1.This chapter does not reduce the liability for unpaid assessments of the insured of an
impaired or insolvent insurer operating under a plan with assessment liability.
2.Records must be kept of all meetings of the board of directors to discuss the activities
of the association in carrying out its powers and duties under section 26.1-38.1-05.
The records of the association with respect to an impaired or insolvent insurer may not
be disclosed before the termination of a liquidation, rehabilitation, or conservation
proceeding involving the impaired or insolvent insurer, except upon the termination of
the impairment or solvency of the member insurer, or upon the order of a court of
competent jurisdiction. Nothing in this subsection limits the duty of the association to
render a report of it
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1. This chapter does not reduce the liability for unpaid assessments of the insured of an
impaired or insolvent insurer operating under a plan with assessment liability.
2. Records must be kept of all meetings of the board of directors to discuss the activities
of the association in carrying out its powers and duties under section 26.1-38.1-05.
The records of the association with respect to an impaired or insolvent insurer may not
be disclosed before the termination of a liquidation, rehabilitation, or conservation
proceeding involving the impaired or insolvent insurer, except upon the termination of
the impairment or solvency of the member insurer, or upon the order of a court of
competent jurisdiction. Nothing in this subsection limits the duty of the association to
render a report of its activities under section 26.1-38.1-12.
3. For the purpose of carrying out its obligations under this chapter, the association must
be deemed to be a creditor of the impaired or insolvent insurer to the extent of assets
attributable to covered policies reduced by any amounts to which the association is
entitled as subrogee pursuant to subsections 12, 13, and 14 of section 26.1-38.1-05.
Assets of the impaired or insolvent insurer attributable to covered policies must be
used to continue as covered policies and pay all contractual obligations of the impaired
or insolvent insurer as required by this chapter. Assets attributable to covered policies
or contracts, as used in this subsection, are that proportion of the assets which the
reserves that should have been established for such policies or contracts bear to the
reserves that should have been established for all policies of insurance or health
benefit plans written by the impaired or insolvent insurer.
4. As a creditor of the impaired or insolvent insurer as established in subsection 3 and
consistent with chapter 26.1-06, the association and other similar associations are
entitled to receive a disbursement of assets out of the marshaled assets, from time to
time as the assets become available to reimburse it, as a credit against contractual
obligations under this chapter. If the liquidator, within one hundred twenty days of a
final determination of insolvency of a member insurer by the receivership court, does
not apply to the court for the approval of a proposal to disburse assets out of
marshaled assets to guaranty associations having obligations because of the
insolvency, the association is entitled to apply to the receivership court for approval of
its own proposal to disburse these assets.
5. Prior to the termination of any liquidation, rehabilitation, or conservation proceeding,
the court may take into consideration the contributions of the respective parties,
including the 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 such
insolvent insurer. In making such a determination, consideration must be given to the
welfare of the policy owners, contract owners, certificate holders, and enrollees of the
continuing or successor member insurer.
6. No distribution to stockholders, if any, of an impaired or insolvent insurer may be made
until and unless the total amount of valid claims of the association with interest thereon
for funds expended in carrying out its powers and duties under section 26.1-38.1-05
with respect to the member insurer have been fully recovered by the association.
7. a. If an order for liquidation or rehabilitation of a member insurer domiciled in this
state has been entered, the receiver appointed under the order has the right to
recover on behalf of the member insurer, from any affiliate that controlled its
capital stock, the amount of distributions, other than stock dividends paid by the
member insurer on its capital stock, made at any time during the five years
preceding the petition for liquidation or rehabilitation subject to the limitations of
subdivisions b, c, and d.
b. No such distribution is 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.
c. Any person who was an affiliate that controlled the member insurer at the time
the distributions were paid is liable up to the amount of distributions the person
received. Any person who was an affiliate that controlled the member insurer at
the time the distributions were declared is liable up to the amount of distributions
the person would have received if payment had been made immediately. If two or
more persons are liable with respect to the same distributions, they are jointly and
severally liable.
d. The maximum amount recoverable under this subsection is the amount needed in
excess of all other available assets of the insolvent insurer to pay the contractual
obligations of the insolvent insurer.
e. If any person liable under subdivision c is insolvent, all its affiliates that controlled
it at the time the distribution was paid, are jointly and severally liable for any
resulting deficiency in the amount recovered from the insolvent affiliate.