Sec. 38a-914. (Formerly Sec. 38-432). Grounds for rehabilitation.
Sec. 38a-914. (Formerly Sec. 38-432). Grounds for rehabilitation. The commissioner may apply by petition to the Superior Court for an order authorizing him to
rehabilitate a domestic insurer or an alien insurer domiciled in this state on any one or
more of the following grounds:
(a) The insurer is in such condition that the further transaction of business would
be hazardous, financially, to its policyholders, creditors or the public.
(b) There is reasonable cause to believe that there has been embezzlement from the
insurer, wrongful sequestration or diversion of the insurer's assets, forgery or fraud
affecting the insurer, or other illegal conduct in, by, or with respect to the insurer that
if established would endanger assets in an amount threatening the solvency of the insurer.
(c) The insurer has failed to remove any person who in fact has executive authority
in the insurer, whether an officer, manager, general agent, employee, or other person,
if the person has been found after notice and hearing by the commissioner to be dishonest
or untrustworthy in a way affecting the insurer's business.
(d) Control of the insurer, whether by stock ownership or otherwise, and whether
direct or indirect, is in a person or persons found after notice and hearing to be dishonest
or untrustworthy.
(e) Any person who in fact has executive authority in the insurer, whether an officer,
manager, general agent, director or trustee, employee or other person has refused to be
examined under oath by the commissioner concerning its affairs, whether in this state
or elsewhere, and after reasonable notice of the fact the insurer has failed promptly and
effectively to terminate the employment and status of the person and all his influence
on management.
(f) After demand by the commissioner pursuant to section 38a-14 or pursuant to
sections 38a-903 to 38a-961, inclusive, the insurer has failed to promptly make available
for examination any of its own property, books, accounts, documents or other records,
or those of any subsidiary or related company within the control of the insurer, or those
of any person having executive authority in the insurer so far as they pertain to the
insurer.
(g) Without first obtaining the written consent of the commissioner, the insurer has
transferred or attempted to transfer, in a manner contrary to section 38a-136, substantially its entire property or business, or has entered into any 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.
(h) The insurer or its property has been or is the subject of an application for the
appointment of a receiver, trustee, custodian, conservator or sequestrator or similar
fiduciary of the insurer or its property otherwise than as authorized under the insurance
laws of this state, and such appointment has been made or is imminent, and such appointment might oust the courts of this state of jurisdiction or might prejudice orderly delinquency proceedings under sections 38a-903 to 38a-961, inclusive.
(i) Within the previous four years the insurer has wilfully violated its charter or
articles of incorporation, its bylaws, any insurance laws of this state or any valid order
of the commissioner.
(j) The insurer has failed to pay within sixty days after due date any obligation to
any state or any subdivision thereof or any judgment entered in any state, if the court
in which such judgment was entered had jurisdiction over such subject matter except
that such nonpayment shall not be a ground until sixty days after any good faith effort
by the insurer to contest the obligation has been terminated, whether it is before the
commissioner or in the courts, or the insurer has systematically attempted to compromise
or renegotiate previously agreed settlements with its creditors on the ground that it is
financially unable to pay its obligations in full.
(k) The insurer has failed to file its annual report or other financial report required
by statute within the time allowed by law and, after written demand by the commissioner,
has failed to give an adequate explanation immediately.
(l) 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 38a-904, request or consent to rehabilitation under sections 38a-903 to 38a-961,
inclusive.
(P.A. 79-382, S. 12; P.A. 92-93, S. 10.)
History: Sec. 38-432 transferred to Sec. 38a-914 in 1991; P.A. 92-93 made technical corrections for statutory consistency.