Virginia Administrative Code › Title 14 - INSURANCE › Agency 5 - STATE CORPORATION COMMISSION, BUREAU OF INSURANCE › Chapter 290 - RULES ESTABLISHING STANDARDS FOR COMPANIES DEEMED TO BE IN HAZARDOUS FINANCIAL CONDITION › Section 14VAC5-290-30 - Standards

Current through Register Vol. 40, No. 24, July 15, 2024
The following factors and standards, either singly or a
				  combination of two or more, may be considered in determining whether an
				  insurer's financial condition, method of operation, or manner of doing business
				  in this Commonwealth might be deemed to be hazardous to its policyholders,
				  creditors, or the general public:
1.
				Adverse findings resulting from any financial condition or market conduct
				examination conducted pursuant to Article 4 (§ 38.2-1317 et seq.) of
				Chapter 13 of Title 38.2 of the Code of Virginia or any inspection authorized
				by the general provisions of § 38.2-200, including inspections of
				financial statements filed pursuant to §§ 38.2-1300, 38.2-1301,
				38.2-1316.2, 38.2-4811, or 38.2-5103 of the Code of Virginia, or reported in
				any examination or other information submitted pursuant to § 38.2-5103 of
				the Code of Virginia, or reported in any audit report, and actuarial opinions,
				reports, or summaries submitted pursuant to §§ 38.2-1315.1 and
				38.2-3127.1 of the Code of Virginia;
2. The National Association of Insurance
				Commissioners' ("NAIC") Insurance Regulatory Information System ("IRIS") and
				its other financial analysis solvency tools and reports;
3. The ratio of the annual premium volume to
				surplus or of liabilities to surplus in relation to loss experience and/or the
				kinds of risks insured;
4. Whether
				the insurer's asset portfolio when viewed in light of current economic
				conditions and indications of financial or operation leverage is of sufficient
				value, liquidity, or diversity to assure the company's ability to meet its
				outstanding obligations as they mature;
5. Whether the insurer has established
				reserves and related actuarial items that make 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 policies and contracts;
6. 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;
7. 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 nonadmitted 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;
8. Whether the insurer's 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
				policyholders in excess of the minimum required;
9. Whether the excess of surplus to
				policyholders over and above an insurer's statutorily required surplus to
				policyholders has decreased by more than 50% in the preceding 12-month period
				or any shorter period of time;
10.
				The age and collectibility of receivables;
11. 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 may affect the solvency of the insurer;
12. Contingent liabilities, pledges or
				guaranties that either individually or collectively involve a total amount that
				may affect the solvency of the insurer;
13. Whether any affiliate of an insurer is
				delinquent in the transmitting to, or payment of, net premiums or other amounts
				due to such insurer;
14. Whether
				the management of an insurer, including officers, directors, or any other
				person who directly or indirectly controls the operation of such insurer, fails
				to possess and demonstrate the competence, fitness and reputation deemed
				necessary to serve the insurer in such position;
15. Whether the 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;
16. Whether the insurer has failed to meet
				financial and holding company filing requirements in the absence of a reason
				satisfactory to the commission;
17.
				Whether the management of an insurer either has filed any false or misleading
				sworn financial statement, or has released any 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;
18. 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;
19. Whether the insurer has
				experienced or will experience in the foreseeable future cash flow and/or
				liquidity problems;
20. Whether
				management has established reserves and related actuarial values that do not
				comply with the requirements of Title 38.2 of the Code of Virginia, related
				rules, regulations, administrative promulgations, and statutory accounting
				standards, or that are not computed in accordance with presently accepted
				actuarial standards consistently applied and in accordance with sound actuarial
				principles and standards of practice;
21. Whether management persistently engages
				in material under reserving that results in adverse development;
22. 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; or
23. Any other
				finding determined by the commission to be hazardous to the insurer's
				policyholders, creditors, or the general public.
Statutory Authority
§§ 12.1-13 and 38.2-223 of the Code of Virginia.