EXEMPTION FROM CAPITAL AND SURPLUS REQUIREMENTS

(a) An association is exempt from the capital and surplus requirements of Section 887.502(2) if the association: (1) possesses capital in an amount equal to at least $100,000 and unencumbered surplus in an amount equal to at least $100,000; and (2) converted to a stock legal reserve life insurance company before September 1, 1999. (b) An association that is exempt under Subsection (a) and that converts on or after September 1, 1989, shall immediately increase its capital and surplus to amounts that satisfy Section 887.502(2) on: (1) a change of control of at least 50 percent of the voting securities of the converted company; or (2) if the converted company or the holding company that controls the converted company, if any, is not controlled by voting securities, a change of at least 50 percent of the ownership of the converted company or its holding company. (c) For purposes of Subsection (b), a transfer of ownership because of death, regardless of whether the decedent died testate or intestate, is not considered a change of control of a converted company or its holding company if ownership is transferred only to one or more individuals, each of whom would have been an heir of the decedent had the decedent died intestate.