Connecticut Administrative Code › Title 38a - Insurance Department › 8 - Organization and Rules of Practice › Article VII - REGULATIONS › Standards on Hazardous Financial Condition › Section 38a-8-103 - Standards

Current through July 10, 2024
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 financial
				  condition and market conduct examination reports, audit reports, and 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) whether the insurer
				  has 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 considered in
				  light of the assets held by the insurer with respect to such reserves and
				  related actuarial items including, but not limited to, the investment earnings
				  on such assets, and the considerations anticipated to be received and retained
				  under such insurer's policies and contracts;
(4) 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;
(5) whether the insurer's operating loss in
				  the last twelve 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 fifty percent (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 twelve-month period or any shorter period of time,
				  excluding net capital gains, is greater than twenty percent (20%) of the
				  insurer's remaining surplus as regards policyholders in excess of the minimum
				  required;
(7) whether a reinsurer,
				  obligor or any entity within the insurer's insurance holding company system, is
				  insolvent, threatened with insolvency, or delinquent in payment of its monetary
				  or other obligations, and which in the opinion of the Commissioner may 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) whether any person controlling a
				  substantial portion of the net written premiums of an insurer is delinquent in
				  the transmitting to, or payment of, net premiums to the insurer;
(10) the age and collectibility of
				  receivables;
(11) 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 such position;
(12) 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;
(13) whether the insurer has failed to meet
				  financial and holding company filing requirements in the absence of a reason
				  satisfactory to the Commissioner;
(14) whether management of an insurer either
				  has filed any false or misleading sworn financial statement, or has released
				  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;
(15) 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;
(16) whether the insurer has experienced or
				  will experience in the foreseeable future cash flow or liquidity
				  problems;
(17) whether management
				  has established reserves that do not comply with minimum standards established
				  by state insurance laws, regulations, statutory accounting standards, sound
				  actuarial principles or standards of practice;
(18) whether management persistently engages
				  in material under-reserving that results in adverse reserve development to meet
				  its claims;
(19) whether
				  transactions among affiliates, subsidiaries or any other person who directly or
				  indirectly controls the operation of the insurer, 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;
(20)
				  any other finding determined by the Commissioner to be hazardous to the
				  insurer's policyholders, creditors or general public.