A. The Life and Health Insurance Guaranty Association Act shall not 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. Records shall be kept of all meetings of the board to discuss the activities of the association in carrying out its powers and duties. Records of the meetings with respect to an impaired or insolvent insurer 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 insolvency of the insurer or upon the order of a court of competent jurisdiction. Nothing in this subsection limits the duty of the association to render the reports required by Section 59A-42-14 NMSA 1978.
C. For the purpose of carrying out its obligations, the association shall be deemed to be a creditor of the impaired or insolvent insurer to the extent of assets attributable to covered policies reduced by amounts to which the association is entitled as a subrogee pursuant to Subsection K of Section 59A-42-7 NMSA 1978. Assets of the impaired or insolvent insurer attributable to covered policies shall be used to continue all covered policies and pay all contractual obligations of the impaired or insolvent insurer. Assets attributable to covered policies, as used in this subsection, are that proportion of the assets that the reserves that should have been established for those policies bear to the reserves that should have been established for all policies of insurance written by the impaired or insolvent insurer.
D. As a creditor of the impaired or insolvent insurer and consistent with the Insurers Conservation, Rehabilitation and Liquidation Law [Chapter 59A, Article 41 NMSA 1978], the association and other similar associations shall be entitled to receive a disbursement of assets out of the marshaled assets, from time to time as the assets become available to reimburse it, as a credit against contractual obligations pursuant to the Life and Health Insurance Guaranty Association Act. If the liquidator has not, within one hundred twenty days of a final determination of insolvency of an insurer by the receivership court, made an application to the court for the approval of a proposal to disburse assets out of marshaled assets to guaranty associations having obligations because of the insolvency, the association shall be entitled to make application to the receivership court for approval of its own proposal to disburse these assets.
E. Prior to the termination of a liquidation, rehabilitation or conservation proceeding, the court may take into consideration the contributions of the respective parties, including the association, the shareholders and policy owners of the insolvent insurer and any other party with a bona fide interest, in making an equitable distribution of the ownership rights of the insolvent insurer. In such a determination, consideration shall be given to the welfare of the policy owners of the continuing or successor insurer.
F. No distribution to stockholders, if any, of an impaired or insolvent insurer shall be made until and unless the total amount of valid claims of the association with interest thereon for funds expended in carrying out its powers and duties with respect to the insurer has been fully recovered by the association.
History: Laws 1984, ch. 127, § 762; 2012, ch. 9, § 16.
ANNOTATIONSThe 2012 amendment, effective July 1, 2012, eliminated the requirement that records be kept of negotiations with the association; provided that the association is a creditor of an insolvent or impaired insurer to the extent of assets attributable to covered policies; provided for the determination and use of assets attributable to covered policies; provided for the disbursements from the assets of an insolvent or impaired insurer to the association and to guaranty associations; in Subsection A, at the beginning of the sentence, deleted "Nothing in this article", and added "The Life and Health Insurance Guaranty Association Act", after "shall", added "not". and after "insureds of an", added "impaired or"; in Subsection B, in the first sentence, after "kept of all", deleted "negotiations and" and after "meetings", deleted "in which the association or its representatives are involved" and added "of the board"; in the second sentence, after "Records of the", deleted "negotiations or", after "meetings", added "with respect to an impaired or insolvent insurer", and after "conservation proceeding involving the", added "impaired or"; and in the third sentence, after "association to render", changed "a report of its activities under Section 763 of this article" to "the reports required by Section 59A-42-14 NMSA 1978"; added Subsections C and D; in Subsection F, after "if any, of an" added "impaired or", after "shall be made until", added "and unless", after "total amount of" deleted "assessments levied by" and added "valid claims of", and after "the association", added "with interest thereon for funds expended in carrying out its powers and duties"; and deleted former Subsection E, which prohibited the use of the protection afforded by the Life and Health Insurance Guaranty Association Law in the sale of insurance.