ALJDEC

01A-194-INS · Department of Insurance · 2001-09-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 4, 2001

APPEARANCES: William J. Dasso, Assistant Secretary (corporate officer), appeared on behalf of Petitioner; the Arizona Department of Insurance was represented by its authorized representative Kurt Regner, Financial Affairs Supervisor.

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Petitioner Old Republic Standard Insurance Company has applied to withdraw from the insurance business as provided in Arizona Revised Statutes (A.R.S.) § 20-217 and Arizona Administrative Code (A.A.C.) R20-6- 303, and for the release of its statutory deposits as provided in A.R.S. §20-588 and A.A.C. R20-6-303. A public hearing took place on September 4, 2001. The parties presented evidence and testimony at the hearing and, based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order to approve the application for withdrawal from the insurance business and release the deposits. FINDINGS OF FACT 1. Petitioner has had a certificate of authority to transact business in property and casualty insurance, with workers’ compensation, in Arizona since 1997. Petitioner has acted only as a reinsurer for a related company, Old Republic Insurance Company. Petitioner applied for withdrawal from the insurance business in Arizona on July 2, 2001. (Exhibit 1.) 2. Petitioner has surrendered its amended certificate of authority to the Arizona Department of Insurance (“Department”). (Exhibit 6.) 3. Petitioner has entered into a “Termination and Retrocession Agreement” with Old Republic Insurance Company that provides for the assumption by Old Republic Insurance Company of all Petitioner’s liabilities relating to policyholder claims incurred but unreported as of the effective date of the Retrocession Agreement. (Exhibit 2.) The Department approved the Retrocession Agreement on July 23, 2001. 4. Petitioner has filed certified copies of Resolutions of Petitioner's Board of Directors and of Petitioner's sole shareholder to withdraw from the insurance business, to amend its articles of incorporation to eliminate its insuring powers, and to adopt a new corporate name that does not include the word "insurance". (Exhibits 3, 4, and 5.) 5. Petitioner has requested release of its statutory deposits. (Exhibit 7, Application for Release of Deposited Funds, dated June 29, 2001.) In furtherance of the request, Petitioner has filed with the Department certified financial statements as of March 31, 2001 and June 30, 2001. (Exhibits 9 and 10.) 6. Petitioner has filed a plan for extinguishing substantially all of its liabilities. (Exhibit 8.) 7. At least ten business days before the hearing of this matter, Petitioner gave notice to its creditors and policyholders, setting forth the date, place, nature, and purpose of the hearing, as evidenced by an affidavit of publication. (Exhibit 11, Notice published August 18, 2001.) Petitioner’s witness represented that there are no known or reasonably ascertainable creditors in Arizona, and so Petitioner has not mailed individual notice to creditors. 8. Petitioner has a $550,000.00 statutory deposit, a $110,000.00 workers’ compensation deposit, and a $100.00 deposit with the Insurance Examiners’ Revolving Fund (“IERF”). (Exhibit B.) 9. Petitioner owes $19.50 to the IERF. (Exhibit B.) 10. Petitioner waives the notice requirements set forth in A.R.S §41- 1092.05(D). (Exhibit 12.)

. . .

CONCLUSIONS OF LAW Petitioner has complied with the provisions of A.A.C. R20-6-303 and with A.R.S. § 20-588 and A.A.C. R20-6-303 relating to the release of its $660,000.00 statutory deposits. RECOMMENDED ORDER IT IS HEREBY RECOMMENDED that the Director of the Arizona Department of Insurance order the following: A. Petitioner may file its Articles of Amendment to the Articles of Redomestication of Old Republic Standard Insurance Company (“Articles of Amendment”) with the Arizona Corporation Commission. B. Petitioner is entitled to the release of its statutory deposit in the sum of $550,00.00. The statutory deposit shall be released to Petitioner after the Department has received the following: (i) payment of a $19.50 fee assessed by the IERF for Invoice 116690, issued on August 17, 2001;

(ii) a copy of Petitioner’s Articles of Amendment, certified as having been filed with the Arizona Corporation Commission;

and (iii) a fully executed Form E126 (Notice of Trust Deposit Release). The statutory deposit cannot be released until the Department receives a fully executed copy of the official State Treasurer Release Receipt Form E101.

C. Petitioner is entitled to the release of its workers’ compensation deposit in the amount of $110,000.00, which shall be released to Petitioner after the Department has received the following: (i) approval from the Industrial Commission of Arizona of the release of the workers’ compensation deposit;

and (ii) a fully executed Form E126 (Notice of Trust Deposit Release).

. . . D. The sum of $100.00, previously credited to the IERF, shall be refunded to Petitioner as provided for in A.R.S. §20-159. E. Unless Petitioner files its Articles of Amendment with the Arizona Corporation Commission on or before December 31, 2001, Petitioner shall file its 2001 Annual Statement with the Department, together with all applicable fees.

Done this 6th day of September 2001.

OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Eric A. Bryant Administrative Law Judge

Original mailed this ___ day of September 2001, to:

Charles R. Cohen, Director ATTN: Curvey Burton Arizona Department of Insurance 2910 N. 44th Street, Suite 210 Phoenix, AZ 85018

By ___________________________

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826