§ 27-14.2-2 - Standards. - Rhode Island Statutes

SECTION 27-14.2-2

   § 27-14.2-2  Standards. – (a) The following standards, either singly or a combination of two (2) or more,may be considered by the director to determine whether the continued operationof any insurer transacting an insurance business in this state might be deemedto be hazardous to the policyholders, creditors, or the general public. Thedirector may consider:

   (1) Adverse findings reported in financial condition andmarket conduct examination reports;

   (2) The National Association of Insurance Commissionersinsurance regulatory information system and its related reports;

   (3) The ratios of commission expense, general insuranceexpense, policy benefits and reserve increases as to annual premium and netinvestment income, which could lead to an impairment of capital and surplus;

   (4) The insurer's asset portfolio when viewed in light ofcurrent economic conditions is not of sufficient value, liquidity, or diversityto assure the company's ability to meet its outstanding obligations as theymature;

   (5) The ability of an assuming reinsurer to perform andwhether the insurer's reinsurance program provides sufficient protection forthe company's remaining surplus after taking into account the insurer's cashflow and the classes of business written and the financial condition of theassuming reinsurer;

   (6) The insurer's operating loss in the last twelve (12)month period or any shorter period of time, including but not limited to netcapital gain or loss, change in nonadmitted assets, and cash dividends paid toshareholders, is greater than fifty percent (50%) of the insurer's remainingsurplus as regards policyholders in excess of the minimum required;

   (7) Whether any affiliate, subsidiary, or reinsurer isinsolvent, threatened with insolvency, or delinquent in payment of its monetaryor other obligation;

   (8) Contingent liabilities, pledges, or guaranties thateither individually or collectively involve a total amount which in the opinionof the director may affect the solvency of the insurer;

   (9) Whether any "controlling person" of an insurer isdelinquent in the transmitting to, or payment of, net premiums to the insurer;

   (10) The age and collectibility of receivables;

   (11) Whether the management of an insurer, includingofficers, directors, or any other person who directly or indirectly controlsthe operation of the insurer, fails to possess and demonstrate the competence,fitness, and reputation deemed necessary to serve the insurer in the position;

   (12) Whether the management of an insurer has failed torespond to inquiries relative to the condition of the insurer or has furnishedfalse and misleading information concerning an inquiry;

   (13) Whether the management of an insurer either has filedany false or misleading sworn financial statement, or has released a false ormisleading financial statement to lending institutions or to the generalpublic, or has made a false or misleading entry, or has omitted an entry ofmaterial amount in the books of the insurer;

   (14) Whether the insurer has grown so rapidly and to such anextent that it lacks adequate financial and administrative capacity to meet itsobligations in a timely manner; or

   (15) Whether the company has experienced or will experiencein the foreseeable future cash flow and/or liquidity problems.

   (b) The standards enumerated in subsection (a) of thissection shall not be construed as limiting the director from making a findingthat other conditions not specifically enumerated also constitute hazardousconditions.