Pennsylvania Code › Title 31 - INSURANCE › Part VIII - Miscellaneous Provisions › Chapter 160 - STANDARDS TO DEFINE INSURERS DEEMED TO BE IN HAZARDOUS FINANCIAL CONDITION › Section 160.3 - Standards

Current through Register Vol. 54, No. 28, July 13, 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 an insurer transacting an insurance business in this
				  Commonwealth might be deemed to be financially hazardous to the general public,
				  holders of policies or certificates of insurance, or creditors. The
				  Commissioner may consider one or more of the following:
(1) A failure by the insurer to maintain
				working capital, as required by law or regulation, based on the nature, type
				and volume of insurance being transacted by the insurer.
(2) Material adverse findings relating to an
				insurer's financial condition reported in financial condition or market conduct
				examination reports; audit reports and other communications required under
				Chapter 147 (relating to annual financial reporting requirements); or actuarial
				opinions, reports, work papers or summaries.
(3) Financial analysis ratios, analyst team
				reports and other financial analytical results produced by the NAIC.
(4) Whether the insurer's net loss from
				operations in the last 12-month period or shorter period of time, excluding net
				realized capital gains, is greater than 20% of the insurer's surplus in excess
				of the statutorily required minimum capital and surplus.
(5) Whether the insurer's asset portfolio
				when viewed in light of current economic conditions with respect to value,
				liquidity or diversity is sufficient to assure the company's ability to meet
				its outstanding obligations as they mature.
(6) The ability of an assuming reinsurer to
				perform and whether the insurer's reinsurance program provides sufficient
				protection for the insurer's 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.
(7) Whether the insurer's net loss in the
				last 12-month period or a shorter period of time, including change in
				nonadmitted assets, net realized and unrealized capital gain or loss, cash
				dividends paid to shareholders, and other direct charges against surplus is
				greater than 50% of the insurer's surplus in excess of the statutorily required
				minimum capital and surplus.
(8)
				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 monetary or other obligations.
(9) Contingent liabilities, pledges or
				guaranties in relationship to the insurer's surplus.
(10) Whether a controlling person, under the
				laws relating to insurance holding companies, of an insurer is delinquent in
				the transmitting to, or payment of, net premiums to the insurer.
(11) The age and collectibility of
				receivables.
(12) Whether the
				management of an insurer, including officers, directors or another 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.
(13) Whether management of an insurer has
				failed to respond to inquiries by the Commissioner or members of the
				Commissioner's staff relative to the condition of the insurer or has furnished
				false or misleading information concerning the inquiries.
(14) Whether management of an insurer has
				done one of the following:
(i) Filed a false
				or misleading sworn financial statement, or released a false or misleading
				financial statement to lending institutions or to the general public.
(ii) Made a false or misleading entry, or
				omitted an entry of material amount in the books of the insurer.
(iii) Established reserves that do not comply
				with minimum standards as required by law, regulation, statutory accounting
				practices and accepted actuarial standards and principles.
(iv) Engaged in material under-reserving that
				resulted in continued adverse development reported in financial statements
				filed with the Department.