980-989

INSURANCE CODE
SECTION 980-989




980.  As used in this article, "liability" includes liability for
losses reported, expenses, taxes, and all other indebtedness not
included in those categories.



984.  Any mortgage insurer or any mortgage guaranty insurer is
insolvent whenever provision for its liabilities and for unearned
income would, after exhausting its required insurance surplus, impair
its capital paid in so as to reduce it below two hundred fifty
thousand dollars ($250,000) or below 75 percent of the aggregate par
value of its issued capital stock.



985.  (a) On or after January 1, 1970, as used in this article and
in subdivision (i) of Section 1011, "insolvency" means either of the
following:
   (1) Any impairment of minimum "paid-in capital" or "capital paid
in," as defined in Section 36, required in the aggregate of an
insurer by the provisions of this code for the class, or classes, of
insurance that it transacts anywhere.
   (2) An inability of the insurer to meet its financial obligations
when they are due.
   (b) On or after January 1, 1970, an insurer cannot escape the
condition of insolvency by being able to provide for all its
liabilities and for reinsurance of all outstanding risks. An insurer
must also be possessed of additional assets equivalent to such
aggregate "paid-in capital" or "capital paid in" required by this
code after making provision for all such liabilities and for such
reinsurance.
   (c) On or after October 1, 1967, as used in this code provision
for reinsurance of all outstanding risks and "gross premiums without
any deduction, received and receivable upon all unexpired risks"
means the greater of: (1) the aggregate amount of actual unearned
premiums, or (2) the amount reasonably estimated as being required to
reinsure in a solvent admitted insurer the unexpired terms of the
risks represented by all outstanding policies.
   (d) On or after October 1, 1967, an insurer must make provision
for reinsurance of the outstanding risk on policies that provide
premiums are fully earned at inception and on policies that for any
other reason do not provide for a return premium to the insured on
cancellation prior to expiration.
   (e) On or after October 1, 1967, the commissioner shall prescribe
standards for reasonably estimating the amount required to reinsure
that will provide adequate safeguards for the policyholders,
creditors and the public.
   (f) On or after October 1, 1967, this section shall not be
applicable to life, title, mortgage or mortgage guaranty insurers.
   (g) In the application of this section to disability insurance, as
defined in Section 106, reserves for unearned premiums and amounts
reasonably estimated as required to reinsure outstanding risks shall
be determined in accordance with the provisions of Section 997.




985.5.  In the case of the insolvency of an admitted insurer, the
commissioner shall prepare a report, which shall be a public record,
with respect to the causes and factors which contributed to that
insolvency. The report shall be submitted to the Governor and to the
Legislature no later than one year from the date of the insolvency.




985.6.  The costs incurred in investigating and preparing the report
required by Section 985.5 shall be an expense of administration
within the meaning of paragraph (1) of subdivision (a) of Section
1033.


986.  A life insurer issuing policies on a reserve basis is
insolvent whenever its assets are exceeded by the total of the
following: (1) the amount necessary to provide for its liabilities;
(2) the amount of paid-in capital, as defined in Section 36, required
by the provisions of Sections 10510, 10511, and 10512; (3) the
amount necessary to provide for reinsurance of all its outstanding
risks at the following rates:
   (a) In the case of contracts issued in a foreign country, upon the
lives of residents thereof, by a domestic insurer authorized to and
doing business in that foreign country, the rates shall be in
accordance with the standard of mortality approved by the
commissioner, as provided by law.
   (b) In the case of group insurance, at the rates required by law
for valuation thereof.
   (c) In the case of all other outstanding risks written prior to
January 1, 1892, at the rates based upon the American Experience
Table of Mortality with interest at the rate of 4 1/2 percent per
annum.
   (d) In the case of all its other outstanding risks written from
and after December 31, 1891, up to and including December 31, 1907,
at rates based upon the Combined Experience or Actuaries' Table of
Mortality with interest at the rate of 4 percent per annum.
   (e) In the case of all its other outstanding risks written from
and after December 31, 1907, and prior to the operative date as to
such risks of Article 3a (commencing with Section 10159.1), Chapter
1, Part 2, Division 2, at rates based upon the American Experience
Table of Mortality with interest at the rate of 3 1/2 percent per
annum, and, where applicable, in accordance with Section 10486.9.
   (f) In the case of contracts of disability insurance, as defined
in Section 106, according to the standards provided in Section 997.
   (g) In the case of all other risks, according to the standards
provided in Article 3a (commencing with Section 10489.1), Chapter 5,
Part 2, Division 2.



987.  A title insurer is insolvent whenever provision for its
liabilities would, after exhausting its required surplus, so far
impair its capital paid in as to reduce it below two hundred fifty
thousand dollars ($250,000), or below 75 percent of the aggregate par
value of its issued capital stock.



988.  (a) As used in this section:
   (1) "Impaired" means a financial situation in which the assets of
an insurer are less than the sum of the insurer's minimum required
capital, minimum required surplus and all liabilities as determined
in accordance with the requirements for the preparation and filing of
the annual statement of an insurer.
   (2) "Chief executive officer" means the person, irrespective of
title, designated by the board of directors or trustees of an insurer
as the person charged with the responsibility of administering and
implementing the insurer's policies and procedures.
   (b) Whenever an insurer is impaired, its chief executive officer
shall immediately notify the commissioner, in writing of that
impairment and shall also immediately notify in writing all of the
board of directors or trustees of the insurer. Any officer, director,
or trustee of an insurer shall notify the person serving as chief
executive officer of the impairment of the insurer in the event the
officer, director, or trustee knows or has reason to know that the
insurer is impaired.
   (c) Any person who violates this section shall, upon conviction
thereof, be fined not more than fifty thousand dollars ($50,000) or
be imprisoned in the county jail for not more than one year, or both.




989.  Any person who does any of the following is guilty of a
misdemeanor punishable by not more than one year in county jail:
   (a) Conceals any property belonging to an insurer.
   (b) Transfers or conceals in contemplation of a state insolvency
proceeding his or her own property or property belonging to an
insurer.
   (c) Conceals, destroys, mutilates, alters or makes a false entry
in any document which affects or relates to the property of an
insurer or withholds any such document from a receiver, trustee or
other officer of a court entitled to its possession.