Hazardous insurer standards; office’s evaluation and enforcement authority; immediate final order.

(1) In determining whether the continued operation of any authorized insurer transacting business in this state may be deemed to be hazardous to its policyholders or creditors or to the general public, the office may consider, in the totality of the circumstances of such insurer, any of the following:

(a) Adverse findings reported in financial condition or market conduct examination reports; audit reports; or actuarial opinions, reports, or summaries.

(b) The National Association of Insurance Commissioners Insurance Regulatory Information System and its other financial analysis solvency tools and reports.

(c) Whether the insurer has made adequate provisions, according to presently accepted actuarial standards of practice, for the anticipated cash flows required to cover its contractual obligations and related expenses.

(d) The ability of an assuming reinsurer to perform and whether the insurer’s reinsurance program provides sufficient protection for the insurer’s remaining surplus after taking into account the insurer’s cash flow and the lines of insurance written, as well as the financial condition of the assuming reinsurer.

(e) Whether the insurer’s operating loss in the last 12-month period, including, but not limited to, net capital gain or loss, change in nonadmitted assets, and cash dividends paid to shareholders, is greater than 50 percent of the insurer’s remaining surplus as regards policyholders in excess of the minimum required.

(f) Whether the insurer’s operating loss in the last 12-month period, excluding net capital gains, is greater than 20 percent of the insurer’s remaining surplus as regards policyholders in excess of the minimum required.

(g) Whether a reinsurer, an obligor, or any entity within the insurer’s insurance holding company system is insolvent, threatened with insolvency, or delinquent in payment of its monetary or other obligations, and which in the opinion of the office may affect the solvency of the insurer.

(h) Contingent liabilities, pledges, or guaranties that individually or collectively involve a total amount that in the opinion of the office may affect the solvency of the insurer.

(i) Whether any affiliate, as defined in s. 624.10(1), of the insurer is delinquent in the transmitting to, or payment of, net premiums to the insurer.

(j) The age and collectability of receivables.

(k) Whether the management of the insurer, including officers, directors, or any other person who directly or indirectly controls the operation of the insurer, fails to possess and demonstrate the competence, fitness, and reputation deemed necessary to serve the insurer in such position.

(l) Whether management of the insurer has failed to respond to inquiries relative to the condition of the insurer or has furnished false or misleading information to the office concerning an inquiry.

(m) Whether the insurer has failed to meet financial and holding company filing requirements in the absence of a reason satisfactory to the office.

(n) Whether management of the insurer has filed any false or misleading sworn financial statement, has released a false or misleading financial statement to lending institutions or to the general public, has made a false or misleading entry, or has omitted an entry of material amount in the books of the insurer.

(o) Whether the insurer has grown so rapidly and to such an extent that it lacks adequate financial and administrative capacity to meet its obligations in a timely manner.

(p) Whether the insurer has experienced, or will experience in the foreseeable future, cash flow or liquidity problems.

(q) Whether management has established reserves that do not comply with minimum standards established by state insurance laws and regulations, statutory accounting standards, sound actuarial principles, and standards of practice.

(r) Whether management persistently engages in material under-reserving that results in adverse development.

(s) Whether transactions among affiliates, subsidiaries, or controlling persons for which the insurer receives assets or capital gains, or both, do not provide sufficient value, liquidity, or diversity to assure the insurer’s ability to meet its outstanding obligations as they mature.

(t) The ratio of the annual premium volume to surplus or of its liabilities to surplus in relation to loss experience, the kinds of risks insured, or both.

(u) Whether the insurer’s asset portfolio, when viewed in light of current economic conditions and indications of financial or operational leverage, is of sufficient value, liquidity, or diversity to assure the company’s ability to meet its outstanding obligations as they mature.

(v) Whether the excess of surplus as regards policyholders above the insurer’s statutorily required surplus as regards policyholders has decreased by more than 50 percent in the preceding 12-month period.

(w) As to a residential property insurer, whether it has sufficient capital, surplus, and reinsurance to withstand significant weather events, including, but not limited to, hurricanes.

(x) Whether the insurer’s required surplus, capital, or capital stock is impaired to an extent prohibited by law.

(y) Whether the insurer continues to write new business when it has not maintained the required surplus or capital.

(z) Whether the insurer moves to dissolve or liquidate without first having made provisions satisfactory to the office for liabilities arising from insurance policies issued by the insurer.

(aa) Whether the insurer has incurred substantial new debt, has had to rely on frequent or substantial capital infusions, or has a highly leveraged balance sheet.

(bb) Whether the insurer relies increasingly on other entities, including, but not limited to, affiliates, third-party administrators, managing general agents, or management companies.

(cc) Whether the insurer meets one or more of the grounds in s. 631.051 for the appointment of the department as receiver.

(dd) Any other finding determined by the office to be hazardous to the insurer’s policyholders or creditors or to the general public.

(2) For the purpose of making a determination of an insurer’s financial condition under the Florida Insurance Code, the office may:

(a) Disregard any credit or amount receivable resulting from transactions with a reinsurer that is insolvent, impaired, or otherwise subject to a delinquency proceeding;

(b) Make appropriate adjustments, including disallowance to asset values attributable to investments in or transactions with parents, subsidiaries, or affiliates, consistent with the National Association of Insurance Commissioners Accounting Practices and Procedures Manual and state laws and rules;

(c) Refuse to recognize the stated value of accounts receivable if the ability to collect receivables is highly speculative in view of the age of the account or the financial condition of the debtor; or

(d) Increase the insurer’s liability, in an amount equal to any contingent liability, pledge, or guarantee not otherwise included, if there is a substantial risk that the insurer will be called upon to meet the obligation undertaken within the next 12-month period.

(3) If the office determines that the continued operations of an insurer authorized to transact business in this state may be hazardous to its policyholders or creditors or to the general public, the office may issue an order requiring the insurer to do any of the following:

(a) Reduce the total amount of present and potential liability for policy benefits by procuring additional reinsurance.

(b) Reduce, suspend, or limit the volume of business being accepted or renewed.

(c) Reduce expenses by specified methods or amounts.

(d) Increase the insurer’s capital and surplus.

(e) Suspend or limit the declaration and payment of dividends by an insurer to its stockholders or to its policyholders.

(f) File reports in a form acceptable to the office concerning the market value of the insurer’s assets.

(g) Limit or withdraw from certain investments or discontinue certain investment practices to the extent the office deems necessary.

(h) Document the adequacy of premium rates in relation to the risks insured.

(i) File, in addition to regular annual statements, interim financial reports on a form prescribed by the commission and adopted by the National Association of Insurance Commissioners.

(j) Correct corporate governance practice deficiencies and adopt and use governance practices acceptable to the office.

(k) Provide a business plan acceptable to the office in order to continue to transact business in this state.

(l) Notwithstanding any other law limiting the frequency or amount of rate adjustments, adjust rates for any non-life insurance product written by the insurer which the office considers necessary to improve the financial condition of the insurer.

(4) This section may not be interpreted to limit the powers granted to the office by any laws of this state, nor may it be interpreted to supersede any laws of this state.

(5) The office may, pursuant to ss. 120.569 and 120.57, in its discretion and without advance notice or hearing, issue an immediate final order to any insurer requiring the actions listed in subsection (3).