KRS 304.24-605: Application for approval of plan of conversion -- Actuarial opinion.

(1) The converting mutual shall file with the commissioner an application for approval

of the plan of conversion.

(2) The application shall consist of the following:

(a) The plan of conversion;

(b) A certificate of the secretary of the converting mutual regar ding the adoption

of the plan of conversion;

(c) A statement of the reasons for the proposed conversion and why it is in the

best interests of the converting mutual and its eligible members, including an

analysis of the risks and benefits to the converting mutual and its members

and a comparison of the risks and benefits of reasonable alternatives to a

conversion;

(d) A five (5) year business plan of the former mutual, including five (5) year

financial projections, detailed descriptive narrative, and all re levant

assumptions;

(e) Any plans or proposals that the former mutual or any affiliate company may

have to raise additional capital through the issuance of stock or otherwise; and

any other plans that the former mutual or any affiliate company may have to

sell or otherwise issue stock to any person, including the adoption of any

employee compensation or benefit plan under which stock may be issued;

(f) Any plans or proposals that the former mutual or any affiliate company may

have to liquidate or dissolve a ny company, to sell any material assets, or to

merge or consolidate with any person, or to make any other material change in

investment policy, business, corporate structure, or management;

(g) Any plans or arrangement for a delayed distribution of conside ration to

eligible members, or restrictions on sale or transfer of stock or other

securities;

(h) A plan of operation for any closed block established for the preservation of the

reasonable dividend expectations of eligible members and other policyholders

with policies that provide for the distribution of policy dividends;

(i) Copies of the current articles of incorporation and bylaws of the converting

mutual;

(j) Copies of any proposed articles of incorporation and bylaws of the former

mutual;

(k) A list o f individuals who are or have been selected to become directors or

officers of the former mutual and of any affiliate, or the individuals who

perform or will perform duties customarily performed by a director or officer,

including the following information:

1. The individual's principal occupation;

2. All offices and positions the individual has held in the preceding five (5)

years;

3. Any criminal convictions of the individual;

4. Information concerning any personal bankruptcy of the individual or the

individual's spouse during the previous seven (7) years;

5. Information concerning the supervision, rehabilitation, or liquidation of

any insurer or the bankruptcy of any corporation or other entity of which

the individual was an officer or director;

6. Information concerning any state or federal securities law allegations

against the individual that resulted in a determination that the individual

violated the state or federal securitie s law, a plea of nolo contendere, or

a consent decree;

7. Information concerning the revocation of any state or federal license

issued to the individual; and

8. Information as to whether the individual was refused a fidelity or other

bond during the previous ten (10) years.

(l) A fairness opinion addressed to the board of directors of the converting

mutual from a qualified independent financial advisor, that the provision of

stock, cash, policy benefits, or other forms of consideration upon

extinguishing the converting mutual's membership interests under the plan of

conversion, is fair and equitable to the eligible members, as a group, from a

financial point of view;

(m) An actuarial opinion and supporting memorandum;

(n) A description of the plans of the fo rmer mutual or its affiliates to assure that

an active trading market for any stock or other securities distributed to eligible

members will develop within a reasonable amount of time after the effective

date of the plan of conversion and that eligible mem bers who receive stock or

other securities will be able to sell their stock or other securities, subject to

any delayed distribution or transfer restrictions, at reasonable cost and effort.

These plans may consist of:

1. Appointing a registrar and transfer agent for the stock or other securities;

2. Making filings, applications, or registrations for the stock or other

securities with the Federal Securities and Exchange Commission and

with appropriate state securities regulators;

3. Listing the stock or othe r securities on a national or other securities

exchange;

4. Facilitating coverage of the stock or other securities by research analysts

and securing the commitment of at least one (1) market maker to make a

market in the stock or other securities;

5. Conducting an underwritten public offering of the same class of stock or

other securities, promptly following the effective date of the plan of

conversion, in order to facilitate the development of a public market;

and

6. Making available a procedure for eligib le members holding small

numbers or amounts of stock or other securities to sell their stock or

other securities to the former mutual or an affiliate at market value

without the payment of brokerage commissions or similar fees, or to sell

their stock or ot her securities in the market through a broker with

discounted brokerage commissions or fees;

(o) Any additional information, documents, or materials that the converting

mutual deems necessary or reasonable; and

(p) Any other additional information, documen ts, or materials that the

commissioner may request in writing.

(3) (a) The actuarial opinion shall address whether:

1. The methodology or formulas used to determine the total aggregate

consideration to be distributed to eligible members is reasonable and

appropriate;

2. The methodology or formulas used to allocate consideration among the

eligible members is reasonable and appropriate;

3. The financial condition of the former mutual will not be adversely

diminished; and

4. If a closed block is used for the p reservation of the reasonable dividend

expectations of eligible members and other policyholders with policies

that provide for the distribution of the policy dividends, the plan of

operation, and the sufficiency of the assets allocated to the closed block,

is reasonable.

(b) The actuarial opinion shall be provided by a qualified and independent actuary

who is a member of the American Academy of Actuaries. The opinion shall

be given in accordance with professional standards and practices generally

accepted b y the actuarial profession and those other factors as the actuary

believes are reasonable and appropriate in the exercise of professional

judgment at the time the opinion is given.

(c) The opinion shall be supported by a memorandum of the actuary, describi ng

the calculations made and the assumptions used in the calculations.