§ 26-3-116 — Suspension and revocation of certificate of authority; discretionary and special grounds

(a) The commissioner may refuse to continue or may suspend
or revoke an insurer's certificate of authority if he finds
after a hearing that the insurer has:
(i) Violated or failed to comply with any lawful
order of the commissioner;
(ii) Willfully violated or failed to comply with any
lawful regulation of the commissioner; or
(iii) Violated any provision of this code other than
those for violation of which suspension or revocation is
mandatory.
(b) The commissioner shall suspend or revoke an insurer's
certificate of authority on any of the following grounds if he
finds after a hearing that the insurer:
(i) Is in unsound condition, or in such condition or
using any methods and practices in the conduct of its business
as to render its further transaction of insurance in this state
injurious to policyholders or to the public;
(ii) With such frequency as to indicate its general
business practice in this state has without just cause:
(A) Failed to pay claims arising under its
policies, whether the claim is in favor of an insurer or is in
favor of a third person with respect to the liability of an
insured to that third person;
(B) Delayed payment of claims; or
(C) Compelled insureds or claimants to accept
less than the amount due them, or to employ attorneys or to
bring suit against the insurer or an insured to secure full
payment or settlement of claims.
(iii) Is affiliated with and under the same general
management, or interlocking directorate, or ownership as another
insurer which transacts direct insurance in this state without
having a certificate of authority therefor, except as permitted
under this code;
(iv) Refuses to be examined, or if its directors,
officers, employees or representatives refuse to:
(A) Submit to examination relative to its
affairs;
(B) Produce its accounts, records and files for
the commissioner's examination when required; or
(C) Perform any legal obligation relative to the
examination.
(v) Failed to pay any final judgment rendered against
it in this state upon any policy, bond, recognizance or
undertaking issued or guaranteed by it, within thirty (30) days
after the judgment became final, or within thirty (30) days
after dismissal of an appeal before final determination,
whichever date is later.
(c) In determining whether the continued operation of any
insurer transacting insurance business in this state is
hazardous or injurious to policyholders, creditors or the
general public the commissioner may consider any of the
following:
(i) Adverse findings reported in financial condition
and market conduct examination reports, audit reports and
actuarial opinions, reports or summaries;
(ii) The National Association of Insurance
Commissioners' Insurance Regulatory Information System and its
other financial analysis solvency tools and reports;
(iii) Repealed By Laws 2012, Ch. 38, § 3.
(iv) Whether the insurer has made adequate provision,
according to presently accepted actuarial standards of practice,
for the anticipated cash flows required by the contractual
obligations and related expenses of the insurer, when considered
in light of the assets held by the insurer with respect to such
reserves and related actuarial items including, but not limited
to, the investment earnings on such assets, and the
considerations anticipated to be received and retained under
such policies and contracts;
(v) The ability of any assuming reinsurer of the
insurer to perform and whether the insurer's reinsurance program
provides sufficient protection for the insurer's remaining
surplus after taking into account the insurer's cash flow and
the classes of business written and the financial condition of
the assuming reinsurer;
(vi) Whether the insurer's operating loss in the last
twelve (12) month period or any shorter period of time is
greater than fifty percent (50%) of the insurer's remaining
surplus as regards policyholders in excess of the minimum
required. For purposes of this paragraph, "operating loss" shall
include, but not be limited to net capital gain or loss, change
in nonadmitted assets and cash dividends paid to shareholders;
(vii) Any affiliate's, subsidiary's, parent's,
obligor's or reinsurer's insolvency, threatened insolvency or
delinquency in payment of its monetary or other obligations and
which in the opinion of the commissioner may affect the solvency
of the insurer;
(viii) Contingent liabilities, pledges or guaranties
which either individually or collectively involve a total amount
which in the opinion of the commissioner may affect the solvency
of the insurer;
(ix) The delinquency of any "controlling person" of
an insurer in transmitting or paying net premiums to the
insurer. For purposes of this paragraph, "controlling person"
means any person who directly or indirectly has the power to
direct the management, control or activities of the insurer;
(x) The age of receivables and the ability to collect
receivables;
(xi) The failure of an insurer's management,
including officers, directors, or any other person who directly
or indirectly controls the operation of the insurer, to possess
and demonstrate the competence, fitness and reputation necessary
to serve the insurer in such position;
(xii) An insurer's management's failure to respond to
inquiries relative to the condition of the insurer or an
insurer's management's furnishing false and misleading
information concerning an inquiry;
(xiii) An insurer's management's:
(A) Filing of any false or misleading sworn
financial statement;
(B) Release of false or misleading financial
statements to lending institutions or to the general public; or
(C) Making of a false or misleading entry, or
omitting an entry of material amount in the books of the
insurer.
(xiv) An insurer's rapid growth to such an extent
that it lacks adequate financial and administrative capacity to
meet its obligations in a timely manner;
(xv) An insurer's past or foreseeable future
experience of cash flow or liquidity problems;
(xvi) Whether the insurer's operating loss in the
last twelve (12) month period or any shorter period of time,
excluding net capital gains, is greater than twenty percent
(20%) of the insurer's remaining surplus as regards
policyholders in excess of the minimum required;
(xvii) Whether the insurer has failed to meet
financial and holding company filing requirements in the absence
of a reason satisfactory to the commissioner;
(xviii) Whether management has established reserves
that do not comply with minimum standards established by state
insurance laws, regulations, statutory accounting standards,
sound actuarial principles or standards of practice;
(xix) Whether management persistently engages in
material underreserving that results in adverse development;
(xx) Whether transactions among affiliates,
subsidiaries or controlling persons for which the insurer
receives assets or capital gains, or both, do not provide
sufficient value, liquidity or diversity to assure the insurer's
ability to meet its outstanding obligations as they mature;
(xxi) Any other finding determined by the
commissioner to be hazardous to the insurer's policyholders,
creditors or general public.
(d) The standards set forth in subsection (c) of this
section are in addition to those set forth in other laws or
regulations of this state and shall not be construed to limit
any other standards.
(e) The commissioner, without advance notice or hearing,
may immediately suspend the certificate of authority of any
insurer as to which proceedings for receivership,
conservatorship, rehabilitation or other delinquency proceedings
have been commenced in any state by the public insurance
supervisory official of that state.