                                 CODE OF VIRGINIA

CONVERSION OF FRATERNAL BENEFIT SOCIETY INTO MUTUAL LIFE INSURER (§ 38.2-4115)

A. Any domestic fraternal benefit society organized or operated under this
chapter may, upon a two-thirds vote of its supreme governing body, amend its
articles of incorporation and laws if already incorporated, or, if not
incorporated, may incorporate, in a manner to transform itself into a mutual
life insurer. It may use the name by which it is already known, or another name,
as its supreme governing body shall determine. However, the proposed plan for
reorganization or reincorporation shall be submitted to and approved by the
Commission. Upon so doing, and upon procuring from the Commission a license to
do the business of insurance in this Commonwealth as a mutual life insurer, it
shall incur the obligations and enjoy the benefits of a mutual life insurer as
if originally incorporated as a mutual life insurer. Any such corporation under
its articles and bylaws as so framed or amended shall be a continuation of the
original organization, and the officers of the organization shall serve through
their respective terms as provided in the original articles and laws. However,
their successors shall be elected and serve as the laws of this Commonwealth and
the articles of incorporation or bylaws of the reorganized company provide. The
incorporation, amendment or reincorporation shall not affect existing suits,
rights or contracts. The organization, after reorganization, shall have the
power to do business of the same nature done by it before reorganization, as
well as the powers conferred in this section and contemplated by its articles of
incorporation, in order to protect and perform rights and contracts existing
before reorganization, but all new business written shall be as a mutual life
insurer.

B. All assets, other than general or expense fund assets, belonging to any
reorganized insurer, prior to reorganization or arising or accruing from benefit
certificates issued prior to the reorganization, shall be used only for the
benefit of the holders of the benefit certificates or their beneficiaries.

C. If at the time of reorganization, or at any time after reorganization, it
appears from the last preceding annual report of any such organization, filed
with the Commission, or any investigation made by the Commission, that the
present value of the contributions to be received from the holders of the
benefit certificates, together with all assets, other than general or expense
fund assets, owned by the insurer that have been accumulated from payments made
by members holding such certificates, are not equal to the present value of the
benefits promised to be paid, including all matured liabilities on any benefit
certificates, then the insurer so reorganized shall establish, provide for, and
maintain a fund, which with the present value of contributions and assets will
equal the present value of the benefits, together with all matured liabilities.
The fund shall be used for the payment of matured liabilities arising on the
benefit certificates when other assets applicable thereto are exhausted. The
fund need not be maintained unless required by conditions expressed in this
chapter.

D. Members in good standing in any society prior to reorganization shall have
the right after reorganization to transfer their insurance in the society to the
mutual life plan without further medical examination for the same or lesser
amount, and at legal reserve or level premium rates. The interest in the assets
of the society of any person so transferring, as determined by the board of
directors, trustees or corresponding body, shall be transferred to, and be a
part of, the assets of the insurer on the legal reserve or level premium plan.

E. The insurer so organized, and its officials, shall exercise all the rights
and powers and perform all the duties conferred or imposed by law upon
organizations writing the kinds of insurance written by the insurer so
organized. The organization and its officials shall exercise all the rights and
powers and have full authority to perform all the duties necessary to protect
rights and contracts existing prior to reorganization. The Commission shall
exercise the powers and discharge the duties concerning any such insurer so
reorganized that are applicable to insurers writing insurance or issuing
policies of the same class, organized or operating in this Commonwealth. The
Commission shall issue a certificate of authority to any solvent insurer so
reorganized that has fully complied with the laws of this Commonwealth to do
such insurance business in this Commonwealth.

F. Any fraternal benefit society reorganized to do mutual life insurance
business as provided in this chapter shall value its benefit certificates
according to the standard of valuation for fraternal benefit societies used in
this Commonwealth, and its legal reserve or level premium policies according to
the standard of valuation for those policies in this Commonwealth. The various
classes of insurance shall be governed by the law applicable to each class of
insurance.

G. The expense of operation and maintenance of a reorganized insurer shall be
apportioned between those holding benefit certificates issued before the
reorganization and those holding policies issued after the reorganization as may
be determined by the board of directors, trustees or corresponding body.

HISTORY: Code 1950, §§ 38-323 through 38-329, 38.1-632 through 38.1-638; 1952,
c. 317, §§ 38.1-638.53 through 38.1-638.59; 1968, c. 654; 1986, c. 562.