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owned by one corporation, proposed a rehabilitation plan which was approved
by the court. The parent corporation appealed the plan's provisions that: (i)
the rehabilitation court had exclusive jurisdiction over the assets of the
companies, and (ii) the rehabilitation court would refuse to honor a judgment
obtained in any other forum. In affirming the lower court's decision, the
Supreme Court of Arkansas announced that nothing contained in the
McCarran‐Ferguson Act or the Bankruptcy Act prohibits a state from
determining the rights of an insurance company's creditors. Furthermore, the
appellate court added, the lower court properly ordered that all claims to the
companies' assets be adjudicated in the rehabilitation court.
Colorado
Florida
Kentucky
Atlantic and Pacific Ins. Co. v. Barnes, 666 P.2d 163 (Colo. App. 1983). The
commissioner of insurance appealed from the trial court's judgment that,
contrary to the commissioner's ruling, the insurer was not impaired. The court
held that it was error for the trial court to place the burden of proof on the
commissioner and that the evidence, weighing equally for both sides,
supported the entering of judgment in favor of the commissioner.
Florida Dep’t of Ins. v. Cypress Ins. Co., 660 So. 2d 1177 (Fla. Dist. Ct. App.
1995). An Oklahoma insurer and a Florida reinsurer, which reinsured a
substantial portion of the Oklahoma insurer’s business, were rendered
insolvent by Hurricane Andrew. The Oklahoma direct insurer was placed into
liquidation in Oklahoma. The Florida Department of Insurance (the “Florida
Department”) petitioned the Florida court for an order placing the Florida
reinsurer in liquidation. The Florida Department alleged that losses owed to
the Oklahoma direct writer rendered insolvent the Florida reinsurer. Before
the petition for liquidation was heard, and while an injunction was pending
which prohibited any person from disposing of the Florida reinsurer’s assets,
the Florida reinsurer unilaterally settled with the Oklahoma reinsurer for a
reduced cash payment and surplus notes. The trial court denied the petition
for liquidation holding that the Florida reinsurer was no longer insolvent.
The appellate court agreed, holding that the insurer’s unilateral settlement
of the Oklahoma receiver’s claims did not violate the Florida injunction and
did not violate Florida statutes delegating exclusive authority upon the
Department of Insurance to rehabilitate an insurer. The appellate court also
held that because the surplus notes were not given in exchange for
borrowed money, the reinsurer did not need the Florida Department’s
approval before issuing the surplus notes.
Grimes v. Central Life Ins. Co., 172 Ky. 18, 188 S.W. 901 (1916). The court held
that the statutory method provided for winding up the affairs of an insolvent
insurer is exclusive of the common law right of stockholders and creditors to
bring proceedings for a receiver, where the statutory remedy is adequate to
protect their rights.
Ohio Valley Fire & Marine Ins. Co. v. Wash., 205 Ky. 819, 266 S.W. 921 (1924).
Method provided by insurance code for winding‐up affairs of insolvent insurer
is exclusive. An insolvent insurer cannot voluntarily liquidate and assign its
assets and liabilities to another insurer for the benefit of its creditors.
Louisiana
State ex rel. Guste v. ALIC Corporation, et al., 595 So.2d 797 (La. App. 2d Cir.
1992). Attorney General and Commissioner of Securities of the State of
Louisiana sued a Louisiana holding company and related Louisiana and
Missouri domiciled insurance companies in the parish of their principal place of
business. Thereafter, an order of liquidation was entered against the insurers in
their respective states and the Louisiana Insurance Commissioner was