                                 CODE OF VIRGINIA

CONTENTS OF PLAN OF MHC CONVERSION (§ 38.2-1005.1:4)

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&#8217;s
   existing policies.

B. Provide that:

   1. All policies of the converted company in force on the effective date of the
   conversion shall continue in force under the terms of those policies, except
   that all voting and other membership rights of the policyholders provided for
   under the policies or under the laws of this Commonwealth and any provisions
   for contingent liability of members shall be extinguished on the effective
   date of the plan of MHC conversion.

   2. The holders of participating policies in force on the date of conversion
   shall continue to have the right to receive dividends as provided in such
   policies, if any. However, except in the case of a mutual company&#8217;s life
   insurance policies, guaranteed renewable accident and sickness insurance
   policies, and non-cancelable accident and sickness insurance policies, if any,
   a plan may provide that the converted stock company will issue the insured a
   nonparticipating policy as a substitute for the participating policy on the
   renewal date of the participating policy next following the date the plan
   becomes effective.

   3. If a mutual life insurance company has participating life insurance
   policies in force on the effective date of the plan of conversion, the
   converted company will maintain such participating life policies as a closed
   block of business for dividend purposes, except that any or all classes of
   group participating policies may be excluded from the closed block. The plan
   shall provide for the establishment of one or more segregated accounts in
   connection with the closed block of business and shall allocate to such
   segregated accounts sufficient assets of the mutual company so that the assets
   so allocated, together with the revenue for the closed block of business, are
   sufficient to support the closed block including, but not limited to, the
   payment of claims, expenses, taxes and any dividends that are provided for
   under the terms of the participating policies with appropriate adjustments in
   the dividends for experience changes. The plan shall be accompanied by an
   opinion of a qualified actuary or appointed actuary who meets the standards
   provided in this title or the Commission&#8217;s regulations for the
   submission of actuarial opinions as to the adequacy of reserves or assets. The
   actuarial opinion shall relate to the adequacy of the assets allocated to the
   segregated accounts of the closed block and shall be based on methods of
   analysis deemed appropriate for such purposes by the Actuarial Standards
   Board. The amount of assets allocated to the segregated accounts of the closed
   block shall be based upon the mutual company&#8217;s most recent annual
   statement updated to the effective date of the conversion. After the effective
   date of the conversion, the converted company shall keep a separate accounting
   for the closed block and shall make and include in each annual statement to be
   filed with the Commission a separate statement showing gains, losses and
   expenses properly attributable to the closed block. With the
   Commission&#8217;s prior approval, assets allocated to the closed block of
   business that are in excess of the amount of assets necessary to support the
   policies then remaining in the closed block shall revert to the benefit of the
   converted company. Notwithstanding the provisions of this subdivision, the
   Commission may waive the requirement for the establishment of a closed block
   of participating policies when it deems a waiver to be in the best interests
   of the participating policyholders of the mutual company.

C. Include the requirements for granting membership interest to persons who
become policyholders of the converted company subsequent to the effective date
of the conversion.

D. Include information sufficient to demonstrate that the financial condition of
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 the
converted company or an intermediate holding company to the public or to other
persons or entities who are not direct or indirect subsidiaries of the mutual
holding company.

F. Include the identity of each of the proposed directors and officers of the
mutual 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 for
inclusion in the plan of MHC conversion.

HISTORY: 2001, c. 726.