(b) The duties of the attorney-in-fact shall be specified in the subscriber's agreement. The agreement shall be approved by the director and amendments shall be approved by the director and the advisory committee. The agreement must, at a minimum, provide that

1. (1) the attorney-in-fact shall provide written notice of and make the necessary arrangements for the election, in person or by proxy, of the members of the advisory committee; the cost of notice, ballot, or proxy for a meeting and the cost of a meeting that may be called for an election shall be paid by the reciprocal insurer;
2. (2) the attorney-in-fact shall provide written notice to the members of the advisory committee of not less than 10 business days for a regular meeting or a special meeting called under AS 21.75.170(e); the cost of notice shall be paid by the reciprocal insurer;
3. (3) the advisory committee may, upon majority vote of its members at a regular or special meeting and upon written notice of the vote to the director and the attorney-in-fact, recommend termination of the attorney-in-fact for a stated cause and the appointment of a new attorney-in-fact;
4. (4) termination of the attorney-in-fact shall require the approval of a two-thirds majority of the subscribers present in person or by proxy at a meeting called for that purpose; the attorney-in-fact shall provide written notice to all subscribers by certified mail not less than 30 days before the meeting; the notice must include the recommendation of termination and replacement drafted by the advisory committee and other appropriate documents drafted by the attorney-in-fact; a copy of all documents mailed and certification of mailing to all subscribers must be provided to all members of the advisory committee; the cost of notice and proxy for the meeting shall be paid by the reciprocal insurer; at least 25 percent of all subscribers shall constitute a quorum for reciprocal insurers with less than 10,000 subscribers; 2,500 subscribers or five percent of all subscribers, whichever is greater, shall constitute a quorum for all other reciprocals;
5. (5) the assets of the reciprocal insurer and its subscribers shall be invested under AS 21.21; investment guidelines shall be approved by the advisory committee and shall be properly accounted for on the financial records of the reciprocal insurer as being held for or on behalf of the subscribers; the cash assets of the reciprocal insurer and its subscribers not otherwise invested in short-term securities, covering policy obligations arising out of policies issued, or issued for delivery in the United States shall be held in one or more appropriately identified accounts in banks that are members of the Federal Reserve System; these accounts shall be drawn on by the attorney-in-fact or by employees or representatives of the reciprocal insurer authorized by the attorney-in-fact for payments on behalf of the reciprocal insurer;
6. (6) if the attorney-in-fact is acting for more than one reciprocal insurer, separate records and accounts shall be maintained for each reciprocal;
7. (7) the attorney-in-fact may not assign responsibilities detailed in the subscriber's agreement in whole or in part without prior approval of the advisory committee and the director;

8. (8) the attorney-in-fact shall

   1. (A) establish and maintain underwriting procedures and manuals that state the rates and conditions for the acceptance or rejection of risks;
   2. (B) make a report to the advisory committee at each regular meeting of the committee on the financial condition of the reciprocal insurer and all material transactions entered into during the period since the last meeting;

   3. (C) annually provide to each member of the advisory committee

      1. (i) on or before March 2, a copy of the reciprocal insurer's annual statement and the accompanying statement of actuarial opinion filed with the director under AS 21.75.130; and
      2. (ii) on or before June 1, a copy of a statement prepared by an independent certified public accountant addressing the financial condition and solvency of the attorney-in-fact;
   4. (D) maintain a financially solvent condition;
9. (9) the forms, amounts, and formulas of compensation the attorney-in-fact will receive for services rendered are specified;
10. (10) the books, accounts, and records of the reciprocal insurer, its subscribers, and the attorney-in-fact are maintained to clearly and accurately disclose the nature and details of each transaction, including all notes, workpapers, documents, and similar material in sufficient detail that relevant events, dates, and persons participating can be identified and information necessary to determine that the compensation received by or owing to the attorney-in-fact conforms to the subscriber's agreement; the books, accounts, and records of the reciprocal insurer are the sole property of the reciprocal insurer;
11. (11) if the subscriber's agreement provides that any of the attorney-in-fact's compensation is contingent upon the reciprocal insurer's profits, that compensation may not be determined and paid until at least five years after the premiums on casualty insurance are earned, at least one year after the premiums are earned on any other kind of insurance, and not until the adequacy of loss reserves on the remaining claims, known and unknown, have been verified under (8) of this subsection; and
12. (12) the attorney-in-fact shall conduct the affairs of the reciprocal insurer as required under this title.

(c) Unless subject to AS 21.22, a material transaction between the reciprocal insurer, its subscribers, the attorney-in-fact, and an affiliate of the attorney-in-fact may not be entered into unless it has been filed with the director of the reciprocal insurer's state of domicile, if accredited by the National Association of Insurance Commissioners, or with the director of this state, if not accredited, at least 30 days before its effective date and the director of the accredited state has not disapproved it; however, a transaction involving five percent or more of admitted assets is subject to prior approval of the director of the reciprocal insurer's state of domicile and the transaction must meet the following standards:

1. (1) the terms shall be fair and equitable;
2. (2) charges or fees for services performed shall be reasonable;
3. (3) expenses incurred and payments received shall be allocated to the reciprocal insurer on an equitable basis in conformity with statutory insurance accounting practices being consistently applied; and
4. (4) the books, accounts, and records of each party shall be maintained to disclose clearly and accurately the precise nature and details of the transaction, including accounting information that is necessary to support the reasonableness of the charges or fees to the respective parties.