R590-265-3. Standards

The following standards, either singly or a combination of two or more, may be considered by the commissioner to determine whether the continued operation of any insurer transacting an insurance business in this state might be deemed to be hazardous to its policyholders, creditors or the general public. The commissioner may consider:

(1) adverse findings reported in:

(a) financial condition examination reports;

(b) market conduct examination reports;

(c) audit reports; and

(d) actuarial opinions, reports or summaries;

(2) the National Association of Insurance Commissioners' Insurance Regulatory Information System and its other financial analysis solvency tools and reports;

(3) the insurer's 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 considered in light of the assets held by the insurer with respect to such reserves and related actuarial items including, but not limited to:

(a) investment earnings on such assets; and

(b) considerations anticipated to be received and retained under such 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 taking into account:

(a) the insurer's cash flow;

(b) classes of business written; and

(c) the financial condition of the assuming reinsurer;

(5) the insurer's operating loss in the last 12 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 dividend paid to shareholders, if greater than 50% of the insurer's remaining surplus as regards policyholders in excess of the minimum required;

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

(7) an insolvent or nearly insolvent or delinquent in payment of its monetary obligations, obligor or any entity within the insurer's insurance holding company system, when in the opinion of the commissioner it may also affect the solvency of the insurer;

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

(9) any "controlling person" of an insurer who is delinquent in transmitting to, or payment of, net premiums to the insurer;

(10) the age and collectability of receivables;

(11) whether management of an insurer, including officers, directors, or any other person who directly or indirectly controls the operation of the insurer, fails to possess and demonstrate competence, fitness and reputation deemed necessary to serve the insurer in such position;

(12) the insurer's failure to respond to inquiries relative to the condition of the insurer or has furnished false and misleading information concerning an inquiry;

(13) the insurer's failure to meet financial and holding company filing requirements in the absence of a reason satisfactory to the commissioner;

(14) whether management of an insurer has:

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

(b) released any false or misleading financial statement to lending institutions or to the general public;

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

(15) a lack of adequate financial and administrative capacity to meet obligations in a timely manner due to the insurer's rapid growth;

(16) cash flow or liquidity problems currently identified or expected in the foreseeable future;

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

(18) persistent under reserving resulting in adverse development;

(19) transactions among affiliates, subsidiaries or controlling persons for which the insurer receives assets or capital gains, or both, if the transactions 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 general public.