§ 7308. Conversion of domestic reciprocal insurers into stock
property/casualty insurance companies. (a) Any domestic reciprocal
insurer doing business under the provisions of this article may, by the
affirmative vote of its subscribers holding two-thirds of its operating
reserve accumulations at the date of the meeting at which the proposal
to convert is voted upon, be converted into and licensed as a stock
property/casualty insurance company, in the manner prescribed by this
section and subject to any other requirements of law. The advisory
committee of any such reciprocal insurer proposing so to convert shall
cause the attorney-in-fact of such reciprocal insurer to give to each
subscriber of record at the close of business on the last day of the
quarter year next preceding the issue of such notice not less than
thirty days notice by mail of the meeting at which the proposed
conversion is to be voted upon and of a hearing of the subscribers
before the superintendent. At such hearing or any adjournment thereof,
the superintendent shall pass upon the fairness of the terms and
conditions of the proposed conversion and of the issuance of shares of
the corporation and he shall approve or disapprove the same. The
provisions of this chapter relative to a similar domestic insurance
company organized to do the same kinds of insurance business shall apply
to the organization and licensing of such corporation.

(b) If converted into a stock insurance corporation, subscriptions to
the capital shares may be made, in whole or in part, by the subscribers
of the reciprocal insurer, and their subscriptions may be paid in to the
extent of their operating reserve accumulations by a transfer thereof or
any portion thereof to such corporation. The contingent surplus of the
reciprocal insurer accumulated pursuant to subsection (a) of section six
thousand one hundred five of this chapter shall be included in the
capital and surplus of the corporation and shares representing the same
shall be issued to existing subscribers, at the rate determined as
provided in the next sentence for each dollar of par value of the shares
of such new corporation, in proportion to their shares in the aggregate
operating reserves at the time when the proposal to convert is adopted.
The rate of payment for each dollar of par value of the stock of such
new corporation shall be determined by agreement between the advisory
committee of the reciprocal insurer and the board of directors of the
stock insurance company. Every such subscriber shall be entitled in the
subscription to the capital shares of such corporation to a priority in
subscribing thereto for thirty days after the opening of the books of
subscription in proportion to his interest in such reciprocal insurer at
such date but at the rate of payment fixed by the board of directors. At
the expiration of such thirty days the board of directors may sell and
dispose of the capital shares which have not been taken or subscribed,
as aforesaid, but at not less than the same rate of payment.

(c) If after examination, the superintendent finds that the
proceedings for the conversion to a corporation of any such insurer have
been regularly taken in conformity with law, and that the corporation
meets with the requirements of this chapter, he may issue a license to
such insurer to do business under the provisions of this chapter.
Thereupon, the remaining assets shall be forthwith transferred to it,
and the predecessor reciprocal insurer or insurers shall cease to have
authority to do business as such and shall be deemed extinguished. Every
such new corporation formed by conversion shall assume and succeed to
all of the obligations and liabilities of the converting reciprocal
insurer and be held liable to pay and discharge all such debts and
liabilities in the same manner as if they had been incurred or
contracted by the corporation, but the subscribers of the reciprocal
insurer shall continue subject to all the liabilities, claims and
demands which shall then exist, or which may thereafter accrue against
them, or any of them, by reason of any obligations incurred by them or
in their behalf as such subscribers before the date of conversion. Upon
the conversion of any reciprocal insurer, dissenting subscribers,
meaning thereby subscribers who shall not within thirty days after the
opening of the books of subscription have subscribed to shares of the
corporation and applied their accumulated operating reserves to payment
therefor as provided in subsection (b) hereof, shall be entitled to the
conditional withdrawal of their accumulated operating reserves on
deposit with the reciprocal insurer as of the date of conversion but a
sufficient amount thereof shall be retained by the corporation as a
deposit until all of the obligations incurred on its behalf have been
extinguished. When all of such obligations have been paid, discharged or
terminated, and the superintendent after an examination shall have so
certified, the said subscribers' deposits or the balances thereof
remaining to their credit shall be returned and released, whereupon the
powers of the attorney-in-fact relating thereto shall cease and
terminate.