Section 375.1205

Title XXIV BUSINESS AND FINANCIAL INSTITUTIONS

Chapter 375

Effective - 28 Aug 1999   

  375.1205.  Distribution of assets, liquidator shall apply for, when — contents — notice provisions. — 1.  Within one year of a final order of liquidation of an insurer by a court of competent jurisdiction of this state, the liquidator shall make application to the court for approval of a proposal to make early access disbursements out of marshaled assets to a guaranty association or foreign guaranty association having obligations because of such insolvency.

  2.  Such proposal shall at least include provisions for:

  (1)  Reserving amounts for the payment of expenses of administration and the payment of claims of secured creditors, to the extent of the value of the security held, and claims falling within priority class I as established in section 375.1218;

  (2)  Initial disbursement of the assets marshaled to date, which shall be as soon as practicable and in any case not later than one hundred twenty days after the approval of the early access plan, and subsequent disbursement of assets which shall be at least annually;

  (3)  The securing by the liquidator from each of the guaranty associations or foreign guaranty associations entitled to disbursements pursuant to this section of an agreement to return to the liquidator such assets, together with income earned on assets previously disbursed, as may be required to pay claims of secured creditors and claims falling within the priorities established in sections 375.700 and 375.1218 in accordance with such priorities.  No bond or indemnity agreement shall be required of any such association;

  (4)  A full report to be made by each guaranty association or foreign guaranty association to the liquidator accounting for all assets so disbursed to the association, all disbursements made therefrom, any interest earned by the association on such assets and any other matter as the court may direct; and

  (5)  Disbursements to guaranty associations in sums as large as possible, subject to the limitations set forth in subdivision (1) of this subsection and subsection 4 of this section.  If the liquidator determines that there are insufficient assets to disburse at the time of any required disbursement, the liquidator shall make application to the court, with notice to the state insurance commissioners and guaranty associations pursuant to subsection 6 of this section, for approval of an intent not to disburse, stating the reasons for such determination.

  3.  Subject only to the provisions of subdivision (4) of subsection 2 of this section, guaranty associations shall not be charged interest on assets disbursed pursuant to this section.

  4.  The liquidator's proposal shall provide for disbursements to each guaranty association of foreign guaranty associations in amounts at least equal to the sum of claims payments and allocated lost adjustment expenses of each guaranty association, and a reasonable estimate of reserves for unpaid but known loss claims and allocated loss adjustment expenses expected to be paid within one year by each guaranty association.  Amounts used for such calculation shall be those reported to the liquidator by each guaranty association in its most recent financial report to the liquidator.  The liquidator's proposal shall further provide that if the assets available for required disbursements do not equal or exceed the amount of such claim payments to be made by the association, the required disbursements may be in the amount of available assets.  Unless otherwise provided by the court, the reserves of the insolvent insurer, as reflected in its records or in the financial examination leading to the finding of insolvency, on the date of the final order of liquidation, shall be used to determine the initial disbursement to the guaranty associations.  The liquidator shall liquidate the assets of the insurer in an expeditious manner, but is not required to make forced or quick sales that would result in obtaining less than market value for assets.

  5.  The liquidator's proposal shall, with respect to an insolvent insurer writing life or health insurance or annuities, provide for disbursements of assets to any guaranty association or any foreign guaranty association covering life or health insurance or annuities or to any other entity or organization reinsuring, assuming or guaranteeing policies or contracts of insurance pursuant to the laws creating such associations.

  6.  Notice of each application shall be given to each guaranty association or foreign guaranty associations in and to the commissioners of the insurance departments of each of the involved states.  Any such notice shall be deemed to have been given when deposited in the United States mail, certified delivery, first class postage prepaid, at least thirty days prior to submission of such application to the court.  Action on the application may be taken by the court provided the above-required notice has been given.

  7.  The liquidator shall not offset the amount to be disbursed to a guaranty association or a foreign guaranty association by the amount of any special deposit or any other statutory deposit or asset of the insolvent insurer held in this state or another state unless such deposit has been forwarded to the guaranty association.

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(L. 1991 H.B. 385, et al. § 83, A.L. 1992 H.B. 1574, A.L. 1999 S.B. 386)