NAC680A.220. Commissioner to determine if continued operation of insurer is hazardous; considerations for determination.

     1. The Commissioner will consider the following to determine whether the continued operation of an insurer transacting the business of insurance in this State is hazardous to the general public or the policyholders or creditors of the insurer:

     (a) Adverse findings concerning the insurer’s financial condition or market conduct as reported or summarized in examination reports, audit reports and actuarial opinions, reports, summaries or memoranda which the Commissioner determines to be material.

     (b) Financial solvency analysis tools and information and reports concerning the insurer from the Insurance Regulatory Information System of the National Association of Insurance Commissioners.

     (c) Whether the insurer has made adequate provision in accordance with accepted actuarial standards of practice for the anticipated cash flows required by policies, contractual obligations and related expenses of the insurer. In making that determination, the Commissioner will consider the assets held by the insurer with respect to reserves and related actuarial items, including, without limitation, the investment earnings on such assets and the financial consideration anticipated to be received and retained under such policies and contracts.

     (d) If the insurer has reinsurance, the ability of the assuming reinsurer to perform and whether the insurer’s reinsurance program provides sufficient protection for the insurer’s remaining surplus after taking into account the insurer’s cash flow, the classes of insurance written by the insurer and the financial condition of the assuming reinsurer.

     (e) Whether the insurer’s operating loss in the most previous 12-month period, or such shorter period as the Commissioner deems appropriate, is greater than 50 percent of the insurer’s surplus which is in excess of the statutory minimum surplus required for that insurer pursuant to NRS 680A.120.

     (f) Whether the insurer’s operating loss, excluding net capital gain, in the most previous 12-month period, or such shorter period as the Commissioner deems appropriate, is greater than 20 percent of the insurer’s surplus which is in excess of the statutory minimum surplus required for that insurer pursuant to NRS 680A.120.

     (g) Whether any entity within the system of the insurance holding company, reinsurer or obligor of the insurer is insolvent, threatened with insolvency or delinquent in payment of its monetary or other obligations and, in the opinion of the Commissioner, such insolvency or delinquency may affect the solvency of the insurer.

     (h) Whether the contingent liabilities, pledges or guaranties of the insurer, either individually or collectively, involve a total amount which, in the opinion of the Commissioner, may affect the solvency of the insurer.

     (i) Whether any person who directly or indirectly controls the insurer is delinquent in the transmission to, or payment of, a net premium to the insurer.

     (j) The age and collectibility of the accounts receivable of the insurer.

     (k) Whether any person involved in the management of the insurer fails to possess and demonstrate the competence, fitness and reputation deemed necessary by the Commissioner to serve the insurer in such a position.

     (l) Whether the management of the insurer has failed to respond to any inquiry concerning the condition of the insurer, or has provided false or misleading information in response to such an inquiry.

     (m) Whether the insurer has failed to meet financial and holding company filing requirements, unless the insurer is excused from such filing requirements for a reason deemed sufficient by the Commissioner.

     (n) Whether the management of the insurer has:

          (1) Filed a false or misleading sworn financial statement with the Division or the insurance regulatory authority of any other state;

          (2) Released a false or misleading statement to a lending institution or the general public; or

          (3) Made a false or misleading entry, or has omitted an entry of a material amount, in the books of the insurer.

     (o) 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.

     (p) Whether the insurer has experienced, or will likely experience in the foreseeable future, problems with its cash flow or liquidity.

     (q) Whether the insurer has established reserves that do not comply with the minimum standards prescribed by specific statute or regulation, statutory accounting practices, sound actuarial principles and actuarial standards of practice.

     (r) Whether the insurer persistently maintains inadequate reserves that results in an adverse effect on the general public or on the policyholders or creditors of the insurer.

     (s) 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 ensure the ability of the insurer to meet its outstanding obligations as the obligations mature.

     (t) Any other finding determined by the Commissioner to be hazardous to the general public or to the policyholders or creditors of the insurer.

     2. As used in this section, unless the context otherwise requires:

     (a) “Management of the insurer” includes officers, directors and any other person who directly or indirectly controls the operation of the insurer.

     (b) “Operating loss” includes, but is not limited to:

          (1) Net capital gain or loss;

          (2) Change in assets which are not allowed as assets in a determination of the financial condition of the insurer pursuant to NRS 681B.020; and

          (3) Cash dividends paid to shareholders.

     (Added to NAC by Comm’r of Insurance, eff. 5-23-96; A by R030-12, 9-14-2012)