(2) For a voluntary termination or voluntary
merger of the Fund, the Trustees shall:
(a)
Provide the Office with written notification of the Fund's intent to terminate
or merge but only with the consent of a two-thirds vote of the Trustees and of
the members.
(b) Provide the Office
with minutes of the Trustees' meeting approving the termination or
merger.
(c) Submit to the Office a
detailed plan to handle the termination or merger. Such plan shall be subject
to the approval of the Office and shall include the following:
1. Evidence of adequate disclosure to
affected parties including the members and the Trustees of the contemplated
termination or merger. Transactions involving affiliates, representatives or
interested parties shall be fully disclosed to the members and Trustees, and
shall include evidence that said transactions are in the best interest of the
Fund. Furthermore, the Office shall require the Trustees to seek independent
legal and actuarial counsel regarding the actions taken in contemplation of the
termination or merger, to certify the adequacy of all disclosures made and the
sufficiency of all due diligence conducted on behalf of the members or the
Trustees, in order to assist the Office in determining actuarial soundness.
Parties providing such counsel shall not be employed with or in any way
affiliated with the assuming insurer.
2. For a termination:
a. The Fund shall continue in a run-off mode,
which is a common insurance industry term which means that assets are not
released until the last claim has been fully settled. The Fund shall have a
reserve analysis completed on its existing liabilities by an actuary who is a
member of the Casualty Actuarial Society. The Fund shall maintain compliance
with Section 627.357, F.S., and the
applicable provisions of this Part, including the continued service of the
Trustees and the administration of the Fund by the Service Agent.
b. The Office shall exempt the Fund from the
requirements of sub-subparagraph (2)(c)2.a., if the Fund demonstrates that the
purchase through competitive bidding of an appropriate insurance product
relieving the Fund of any liabilities incurred while operating pursuant to
Section 627.357, F.S., is in the best
interest of the Fund and that the provider of the product is an insurer
authorized to transact insurance in this state.
c. Any monies remaining in the Fund after the
satisfaction of all liabilities incurred while operating pursuant to Section
627.357, F.S., shall be declared
dividends and returned to the members of the Fund.
3. For a merger:
a. The Fund shall submit a request for a Loss
Portfolio Transfer. All filings shall be submitted electronically to
http://www.floir.com/iportal.
b.
The Fund shall have a reserve analysis completed on its existing liabilities by
an independent actuary who is a member of the Casualty Actuarial Society. The
liabilities of the Fund as determined in the reserve analysis shall be assumed,
as evidenced in the Loss Portfolio Transfer Agreement, by an insurer authorized
to transact insurance in this state. The assuming insurer shall provide a
three-year pro-forma on both a countrywide and Florida only basis indicating
the projected impact of the contemplated assumption of the Fund's liabilities.
Furthermore, a three-year business plan shall be provided if the assuming
insurer plans to or is currently writing medical malpractice insurance. Rates
for any assuming insurer planning to or currently writing medical malpractice
insurance shall be actuarially sound and in compliance with Section
627.062(1),
F.S. The most recent Annual Statement of the assuming insurer shall contain the
appropriate loss reserve certification, as required by Section
624.424, F.S., and Rule
69O-137.001, F.A.C.
c. The Office shall require a portion of the
LPT assets deemed to be material in accordance with the application of
generally accepted accounting practices and procedures to be placed in an
interest bearing trust account designated by the Treasurer of this state and
maintained for the purpose of holding such deposits. Such deposit is to be
maintained as assurance of the payment of claims arising from policies issued
by the Fund; provided, that the interest shall be credited to the assuming
insurer and reported to the assuming insurer's taxpayer ID number and that the
assuming insurer may take financial statement credit for this deposit. Such
deposit shall remain in place for a period of 5 years; provided, that the
assuming insurer may apply for release of all or part of the deposit prior to
the end of the 5 year period. The Office shall release the deposit if the
insurer demonstrates that the interests of the Fund members are otherwise
protected. The assuming insurer shall not, without the express consent of the
Office, for a period of 5 years, pay any dividend to its shareholders or permit
the ratio of its premiums to surplus and capital to exceed 3:1. If the assuming
insurer seeks the Office's consent to grant a dividend or increase its writing
to surplus ratio, the Office shall grant such a request if the insurer
demonstrates that the interests of the Fund members are otherwise protected. In
the event the assuming insurer's claims payments for the liabilities of the
Fund, including ALAE and ULAE, are less than that projected in the reserve
indication set forth in the material presented to the members at the time of
the merger, the difference between the projected amount and the amount actually
paid shall be refunded back to the Fund members.