31A-28-114.   Miscellaneous provisions.
     (1) Nothing in this part shall be construed to reduce the liability for unpaid assessments of the insureds of an impaired or insolvent insurer operating under a plan with assessment liability.
     (2) (a) Records shall 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 31A-28-108.
     (b) Records of the association with respect to an impaired or insolvent insurer may not be disclosed before the earlier of:
     (i) the termination of a liquidation, rehabilitation, or conservation proceeding involving the impaired or insolvent insurer;
     (ii) the termination of the impairment or insolvency of the insurer; or
     (iii) upon the order of a court of competent jurisdiction.
     (c) Nothing in this Subsection (2) shall limit the duty of the association to render a report of its activities under Section 31A-28-115.
     (3) (a) For the purpose of carrying out its obligations under this part, the association shall be considered to be a creditor of an 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 Subsection 31A-28-108(14).
     (b) Assets of the impaired or insolvent insurer attributable to covered policies shall be used to continue all covered policies and pay all contractual obligations of the impaired or insolvent insurer as required by this part.
     (c) As used in this Subsection (3), assets attributable to covered policies are that proportion of the assets which the reserves that should have been established for covered policies bear to the reserves that should have been established for all policies of insurance written by the impaired or insolvent insurer.
     (4) (a) As a creditor of the impaired or insolvent insurer under Subsection (3) and consistent with Section 31A-27a-701, the association and any other similar association are entitled to receive a disbursement of assets out of the marshaled assets, from time to time as the assets become available to reimburse the association and any other similar association.
     (b) If, within 120 days of a final determination of insolvency of an insurer by the receivership court, the liquidator has not made an application to the court for the approval of a proposal to disburse assets out of marshaled assets to all guaranty associations having obligations because of the insolvency, the association is entitled to make application to the receivership court for approval of the association's proposal for disbursement of these assets.
     (5) (a) Prior to the termination of any liquidation, rehabilitation, or conservation proceeding, the court may take into consideration the contributions of the respective parties, including:
     (i) the association;
     (ii) the shareholders;
     (iii) policyowners of the insolvent insurer; and
     (iv) any other party with a bona fide interest in making an equitable distribution of the ownership rights of the insolvent insurer.
     (b) In making a determination under Subsection (5)(a), the court shall consider the welfare of the policyholders of the continuing or successor insurer.
     (c) A distribution to any stockholder of an impaired or insolvent insurer may not be made

until and unless the total amount of valid claims of the association with interest has been fully recovered by the association for funds expended in carrying out its powers and duties under Section 31A-28-108 with respect to the insurer.
     (6) (a) If an order for liquidation or rehabilitation of an insurer domiciled in this state has been entered, the receiver appointed under the order shall have a right to recover on behalf of the insurer, from any affiliate that controlled the insurer, the amount of distributions, other than stock dividends paid by the 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 Subsections (6)(b) through (d).
     (b) A distribution described in Subsection (6)(a) may not be recovered if the insurer shows that:
     (i) when paid the distribution was lawful and reasonable; and
     (ii) 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.
     (c) (i) A person that was an affiliate that controlled the insurer at the time the distributions were paid shall be liable up to the amount of distributions received.
     (ii) A person that was an affiliate that controlled the insurer at the time the distributions were declared shall be liable up to the amount of distributions that would have been received if they had been paid immediately.
     (iii) If two or more persons are liable with respect to the same distributions, they shall be jointly and severally liable.
     (d) The maximum amount recoverable under this Subsection (6) shall be 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 Subsection (6)(c) is insolvent, all of its affiliates that controlled it at the time the distribution was paid shall be jointly and severally liable for any resulting deficiency in the amount recovered from the insolvent affiliate.

Amended by Chapter 250, 2008 General Session
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Last revised: Thursday, May 28, 2009