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Texas Insurance Code - Not Codified - Section 21A.057. Grounds For Conservation, Rehabilitation, Or Liquidation

Legal Research Home > Texas Lawyer > Insurance Code - Not Codified > Texas Insurance Code - Not Codified - Section 21A.057. Grounds For Conservation, Rehabilitation, Or Liquidation

Sec. 21A.057. GROUNDS FOR CONSERVATION, REHABILITATION, OR
LIQUIDATION.  The commissioner may file with a court in this state
a petition with respect to an insurer domiciled in this state or an
unauthorized insurer for an order of rehabilitation or liquidation
on any one or more of the following grounds:
	(1)  the insurer is impaired;
	(2)  the insurer is insolvent;
	(3)  the insurer is about to become insolvent, with "about to
become insolvent" being defined as reasonably anticipated that the
insurer will not have liquid assets to meet its next 90 days'
current obligations;
	(4)  the insurer has neglected or refused to comply with an
order of the commissioner to make good within the time prescribed by
law any deficiency, whenever its capital and minimum required
surplus, if a stock company, or its surplus, if a company other than
stock, has become impaired;
	(5)  the insurer, its parent company, its subsidiaries, or
its affiliates have converted, wasted, or concealed property of the
insurer or have otherwise improperly disposed of, dissipated, used,
released, transferred, sold, assigned, hypothecated, or removed
the property of the insurer;
	(6)  the insurer is in a condition such that it could not meet
the requirements for organization and authorization as required by
law, except as to the amount of the original surplus required of a
stock company under Title 6, and except as to the amount of the
surplus required of a company other than a stock company in excess
of the minimum surplus required to be maintained;
	(7)  the insurer, its parent company, its subsidiaries, or
its affiliates have concealed, removed, altered, destroyed, or
failed to establish and maintain books, records, documents,
accounts, vouchers, and other pertinent material adequate for the
determination of the financial condition of the insurer by
examination under Article 1.15, 1.15A, or 1.16 or has failed to
properly administer claims or maintain claims records that are
adequate for the determination of its outstanding claims liability;
	(8)  at any time after the issuance of an order under Article
1.32 or 21.28-A, or at the time of instituting any proceeding under
this chapter, it appears to the commissioner that, upon good cause
shown, it would not be in the best interest of the policyholders,
creditors, or the public to proceed with the conduct of the business
of the insurer;
	(9)  the insurer is in a condition such that the further
transaction of business would be hazardous financially, according
to Article 1.32 or otherwise, to its policyholders, creditors, or
the public;
	(10)  there is reasonable cause to believe that there has
been embezzlement from the insurer, wrongful sequestration or
diversion of the insurer's property, forgery or fraud affecting the
insurer, or other illegal conduct in, by, or with respect to the
insurer that, if established, would endanger assets in an amount
threatening the solvency of the insurer;
	(11)  control of the insurer is in a person who is:
	(A)  dishonest or untrustworthy;  or
	(B)  so lacking in insurance company managerial experience
or capability as to be hazardous to policyholders, creditors, or
the public;
	(12)  any person who in fact has executive authority in the
insurer, whether an officer, manager, general agent, director,
trustee, employee, shareholder, or other person, has refused to be
examined under oath by the commissioner concerning the insurer's
affairs, whether in this state or elsewhere or if examined under
oath, refuses to divulge pertinent information reasonably known to
the person;  and after reasonable notice of the fact, the insurer
has failed promptly and effectively to terminate the employment and
status of the person and all the person's influence on management;
	(13)  after demand by the commissioner under Article 1.15,
1.15A, or 1.16 or under this chapter, the insurer has failed
promptly to make available for examination any of its own property,
books, accounts, documents, or other records, or those of any
subsidiary or related company within the control of the insurer or
of any person having executive authority in the insurer, so far as
they pertain to the insurer;
	(14)  without first obtaining the written consent of the
commissioner, the insurer has transferred, or attempted to
transfer, in a manner contrary to Chapter 823 or any law relating to
bulk reinsurance, substantially its entire property or business, or
has entered into any transaction the effect of which is to merge,
consolidate, or reinsure substantially its entire property or
business in or with the property or business of any other person;
	(15)  the insurer or its property has been or is the subject
of an application for the appointment of a receiver, trustee,
custodian, conservator, sequestrator, or similar fiduciary of the
insurer or its property otherwise than as authorized under the
insurance laws of this state;
	(16)  within the previous five years, the insurer has
wilfully and continuously violated its charter, articles of
incorporation or bylaws, any insurance law of this state, or any
valid order of the commissioner;
	(17)  the insurer has failed to pay within 60 days after the
due date any obligation to any state or political subdivision of a
state or any judgment entered in any state, if the court in which
the judgment was entered had jurisdiction over the subject matter,
except that nonpayment is not a ground until 60 days after any good
faith effort by the insurer to contest the obligation has been
terminated, whether it is before the commissioner or in the courts;
	(18)  the insurer has systematically engaged in the practice
of reaching settlements with and obtaining releases from claimants,
and then unreasonably delayed payment, failed to pay the
agreed-upon settlements, or systematically attempted to compromise
with claimants or other creditors on the ground that it is
financially unable to pay its claims or obligations in full;
	(19)  the insurer has failed to file its annual report or
other financial report required by statute within the time allowed
by law;
	(20)  the board of directors or the holders of a majority of
the shares entitled to vote, or a majority of those individuals
entitled to the control of those entities specified by Section
21A.003, request or consent to rehabilitation or liquidation under
this chapter;
	(21)  the insurer does not comply with its domiciliary
state's requirements for issuance to it of a certificate of
authority, or its certificate of authority has been revoked by its
state of domicile;  or
	(22)  when authorized by department rules.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.

Last modified: August 11, 2007