Section 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.