2006 Utah Code - 31A-27-301 — Grounds for rehabilitation.

     31A-27-301.   Grounds for rehabilitation.
     The commissioner may apply by verified petition to the Third District Court for Salt Lake County or to the district court in the county in which the principal office of the insurer is located, for an order directing the rehabilitation of a domestic insurer or an alien insurer domiciled in this state on any one or more of the following grounds:
     (1) any of the grounds on which the commissioner may apply for an order of liquidation under Section 31A-27-307, whenever he reasonably believes that the insurer may be successfully rehabilitated without substantial increase in the risk of loss to the insurer's policyholders or creditors, or to the public;
     (2) that the commissioner has 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;
     (3) that information coming into the commissioner's possession has disclosed substantial and not adequately explained discrepancies between the insurer's records and the most recent annual report or other official company reports;
     (4) that the insurer has failed to remove any person who in fact has executive authority in the insurer, whether that person is an officer, manager, general agent, employee, or other person, after that person has been found by the commissioner, after notice and hearing, to be dishonest or untrustworthy in a way affecting the insurer's business;
     (5) that control of the insurer, whether by stock ownership or otherwise, and whether direct or indirect, is in one or more persons who are dishonest or untrustworthy, as determined by the commissioner after notice and a hearing;
     (6) that any person who in fact has executive authority in the insurer, whether an officer, manager, general agent, employee, or other person, has refused to be examined under oath by the commissioner concerning its affairs, whether in this state or elsewhere, and after reasonable notice of the fact the insurer has failed to promptly and effectively terminate the employment and status of the person and all his influence on management;
     (7) that after demand by the commissioner, the insurer has failed to promptly submit any of its own property, books, accounts, documents, or other records, or those of any subsidiary or other affiliate within the control of the insurer, or those of any person having executive authority in the insurer so far as they pertain to the insurer, to reasonable inspection or examination by the commissioner or the commissioner's authorized representative; provided however that if the insurer is unable to submit the property, books, accounts, documents or other records of a person having executive authority in the insurer, it is excused from doing so if it promptly and effectively terminates the relationship of the person to the insurer;
     (8) that less than 30 days after reporting the proposed action to the commissioner, unless it is earlier approved by the commissioner, or after the action has been disapproved by the commissioner, the insurer has transferred, or attempted to transfer, substantially its entire property or business, or has entered into any transaction, the effect of which is to merge, consolidate, or reinsure substantially its entire property or business in or with the property or business of any other person;
     (9) that the insurer or its property has been or is the subject of an application for the appointment of a receiver, trustee, custodian, conservator, sequestrator, or similar fiduciary of the insurer or its property otherwise than as authorized under this chapter; that the appointment has

been made or is imminent, and that the appointment might remove jurisdiction from the courts of this state or prejudice orderly delinquency proceedings under this chapter;
     (10) that within the previous four years the insurer has wilfully violated its charter, its articles of incorporation, or its bylaws or any insurance law or rule of any state, or of the federal government, or any valid order of the commissioner under Section 31A-27-201; or having become aware within the previous year of an unintentional violation, the insurer has failed to take all reasonable steps to remedy the situation resulting from the violation and to prevent future violations;
     (11) that the insurer has failed to file its annual report or other report within the time allowed by law, and after written demand by the commissioner has failed to give an immediate adequate explanation; or
     (12) that a majority of the board of directors, or the holders of a majority of the shares entitled to vote, or a majority of members or policyholders of an insurer subject to control by its members or policyholders, consent to rehabilitation under this chapter.

Amended by Chapter 204, 1986 General Session