P.R. Laws tit. 26, § 4009
The Commissioner may request the Court of First Instance, San Juan Part, to issue an order authorizing him/her to rehabilitate a domestic insurer or an alien insurer domiciled in Puerto Rico on any one or more of the following grounds:
(1) The financial condition of the insurer is such that further business transactions would be hazardous to its policyholders, creditors and public in general.
(2) The insurer is in a capital or asset deficit.
(3) The insurer or its parent company, subsidiaries or affiliates have misappropriated, squandered or concealed property of the insurer or otherwise have improperly disposed of, used, transferred, sold, assigned, mortgaged, squandered, conveyed or removed the property of the insurer.
(4) The insurer, its parent company, subsidiaries or affiliates have misappropriated, removed, altered, destroyed, or failed to fulfill their duty to establish and maintain books, records, documents, accounts, vouchers, and other pertinent documents and information adequate for the determination of the financial condition of the insurer, or have failed to properly administer claims or adequately maintain claims records for the determination with respect to the same.
(5) The Commissioner has evidence that there was embezzlement of funds from the insurer, wrongful sequestration or diversion of the insurer’s assets, forgery or fraud affecting the insurer or other illegal conduct in, by or with respect to the insurer of such magnitude that it would be endangered for the solvency of the insurer.
(6) After having been [required by] the Commissioner, the insurer has failed to dismiss or remove any person who, in fact, has administrative or managerial authority in the insurer, whether an officer, manager, employee, general agent or any other person; if, after notice and hearing, the person has been found by the Commissioner to be dishonest, irresponsible, incompetent and untrustworthy to such an extent that the insurer’s business would be materially and adversely affected.
(7) The insurer in under control, whether by stock ownership or otherwise, and whether directly or indirectly, of a person or persons, found after notice and hearing to be dishonest.
(8) If a person who in fact has administrative or managerial authority over the insurer, whether an officer, manager, general agent, director, trustee, employee, shareholder, or other person, refuses to be examined under oath by the Commissioner concerning the insurer’s affairs, whether conducted in Puerto Rico or elsewhere, or if examined under oath, the person refuses to disclose pertinent information reasonably known to the person, and after reasonable notice of such a fact, the insurer fails to promptly and effectively terminate the person’s employment, position and influence over the management or administration of the insurer.
(9) If after required by the Commissioner, the insurer fails to promptly make available for examination any part of its own property, books, accounts, documents or other records, or those of any subsidiary or affiliate company under the control of the insurer, or those of any person having administrative authority over the insurer, provided that they belong to the insurer.
(10) The Insurer, without first obtaining the written consent of the Commissioner as required by the provisions of this Code, has transferred or attempted to transfer, in a manner contrary to the provisions of this Code, a substantial part of its property or business, or enters into a transaction, the effect of which is to substantially merge or consolidate its entire property or business with the property or business of any other person.
(11) The insurer or its property has been or is the subject of a request for the appointment of an administrator, trustee, judicial conservator or custodian or similar position of the insurer or its property in a manner other than as authorized under this Code, and such an appointment has been made or is imminent and the same might oust the courts of Puerto Rico [of] jurisdiction or might prejudice orderly receivership proceedings as provided by this chapter.
(12) Within the previous three years, the insurer has willfully violated his/her charter or articles of incorporation, his/her bylaws, this title or any order issued by the Commissioner pursuant to this title.
(13) The insurer has failed to pay any judgment entered by a court with jurisdiction, except that said nonpayment shall not be taken into consideration until sixty (60) days after the insurer has made an effort in good faith to contest the obligation whether it be before the Commissioner or in the courts.
(14) The insurer has failed to file its annual report or other financial report required by this Code within the term established, and after required in writing by the Commissioner, has failed to immediately provide a satisfactory excuse.
(15) The board of directors or the holders of a majority of the voting shares of the insurer, or a majority of those individuals with control over entities specified in § 4002 of this title, request or consent to rehabilitation under this chapter.
(16) The insurer has systematically engaged in the practice of reaching settlements with and obtaining releases from claimants and subsequently, delays payment unreasonably or fails to pay the agreed-upon settlements, or systematically attempts to compromise with claimants or creditors on the grounds that it is financially unable to pay its claims or debts in full.
History —Ins. Code, added as § 40.090 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 9.