1540                               Laws of Maryland                        [Ch. 715

(3) For the purpose of carrying out its obligations under this
Act, the Association shall be deemed to be a creditor of the impaired
insurer to the extent of assets attributable to covered policies reduced
by any amounts to which the Association is entitled as subrogee
pursuant to subsection 511(9). All assets of the impaired insurer
attributable to covered policies shall be used to continue all covered
policies and pay all contractual obligations of the impaired insurer
as required by this Act. Assets attributable to covered policies, as
used in this subsection, is that proportion of the assets which the
reserves that should have been established for such policies bear
to the reserve RESERVES that should have been established for all
policies of insurance written by the impaired insurer.

(4) (a) Prior to the termination of any liquidation, rehabilita-
tion, or conservation proceeding, the court may take into considera-
tion the contributions of the respective parties, including the Asso-
ciation, the shareholders and policyowners of the impaired insurer,
and any other party with a bona fide interest, in making an equitable
distribution of the ownership rights of such impaired insurer. In
such a determination, consideration shall be given to the welfare of
the policyholders of the continuing or successor insurer.

(b) No distribution to stockholders, if any, of an impaired in-
surer shall be made until and unless the total amount of assessments
levied by the Association with respect to such insurer have been
fully recovered by the Association.

(5)    It shall be a prohibited unfair method of competition, sub-
ject to the provisions of the Unfair Trade Practices Law (subtitle 15
of this Article), for any person to make use in any manner of the
protection afforded by this Act in the sale of insurance.

(6) (a) If an order for liquidation or rehabilitation of an insurer
domiciled in this State has been entered, the receiver appointed under
such order shall have a right to recover on behalf of the insurer, from
any affiliate that controlled it, the amount of distribution, other than
stock dividends paid by the 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 paragraphs (b) and (d).

(b)    No such dividend shall be recoverable if the insurer shows
that when paid the distribution was lawful and reasonable, and that
the insurer did not know and could not reasonably have known that
the distribution might adversely affect the ability of the insurer to
fulfill its contractual obligations.

(c)    Any person who as an affiliate that controlled the insurer at
the time the distributions were paid shall be liable up to the amount
of distributions he received. Any person who was an affiliate that
controlled the insurer at the time the distributions were declared,
shall be liable up to the amount of distributions he would have re-
ceived if they had been paid immediately. If two persons are liable
with respect to the same distributions, they shall be jointly and
severally liable.

(d)    The maximum amount recoverable under this subsection
shall be the amount needed in excess of all other available assets of
the impaired insurer to pay the contractual obligations of the im-
paired insurer.

(e)    If any person liable under paragraph (c) is insolvent, all its
affiliates that controlled it at the time the dividend was paid shall be