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instituting or taking further action in proceedings against the insurer and
staying all suits and seizures against the insurer, it is applicable to State
agencies, including, the Attorney General and Commissioner of Securities
who sought to initiate suit alleging that the insurer had violated securities
laws and committed unfair trade practices. Once the receiver is appointed,
all claims against the insolvent receiver must be presented either to the
domiciliary receiver or to the ancillary receiver appointed in the reciprocal
state. Prior to the appointment of an ancillary receiver in Louisiana for an
insolvent foreign insurer, the only individual with authority over the assets of
the insurer or authority over liability claims against the insurer is the
insurance commissioner in the foreign state. After appointment of the
Louisiana Insurance Commissioner as ancillary receiver, claims against the
insurer may be brought in either domiciliary or ancillary forum. Subject
matter jurisdiction vests in the district court in which receivership
proceedings are instituted. Therefore, subject matter jurisdiction is
conferred exclusively to the courts where domiciliary and ancillary
receiverships are instituted, proceedings in any other courts lack subject
matter jurisdiction against the insurer.
In the Matter Of First Columbia Life Insurance Company, 97‐1083 (La. App. 1
Cir. 9/29/98), 724 So.2d 790. Insurance Guaranty Associations (IGA)
successfully challenged a dissolution plan that prioritized payment of First
Columbia Life Insurance Company’s administrative costs ahead of foreign
insurance guaranty fund claims. The court held that LSA‐R.S. 22:743, 22:746,
entitling Insurance Commissioner to payment of administrative costs out of
the fund of the insolvent insurer did not confer priority over other Class I
claims, including domestic and foreign guaranty fund claims. The statutes
merely identify the source of the funds for dispersal, not the priority in which
claims of the same class are to be distributed. The proper method for
dispersal of funds within Class I claimants, when there are insufficient funds
to satisfy the claims in full, is a pro rata distribution. Accordingly, payments
made to the Liquidator for administrative expenses and to domestic
guaranty funds cannot prejudice the rights to equally ranking foreign
guaranty funds.
New Hampshire
In Re: The Liquidation of The Home Ins. Co., 154 N.H. 472 (2006). Where an
insolvent insurer had assumed business from a group of ceding insurers and
retroceded the same business to another reinsurer, the Court approved the
Liquidator’s agreement with the ceding insurers to pay a portion of reinsurance
recovered on allowed claims to the ceding insurers, who otherwise would not
prosecute claims as Class V claims were not expected to receive any
distribution. The Court held that the Liquidator is authorized to enter such an
agreement where the result is a net benefit to the estate. The payments to the
ceding insurers are administrative costs because they are pursuant to a postliquidation
agreement designed to collect assets that otherwise would be lost,
not “distributions” to lower class creditors. The Court affirmed the lower
court’s findings that the Class I payments were “necessary” and that the
agreement was fair and reasonable.
New York Curiale v. United States, 216 A.D. 2d 48, 627 N.Y.S. 2d 655 (1 st Dept. 1995).
The court interpreted Department of Treasury v Fabe (508 U.S. 491, 113 S. Ct.
2202, 124 L. Ed . 2d 449) and New York Insurance Law Article 74
(Rehabilitation and Liquidation of Insurers)to give administrative costs and
expenses of a property/casualty insurer priority over claims by the Internal
Revenue Service (IRS). The court ruled that the IRS claims have priority over
all other claims except policyholder claims, with which the IRS claim shall
have equal priority. The Court stated, however, that if the insolvent were a
life insurance company, the IRS would, under New York law, have a lower
priority than policyholders.