISC - Insurance Article 73 - Conversion to Different Type of Insurer 7312 - Reorganization of a Domestic Mutual Life Insurer Into a Domestic Stock Life Insurer.

§  7312.  Reorganization  of  a  domestic  mutual  life insurer into a domestic stock life insurer. (a) Definitions. As used in  this  section, the following terms shall have the following meanings:  (1) "Mutual life insurer" means a domestic mutual life insurer.  (2) "Policyholder"  means  a person, as determined by the records of a mutual life insurer, who is deemed to be the "policyholder" of a  policy or  annuity contract which is of a type described in paragraphs one, two or three of subsection (a) of section one thousand one hundred  thirteen of  this  chapter  for  purposes of paragraph three of subsection (a) of section four thousand two hundred ten of this chapter.  (3) "Policyholders'  membership  interest"  means  and  includes   all policyholders' rights as members arising under the charter of the mutual life  insurer  or  this  chapter  or otherwise by law including, but not limited to, the rights to vote and to participate in any distribution of surplus whether or not incident to a  liquidation  of  the  mutual  life insurer.  The term "policyholders' membership interest" does not include rights, including without limitation the right  to  participate  in  the distribution  of  surplus, expressly conferred upon the policyholders by their policies or contracts other than any right to vote.  (4) "Plan of reorganization" means a plan of conversion or  conversion and merger in accordance with this section.  (5) "Reorganized  insurer"  means the domestic stock life insurer into which a mutual life insurer has been reorganized in accordance with this section.  (6) "Statement date" means the December thirty-first immediately prior to the date the plan of reorganization was adopted.  (7) "Person" means  an  individual,  partnership,  firm,  association, corporation,  joint-stock  company,  trust,  any  similar  entity or any combination of the foregoing acting in concert.  (b) Demutualization. Any  other  provision  of  this  chapter  to  the contrary  notwithstanding,  upon compliance with the requirements of and completion of the proceedings prescribed by this section  and  with  the written approval of the superintendent, a mutual life insurer may either (1)  reorganize  into a domestic stock life insurer or (2) reorganize as part of a plan of reorganization in which  a  majority  or  all  of  the common  shares of the domestic stock life insurer is acquired by another institution which may be an institution organized for such  purpose.  As part  of  the  reorganization,  the mutual life insurer may merge with a domestic stock insurer, provided that the merging insurers shall  comply with the provisions of this chapter applicable to their participation in such a merger.  (c)  Plan  of  reorganization.  A  plan  of  reorganization  must: (1) demonstrate  a  purpose   and   specify   reasons   for   the   proposed reorganization;  (2)  be in the best interest of the mutual life insurer and its policyholders; (3) be fair and equitable to  policyholders;  (4) provide  for  the  enhancement  of  the  operations  of  the reorganized insurer; and (5) not substantially lessen competition  in  any  line  of insurance business.  (d)  Reorganization. The proposed reorganization shall be accomplished by a plan which must be fair and equitable to the policyholders and must comply with the terms and conditions set forth in paragraph one, two  or four  of  this  subsection  provided however, that a mutual life insurer which has surplus to  policyholders,  excluding  contingently  repayable obligations  of the mutual life insurer under section one thousand three hundred seven of this chapter, of less than fifty  million  dollars  and which  has  industrial insurance in force must comply with the terms and conditions set forth in paragraph  one,  two,  three  or  four  of  this subsection.  Nothing  herein contained shall be deemed to give any class  of policyholders priority  with  respect  to  the  assets  of  any  such reorganized  insurer  in  liquidation, other than as expressly stated in paragraph two of this subsection.  (1)  (A) The mutual life insurer's participating business comprised of its participating policies and contracts in force on the effective  date of  reorganization  shall  be  operated  by the reorganized insurer as a closed block of participating business in accordance with paragraph five of this subsection except  that,  at  the  option  of  the  mutual  life insurer,  some  or  all  classes  of group policies and contracts may be excluded from the closed block of participating  business  and  in  such event such group policies and contracts shall continue to be eligible to receive  dividends based on the experience of such class or classes; (B) subject to the provisions of subparagraph (D)  of  this  paragraph,  the plan  of  reorganization  provides  that  the  policyholders' membership interest will  be  exchanged  for  all  of  the  common  shares  of  the reorganized  insurer  or its parent company, if any, or for either, or a combination of (i) the common shares of the reorganized insurer  or  its parent  company, if any, and (ii) consideration equal to the proceeds of the public sale in the market  of  such  common  shares  by  the  issuer thereof or by a trust or other entity existing for the exclusive benefit of the policyholders and established solely for the purpose of effecting the  reorganization to which such common shares are issued by the issuer on the effective  date  of  reorganization,  such  consideration  to  be distributed   to   policyholders  during  a  process  of  reorganization specified in the plan and not to last more  than  ten  years  after  the effective date of reorganization or until notification of the death of a policyholder  or  the  death of the insured, whichever occurs first; (C) the consideration to be given to the policyholders  is  allocated  among the   policyholders   in  a  manner  which  is  fair  and  equitable  to policyholders  and  which  may   take   into   account   the   estimated proportionate  contribution  of each class of participating policies and contracts to the aggregate consideration being given  to  policyholders; (D)  unless such issuance within a shorter or longer period is disclosed in the plan of reorganization, the issuer of such common shares has  not issued  and does not issue within two years of the effective date of the reorganization (i)  any  of  its  common  shares,  (ii)  any  securities convertible,  with  or without consideration, into such common shares or carrying any warrant or right to subscribe  to  or  to  purchase  common shares, or (iii) any warrants or rights to subscribe to or purchase such common  shares  or  other  securities  described  in  item  (ii) of this subparagraph, except for the issue  of  common  shares  to  or  for  the benefit  of  the  policyholders  pursuant  to the reorganization and the issue of stock in anticipation of options for  the  purchase  of  common shares being granted to officers or employees of the reorganized insurer or  its  holding  company,  if  any, pursuant to this chapter and a plan approved by the superintendent;  (E)  the  issuer  shall  use  its  best efforts  to encourage and assist in the establishment of a public market for such common shares within two years of the  effective  date  of  the reorganization (or such longer period as may be disclosed in the plan of reorganization);  (F)  within one year after the offering of stock other than the initial distribution, but no later than  six  years  after  the effective  date of the reorganization the insurer, under a plan approved by the  superintendent,  which  he  finds  not  to  be  harmful  to  the reorganized  insurer, shall offer to make available to policyholders who received  and  retained  shares  of  stock  with   minimal   values   on reorganization,  a  procedure  to  dispose  of  those shares of stock at market value without brokerage commissions or similar fees; and (G)  the costs  and  expenses of the reorganization shall be borne by the insurer  but no costs and expenses incurred in any manner in connection with  the reorganization shall be charged to the closed block.  (2)  (A) The mutual life insurer's participating business comprised of its participating policies and contracts in force on the effective  date of  the reorganization shall be operated by the reorganized insurer as a closed block of participating business in accordance with paragraph five of this subsection except that, at the option of the mutual life insurer some or all classes of group policies and contracts may be excluded from the closed block of participating business and in such event such  group policies  and  contracts  shall  continue  to  be  eligible  to  receive dividends based on the experience of such  class  or  classes;  (B)  the reorganized  insurer  or  its  parent  corporation  is to issue and sell shares of one or more classes of stock having  a  total  offering  price equal  to  the  estimated  value in the public market of the mutual life insurer; (C) the policyholders' equity is equal to the excess of (i) the amount of the mutual insurer's assets accumulated from the operations of participating policies and contracts in force on the effective  date  of the  reorganization, over the sum of (ii) the amount of assets allocated to the closed block of participating business and (iii) an amount  equal to  the  statutory reserves and other statutory liabilities attributable to any group participating  policies  and  contracts  in  force  on  the effective date of reorganization and not included in the closed block of participating business, provided however, that the policyholders' equity cannot be less than the amount of the policyholders' preference account. The  amount  of  the policyholders' equity shall be determined as of the statement date and adjusted by the estimated percentage  change  in  the mutual  insurer's total assets, as reported in its statutory statements, between the statement date and the effective date of the reorganization. Any determination of policyholders' equity shall include adjustments for any events or matters deemed by the  superintendent  appropriate,  which have  a  material  effect  on  policyholders' equity and occurred within seven years prior to the statement date; (D) the plan of  reorganization provides  that  the policyholders' membership interest will be exchanged for  consideration  equal  to  (i)  the  policyholders'   equity,   (ii) nontransferable  preemptive  subscription  rights to purchase all of the shares of such  issuer,  (iii)  ten  percent  of  the  proceeds  net  of underwriting commissions and fees raised by the insurer upon the sale of its  initial  offering  of  shares,  and  (iv)  the  establishment  of a policyholders' preference  account  for  the  benefit  of  policyholders existing on the effective date of reorganization, and for the benefit of the  future  policyholders of the reorganized insurer, in the event of a subsequent  complete  liquidation  of  the  reorganized  insurer,   such policyholders'  preference  account  having the terms described below in this paragraph; (E) the consideration to be given to  the  policyholders is  allocated  among  the  policyholders  in  a manner which is fair and equitable to policyholders and which may take into account the estimated proportionate contribution of each class of participating  policies  and contracts  to  the aggregate consideration being given to policyholders; (F) at the option of the mutual life insurer, any common shares  of  the reorganized  insurer  or  its  parent  company,  if any, included in the policyholders' consideration, other than those acquired as a result of a policyholder exercising  any  preemptive  subscription  rights,  may  be placed  in a trust or other entity existing for the exclusive benefit of the policyholders and established solely for the  purpose  of  effecting the  reorganization to which such common shares are issued by the issuer on the effective date  of  reorganization,  such  consideration  or  the proceeds  of  the  sale  of  such  consideration  to  be  distributed to policyholders during a process specified in the plan  and  not  to  last  more  than ten years after the effective date of reorganization or until notification of the death of  the  policyholder  or  the  death  of  the insured,  whichever  occurs  first;  (G)  the  issuer shall use its best efforts  to encourage and assist in the establishment of a public market for such common shares within two years of the  effective  date  of  the reorganization;  (H)  within  one year after the offering of stock other than the initial distribution, but no later than  six  years  after  the effective  date of the reorganization the insurer, under a plan approved by  the  superintendent  which  he  finds  not  to  be  harmful  to  the reorganized  insurer, shall offer to make available to policyholders who received  and  retained  shares  of  stock  with   minimal   values   on reorganization,   including  but  not  limited  to  shares  acquired  by policyholders  exercising  their  preemptive  subscription   rights,   a procedure  to  dispose  of those shares of stock at market value without brokerage commissions or similar fees; (I) the costs and expenses of the reorganization  shall  be  borne  by  the  insurer,   however   if   the reorganization is effected, no costs and expenses incurred in any manner in   connection   with  the  reorganization  shall  be  charged  to  the participating business in force on the effective date of reorganization. Costs and expenses shall include but  not  be  limited  to  legal  fees, appraisal  fees,  printing  and/or  mailing  costs;  (J) notwithstanding subparagraph (I) of  this  paragraph,  if  the  plan  of  reorganization provides  for  or  permits a person to directly or indirectly acquire in any manner the beneficial ownership of  five  percent  or  more  of  the voting  securities  of  such  reorganized  insurer or of any institution which owns a majority or all of the voting securities of the reorganized insurer, or if the superintendent determines that a person will control, as defined in paragraph sixteen of subsection (a) of section one hundred seven of this chapter, such reorganized insurer or any institution which owns a majority or all of  the  voting  securities  of  the  reorganized insurer  then,  unless  the  superintendent determines that it is in the policyholders' interest to waive all or  part  of  this  condition,  the mutual  life  insurer  shall not, directly or indirectly, pay for any of the costs or expenses of a proposed reorganization whether or  not  such reorganization  is  effected  and in no event shall any of the costs and expenses incurred in any manner in connection with the reorganization be charged to the participating business in force on the effective date  of reorganization.  Costs  and expenses shall include but not be limited to legal fees, appraisal fees,  printing  and/or  mailing  costs;  (K)  the policyholders'  preference  account  referred to above shall be equal to the excess of the amount of the mutual insurer's total  admitted  assets over  the  sum of (i) the total amount of assets allocated to the closed block of participating business and (ii) the policyholders'  equity  and (iii)  statutory  reserves  and  liabilities  attributed to policies and contracts not included in the closed block  of  participating  business. The  policyholders'  preference  account  shall  be calculated as of the statement date and adjusted appropriately to reflect any changes in  the components   used  in  determining  the  amount  of  the  policyholders' preference account between the statement date and the effective date  of reorganization; (L) a mutual life insurer whose policyholders' equity is paid  in  the  form  of  stock  may  show,  as  a  write-in item labeled "Reorganization surplus" immediately following "Capital paid up" on  the annual  statement of the reorganized insurer, a negative amount equal to the excess of the policyholders' equity which was paid in  the  form  of stock over its unassigned surplus on the date of reorganization; and (M) the  policyholders'  preference account shall be so designated and shown as a footnote to the surplus of the reorganized insurer in  all  of  its published  and  filed  statements. In the event of a subsequent complete  liquidation of the reorganized insurer, and  only  in  such  event,  the policyholders'  preference  account  shall  be  allocated among the then policyholders in a manner found by the superintendent  to  be  fair  and equitable  to policyholders, first to policyholders having participating policies  and  contracts  in  force  on  the  effective  date   of   the reorganization  and  then  to all other policyholders of the reorganized insurer. The function of the policyholders' preference account shall  be solely  to  establish  a priority on liquidation and its existence shall not operate to restrict the use or application of  the  surplus  of  the reorganized insurer except that the reorganized insurer, after complying with  all  other  requirements  of this chapter, cannot declare or pay a cash dividend on, or repurchase  any  of,  its  shares  if,  after  such declaration  or  payment,  the  amount  of  net preference assets of the reorganized insurer is  less  than  the  amount  of  the  policyholders' preference account. For this purpose, the net preference assets shall be equal  to  the  insurer's  total admitted assets less the sum of (i) the assets in the closed block of participating business (ii) the  statutory reserves  and  liabilities  with  respect to business not in such closed block and (iii) the reorganized insurer's capital and paid in surplus.  (3) (A) The mutual life insurer's participating business comprised  of its  participating policies and contracts in force on the effective date of the reorganization shall be operated by the reorganized insurer as  a closed  block  of  participating  business,  for  policyholder  dividend purposes only, to which shall be allocated admitted assets of the mutual life insurer in an amount equal to the statutory reserves and  statutory liabilities  of  the  mutual  life  insurer; (B) the consideration to be given in exchange for the policyholders' membership  interest  shall  be equal  to  the  statutory  surplus  of  the mutual life insurer; (C) the amount of statutory reserves and  statutory  liabilities  and  statutory surplus shall be determined as of the statement date and adjusted by the estimated  percentage  change  in  the  mutual  insurer's total admitted assets  between  the  statement  date  and   the   effective   date   of reorganization.  Any  determination  of  statutory surplus shall include adjustments for any events  or  matters  deemed  by  the  superintendent appropriate,   which   have   a   material   effect   on  policyholders' consideration and occurred within seven years  prior  to  the  statement date;  (D)  the consideration shall be allocated among the policyholders in a manner which is fair and equitable to the policyholders  and  which may  take  into account the estimated proportionate contribution of each class  of  participating  policies  and  contracts  to   the   aggregate consideration  being given to policyholders; (E) the reorganized insurer or its parent corporation is to issue and sell shares  of  one  or  more classes  of  stock  having a total offering price equal to the estimated value in the market of the  mutual  life  insurer;  (F)  the  costs  and expenses  of  the reorganization shall be borne by the insurer; however, if the plan of reorganization  provides  for  or  permits  a  person  to directly or indirectly acquire in any manner the beneficial ownership of five  percent  or  more  of  any  class  of  a  voting  security of such reorganized insurer or of any institution which owns a majority  or  all of  the  voting  securities  of  the  reorganized  insurer,  or  if  the superintendent determines that a person  will  control,  as  defined  in paragraph sixteen of subsection (a) of section one hundred seven of this chapter,  such  reorganized  insurer  or  any  institution  which owns a majority or all of the voting  securities  of  the  reorganized  insurer then,   unless   the   superintendent  determines  that  it  is  in  the policyholders' interest to waive all or  part  of  this  condition,  the mutual  life  insurer  shall not, directly or indirectly, pay for any of the costs or expenses of a proposed reorganization whether or  not  such  reorganization  is effected. Costs and expenses shall include but not be limited to legal fees, appraisal fees, printing  and/or  mailing  costs; and  (G)  none of the assets, including the revenue therefrom, allocated in  accordance  with  subparagraph (A) of this paragraph shall revert to the benefit of the stockholders of the reorganized insurer.  (4) (A) Any method approved by  the  superintendent  under  which  the policyholders'  membership  interest  is converted into or exchanged for consideration determined by the superintendent to be fair and  equitable to  policyholders  and meeting the requirements of this section; (B) the consideration to be given to the policyholders is  allocated  among  the policyholders  in  a  manner which is fair and equitable; (C) unless the superintendent determines that it is in the policyholders'  interest  to waive  all  or part of this condition, the mutual life insurer does not, directly or indirectly, pay for any  of  the  costs  or  expenses  of  a proposed  reorganization whether or not such reorganization is effected. Costs and expenses shall include but  not  be  limited  to  legal  fees, appraisal  fees,  printing  and/or mailing costs; and (D) in determining whether any reorganization is fair  and  equitable,  the  superintendent shall  be  guided  by the legitimate economic interests of participating policyholders as delineated in this section.  (5)  (A)  When  the  mutual  life  insurer's  participating   business comprised  of  its  participating policies and contracts in force on the effective  date  of  the  reorganization  shall  be  operated   by   the reorganized  insurer  as  a  closed  block  of participating business in accordance with paragraphs one and two of this subsection, then it shall be so operated for the exclusive benefit of such policies and  contracts included  therein,  for policyholder dividend purposes only; (B) to such closed block shall be allocated assets of the mutual life insurer in  an amount  which  together  with  anticipated revenue from such business is reasonably expected to be sufficient to support such business including, but not limited to, provisions  for  payment  of  claims,  expenses  and taxes,  and  to  provide  for  continuation  of current payable dividend scales, if the experience  underlying  such  scales  continues  and  for appropriate  adjustments  in  such scales if the experience changes; (C) the amount of such assets shall be determined as of the  statement  date and  brought  forward  to the effective date of the reorganization using methods which would have been used had the closed block been established on the statement date with appropriate recognition of  new  issues;  and (D)  none  of  the assets, including the revenue therefrom, allocated in accordance with subparagraph (B) of this paragraph shall revert  to  the benefit of the stockholders of the reorganized insurer.  (6)  If  any  amount  of  the policyholders' consideration for certain classes of policies or contracts is to be paid in the form of  increased annual  dividends  to the policyholders in those classes, that amount is to be added to  the  assets  previously  allocated  in  accordance  with paragraph  three  or  five  of  this subsection and is to be paid out to those classes in a fair and equitable manner.  (e) Adoption of plan of reorganization.  (1)  A  mutual  life  insurer seeking   to   reorganize   under  this  section  shall,  by  action  of three-fourths of its entire board of directors, adopt a plan  consistent with  the  provisions  of  this  section  and  that it finds is fair and equitable to the policyholders. The board of  directors  of  the  mutual life  insurer,  in  selecting one of the methods described in subsection (d) of this section, shall set forth the basis for their selection.  The plan  of  reorganization  shall  set  forth  (A)  a demonstration of the purpose  for  the  proposed  reorganization;  (B)  the   form   of   the reorganization;  (C) the proposed charter of the reorganized insurer set out in accordance with section one thousand  two  hundred  one  of  this  chapter  and its proposed by-laws which shall provide for the removal of the word "mutual" from the name of the company; (D) the manner and basis by which the reorganization shall take place; (E) the  consideration  to be  given  to  the  policyholders  in  exchange for their policyholders' membership interest or  the  manner  of  converting  the  policyholders' membership  interest  into  securities  or  other consideration; (F) the method of allocating the  consideration  among  policyholders;  (G)  the method  of operation of the mutual life insurer's participating business comprised of its participating policies and contracts in  force  on  the effective  date  of  the reorganization; and (H) a plan of operation for the reorganized insurer including actuarial projections for  a  ten-year period  and a statement indicating its intentions with regard to issuing any nonparticipating business. If the reorganized  insurer  proposes  to continue  to  issue for delivery in this state participating policies or contracts, the plan of reorganization shall so specify. In  such  event, upon  the  superintendent's  approval  of  the  plan  of  reorganization pursuant to this section, the superintendent shall, in  accordance  with section  four  thousand  two hundred thirty-one of this chapter, issue a revocable permit to the reorganized  insurer  authorizing  it  to  issue participating  policies  and  contracts  in  this  state.  The  plan  of reorganization may contain any other conditions and provisions which the board of directors of the mutual life  insurer  may  deem  necessary  or advisable in connection with the proposed reorganization.  (2)  The  consideration to be given in exchange for the policyholders' membership interest or into which such  membership  interest  is  to  be converted  may consist of cash, securities of the reorganized insurer or securities of another institution  or  institutions,  a  certificate  of contribution,  additional  life insurance or annuity benefits, increased dividends or other consideration or any combination  of  such  forms  of consideration. The consideration, if any, given to any class or category of  policyholder  need not be the same as the consideration given to any other class or category of policyholder. The certificate of contribution referred to above shall be repayable  in  five  years  and  bear  annual interest  at  the published monthly average, as defined in section three thousand two hundred six of this chapter, for the calendar month  ending two months before the effective date of reorganization.  (3)  The  policyholders who shall be entitled to notice of and to vote upon the proposal to approve the plan of reorganization and to notice of the public hearing required by this section shall be  the  policyholders whose  policies or contracts are in force on the date of adoption of the plan of reorganization. Each such policyholder whose policy has been  in force  on  such  date  shall  be  entitled to the consideration, if any, provided for such policyholder in the plan based on such  policyholder's membership  interest determined pursuant to this section but only to the extent that such policyholder's membership interest arose from  policies or contracts that shall be in force on the date of adoption of the plan.  (4)  Upon  adoption  of  the  plan of reorganization, it shall be duly executed by the chairman of the board, the president or a vice president and attested by the secretary or an assistant secretary  of  the  mutual life  insurer under such insurer's corporate seal and shall be submitted to the superintendent with a copy of the resolutions adopting such  plan and  finding  that  it  is  fair  and  equitable  to  the policyholders, accompanied by a certificate of adoption of such resolutions  subscribed by such officers and affirmed by them as true under penalties of perjury and under the seal of the mutual life insurer.  (f)  Amendment  or withdrawal of plan. The mutual life insurer may, by action of a majority of the entire  board  of  directors,  at  any  time before  the plan of reorganization becomes effective as provided by this  section (1) amend the plan of reorganization; or (2) withdraw  the  plan of reorganization. On adoption of an amendment it shall be duly executed by  the  chairman  of  the  board, the president or a vice president and attested  by  the secretary or an assistant secretary of the mutual life insurer under such insurer's corporate seal and shall  be  submitted  to the  superintendent  with  a  copy  of  the  resolutions  adopting  such amendments subscribed by such officers and  affirmed  by  them  as  true under  penalties  of  perjury  and  under  the  seal  of the mutual life insurer. In case of an amendment, all references in this section to  the plan  of reorganization shall be deemed to refer to the plan as amended. No amendment made after any public hearing required by this  section  or after  approval  by  the policyholders as provided in this section shall change the plan in a  manner  which  the  superintendent  determines  is materially  disadvantageous to any of the policyholders unless a further public hearing is held on the plan as amended if the amendment  is  made after  the  public  hearing,  or  the  plan  as amended is submitted for reconsideration by the policyholders if the amendment is made after  the plan  has  been  approved by the policyholders, under the conditions and procedures determined by the  superintendent  in  accordance  with  this section.  (g)  Additional  information.  Upon  submission  to him of the plan of reorganization, the superintendent may request any additional  documents or  information  and  may  examine the mutual life insurer or any of its affiliates, to the extent he may determine to be necessary to enable him to make the findings required by this section for the approval by him of the plan of reorganization.  If  the  reorganized  insurer  proposes  to continue  to  issue for delivery in this state participating policies or contracts, the superintendent  may  also  request  such  information  or agreements  relative  thereto as he may require pursuant to section four thousand two hundred thirty-one of this chapter.  (h) Consultants and certifications. (1) The superintendent may appoint one  or  more  qualified  disinterested  persons  or   institutions   as consultants  to advise him on any matters related to the reorganization. The appointment of a consultant shall be in writing and shall set  forth the  duties  and  responsibilities  of  the  consultant.  Copies of such appointment shall be given to the consultant  and  concurrently  to  the mutual life insurer.  (2)  If  the plan of reorganization satisfies the conditions set forth in paragraph  one  or  two  of  subsection  (d)  of  this  section,  the superintendent  shall  appoint  one  or more qualified and disinterested actuaries  for  the  purpose  specified  in  paragraph  three  of   this subsection.  Such  actuary  shall be a member of the American Academy of Actuaries, and shall be knowledgeable and experienced as to the  matters to be certified.  (3)  Such  actuary shall certify in writing as to (A) in the case of a plan of reorganization pursuant to paragraph two of  subsection  (d)  of this section, the amount of the mutual insurer's assets accumulated from the  operations  of participating policies and contracts in force on the effective date of the reorganization and (B) in the case of  a  plan  of reorganization  pursuant  to  paragraphs one or two of subsection (d) of this section, the reasonableness and sufficiency of the asset allocation referred to in subparagraph (B) of paragraph five of subsection  (d)  of this  section.  Such  certification shall be in form satisfactory to the superintendent  and  shall  be  made  in  accordance  with  professional standards  and  practices generally accepted by the actuarial profession and such other factors as such  actuary  in  his  professional  judgment believes  are  reasonable and appropriate at the time such certification is made. Any such certification shall be accompanied by a memorandum  of  the  actuary, in form satisfactory to the superintendent, describing the calculations made in support of such certification and  the  assumptions used in such calculations.  (4)  The  consultant  and  the  actuary may request of the mutual life insurer access to its books and records and the furnishing by it of  any other  information in its possession, to the extent it may reasonably be deemed necessary to make the valuations and certifications  contemplated by  this  subsection,  or  to  advise  the superintendent on any matters related to the reorganization. The  consultant  and  the  actuary  shall report  to  the  superintendent  any  instance  in which the mutual life insurer  fails  to  provide  any  information  requested  by  them.  The consultant  and  the  actuary  shall  not,  under  judicial  process  or otherwise, be obligated or permitted to divulge to any  one  except  the superintendent any information not otherwise publicly available which is so  obtained  by  them.  The  consultant  and  the actuary shall receive reasonable compensation and shall be reimbursed for reasonable  expenses incurred in performing their duties.  (5)  The report of the consultant and the certification of the actuary shall be made  to  the  superintendent.  In  making  the  determinations contemplated  by  this section, the superintendent shall not be bound by any findings, conclusions, certifications or recommendations made by the consultant  or  the   actuary.   All   information   obtained   by   the superintendent  pursuant  to  this section, including without limitation information obtained through examinations by  him,  the  report  of  the consultant,  the  certification  of  the  actuary, the memorandum of the actuary and other information secured by the consultant or  the  actuary and turned over to the superintendent, are hereby specifically exempted, as   contemplated  by  paragraph  (a)  of  subdivision  two  of  section eighty-seven  of  the  public  officers  law,  from  disclosure  by  the superintendent  under  said  section  eighty-seven  of  such  law.  Such exemption  shall  not  preclude  or  exempt  the   superintendent   from disclosure  of  such  information  pursuant  to  judicial  process under provisions of law other than said section  eighty-seven  of  the  public officers  law,  nor  prohibit any disclosure which in the opinion of the superintendent, and after an opportunity for the insurer  to  be  heard, the  superintendent  deems  should be made public for the benefit of the insurer, its policyholders or the public. If the department  intends  to make   any   report   or  certification  public,  then  such  report  or certification shall be made available to the company  at  least  fifteen days prior to such public disclosure.  (6)  Nothing  contained  in this section shall be construed to exclude any person or employee or member of an institution from the category  of "disinterested  person" solely because such individual is a policyholder of the insurer or that such person or institution is to be  one  of  the underwriters  of  any  shares  to  be  sold  pursuant  to  the  plan  of reorganization.  (i) Public hearing. The superintendent shall  hold  a  public  hearing upon   the  fairness  of  the  terms  and  conditions  of  the  plan  of reorganization, the reasons and purposes for the mutual life insurer  to demutualize,  and  whether  the reorganization is in the interest of the mutual life insurer and its policyholders, and not  detrimental  to  the public.  Notice stating the time, place and purpose of the hearing shall be mailed by the mutual life insurer to each  policyholder  entitled  to notice  of  the hearing in accordance with paragraph three of subsection (e) of this section, at his last known address as shown on  the  records of  the mutual life insurer; such notice shall be mailed at least thirty days before the date of the hearing. Such notice shall  be  preceded  or accompanied  by  a  true  and complete copy of the plan, or by a summary  thereof approved by  the  superintendent,  and  such  other  explanatory information as the superintendent shall approve or require. In addition, the mutual life insurer shall give notice of the time, place and purpose of   the   hearing   by  publication  in  three  newspapers  of  general circulation, one in the county in which the insurer  has  its  principal office  and two in other cities within or without this state approved by the superintendent. Such newspaper publications shall be made  not  less than fifteen days nor more than sixty days before the hearing, and shall be in a form approved by the superintendent.  (j) Approval of plan by superintendent. The superintendent shall after the  public  hearing  required by subsection (i) of this section approve the plan of reorganization if he finds that the proposed reorganization, in whole and in part,  does  not  violate  this  chapter,  is  fair  and equitable  to the policyholders and is not detrimental to the public and that, after giving effect to the reorganization, the reorganized insurer will have an amount of capital and surplus the superintendent  deems  to be  reasonably necessary for its future solvency. If approval is denied, the denial shall be in writing setting forth a statement of the  reasons therefor  and  the mutual life insurer shall have the right to a hearing before the superintendent within thirty days of the date of such denial. The superintendent shall not disapprove of a plan of reorganization  for the  reason  that  the  mutual  life insurer selected one of the methods provided for in subsection (d) of this section rather than another.  The superintendent  shall  approve  or  disapprove the plan in writing on or before sixty days after the conclusion of the public hearing required by subsection (i) of this section.  (k) Approval by policyholders. (1) A proposal to approve the  plan  of reorganization  shall  be submitted to policyholders. Notice stating the date, time and place for voting on such proposal shall be mailed by  the mutual  life  insurer  to each policyholder entitled to notice of and to vote on the proposal in accordance with paragraph  three  of  subsection (e)  of  this section, at his last known address as shown on the records of the mutual life insurer; such notice shall be mailed at least  thirty days  before  the  date  of the action. Such notice may be combined with notice of the public hearing required by this section. Such notice shall be preceded or accompanied by a true and complete copy of the  plan,  or by  a  summary  thereof  approved  by the superintendent, and such other explanatory information as the superintendent shall approve or require.  (2) Each policyholder entitled  to  vote  on  the  proposal  shall  be entitled  to  cast one vote, unless otherwise provided in the charter or by-laws of the mutual life insurer, on the proposal, either in person or by mail or by proxy,  irrespective  of  the  number  or  amount  of  the policies or contracts he holds. Any proxy shall be revocable at any time except  to the extent that, at the time of exercise, the power conferred thereby has been exercised. All votes shall be by written ballot cast in person or by mail by policyholders entitled to vote or by  proxy  agents duly  appointed  by  policyholders  entitled  to vote. The voting on the proposal shall be held at the home office of the  mutual  life  insurer. The polls shall be opened at ten o'clock in the forenoon and remain open until four o'clock in the afternoon of the day fixed for such voting, at which  time  they  shall  be closed. The proposal to approve the plan of reorganization may be adopted by the affirmative vote of  two-thirds  of all votes cast by policyholders entitled to vote.  (3)  The  superintendent  shall have power to supervise and direct and prescribe rules governing the procedure for the conduct of the voting on the proposal to such extent, consistent  with  the  provisions  of  this section,  as he deems necessary to insure a fair and accurate vote. Such powers shall include, but not be limited  to,  power  to  supervise  and  regulate  (A)  the  determination of policyholders entitled to notice of and to vote on the proposal; (B) the giving of notice of  the  proposal; (C)  the  receipt, custody, safeguarding, verification and tabulation of proxy forms and ballots; and (D) the resolution of disputes.  (4)  The superintendent shall appoint as inspectors an adequate number of personnel of the department of financial services or other  competent and   disinterested  persons  and  may  appoint,  if  necessary,  expert accountants and other assistants and may authorize  the  procurement  of stationery  and  supplies  necessary  for  conducting  the voting on the proposal and canvassing the votes. The inspectors shall  have  power  to determine  all  questions concerning the verification of the ballots and proxies, the ascertainment of the validity thereof,  the  qualifications of  the  voters  and  the  canvass of the vote, and with respect thereto shall act under such rules as shall be prescribed by the superintendent. Any disagreement among the inspectors shall be reported to and shall  be resolved  by the superintendent. Any determinations by the inspectors or the superintendent shall be subject to judicial review.  (5) Representatives of the policyholders, including representatives of policyholders favoring or opposing the approval of the  plan,  shall  be entitled  to  be present during the casting, verification and canvassing of the proxies and ballots and shall be entitled to examine  and  object to  any  such  proxy or ballot. The superintendent or the inspectors may limit the number of persons representing any interested person or  group and  may  specify  fair and reasonable procedures for the examination of and presentation of objections to the proxies  and  ballots.  Costs  and expenses incurred in providing such representation shall not be a charge upon  or  paid  from  the funds of the mutual life insurer or the person responsible for the costs and expenses of the reorganization.  (6) Neither the mutual life insurer nor any officer, agent or employee thereof shall knowingly omit, from any list of policyholders entitled to notice of and to vote on the proposal,  the  name  of  any  policyholder required  to  be included therein, or shall, in connection with any such list, knowingly omit to give the name and address, as last shown on  the records of the mutual life insurer, of any policyholder. No person shall conceal  or  withhold  or  aid or abet any other person in concealing or withholding any proxy or ballot from the authorized  custodians  thereof or  from the inspectors. No policyholder shall sell or offer to sell any vote or proxy for any sum of money or anything of value other  than  the consideration  provided  for  in the plan or reorganization if such plan becomes effective.  (7)  All  ballots  and  proxies  received  by  the  inspectors   shall immediately  upon  the  completion  of  the  canvass be placed in sealed packages and shall be preserved by the inspectors for a period  of  four years,  subject  to  the  order  of any court having jurisdiction of any proceedings relating thereto, and then  shall  be  turned  over  to  the mutual  life  insurer,  or the reorganized insurer if the reorganization has become effective.  (8) The conduct of the voting on the proposal shall at all  times,  on petition  of the superintendent or of any person or persons whose rights may be affected, be subject  to  the  supervision  and  control  of  the supreme  court in the judicial district in which the mutual life insurer has its home office.  (9) The inclusion by the mutual life insurer of the name of any person in any list of policyholders required  by  this  section  shall  not  be construed  as an admission by such insurer of the validity of any policy or contract and no such list shall be competent  evidence  against  such insurer  in  any  action  or  proceeding  in  which  the question of the validity of any policy or contract or of any claim under it is involved.  (10) The provisions of section four thousand two hundred ten  of  this chapter  shall not apply to the action by policyholders pursuant to this section.  (11)  Upon  the  conclusion of the vote, the mutual life insurer shall submit to the superintendent  (A)  a  certified  copy  of  the  plan  of reorganization,  subscribed  by the chairman of the board, the president or any vice president and attested by  the  secretary  or  an  assistant secretary  of  the mutual life insurer; (B) a certificate, subscribed by the chairman of the board, the  president  or  any  vice  president  and attested  by  the  secretary  or  assistant secretary of the mutual life insurer, or subscribed by the person or persons, if any,  designated  by the  superintendent  to  supervise  the giving of notice of the date for action on the proposal, to the effect that  such  notice  was  given  in accordance  with  this  section  to  all  policyholders entitled to such notice; and (C) a  certificate  subscribed  by  the  inspectors  of  the results  of  the vote, as evidenced by valid ballots received before the polls were closed. Each such certificate shall be affirmed as true under the penalties of perjury by the person or persons subscribing  the  same and,  in the case of a certificate signed by officers of the mutual life insurer, shall be affirmed under the corporate seal of the  mutual  life insurer.  (l)  Effective  date  of  reorganization.  When the superintendent has given his  approval  of  the  plan  of  reorganization  as  provided  in subsection (j) of this section and certification of approval of the plan has  been  made  to  the superintendent as provided in subsection (k) of this  section,  a  copy  of  the  plan  of  reorganization,   with   the superintendent's approval endorsed thereon, shall be filed in the office of   the   superintendent.   A  copy  of  such  plan  certified  by  the superintendent shall also be filed by the mutual  life  insurer  in  the office  of  the  clerk  of  the county where the principal office of the mutual life insurer is located. The plan of  reorganization  shall  take effect  in  accordance  with  its  terms  on  the  date when the filings required by this subsection have been made or on  such  later  date,  if any, as may have been specified in or determined in accordance with said plan  or  pursuant  thereto.  The  superintendent shall issue an amended certificate of authority to the reorganized insurer and such license, if any, as may be required under section one thousand two hundred  four  of this  chapter for the sale of its securities as specified in its plan of reorganization.  (m) Corporate existence. Upon the reorganization of  the  mutual  life insurer  in the manner herein provided, the reorganized insurer shall be deemed a continuation of the corporate  existence  of  the  mutual  life insurer  or,  in  the  case of a merger, of the company specified in the plan of reorganization as the continuing company, which  may  be  either the mutual life insurer or the domestic stock life insurer with which it is  merged.  All the rights, franchises and interests of the mutual life insurer and, in the case of a merger, of the domestic stock insurer,  in and  to  every species of property, real, personal and mixed, and things in action thereunto belonging, shall be deemed transferred to and vested in the continuing company, without  any  other  deed  or  transfer;  and simultaneously therewith such continuing company shall be deemed to have assumed  all  of  the  obligations  and  liabilities  of the mutual life insurer and, in the case of a merger, of  the  domestic  stock  insurer, other   than   obligations   and   liabilities   with   respect  to  the policyholders'  membership  interest   eliminated   by   the   plan   of reorganization.  (n)  Actions  and  proceedings. No action or proceeding pending at the time of the reorganization to which the mutual life  insurer  may  be  a  party  shall be abated or discontinued by reason of such reorganization, but the same may be prosecuted to final judgment in the same  manner  as if  the  reorganization  had not taken place, or the reorganized insurer may  be substituted in place of such mutual life insurer by order of the court in which the action or proceeding may be pending.  (o) Directors and officers. The directors and officers of  the  mutual life  insurer, unless otherwise specified in the plan of reorganization, shall serve as directors and officers of the reorganized  insurer  until new directors and officers have been duly elected and qualified pursuant to the charter and by-laws of the reorganized insurer.  (p)  Costs  and expenses. (1) The mutual life insurer shall deliver to the  superintendent  at  the  time  of  submission  of   the   plan   of reorganization  a written undertaking in form and substance satisfactory to the superintendent and signed by the mutual life insurer, and by such other persons as the superintendent may require, specifying  the  manner in  which  all  costs  and expenses incurred in any manner in connection with the plan of  reorganization  shall  be  paid  or  reimbursed.  Such undertaking  shall  provide  for  the  payment  or  reimbursement of all expenses incurred by the superintendent or the department in  connection with the plan of reorganization, other than normal operating expenses of the department.  (2)   Such  undertaking,  other  than  a  reorganization  pursuant  to paragraph one of subsection (d) of this section, shall also provide that no payment of costs and expenses by  the  mutual  life  insurer  or  the reorganized  insurer  shall, after giving effect to any reimbursement or contribution received by such insurer with  respect  thereto,  have  the effect  of  reducing  the  consideration,  other than the policyholders' preference account referred to in paragraph two  of  subsection  (d)  of this  section,  to  be paid to the policyholders pursuant to the plan of reorganization. The requirements of this paragraph may be  waived  in  a reorganization  pursuant  to paragraphs three and four of subsection (d) of this section if the superintendent  determines  that  it  is  in  the policyholders' interest to do so.  (3)  The  said  undertaking shall apply to costs and expenses incurred prior to the submission of the plan of reorganization as well  as  those incurred  thereafter  and  shall  be  binding whether or not the plan of reorganization  takes  effect.  The  consideration  to   be   given   to policyholders pursuant to the plan shall not be deemed a cost or expense of   the   reorganization   subject  to  this  subsection  nor  to  such undertaking.  (q) Notice of proposed reorganization. Notice of the pendency  of  the proposed  reorganization and of the effect thereof shall be given by the mutual life insurer in a manner satisfactory to  the  superintendent  to all  persons  to  whom  the  mutual  life  insurer  delivers policies or contracts which  are  issued  after  the  date  on  which  the  plan  of reorganization is adopted by the mutual life insurer and before the plan takes  effect or is withdrawn. Such persons shall have the right, unless the laws of their domiciliary state gives other rights, to rescind  such policies  or contracts, and to be refunded any amounts paid with respect thereto, by written notice to such insurer or its agent given within ten days of their receipt of the aforesaid notice given by such insurer.  (r) Effect of reorganization. If  the  plan  of  reorganization  takes effect, the rights of all policyholders thereafter shall be as specified in  their  policies  or  contracts,  in  the  charter of the reorganized insurer and in the plan of reorganization, except for the elimination of the right to vote, if any, and they  shall  have  no  rights  under  the charter  of  the  mutual  life  insurer.  The  reorganized insurer shall thereafter be subject to all laws, rules and regulations  applicable  to  domestic stock life insurers and shall not be subject to any laws, rules or  regulations of this state applicable to domestic mutual insurers and not to domestic stock life insurers.  (s)  Failure  to  give  notice.  If  the  mutual life insurer complies substantially and in good faith with the requirements  of  this  section with  respect to the giving of any required notice to policyholders, its failure in any case to  give  such  notice  to  any  person  or  persons entitled  thereto  shall  not  impair  the  validity  of the actions and proceedings taken under this section  or  entitle  such  person  to  any injunctive  or  other  equitable  relief  with respect thereto, but this subsection shall not impair any claim for damage such person or  persons would otherwise have due to such failure.  (t)  Limitation  of  actions; security. (1) Any action challenging the validity of or arising out of acts taken or proposed to be  taken  under this  section must be commenced within one year after a copy of the plan of reorganization, with the superintendent's approval endorsed  thereon, shall  be  filed  in the office of the superintendent or six months from the effective date of the reorganization, whichever is later, or if  the plan   of  reorganization  is  withdrawn,  within  six  months  of  such withdrawal.  (2) In any action arising out of acts taken or proposed  to  be  taken under  this  section, the mutual life insurer of the reorganized insurer shall be entitled at any stage of the proceedings before final  judgment to  petition  the  court  to  require  plaintiff  or  plaintiffs to give security for the reasonable expenses, including attorneys'  fees,  which may  be  incurred  by it in connection with such action and by any other parties defendant in connection therewith or for which the  mutual  life insurer or the reorganized insurer may become liable under this chapter, under  any  contract  or  otherwise by law, to which security the mutual life insurer or the reorganized insurer  shall  have  recourse  in  such amount  as  the court having jurisdiction of such action shall determine upon the  termination  of  such  action.  The  amount  of  security  may thereafter from time to time be increased or decreased in the discretion of  the  court  having jurisdiction of such action upon showing that the security provided has or may become inadequate or excessive.  (u) Modification or exchange of existing  policies.  Nothing  in  this section shall preclude either the mutual life insurer or the reorganized insurer, on compliance with all applicable requirements of this chapter, from  offering at any time or from time to time to any class or category of policyholders to modify their policies or contracts  or  to  exchange their  policies  or  contracts  for  other  policies or contracts in the manner set forth in the offer.  (v) Prohibitions on certain offers  to  acquire  and  acquisitions  of shares. Prior to, and for a period of five years following the date when the  distribution  of consideration to the policyholders in exchange for their membership  interests  is  completed  pursuant  to  such  plan  of reorganization,  no  person,  other  than  the reorganized insurer or an institution referred to in subsection (b) of this section that is a part of the plan of reorganization as provided by said subsection (b)  or  an institution  that  is  formed,  with the approval of the superintendent, subsequent to the effective date  of  the  reorganization  in  order  to acquire  all  of  the  common  shares  of  the  reorganized insurer in a transaction where holders of common shares of  the  reorganized  insurer receive  all of the common shares of such institution on a basis that is proportionate to the number of common shares of the reorganized  insurer held  by each such holder, shall directly or indirectly offer to acquire or acquire in any manner the beneficial ownership  of  five  percent  or more of any class of a voting security of such reorganized insurer or of  any institution which owns a majority or all of the voting securities of the   reorganized   insurer,   without   the   prior   approval  of  the superintendent. In the event of any violation of this subsection, or  of any action which, if consummated, might constitute such a violation, (1) all  voting securities of the reorganized insurer or of such institution acquired by any person in excess of the maximum amount permitted  to  be acquired  by  such person pursuant to this subsection shall be deemed to be  non-voting  securities  of  the  reorganized  insurer  or  of   such institution, as the case may be, and (2) such violation or action may be enforced  or  enjoined,  as  the  case may be, by appropriate proceeding commenced  by  the  reorganized  insurer,  such   institution   or   the superintendent,  the attorney general or any policyholder or stockholder of the  reorganized  insurer  or  such  institution  on  behalf  of  the reorganized  insurer  or  such  institution  in the supreme court in the judicial district in which the reorganized insurer has its  home  office or  in any other court having jurisdiction, and such court may issue any order,  injunctive  or  otherwise,  it  finds  necessary  to  cure  such violation   or  to  prevent  such  action.  For  the  purposes  of  this subsection,  the  term  "beneficial  ownership",  with  respect  to  any security,  means  the sole or shared power to vote, or direct the voting of, such security and/or the sole or shared power to dispose, or  direct the  disposition,  of such security; the term "voting security" includes voting securities as defined in paragraph forty-five of  subsection  (a) of  section  one  hundred  seven  of  this  chapter, any preorganization certificate  or  subscription  (including  subscription  rights   issued pursuant to a plan of reorganization), or any security convertible (with or  without  consideration)  into  any  such  security,  or carrying any warrant or right to subscribe for or purchase any such security, or  any such  warrant  or right; the term "offer" includes every offer to buy or acquire, solicitation of an offer to sell, tender offer for, or  request or  invitation  for tenders of, a security or interest in a security for value;  and  the  term  "person"  means  an  individual,  group,   firm, corporation,  partnership,  association, joint stock company, trust, any similar entity or any combination of the foregoing acting in concert.  (w) Prohibited transactions by officers, directors or  employees.  (1) Prior  to,  and  for  a period of five years following the date when the distribution of consideration to the policyholders in exchange for their membership  interests  is   completed   pursuant   to   such   plan   of reorganization,  no  officer, director or employee of the mutual insurer or of the  reorganized  insurer,  including  family  members  and  their spouses,  shall directly or indirectly offer to acquire or shall acquire in any  manner  the  beneficial  ownership  of  any  securities  of  the reorganized  insurer or of the institution referred to in subsection (b) of this section unless the acquisition is (A) made pursuant to  a  stock option  plan  approved  by  the superintendent; (B) made pursuant to the plan of reorganization; (C) made by employees,  including  their  family members  and  their spouses, from a broker or dealer registered with the Securities and Exchange Commission at the then quoted prices on the date of purchase; or (D) made  by  officers  or  directors,  including  their family  members  and their spouses, at least two years after the initial public offering from a broker or dealer registered with  the  Securities and  Exchange  Commission  at  the  then  quoted  prices  on the date of purchase.  (2) For purposes of this subsection, the term "beneficial  ownership", with respect to any security, means the sole or shared power to vote, or direct  the  voting of, such security and/or the sole or shared power to dispose, or direct the disposition, of such security.  (3) For purposes of this subsection, the term  "securities",  includes voting  securities  as  defined  in  section  one  hundred seven of this chapter, any  preorganization  certificate  or  subscription  (including subscription rights issued pursuant to a plan of reorganization), or any security  convertible  (with  or  without  consideration), into any such security, or carrying any warrant or right to subscribe for or  purchase any such security, or any such warrant or right.  (4)  For  purposes  of  this  subsection,  the  term  "family member", includes a brother,  sister,  spouse,  ancestor  or  descendant  of  the officer,   director  or  employee  of  the  mutual  insurer  or  of  the reorganized insurer.  (5) No officer, director or employee shall receive any  fee  or  other consideration,   other   than   regular   salary,   director   fees,  or consideration  as  a  policyholder  in  connection  with  any   proposed reorganization.  This  paragraph, however, shall not prohibit the mutual life insurer from compensating in cash any firm with which  one  of  its directors  is  associated  for  services rendered in connection with any proposed reorganization.  (x) Effect on department personnel. Notwithstanding subsection (a)  of section two hundred four of this chapter, the superintendent, any deputy or  other  employee  of the department shall be permitted to receive and exercise any rights received as a  policyholder  in  connection  with  a reorganization.