§ 10-3-1712 — Resulting insurers' liability for allocated assets and debts

(1)
Except as expressly provided in this section, when a division becomes effective, by
operation of law all of the following apply:

(a) A resulting insurer is individually liable for the liabilities, including policy
liabilities:

(I) That the resulting insurer issues, undertakes, or incurs in its own name
after the division; and

(II) Of the dividing insurer that are allocated to or remain the liability of the
resulting insurer to the extent specified in the plan of division;

(b) The dividing insurer remains responsible for the liabilities, including
policy liabilities, of the dividing insurer that are not allocated by the plan of division
if the dividing insurer survives the division; and

(c) A resulting insurer is liable pro rata individually for the liabilities,
including policy liabilities, of the dividing insurer that are not allocated by the plan
of division if the dividing insurer does not survive the division.

(2) Except as otherwise expressly provided in this section, when a division
becomes effective, a resulting insurer is not responsible for and does not have
liability for:

(a) Any liabilities, including policy liabilities, that another resulting insurer
issues, undertakes, or incurs in the resulting insurer's own name after the division;
or

(b) Any liabilities, including policy liabilities, of the dividing insurer that are
allocated to or remain the liability of another resulting insurer under the plan of
division.

(3) If a provision of any evidence of indebtedness, whether secured or
unsecured, or a provision of any contract other than an insurance policy, annuity, or
reinsurance agreement that was issued, incurred, or executed by the dividing
insurer before September 7, 2021, requires the consent of the obligee to a merger
of the dividing insurer, or treats such a merger as a default, the provision applies to
a division of the dividing insurer as if the division were a merger.

(4) If a division breaches a contractual obligation of the dividing insurer, all
resulting insurers are jointly and severally liable for the breach. The validity and
effectiveness of the division is not affected by the breach.

(5) A direct or indirect allocation of capital, surplus, assets, or liabilities,
including policy liabilities, occurs automatically, by operation of law, and may not
be treated as a distribution or transfer for any purpose with respect to either the
dividing insurer or any resulting insurer.

(6) Liens, security interests, and other charges on the capital, surplus, or
other assets of the dividing insurer are not impaired by the division, notwithstanding
any otherwise enforceable allocation of liabilities, including policy liabilities, of the
dividing insurer.

(7) If the dividing insurer is bound by a security agreement governed by
article 5 or 9 of title 4, or by the substantial equivalent as enacted in any other
jurisdiction, and the security agreement provides that the security interest attaches
to after-acquired collateral, a resulting insurer is bound by the security agreement.

(8) Unless otherwise provided in the plan of division and specifically
approved by the commissioner, an allocation of a policy or other liability may not:

(a) Affect the rights that a policyholder or creditor has under any other law
with respect to the policy or other liability; except that the rights are available only
against a resulting insurer responsible for the policy or liability under this section;
or

(b) Release or reduce the obligation of a reinsurer, surety, or guarantor of
the policy or liability.

(9) A resulting insurer is liable only for the liabilities allocated to the
resulting insurer in accordance with the plan of division and this section and is not
liable for any other liabilities under the common law doctrine of successor liability
or any other theory of liability applicable to transferees or assignees of assets.

Legislative History

Source: L. 2021: Entire part added, (HB 21-1013), ch. 144, p. 853, � 1, effective September 7.