(1) The commissioner may petition a court with jurisdiction under Title 78A, Judiciary and Judicial Administration, with respect to an insurer domiciled in this state or an unauthorized insurer for an order of rehabilitation or liquidation on any one or more of the following grounds:

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Terms Used In Utah Code 31A-27a-207

  • Affiliate: is a s defined in Section 31A-1-301. See Utah Code 31A-27a-102
  • Application: means a document:
         (10)(a)
              (10)(a)(i) completed by an applicant to provide information about the risk to be insured; and
              (10)(a)(ii) that contains information that is used by the insurer to evaluate risk and decide whether to:
                   (10)(a)(ii)(A) insure the risk under:
                        (10)(a)(ii)(A)(I) the coverage as originally offered; or
                        (10)(a)(ii)(A)(II) a modification of the coverage as originally offered; or
                   (10)(a)(ii)(B) decline to insure the risk; or
         (10)(b) used by the insurer to gather information from the applicant before issuance of an annuity contract. See Utah Code 31A-1-301
  • articles of incorporation: means :
         (11)(a) the original articles;
         (11)(b) a special law;
         (11)(c) a charter;
         (11)(d) an amendment;
         (11)(e) restated articles;
         (11)(f) articles of merger or consolidation;
         (11)(g) a trust instrument;
         (11)(h) another constitutive document for a trust or other entity that is not a corporation; and
         (11)(i) an amendment to an item listed in Subsections (11)(a) through (h). See Utah Code 31A-1-301
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • board of directors: means the group of persons with responsibility over, or management of, a corporation, however designated. See Utah Code 31A-1-301
  • Certificate: means evidence of insurance given to:
         (23)(a) an insured under a group insurance policy; or
         (23)(b) a third party. See Utah Code 31A-1-301
  • Commissioner: is a s defined in Section 31A-1-301. See Utah Code 31A-27a-102
  • Control: is a s defined in Section 31A-1-301. See Utah Code 31A-27a-102
  • Director: means a member of the board of directors of a corporation. See Utah Code 31A-1-301
  • domiciliary state: means the state in which an insurer is incorporated or organized, except that "domiciliary state" means:
         (12)(a) in the case of an alien insurer, its state of entry; or
         (12)(b) in the case of a risk retention group, the state in which the risk retention group is chartered as contemplated in the Liability Risk Retention Act, Utah Code 31A-27a-102
  • Embezzlement: In most states, embezzlement is defined as theft/larceny of assets (money or property) by a person in a position of trust or responsibility over those assets. Embezzlement typically occurs in the employment and corporate settings. Source: OCC
  • Employee: means :
         (57)(a) an individual employed by an employer; or
         (57)(b) an individual who meets the requirements of Subsection (55)(b). See Utah Code 31A-1-301
  • Fiduciary: A trustee, executor, or administrator.
  • Forgery: The fraudulent signing or alteration of another's name to an instrument such as a deed, mortgage, or check. The intent of the forgery is to deceive or defraud. Source: OCC
  • Fraud: Intentional deception resulting in injury to another.
  • Good faith: means honesty in fact and intention, and in regard to Part 5, Asset Recovery, also requires the absence of:
         (19)(a) information that would lead a reasonable person in the same position to know that the insurer is financially impaired or insolvent; and
         (19)(b) knowledge regarding the imminence or pendency of a delinquency proceeding against the insurer. See Utah Code 31A-27a-102
  • Impaired: means that an insurer:
         (21)(a) does not have admitted assets at least equal to the sum of:
              (21)(a)(i) all its liabilities; and
              (21)(a)(ii) the minimum surplus required to be maintained by Section 31A-5-211 or 31A-8-209; or
         (21)(b) has a total adjusted capital that is less than its authorized control level RBC, as defined in Section 31A-17-601. See Utah Code 31A-27a-102
  • insolvent: means that an insurer:
         (22)(a) is unable to pay its obligations when they are due;
         (22)(b) does not have admitted assets at least equal to all of its liabilities; or
         (22)(c) has a total adjusted capital that is less than its mandatory control level RBC, as defined in Section 31A-17-601. See Utah Code 31A-27a-102
  • Insurance: includes :
              (96)(b)(i) a risk distributing arrangement providing for compensation or replacement for damages or loss through the provision of a service or a benefit in kind;
              (96)(b)(ii) a contract of guaranty or suretyship entered into by the guarantor or surety as a business and not as merely incidental to a business transaction; and
              (96)(b)(iii) a plan in which the risk does not rest upon the person who makes an arrangement, but with a class of persons who have agreed to share the risk. See Utah Code 31A-1-301
  • insurer: means a person who:
         (23)(a) is doing, has done, purports to do, or is licensed to do the business of insurance;
         (23)(b) is or has been subject to the authority of, or to rehabilitation, liquidation, reorganization, supervision, or conservation by an insurance commissioner; or
         (23)(c) is included under Section 31A-27a-104. See Utah Code 31A-27a-102
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • Oath: A promise to tell the truth.
  • Oath: includes "affirmation. See Utah Code 68-3-12.5
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Order: means an order of the commissioner. See Utah Code 31A-1-301
  • Person: includes :
         (146)(a) an individual;
         (146)(b) a partnership;
         (146)(c) a corporation;
         (146)(d) an incorporated or unincorporated association;
         (146)(e) a joint stock company;
         (146)(f) a trust;
         (146)(g) a limited liability company;
         (146)(h) a reciprocal;
         (146)(i) a syndicate; or
         (146)(j) another similar entity or combination of entities acting in concert. See Utah Code 31A-1-301
  • Proceeding: includes an action or special statutory proceeding. See Utah Code 31A-1-301
  • Property: includes both real and personal property. See Utah Code 68-3-12.5
  • receiver: means the commissioner or the commissioner's designee, including a rehabilitator, liquidator, or ancillary receiver. See Utah Code 31A-27a-102
  • State: means a state, district, or territory of the United States. See Utah Code 31A-27a-102
  • Statute: A law passed by a legislature.
  • Subsidiary: is a s defined in Section 31A-1-301. See Utah Code 31A-27a-102
  • Surplus: means the excess of assets over the sum of paid-in capital and liabilities. See Utah Code 31A-1-301
  • Transfer: includes the sale and every other and different mode of disposing of or parting with property or with an interest in property, whether:
              (46)(a)(i) directly or indirectly;
              (46)(a)(ii) absolutely or conditionally;
              (46)(a)(iii) voluntarily or involuntarily; or
              (46)(a)(iv) by or without judicial proceedings. See Utah Code 31A-27a-102
  • Trustee: means "director" when referring to the board of directors of a corporation. See Utah Code 31A-1-301
  • Trustee: A person or institution holding and administering property in trust.
  • unauthorized insurer: means an insurer transacting the business of insurance in this state that has not received a certificate of authority from this state, or some other type of authority that allows for the transaction of the business of insurance in this state. See Utah Code 31A-27a-102
     (1)(a) the insurer is impaired;
     (1)(b) the insurer is insolvent;
     (1)(c) subject to Subsection (2), the insurer is about to become insolvent;
     (1)(d)

          (1)(d)(i) the insurer neglects or refuses to comply with an order of the commissioner to make good within the time prescribed by law any deficiency;
          (1)(d)(ii) if a stock company, if its capital and minimum required surplus is impaired; or
          (1)(d)(iii) if a company other than a stock company, if its surplus is impaired;
     (1)(e) the insurer, its parent company, its subsidiary, or its affiliate:

          (1)(e)(i) converts, wastes, or conceals property of the insurer; or
          (1)(e)(ii) otherwise improperly disposes of, dissipates, uses, releases, transfers, sells, assigns, hypothecates, or removes the property of the insurer;
     (1)(f) the insurer is in such condition that the insurer could not meet the requirements for organization and authorization as required by law, except as to the amount of:

          (1)(f)(i) the original surplus required of a stock company under Sections 31A-5-211 and 31A-8-209; and
          (1)(f)(ii) the surplus required of a company other than a stock company in excess of the minimum surplus required to be maintained;
     (1)(g) the insurer, its parent company, its subsidiary, or its affiliate:

          (1)(g)(i) conceals, removes, alters, destroys, or fails to establish and maintain records and other pertinent material adequate for the determination of the financial condition of the insurer by examination under Section 31A-2-203; or
          (1)(g)(ii) fails to properly administer claims or maintain claims records that are adequate for the determination of its outstanding claims liability;
     (1)(h) at any time after the issuance of an order under Subsection 31A-2-201(4), or at the time of instituting a proceeding under this chapter, it appears to the commissioner that upon good cause shown, it is not in the best interest of the policyholders, creditors, or the public to proceed with the conduct of the business of the insurer;
     (1)(i) the insurer is in such condition that the further transaction of business would be hazardous financially, according to Subsection 31A-17-609(3) or otherwise, to its policyholders, creditors, or the public;
     (1)(j) there is reasonable cause to believe that:

          (1)(j)(i) there has been:

               (1)(j)(i)(A) embezzlement from the insurer;
               (1)(j)(i)(B) wrongful sequestration or diversion of the insurer’s property;
               (1)(j)(i)(C) forgery or fraud affecting the insurer; or
               (1)(j)(i)(D) other illegal conduct in, by, or with respect to the insurer; and
          (1)(j)(ii) the act described in Subsection (1)(j)(i) if established would endanger assets in an amount threatening the solvency of the insurer;
     (1)(k) control of the insurer is in a person who is:

          (1)(k)(i) dishonest;
          (1)(k)(ii) untrustworthy; or
          (1)(k)(iii) so lacking in insurance company managerial experience or capability as to be hazardous to policyholders, creditors, or the public;
     (1)(l) if:

          (1)(l)(i) a person who in fact has executive authority in the insurer, whether an officer, manager, general agent, director, trustee, employee, shareholder, or other person:

               (1)(l)(i)(A) refuses to be examined under oath by the commissioner concerning the insurer’s affairs, whether in this state or elsewhere; or
               (1)(l)(i)(B) if examined under oath, refuses to divulge pertinent information reasonably known to the person; and
          (1)(l)(ii) after reasonable notice of the facts described in Subsection (1)(l)(i), the insurer fails promptly and effectively to terminate:

               (1)(l)(ii)(A) the employment or status of the person; and
               (1)(l)(ii)(B) all of the person’s influence on management;
     (1)(m) after demand by the commissioner under Section 31A-2-203 or under this chapter, the insurer fails to promptly make available for examination:

          (1)(m)(i) any of its own property, accounts, or records; or
          (1)(m)(ii) so far as it pertains to the insurer, property, accounts, or records of:

               (1)(m)(ii)(A) a subsidiary or related company within the control of the insurer; or
               (1)(m)(ii)(B) a person having executive authority in the insurer;
     (1)(n) without first obtaining the written consent of the commissioner, the insurer:

          (1)(n)(i) transfers, or attempts to transfer, in a manner contrary to Section 31A-5-508 or 31A-16-103, substantially its entire property or business; or
          (1)(n)(ii) enters into a transaction the effect of which is to merge, consolidate, or reinsure substantially its entire property or business in or with the property or business of any other person;
     (1)(o) the insurer or its property has been or is the subject of an application for the appointment of a receiver, trustee, custodian, conservator, sequestrator, or similar fiduciary of the insurer or its property otherwise than as authorized under the insurance laws of this state;
     (1)(p) within the previous five years the insurer willfully and continuously violates:

          (1)(p)(i) its charter or articles of incorporation;
          (1)(p)(ii) its bylaws;
          (1)(p)(iii) an insurance law of this state; or
          (1)(p)(iv) a valid order of the commissioner;
     (1)(q) the insurer fails to pay within 60 days after the due date:

          (1)(q)(i)

               (1)(q)(i)(A) an obligation to any state or any subdivision of a state; or
               (1)(q)(i)(B) a judgment entered in any state, if the court in which the judgment is entered has jurisdiction over the subject matter; and
          (1)(q)(ii) except that nonpayment is not a ground until 60 days after a good faith effort by the insurer to contest the obligation has been terminated, whether it is before the commissioner or in the courts;
     (1)(r) the insurer systematically:

          (1)(r)(i) engages in the practice of:

               (1)(r)(i)(A) reaching settlements with and obtaining releases from claimants; and
               (1)(r)(i)(B) unreasonably delaying payment, or failing to pay the agreed-upon settlements; or
          (1)(r)(ii) attempts to compromise with claimants or other creditors on the ground that it is financially unable to pay its claims or obligations in full;
     (1)(s) the insurer fails to file its annual report or other financial report required by statute within the time allowed by law;
     (1)(t) the board of directors or the holders of a majority of the shares entitled to vote, or a majority of those individuals entitled to the control of those entities specified in Section 31A-27a-104, request or consent to rehabilitation or liquidation under this chapter;
     (1)(u)

          (1)(u)(i) the insurer does not comply with its domiciliary state‘s requirements for issuance to it of a certificate of authority; or
          (1)(u)(ii) the insurer’s certificate of authority is revoked by its state of domicile; or
     (1)(v) when authorized by Chapter 17, Part 6, Risk-Based Capital.
(2) For purposes of this section, an insurer is about to become insolvent if it is reasonably anticipated that the insurer will not have liquid assets to meet its current obligations for the next 90 days.

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