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insurance company, the court held that the purported assignment of the
insolvent insurer's assets just prior to the petition did not remove the
commissioner's regulatory authority over it even though stockholders of the
company may have assented to the transfer.
Nebraska
New Jersey
State ex rel. Neff v. Christian Brotherhood of America Burial Ass'n, 184 N.W.2d
643, 186 Neb. 525 (1971). The insurance commissioner secured an order of
liquidation against a burial association after repeal of its enabling legislation.
The Nebraska Supreme Court stated that whenever a domestic insurance
company is determined to be in such condition that further business
transactions by it would be hazardous to its policyholders, creditors,
stockholders, or the public, the court may order liquidation of the company.
The court stated that it was within the police power of the state to subject the
insurance business to reasonable regulation regardless of the repeal of the
enabling legislation.
Fortunato v. New Jersey Life Ins., 254 N.J. Super. 420 (App. Div. 1991). The
Appellate Division held that the Chancery Division should not have denied the
Commissioner's request for an order directing him to rehabilitate New Jersey
Life Insurance Company. The Chancery judge had refused to grant the request
for rehabilitation because there were issues of fact concerning the existence of
insolvency, including the issue of whether a reinsurance agreement had been
repudiated. The reinsurance issue was scheduled for arbitration at a later date.
While the Uniform Insurers Liquidation Act [N.J.S.A. 17B:32‐2, before
amendment by P.L.1992, c. 65] gives the Superior Court original jurisdiction
over the Commissioner's petition, it does not require a full hearing before the
court issues orders. The Commissioner's determination that further business
by the insurer would be hazardous was a finding of fact, an informed
prediction, and was neither arbitrary nor unreasonable. Because the insurer
failed to demonstrate to the contrary, the Commissioner's determination was
sufficient to grant the rehabilitation order.
New York Application of Bohlinger, 199 Misc. 941, 106 N.Y.S.2d 953 (1951), affirmed, 280
A.D. 517, 113 N.Y.S.2d 755 (1952), affirmed, 305 N.Y. 258, 112 N.E.2d 280 (1953),
certiorari denied, 346 U.S. 857, rehearing denied, 346 U.S. 857. The court held
that the insurance commissioner is authorized to rehabilitate or liquidate an
insurance company, whether solvent or insolvent, if it was found that its
management, internal organization, practices or personnel was hazardous to
its policyholders. "Hazardous" was broadly defined to include anything which
would adversely affect the insureds. Further, the court stated that the
commissioner did not have to wait for a conviction of any purported illegality,
but could act to dissolve a corporation on the mere likelihood of illegality or
potential hazard. The commissioner found the company mixed the business of
insurance with politics and was controlled by the Communist Party.
In re International Workers, 280 A.D. 517, 113 N.Y.S.2d 755 (1952), affirmed, 305
N.Y. 258, 112 N.E.2d 280 certiorari denied, 346 U.S. 857, rehearing denied, 346
U.S. 913. The court acted appropriately in ordering a fraternal benefit society
liquidated and dissolved where the society's officers were agents of the
Communist Party and Soviet Russia and exceeded powers conferred by the
society's charter, did activities which were not for the benefit of its members
or beneficiaries and were hazardous to its policyholders, creditors and the
public, notwithstanding the society's sound actuarial basis.