A. Whenever the superintendent finds an insurer authorized to transact insurance in New Mexico to be in hazardous financial condition, as referred to in Section 59A-41-24 NMSA 1978, the superintendent may order the insurer to take such action as the superintendent deems reasonably necessary to rectify the hazardous condition, including requiring the insurer to:

1. (1) reduce, suspend or limit the volume of business being accepted or renewed;
2. (2) submit its reinsurance contracts for approval and make such further requirements as to the insurer's reinsurance arrangements as the superintendent deems necessary;
3. (3) bulk-reinsure all or any part of its New Mexico business with another insurer authorized to transact such business in New Mexico;
4. (4) increase the insurer's capital and surplus on such terms, in such amount and in such manner as the superintendent deems necessary;

5. (5) maintain with the superintendent a special deposit in cash or securities eligible for investment of funds of a like domestic insurer under Chapter 59A, Article 9 NMSA 1978 and in amount not less than the lesser of:

   1. (a) the amounts required to be maintained as: 1) reserves for losses and loss adjustment expenses on New Mexico business; and 2) reserves for unearned premiums on New Mexico business. In determining the amount of deposit required, the reserves for losses, loss adjustment expenses and unearned premiums shall be reduced only for reinsurance ceded to authorized or accredited reinsurers that maintain with an independent custodian cash or marketable securities in amount not less than the sum of the reinsurer's reserves for losses, loss adjustment expenses and unearned premiums as to reinsurance assumed; or
   2. (b) five hundred thousand dollars ($500,000).

6. Any deposit required by this paragraph shall be for the protection and benefit only of New Mexico policyholders or claimants, or both, and shall not be withdrawn until the superintendent terminates the requirement of the deposit. This paragraph shall not apply as to any domestic insurer, and Subparagraph (b) of this paragraph shall not apply as to any life insurer;

   1. (6) reduce general insurance and commission expenses by specified methods;
   2. (7) suspend or limit the declaration and payment of dividends to its stockholders or to its policyholders;
   3. (8) file reports in a form acceptable to the superintendent concerning the market value of an insurer's assets;
   4. (9) limit or withdraw from certain investments or discontinue certain investment practices to the extent the superintendent deems necessary;
   5. (10) document the adequacy of premium rates in relation to the risks insured;
   6. (11) 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 required by the superintendent;
   7. (12) correct corporate governance practice deficiencies and adopt and use governance practices acceptable to the superintendent;
   8. (13) provide to the superintendent a business plan in order to continue to transact business in the state; or

   9. (14) notwithstanding another provision of law limiting the frequency or amount of premium rate adjustments, adjust rates for a non-life insurance product written by the insurer that the superintendent considers necessary to improve the financial condition of the insurer.

      B. The insurer may request a hearing to review the order in accordance with Chapter 59A, Article 4 NMSA 1978; however, the superintendent shall give written notice of the hearing not less than ten days in advance of the hearing, and the hearing shall be held privately unless the insurer requests a public hearing, in which case the hearing shall be public.

History: Laws 1984, ch. 127, § 717; 1993, ch. 320, § 91; 2014, ch. 59, § 48.

ANNOTATIONS

The 2014 amendment, effective July 1, 2014, expanded the requirements the superintendent may place on an insurer in a hazardous financial condition; in Subsection A, in the introductory paragraph, after "rectify the hazardous condition, including", deleted "but not limited to one or more of the following measures" and added "requiring the insurer to"; in Subsection A, Paragraph (1), after "reduce", added "suspend or limit", after "volume of", deleted "new", and after "business being accepted", deleted "to an amount, for the period of time, and in a manner prescribed by the superintendent’s order" and added "or renewed"; in Subsection A, Paragraph (2), at the beginning of the sentence, deleted "require submission of" and added "submit its"; in Subsection A, Paragraph (4), at the beginning of the sentence, added "increase", and after "increase the insurer’s", added "capital and"; and in Subsection A, added Paragraphs (12), (13) and (14).

Severability. — Laws 2014, ch. 59, § 54 provided that if any part or application of the provisions of Laws 2014, ch. 59 is held invalid, the remainder or its application to other situations or persons shall not be affected.

The 1993 amendment, effective June 18, 1993, added the subsection "A" designation; redesignated former Subsections A through E as Paragraphs (1) through (5) of Subsection A; in Subsection A, substituted "Section 59A-41-24 NMSA 1978" for "Section 716 of this article" in the introductory language, in Paragraph (5), rewrote the introductory language, in Paragraph (5)(a), deleted "by the above subparagraphs" following "the amount of deposit required" and substituted "authorized and accredited" for "approved", made stylistic changes throughout the paragraph and added Paragraphs (6) through (11); and added Subsection B.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 44 C.J.S. Insurance § 138 et seq.