What does the Guarantee Association Act state regarding insurers when a Court Order of Liquidation exists?

The Guarantee Association Act addresses the situation where an insurer is placed under a Court Order of Liquidation, marking a critical point in the regulatory framework for insurance companies. When a court orders the liquidation of an insurer, it means that the company has become insolvent.

Insolvency, in this context, refers to the inability of the insurer to meet its financial obligations or liabilities as they become due. This could be due to a range of factors, including accumulated losses, inadequate reserves, or excessive claims that exceed the insurer's financial capacity.

The important aspect of the Guarantee Association Act is that it provides a mechanism for protecting policyholders when an insurer cannot meet its obligations. When the court invokes liquidation proceedings, it effectively confirms that the company's assets are insufficient to satisfy its debts, categorizing the firm as insolvent.

While the other options may suggest various states or outcomes for an insurer under different circumstances, they do not accurately reflect the specific legal declaration tied to a Court Order of Liquidation under the Act. The Act explicitly states the condition of insolvency is what triggers protective measures for policyholders through the Guarantee Association.