{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/38.2-1710.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/38.2-1710.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/38.2-1710.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/38.2-1710.html"}],"law_id":56896,"edition_id":1,"section_id":56896,"structure_id":14902,"section_number":"38.2-1710","catch_line":"Miscellaneous provisions","history":"1976, c. 330, \u00a7 38.1-482.28; 1986, c. 562; 2010, c. 510; 2018, c. 706.","full_text":"A\n\nNothing in this chapter shall be construed to reduce the liability for unpaid assessments of the insureds on an impaired or insolvent insurer operating under a plan with assessment liability.B\n\nRecords shall be kept of all meetings of the board of directors to discuss the activities of the Association in carrying out its powers and duties under § 38.2-1704. The records of the Association with respect to an impaired or insolvent insurer shall not be disclosed prior to the termination of a liquidation, rehabilitation, or conservation proceeding involving the impaired or insolvent insurer, except (i) upon the termination of the impairment or insolvency of the member insurer or (ii) upon the order of a court of competent jurisdiction. Nothing in this subsection shall limit the duty of the Association to render a report of its activities under § 38.2-1711.C\n\nFor the purpose of carrying out its obligations under this chapter, the Association shall be deemed to be a creditor of the impaired or insolvent insurer to the extent of assets attributable to covered policies and contracts reduced by any amounts to which the Association is entitled as subrogee pursuant to subsection K of § 38.2-1704. Assets of the impaired or insolvent insurer attributable to covered policies and contracts shall be used to continue all covered policies and contracts and pay all contractual obligations of the impaired or insolvent insurer as required by this chapter. “Assets attributable to covered policies and contracts” means that proportion of the assets which the reserves that should have been established for these policies and contracts bear to the reserves that should have been established for all insurance policies, contracts, and health benefit plans written by the impaired or insolvent insurer.D\n\nAs a creditor of the impaired or insolvent insurer as established in subsection C and consistent with subsection B of § 38.2-1509, the Association and other similar associations shall be entitled to receive a disbursement of assets out of the marshaled assets, from time to time as the assets become available to reimburse it, as a credit against contractual obligations under this chapter. If the liquidator has not, within 120 days of a final determination of insolvency of a member insurer by the receivership court, made an application to the court for the approval of a proposal to disburse assets out of marshaled assets to guaranty associations having obligations because of the insolvency, then the Association shall be entitled to make application to the receivership court for approval of its own proposal to disburse these assets.E\n\n1. Prior to the termination of any liquidation, rehabilitation, or conservation proceeding, the court, in making an equitable distribution of the ownership rights of the insolvent insurer, may take into consideration the contributions of the respective parties, including the Association, the shareholders, contract owners, certificate holders, enrollees, and policy and contract owners of the insolvent insurer, and any other party with a legitimate interest. In this determination, consideration shall be given to the welfare of the policy owners, contract owners, certificate holders, and enrollees of the continuing or successor member insurer.2\n\nNo distribution to any stockholders, if any, of an impaired or insolvent insurer shall be made until and unless the total amount of valid claims of the Association with interest thereon for funds expended in carrying out its powers and duties under § 38.2-1704 with respect to the member insurer have been fully recovered by the Association.F\n\n1. If an order for liquidation or rehabilitation of a member insurer domiciled in the Commonwealth has been entered, the receiver appointed under that order shall have a right to recover on behalf of the member insurer, from any affiliate that controlled it, the amount of distributions, other than stock dividends paid by the member insurer on its capital stock, made at any time during the five years preceding the petition for liquidation or rehabilitation, subject to the limitations of subdivisions 2 through 4.2\n\nNo such distribution shall be recoverable if the member insurer shows that when paid the distribution was lawful and reasonable, and that the member insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the member insurer to fulfill its contractual obligations.3\n\nAny person who was an affiliate that controlled the member insurer at the time the distributions were paid shall be liable up to the amount of distributions received. Any person who was an affiliate that controlled the member insurer at the time the distributions were declared shall be liable up to the amount of distributions that would have been received if they had been paid immediately. If two or more persons are liable with respect to the same distributions, they shall be jointly and severally liable.4\n\nThe maximum amount recoverable under this subsection shall be the amount in excess of all other available assets of the insolvent insurer needed to pay (i) the contractual obligations of the insolvent insurer and (ii) the reasonable expenses of the Association incurred in connection with the performance of its duties for the insolvent insurer.5\n\nIf any person liable under subdivision 3 is insolvent, all its affiliates that controlled it at the time the distribution was paid shall be jointly and severally liable for any resulting deficiency in the amount recovered from the insolvent affiliate.","order_by":null,"text":{"0":{"id":208400,"text":"Nothing in this chapter shall be construed to reduce the liability for unpaid assessments of the insureds on an impaired or insolvent insurer operating under a plan with assessment liability.","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"B"},"1":{"id":208401,"text":"Records shall be kept of all meetings of the board of directors to discuss the activities of the Association in carrying out its powers and duties under § 38.2-1704. The records of the Association with respect to an impaired or insolvent insurer shall not be disclosed prior to the termination of a liquidation, rehabilitation, or conservation proceeding involving the impaired or insolvent insurer, except (i) upon the termination of the impairment or insolvency of the member insurer or (ii) upon the order of a court of competent jurisdiction. Nothing in this subsection shall limit the duty of the Association to render a report of its activities under § 38.2-1711.","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A","next_prefix":"C"},"2":{"id":208402,"text":"For the purpose of carrying out its obligations under this chapter, the Association shall be deemed to be a creditor of the impaired or insolvent insurer to the extent of assets attributable to covered policies and contracts reduced by any amounts to which the Association is entitled as subrogee pursuant to subsection K of § 38.2-1704. Assets of the impaired or insolvent insurer attributable to covered policies and contracts shall be used to continue all covered policies and contracts and pay all contractual obligations of the impaired or insolvent insurer as required by this chapter. “Assets attributable to covered policies and contracts” means that proportion of the assets which the reserves that should have been established for these policies and contracts bear to the reserves that should have been established for all insurance policies, contracts, and health benefit plans written by the impaired or insolvent insurer.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B","next_prefix":"D"},"3":{"id":208403,"text":"As a creditor of the impaired or insolvent insurer as established in subsection C and consistent with subsection B of § 38.2-1509, the Association and other similar associations shall be entitled to receive a disbursement of assets out of the marshaled assets, from time to time as the assets become available to reimburse it, as a credit against contractual obligations under this chapter. If the liquidator has not, within 120 days of a final determination of insolvency of a member insurer by the receivership court, made an application to the court for the approval of a proposal to disburse assets out of marshaled assets to guaranty associations having obligations because of the insolvency, then the Association shall be entitled to make application to the receivership court for approval of its own proposal to disburse these assets.","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C","next_prefix":"E"},"4":{"id":208404,"text":"1. Prior to the termination of any liquidation, rehabilitation, or conservation proceeding, the court, in making an equitable distribution of the ownership rights of the insolvent insurer, may take into consideration the contributions of the respective parties, including the Association, the shareholders, contract owners, certificate holders, enrollees, and policy and contract owners of the insolvent insurer, and any other party with a legitimate interest. In this determination, consideration shall be given to the welfare of the policy owners, contract owners, certificate holders, and enrollees of the continuing or successor member insurer.","type":"section","prefixes":["E"],"prefix":"E","entire_prefix":"E","prefix_anchor":"E","level":1,"prior_prefix":"D","next_prefix":"E2"},"5":{"id":208405,"text":"No distribution to any stockholders, if any, of an impaired or insolvent insurer shall be made until and unless the total amount of valid claims of the Association with interest thereon for funds expended in carrying out its powers and duties under § 38.2-1704 with respect to the member insurer have been fully recovered by the Association.","type":"section","prefixes":["E","2"],"prefix":"2","entire_prefix":"E2","prefix_anchor":"E2","level":2,"prior_prefix":"E","next_prefix":"F"},"6":{"id":208406,"text":"1. If an order for liquidation or rehabilitation of a member insurer domiciled in the Commonwealth has been entered, the receiver appointed under that order shall have a right to recover on behalf of the member insurer, from any affiliate that controlled it, the amount of distributions, other than stock dividends paid by the member insurer on its capital stock, made at any time during the five years preceding the petition for liquidation or rehabilitation, subject to the limitations of subdivisions 2 through 4.","type":"section","prefixes":["F"],"prefix":"F","entire_prefix":"F","prefix_anchor":"F","level":1,"prior_prefix":"E2","next_prefix":"F2"},"7":{"id":208407,"text":"No such distribution shall be recoverable if the member insurer shows that when paid the distribution was lawful and reasonable, and that the member insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the member insurer to fulfill its contractual obligations.","type":"section","prefixes":["F","2"],"prefix":"2","entire_prefix":"F2","prefix_anchor":"F2","level":2,"prior_prefix":"F","next_prefix":"F3"},"8":{"id":208408,"text":"Any person who was an affiliate that controlled the member insurer at the time the distributions were paid shall be liable up to the amount of distributions received. Any person who was an affiliate that controlled the member insurer at the time the distributions were declared shall be liable up to the amount of distributions that would have been received if they had been paid immediately. If two or more persons are liable with respect to the same distributions, they shall be jointly and severally liable.","type":"section","prefixes":["F","3"],"prefix":"3","entire_prefix":"F3","prefix_anchor":"F3","level":2,"prior_prefix":"F2","next_prefix":"F4"},"9":{"id":208409,"text":"The maximum amount recoverable under this subsection shall be the amount in excess of all other available assets of the insolvent insurer needed to pay (i) the contractual obligations of the insolvent insurer and (ii) the reasonable expenses of the Association incurred in connection with the performance of its duties for the insolvent insurer.","type":"section","prefixes":["F","4"],"prefix":"4","entire_prefix":"F4","prefix_anchor":"F4","level":2,"prior_prefix":"F3","next_prefix":"F5"},"10":{"id":208410,"text":"If any person liable under subdivision 3 is insolvent, all its affiliates that controlled it at the time the distribution was paid shall be jointly and severally liable for any resulting deficiency in the amount recovered from the insolvent affiliate.","type":"section","prefixes":["F","5"],"prefix":"5","entire_prefix":"F5","prefix_anchor":"F5","level":2,"prior_prefix":"F4"}},"ancestry":[{"id":14902,"edition_id":1,"name":"Establishment and Operation of the Association","identifier":"1","label":"article","depth":3,"order_by":1,"parent_id":14649,"metadata":{},"date_created":"2026-06-26 03:50:41","date_modified":"2026-06-26 03:50:41","permalink":{"id":212319,"object_type":"structure","relational_id":14902,"identifier":"1","token":"38.2\/17\/1","url":"\/38.2\/17\/1\/","edition_id":1,"permalink":0,"preferred":1}},{"id":14649,"edition_id":1,"name":"Virginia Life, Accident and Sickness Insurance Guaranty Association","identifier":"17","label":"chapter","depth":2,"order_by":1,"parent_id":12698,"metadata":{},"date_created":"2026-06-26 03:49:08","date_modified":"2026-06-26 03:49:08","permalink":{"id":212317,"object_type":"structure","relational_id":14649,"identifier":"17","token":"38.2\/17","url":"\/38.2\/17\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12698,"edition_id":1,"name":"Insurance","identifier":"38.2","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:49","date_modified":"2026-06-26 03:43:49","permalink":{"id":210661,"object_type":"structure","relational_id":12698,"identifier":"38.2","token":"38.2","url":"\/38.2\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":85176,"structure_id":14902,"section_number":"38.2-1700","catch_line":"Purpose and applicability of chapter","url":"\/38.2-1700\/","token":"38.2\/17\/1\/38.2-1700","metadata":false},{"id":79730,"structure_id":14902,"section_number":"38.2-1701","catch_line":"Definitions","url":"\/38.2-1701\/","token":"38.2\/17\/1\/38.2-1701","metadata":false},{"id":62816,"structure_id":14902,"section_number":"38.2-1702","catch_line":"Association; creation; memberships; accounts; supervision","url":"\/38.2-1702\/","token":"38.2\/17\/1\/38.2-1702","metadata":false},{"id":72232,"structure_id":14902,"section_number":"38.2-1703","catch_line":"Board of directors of Association","url":"\/38.2-1703\/","token":"38.2\/17\/1\/38.2-1703","metadata":false},{"id":65404,"structure_id":14902,"section_number":"38.2-1704","catch_line":"Powers and duties of Association","url":"\/38.2-1704\/","token":"38.2\/17\/1\/38.2-1704","metadata":false},{"id":59600,"structure_id":14902,"section_number":"38.2-1705","catch_line":"Assessments","url":"\/38.2-1705\/","token":"38.2\/17\/1\/38.2-1705","metadata":false},{"id":74544,"structure_id":14902,"section_number":"38.2-1706","catch_line":"Plan of operation","url":"\/38.2-1706\/","token":"38.2\/17\/1\/38.2-1706","metadata":false},{"id":64107,"structure_id":14902,"section_number":"38.2-1707","catch_line":"Duties and powers of the Commission","url":"\/38.2-1707\/","token":"38.2\/17\/1\/38.2-1707","metadata":false},{"id":65805,"structure_id":14902,"section_number":"38.2-1708","catch_line":"Detection and prevention of insolvencies","url":"\/38.2-1708\/","token":"38.2\/17\/1\/38.2-1708","metadata":false},{"id":69918,"structure_id":14902,"section_number":"38.2-1709","catch_line":"Tax write-offs of certificates of contributions","url":"\/38.2-1709\/","token":"38.2\/17\/1\/38.2-1709","metadata":false},{"id":56896,"structure_id":14902,"section_number":"38.2-1710","catch_line":"Miscellaneous provisions","url":"\/38.2-1710\/","token":"38.2\/17\/1\/38.2-1710","metadata":false},{"id":61703,"structure_id":14902,"section_number":"38.2-1711","catch_line":"Examination of the Association; annual report","url":"\/38.2-1711\/","token":"38.2\/17\/1\/38.2-1711","metadata":false},{"id":57475,"structure_id":14902,"section_number":"38.2-1712","catch_line":"Tax exemptions","url":"\/38.2-1712\/","token":"38.2\/17\/1\/38.2-1712","metadata":false},{"id":77644,"structure_id":14902,"section_number":"38.2-1713","catch_line":"Immunity","url":"\/38.2-1713\/","token":"38.2\/17\/1\/38.2-1713","metadata":false},{"id":59069,"structure_id":14902,"section_number":"38.2-1714","catch_line":"Stay of proceedings; reopening default judgments","url":"\/38.2-1714\/","token":"38.2\/17\/1\/38.2-1714","metadata":false},{"id":59869,"structure_id":14902,"section_number":"38.2-1715","catch_line":"Prohibited advertisement of Association coverage in insurance sales; notice to policy owners","url":"\/38.2-1715\/","token":"38.2\/17\/1\/38.2-1715","metadata":false}],"previous_section":{"id":69918,"structure_id":14902,"section_number":"38.2-1709","catch_line":"Tax write-offs of certificates of contributions","url":"\/38.2-1709\/","token":"38.2\/17\/1\/38.2-1709","metadata":false},"next_section":{"id":61703,"structure_id":14902,"section_number":"38.2-1711","catch_line":"Examination of the Association; annual report","url":"\/38.2-1711\/","token":"38.2\/17\/1\/38.2-1711","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/38.2-1710\/","history_text":"

This law was first created in 1976. The record of its establishment is cataloged in chapter 330 of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year. Unfortunately, the 1976 \u201cActs\u201d aren\u2019t available online. It has been modified 3 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 1986, chapter 562; in 2010, chapter 510<\/a>; in 2018, chapter 706<\/a>.<\/p>","references":false,"refers_to":[{"id":66006,"section_number":"38.2-1509","catch_line":"Powers of Commission when authorized to rehabilitate or liquidate insurers by court order; disbursement of available assets to an association, etc","order_by":null,"url":"\/38.2-1509\/"},{"id":65404,"section_number":"38.2-1704","catch_line":"Powers and duties of Association","order_by":null,"url":"\/38.2-1704\/"}],"permalink":{"id":212361,"object_type":"law","relational_id":56896,"identifier":"38.2-1710","token":"38.2\/17\/1\/38.2-1710","url":"\/38.2-1710\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/38.2-1710\/","token":"38.2\/17\/1\/38.2-1710","dublin_core":{"Title":"Miscellaneous provisions","Type":"Text","Format":"text\/html","Identifier":"\u00a7 38.2-1710","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> Nothing in this chapter shall be construed to reduce the liability for unpaid assessments of the insureds on an impaired or insolvent insurer<\/span> operating under a plan with assessment liability. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> Records shall be kept of all meetings of the board of directors to discuss the activities of the Association<\/span> in carrying out its powers and duties under § 38.2-1704<\/a>. The records of the Association<\/span> with respect to an impaired or insolvent insurer<\/span> shall not be disclosed prior to the termination of a liquidation<\/span>, rehabilitation, or conservation proceeding involving the impaired or insolvent insurer<\/span>, except (i) upon the termination of the impairment or insolvency of the member insurer<\/span> or (ii) upon the order<\/span> of a court<\/span> of competent jurisdiction<\/span>. Nothing in this subsection shall limit the duty of the Association<\/span> to render a report of its activities under § 38.2-1711<\/a>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> For the purpose of carrying out its obligations under this chapter, the Association<\/span> shall be deemed to be a creditor<\/span> of the impaired or insolvent insurer<\/span> to the extent of assets attributable to covered policies and contracts<\/span> reduced by any amounts to which the Association<\/span> is entitled as subrogee pursuant to subsection K of § 38.2-1704<\/a>. Assets of the impaired or insolvent insurer<\/span> attributable to covered policies and contracts shall be used to continue all covered policies and contracts and pay all contractual obligations<\/span> of the impaired or insolvent insurer<\/span> as required by this chapter. “Assets attributable to covered policies and contracts<\/span>” means that proportion of the assets which the reserves that should have been established for these policies and contracts bear to the reserves that should have been established for all insurance policies<\/span>, contracts, and health benefit plans<\/span> written by the impaired or insolvent insurer<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> As a creditor<\/span> of the impaired or insolvent insurer<\/span> as established in subsection C and consistent with subsection B of § 38.2-1509<\/a>, the Association<\/span> and other similar associations<\/span> shall be entitled to receive a disbursement of assets out of the marshaled assets, from time to time as the assets become available to reimburse it, as a credit against contractual obligations<\/span> under this chapter. If the liquidator has not, within 120 days of a final determination of insolvency of a member insurer<\/span> by the receivership court<\/span>, made an application to the court for the approval of a proposal to disburse assets out of marshaled assets to guaranty associations<\/span> having obligations because of the insolvency, then the Association<\/span> shall be entitled to make application to the receivership court<\/span> for approval of its own proposal to disburse these assets. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

E.<\/span> 1. Prior to the termination of any liquidation<\/span>, rehabilitation, or conservation proceeding, the court, in making an equitable distribution<\/span> of the ownership rights of the insolvent insurer<\/span>, may take into consideration the contributions of the respective parties, including the Association<\/span>, the shareholders, contract owners<\/span>, certificate holders, enrollees, and policy and contract owners<\/span> of the insolvent insurer<\/span>, and any other party<\/span> with a legitimate interest. In this determination, consideration shall be given to the welfare of the policy owners<\/span>, contract owners<\/span>, certificate holders, and enrollees of the continuing or successor member insurer<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> No distribution to any stockholders, if any, of an impaired or insolvent insurer<\/span> shall be made until and unless the total amount of valid claims of the Association<\/span> with interest thereon for funds expended in carrying out its powers and duties under § 38.2-1704<\/a> with respect to the member insurer<\/span> have been fully recovered by the Association<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

F.<\/span> 1. If an order<\/span> for liquidation<\/span> or rehabilitation of a member insurer<\/span> domiciled in the Commonwealth has been entered, the receiver appointed under that order<\/span> shall have a right to recover on behalf of the member insurer<\/span>, from any affiliate that controlled it, the amount of distributions, other than stock dividends paid by the member insurer<\/span> on its capital stock, made at any time during the five years preceding the petition<\/span> for liquidation<\/span> or rehabilitation, subject to the limitations of subdivisions 2 through 4. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> No such distribution shall be recoverable if the member insurer<\/span> shows that when paid the distribution was lawful and reasonable, and that the member insurer<\/span> did not know and could not reasonably have known that the distribution might adversely affect the ability of the member insurer<\/span> to fulfill its contractual obligations<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> Any person<\/span> who was an affiliate that controlled the member insurer<\/span> at the time the distributions were paid shall be liable up to the amount of distributions received. Any person<\/span> who was an affiliate that controlled the member insurer<\/span> at the time the distributions were declared shall be liable up to the amount of distributions that would have been received if they had been paid immediately. If two or more persons<\/span> are liable with respect to the same distributions, they shall be jointly and severally liable. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> The maximum amount recoverable under this subsection shall be the amount in excess of all other available assets of the insolvent insurer<\/span> needed to pay (i) the contractual obligations<\/span> of the insolvent insurer<\/span> and (ii) the reasonable expenses of the Association<\/span> incurred in connection with the performance of its duties for the insolvent insurer<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

5.<\/span> If any person<\/span> liable under subdivision 3 is insolvent, all its affiliates that controlled it at the time the distribution was paid shall be jointly and severally liable for any resulting deficiency in the amount recovered from the insolvent affiliate. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nMISCELLANEOUS PROVISIONS (\u00a7 38.2-1710)\n\nA. Nothing in this chapter shall be construed to reduce the liability for unpaid\nassessments of the insureds on an impaired or insolvent insurer operating under\na plan with assessment liability.\n\nB. Records shall be kept of all meetings of the board of directors to discuss\nthe activities of the Association in carrying out its powers and duties under\n§ 38.2-1704. The records of the Association with respect to an impaired or\ninsolvent insurer shall not be disclosed prior to the termination of a\nliquidation, rehabilitation, or conservation proceeding involving the impaired\nor insolvent insurer, except (i) upon the termination of the impairment or\ninsolvency of the member insurer or (ii) upon the order of a court of competent\njurisdiction. Nothing in this subsection shall limit the duty of the Association\nto render a report of its activities under § 38.2-1711.\n\nC. For the purpose of carrying out its obligations under this chapter, the\nAssociation shall be deemed to be a creditor of the impaired or insolvent\ninsurer to the extent of assets attributable to covered policies and contracts\nreduced by any amounts to which the Association is entitled as subrogee pursuant\nto subsection K of § 38.2-1704. Assets of the impaired or insolvent insurer\nattributable to covered policies and contracts shall be used to continue all\ncovered policies and contracts and pay all contractual obligations of the\nimpaired or insolvent insurer as required by this chapter. “Assets\nattributable to covered policies and contracts” means that proportion of\nthe assets which the reserves that should have been established for these\npolicies and contracts bear to the reserves that should have been established\nfor all insurance policies, contracts, and health benefit plans written by the\nimpaired or insolvent insurer.\n\nD. As a creditor of the impaired or insolvent insurer as established in\nsubsection C and consistent with subsection B of § 38.2-1509, the\nAssociation and other similar associations shall be entitled to receive a\ndisbursement of assets out of the marshaled assets, from time to time as the\nassets become available to reimburse it, as a credit against contractual\nobligations under this chapter. If the liquidator has not, within 120 days of a\nfinal determination of insolvency of a member insurer by the receivership court,\nmade an application to the court for the approval of a proposal to disburse\nassets out of marshaled assets to guaranty associations having obligations\nbecause of the insolvency, then the Association shall be entitled to make\napplication to the receivership court for approval of its own proposal to\ndisburse these assets.\n\nE. 1. Prior to the termination of any liquidation, rehabilitation, or\nconservation proceeding, the court, in making an equitable distribution of the\nownership rights of the insolvent insurer, may take into consideration the\ncontributions of the respective parties, including the Association, the\nshareholders, contract owners, certificate holders, enrollees, and policy and\ncontract owners of the insolvent insurer, and any other party with a legitimate\ninterest. In this determination, consideration shall be given to the welfare of\nthe policy owners, contract owners, certificate holders, and enrollees of the\ncontinuing or successor member insurer.\n\n 2. No distribution to any stockholders, if any, of an impaired or insolvent\n insurer shall be made until and unless the total amount of valid claims of the\n Association with interest thereon for funds expended in carrying out its\n powers and duties under § 38.2-1704 with respect to the member insurer\n have been fully recovered by the Association.\n\nF. 1. If an order for liquidation or rehabilitation of a member insurer\ndomiciled in the Commonwealth has been entered, the receiver appointed under\nthat order shall have a right to recover on behalf of the member insurer, from\nany affiliate that controlled it, the amount of distributions, other than stock\ndividends paid by the member insurer on its capital stock, made at any time\nduring the five years preceding the petition for liquidation or rehabilitation,\nsubject to the limitations of subdivisions 2 through 4.\n\n 2. No such distribution shall be recoverable if the member insurer shows that\n when paid the distribution was lawful and reasonable, and that the member\n insurer did not know and could not reasonably have known that the distribution\n might adversely affect the ability of the member insurer to fulfill its\n contractual obligations.\n\n 3. Any person who was an affiliate that controlled the member insurer at the\n time the distributions were paid shall be liable up to the amount of\n distributions received. Any person who was an affiliate that controlled the\n member insurer at the time the distributions were declared shall be liable up\n to the amount of distributions that would have been received if they had been\n paid immediately. If two or more persons are liable with respect to the same\n distributions, they shall be jointly and severally liable.\n\n 4. The maximum amount recoverable under this subsection shall be the amount in\n excess of all other available assets of the insolvent insurer needed to pay\n (i) the contractual obligations of the insolvent insurer and (ii) the\n reasonable expenses of the Association incurred in connection with the\n performance of its duties for the insolvent insurer.\n\n 5. If any person liable under subdivision 3 is insolvent, all its affiliates\n that controlled it at the time the distribution was paid shall be jointly and\n severally liable for any resulting deficiency in the amount recovered from the\n insolvent affiliate.\n\nHISTORY: 1976, c. 330, \u00a7 38.1-482.28; 1986, c. 562; 2010, c. 510; 2018, c. 706.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}