Or. Admin. Code § 836-029-0095

Current through Register Vol. 63, No. 12, December 1, 2024

Section 836-029-0095 - Standards

The director may consider the following standards, either singly or in combination of two or more, to determine whether the continued operation of any captive 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 audit reports, and actuarial opinions, reports or summaries.

(2) Whether the captive 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 captive insurer, when considered in light of the assets held by the captive 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.

(3) The ability of an assuming reinsurer to perform and whether the captive insurer's reinsurance program provides sufficient protection for the captive insurer's remaining capital and surplus after taking into account the captive insurer's cash flow and the classes of business written as well as the financial condition of the assuming reinsurer.

(4) Whether the captive 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 captive insurer's remaining capital and surplus in excess of the minimum required.

(5) Whether the captive 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 captive insurer's remaining surplus as regards policyholders in excess of the minimum required.

(6) Whether a reinsurer or obligor, or any entity within the captive 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 captive insurer.

(7) 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 captive insurer.

(8) Whether any "controlling person" of a captive insurer is delinquent in the transmitting to, or payment of, net premiums to the captive insurer.

(9) The age and collectability of receivables.

(10) Whether the management of a captive insurer, including officers, directors or any other person who directly or indirectly controls the operation of the captive insurer, fails to possess and demonstrate the competence, fitness and reputation determined by the director to be necessary to serve the captive insurer in such position.

(11) Whether management of a captive insurer has failed to respond to inquiries relating to the condition of the captive insurer or has furnished false and misleading information concerning an inquiry.

(12) Whether the captive insurer has failed to meet financial and holding company filing requirements in the absence of a reason satisfactory to the director.

(13) Whether management of an captive 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 captive insurer.

(14) Whether the captive 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.

(15) Whether the captive insurer has experienced or will experience in the foreseeable future cash flow or liquidity problems, or both.

(16) 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.

(17) Whether management persistently engages in material under reserving that results in adverse development.

(18) Whether transactions among affiliates, subsidiaries or controlling persons for which the captive insurer receives assets or capital gains, or both, do not provide sufficient value, liquidity or diversity to assure the captive insurer's ability to meet its outstanding obligations as they mature.

(19) Any other finding determined by the director to be hazardous to the captive insurer's policyholders, creditors or general public.

Or. Admin. Code § 836-029-0095

ID 11-2012(Temp), f. 6-15-12, cert. ef. 7-1-12 thru 12-27-12; ID 17-2012, f. & cert. ef. 11-7-12

Stat. Auth.: ORS 731.244, 2012 OL Ch. 84, Sec. 4 (Enrolled SB 1547)

Stats. Implemented: 2012 OL Ch. 84, Sec. 2-22 (Enrolled SB 1547)