§2005. Grounds for rehabilitation and liquidation

The commissioner of insurance may apply by petition to the district court of the parish in which an insurer has its principal office, or to the district court of the parish of East Baton Rouge, or to any one of the judges thereof should the court be in vacation, at the commissioner of insurance's sole option, for a rule to show cause why an order to rehabilitate, conserve, liquidate, or dissolve such insurer as provided in this Chapter should not be entered, and for such other relief as the nature of the case and the interest of the insurer's policyholders, members, stockholders, creditors, or the public may require, whenever any domestic insurer is in one of the following positions:

(1) Has obligations or claims exceeding its assets, cannot pay its contracts in full, or is otherwise found by the commissioner of insurance to be insolvent.

(2) Has refused to submit its books, papers, accounts, records, or affairs to the reasonable inspection or examination of the commissioner of insurance, or his actuaries, supervisors, deputies, or examiners.

(3) Has neglected or refused to observe an order of the commissioner of insurance to make good within the time prescribed by law any deficiency, whenever its capital, if a stock insurer, or its required surplus, if an insurer other than stock, shall have become impaired.

(4) Has, by articles of consolidation, contract or reinsurance, or otherwise, transferred or attempted to transfer its entire property or business not in conformity with this Code, or entered into any transaction the effect of which is to merge substantially its entire property or business in any other insurer without having first obtained the written approval of the commissioner of insurance pursuant to the provisions of this Code.

(5) Is found to be in such condition that its further transaction of business would be hazardous to its policyholders, its creditors, or the public.

(6) Has an officer who has refused upon reasonable demand to be examined under oath touching its affairs.

(7) Is found to be in such condition that it could not meet the requirements for organization and authorization as required by law, except as to the amount of the surplus required of a stock insurer in R.S. 22:81, and except as to the amount of the surplus required by this Code to be maintained.

(8) Has ceased for the period of one year to transact insurance business.

(9) Has commenced, or has attempted to commence, any voluntary liquidation or dissolution proceedings, or any proceeding to procure the appointment of a receiver, liquidator, rehabilitator, sequestrator, or similar officer for itself.

(10) If a party, either plaintiff or defendant in any proceeding in which an application is made for the appointment of a receiver, custodian, liquidator, rehabilitator, sequestrator, or similar officer, for such insurer or its property, or a receiver, custodian, liquidator, rehabilitator, sequestrator, or similar officer, for such insurer or its property is appointed by any court, or such appointment is imminent.

(11) Consents to such an order by a majority of its directors, stockholders, or members.

(12) Has not organized and obtained a certificate authorizing it to commence the transaction of its business within the period of time prescribed by the sections of this Code under which it is or proposes to be organized.

(13) Gives reasonable cause to believe that there has been embezzlement from the insurer, wrongful sequestration or diversion of the insurer's assets, forgery or fraud affecting the insurer, or other illegal conduct in, by, or with respect to the insurer that if established would endanger assets in an amount threatening the solvency of the insurer.

(14) Within the previous four years, the insurer has willfully violated its charter or articles of incorporation, its bylaws, any insurance law of this state, or any valid order of the commissioner, or failed to maintain adequate records in accordance with statutory accounting practices and generally accepted accounting principles.

(15) Has failed to file its annual report or other financial report required by R.S. 22:571 within the time allowed by law and, within ten days of receipt of written demand by the commissioner, has failed to provide the report.

(16) Has failed to pay a final judgment rendered against it in any state upon any insurance contract issued or assumed by it, within sixty days after the judgment became final or within sixty days after time for taking an appeal has expired, or within sixty days after dismissal of an appeal before final determination whichever date is the later.

Acts 1958, No. 125; Acts 1992, No. 808, §1, eff. July 7, 1992; Acts 1992, No. 1095, §2; Acts 1993, No. 955, §1; Redesignated from R.S. 22:733 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009; Acts 2012, No. 271, §1; Acts 2012, No. 468, §1.

NOTE: Former R.S. 22:2005 redesignated as R.S. 22:248 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009.