Oregon Administrative Rules › Chapter 836 - DEPARTMENT OF CONSUMER AND BUSINESS SERVICES, INSURANCE REGULATION › Division 29 - CAPTIVE INSURERS › Section 836-029-0095 - Standards

Current through Register Vol. 63, No. 7, July 1, 2024
The director may consider the following standards, either
				singly or in combination of two or more, to determine whether the continued
				operation of any captive insurer transacting insurance in this state might be
				determined to be hazardous to the policyholders, its creditors or the general
				public:
(1) Adverse findings reported
			 in financial condition and audit reports, and actuarial opinions, reports or
			 summaries.
(2) Whether the captive
			 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 captive insurer, when
			 considered in light of the assets held by the captive insurer with respect to
			 such reserves and related actuarial items including but not limited the
			 investment earnings on such assets, and the considerations anticipated to be
			 received and retained under such policies and contracts.
(3) The ability of an assuming reinsurer to
			 perform and whether the captive insurer's reinsurance program provides
			 sufficient protection for the captive insurer's remaining capital and surplus
			 after taking into account the captive insurer's cash flow and the classes of
			 business written as well as the financial condition of the assuming
			 reinsurer.
(4) Whether the captive
			 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
			 percent of the captive insurer's remaining capital and surplus in excess of the
			 minimum required.
(5) Whether the
			 captive insurer's operating loss in the last 12-month period or any shorter
			 period of time, excluding net capital gains, is greater than 20 percent of the
			 captive insurer's remaining surplus as regards policyholders in excess of the
			 minimum required.
(6) Whether a
			 reinsurer or obligor, or any entity within the captive 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 director may affect the solvency of the captive insurer.
(7) Contingent liabilities, pledges or
			 guaranties that either individually or collectively involve a total amount that
			 in the opinion of the director may affect the solvency of the captive
			 insurer.
(8) Whether any
			 "controlling person" of a captive insurer is delinquent in the transmitting to,
			 or payment of, net premiums to the captive insurer.
(9) The age and collectability of
			 receivables.
(10) Whether the
			 management of a captive insurer, including officers, directors or any other
			 person who directly or indirectly controls the operation of the captive
			 insurer, fails to possess and demonstrate the competence, fitness and
			 reputation determined by the director to be necessary to serve the captive
			 insurer in such position.
(11)
			 Whether management of a captive insurer has failed to respond to inquiries
			 relating to the condition of the captive insurer or has furnished false and
			 misleading information concerning an inquiry.
(12) Whether the captive insurer has failed
			 to meet financial and holding company filing requirements in the absence of a
			 reason satisfactory to the director.
(13) Whether management of an captive 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 captive insurer.
(14) Whether the captive 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.
(15) Whether the captive insurer has
			 experienced or will experience in the foreseeable future cash flow or liquidity
			 problems, or both.
(16) 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 standards of practice.
(17) Whether management persistently engages
			 in material under reserving that results in adverse development.
(18) Whether transactions among affiliates,
			 subsidiaries or controlling persons for which the captive insurer receives
			 assets or capital gains, or both, do not provide sufficient value, liquidity or
			 diversity to assure the captive insurer's ability to meet its outstanding
			 obligations as they mature.
(19)
			 Any other finding determined by the director to be hazardous to the captive
			 insurer's policyholders, creditors or general public.
Stat. Auth.: ORS
				  731.244, 2012 OL Ch. 84, Sec. 4
				  (Enrolled SB 1547)
Stats. Implemented: 2012 OL Ch. 84, Sec. 2-22 (Enrolled SB
				  1547)