Utah Admin. Code R590-265-4 - Standards Used by the Commissioner to Determine Hazardous Financial Condition

The commissioner may consider the following standards, either singly or a combination of two or more, to determine whether the continued operation of an insurer is hazardous to its policyholders, creditors, or the general public:

(1) adverse findings reported in:

(a) a financial condition examination report;

(b) a market conduct examination report;

(c) an audit report; or

(d) an actuarial opinion, report or summary;

(2) the NAIC Regulatory Information System and its other financial analysis solvency tools and reports;

(3) whether the insurer made adequate provision, according to presently accepted actuarial standards of practice, for the anticipated cash flows required by the contractual obligations and related expenses of the insurer, when the assets held by the insurer for the reserves and related actuarial items include:

(a) the investment earnings on such assets; and

(b) the considerations anticipated to be received and retained under the policies and contracts;

(4) an assuming reinsurer's ability to perform and whether the insurer's reinsurance program provides sufficient protection for the insurer's remaining surplus after considering:

(a) the insurer's cash flow;

(b) the classes of business written; and

(c) the financial condition of the assuming reinsurer;

(5) whether the insurer's operating loss in the last 12 -month period or any shorter period of time, including net capital gain or loss, change in non-admitted assets, and cash dividend paid to shareholders, is greater than 50% of the insurer's remaining surplus as regards policyholders in excess of the minimum required;

(6) whether the insurer's operating loss in the last 12 -month period or any shorter period of time, excluding net capital gains, is greater than 20% of the insurer's remaining surplus as regards policyholders in excess of the minimum required;

(7) whether an obligor or an entity within the insurer's holding company system is insolvent, nearly insolvent, or delinquent in payment of its monetary or other obligations, and in the opinion of the commissioner it may impact the solvency of the insurer;

(8) contingent liabilities, pledges, or guaranties that either individually or collectively involve a total amount that, in the opinion of the commissioner, may impact the solvency of the insurer;

(9) whether a controlling person of an insurer is delinquent in transmitting or paying net premiums to the insurer;

(10) the age and collectability of receivables;

(11) whether an officer, a director, or any other person who directly or indirectly controls the operation of the insurer, fails to possess and demonstrate competence, fitness, and reputation considered necessary to serve the insurer in such position;

(12) whether the insurer failed to respond to an inquiry regarding the condition of the insurer or has furnished false and misleading information concerning an inquiry;

(13) whether the insurer failed to meet financial and holding company filing requirements, absent a reason satisfactory to the commissioner;

(14) whether an insurer:

(a) filed a false or misleading sworn financial statement;

(b) released a false or misleading financial statement to a lending institution or to the general public; or

(c) made a false or misleading entry or omitted an entry of a material amount in the books of the insurer;

(15) whether the insurer has grown so rapidly and to such an extent that it lacks adequate financial and administrative capacity to meet obligations in a timely manner;

(16) whether the insurer has experienced or will experience in the foreseeable future cash flow or liquidity problems;

(17) whether the insurer established reserves that do not comply with minimum standards established by insurance laws and rules, statutory accounting standards, sound actuarial principles, and standards of practice;

(18) whether the insurer persistently engages in under reserving, resulting in adverse development;

(19) whether transactions among affiliates, subsidiaries, or controlling persons for which the insurer receives assets or capital gains do not provide sufficient value, liquidity, or diversity to assure the insurer's ability to meet its outstanding obligations as they mature; or

(20) any other finding determined by the commissioner to be hazardous to the insurer's policyholders, creditors, or the general public.

Notes

Utah Admin. Code R590-265-4

Amended by Utah State Bulletin Number 2023-02, effective 1/10/2023