Order Approving the Reorganization of Vermont Mutual Insurance Co. into a Mutual Insurance Holding Company

STATE OF VERMONT
DEPARTMENT OF FINANCIAL REGULATION
IN RE: VERMONT MUTUAL INSURANCE
COMPANY PLAN OF REORGANIZATION
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Docket No. 26-015-1
ORDER APPROVING THE REORGANIZATION OF VERMONT MUTUAL INSURANCE COMPANY INTO A MUTUAL INSURANCE HOLDING COMPANY PURSUANT TO 8 V.S.A. §3441 WHEREAS, Vermont Mutual Insurance Company is a Vermont-domiciled mutual insurance company; WHEREAS, 8 V.S.A. §3441 provides that a mutual insurance company may be reorganized into a mutual insurance holding company structure upon approval of the Commissioner (the “Commissioner”) of the Vermont Department of Financial Regulation (the “DFR”) and subject to approval of the mutual insurance company’s members or policyholders; WHEREAS, on February 26, 2026, Vermont Mutual Insurance Company’s (“VMIC”) board of directors unanimously approved a plan of reorganization (the “Plan”) providing for VMIC’s reorganization pursuant to 8 V.S.A. §3441(a) into a mutual insurance holding company structure comprised of (i) mutual insurance holding company, Vermont Mutual Insurance Group, Inc. (“VMIG”), (ii) an intermediate holding company, Baldwin Holding Co. (“Baldwin”), and a stock insurance company, Vermont Mutual Insurance Company, SI (“VMICSI”); WHEREAS, on March 5, 2026, VMIC filed with the DFR an initial application seeking approval of the Plan; WHEREAS, on June 1, 2026, VMIC filed with the DFR its finalized application (the “Application”) seeking approval of the Plan; WHEREAS, the Application was reviewed by the Insurance Division of the DFR which deemed the Application complete on June 16, 2026. WHEREAS, the Commissioner appointed a Hearing Officer and directed the DFR and VMIC to hold a discretionary public hearing pursuant to 8 V.S.A. §3441(a) to consider the formation of the mutual insurance holding company and stock insurance company. DFR issued a notice of Public Hearing informing members of the public that a public hearing would be held at 9:30 am on Thursday July 23, 2026, in Montpelier, Vermont and via Microsoft Teams teleconference (the “Public Hearing”); WHEREAS, a special meeting of VMIC’s members at which VMIC’s members will be asked to approve the Plan (the “Special Meeting”) is scheduled for September 2, 2026; Docusign Envelope ID: F9DCACBE-E4DA-8961-811C-1B64EF9973C7

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WHEREAS, on June 18, 2026, a joint notice of the Public Hearing and the Special Meeting was mailed to VMIC’s members eligible to vote on the Plan together with a letter from VMIC’s Chief Executive Officer to its members, a frequently asked questions document, and proxy form. A Policyholder Information Statement was made available to VMIC’s members on a VMIC-hosted website; WHEREAS, a Public Hearing was held on July 23, 2026, at 89 Main Street, Montpelier, Vermont and via Microsoft Teams teleconference, starting at 9:30 am Eastern Time; WHEREAS, at the Public Hearing VMIC’s legal counsel attorney Zaw Win of Downs Rachlin Martin PLLC and attorney Lori McAllister of Dykema Gossett PLLC, VMIC’s Chair, President, and Chief Executive Officer Mark J. McDonnell, and VMIC’s Vice President, Chief Legal Officer, and Secretary William J. Cahill each spoke in favor of the Plan; WHEREAS, no members of the public, nor members of VMIC, presented public comments or provided testimony to the DFR; WHEREAS, on July 23, 2026, the DFR received the written testimony of William J Cahill and the written testimony of Mark J McDonnell supporting the Plan; WHEREAS, on July 23, 2026, the DFR received a copy of a tax opinion provided to VMIC by Dykema Gossett PLLC dated February 13, 2026 (the “Tax Opinion”) opining that neither the members of VMIC nor VMIC, VMIG, Baldwin, or VMICSI will recognize a taxable gain or loss in connection with the Plan; WHEREAS, on July 23, 2026, the DFR received a copy of the securities opinion provided to VMIC by Dykema Gossett PLLC dated February 13, 2026 (the “Securities Opinion”) opining that the membership interests in VMIG that will be received by policyholders pursuant to the Plan will not, when issued, constitute “securities” the offer or sale of which requires registration under the Securities Act of 1993, as amended, or the Securities Exchange Act of 1934, as amended; WHEREAS, on August 24, 2026, Karen Ducharme, Director of Company Licensing and Examinations for the Insurance Division of the DFR, submitted to the docket testimony in which she: (i) reviewed the procedures she conducted, (ii) concluded that she had not identified any significant issues with respect to adverse implications for policyholders or any other areas of non￾compliance with 8 V.S.A. §3441 and associated regulatory requirements, and (iii) therefore recommend approval of VMIC’s reorganization; WHEREAS, the anticipated effective date of the Plan is January 1, 2027; NOW THEREFORE, the Commissioner makes the findings of fact and conclusions of law as follows, and issues the following order approving the Plan:
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FINDINGS OF FACT

1. On February 26, 2026, VMIC’s board of directors unanimously approved the Plan
   providing for VMIC’s reorganization pursuant to 8 V.S.A. §3441(a) into a mutual insurance holding company structure comprised of (i) a mutual insurance holding company, VMIG, (ii) an intermediate holding company, Baldwin, and (iii) a stock insurance company, VMICSI. See Certification of Resolution at Exhibit A of the Plan.
2. On June 1, 2026, VMIC filed the Application with the DFR. The Application
   included (i) the Plan, attached as Annex A to the Application; (ii) the proposed amended and restated Charter and proposed Bylaws for VMICSI, the proposed Charter and proposed amended and restated Bylaws for VMIG, and the proposed Charter and Bylaws for Baldwin, attached as Exhibits B-G of the Plan; (iii) a schedule of the officers and directors for VMIG, Baldwin and VMICSI and information regarding the independence of each director, attached as Exhibit H to the Plan; (iv) a certified copy of the resolutions of VMIC’s board of directors approving the Plan, attached as Exhibit A to the Plan; (v) pro forma financial statements for VMICSI showing the impact of the reorganization, attached to the Application as Annex B; (vi) a fairness opinion prepared by RP Financial (the “Fairness Opinion”), attached to the Application as Annex C, demonstrating that the proposed reorganization is neither unfair nor contrary to the financial interests of VMIC’s members, together with the analysis prepared by RP Financial that formed the basis for the Fairness Opinion, attached to the Application as Annex D; (vii) information related to the Special Meeting including the materials to be provided to VMIC’s members and future members, attached to the Application as Annexes E-J; and (viii) information sufficient to demonstrate that the interests of VMIC’s members are protected from unfair subordination to debt holders.
3. The DFR confirmed that the Application was complete on June 16, 2026. See the
   Application and Recording of Public Hearing, at 4:36.
4. A joint notice of the Public Hearing and Special Meeting was mailed to VMIC’s
   members eligible to vote on the Plan on June 18, 2026, together with a letter from VMIC’s Chief Executive Officer to its members, a frequently asked questions document, and proxy form. A Policyholder Information Statement was made available to VMIC’s members on a VMIC-hosted website; See Application, Cahill Testimony, p. 6.
5. A Public Hearing was held on July 23, 2026, at 89 Main Street, Montpelier,
   Vermont and via Microsoft Teams teleconference, starting at 9:30 am Eastern Time. The Hearing was noticed and conducted in accordance with the applicable laws and regulations of the State of Vermont and the DFR’s Administrative Procedures.
6. At the Public Hearing, the Deputy Commissioner for the DFR’s Insurance
   Division, Mary Block, provided a brief statement. VMIC’s legal counsel attorney Zaw Win of Downs Rachlin Martin PLLC and attorney Lori McAllister of Dykema Gossett PLLC, VMIC’s Chair, President, and Chief Executive Officer Mark J. McDonnell, and VMIC’s Vice President, Chief Legal Officer, and Secretary William J. Cahill each spoke in favor of the Plan. No Docusign Envelope ID: F9DCACBE-E4DA-8961-811C-1B64EF9973C7

4 members of the public, nor members of VMIC, presented public comments at the Public Hearing. See Recording of Public Hearing.
7. On the Plan’s effective date, all membership interests of VMIC will be
extinguished and the members of VMIC will become the exclusive members of VMIG, with such rights and privileges, including membership interests of VMIG, as are provided for pursuant to the Vermont Insurance Laws and the Charter and Bylaws of VMIG. After the effective date, the owners of policies issued from time to time by VMICSI will also automatically become members of VMIG and VMICSI’s policyholders will remain members of VMIG for as long as their respective policies remain in force. See The Plan, Article II, Section II.4(b); VMIC Bylaws Article II at Exhibit E of the Plan; Cahill Testimony, p. 8-11; McDonnell Testimony, p. 9.
8. VMIG will at all times own, directly or indirectly, a majority of the voting shares
of the capital stock of VMICSI. On the Plan’s effective date, VMIG will be issued 100% of the initial shares of voting stock of Baldwin and VMIG will at all times hold at least a majority of the voting stock of Baldwin, and Baldwin will be issued 100% of the initial shares of voting stock of VMICSI. See The Plan, Article II, Section II.4(c) and (d); Cahill Testimony, p. 11; McDonnell Testimony, p. 11.
9. On the Plan’s effective date, the Officers and Directors of each of VMIG,
Baldwin, and VMICSI will be the same individuals who hold those positions at VMIC immediately prior to the effective date. With the exception of Daniel Bridge and Mark McDonnell, all of the members of the Board of Directors qualify as independent. See, Exhibit H of the Plan; Cahill Testimony, p. 10.
10. VMIC received a Tax Opinion and a Securities Law Opinion from their special
counsel, Dykema Gossett PLLC, both dated February 13, 2026 opining that no member of VMIC will recognize a taxable gain or loss in connection with the proposed reorganization, neither VMIG, Baldwin, or VMICSI will recognize a taxable gain or loss in connection with the reorganization, and the membership interests in VMIG that will be received by policyholders on the effective date and persons who become policyholders after the effective date will not, when issued, constitute “securities” the offer or sale of which requires registration under the Securities Act of 1933 or the Securities Exchange Act of 1934, and will not be “securities” within the meaning of 9A V.S.A. §8-102(a)(15). See, Tax Opinion and Securities Law Opinion.
11. As of December 31, 2025, VMIC had capital and surplus in excess of $1 billion
and approximately $1.87 billion in net admitted assets. On the Plan’s effective date, VMIG will be capitalized by transferring $500,000 from VMIC’s assets and VMICSI will retain all remaining VMIC assets. VMIC has the financial strength to meet its present and future obligations to its policyholders, employees, and creditors with or without the reorganization. See,
Annex B to the Application (Summary Financials for Converted Vermont Mutual); McDonnell
Testimony, p. 3.
12. The Plan will not change the insurance coverage and other benefits provided, and
the premiums charged, to VMIC’s policyholders and the principal membership interests of Docusign Envelope ID: F9DCACBE-E4DA-8961-811C-1B64EF9973C7

5 members will remain substantially unchanged except that they will be exercised with respect to the operations of VMIG and not those of VMIC or VMICSI. See, McDonnell Testimony, p. 10- 11; Cahill Testimony, p. 8-9, 13.
13. A fairness opinion prepared by RP Financial and dated February 26, 2026, finds
that the Plan is fair from a financial point of view to the policyholders who are members of VMIC, taken as a group. See, Annex C to the Application (Fairness Opinion Letter); McDonnell Testimony, p 12; Cahill Testimony, p. 13.
14. The Plan does not include an offering or incurrence of debt, VMICSI will not
have any debt holders following the reorganization, and members’ interests will not be subordinated to the rights of any third parties. See, Cahill Testimony, p. 13.
15. The Plan may present several benefits to VMIC and its policyholders, including
access to capital markets, the ability to maintain mutuality, potential transactions with non￾insurers and diversification of assets, and ability to pursue strategic acquisitions opportunities. See, McDonnell Testimony, p. 6-9.
16. The Special Meeting at which VMIC’s members will be asked to approve the
Plan is scheduled for September 2, 2026. See Cahill Testimony, p. 6.
CONCLUSIONS OF LAW
17. Vermont law allows for a domestic mutual insurance company, upon approval of
the Commissioner of the DFR, to reorganize by forming an insurance holding company based upon a mutual plan and continue the corporate existence of the reorganized insurance company as a stock insurance company subsidiary of the mutual insurance holding company. See 8 V.S.A. §3441(a).
18. To effectuate such a reorganization, the mutual insurance company must file with
the Commissioner a plan of reorganization, proposed amended and restated governance documents for the mutual holding company, the stock insurance company, and any intermediate holding companies, and such other relevant information as the Commissioner shall require. See Id. Additional required information is set out in DFR Regulation I-1997-05 (Revised) § 5 and includes the following:
(1) the plan of reorganization;
(2) the proposed charter and proposed amended and restated bylaws of the mutual insurance holding company; (3) the proposed charter and proposed bylaws of the intermediate holding company; (4) the proposed amended and restated charter and proposed bylaws for the converted stock insurance company; (5) a list of officers and directors for each of the mutual insurance holding company, intermediate holding company, and converted stock insurance company with information sufficient to demonstrate compliance with the Docusign Envelope ID: F9DCACBE-E4DA-8961-811C-1B64EF9973C7

6 independent director requirement as defined in DFR Regulation I-1997-05 (Revised) § 3(8)(A); (6) authorizing resolutions, certified by VMIC’s Secretary; (7) information sufficient to demonstrate that (i) formation of the mutual insurance holding company shall not involve practices that will cause financial impairment to the reorganizing insurer; and (ii) the financial and management resources of the mutual insurance company are sufficient to accomplish the plan of reorganization successfully and that the financial condition of the applicant will not be diminished upon reorganization; (8) information sufficient to demonstrate that the reorganization (i) is not contrary to the financial interests of the members, and (ii) would not be unfair to the members; (9) a plan for obtaining approval of the plan for reorganization from the members, the materials to be mailed or otherwise provided to the applicant’s members in connection with their consideration of the reorganization, and a proxy form which will be provided to the applicant’s members in connection with their consideration of the reorganization; (10) information sufficient to demonstrate that members’ interests are protected from unfair subordination to debt holders of the reorganized insurer or any affiliate. See 8 V.S.A. §3441(a) and DFR Regulation I-1997-05 (Revised) § 5.
19. After review of the Application and its Attachments, the additional information
submitted by VMIC, as well as the testimony from VMIC, the Commissioner is satisfied that the Application contains all the requirements set out above in paragraph 18.
20. The Commissioner may, in his or her discretion, conduct a single public hearing
as provided by 8 V.S.A. §3305, to consider the formation of a mutual holding company and stock insurance company.
21. Pursuant to 8 V.S.A. §3441(a), 8 V.S.A. §3441(d), and DFR Regulation I-1997-
05 (Revised) § 6, the Commissioner shall approve any proposed mutual holding company formation unless the Commissioner finds that:
(1) disapproval is necessary to prevent practices that will cause financial impairment to the mutual insurance company or proposed stock company; (2) the financial or management resources of the mutual insurance company warrant disapproval; (3) the mutual insurance company fails to furnish the information required by 8 V.S.A. §3441(a) and DFR Regulation I-1997-05 (Revised) § 5; (4) the proposed reorganization would be unfair to policyholders; (5) the proposed reorganization would be contrary to the financial interests of the policyholders; or (6) the proposed mutual insurance holding company will not promote the general good of the state. Docusign Envelope ID: F9DCACBE-E4DA-8961-811C-1B64EF9973C7

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22. Having reviewed the full record, including the Application and its Attachments,
the additional information submitted by VMIC, the recording of the Public Hearing, and the testimony from VMIC, the Commissioner did not find grounds for denying approval of the Plan as listed at paragraph 21, above.
23. Reorganization of the domestic mutual insurance company is subject to approval
of its members or policyholders in accordance with 8 V.S.A. § 3427 and the Plan must be approved by at least two-thirds of VMIC’s eligible members who vote (in person or by proxy) at the Special Meeting. A Special Meeting at which VMIC’s members will be asked to approve the Plan is scheduled for September 2, 2026, and the notice of the Special meeting provided to VMIC’s eligible members was sufficient for the purposes of DFR Regulation I-1997-05 (Revised) § 6E.
24. VMIC must file with the Commissioner within 30 days of the Special Meeting the
minutes of the Special Meeting and a certificate setting forth the vote and certifying that the Plan was approved by not less than two-thirds of the policyholders voting in person or by proxy on the Plan. See, DFR Regulation I-1997-05 (Revised) § 6.E.5. Docusign Envelope ID: F9DCACBE-E4DA-8961-811C-1B64EF9973C7

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ORDER
NOW, THEREFORE, based on the above findings of fact and conclusions of law, the Commissioner has determined that approval of the Plan will promote the general good of the State and IT IS HEREBY ORDERED as follows:

1. Pursuant to 8 V.S.A. §3441, the Plan is approved by the Commissioner in its
   entirety and, provided that the Plan is approved by at least two-thirds of VMIC’s eligible members who vote (in person or by proxy) at the Special Meeting, VMIC is authorized to reorganize into a mutual insurance holding company, an intermediate holding company, and a stock insurance company, and to take any other steps set forth in the Plan, effective January 1,
3. VMIC shall file with the Commissioner within 30 days of the Special Meeting the
   minutes of the Special Meeting and a certificate setting forth the vote and certifying that the Plan was approved by not less than two-thirds of the policyholders voting in person or by proxy on the Plan.
4. The governance documents for VMIG, Baldwin and VMICSI are hereby
   approved and, provided that the Plan is approved by at least two-thirds of VMIC’s eligible members who vote (in person or by proxy) at the Special Meeting, VMIC is authorized to file articles of incorporation for each of VMIG, Baldwin and VMICSI with the Vermont Secretary of State with an effective date of January 1, 2027.
5. Approval of the Plan will expire if the reorganization is not accomplished within
   180 days of the date of this Order, unless such period is extended upon showing of good cause. ENTERED at Montpelier, Vermont, this 27 th day of August, 2026 ________________________________ Kaj Samsom Commissioner Vermont Department of Financial Regulation Docusign Envelope ID: F9DCACBE-E4DA-8961-811C-1B64EF9973C7