1. Anatomy of a Demutualization Monday, November 15, 2010 R. Dale Hall, FSA, CERA, MAAA, CFA Vice President & Chief Actuary, Life/Health Operations COUNTRY Financial

2. Backdrop to the story… Geographic expansion Alliance partnership with Mutual Service Insurance companies, circa 2002 Transition of Property/Casualty writings to COUNTRY Mutual Decision point for Mutual Service Life Insurance Company

3. Structures and History Stock / Mutual / Fraternal –Sponsored Demutualization –Full Demutualization –Conversion to Mutual Holding Company structure Activity in 1990’s –Large mutuals desired a better ability to raise capital –Moved forward: Prudential, Metropolitan Life, MoNY –Stayed the same: NML, Mass Mutual, NY Life, Pacific Life

4. Sponsored Demutualization of MSL by CLIC Minnesota Code 60A.075 (now 66A.41) –Plan of Conversion –Notice to Members –Voting and Proxies –Articles of Incorporation –Basis for determining distributable net worth –Independent evaluation of net worth –Independent actuarial opinion on fairness

5. Plan of Conversion Date of Record to establish eligibility of members Description of how total consideration to be paid Protection of reasonable future dividend expectations

6. Key Actuarial Items (Page 1) Determining purchase price to determine total distributable amount –Actuarial Appraisal process –Comparable recent transactions Purchase price (~$45M) established

7. Key Actuarial Items (Page 2) Determining equitable process to distribute –Review of historical earnings to get to current surplus –Fixed and Variable components of compensation –Variable compensation based on line of business age of policy (or eras policy survived) size of policy

8. Key Actuarial Items (Page 3) How to distribute the amounts to members –Cash? –Addition to current account values?

9. Key Actuarial Items (Page 4) Dividend Protection –Closed Block? –Dividend Protection Mechanism Work with Insurance Commissioner to ensure appropriate methods used Annual review

11. Presentation Public Hearing, November 2004 –Company and Independent Evaluation testimony –Policyholder testimony Approval in early 2005

12. Final Formal Steps Member approval in 2005 MSLIC becomes a stock company, wholly owned by COUNTRY Life Insurance Company All done??

13. Next Steps Not done….. desire Merger of MSLIC into CLIC Section 60A.16 of Minnesota Law Create Plan of Merger Residual issues with other states MSLIC merged into CLIC, November 2007