(1) Except as expressly provided in this section, when a division becomes effective, by operation of law all of the following apply: (a) A resulting insurer is individually liable for the liabilities, including policy liabilities: (I) That the resulting insurer issues, undertakes, or incurs in its own name after the division; and (II) Of the dividing insurer that are allocated to or remain the liability of the resulting insurer to the extent specified in the plan of division; (b) The dividing insurer remains responsible for the liabilities, including policy liabilities, of the dividing insurer that are not allocated by the plan of division if the dividing insurer survives the division; and (c) A resulting insurer is liable pro rata individually for the liabilities, including policy liabilities, of the dividing insurer that are not allocated by the plan of division if the dividing insurer does not survive the division. (2) Except as otherwise expressly provided in this section, when a division becomes effective, a resulting insurer is not responsible for and does not have liability for: (a) Any liabilities, including policy liabilities, that another resulting insurer issues, undertakes, or incurs in the resulting insurer's own name after the division; or (b) Any liabilities, including policy liabilities, of the dividing insurer that are allocated to or remain the liability of another resulting insurer under the plan of division. (3) If a provision of any evidence of indebtedness, whether secured or unsecured, or a provision of any contract other than an insurance policy, annuity, or reinsurance agreement that was issued, incurred, or executed by the dividing insurer before September 7, 2021, requires the consent of the obligee to a merger of the dividing insurer, or treats such a merger as a default, the provision applies to a division of the dividing insurer as if the division were a merger. (4) If a division breaches a contractual obligation of the dividing insurer, all resulting insurers are jointly and severally liable for the breach. The validity and effectiveness of the division is not affected by the breach. (5) A direct or indirect allocation of capital, surplus, assets, or liabilities, including policy liabilities, occurs automatically, by operation of law, and may not be treated as a distribution or transfer for any purpose with respect to either the dividing insurer or any resulting insurer. (6) Liens, security interests, and other charges on the capital, surplus, or other assets of the dividing insurer are not impaired by the division, notwithstanding any otherwise enforceable allocation of liabilities, including policy liabilities, of the dividing insurer. (7) If the dividing insurer is bound by a security agreement governed by article 5 or 9 of title 4, or by the substantial equivalent as enacted in any other jurisdiction, and the security agreement provides that the security interest attaches to after-acquired collateral, a resulting insurer is bound by the security agreement. (8) Unless otherwise provided in the plan of division and specifically approved by the commissioner, an allocation of a policy or other liability may not: (a) Affect the rights that a policyholder or creditor has under any other law with respect to the policy or other liability; except that the rights are available only against a resulting insurer responsible for the policy or liability under this section; or (b) Release or reduce the obligation of a reinsurer, surety, or guarantor of the policy or liability. (9) A resulting insurer is liable only for the liabilities allocated to the resulting insurer in accordance with the plan of division and this section and is not liable for any other liabilities under the common law doctrine of successor liability or any other theory of liability applicable to transferees or assignees of assets.
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