Section 90C. Any mutual company empowered by subdivision (e) of section fifty-four to transact the kinds of business set forth in the fourth clause of section forty-seven, which has net cash assets, computed on the basis fixed by sections ten to twelve, inclusive, of not less than two million dollars may, in lieu of a guaranty capital as provided in section ninety B, if previously authorized by a vote of its policyholders at any meeting and with the written approval of the commissioner, segregate a portion of its net cash assets to an amount of not less than the combined capital and surplus provisions required under section forty-eight and constitute said amount a guaranty fund.

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Any such fund shall be maintained so long as the company transacts business under said clause fourth, shall be invested as provided by this chapter for the investment of the capital stock of domestic stock companies, and shall not be reduced or dissolved except with the written approval of the commissioner.

The said fund shall be applied solely to the payment of claims under policies or contracts issued or executed under said clause fourth, but only in case the company has exhausted its assets, exclusive of uncollected premiums.

No company with such a guaranty fund which ceases to transact business shall divide among its policyholders any of its assets or guaranty fund, until it shall have performed or cancelled all obligations under its policies and contracts.

Any company may, subject to the provisions of this section, from time to time increase its guaranty capital subject to the written approval of the commissioner; provided, however, that no such increase shall be made unless the net cash assets of the company, computed as aforesaid, inclusive of the amount of said fund, amount to at least two million dollars at the time the increase is made.