§ 58-62-61. Miscellaneous provisions. - North Carolina Statutes

§58‑62‑61.  Miscellaneous provisions.

(a)        Nothing in thisArticle reduces the liability for unpaid assessments of the insureds of adelinquent insurer operating under an insurance plan with assessment liability.

(b)        Records shall bekept of all negotiations and meetings in which the Association or itsrepresentatives are involved and in which the activities of the Association incarrying out its powers and duties under G.S. 58‑62‑36 arediscussed.  Records of those negotiations or meetings shall be made public onlyupon the termination of a liquidation, rehabilitation, or conservationproceeding involving the delinquent insurer, upon the termination of thedelinquency of the insurer, or upon the order of a court of competentjurisdiction.  Nothing in this subsection limits the duty of the Association torender a report of its activities under G.S. 58‑62‑66.

(c)        For the purpose ofcarrying out its obligations under this Article, the Association is a creditorof the delinquent insurer to the extent of assets attributable to coveredpolicies reduced by any amounts to which the Association is entitled assubrogee under G.S. 58‑62‑36(r).  Assets of the delinquent insurerattributable to covered policies shall be used to continue all covered policiesand pay all contractual obligations of the delinquent insurer as required bythis Article.  Assets attributable to covered policies, as used in thissubsection, are that proportion of the assets that the reserves that shouldhave been established for the policies bear to the reserves that should havebeen established for all policies of insurance written by the delinquentinsurer.

(d)        Before thetermination of any liquidation, rehabilitation, or conservation proceeding, thecourt may take into consideration the contributions of the respective parties,including the Association, the shareholders, and policyowners of the insolventinsurer, and any other party with a bona fide interest, in making an equitabledistribution of the ownership rights of the insolvent insurer.  In making sucha determination, consideration shall be given to the welfare of thepolicyholders of the continuing or successor insurer.

(e)        No distribution tostockholders, if any, of a delinquent insurer shall be made until and unlessthe Association has fully recovered the total amount of its valid claims withinterest thereon for funds expended in carrying out its powers and duties underG.S. 58‑62‑36 with respect to the insurer.

(f)         If an order forliquidation or rehabilitation of an insurer domiciled in this State has beenentered, the receiver appointed under the order has a right to recover onbehalf of the insurer, from any affiliate that controlled it, the amount ofdistributions, other than stock dividends paid by the insurer on its capitalstock, made at any time during the five years preceding the petition forliquidation or rehabilitation subject to the limitations of subsections (g)through (i) of this section.

(g)        No suchdistribution is recoverable if the insurer shows that when paid the distributionwas lawful and reasonable, and that the insurer did not know and could notreasonably have known that the distribution might adversely affect theinsurer's ability to fulfill its contractual obligations.

(h)        Any person who wasan affiliate that controlled the insurer when the distributions were paid isliable up to the amount of distributions it received.  Any person who was anaffiliate that controlled the insurer when the distributions were declared isliable up to the amount of distributions it would have received if they hadbeen paid immediately.  If two or more persons are liable with respect to thesame distributions, they are jointly and severally liable.

(i)         The maximum amountrecoverable under this subsection is the amount needed in excess of all otheravailable assets of the insolvent insurer to pay the insolvent insurer'scontractual obligations.

(j)         If any personliable under subsection (h) of this section is insolvent, all of its affiliatesthat controlled it when the distribution was paid are jointly and severallyliable for any resulting deficiency in the amount recovered from the insolventaffiliate. (1991, c. 681, s. 56.)