Connecticut General Statutes 38a-962j – Right of recovery
(a) If an order for liquidation of a domestic insurance company has been entered, the receiver appointed under such order shall have a right to recover on behalf of the insurance company, (1) from any parent corporation or holding company or person or affiliate who otherwise controlled the insurance company, the amount of distributions, other than distributions of shares of the same class of stock, paid by the insurance company on its capital stock, or (2) any payment in the form of a bonus, termination settlement or extraordinary lump sum salary adjustment made by the insurance company or its subsidiary to a director, officer or other employee exercising senior managerial responsibilities, where the distribution or payment pursuant to subdivision (1) or (2) is made at any time during the one year preceding the petition for liquidation, conservation or rehabilitation, as the case may be, subject to the limitations of subsections (b), (c) and (d) of this section.
Terms Used In Connecticut General Statutes 38a-962j
- 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.
- insolvent: means , for any insurer, that it is unable to pay its obligations when they are due, or when its admitted assets do not exceed its liabilities plus the greater of: (A) Capital and surplus required by law for its organization and continued operation. See Connecticut General Statutes 38a-1
- Insurance: means any agreement to pay a sum of money, provide services or any other thing of value on the happening of a particular event or contingency or to provide indemnity for loss in respect to a specified subject by specified perils in return for a consideration. See Connecticut General Statutes 38a-1
- insurance company: includes any person or combination of persons doing any kind or form of insurance business other than a fraternal benefit society, and shall include a receiver of any insurer when the context reasonably permits. See Connecticut General Statutes 38a-1
- Person: means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a business trust, an unincorporated organization or other legal entity. See Connecticut General Statutes 38a-1
- 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 or payment shall be recoverable if the parent corporation, holding company, person or affiliate shows that when paid such distribution or payment was lawful and reasonable, and that the insurance company did not know and could not reasonably have known that such distribution might adversely affect the ability of the insurance company to fulfill its contractual obligations.
(c) Any person who was a parent corporation or holding company or a person or affiliate who otherwise controlled the insurance company at the time such distributions were paid shall be liable up to the amount of distributions or payments such person received under subsection (a) of this section. Any person who otherwise controlled the insurance company at the time such distributions were declared shall be 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 shall be jointly and severally liable.
(d) The maximum amount recoverable under this section shall be the amount needed in excess of other available assets of the impaired or insolvent insurance company to pay the contractual obligations of the impaired or insolvent insurance company and to reimburse any guaranty funds.
(e) To the extent that any person liable under subsection (c) of this section is insolvent or otherwise fails to pay any claims due from it pursuant to such subsection, its parent corporation or holding company or person who otherwise controlled it at the time the distribution was paid, shall be jointly and severally liable for any resulting deficiency in the amount recovered from the person who is insolvent or otherwise fails to pay.