Virginia Law

A. For purposes of making a determination of an insurer's financial condition, the commission may:

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

2. Make appropriate adjustments, including disallowance, to asset values attributable to investments in or transactions with parents, subsidiaries, or affiliates consistent with the NAIC Accounting Practices and Procedures Manual, state laws, and regulations;

3. 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;

4. 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.

B. For all entities subject to the provisions of § 38.2-1038 of the Code of Virginia, the commission may issue an order regarding corrective action when it finds that (i) the insurer cannot, or there is a reasonable expectation that the insurer will not be able to, meet its obligations to all policyholders, or (ii) the insurer's continued operation in this Commonwealth is hazardous to policyholders, creditors, and the general public in this Commonwealth. Such an order may require the insurer, among other things, to undertake one or more of the following steps:

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 commission 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 commission deems necessary;

8. Document the adequacy of premium rates in relation to the risks insured;

9. File, in addition to regular annual statements, interim financial reports on the form adopted by the NAIC or in such format as promulgated by the commission or any other analyses of the insurer's data necessary to secure complete information concerning the condition and affairs of the insurer;

10. Correct corporate governance practice deficiencies, and adopt and utilize governance practices acceptable to the commission;

11. Provide a business plan to the commission in order to continue to transact business in this Commonwealth; or

12. Notwithstanding any other provision of law limiting the frequency or amount of premium rate adjustments, adjust rates for any nonlife insurance product written by the insurer that the commission considers necessary to improve the financial condition of the insurer.