§ 23-69-138 - Impairment of capital or assets.
23-69-138. Impairment of capital or assets.
(a) (1) (A) If a stock or mutual insurer becomes impaired or insolvent, the Insurance Commissioner shall at once:
(i) Determine the amount of the deficiency; and
(ii) Serve notice upon the insurer to make good the deficiency within thirty (30) days after service of the notice.
(B) After a hearing, the commissioner may suspend the insurer from soliciting or writing any new coverages in this state until the deficiency is made good.
(2) For the purposes of this section, "insolvent" or "impairment" shall be defined as those terms are used in the Uniform Insurers Liquidation Act, 23-68-101, 23-68-102(2)-(13), 23-68-104, 23-68-105, 23-68-113, and 23-68-115 -- 23-68-120.
(b) The deficiency may be made good in cash or in assets eligible under the provisions of 23-63-801 et seq., which refers to investments, for the investment of the insurer's funds or, if a stock insurer, by reduction of the insurer's capital to an amount not below the minimum required for the kinds of insurance thereafter to be transacted or by amendment of its certificate of authority to cover only such kinds of insurance thereafter for which the insurer has sufficient capital, if a stock insurer, or surplus, if a mutual insurer, under the Arkansas Insurance Code.
(c) (1) If the deficiency is not made good and proof thereof filed with the commissioner within the thirty-day period:
(A) The insurer shall be deemed insolvent; and
(B) The commissioner shall institute delinquency proceedings against the insurer under the Uniform Insurers Liquidation Act, 23-68-101, 23-68-102(2)-(13), 23-68-104, 23-68-105, 23-68-113, and 23-68-115 -- 23-68-120.
(2) (A) However, if the deficiency exists because of increased loss reserves required by the commissioner or because of disallowance by the commissioner of certain assets or reduction of the value at which carried in the insurer's accounts, the commissioner in his or her discretion and upon application and good cause shown may extend for not more than an additional thirty (30) days the period within which the deficiency may be made good and the proof thereof filed.
(B) However, acquisitions or changes of control of an impaired or insolvent domestic insurer that is or has applied to become an affiliate or subsidiary of a depository institution pursuant to federal law shall comply with the time periods set forth therein to restore capital or surplus.
(d) This section shall apply only to:
(1) Monoline mortgage guaranty insurers, financial guaranty insurers, and title insurers that are excluded by definition from compliance with risk-based capital laws under 23-63-1302;
(2) Organizations licensed as either life and health insurers or property and casualty insurers that are otherwise subject to either the life or property and casualty risk-based capital requirements and are excluded by definition from compliance with risk-based capital laws under 23-63-1501; and
(3) Domestic stock and mutual insurers that, at the commissioner's discretion, are exempted from compliance with risk-based capital laws under 23-63-1310 or 23-63-1509.