§ 10-3-815 — Recovery of distributions or payments

Colorado § 10-3-815

• Jurisdiction: Colorado
• Title 10: Insurance
• Art.: Regulation of Insurance Companies

Text

(1) Subject to the
limitations of this section, where a distribution or payment pursuant to paragraph
(a) or (b) of this subsection (1) is made at any time during the one year preceding a
petition for liquidation, conservation, or rehabilitation, as the case may be, if an
order for liquidation or rehabilitation of a domestic insurer has been entered, the
receiver appointed under the order may recover on behalf of the insurer:

(a) From any parent corporation or holding company or person or affiliate
who otherwise controlled the insurer, the amount of distributions other than
distributions of shares of the same class of stock paid by the insurer on its capital
stock; or

(b) Any payment in the form of a bonus, termination settlement, or
extraordinary lump sum salary adjustment made by the insurer or its subsidiary to a
director, officer, or employee.

(2) A distribution is not recoverable if the parent or affiliate shows that, when
paid, the distribution was lawful and reasonable and that the insurer did not know
and could not reasonably have known that the distribution might adversely affect
the ability of the insurer to fulfill its contractual obligations.

(3) A person who was a parent corporation or holding company or a person
who otherwise controlled the insurer or affiliate at the time the distributions were
paid is liable up to the amount of distributions or payments under subsection (1) of
this section that the person received. A person who otherwise controlled the insurer
at the time the distributions were declared is liable up to the amount of
distributions that would have been received if they had been paid immediately. If
two or more persons are liable with respect to the same distributions, they are
jointly and severally liable.

(4) The maximum amount recoverable under this section is the amount
needed in excess of all other available assets of the impaired or insolvent insurer to
pay the contractual obligations of the impaired or insolvent insurer and to
reimburse the Colorado insurance guaranty association, as that term is defined in
section 10-3-502 (9).

(5) To the extent that a person liable under subsection (3) of this section is
insolvent or otherwise fails to pay claims due from it, its parent corporation, holding
company, or a person who otherwise controlled it at the time the distribution was
paid is jointly and severally liable for any resulting deficiency in the amount
recovered from the parent corporation, holding company, or person who otherwise
controlled it.

Legislative History

Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1353, � 2, effective July 1.