KRS 304.24-110: Formation of mutual -- Bond.

(1) Before soliciting any applications for insurance required under KRS 304.24 -100 as

qualification for the original certificate of authority, the incorporators of the

proposed insurer shall file with the commissioner a corporate surety bond in the

penal sum of one hundred thousand dollars ($100,000), in favor of the state and for

the use and benefit of the state and of applicant members and creditors of the

corporation. The bond shall be conditioned as follows:

(a) For the prompt return to applicant members of all premiums collected in

advance;

(b) For payment of all indebtedness of the corporation;

(c) For payment of costs incurred by the state in event of any legal proceedings

for liquidation or dissolution of the corporation;

all in the event the corporatio n fails to complete its organization and secure a

certificate of authority within one (1) year after the date of its certificate of

incorporation; and

(d) That it is not subject to cancellation unless thirty (30) days' advance notice in

writing of cancellation is given both the incorporators and the commissioner.

(2) In lieu of such bond, the incorporators may deposit with the commissioner one

hundred thousand dollars ($100,000) in cash or United States government bonds

negotiable and payable to the bearer, with a market value of not less than one

hundred thousand dollars ($100,000), to be held in trust upon the same conditions

as required for the bond.

(3) Any such bond filed or deposit or remaining portion thereof held under this section

shall be released and discharged upon settlement and termination of all liabilities

against it.

(4) In addition to the bond the proposed insurer shall file with the commissioner copies

of any proposed form or policy to be offered and schedule of premium rates

therefor, copies of all advertising and sales literature proposed to be used in such

solicitation, and such other information relative to the solicitation of such insurance

or procuring of such funds as the commissioner may reasonably require, all of

which must comply with the law.