Section 27-37-4 Disallowance of assets or credits for deception. - Alabama Statutes

Section 27-37-4

Disallowance of assets or credits for deception.

(a) The commissioner shall disallow as an asset or as a credit against liabilities any reinsurance found by him after a hearing thereon to have been arranged for on a temporary basis for the purpose principally of deception as to the ceding insurer's financial condition as at the date of any financial statement of the insurer. Reinsurance of any substantial part of the insurer's outstanding risks contracted for in fact within 90 days prior to the date of any such financial statement and cancelled in fact within 90 days after the date of such statement shall prima facie be deemed to have been arranged for the purpose of deception within the intent of this section.

(b) The commissioner shall disallow as an asset any deposit, funds, or other assets of the insurer found by him after a hearing thereon:

(1) Not to be in good faith the property of the insurer;

(2) Not freely subject to withdrawal or liquidation by the insurer at any time for the payment or discharge of claims or other obligations arising under its policies; and

(3) To be resulting from arrangements made principally for the purpose of deception as to the insurer's financial condition as at the date of any financial statement of the insurer.

(c) No such disallowance of assets or credits shall be valid unless made by the commissioner after a hearing of which notice was given the insurer within six months after the date the financial statement of the insurer as to which such deception is claimed was filed with the commissioner.

(d) The commissioner may suspend or revoke the certificate of authority of any insurer which has knowingly been a party to any such deception or attempt thereat.

(Acts 1971, No. 407, p. 707, §748.)