ANNUAL STATEMENT; DIRECTOR'S AUTHORITY
(1) OAR 836-013-0100 to 836-013-0120 are adopted pursuant to ORS 731.244, 731.296 and 731.385.
(2) OAR 836-013-0100 to 836-013-0120 set forth the standards that the Director may use for identifying insurers who are in such condition as to render the continuance of their business hazardous to the public or to holders of their policies or certificates of insurance.
(3) OAR 836-013-0100 to 836-013-0120 are not a limitation on the regulatory powers of the Director.
Stat. Auth.: ORS 731.244, 731.296, 731.385
Stats. Implemented: ORS 731.296, 731.385
Hist.: ID 8-1993, f. & cert. ef. 9-23-93; ID 15-1996, f. & cert. ef. 11-12-96; ID 14-2010, f. & cert. ef. 8-19-10
The Director may consider the following standards, either singly or in combination of two or more, to determine whether the continued operation of any insurer transacting insurance in this state might be determined to be hazardous to the policyholders, its creditors or the general public:
(1) Adverse findings reported in financial condition and market conduct examination reports, audit reports, and actuarial opinions, reports or summaries.
(2) The National Association of Insurance Commissioners Insurance Regulatory Information System and its other financial analysis solvency tools and reports.
(3) 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 the investment earnings on such assets, and the considerations anticipated to be received and retained under such policies and contracts.
(4) The ability of an assuming reinsurer to perform and whether the insurer's reinsurance program provides sufficient protection for the insurer's remaining capital and surplus after taking into account the insurer's cash flow and the classes of business written as well as the financial condition of the assuming reinsurer.
(5) Whether the insurer's operating loss in the last 12-month period or any shorter period of time, including but not limited to net capital gain or loss, change in non-admitted assets and cash dividends paid to shareholders, is greater than 50 percent of the insurer's remaining capital and surplus in excess of the minimum required.
(6) Whether the insurer’s operating loss in the last 12-month period or any shorter period of time, excluding net capital gains, is greater than 20 percent of the insurer’s remaining surplus as regards policyholders in excess of the minimum required.
(7) Whether a reinsurer or obligor, or any entity within the insurer’s insurance holding company system is insolvent, threatened with insolvency or delinquent in payment of its monetary or other obligations and which, in the opinion of the director may affect the solvency of the insurer.
(8) Contingent liabilities, pledges or guaranties that either individually or collectively involve a total amount that in the opinion of the Director may affect the solvency of the insurer.
(9) Whether any "controlling person" of an insurer is delinquent in the transmitting to, or payment of, net premiums to the insurer.
(10) The age and collectibility of receivables.
(11) Whether the management of an insurer, including officers, directors or any other person who directly or indirectly controls the operation of the insurer, fails to possess and demonstrate the competence, fitness and reputation determined by the Director to be necessary to serve the insurer in such position.
(12) Whether management of an insurer has failed to respond to inquiries relating to the condition of the insurer or has furnished false and misleading information concerning an inquiry.
(13) Whether the insurer has failed to meet financial and holding company filing requirements in the absence of a reason satisfactory to the director.
(14) Whether management of an insurer either has filed a false or misleading sworn financial statement or has released a false or misleading financial statement to lending institutions or to the general public, or has made a false or misleading entry, or has omitted an entry of material amount in the books of the insurer.
(15) Whether the insurer has grown so rapidly and to such an extent that it lacks adequate financial and administrative capacity to meet its obligations in a timely manner.
(16) Whether the insurer has experienced or will experience in the foreseeable future cash flow or liquidity problems, or both.
(17) Whether management has established reserves that do not comply with minimum standards established by state insurance laws, regulations, statutory accounting standards, sound actuarial principles and standards of practice.
(18) Whether management persistently engages in material under reserving that results in adverse development.
(19) 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.
(20) Any other finding determined by the director to be hazardous to the insurer’s policyholders, creditors or general public.
Stat. Auth.: ORS 731.244, 731.385
Stats. Implemented: ORS 731.385
Hist.: ID 8-1993, f. & cert. ef. 9-23-93; ID 14-2010, f. & cert. ef. 8-19-10
(1) For the purposes of making a determination of the financial condition of an insurer under OAR 836-013-0100 to 836-013-0120, the Director may do one or more of the following:
(a) Disregard any credit or amount receivable resulting from transactions with a reinsurer that is insolvent, impaired or otherwise subject to a delinquency proceeding;
(b) Make appropriate adjustments to asset values attributable to investments in or transactions with parents, subsidiaries or affiliates;
(c) Refuse to recognize the stated value of accounts receivable if the ability to collect receivables is highly speculative in view of the age of the account or the financial condition of the debtor; or
(d) Increase the insurer's liability in an amount equal to any contingent liability, pledge, or guarantee not otherwise included if there is a substantial risk that the insurer will be called upon to meet the obligation undertaken within the next 12-month period.
(2) An order of the Director under ORS 731.385 regarding a foreign insurer may be limited to the extent provided by statute.
(3) In addition to the requirements the director may impose under ORS 731.385, if the director determines that the continued operation of the insurer licensed to transact business in this state may be hazardous to the policyholders or the general public, the director may require the insurer to:
(a) File reports in a form acceptable to the director concerning the market value of the insurer’s assets;
(b) Document the adequacy of premium rates in relation to the risks insured;
(c) In addition to regular annual statements, file interim financial reports on the form specified by the director;
(d) Correct corporate governance practice deficiencies, and adopt and utilize the governance practices acceptable to the director; or
(e) Provide a business plan to the director in order to continue to transact business in this state.
(4) Notwithstanding any other provision of law limiting the frequency or amount of premium rate adjustments, the director may include as a requirement under section (3) of this rule, any rate adjustment for any non-life insurance product written by the insurer that the director considers necessary to improve the financial condition of the insurer.
Stat. Auth.: ORS 731.244, 731.296. 731.385
Stats. Implemented: ORS 731.296, 731.385
Hist.: ID 8-1993, f. & cert. ef. 9-23-93; ID 19-2006, f. & cert. ef. 9-26-06; ID 14-2010, f. & cert. ef. 8-19-10