§ 23-96-119 — Distributions of ownership rights

Arkansas § 23-96-119

• Jurisdiction: Arkansas
• Title: 23

Text

(a) (1) (A) Before the termination of any liquidation, rehabilitation, or conservation proceeding, the court may take into consideration the contributions of the respective parties, including the Arkansas Life and Health Insurance Guaranty Association, the shareholders, contract owners, certificate holders, enrollees, and policy owners of the insolvent insurer, and any other party with a bona fide interest, in making an equitable distribution of the ownership rights of the insolvent insurer. (B) In such a determination, consideration shall be given to the welfare of the policy owners, contract owners, certificate holders, and enrollees of the continuing or successor member insurer. (2) A distribution to stockholders, if any, of an impaired insurer or insolvent insurer shall not be made until the total amount of valid claims of the association with interest thereon for funds expended in carrying out its powers and duties under §§ 23-96-111 - 23-96-114 and 23-96-120 with respect to the member insurer has been fully recovered by the association. (b) (1) If an order for liquidation or rehabilitation of a member insurer domiciled in this state has been entered, the receiver appointed under the order shall have a right to recover on behalf of the member insurer, from any affiliate that controlled it, the amount of distributions, other than stock dividends paid by the member insurer on its capital stock, made at any time during the five (5) years preceding the petition for liquidation or rehabilitation subject to the limitations of subdivisions (b)(2)-(4) of this section. (2) Such a distribution is not recoverable if the member insurer shows that, when paid, the distribution was lawful and reasonable and that the member insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the member insurer to fulfill its contractual obligations. (3) (A) Any person that was an affiliate that controlled the member insurer at the time the distributions were paid shall be liable up to the amount of distributions the person received. (B) Any person that was an affiliate that controlled the member insurer at the time the distributions were declared shall be liable up to the amount of distributions the person would have received if the distributions had been paid immediately. (C) If two (2) or more persons are liable with respect to the same distributions, they shall be jointly and severally liable. (4) The maximum amount recoverable under this subsection shall be the amount needed in excess of all other available assets of the insolvent insurer to pay the contractual obligations of the insolvent insurer. (5) If any person liable under subdivision (b)(3) of this section is insolvent, all of the affiliates that controlled the person at the time the distribution was paid shall be jointly and severally liable for any resulting deficiency in the amount recovered from the insolvent affiliate.

Legislative History

Amended by Act 2019, No. 520,§ 2, eff. 7/24/2019. Acts 1989, No. 444, § 14; 1997, No. 950, § 1.