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policyholders were brought against the director and chief executive officer
of the insolvent insurer on behalf of estate of insolvent insurer and were
thus protected by statute extending unexpired statute of limitations and
permitting liquidator to sue on behalf of the estate within two years after
liquidation order. Therefore, the three‐year statutes of limitation applicable
to claims arising out of and after loans by insurer less than three years
before liquidation order did not bar suit filed within two years of
appointment. Third, conclusion that insurer’s collateral for loans on which
borrower defaulted was less than the minimum value approved by the
boards of directors of insurer and parent corporation was supported by
evidence, including an appraiser’s testimony. Fourth, defendant’s actions
did not fall under the business judgment rule because director was a leading
participant in a plan to benefit himself and his interests at the expense of the
insurer. Fifth, evidence, showing that defendant, although seeking and
receiving advice on corporate decisions, ignored advice that was contrary to
his efforts to maintain insurer as a going concern, supported the trial court’s
conclusion that defendant breached his fiduciary duties and that his actions
were not made in reliance on the advice of professionals. Finally, evidence
that director and chief executive officer of insurer and its parent corporation
permitted parent corporation to utilize insurer’s funds to pay the parent
corporation’s debts guarantied by director, failed to pay dividends to
insurer’s borrower thereby causing default, and held limited partnership
units until value to insurer diminished supported the trial court’s conclusion
that director and chief executive officer of insurer and its parent corporation
proximately caused insurer’s insolvency.
Ohio
Benjamin v. Sawicz, 159 Ohio App. 3d 265 (Ohio Ct. App. 2004). Pursuant to
Ohio Revised Code Chapter 3903, the superintendent of insurance is authorized
to institute actions to rehabilitate or liquidate insurance companies. Specifically,
Ohio Revised Code § 3903.12 states that the superintendent of insurance “may
file a complaint in the court of common pleas for an order authorizing him to
rehabilitate a domestic insurer or an alien insurer domiciled in the state on the
basis of various enumerated grounds. Further, as the rehabilitator, the
superintendent is authorized to “take such actions as he considers necessary or
appropriate to reform and revitalize the insurer.” Ohio Rev. Code § 3903.14(B).
In instances where it appears there has been criminal or tortious conduct, the
rehabilitator may pursue “all appropriate legal remedies on behalf of the
insurer.” Ohio Rev. Code § 3903.14(C). Finally, in situations where the
superintendent believes that the rehabilitation of the insurer “would
substantially increase the risk of loss to creditors, policyholders, or the public, or
would be futile, the superintendent may file a motion in the court of common
pleas for an order of liquidation.” Ohio Rev. Code § 3903.16. In this case, the
superintendent, acting as the insurance company’s liquidator, claimed it was
improper to make her provide discovery in her role as superintendent. The
Court held that the superintendent controlled, through the insurance
department, knowledge vital to the action, so she had to disclose all relevant
and material information, whether as regulator or liquidator.
Fabe, Superintendent of Insurance v. Prompt Finance, Inc., 69 Ohio St.3d
268, 631 N.E.2d 614 (1994). The Supreme Court of Ohio held that to protect
the interests of policyholders, creditors, claimants, and the public generally,
the Superintendent of Insurance has the authority to issue an order placing
an insurer under supervision and may require an insurer to obtain approval
from the Superintendent prior to the transfer of any of the insurer’s
property.