§ 38.2-1710. Miscellaneous provisions
A. Nothing in this chapter shall be construed to reduce the liability for unpaid assessments of the insureds on an impaired or insolvent insurer operating under a plan with assessment liability.
B. Records shall be kept of all negotiations and meetings in which the Association or its representatives are involved in carrying out its powers and duties under § 38.2-1704. Records of these negotiations or meetings shall be made public only upon (i) the termination of a liquidation, rehabilitation, or conservation proceeding involving the impaired or insolvent insurer, (ii) the termination of the impairment or insolvency of the insurer, or (iii) the order of a court of competent jurisdiction. Nothing in this subsection shall limit the duty of the Association to render a report of its activities under § 38.2-1711.
C. For the purpose of carrying out its obligations under this chapter, the Association shall be deemed to be a creditor of the impaired or insolvent insurer to the extent of assets attributable to covered policies reduced by any amounts to which the Association is entitled as subrogee pursuant to subsection H of § 38.2-1704. All assets of the impaired or insolvent insurer attributable to covered policies shall be used to continue all covered policies and pay all contractual obligations of the impaired or insolvent insurer as required by this chapter. For the purpose of this subsection, assets attributable to covered policies is that proportion of the assets which the reserves, that should have been established for these policies, bear to the reserves that should have been established for all insurance policies written by the impaired or insolvent insurer.
D. 1. Prior to the termination of any liquidation, rehabilitation, or conservation proceeding, the court, in making an equitable distribution of the ownership rights of the insolvent insurer, may take into consideration the contributions of the respective parties, including the Association, the shareholders and policyowners of the insolvent insurer, and any other party with a legitimate interest. In this determination, consideration shall be given to the welfare of the policyholders of the continuing or successor insurer.
2. No distribution to any stockholders of an impaired or insolvent insurer shall be made until the total amount of valid claims have been fully recovered by the Association for funds expended in carrying out its powers and duties under § 38.2-1704.
E. 1. If an order for liquidation of an insurer domiciled in this Commonwealth has been entered, the receiver appointed under that order shall have a right to recover from any controlling affiliate on behalf of the insurer distributions, other than stock dividends, made at any time during the five years preceding the petition for liquidation or rehabilitation. This shall be subject to the limitations of subdivisions 2 through 4 of this subsection.
2. No dividend shall be recoverable if the insurer shows that the distribution was lawful and reasonable at the time of payment, and that the insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the insurer to fulfill its contractual obligations.
3. Any person who was an affiliate that controlled the insurer at the time the distributions were paid shall be liable up to the amount of distributions he received. Any person who was an affiliate that controlled the insurer at the time the distributions were declared shall be liable up to the amount of distributions he would have received if they had been paid immediately. If two persons are liable with respect to the same distributions, they shall be jointly and severally liable.
4. The maximum amount recoverable under this subsection shall be the amount in excess of all other available assets of the insolvent insurer needed to pay (i) the contractual obligations of the insolvent insurer and (ii) the reasonable expenses of the Association incurred in connection with the performance of its duties for the insolvent insurer.
5. If any person liable under subdivision 3 of this subsection is insolvent, all its affiliates that controlled it at the time the dividend was paid shall be jointly and severally liable for any resulting deficiency in the amount recovered from the insolvent affiliate.
(1976, c. 330, § 38.1-482.28; 1986, c. 562.)
Sections: Previous 38.2-1703 38.2-1704 38.2-1705 38.2-1706 38.2-1707 38.2-1708 38.2-1709 38.2-1710 38.2-1711 38.2-1712 38.2-1713 38.2-1714 38.2-1715 38.2-1716 38.2-1717 NextLast modified: April 16, 2009