N.Y. Insurance Law § 7713: Miscellaneous provisions

§ 7713. Miscellaneous provisions. (a) Nothing in this article 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.

(b) The corporation shall maintain records of all negotiations and

meetings in which the corporation or its representatives are involved to

discuss the activities of the corporation in carrying out its powers and

duties under section seven thousand seven hundred eight of this article,

except to the extent otherwise provided by or pursuant to the plan of

operation. Records of such negotiations or meetings shall be made public

only upon the termination of a liquidation, rehabilitation or

conservation proceeding involving the impaired or insolvent insurer,

upon the termination of the impairment or insolvency of the insurer, or

upon the order of a court of competent jurisdiction. Nothing in this

subsection shall limit the duty of the corporation to render a report of

its activities under section seven thousand seven hundred fourteen of

this article.

(c) (1) During an article seventy-four rehabilitation proceeding,

assets of the impaired or insolvent insurer which are determined by the

superintendent to be currently available may be used to continue all

covered policies, and pay all contractual obligations, of the impaired

or insolvent insurer that would otherwise be covered by the corporation

under section seven thousand seven hundred eight of this article. The

corporation shall, subsequent to the termination of the article

seventy-four rehabilitation proceeding and within a reasonable time

after the commencement of a liquidation proceeding under article

seventy-four of this chapter reimburse the estate of the impaired or

insolvent insurer for such portion of the amount of assets so used to

the extent necessary to pay class one, two and three claims pursuant to

paragraph one, two or three of subsection (a) of section seven thousand

four hundred thirty-five of this chapter. The corporation shall have a

claim against the estate of the impaired or insolvent insurer equal to

the full amount of such reimbursement, consistent with the provisions of

paragraph four of subsection (a) of section seven thousand four hundred

thirty-five of this chapter.

(2) During an article seventy-four rehabilitation proceeding, assets

of the impaired or insolvent insurer which are determined by the

superintendent to be currently available may be used to continue covered

policies, and pay contractual obligations, of the impaired or insolvent

insurer, other than the covered policies and contractual obligations

that are covered by the corporation under section seven thousand seven

hundred eight of this article, if a corporation, association or other

organization which performs or will perform functions similar to those

of the corporation enters into an agreement satisfactory to the

superintendent prior to such use of such assets to repay the amount of

such assets subsequent to the termination of the article seventy-four

rehabilitation proceeding and within a reasonable time after the

commencement of a liquidation proceeding under article seventy-four of

this chapter.

(d) In addition to the duties and powers enumerated elsewhere in this

chapter, and subject to the limitations and exclusions contained in this

and other sections of this chapter, upon the commencement of a

proceeding under article seventy-four of this chapter with respect to

any impaired or insolvent domestic insurer, the superintendent may

request and receive from the corporation, and the corporation shall lend

to the superintendent upon such request, an amount not to exceed five

hundred thousand dollars as determined by the superintendent to be

necessary on an emergency basis for use by the superintendent, as

liquidator or rehabilitator, in the administration of the affairs of

such impaired or insolvent insurer. To the extent it deems necessary or

appropriate to carry out its duties under this section, the corporation

may borrow such amount in accordance with subsection (h) of section

seven thousand seven hundred eight of this article and may assess member

insurers for the purpose of repaying such borrowing. Such assessments

against each member insurer shall be in the proportion that the premiums

received by such insurer on business in this state in all accounts for

the calendar year preceding the assessment bear to such premiums

received on business in this state in all accounts for such calendar

year by all assessable member insurers. The corporation shall have a

claim against the estate of such impaired or insolvent insurer equal to

the amount loaned to the superintendent in accordance with this

subsection, together with interest thereon at the maximum rate allowed

by subdivision one of section 5-501 of the general obligations law, and

such claim shall be treated as a class one claim under section seven

thousand four hundred thirty-five of this chapter.

(e) The corporation shall have a claim against the impaired or

insolvent insurer for all amounts expended by the corporation for the

purposes of carrying out its obligations under this article.

(f) (1) Prior to the termination of any proceeding under article

seventy-four of this chapter, the court may take into consideration the

contributions of the respective parties, including the corporation, the

shareholders and policyholders of the impaired or insolvent insurer, and

any other party with a bona fide interest, in making an equitable

distribution of the ownership rights of such impaired or insolvent

insurer. In such a determination, consideration shall be given to the

welfare of the policyholders of the continuing or successor insurer.

(2) No distribution to shareholders, if any, of an impaired or

insolvent insurer shall be made, and no rehabilitation proceeding shall

be terminated (except by a final order of liquidation), until and unless

the total amount of valid claims of the corporation for all funds

expended in carrying out its powers and duties under section seven

thousand seven hundred eight of this article with respect to such

insurer, together with interest thereon, have been fully recovered by

the corporation or an arrangement satisfactory to the corporation has

been made for their recovery. Such interest shall be at a rate which, in

the opinion of the court, fairly compensates the corporation for the use

of such funds, but in no event shall such rate be in excess of the

maximum rate allowed by subdivision one of section 5-501 of the general

obligations law at the time such funds were expended.

(g) (1) If an order for liquidation or rehabilitation of an insurer

domiciled in this state has been entered, the receiver appointed under

such order shall have a right to recover on behalf of the insurer, from

any parent corporation or holding company or person who otherwise

controlled the insurer, the amount of distributions (other than

distributions of shares of the same class of stock) paid by the insurer

on its capital stock, made at any time during the five years preceding

the petition for liquidation, conservation or rehabilitation, as the

case may be, subject to the limitations of paragraphs two, three and

four of this subsection.

(2) No such distribution shall be recoverable if the insurer shows

that when paid, such distribution was reasonable and that the insurer

did not know and could not reasonably have known that such distribution

might adversely affect the ability of the insurer to fulfill its

contractual obligations. Notice to the superintendent pursuant to

subsection (a) of section four thousand two hundred seven of this

chapter and the lack of a prior objection by the superintendent to such

distributions shall not constitute evidence to support the showing of

reasonableness which would prevent the recovery of such distribution.

(3) Any person who was a parent corporation or holding company or a

person who otherwise controlled the insurer at the time such

distributions were paid shall be liable up to the amount of

distributions such persons received. Any person who was a parent

corporation or holding company or a person who otherwise controlled the

insurer at the time such distributions were declared shall be liable up

to the amount of distributions he would have received if they had been

paid immediately. If two or more persons are liable with respect to the

same distribution, they shall be jointly and severally liable.

(4) The maximum amount recoverable under this subsection shall be the

amount needed in excess of all other available assets of the impaired or

insolvent insurer to pay the contractual obligations of the impaired or

insolvent insurer and to reimburse the corporation for such payments and

for all other claims the corporation may have pursuant to subsection (c)

of this section.

(5) To the extent that any person liable under paragraph three of this

subsection is insolvent or otherwise fails to pay claims due from it

pursuant to such paragraph, its parent corporation or holding company or

person who otherwise controlled it at the time the distribution was

paid, shall be jointly and severally liable for any resulting deficiency

in the amount recovered from such parent corporation or holding company

or person who otherwise controlled it.