Arkansas Code
Chapter 68 - Rehabilitation and Liquidation of Insurance Companies
§ 23-68-126. Priority of distribution of general assets

(a)
(1) The priority of distribution of claims from the general assets of the insurer's estate shall be in accordance with the order in which each class of claims is set forth in this section.
(2) Every claim in each class shall be paid in full, or adequate funds retained for the payment, before the members of the next class receive any payment.
(3) No subclasses shall be established within any class.

(b) The order of distribution of claims shall be:
(1) Class 1. The costs and expenses of administration, including, but not limited to, the following:
(A) The actual and necessary costs of preserving or recovering the assets of the insurer;
(B) Compensation for all services rendered in the liquidation;
(C) Any necessary filing fees from which the receiver is not exempt under § 23-68-122;
(D) The fees and mileage payable to witnesses;
(E) Reasonable attorney's fees; and
(F) The reasonable expenses of the Arkansas Property and Casualty Insurance Guaranty Fund, or any other domestic or foreign guaranty fund or guaranty association, for the handling of claims;

(2) Class 2.
(A) All claims under policies for losses incurred, including third-party claims, and all claims of a domestic or foreign guaranty fund or guaranty association.
(B) All claims under life insurance and annuity policies, whether for death proceeds, annuity proceeds, or investment values, shall be treated as loss claims.
(C) That portion of any loss, for which indemnification is provided by other benefits or advantages recovered by the claimant shall not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligations of support, or by way of succession at death, or as proceeds of life insurance, or as gratuities.
(D) No payment by an employer to his or her employee shall be treated as a gratuity;

(3) Class 3. Claims under nonassessable policies for unearned premium or other premium refunds;
(4) Class 4. Claims of the federal government not included in Class 2 or 3 above;
(5) Class 5. Debts due to employees for services performed to the extent that they do not exceed one thousand dollars ($1,000) and represent payment for services performed within one (1) year before the filing of the petition for liquidation. Officers and directors shall not be entitled to the benefit of this priority. The priority shall be in lieu of any similar priority which may be authorized by law as to wages or compensation of employees;
(6) Class 6. All claims against the insurer for liability for bodily injury to or destruction of tangible property which are not under policies, and claims of general creditors;
(7) Class 7. Claims of any state or local government. Claims, including those of any state or local governmental body for a penalty or forfeiture, shall be allowed in this class only to the extent of the pecuniary loss sustained from the act, transaction, or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby. The remainder of the claim shall be postponed to the class of claims under subdivision (b)(10) of this section;
(8) Class 8. Claims filed late or any other claims other than claims under subdivisions (b)(9) and (10) of this section;
(9) Class 9. Surplus notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law;
(10) Class 10. The claims of shareholders or other owners.

(c)
(1) Every claim under a separate account established under the provisions of § 23-81-402 providing that the income, gains, and losses, realized and unrealized, from assets allocated to the separate account shall be credited to or charged against the account without regard to other income, gains, or losses of the life insurance company and, to the extent provided under the applicable contracts, that that portion of the assets of any such separate account equal to the reserves and other contract liabilities with respect to the separate account shall not be chargeable with liabilities arising out of any other business the company may conduct, shall be satisfied out of the assets in the separate account equal to the reserves maintained in the account for the contracts.
(2) To the extent, if any, reserves maintained in the separate account are in excess of the amounts needed to satisfy claims under the separate account contracts, the excess shall be treated as general assets of the life insurance company.