2006 Minnesota Statutes

60G.20 STANDARDS.
    Subdivision 1. Hazardous consideration. The following standards, either singly or a
combination of two or more, may be considered by the commissioner to determine whether the
continued operation of any insurer, whether domestic, foreign, or alien, transacting an insurance
business in this state may be considered hazardous to the policyholders, creditors or the general
public. The commissioner may consider:
(1) an adverse finding reported in financial condition and market conduct examination
reports;
(2) the National Association of Insurance Commissioners insurance regulatory information
system and its related reports;
(3) the ratios of commission expense, general insurance expense, policy benefits, and reserve
increases as to annual premium and net investment income which may lead to an impairment of
capital and surplus;
(4) whether the insurer's asset portfolio when viewed in light of current economic conditions
is not of sufficient value, liquidity, or diversity to assure the company's ability to meet its
outstanding obligations as they mature;
(5) the ability of an assuming reinsurer to perform and whether the insurer's reinsurance
program provides sufficient protection for the company'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;
(6) 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 percent of the insurer's remaining surplus
as regards policyholders in excess of the minimum required;
(7) whether any affiliate, subsidiary, or reinsurer is insolvent, threatened with insolvency,
or delinquent in payment of its monetary or other obligations;
(8) contingent liabilities, pledges, or guaranties which either individually or collectively
involve a total amount which in the opinion of the commissioner may affect the solvency of
the insurer;
(9) whether any "controlling person" of an insurer is delinquent 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, including officers, directors, or any other person
who directly or indirectly controls the operation of the insurer, fails to possess and demonstrate
the competence, fitness, and reputation necessary to serve the insurer in the position;
(12) whether 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;
(13) whether management of an 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 insurer;
(14) 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; or
(15) whether the company has experienced or will experience in the foreseeable future cash
flow or liquidity problems.
    Subd. 2. Commissioner's authority. For the purposes of making a determination of an
insurer's financial condition under subdivision 1, the commissioner may:
(1) disregard any credit or amount receivable resulting from transactions with a reinsurer
which is insolvent, impaired, or otherwise subject to a delinquency proceeding;
(2) make appropriate adjustments to asset values attributable to investments in or transactions
with the corporation's parents, subsidiaries, or affiliates;
(3) refuse to recognize the stated value of accounts receivable if the ability to collect
receivables is highly speculative in view of the age of the account or the financial condition
of the debtor; or
(4) increase the insurer's liability in an amount equal to any contingent liability, pledge, or
guarantee not otherwise included if there is a substantial risk that the insurer will be called upon
to meet the obligation undertaken within the next 12-month period.
History: 1991 c 325 art 3 s 1