The Happy Life Insurance Company is a stock insurer licensed in a large western state. Its loss reserves are estimated at $9.5 million and its unearned premium reserves at $1.7 million. Other liabilities are valued at $1.3 million. It is a mono-line insurer that has been operating in the state for over twenty years.

1. What concern might the commissioner have if most of Happy Life Insurance Company's assets are stocks? How might regulation address this concern?
2. If Happy Life Insurance Company fails to meet minimum capital and surplus requirements, what options are available to the commissioner of insurance? How would Happy Life Insurance Company's policyholders be affected? How would the policyholders of other life insurers in the state be affected?