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(a) To determine whether an insurer is impaired or in imminent danger of becoming impaired, the director will, in the director's discretion, consider one or more of the following:
(1) findings reported in financial condition and market conduct examination reports prepared by the division or another licensing jurisdiction;
(2) National Association of Insurance Commissioners' Insurance Regulatory Information System reports;
(3) the ratios of commission expense, general insurance expense, policy benefits, and reserve increases to annual premium and net investment income;
(4) whether the insurer's asset portfolio when viewed in light of current economic conditions is of sufficient value, liquidity, or diversity to assure the insurer's ability to meet its outstanding obligations as they mature;
(5) the financial condition and ability of an assuming reinsurer to perform and, after taking into account the insurer's cash flow and the classes of business written, whether the insurer's reinsurance program provides sufficient protection for the insurer's remaining surplus;
(6) whether the insurer's operating results within the last 12 months including any net capital gain or loss, a change in non-admitted assets, and cash dividends paid to shareholders, would reduce by more than 50 percent the insurer's remaining policyholder surplus held in excess of the minimum policyholder surplus required under AS 21;
(7) whether an affiliate, subsidiary, or reinsurer is insolvent, threatened with insolvency, or delinquent in payment of a monetary obligation;
(8) contingent liabilities, pledges, or guaranties that, individually or collectively, involve a total amount that the director determines may affect the solvency of the insurer, if there is a substantial risk that the insurer will be called upon to meet those obligations within the next 60 months;
(9) whether a controlling person of an insurer is delinquent in the transmission or payment of net premiums to the insurer;
(10) the age and collectability of receivables;
(11) whether the management of an insurer fails to respond to an inquiry of the director relative to the condition of the insurer or gives the director false or misleading information concerning an inquiry;
(12) whether the management of an insurer files a false or misleading sworn financial statement, releases a false or misleading financial statement to a lending institution or the public, makes a false or misleading entry, or omits an entry in the books of the insurer in a material amount or an amount that would place the insurer in an impaired condition as defined in AS 21.90.900 ;
(13) whether the 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;
(14) whether the company has experienced or will experience in the next 60 months negative cash flow or liquidity problems; or
(15) any other condition that might constitute impairment as defined in AS 21.90.900 .
(1) disregard a credit or account receivable resulting from a transaction with a reinsurer that is insolvent, impaired, or otherwise subject to a delinquency proceeding;
(3) refuse to recognize the stated value of an account receivable if the account receivable is in excess of 90 days past due or the collectability of the account receivable is in question;
(4) increase the insurer's liability in an amount equal to a contingent liability that is unrelated to a claim made on a policy issued by the insurer, a pledge, or a guarantee not otherwise included, if there is a substantial risk that the insurer will be called upon to meet that obligation within the next 12 months; or
(5) take whatever other action is necessary to accurately determine an insurer's actual financial condition.
History: Eff. 10/24/92, Register 124; am 7/9/93, Register 127
Authority: AS 21.06.090
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Last modified 7/05/2006