Current through Reg. 50, No. 187; September 24, 2024
(1) The Office's determination as to whether
the provisions of part VI, chapter 624, F.S., regarding administrative
supervision are appropriate for an insurer shall be based on the standards set
out in sections 624.80 and
624.81, F.S.
(2) Criteria which shall be considered in
determining whether an insurer is in unsound condition as provided in section
624.80(2),
F.S., or is engaging in methods or practices which render the continuance of
business hazardous to the public or insureds include the following:
(a) Adverse findings reported in financial
condition and market conduct examination reports;
(b) The National Association of Insurance
Commissioners Insurance Regulatory Information System and its related
reports;
(c) The ratios of
commission expense, general insurance expense, policy benefits and reserve
increases as to annual written premium and net investment income which could
lead to an impairment of capital and surplus;
(d) That the insurer's asset portfolio when
viewed in light of current economic conditions is not of sufficient value,
liquidity, or diversity to assure the company's ability to meet its outstanding
obligations as they mature;
(e) The
ability of an assuming reinsurer to perform and whether the insurer's
reinsurance program provides sufficient protection for the company's remaining
surplus after taking into account the insurer's cash flow and the classes of
business written as well as the financial condition of the assuming
reinsurer;
(f) That the insurer's
operating loss in the last twelve month period or any shorter period of time,
including but not limited to net capital gain or loss, change in non-admitted
assets, and cash dividends paid to shareholders, is greater than 50% of such
insurer's remaining surplus as regards policyholders in excess of the minimum
required;
(g) Whether any parent,
holding company, affiliate, subsidiary, or reinsurer is insolvent, threatened
with insolvency, or delinquent in payment of its monetary or other
obligations;
(h) Contingent
liabilities, pledges or guaranties which either individually or collectively
involve a total amount which in the Office's opinion may affect the solvency of
the insurer;
(i) Whether any
"controlling person" of an insurer is delinquent in the transmitting to, or
payment of, net premiums to such insurer;
(j) The age and collectibility of
receivables;
(k) Whether the
management of an insurer, including officers, directors, or any other person
who directly or indirectly controls the operation of such insurer, fails to
possess and demonstrate the competence, fitness and reputation deemed necessary
to serve the insurer in such position;
(l) Whether management of an insurer has
failed to respond to inquiries relative to the condition of the insurer or has
furnished false or misleading information concerning an inquiry;
(m) Whether management of an insurer either
has filed any false or misleading sworn financial statement, or has released
any false or misleading financial statement to lending institutions or to the
general public, or has made a false or misleading entry, or has omitted an
entry of material amount in the books of the insurer;
(n) Whether an insurer has grown so rapidly
and to such an extent that it lacks adequate financial and administrative
capacity to meet its obligations in a timely manner;
(o) Whether an insurer has experienced or
will experience in the foreseeable future cash flow and/or liquidity
problems;
(p) Whether an insurer
has violated any applicable statutes or rules, or has been subjected to any
final agency action relating to violation of such statutes or rules;
(q) Whether an insurer has incurred
substantial new debt, has had to rely on frequent or substantial capital
infusions, has a highly leveraged balance sheet, or relies increasingly on
outside consulting sources (e.g. TPA's, MGA's, or management
companies);
(r) Whether the Office
has received a noticeable increase of consumer complaints for non-payment of
claims or unusual delays in claim payments;
(s) Whether the Office believes future
problems with insurer solvency will occur because of known or developing
current events or situations (e.g. declining occupancy rates, inadequate
reserves or change in reserve practices, or increase in debt service, or
adverse changes in financial markets);
(t) Whether an insurer has voluntarily
allowed the suspension or revocation of its certificate of authority in any
state;
(u) Whether transactions
with an insurer's affiliates, parent company, holding company, subsidiaries,
officers, directors, shareholders, owners, management company, employees,
agents, creditors, or any other person or entity have affected the insurer's
solvency or liquidity in a manner which places the insurer's insureds at risk
of loss of contracted benefits or security; or
(v) Whether a deadlock or dispute that
threatens the solvency or viability of an insurer exists between the officers,
directors, managing owners, managers, or other persons who control the
operations of an insurer.
(3) Administrative supervision shall include
affiliates, subsidiaries, parent companies, or holding companies of an insurer
if:
(a) There have been any transactions
resulting in the transfer of funds from the insurer to any of those entities;
or
(b) The insurer has the
authority to transfer funds to any of those entities without prior approval
from the Office; and,
(c) The
transfers are found to affect the solvency or viability of the
insurer.
(4) Actions
under administrative supervision shall include the use of all powers of
enforcement as provided by section
624.310, F.S., including actions
against any affiliated party. These enforcement powers shall apply but not be
limited in application to all entities which are subject to administrative
supervision based on the criteria set forth in subsection (3) of this rule,
whether or not the entity has consented to administrative supervision and
whether or not a plan of correction has been approved.
Rulemaking Authority 624.308(1) FS. Law Implemented
624.307(1), 624.310, 624.4095, 624.418, 624.80, 624.81, 625.012, 625.305
FS.
New 1-30-91, Formerly 4-93.002, Amended 5-5-92, Formerly
4-141.002.
