Arizona Laws 20-481.27. Recovery; liability
A. If an order for liquidation or rehabilitation of a domestic insurer has been entered, the receiver appointed under that order has a right to recover on behalf of the insurer from any parent corporation, holding company or person or affiliate that otherwise controlled the insurer the amount of distributions, other than distributions of shares of the same class of stock, paid by the insurer on its capital stock or to recover any payment in the form of a bonus, termination settlement or extraordinary lump sum salary adjustment made by the insurer or its subsidiary to a director, officer or employee if the distribution or payment is made at any time during the year preceding the petition for liquidation, conservation or rehabilitation, subject to the limitations of subsections B, C and D.
Terms Used In Arizona Laws 20-481.27
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Insurer: means every person engaged in the business of making contracts of insurance except:
(a) Agencies, authorities or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia or a state or political subdivision of a state. See Arizona Laws 20-481
- Person: means an individual, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization and any similar entity or any combination of the foregoing acting in concert but does not include any joint venture partnership exclusively engaged in owning, managing, leasing or developing real or tangible personal property. See Arizona Laws 20-481
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
B. No distribution is recoverable if the parent or affiliate shows that when paid the distribution was lawful and reasonable and that the insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the insurer to fulfill its contractual obligations.
C. A person who was a parent corporation or holding company or a person who otherwise controlled the insurer or affiliate at the time the distributions were paid is liable up to the amount of the distributions or payments the person received. A person who otherwise controlled the insurer at the time the distributions were declared is liable up to the amount of distributions he would have received if they had been paid immediately. If two or more persons are liable with respect to the same distributions, they are jointly and severally liable.
D. The maximum amount recoverable under this section is the amount needed in excess of all other available assets of the impaired or insolvent insurer to pay the contractual obligations of the impaired or insolvent insurer and to reimburse any guaranty funds.
E. To the extent that a person liable under subsection C is insolvent or otherwise fails to pay claims due from it, its parent corporation or holding company or a person who otherwise controlled it at the time the distribution was paid is jointly and severally liable for a resulting deficiency in the amount recovered from the parent corporation or holding company or person who otherwise controlled it.