To repeal section 375.700, RSMo 1994, relating to the distribution of assets of dissolved insurers, and to enact in lieu thereof one new section relating to the same subject.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF MISSOURI,

AS FOLLOWS:

Section A. Section 375.700, RSMo 1994, is repealed and one new section enacted in lieu thereof to be known as section 375.700, to read as follows:

375.700. 1. Unless reinsurance of a dissolved insurer is effected and its assets conveyed to the reinsuring company as provided by law, and unless such insurer is being rehabilitated under other provisions of sections 375.010 to 375.1246, the receiver, under the direction of the court, shall apply the sums realized from the assets of such insurer in hereafter making any partial or final distribution, in the following order:

(1) To payment of all the expenses of closing the business and disposing of the assets of such insurer;

(2) To the payment of all lawful taxes and debts due the state [and the United States] and the counties and municipalities of this state;

(3) To the payment of policy claims;

(4) To the payment of the other debts and claims allowed against such insurer, debts due the United States and the unearned premiums and the surrendered value of its policies, in proportion to their respective amounts.

2. A guaranty association which has paid a claim because of insurance coverage afforded by the insurer in receivership may in addition to its reimbursement claim for the amount it paid to a claimant also claim from the receivership and have allowed reasonable allocated loss adjustment expenses incurred and paid by it with respect to such claim on or after January 1, 1986. The receiver and the court shall have authority, however, to inquire into the reasonableness of the allocated loss adjustment expenses claimed and such claim shall not be allowed if it is found to be unreasonable. Any claim amount allowed to a guaranty association as allocated loss adjustment expense reimbursement shall be assigned the same priority under subsection 1 of this section as the claim to which it relates would be entitled had the claim been allowed. A guaranty association shall only be entitled to an allowance for reimbursement of its allocated loss adjustment expenses and shall not be allowed reimbursement for its general administrative expenses.

3. The court shall have authority from time to time upon application of the receiver to make partial distributions upon allowed claims to guaranty associations or other claimants prior to a final distribution from the receivership estate. Prior to doing so, the court shall hold an evidentiary hearing at which time the condition of the receivership estate shall be considered and there shall be presented evidence as to projected claims, projected expenses of administration and projected assets which may be available for ultimate distribution. Before making any such partial distribution the court shall find that such will not prejudice the rights of any other claimants, that such will not hinder the administration of the receivership, and that the distribution being allowed is fair and reasonable. The court may condition any partial distribution upon such terms or conditions as it believes to be in the best interests of the receivership as a whole.

4. If the insurer is a life insurance company and has deposits for policyholders or for the security of registered policies or annuity bonds, such deposits shall be disposed of as provided in sections 375.010 to 375.1246.

5. This section shall apply only to proceedings instituted before August 28, 1991.