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Subject 120-2-55 ADMINISTRATIVE SUPERVISION

Rule 120-2-55-.01 Authority

This Regulation is promulgated pursuant to the authority granted by O.C.G.A. Sections 33-2-9 and 33-3-1.

Rule 120-2-55-.02 Purpose

The purpose of this Regulation is to set forth the rules and procedural requirements which the Commissioner of Insurance deems necessary to carry out the provisions of Chapter 3, Title 33 of the Georgia Insurance Code, relating to administrative supervision.

(a) This Regulation shall not be interpreted to limit the powers granted the Commissioner by any laws or parts of laws of this state.

Rule 120-2-55-.03 Definitions

(1) "Exceeded its Powers" means, including but not limited to, the following conditions:
(a) The insurer has refused to permit examination of its books, papers, accounts, records of affairs by the Commissioner;
(b) A domestic insurer has unlawfully removed from this State books, papers, accounts or records necessary for an examination of the insurer;
(c) The insurer has failed to promptly comply with the applicable financial reporting statutes or rules and departmental requests relating thereto;
(d) The insurer has neglected or refused to observe a requirement or order of the Commissioner to make good, within the time prescribed by law, any prohibited deficiency in its capital, capital stock, surplus.
(e) The insurer is continuing to transact insurance or write business after its license has been revoked or suspended by the Commissioner;
(f) The insurer, by contract or otherwise, has unlawfully or has in violation of a requirement or order of the Commissioner or has without first having obtained written approval of the Commissioner if approval is required by law:
1. Totally reinsured its entire outstanding business; or
2. Merged or consolidated substantially its entire property or business with another insurer.
(g) The insurer engaged in any transaction in which it is not authorized to engage under the laws of this State;
(h) The insurer has failed to comply with a lawful requirement or order of the Commissioner.
(2) "Consent" means agreement to administrative supervision by the insurer.

Rule 120-2-55-.04 Applicability

This Regulation shall apply to all insurers doing business in this State.

Rule 120-2-55-.05 Requirements to Comply; Administrative Supervision

(1) If the Commissioner determines that any of the conditions exist as set forth in Section 33-3-17 or 33-3-18 of the Official Code of Georgia Annotated relating to administrative supervision, the Commissioner may proceed with the administrative supervision of the insurer.
(2) If placed under administrative supervision, the insurer shall have such period of time as deemed necessary by the Commissioner to comply with the requirements of the Commissioner subject to the provisions of this Regulation.
(3) If it is determined by the Commissioner that the conditions giving rise to the supervision still exist at the end of the supervision period specified above, the Commissioner may extend such period.
(4) If it is determined by the Commissioner that none of the conditions giving rise to the supervision exist, the Commissioner may release the insurer from supervision.

Rule 120-2-55-.06 Powers

The Commissioner may take such action as deemed necessary or appropriate to reform the insurer under supervision and the expense for such action shall be borne by the insurer. The Commissioner shall have all the powers of the shareholders, policyholders, members, subscribers, directors, committees of the board of directors, officers, managers, and attorneys-in-fact whose authority shall be subordinate to him. He shall have full power to direct and manage, to hire and discharge employees, officers and directors, notwithstanding any by-laws of the insurer or any contracts that may exist. The Commissioner may deal directly with the property and business affairs of the insurer.

(a) Administrative supervision consists of supervision of the actions of the Board of Directors of the company and the employees of the company. Any resolutions by the board of Directors shall be subject to the approval of the Commissioner. All actions and transactions of the employees and officers of the company are subject to the approval of the Commissioner as the administrator.
(b) The Commissioner shall have control over the cash receipts and cash disbursements of the company. All company decisions shall be subject to the approval of the Commissioner.
(c) The Commissioner shall be able to act for the company in connection with any of its custodian agreements.
(d) The Commissioner may require the insurer to:
1. Reduce the total amount of present and potential liability for policy benefits by reinsurance;
2. Reduce, suspend or limit the volume of business being accepted or renewed;
3. Reduce general insurance and commission expenses by specified methods;
4. Increase the insurer's capital and surplus;
5. Suspend or limit the declaration and payment of dividend by an insurer to its stockholders or to its policyholders;
6. File reports in a form acceptable to the Commissioner concerning the market value of an insurer's assets;
7. Limit or withdraw from certain investments or discontinue certain investment practices to the extent the Commissioner deems necessary;
8. Document the adequacy of premium rates in relation to the risks insured; or
9. File, in addition to regular annual statements, interim financial reports on the form adopted by the National Association of Insurance Commissioners or on such format as promulgated by the Commissioner.

Rule 120-2-55-.07 Prohibited Acts During Period of Supervision

During the period of supervision, the Commissioner or his designated appointee shall serve as the Administrator. The Commissioner may provide that the insurer is prohibited from doing any of the following things during the period of supervision, without the prior approval of the Commissioner or his appointed supervisor:

(a) Dispose of; convey or encumber any of its assets or its business in force;
(b) Withdraw any of its bank accounts;
(c) Lend any of its funds;
(d) Invest any of its funds;
(e) Transfer any of its property;
(f) Incur any debt, obligation or liability;
(g) Merge or consolidate with another company;
(h) Approve new premiums or renew any policies;
(i) Enter into any new reinsurance contract or treaty;
(j) Terminate, surrender, forfeit, convey or lapse any insurance policy, certificate or contract, except for nonpayment of premiums due;
(k) Release, pay or refund premium deposits, accrued cash or loan values, unearned premiums, or other reserves on any insurance policy, certificate or contract;
(l) Make any material change in management;
(m) Increase salaries and benefits of officers or directors or the preferential payment of bonuses, dividends or other payments deemed preferential; or
(n) Any other action the Commissioner deems may impair the safety or security of the insurer's policyholders or certificate holders, its creditors, or the public.

Rule 120-2-55-.08 Administrative Election of Proceedings

Nothing contained in this Regulation shall preclude the Commissioner from initiating proceedings to place an insurer in conservation, rehabilitation or liquidation proceedings or other delinquency proceedings, however designated under the laws of this State, regardless of whether the Commissioner has previously initiated administrative supervision proceedings under this Regulation against the insurer.

Rule 120-2-55-.09 Severability

If any provision of this Regulation or the application thereof to any person or circumstance is held invalid by a court of competent jurisdiction, the remainder of the Regulation or the applicability of such provision to other persons or circumstances shall not be affected.