Illinois Administrative Code › Title 50 - INSURANCE › Part 1250 - CORRECTIVE ORDERS › Section 1250.20 - Standards

Current through Register Vol. 48, No. 28, July 12, 2024
Depending upon an examination of the factual circumstances,
				applicable law and financial situation of the company involved, the following
				standards, either singly or a combination of two or more, may be considered by
				the Director to determine whether the continued operation of any insurer
				transacting an insurance business in this State might be deemed to be hazardous
				to the policyholders, creditors or the general public which could warrant the
				Director issuing a corrective order:
a) adverse findings reported in financial and
			 market conduct examination reports, audit reports, and actuarial opinions,
			 reports or summaries;
b)
			 information from the NAIC Insurance Regulatory Information System and NAIC's
			 other financial analysis solvency tools and reports;
c) whether the insurer has made adequate
			 provision, according to 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 reserves and related actuarial items, including, but not limited to,
			 the investment earnings on assets and the considerations anticipated to be
			 received and retained under the insurer's policies and contracts;
d) the ability of an assuming reinsurer to
			 perform and whether the insurer's reinsurance program provides sufficient
			 protection for the insurer'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;
e) whether 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
			 dividends paid to shareholders, is greater than 50% of the insurer's remaining
			 surplus as regards policyholders in excess of the minimum required;
f) whether the insurer 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 to
			 policyholders in excess of the minimum required;
g) whether a reinsurer, obligor or any entity
			 within the insurer's insurance holding company system is insolvent, threatened
			 with insolvency, or delinquent in the payment of its obligations, if, in the
			 opinion of the Director, that condition may affect the solvency of the
			 insurer;
h) whether contingent
			 liabilities, pledges or guarantees that, either individually or collectively,
			 involve a total amount that, in the opinion of the Director, 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 the insurer;
j) the age and collectibility of its
			 receivables;
k) whether the
			 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 the competence, fitness and reputation deemed necessary
			 to serve the insurer in that position;
l) whether management of an insurer has
			 failed to respond to inquiries relative to the condition of the insurer or has
			 furnished false and misleading information concerning an inquiry;
m) whether the insurer has failed to meet
			 financial and holding company filing requirements in the absence of a reason
			 satisfactory to the Director;
n)
			 whether management of an insurer either has filed a false or misleading sworn
			 financial statement, or has released a 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;
o) 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;
p) whether the insurer has experienced or
			 will experience in the foreseeable future cash flow and/or liquidity
			 problems;
q) whether management has
			 established reserves that do not comply with minimum standards established by
			 State insurance laws, regulations, statutory accounting standards, sound
			 actuarial principles and Actuarial Standards of
			 Practice
;
r) whether management persistently engages in
			 material under reserving that results in adverse development;
s) whether transactions among affiliates,
			 subsidiaries or controlling persons for which the insurer receives assets or
			 capital gains, or both, do not provide sufficient value, liquidity or diversity
			 to assure the insurer's ability to meet its outstanding obligations as they
			 mature;
t) any other finding
			 determined by the Director to be hazardous to the insurer's policyholders,
			 creditors or general public, including those of a nonfinancial
			 nature.