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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 1619 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                S. 1619

             To create the Insurance Regulatory Commission.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

             November 4 (legislative day, November 2), 1993

Mr. Metzenbaum introduced the following bill; which was read twice and 
   referred to the Committee on Commerce, Science, and Transportation

_______________________________________________________________________

                                 A BILL

 
             To create the Insurance Regulatory Commission.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Insurance Protection Act of 1993''.

SEC. 2. TABLE OF CONTENTS.

Sec. 1. Short title.
Sec. 2. Table of contents.
                TITLE I--INSURANCE REGULATORY COMMISSION

Sec. 101. Insurance Regulatory Commission.
Sec. 102. Powers of the Commission; compensation; personnel.
Sec. 103. Office and place of meeting.
Sec. 104. Definitions.
Sec. 105. Delegation of functions by the Commission. 
Sec. 106. Rules and regulations. 
Sec. 107. Investigative powers of the Commission. 
Sec. 108. Annual and special reports.
Sec. 109. Assessments to pay expenses. 
Sec. 110. State accreditation.
Sec. 111. Examination of State insurance departments.
Sec. 112. Examination of insurance companies.
Sec. 113. Central depository for insurance data.
Sec. 114. Referral of matters to enforcement authorities.
Sec. 115. Securities Valuation Office.
                  TITLE II--FEDERAL MINIMUM STANDARDS

Sec. 201. Rules and regulations. 
Sec. 202. Minimum capital and surplus requirements. 
Sec. 203. Accounting practices and procedures. 
Sec. 204. Standards and Commissioner's authority for companies deemed 
                            to be in hazardous financial condition. 
Sec. 205. Insurance holding company systems. 
Sec. 206. Risk limitations. 
Sec. 207. Investment regulations. 
Sec. 208. Admissible assets. 
Sec. 209. Liabilities and reserves.
Sec. 210. Independent CPA audits.
Sec. 211. Qualified actuarial analysis.
Sec. 212. Transfer of policies.
Sec. 213. Restrictions on ownership and transfer of ownership.
Sec. 214. Consumer disclosure.
Sec. 215. Consumer protection.
Sec. 216. Real estate valuation.
Sec. 217. Reinsurance.
Sec. 218. Surplus notes.
Sec. 219. State insurance department resources.
Sec. 220. Other standards.
Sec. 221. Insurance Advisory Committee.
                         TITLE III--REINSURANCE

Sec. 301. Commission authority.
Sec. 302. Office of Reinsurance Regulation.
Sec. 303. Personnel.
Sec. 304. Powers and duties of Director.
Sec. 305. Rules and regulations.
Sec. 306. Budget and financial reports.
Sec. 307. Information, records, and meetings.
Sec. 308. Annual report by the Director.
Sec. 308A. License of professional reinsurers.
Sec. 308B. License for other providers of reinsurance.
Sec. 308C. Suspension and revocation of Federal license to provide 
                            reinsurance.
Sec. 308D. Credit for reinsurance.
Sec. 308E. Relationship to State law.
Sec. 309. Financial reports by reinsurers.
Sec. 309A. Accounting standards and independent accountants.
Sec. 310. Examinations.
Sec. 310A. Actuaries.
Sec. 311. Limitation on subsequent employment.
Sec. 312. Exchange of information.
Sec. 313. Arbitration clauses.
Sec. 314. Reinsurance intermediaries.
Sec. 315. Appointment of receivers.
Sec. 316. Order appointing receiver.
Sec. 317. Effect of order.
Sec. 318. Jurisdiction over property of reinsurer.
Sec. 319. Examinations.
Sec. 320. Expenses of establishing receivership.
Sec. 321. Compensation of receiver and employees.
Sec. 322. Standing of guaranty associations.
Sec. 323. Applicability of receivership to foreign reinsurer.
Sec. 324. Stay of actions.
Sec. 325. Cooperation of officers, owners and employees.
Sec. 326. Injunctions and orders.
Sec. 327. Pending litigation.
Sec. 328. Conflicts of interest and financial disclosure.
Sec. 329. Proceeding against culpable persons.
Sec. 330. Liability protection for receivers.
Sec. 331. Powers of examination; subpoenas.
Sec. 333. Grounds for the appointment of receiver for rehabilitation.
Sec. 334. Rehabilitation orders.
Sec. 335. Powers of receiver for purposes of rehabilitation.
Sec. 336. Termination of the receivership for rehabilitation.
Sec. 337. Liquidation.
Sec. 338. Liquidation orders.
Sec. 339. Powers of the Director as receiver for liquidation.
Sec. 340. Dissolution of reinsurer.
Sec. 341. Obligation of reinsurer.
Sec. 342. Reinsurer's liability.
Sec. 343. Notice to creditors and others.
Sec. 344. Proof of claims.
Sec. 345. Payment of claims.
Sec. 346. Duties of agents and intermediaries.
Sec. 347. Fraudulent transfers.
Sec. 348. Voidable preferences and liens.
Sec. 349. Setoffs.
Sec. 350. Recovery of premiums owed.
Sec. 351. Priority of distribution.
Sec. 352. Unclaimed and withheld funds.
Sec. 353. Termination of proceedings.
Sec. 354. Construction.
Sec. 355. Limitation on transaction of reinsurance.
Sec. 356. Preemption.
Sec. 357. Existing licenses and contracts.
Sec. 358. Protection of confidential information.
           TITLE IV--NATIONAL INSURANCE GUARANTY CORPORATION

Sec. 401. Establishment of the Corporation.
Sec. 402. Definitions.
Sec. 403. Board of directors.
Sec. 404. Duties and responsibilities of the Board.
Sec. 405. National Insurance Guaranty Fund.
Sec. 406. Corporate powers.
Sec. 407. Membership.
Sec. 408. Assessments.
Sec. 409. Exchange of information.
Sec. 410. Liability of Directors and Officers of the Corporation.
Sec. 411. Tax exemption.
Sec. 412. Reports by the Corporation.
Sec. 413. Preemption.
                TITLE V--LIQUIDATION OF MEMBER INSURERS

Sec. 501. Corporation as liquidator. 
Sec. 502. Definitions. 
Sec. 503. Petition for appointment. 
Sec. 504. Order appointing corporation liquidator.
Sec. 505. Effect of order.
Sec. 506. Jurisdiction over property of insurer.
Sec. 507. Stay of actions.
Sec. 508. Cooperation of officers, owners and employees.
Sec. 509. Evidence of wrongdoing.
Sec. 510. Continuance of coverage.
Sec. 511. Powers of the Corporation as liquidator.
Sec. 512. Notice to creditors and others.
Sec. 513. Proof of claims.
Sec. 514. Payment of claims.
Sec. 515. Duties of agents.
Sec. 516. Fraudulent transfers.
Sec. 517. Voidable preferences and liens.
Sec. 518. Setoffs and counterclaims.
Sec. 519. Recovery of premiums owed.
Sec. 520. Priority of distribution.
Sec. 521. Unclaimed and withheld funds.
Sec. 522. Termination of proceedings.
Sec. 523. Study by the Board.
Sec. 524. Preemption.
                 TITLE VI--CRIMINAL AND CIVIL PENALTIES

Sec. 601. Short title.
Sec. 602. Crimes by or affecting persons engaged in the business of 
                            insurance whose activities affect 
                            interstate commerce.
Sec. 603. Miscellaneous amendments to title 18, United States Code.

                TITLE I--INSURANCE REGULATORY COMMISSION

SEC. 101. INSURANCE REGULATORY COMMISSION.

    (a) Establishment.--There is established an Insurance Regulatory 
Commission (hereinafter referred to as the ``Commission'') to be 
composed of 5 commissioners to be appointed by the President, by and 
with the advice and consent of the Senate.
    (b) Chairman.--The President shall designate 1 of the members as 
Chairman of the Commission.
    (c) Political Parties.--Not more than 3 of such commissioners shall 
be members of the same political party, and in making appointments 
members of different political parties shall be appointed alternately 
as nearly as may be practicable.
    (d) Full-Time Employment.--No commissioner shall engage in any 
other business, vocation, or employment than that of serving as 
commissioner, nor shall any commissioner participate, directly or 
indirectly, in any insurance company operations or transactions of a 
character subject to regulation by the Commission pursuant to this 
title.
    (e) Terms.--Each commissioner shall hold office for a term of 5 
years and until his successor is appointed and has qualified, except 
that--
            (1) a commissioner shall not continue to serve beyond the 
        expiration of the next session of Congress subsequent to the 
        expiration of the fixed term of office;
            (2) any commissioner appointed to fill a vacancy occurring 
        prior to the expiration of the term for which his predecessor 
        was appointed shall be appointed for the remainder of such 
        term; and
            (3) the terms of office of the commissioners first taking 
        office after the enactment of this title shall expire as 
        designated by the President at the time of nomination, 1 at the 
        end of the year, 1 at the end of 2 years, 1 at the end of 3 
        years, 1 at the end of 4 years, and 1 at the end of 5 years, 
        after the date of the enactment of this title.
    (f) Agency of the United States.--The Commission shall be deemed to 
be an agency of the United States for purposes of subchapter II of 
chapter 5 and chapter 7 of title 5, United States Code.

SEC. 102. POWERS OF THE COMMISSION; COMPENSATION; PERSONNEL.

    (a) Hearings.--The Commission may hold such hearings, sit and act 
at such times and places, take such testimony, and receive such 
evidence as the Commission considers advisable to carry out the 
purposes of this Act.
    (b) Information From Federal Agencies.--The Commission may secure 
directly from any Federal department or agency such information as the 
Commission considers necessary to carry out the provisions of this Act. 
Upon request of the Chairman of the Commission, the head of such 
department or agency shall furnish such information to the Commission.
    (c) Postal Services.--The Commission may use the United States 
mails in the same manner and under the same conditions as other 
departments and agencies of the Federal Government.
    (d) Compensation of Members.--Each member of the Commission shall 
be compensated in an amount equal to that prescribed for level IV of 
the Executive Schedule under section 5315 of title 5, United States 
Code.
    (e) Travel Expenses.--The members of the Commission shall be 
allowed travel expenses, including per diem in lieu of subsistence, at 
rates authorized for employees of agencies under subchapter I of 
chapter 57 of title 5, United States Code, while away from their homes 
or regular places of business in the performance of services for the 
Commission.
    (f) Appointments; Compensation.--The Chairman of the Commission may 
appoint and fix the compensation of an executive director and other 
personnel as may be necessary to carry out this Act.
    (g) Detail of Government Employees.--Any Federal Government 
employee may be detailed to the Commission without reimbursement, and 
such detail shall be without interruption or loss of civil service 
status or privilege.
    (h) Procurement of Temporary and Intermittent Services.--The 
Chairman of the Commission may procure temporary and intermittent 
services under section 3109(b) of title 5, United States Code, at rates 
for individuals which do not exceed the daily equivalent of the annual 
rate of basic pay prescribed for level V of the Executive Schedule 
under section 5316 of such title.

SEC. 103. OFFICE AND PLACE OF MEETING.

    The principal office of the Commission shall be in the city of 
Washington, District of Columbia, but it may meet and exercise all its 
powers at any other place. The Commission may, by one or more of its 
members, or by such examiners as it may designate, prosecute any 
inquiry necessary to its duties in any part of the United States.

SEC. 104. DEFINITIONS.

    As used in this Act, the term:
            (1) ``State insurance department'' means a State 
        governmental bureau charged with the administration of 
        insurance laws.
            (2) ``Insurer'' means the party to an insurance arrangement 
        who undertakes to indemnify for losses, provide pecuniary 
        benefits or render services, but does not include an employee 
        benefit plan qualified under section 1001 of title 29, United 
        States Code.
            (3) ``Insurance'' means a contract whereby a person 
        undertakes to indemnify another person or to pay another person 
        a specified amount upon determinable contingencies.
            (4) ``Interstate Insurance License'' means a certification 
        of authority for an insurer to do business in interstate 
        commerce issued by a State which is accredited by the Insurance 
        Regulatory Commission pursuant to the provisions of this title.
            (5) ``Person'' means an individual, a corporation, a 
        partnership, an association, a joint stock company, a trust, an 
        unincorporated organization, or any similar entity or any 
        combination of the foregoing acting in concert.
            (6) ``State'' means the 50 States, the District of 
        Columbia, Puerto Rico, Guam, the Virgin Islands and any 
        district, territory or other separately governed political 
        subdivision under the authority of the United States.
            (7) ``Reinsurance'' means a type of insurance that involves 
        acceptance by an insurer of all or a part of the risk of loss 
        covered by another insurer.
            (8) ``Reinsurer'' means an insurer that assumes all or part 
        of the insurance or reinsurance written by another insurer.

SEC. 105. DELEGATION OF FUNCTIONS BY THE COMMISSION.

    (a) Authority To Delegate.--The Commission shall have the authority 
to delegate, by published order or rule, any of its functions to a 
division of the Commission, an individual Commissioner, an 
administrative law judge, or an employee or employee board, including 
functions with respect to hearing, determining, ordering, certifying, 
reporting, or otherwise acting as to any work, business, or matter. 
Nothing in this section shall be deemed to supersede the provisions of 
section 556(b) of title 5, United States Code, or to authorize the 
delegation of the function of rule making as defined in subchapter II 
of chapter 5 of title 5, United States Code, with reference to general 
rules as distinguished from rules of particular applicability, or of 
the making of any rule.
    (b) Review.--With respect to the delegation of any of its 
functions, as provided in subsection (a) of this section, the 
Commission shall retain a discretionary right to review the action of 
any such division of the Commission, individual Commissioner, 
administrative law judge, employee, or employee board, upon its own 
initiative or upon petition of a party to or intervenor in such action, 
within such time and in such manner as the Commission by rule shall 
prescribe. The vote of one member of the Commission shall be sufficient 
to bring any such action before the Commission for review. A person or 
party shall be entitled to review by the Commission if adversely 
affected by action at a delegated level.
    (c) Action of Commission.--If the right to exercise such review is 
declined, or if no such review is sought within the time stated in the 
rules promulgated by the Commission, then the action of any such 
division of the Commission, individual Commissioner, administrative law 
judge, employee, or employee board, shall, for all purposes, including 
appeal or review thereof, be deemed the action of the Commission.

SEC. 106. RULES AND REGULATIONS.

    The Commission shall promulgate rules and regulations necessary to 
carry out its responsibilities under this Act.

SEC. 107. INVESTIGATIVE POWERS OF THE COMMISSION.

    The Commission shall have the power to gather and compile 
information concerning, and to investigate from time to time the 
organization, business, conduct, practices and management of any 
person, partnership, or corporation engaged in the business of 
insurance.

SEC. 108. ANNUAL AND SPECIAL REPORTS.

    The Commission shall have the power to require, by general or 
special orders or by subpoena, any person engaged in the business of 
insurance, to file with the Commission in such form as the Commission 
may prescribe annual or special, or both annual and special, reports, 
or answers in writing to specific questions, furnishing to the 
Commission such information as it may require as to the organization, 
business, conduct, practices, management, and relation to other 
corporations, partnerships, and individuals of the respective persons, 
partnerships, and corporations filing such reports or answers in 
writing. Such reports and answers shall be made under oath, or 
otherwise, as the Commission may prescribe, and shall be filed with the 
Commission within such reasonable period as the Commission may 
prescribe, unless additional time be granted in any case by the 
Commission.

SEC. 109. ASSESSMENTS TO PAY EXPENSES.

    (a) Assessments.--The Commission shall have the authority to levy 
semiannually upon insurers, including reinsurers, in proportion to 
their premiums, an assessment sufficient to pay the estimated expenses 
of the Commission and the salaries of its members and employees for the 
half year succeeding the levying of such assessment, together with any 
deficit carried forward from the preceding half year. The formula for 
the assessment shall be determined by the Commission.
    (b) Loans.--(1) At the time of the establishment of the Commission 
and thereafter if, in the judgment of the Commission, a loan to finance 
the activity of the Commission is required, the Secretary of the 
Treasury shall make such loans as are required, but loans under this 
paragraph shall not exceed in the aggregate $20,000,000 outstanding at 
one time. Each loan under this paragraph shall be made on such terms as 
may be fixed by agreement between the Commission and the Secretary of 
the Treasury. The amount of the loan shall be a liability of the 
Commission.
    (2) Interest shall accrue to the Treasury on the amount of any 
outstanding loans made to the Commission pursuant to paragraph (b)(1) 
of this section on the basis of the average daily amount of such 
outstanding loans determined at the close of each fiscal year with 
respect to such year, and the Commission shall pay the interest so 
accruing into the Treasury as miscellaneous receipts annually from the 
fund. The Secretary of the Treasury shall determine the applicable 
interest rate in advance.
    (3) So long as any loans to the fund are outstanding, the 
Commission shall from time to time, not less often than annually, 
determine whether the balance in the fund is in excess of the amount 
which, in its judgment, is needed to meet the requirements of the fund 
and shall pay such excess to the Secretary of the Treasury, to be 
credited against the loans to the Commission.

SEC. 110. STATE ACCREDITATION.

    (a) Certifications.--The Commission shall have the authority to 
certify State insurance departments.
    (b) Standards.--The Commission shall grant certification to those 
States which the Commission determines--
            (1) meet the standards promulgated by the Commission 
        pursuant this Act, and
            (2) effectively implement such standards.
    (c) Licenses.--A State certified pursuant to subsection (b) may 
issue an interstate insurance license to an insurer domiciled in that 
State. Each such license issued by the State shall bear a seal 
authorized by the Commission.
    (d) Failure To Obtain Certification.--No insurer domiciled in a 
State which is not certified by the Commission may conduct the business 
of insurance in interstate commerce.
    (e) Effective Date.--The provisions of this section shall not apply 
in a State until 1 year after the date such standards are first 
established by the Commission. For a State which is not scheduled to 
meet in a legislative session in the year following the establishment 
of the standards by the Commission, the date specified in this 
subsection is the first day of the first calendar quarter beginning 
after the close of the first legislative session of the State 
legislature that begins on or after January 1 of the year next 
following establishment of the standards by the Commission. For the 
purposes of the previous sentence, in the case of a State that has a 2-
year legislative session, each year of such session shall be deemed to 
be a separate regular session of the State legislature.
    (f) Time Period.--The Commission shall provide a time period for an 
insurer domiciled in a State which either is not initially accredited 
or which has its accreditation revoked to transfer its domicile to an 
accredited State.

SEC. 111. EXAMINATION OF STATE INSURANCE DEPARTMENTS.

    (a) Examination.--Prior to certifying a State, the Commission shall 
examine the State Insurance Department with regard to whether that 
Department meets the requirements of section 110.
    (b) Continued Examination.--After initially certifying a State, the 
Commission may, on its own initiative or at the request of any State 
Insurance Department, order an examination of a State Insurance 
Department with regard to whether that Department continues to meet the 
requirements of section 110.
    (c) Refusal To Accredit.--The Commission may refuse to accredit or 
may revoke the accreditation of any State which the Commission finds, 
pursuant to an examination, fails to meet the requirements of section 
110.

SEC. 112. EXAMINATION OF INSURANCE COMPANIES.

    (a) Special Examinations.--The Commission may order special 
examinations of any insurer which holds an interstate insurance 
license. The examination shall be conducted by examiners chosen by the 
Commission. The Commission shall in all cases approve the form of the 
examination. The expenses of all examinations may, in the discretion of 
the Commission, be assessed against the insurer examined, and when so 
assessed, shall be paid by the insurer examined. Copies of the reports 
of such examinations may, in the discretion of the Commission, be 
furnished to the State Insurance Departments, to officers and 
directors, or receivers of the insurer, and to any persons as the 
Commission shall deem appropriate.
    (b) Standards.--The Commission shall establish standards for 
determining which insurers to examine.
    (c) Additional Requirements.--The Commission may, on the basis of 
an examination of an insurer, request that the State Insurance 
Department of the State which issued the interstate insurance license 
to such insurer examine the insurer, and may further suggest that the 
State take certain actions the Commission deems necessary to assure the 
soundness of the insurer.

SEC. 113. CENTRAL DEPOSITORY FOR INSURANCE DATA.

    (a) Annual Statements; Periodic Reports.--The Commission shall 
collect the annual statements and other periodic reports of all 
insurers holding interstate insurance licenses. These statements and 
reports shall be available to the public. The Commission shall compile 
information from these statements and reports in a data base for the 
purpose of studying the insurance industry.
    (b) Data Base.--The Commission shall maintain a data base on 
information concerning any State or Federal regulatory and legal 
actions involving any person engaged in the business of insurance. The 
Commission shall gather any such information from State Insurance 
Departments and any other source of information.
    (c) Information To Be Made Public.--(1) The Commission shall--
            (A) make public, from time to time, such portions of the 
        information obtained by it as are in the public interest;
            (B) make annual and special reports to the Congress and 
        submit therewith recommendations for additional legislation; 
        and
            (C) provide for the publication of its reports and 
        decisions in such form and manner as may be best adapted for 
        public information and use.
    (2) The Commission shall not have authority to make public any 
information it determines is a trade secret or any commercial or 
financial information which is obtained from any person and which the 
Commission determines is privileged or confidential, except that the 
Commission may disclose such information to officers and employees of 
appropriate Federal law enforcement agencies or to any officer or 
employee of any State law enforcement agency upon the prior 
certification of an officer of any such Federal or State law 
enforcement agency that such information will be maintained in 
confidence and will be used only for official law enforcement purposes.

SEC. 114. REFERRAL OF MATTERS TO ENFORCEMENT AUTHORITIES.

    The Commission shall refer to the Department of Justice or to the 
appropriate State enforcement authorities any information or matters 
which it deems warrant investigation for possible civil or criminal 
enforcement action.

SEC. 115. SECURITIES VALUATION OFFICE.

    (a) Establishment of Office.--The Commission shall establish a 
Securities Valuation Office (hereinafter referred to as the ``SVO'').
            (1) The SVO shall value such assets as required by the 
        Commission.
            (2) The SVO shall establish quality ratings for such assets 
        as required by the Commission.
            (3) The SVO shall publish a Valuations of Securities Manual 
        containing the market prices and SVO quality ratings for all 
        securities owned by insurers.
    (b) Rules and Regulations.--The Commission shall promulgate such 
rules and regulations as are necessary to provide a source for uniform 
prices and quality ratings of assets held by insurers. Such rules and 
regulations shall require--
            (1) valuations for all securities including, but not 
        limited to stocks, bonds, warrants, options and financial 
        futures contracts;
            (2) that all insurers holding an interstate insurance 
        license file with the SVO such financial and other 
        documentation as the Commission deems necessary for determining 
        a value for admissible assets held by the insurer; and
            (3) insurers to use SVO prices and ratings in preparing 
        their annual statements to be filed with State and Federal 
        regulatory authorities.
    (c) Reserves.--The Commission shall promulgate rules and 
regulations requiring life insurers and fraternal benefits societies to 
establish and maintain a mandatory reserve for all assets based on the 
values and quality ratings of the SVO.
    (d) Appeals Process.--The Commission shall promulgate rules and 
regulations providing for an appeals process by which any person can 
challenge an SVO price or quality rating.
    (e) Minimum Standards.--The Commission shall promulgate rules and 
regulations establishing minimum standards for banks that issue letters 
of credit for reinsurance purposes. Banks meeting these standards shall 
be published in a list to be prepared by the SVO in order to assist 
insurance regulatory officials in the evaluation of reinsurance credits 
claimed by ceding insurers.

                  TITLE II--FEDERAL MINIMUM STANDARDS

SEC. 201. RULES AND REGULATIONS.

    The Commission shall establish, by regulation, standards for 
implementation by accredited State Insurance Departments. The 
Commission shall establish initial standards within 12 months following 
the date of the enactment of this Act.

SEC. 202. MINIMUM CAPITAL AND SURPLUS REQUIREMENTS.

    (a) Minimum Capital.--The Commission shall require all insurers to 
maintain at all times minimum amounts of capital and surplus necessary 
for insurers to engage in the business of insurance.
    (b) Additional Capital and Surplus.--The Commission shall require 
all insurers to maintain such additional capital and surplus, based 
upon the type, volume and nature of insurance business transacted, as 
are required to assure the solidity of the insurer.
    (c) Risk.--The Commission shall determine the appropriateness of 
requiring each insurer to maintain amounts of capital and surplus 
depending upon the risk associated with that insurer.

SEC. 203. ACCOUNTING PRACTICES AND PROCEDURES.

    (a) Annual Statements.--The Commission shall create and maintain 
uniform annual statement forms for insurers. All insurers doing 
business in interstate commerce shall file the appropriate annual 
statement form with the appropriate State and Federal authorities.
    (b) Accounting Procedures.--The Commission shall prescribe 
accounting procedures and practices for insurers to follow in preparing 
the annual statement form required by subsection (a).

SEC. 204. STANDARDS AND COMMISSIONER'S AUTHORITY FOR COMPANIES DEEMED 
              TO BE IN HAZARDOUS FINANCIAL CONDITION.

    (a) Identification.--The Commission shall establish standards for 
State Insurance Departments to use in identifying insurers found to be 
in such condition as to render the continuance of their business 
hazardous to the public or to holders of their policies or certificates 
of insurance.
    (b) Corrective Action.--The Commission shall define the authority 
of a State Insurance Department to order a company to take necessary 
corrective action or cease and desist certain practices which, if not 
corrected, could place the company in a hazardous financial condition.

SEC. 205. INSURANCE HOLDING COMPANY SYSTEMS.

    (a) Definitions.--For purposes of this section:
            (1) The term ``affiliate'' means a person that directly, or 
        indirectly through one or more intermediaries, controls, or is 
        controlled by, or is under common control with, the person 
        specified.
            (2) The term ``insurance holding company system'' means two 
        or more affiliated persons, one or more of which is an insurer.
    (b) Financial Condition.--The Commission shall establish such 
requirements as necessary to ensure effective and comprehensive 
regulation of the financial condition of an insurer in a holding 
company system. These requirements shall address but are not limited to 
intrasystem transactions involving the insurer, mergers and 
acquisitions of insurers, investments in subsidiaries, registration of 
members of the system and disclosure and verification by examination of 
matters which may affect the financial status of an insurer in the 
system.

SEC. 206. RISK LIMITATIONS.

    The Commission shall prescribe the amount of risk which may be 
retained by a property and liability company for an individual risk 
based upon the insurer's capital and surplus.

SEC. 207. INVESTMENT REGULATIONS.

    (a) Diversification.--The Commission shall require a diversified 
investment portfolio for all insurers.
    (b) Requirements.--Such requirement shall include limitations as to 
type and issue of investment, percentage limitations for certain 
investments such as non-investment grade bonds and investments 
involving real estate and real estate mortgages, and minimum levels of 
liquidity.

SEC. 208. ADMISSIBLE ASSETS.

    (a) Assets.--The Commission shall prescribe assets which may be 
admitted, authorized or allowed as assets in the financial statement of 
insurers.
    (b) Value of Assets.--The Commission shall prescribe methods for 
establishing the value of such assets which will enable the most 
accurate estimates to be made.

SEC. 209. LIABILITIES AND RESERVES.

    (a) Liabilities and Reserves.--The Commission shall prescribe 
requirements for the establishment of liabilities and reserves 
resulting from insurance contracts issued by an insurer.
    (b) Life Reserves.--The requirements established pursuant to 
subsection (a) shall include, but should not be limited to, 
requirements for life reserves; active life reserves and unearned 
premium reserves; liabilities for claims and losses unpaid; and for 
claims incurred but not reported.

SEC. 210. INDEPENDENT CPA AUDITS.

    (a) Annual Audits.--The Commission shall require annual audits by 
qualified independent certified public accountants of the financial 
statements reporting the financial condition and the results of 
operations of all insurers.
    (b) Notifications.--The requirements in subsection (a) shall 
require the insurer furnishing the annual audited financial reports to 
require the independent certified public accountant to immediately 
notify in writing an executive officer and all directors of the insurer 
of the final determination by that independent certified public 
accountant that the insurer has materially misstated its financial 
condition as reported to the Commission as of the balance sheet date 
currently under examination or that the insurer does not meet the 
minimum capital and surplus required by law as of that date. The 
insurer shall furnish such notification to the Commission within 5 days 
of receipt thereof.

SEC. 211. QUALIFIED ACTUARIAL ANALYSIS.

    The Commission shall require an opinion on life and health policy 
and claim reserves and loss and loss adjustment expense reserves by a 
qualified actuary or specialist on an annual basis for all insurers.

SEC. 212. TRANSFER OF POLICIES.

    (a) Approval of the Director.--Prior approval of the Commission is 
required for any transaction where an insurer assumes or transfers 
obligations or risks on contracts of insurance under an assumption 
reinsurance agreement. The Commission shall have not more than 30 days 
in which to approve or reject such application. If the Commission 
approves such request, the Commission shall issue to the insurer an 
``Approval of Assumption Reinsurance'' certificate.
    (b) Factors To Be Considered.--In reviewing an application to 
assume or transfer obligations or risks on contracts of insurance under 
an assumption reinsurance agreement, the Commission shall consider the 
following factors:
            (1) the financial condition of the transferring insurer and 
        assuming insurer and the effect the transaction will have on 
        the financial condition of the assuming insurer and the 
        transferring insurer;
            (2) the managerial expertise and experience of those 
        persons who will control the operations of the assuming 
        insurer;
            (3) the plans or proposals the assuming insurer has with 
        respect to the administration of the policies subject to the 
        proposed transfer;
            (4) whether the transfer is fair and reasonable to the 
        policyholders of both companies;
            (5) whether an administrative or judicial proceeding has 
        been instituted against the transferring or assuming insurer 
        for purposes of liquidating, reorganizing or conserving such 
        insurer and whether the transfer of the contracts of insurance 
        is in the best interest of the policyholders;
            (6) whether the contracts of insurance that are the subject 
        of the transfer provide that notice shall be given to 
        policyholders of a potential transfer of policy; and
            (7) whether the disclosure required by subsection (c) to 
        the policyholders to be transferred is fair, adequate and not 
        misleading to the policyholders.
    (c) Requirements for a Transfer.--No transfer of obligations or 
risks on contracts of insurance under an assumption reinsurance 
agreement shall take place until--
            (1) the transferring insurer gives advance written notice 
        of the potential transfer to each policyholder and provides 
        each policyholder and the Commission with information on the 
        financial stability and managerial capability of the assuming 
        insurer including but not limited to--
                    (i) all ratings issued within the previous 3 years 
                by a nationally recognized rating agency, the 
                transferring insurer and the assuming insurer;
                    (ii) the financial statements of the transferring 
                insurer and the assuming insurer for the 3 previous 
                years;
                    (iii) where the policies being transferred involve 
                at least 5 percent of the reserve liability of either 
                the transferring insurer and the assuming insurer, pro 
                forma financial statements forecasting the effect of 
                the transfer on the transferring insurer and on the 
                assuming insurer; and
                    (iv) an option by a disinterested third party 
                expert that such transfer is fair and in the best 
                interests of the policyholders being transferred, the 
                policyholders who remain with the transferring company, 
                and the policyholders of the assuming company; and
            (2) each policyholder has affirmatively consented in 
        writing to the policy transfer.
    (d) Prohibited Transfers; Servicing Contracts; Liability.--No 
assumption reinsurance agreement shall be effective unless a 
policyholder has specifically consented to the transfer under 
subsection (c) of this section. Each policyholder who has consented to 
the assumption reinsurance agreement, may have their contract of 
insurance assumed by another insurer. If a policy holder has not 
consented to the assumption reinsurance agreement, such contracts of 
insurance shall not be transferred. The transferring insurer may enter 
into a contract with the assuming insurer wherein the assuming insurer 
agrees to provide the administrative servicing of those contacts of 
insurance not transferred. The transferring insurer shall remain 
directly liable to the policyholders for those contracts of insurance 
that are not transferred.
    (e) State Insurance Departments.--Any licensed insurer which enters 
into an assumption reinsurance agreement shall file or cause to be 
filed a ``Approval of Assumption Reinsurance'' certificate.
    (f) Exceptions.--The Commission may establish exceptions to the 
requirements of subsections (b) and (c) where the transfer is part of a 
conservatorship, receivership, or liquidation process approved by 
judicial order.

SEC. 213. RESTRICTIONS ON OWNERSHIP AND TRANSFER OF OWNERSHIP.

    The Commission shall restrict ownership and control of an insurer 
to persons with appropriate qualifications and good character. These 
requirements shall require that any transfer of ownership be subject to 
a review of the qualifications and character of persons who will own or 
control the insurer.

SEC. 214. CONSUMER DISCLOSURE.

    (a) Information Required.--The Commission shall prescribe the 
information which must be provided by representatives of the insurer to 
a consumer prior to the purchase of any insurance policy or 
certificate. Such information shall--
            (1) inform the consumer of the rights and obligations of 
        the parties to the agreement;
            (2) convey information, understandable to the consumer, 
        that will enable the consumer to make meaningful cost and 
        coverage comparisons of similar policies offered by other 
        insurers and of different policies of the same insurer;
            (3) with regard to life insurance policies, convey to the 
        consumer information regarding the relationship of premiums to 
        the accumulation of interest;
            (4) convey to the consumer existing public information 
        concerning the financial solidity of the insurer; and
            (5) include any other information which the Commission 
        deems necessary to fully inform the consumer.
    (b) Revocations.--The Commission shall establish requirements which 
allow a consumer to revoke the agreement within a reasonable amount of 
time following acceptance.
    (c) Clarity of Contracts.--The Commission shall establish 
requirements for the simplification and, where appropriate, the 
standardization of insurers' contracts for the benefit of consumers.
    (d) Good Faith.--The Commission shall require that each individual 
who sells or offers to sell an insurance policy has a duty of good 
faith and fair dealing to the purchaser or potential purchaser of such 
policy. Such requirements shall require that such an individual not 
knowingly make any misleading representation or fraudulent comparison 
of any policy or insurer for the purpose of inducing any person to 
purchase a policy or use undue pressure to induce the purchase of a 
policy.

SEC. 215. CONSUMER PROTECTION.

    (a) Informed Decisions.--The Commission shall require that State 
Insurance Departments provide information that will assist consumers in 
making informed decisions when purchasing from insurers. The Commission 
may require such assistance to include programs like toll free 
telephone service for consumer information on insurers and policies, 
counseling programs and buyer guides.
    (b) Consumer Complaints.--The Commission shall require that State 
Insurance Departments devote adequate resources to handling consumer 
complaints and to providing other consumer assistance. The Commission 
shall also require that Departments maintain data on consumer 
complaints.
    (c) Market Conduct Examinations.--The Commission shall prescribe 
standards for market conduct examinations.

SEC. 216. REAL ESTATE VALUATION.

    (a) Market Value.--The Commission shall require that real estate 
holdings held as assets by insurers be valued at market value on a 
regular basis.
    (b) Materiality.--Such requirements shall provide for the weighing 
of the materiality of the asset against the costs of determining the 
market value of the asset. In promulgating a standard for materiality 
the Commission shall consider the real estate holding as a percentage 
of an insurer's net worth and as a percentage of the insurer's other 
real estate holdings.

SEC. 217. REINSURANCE.

    (a) Credits.--The Commission shall prescribe requirements under 
which a ceding insurer may be allowed credit for reinsurance either as 
an asset or as a deduction from liability.
    (b) Valid Licenses.--Such requirements shall require that no credit 
be allowed except where the reinsurer has a valid license issued 
pursuant to the provisions of this Act.
    (c) Legitimacy.--Such requirements shall establish standards with 
regard to whether the reinsurance is legitimate. In promulgating 
standards as to the legitimacy of a reinsurance agreement the 
Commission shall consider a variety of factors including, but not 
limited to, whether--
            (1) the primary effect of the reinsurance agreement is to 
        transfer deficiency reserves or excess interest reserves to the 
        books of the reinsurer for a ``risk charge'' and the agreement 
        does not provide for significant participation by the reinsurer 
        in one or more of the following risks: mortality, morbidity, 
        investment or surrender benefit;
            (2) the reserve credit taken by the ceding insurer is not 
        in compliance with the insurance laws, rules or regulations, 
        including actuarial interpretations or standards, adopted by 
        the Federal or State authorities;
            (3) the reserve credit taken by the ceding insurer is 
        greater than the underlying reserve of the ceding company 
        supporting the policy obligations transferred under the 
        reinsurance agreement;
            (4) the ceding insurer is required to reimburse the 
        reinsurer for negative experience under the reinsurance 
        agreement, except that neither offsetting experience refunds 
        against prior years losses nor payment by the ceding insurer of 
        an amount equal to prior years losses upon voluntary 
        termination of in-force reinsurance by that ceding insurer 
        shall be considered such reimbursement to the reinsurer for 
        negative experience;
            (5) the ceding insurer can be deprived of surplus at the 
        reinsurer's option or automatically upon the occurrence of some 
        event, such as the insolvency of the ceding insurer, except 
        that termination of the reinsurance agreement by the reinsurer 
        for non-payment of reinsurance premiums shall not be considered 
        to be such a deprivation of surplus;
            (6) the ceding insurer must, at specific points in time 
        scheduled in the agreement, terminate or automatically 
        recapture all or part of the reinsurance ceded;
            (7) no cash payment is due from the reinsurer, throughout 
        the lifetime of the reinsurance agreement, with all settlements 
        prior to the termination date of the agreement made only in a 
        ``reinsurance account'', and no funds in such account are 
        available for the payment of benefits;
            (8) the reinsurance agreement involves the possible payment 
        by the ceding insurer to the reinsurer of amounts other than 
        from income reasonably expected from the reinsured policies; 
        and
            (9) the reinsurance would allow an insurer otherwise in 
        hazardous financial condition to continue to transact business 
        to the detriment of consumers.

SEC. 218. SURPLUS NOTES.

    The Commission shall restrict the use of surplus notes and other 
financial devices where the Commission determines such devices would 
allow an insurer otherwise in hazardous financial condition to continue 
to transact business to the detriment of consumers.

SEC. 219. STATE INSURANCE DEPARTMENT RESOURCES.

    The Commission shall prescribe standards for the adequacy of 
resources for State insurance departments. In prescribing such 
standards the Commission shall consider a variety of factors including, 
but not limited to, the following:
            (1) The number of insurers domiciled in the State.
            (2) The annual amount of premiums collected by insurers 
        licensed in the State.
            (3) The number of examiners necessary to adequately 
        regulate.
            (4) The number of qualified actuaries necessary to 
        adequately regulate.
            (5) The number of consumer complaints and inquiries 
        received by the department.
            (6) The adequacy of any other resource necessary to 
        effectively regulate insurance in the State.

SEC. 220. OTHER STANDARDS.

    The Commission shall establish such other requirements as it deems 
necessary to ensure the effective regulation of insurance by the 
States.

SEC. 221. INSURANCE ADVISORY COMMITTEE.

    (a) Establishment of Committee.--There is established the Insurance 
Advisory Committee (hereinafter referred to as the ``Advisory 
Committee'').
    (b) Membership.--(1) The Advisory Committee shall consist of 13 
members as follows:
            (A) Secretary of Commerce.
            (B) Secretary of the Treasury.
            (C) Director of the Office of Reinsurance Regulation 
        (established by section 302 of this Act).
            (D) Two members appointed by the Chairman of the Commission 
        from the members of the Commission.
            (E) Five members appointed by the Chairman of the 
        Commission from among State insurance regulators.
            (F) Two members appointed by the Chairman of the 
        Commission, with a demonstrated understanding of insurance and 
        reinsurance regulation, and of whom, one shall be an insurance 
        broker and one a commercial risk manager.
            (G) One member appointed by the Chairman of the Commission 
        who shall be a consumer representative.
    (2) Members of the Advisory Committee designated by clauses (A), 
(B), and (C) shall serve ex officio.
    (3) The Chairman of the Commission shall designate a chairman and a 
vice chairman of the Advisory Committee from among the members thereof.
    (c) Functions.--It shall be the function of the Advisory Committee 
to--
            (1) investigate and study issues and problems relating to 
        the Federal regulation of insurance and reinsurance;
            (2) evaluate the advisability of proposals with respect to 
        such issues and problems;
            (3) investigate the role and impact of insurance and 
        reinsurance and the insurance and reinsurance markets on 
        interstate and international commerce and regulation; and
            (4) prepare and submit to the President, the Congress, and 
        the Commission their findings and any recommendations for 
        legislative or administrative action.
    (d) Term.--Members of the Advisory Committee, other than those 
serving ex officio, shall be appointed for a period of 5 years. No 
person who is appointed while a full-time employee of a State or the 
Federal Government shall serve in such position after he ceases to be 
so employed.
    (e) Quorum.--Five members of the Advisory Committee shall 
constitute a quorum, but a lesser number may conduct meetings.
    (f) Meetings.--The first meeting of the Advisory Committee shall be 
called by the Chairman of the Commission and shall be held within 90 
days after the date of enactment of this title. The Advisory Committee 
shall meet at such times and places as it or the Commission may fix and 
determine, but shall hold at least 4 regularly scheduled meetings a 
year. Special meetings may be held at the call of the Chairman or any 3 
members of the Advisory Committee, or at the call of the Commission. 
The Chairman shall preside at all meetings, and the Vice Chairman shall 
preside in the absence or disability of the Chairman. In the absence of 
both the Chairman and the Vice Chairman, the Director may appoint any 
member to act as Chairman pro tempore.
    (g) Vacancy.--A vacancy on the Advisory Committee resulting from 
the death or resignation of a member shall not affect its powers and 
shall be filled in the same manner in which the original appointment 
was made.
    (h) Pay.--
            (1) Nongovernment employees.--Each member of the Advisory 
        Committee who is not otherwise employed by the Federal 
        Government or State government shall be entitled to receive the 
        daily equivalent of the annual rate of basic pay payable for 
        level IV of the Executive Schedule under section 5315 of title 
        5, United States Code, for each day (including travel time) 
        during which he or she is engaged in the actual performance of 
        duties as a member of the Advisory Committee.
            (2) Government employees.--A member of the Advisory 
        Committee who is an officer or employee of the Federal 
        Government or State government shall serve without additional 
        compensation.
            (3) Travel.--Members of the Advisory Committee shall be 
        reimbursed for travel, subsistence, and other necessary 
        expenses incurred by them in the performance of their duties.
    (i) Powers of the Advisory Committee.--
            (1) Hearings and meetings.--The Advisory Committee or, on 
        authorization of the Advisory Committee, a member of the 
        Advisory Committee, may hold such hearings, at such time and 
        places, take such testimony, and receive such evidence, as the 
        Advisory Committee considers appropriate. The Advisory 
        Committee or a member of the Advisory Committee may administer 
        oaths or affirmations to witnesses appearing before it.
            (2) Facilities and support services.--The Administrator of 
        General Services shall provide to the Advisory Committee on a 
        reimbursable basis such facilities and support services as the 
        Advisory Committee may request. Upon request of the Advisory 
        Committee, the head of a Federal department or agency may make 
        any of the facilities or services of the agency available to 
        the Advisory Committee to assist the Advisory Committee in 
        carrying out its duties under this title.
            (3) Mails.--The Advisory Committee may use the United 
        States mails in the same manner and under the same conditions 
        as other Federal departments and agencies of the United States.
            (4) Experts and consultants.--The Advisory Committee may 
        procure temporary and intermittent services of experts and 
        consultants under section 3109(b) of title 5, United States 
        Code.
    (j) Written Report.--The Advisory Committee shall submit to the 
Congress and the President, a yearly written report. The report shall 
contain a detailed statement of the findings and conclusions of the 
Advisory Committee, together with its recommendations for such 
legislative (including tax legislation) and administrative action as it 
considers appropriate. The first report shall be due not later than 6 
months after the date of enactment of this title. All subsequent 
reports shall be due on January 1, of each year.
    (k) Termination.--The Advisory Committee shall cease to exist on a 
date that is 5 years after the date of enactment of this title unless 
otherwise extended by Congress.

                         TITLE III--REINSURANCE

SEC. 301. COMMISSION AUTHORITY.

    (a) In General.--The Commission shall have the authority to 
establish, by regulation, the standards and procedures for granting a 
license to professional reinsurers under section 308A and other 
reinsurers and insurers in the business of providing reinsurance under 
section 308B (collectively may be referred to as ``reinsurers'').
    (b) Rules and Regulations.--The Commission shall duly consider any 
proposals for rules and regulations submitted by the Director of the 
Office of Reinsurance Regulation and shall promulgate such rules and 
regulations as it deems warranted.
    (c) Annual Reports.--The Commission through regulations shall 
require each holder of a license to conduct the business of reinsurance 
to submit an annual report of its financial condition and an annual 
report on the condition of any trust fund regulated under this Act.
    (d) Qualified Financial Institution.--The Commission shall 
establish, by regulation, appropriate criteria for becoming a qualified 
financial institution for purposes of the establishment of a trust fund 
under section 308B(c). Foreign banks with a United States presence may 
apply for acceptance.
    (e) National Solvency Standards.--The Commission shall establish 
national standards for the financial soundness and solvency of all 
insurers or reinsurers that seek a reinsurance license under this 
title.
    (f) Certificate of Solvency.--The Commission is authorized to issue 
a Federal certificate of solvency to an insurer or reinsurer pursuant 
to the financial standards and procedures adopted by the Commission if 
the Commission determines that the insurer or reinsurer meets such 
standards.

SEC. 302. OFFICE OF REINSURANCE REGULATION.

    (a) Office.--There is hereby established within the Insurance 
Regulatory Commission an Office of Reinsurance Regulation (hereinafter 
referred to as the ``Reinsurance Office'').
    (b) Director.--
            (1) Appointment.--The Chairman of the Commission shall 
        appoint and fix the compensation of a Director of the Office of 
        Reinsurance Regulation (hereinafter referred to as the 
        ``Director'') from among individuals who--
                    (A) are citizens of the United States,
                    (B) have a demonstrated understanding of financial 
                institution management or oversight, and
                    (C) have a demonstrated understanding of the 
                insurance and reinsurance industries, and insurance and 
                reinsurance regulation.
            (2) Limitation.--An individual may not be appointed as 
        Director if the individual has served as an officer or director 
        of a reinsurance company, or as an officer or director of a 
        reinsurance intermediary management or brokerage company at any 
        time during the 2-year period preceding the nomination of such 
        individual for appointment.
            (3) Term.--The Director shall be appointed for a term of 5 
        years.
            (4) Vacancy.--A vacancy in the position of Director shall 
        be filled in the same manner as the original appointment was 
        made under subsection (b) of this section.
            (5) Service after the end of the term.--A Director may 
        serve after the expiration of the term for which the Director 
        was appointed until a successor has been appointed.

SEC. 303. PERSONNEL.

    (a) Deputy Director.--
            (1) In general.--The Reinsurance Office shall have a Deputy 
        Director who shall be appointed, and whose compensation shall 
        be fixed, by the Commission from among individuals who--
                    (A) are citizens of the United States,
                    (B) have a demonstrated understanding of financial 
                institution management or oversight, and
                    (C) have a demonstrated understanding of the 
                insurance and reinsurance industries, and insurance and 
                reinsurance regulation.
            (2) Limitation.--An individual may not be appointed as 
        Deputy Director if the individual has served as an officer or 
        director of a reinsurance company, or as an officer or director 
        of a reinsurance management or brokerage company at any time 
        during the 2-year period immediately preceding the appointment 
        of such individual as Deputy Director.
            (3) Powers, functions, and duties.--The Deputy Director 
        shall--
                    (A) have such powers, functions, and duties as the 
                Director or Commission shall prescribe, and
                    (B) serve as Acting Director in the event of the 
                death, resignation, sickness, or absence of the 
                Director, until the return of the Director or the 
                appointment of a successor.
    (b) Other Employees.--The Director, with the approval of the 
Commission, may appoint and fix the compensation of employees and 
agents necessary to carry out the functions of the Director and the 
reinsurance office.
    (c) Conflict of Interest.--The Director, the Deputy Director, 
officers, and employees of the reinsurance office shall not be 
financially interested, directly or indirectly, in any reinsurance or 
insurance company, any insurance or reinsurance management or brokerage 
company, or in any reinsurance or insurance transaction except as a 
policyholder or claimant under a policy.
    (d) Outside Experts and Consultants.--Notwithstanding any provision 
of law limiting pay or compensation, the Director may, with the 
approval of the Commission, appoint and compensate such outside experts 
and consultants as the Director determines necessary to assist the work 
of the Office.

SEC. 304. POWERS AND DUTIES OF DIRECTOR.

    (a) Duties.--The Director shall administer the Reinsurance Office 
and enforce the provisions of and execute the duties imposed by this 
title and delegated by the Commission. The Director shall also ensure 
that reinsurers licensed under this Act are adequately capitalized and 
operating safely in the United States.
    (b) Licenses.--When required, the Director shall issue licenses to 
transact reinsurance business. The Director may refuse to issue or may 
revoke such licenses pursuant to the requirements of this Act. Such 
licenses shall bear a seal of the Commission.
    (c) Investigations.--The Director shall conduct such examinations 
and investigations on reinsurance matters, as are required to determine 
whether a person has violated any provision of this title or for the 
purpose of securing information useful in the lawful administration of 
any such provision.
    (d) Additional Rules and Regulations.--The Director shall propose 
to the Commission any rules and regulations necessary for effectuating 
any provision of this title.
    (e) Records.--The Director shall maintain records of official 
transactions of the Reinsurance Office, examinations, investigations 
and proceedings. Such records and reinsurance filings shall be open to 
public inspections, except as deemed necessary by the Director.
    (f) Reports.--The Director shall annually prepare a report for 
delivery to the Commission and the Congress with respect to the work of 
the Reinsurance Office, recommendations for legislative or 
administrative action, proposals for rules and regulations affecting 
reinsurance and matters affecting the Reinsurance Office, and such 
other pertinent information and matters as the Director deems proper.
    (g) Wrongful Acts.--The Director shall refer to the Commission any 
information concerning criminal or tortious conduct, or breach of any 
contractual or fiduciary obligation or any other wrongdoing by any 
officer, manager, agent, broker, employee or other person related to 
the reinsurer.
    (h) Revocation of Licenses.--The Director may suspend or revoke the 
license of any reinsurer which violates the provisions of this Act. In 
addition to, or in lieu of suspension or revocation, the Director may 
fine any reinsurer which violates the provisions of this Act in an 
amount not to exceed $100,000 per violation.
    (i) Research.--The Director shall conduct research and financial 
analysis of the reinsurance industry and any other research and 
analysis deemed appropriate by the Director.
    (j) Hearings.--The Director shall hold hearings consistent with the 
requirements of subchapter II of chapter 5 and chapter 7 of title 5, 
United States Code, for any purpose deemed necessary and within the 
scope of this Act.
    (k) Assessments.--The Director shall levy and collect assessments 
and other fees imposed pursuant to this Act.

SEC. 305. RULES AND REGULATIONS.

    In addition to any other rules and regulations the Commission deems 
necessary for the effective regulation of reinsurance, the Commission 
shall promulgate rules and regulations--
            (1) requiring a license, issued by the Director, to conduct 
        the business of reinsurance in the United States;
            (2) establishing minimum levels of capital and surplus 
        necessary for reinsurers to transact business;
            (3) requiring, where appropriate, the establishment of 
        irrevocable trust accounts in qualified United States financial 
        institutions adequate for the payment of the claims of their 
        United States policy holders and ceding insurers, their assigns 
        and successors in interest;
            (4) requiring that all reinsurers agree to submit to the 
        jurisdiction and be bound by the final order or judgment of any 
        court of competent jurisdiction in the United States;
            (5) requiring the Director to review the business plan of 
        all reinsurers seeking a license to see that the reinsurer's 
        methods of operation are reasonable, prudent and do not present 
        a threat to the public;
            (6)(i) defining standards for identifying reinsurers found 
        to be in such condition as to render the continuance of their 
        business hazardous to the public, and (ii) defining the 
        authority of the Reinsurance Office to order a company to take 
        necessary corrective action or cease and desist certain 
        practices which, if not corrected, could place the company in a 
        hazardous financial condition;
            (7) requiring compliance with regulations adopted pursuant 
        to section 201 of this Act;
            (8) requiring that all directors and senior officers of a 
        reinsurer possess appropriate qualifications and good 
        character;
            (9) requiring a diversified investment portfolio;
            (10) prescribing assets which may be admitted, authorized 
        or allowed as assets in the statutory financial statement;
            (11) restricting the credit that may be allowed to licensed 
        reinsurers, either as asset or as a reduction of liabilities 
        for retrocessions reinsurers not licensed to do business in the 
        United States; and
            (12) prescribing disciplinary authority to be exercised by 
        the Director.

SEC. 306. BUDGET AND FINANCIAL REPORTS.

    (a) Financial Operating Plans and Forecasts.--Before the beginning 
of each fiscal year, the Director shall submit to the Commission a copy 
of the Reinsurance Office's financial operating plans and forecasts.
    (b) Reports of Administrative Operations.--As soon as practicable 
after the end of each fiscal year and each quarter, the Director shall 
submit to the Commission a copy of the report of the results of the 
operations of the Office during such period.
    (c) Audits.--
            (1) In general.--The Comptroller General of the United 
        States shall audit the operations of the Reinsurance Office in 
        accordance with generally accepted Government auditing 
        standards. All books, records, accounts, reports, files, and 
        property belonging to or used by the Reinsurance Office shall 
        be made available to the Comptroller General.
            (2) Frequency.--Audits shall be conducted annually for the 
        first 2 years following the effective date of the title and as 
        appropriate thereafter.

SEC. 307. INFORMATION, RECORDS, AND MEETINGS.

    For purposes of subchapter II of chapter 5 of title 5, United 
States Code, the Reinsurance Office and the Commission shall, with 
respect to activities under this Act, be considered agencies 
responsible for the regulation or supervision of financial 
institutions.

SEC. 308. ANNUAL REPORT BY THE DIRECTOR.

    Not later than June 15 of the calendar year next following the 
calendar year in which this Act is enacted, and on or before June 15 of 
each year thereafter, the Director shall submit to the Commission a 
written report which shall include--
            (1) a description of the actions taken, and being 
        undertaken, by the Director to carry out this Act;
            (2) a description of the financial condition of the 
        reinsurance market, including the results and conclusions of 
        the annual examinations of reinsurers; and
            (3) an assessment of the extent to which reinsurers are 
        achieving their purpose of providing reinsurance to the United 
        States insurance market.

SEC. 308A. LICENSE OF PROFESSIONAL REINSURERS.

    (a) In General.--The Commission through the Director is authorized 
to license and otherwise regulate professional reinsurers. A 
professional reinsurer shall be subject to regulation solely by the 
Commission as to the business of reinsurance in the United States.
    (b) Establishment of Standards.--The Commission in consultation 
with the Director shall, by regulation, establish standards and 
procedures for the licensing and regulation of professional reinsurers. 
Such standards shall give due consideration to the public interest in 
providing secure reinsurance capacity in the United States and to the 
need for promptly collectible reinsurance recoverables.
    (c) Standards.--Licensing standards for professional reinsurers 
promulgated by the Commission under subsection (b) shall include the 
following:
            (1) Minimum net worth requirements, risk-based or 
        otherwise, appropriate to the nature of the reinsurance written 
        by the different types and sizes of reinsurers, except that the 
        Commission shall set the minimum at an amount not less than 
        $50,000,000 and shall establish additional net worth 
        requirements for appropriate categories of professional 
        reinsurers based upon their operations, including such factors 
        as premium volume, volatility, and loss development 
        characteristics of the types of reinsurance provided by such 
        reinsurers. The Commission shall adjust such minimum for 
        inflation every fifth year unless for good cause the Commission 
        determines that it should be adjusted more frequently.
            (2) Appropriate standards for investments, reserves, and 
        asset valuations relating to minimum net worth, including 
        percentage limitations for various categories of investments; 
        except that investments in excess of minimum net worth and 
        reserves shall be subject to the prudent person standard.
            (3) Limitations on the net amount of exposure that may be 
        retained on a single risk, based on the amount of net worth.
            (4) Accounting standards and standards for reserve 
        valuation that will promote strong and appropriate financial 
        monitoring.
            (5) Liquidity requirements appropriate to the nature of the 
        reinsurance written.
            (6) Requirements for annual reports by independent 
        accountants of financial statements reporting financial 
        condition and financial activities.
            (7) Limitations and controls on the use of reinsurance, and 
        standards for ceding, reporting on, and credit for such 
        reinsurance.
            (8) Requirements for certification of loss reserves by 
        actuaries and reports of such certification.
            (9) Disclosure of all subsidiary and affiliate 
        relationships and the identity of all persons which control the 
        professional reinsurer.
            (10) Regulation of financial transactions within holding 
        company systems.
            (11) Procedures for initial and special examinations and 
        for the annual financial review of financial statements.
            (12) Regulations under which a foreign insurer or reinsurer 
        may establish a United States branch which may become a 
        certified professional reinsurer.
            (13) Minimum security deposit requirements for United 
        States branches of foreign insurers or reinsurers that apply to 
        become professional reinsurers.
            (14) Appointment of an agent in the United States upon whom 
        may be served any lawful process in any action, suit, or 
        proceeding instituted by or on behalf of any person in the 
        United States, and an agreement that, in the event such process 
        may not be served upon the appointed agent, process may be 
        served upon the Director.
            (15) Agreement, by a foreign professional reinsurer, to 
        submit to the jurisdiction and be bound by the final order or 
        judgment of any court of competent jurisdiction in the United 
        States.
            (16) Procedures for ongoing monitoring and enforcement of 
        compliance with Commission standards.
            (17) Minimum standards as to the qualifications of the 
        management of professional reinsurers.
            (18) Minimum standards governing the fiduciary duties of 
        officers and directors of professional reinsurers.
            (19) Submission of an outline of current and projected 
        operations in the United States demonstrating that the methods 
        of operation are reasonable, prudent, and do not present an 
        undue risk to the public.
            (20) Demonstration of sufficient data processing capability 
        and capacity to meet all data collection and reporting 
        requirements of the Commission.
            (21) Submission of biographical information, which shall be 
        updated annually, demonstrating that all directors and senior 
        officers possess sufficient experience and good character to 
        manage business affairs in a competent and trustworthy manner.
            (22) Disclosure requirements, in addition to those 
        enumerated above, for information to be provided to the 
        Director and the public.
            (23) Such other standards as the Commission determines to 
        be necessary to evaluate and maintain the sound financial 
        condition of federally certified professional reinsurers.

SEC. 308B. LICENSE FOR OTHER PROVIDERS OF REINSURANCE.

    (a) In General.--The Commission through the Director is authorized 
to issue a reinsurance license to insurers and to any reinsurer that 
does not seek certification as a professional reinsurer under section 
308A.
    (b) Establishment of Qualifications.--The Commission shall 
establish, by regulation, standards and procedures for licensing under 
this section.
    (c) Qualifications for Certificate.--To qualify for a reinsurance 
license, an insurer or reinsurer must meet one of the following 3 
standards:
            (1) The insurer or reinsurer shall have met the national 
        standards established under this Act and have a State license 
        to transact the business of insurance or have a certificate of 
        solvency issued by the Commission under and either--
                    (A) maintain a net worth which is not less than a 
                minimum set by the Commission which--
                            (i) shall be no less than $5,000,000;
                            (ii) shall establish additional net worth 
                        requirements for appropriate categories of 
                        reinsurers based upon their operations, 
                        including such factors as premium volume, 
                        volatility, and loss development 
                        characteristics of the types of reinsurance 
                        provided by such reinsurers; and
                            (iii) shall ensure that reinsurance 
                        obligations will be met; or
                    (B) in the case of a financially sound applicant 
                that does not meet the net worth dollar standard of 
                subparagraph (A), obtain a waiver of this minimum 
                dollar standard if the Commission concludes that the 
                applicant is sufficiently financially sound, is able to 
                pay its reinsurance obligations, and has sufficient 
                expertise to provide the type of reinsurance that it 
                intends to offer.
        An applicant with a State license must have been doing business 
        in its State of domicile for at least 3 years unless the 
        Commission for good cause shown, pursuant to regulations, 
        waives such 3-year operating requirement. The Commission shall 
        adjust for inflation the minimum established in subparagraph 
        (A) every fifth year unless the Commission determines for good 
        cause that it should be adjusted more frequently.
            (2) The insurer or reinsurer shall be authorized by the law 
        of its domiciliary jurisdiction to assume reinsurance; 
        demonstrate to the Director that it has sufficient assets and 
        management experience so that it can operate safely in the 
        United States reinsurance market in a way that will protect the 
        public interest; and maintain a trust fund in a qualified 
        financial institution which includes a trusteed surplus for the 
        protection of United States ceding insurers and which is--
                    (A) for a single company, an amount not less than 
                its United States reinsurance liabilities arising from 
                reinsurance contracts entered into after the date of 
                enactment of this Act plus $20,000,000;
                    (B) for an established group of individual 
                unincorporated underwriters regulated as a group by its 
                State or country of domicile, an amount not less than 
                the group's United States reinsurance liabilities 
                arising from reinsurance contracts entered into after 
                the date of enactment of this Act plus $100,000,000; or
                    (C) for a group of incorporated insurers under 
                common administration, and which has continuously 
                transacted an insurance or reinsurance business outside 
                the United States for at least 10 years, in an amount 
                not less than the group's United States reinsurance 
                liabilities arising from reinsurance contracts entered 
                into after the date of enactment of this Act plus 
                $100,000,000.
        The Commission shall require additional amounts to be held in a 
        trust established under this paragraph as a condition for 
        initial or continued license if the Commission determines that 
        such additional amounts are required for the protection of 
        United States ceding insurers.
            (3) The insurer or reinsurer shall be authorized by the 
        laws of its domiciliary jurisdiction to assume reinsurance and 
        demonstrate to the Director that it has sufficient assets and 
        management experience so that it will operate safely in the 
        United States reinsurance market in a way that will protect the 
        public interest and in addition complies with the following:
                    (A) Holders of licenses will be required to fund 
                their obligations to United States ceding insurers 
                pursuant to subsection (e) for such ceding insurers to 
                be able to count such reinsurance as an asset or 
                deduction from liabilities on the ceding insurer's 
                financial statements.
                    (B) In the event the Director determines that the 
                funding required by subsection (e) is inadequate to 
                protect United States ceding insurers, the Director may 
                require, as a condition for initial or continued 
                license, additional security requirements, including 
                the establishment of a United States trust fund for the 
                exclusive protection of United States ceding insurers. 
                The Commission may require such trust fund to be in any 
                amount that the Commission determines to be appropriate 
                to protect United States ceding insurers.
    (d) Requirements for a Trust Fund Under Subsection (c).--A trust 
fund required by paragraphs (2) and (3) of subsection (c) shall be in a 
form approved by the Commission and shall meet the following 
requirements for all new reinsurance provided after the date the 
license to provide reinsurance was granted:
            (1) The trust fund shall be exclusively for the purpose of 
        securing the payment of valid claims of United States ceding 
        insurers and their assigns and successors in interest.
            (2) The trust fund shall be established in a qualified 
        financial institution in a form approved by the Commission. The 
        Commission shall establish acceptable criteria for assets held 
        in trust, which shall include cash, securities, bonds, 
        commercial paper, clean, irrevocable, unconditional, and 
        automatically renewable letters of credit issued by a qualified 
        financial institution, or any other appropriate assets, whether 
        United States or non-United States, the fair market value of 
        which can be readily ascertained and which provide the 
        stability necessary for adequate protection of the trust 
        beneficiaries.
            (3) Assets may be held in trust by a qualified financial 
        institution the principal place of business of which is outside 
        the United States if the holder of the license demonstrates 
        that a beneficiary of the trust can obtain immediate payment 
        from a United States branch, subsidiary, or representative 
        office of the institution.
            (4) The trust instrument shall provide that claims shall be 
        paid with the concurrence of the holder of the license or upon 
        final order of any court of competent jurisdiction in the 
        United States. The holder of the license may freely substitute 
        and withdraw assets in the trust so long as the value of the 
        assets maintained in the trust equals or exceeds the amount set 
        forth in paragraph (2) or (3) of subsection (c).
            (5) The trustees of the trust shall report annually to the 
        Director and to the insurance commissioner of each ceding 
        insurer's State of domicile, in writing, setting forth the 
        balance of the trust, providing an actuary's opinion as to the 
        reasonableness of the trust reserves, listing the trust's 
        investments at the preceding year end, and certifying the date 
        of termination of the trust if so planned, or certifying that 
        the trust shall not expire as to new business prior to the next 
        following December 31. The trust shall remain in effect as long 
        as there are outstanding obligations under the reinsurance 
        agreements to which the trust pertains.
            (6) The trust instrument shall provide that, in the event 
        the holder of the license is placed in supervision, 
        rehabilitation, or liquidation, or its equivalent by its State 
        or country of domicile, or if the Director determines, pursuant 
        to regulations adopted by the Commission, that the condition of 
        the holder is such that further transaction of business will be 
        hazardous to United States creditors or to the public, the 
        Director may take control of the trust.
            (7) The trust shall be subject to annual review and initial 
        and special examination by the Director in the same manner as 
        the Director may examine certified reinsurers.
    (e) Requirements for the Form of Funding Under Subsection (c).--The 
funds required by subsection (c)(3) may be in the form of--
            (1) cash under the control of the ceding insurer;
            (2) a clean, irrevocable, unconditional, and automatically 
        renewable letter of credit issued by a qualified financial 
        institution and held by the ceding insurer; or
            (3) other funding acceptable to the Commission.
    (f) Previous Reinsurance Obligations.--As a pre-condition for 
obtaining a license to provide reinsurance on the basis of meeting the 
requirements of paragraph (2) or (3) of subsection (c), the applicant 
shall be required to demonstrate to the Director that it has adequately 
secured its reinsurance liabilities in existence at the time of 
licensing. The adequacy of the funding of such previous reinsurance 
liabilities shall be subject to the requirements of this Act and shall 
be reviewed by the Director in determining the financial condition of 
the reinsurer in each annual review.
    (g) Additional Requirements for a Foreign Applicant.--Any foreign 
insurer or reinsurer applying under this section for a reinsurance 
license shall meet the following additional requirements:
            (1) Have been doing business in its country of domicile for 
        at least 3 years, or be an affiliate of an insurer or reinsurer 
        which has been doing business in its country of domicile for at 
        least 3 years, unless the Director, for good cause shown, 
        pursuant to regulations, waives this 3-year operating 
        requirement.
            (2) File an annual financial statement with its domiciliary 
        regulator and have established satisfactory evidence of good 
        repute and financial integrity.
            (3) File annually with the Director a copy of the financial 
        statement provided to its domiciliary regulator (if 
        appropriate, translated from its original language) and a 
        report showing the volume of written premiums assumed from 
        United States insurers in the past year and such other 
        information as the Director, in its sole discretion, requires.
            (4) File with the Director a list identifying its officers 
        and directors (or similar principals) along with biographical 
        information for each, and provide an annual update of this 
        information.
            (5) Agree to allow the Director to examine its books and 
        records and to waive any protection it has under any secrecy 
        laws of its domiciliary jurisdiction, except that such 
        examinations will only take place upon the Director's showing 
        of good cause for concern about the financial soundness or 
        solvency of the subject entity.
            (6) Appoint an agent in the United States upon whom may be 
        served any lawful process in any action, suit, or proceeding 
        instituted by or on behalf of a domestic ceding insurer, and 
        agree that, in the event such process may not be served upon 
        the appointed agent, process may be served upon the Director.
            (7) Submit to the jurisdiction of any United States court 
        of competent jurisdiction for the resolution of any dispute 
        arising out of a reinsurance agreement with a domestic ceding 
        insurer or to respond to any allegations or charges made 
        against it by any United States Government official or agency 
        except that this paragraph does not override any contractual 
        agreement of the parties to resolve disputes between them 
        pursuant to other procedures.

SEC. 308C. SUSPENSION AND REVOCATION OF FEDERAL LICENSE TO PROVIDE 
              REINSURANCE.

    (a) In General.--The Commission through the Director shall suspend 
or revoke the certificate of a professional reinsurer issued under 
section 308A or a reinsurance certificate issued under section 308B at 
any time the Director determines the standards for holding such license 
are no longer satisfied. The Director shall provide the opportunity for 
a hearing on the record before making a determination to suspend or 
revoke such certificate.
    (b) Notice of Suspension or Revocation.--
            (1) The Director shall notify the State or country of 
        domicile of a licensed professional reinsurer or holder of a 
        reinsurance license that the license has been suspended or 
        revoked. Such notification shall be made at the earliest 
        possible date.
            (2) The holder of a license that is suspended or revoked 
        under subsection (a) shall immediately notify all insurers and 
        reinsurers from which it has accepted cessions of such 
        suspension or revocation.

SEC. 308D. CREDIT FOR REINSURANCE.

    (a) In General.--Notwithstanding any provision of State law to the 
contrary, any insurer certified by the Director or regulated for 
financial condition by a State may count reinsurance as an asset or a 
deduction from its liabilities on its annual financial statement only 
if the provider of reinsurance, at the time such statement is filed--
            (1) holds a Federal license as a professional reinsurer 
        under section 308A;
            (2) holds a State insurance license or a Federal 
        certificate of solvency and is licensed pursuant to section 
        308B(c)(1);
            (3) maintains a United States trust fund and is licensed 
        pursuant to section 308B(c)(2); or
            (4) is licensed pursuant to section 308B(c)(3) and funds 
        its obligations to ceding insurers and reinsurers as required 
        in section 308B(e).
    (b) Limitation on Credit.--With regard to a reinsurer licensed 
pursuant to section 308B(c)(3), a ceding insurer may count as an asset 
or deduction from liabilities only that portion of the reinsurance 
which meets the standards for funding under section 308B(e). Such 
ceding insurer may also not count as such an asset or deduction any 
reinsurance secured by letters of credit, trust funds, or other 
collateral if such sources of security are not transferable to it when 
due.
    (c) Credit Pending Certification.--A United States insurer may take 
credit for reinsurance from a reinsurer that does not hold a 
professional reinsurer license issued pursuant to section 308A or a 
reinsurance license issued pursuant to section 308B only if--
            (1) the reinsurer submits to the Director a complete 
        application for a license within 30 days of the coverage being 
        placed;
            (2) the reinsurer places all premiums in trust in a 
        qualified financial institution pending consideration of its 
        application, and provides evidence to the Director that all 
        premiums from United States ceding insurers have been placed in 
        such trust;
            (3) the reinsurer funds any liabilities pursuant to 
        reinsurance assumed in a manner consistent with the 
        requirements of section 308B(e) and submits to the Director 
        proof of such funding;
            (4) the reinsurance agreement expressly provides that it 
        may be canceled from inception or at any subsequent time at the 
        request of the Director if the provider's application for a 
        license is denied;
            (5) the reinsurer is authorized in its State or country of 
        domicile to do an insurance business and either has been doing 
        business in its State or country of domicile for at least 3 
        years or is an affiliate of an insurer which has been doing 
        business in its State or country of domicile for at least 3 
        years, except that this 3-year operating requirement may be 
        waived by the Director for good cause pursuant to regulations; 
        and
            (6) the ceding insurer has not, within the previous 3 
        years, taken a credit for reinsurance ceded to the reinsurer 
        pursuant to this subsection.
    (d) Preemption.--No State shall regulate credit for reinsurance 
whether purchased by federally certified insurers or insurers regulated 
for financial condition by a State. The Commission through the Director 
shall have exclusive jurisdiction to regulate such credit.
    (e) Exceptions.--Notwithstanding any other provision of this 
section, a ceding insurer may count as an asset or deduction from 
liabilities--
            (1) reinsurance of risks located in jurisdictions within or 
        without the United States where such reinsurance is required by 
        applicable law of that jurisdiction;
            (2) reinsurance ceded to a reinsurer which is licensed by 
        one or more States and which is ceded to--
                    (A) a member of the same holding company system as 
                the ceding insurer; or
                    (B) an underwriting pool of which the ceding 
                insurer is a member;
            (3) risks ceded to a pool authorized or permitted by a 
        statute, regulation, or policy of the United States or under an 
        arrangement approved by the Federal or a State government;
            (4) risks of a parent or affiliate ceded to a pool or group 
        captive insurer or reinsurer where the captive's obligations 
        are funded or collateralized as provided in subsection (d) or 
        (e) of section 308B; or
            (5) risks ceded to a risk retention group authorized by and 
        operating pursuant to the Liability Risk Retention Act of 1986 
        (15 U.S.C. 3901 et seq.) if the risk retention group's 
        obligations are funded or collateralized as provided in 
        subsection (d) or (e) of section 308B.
    (f) Effect of Loss of License.--In the event that the Director 
suspends or revokes a license issued pursuant to this title or such 
license is lost for any other reason, a ceding insurer may not count 
reinsurance as an asset or a deduction from its liabilities on its 
annual financial statement for any cessions made after the date the 
certification ceases. For those cessions before the loss of license 
under this Act--
            (1) a ceding insurer may continue to count as an asset or 
        deduction any funds withheld from such reinsurer; and
            (2) a ceding insurer may also continue to count as an asset 
        or deduction any unfunded reinsurance for 90 days or such 
        longer period as approved by the Director.
A ceding insurer affected by the suspension or revocation of a license 
issued pursuant to this title shall immediately notify the Director of 
this fact.
    (g) Effective Date of This Section.--This section shall apply to 
cessions which take place 2 years after the date of enactment of this 
Act.

SEC. 308E. RELATIONSHIP TO STATE LAW.

    (a) Preemption.--
            (1) A professional reinsurer certified pursuant to section 
        308A shall be exempt from the application of any State law or 
        regulation pertaining to the licensing or regulation of 
        reinsurers or reinsurance transactions.
            (2) An insurer or reinsurer with a reinsurance license 
        issued pursuant to section 308B shall be subject to insurance 
        regulation by a State, unless that insurer or reinsurer has a 
        Federal certificate of solvency.
            (3) Any insurer or reinsurer described in paragraph (1) or 
        (2) that maintains its corporate existence pursuant to State 
        law shall be subject to applicable State tax and corporate 
        governance laws.
    (b) Nondiscrimination.--
            (1) With respect to any State law requiring evidence of 
        insurance or of financial responsibility, reinsurance contracts 
        made by a professional reinsurer licensed pursuant to section 
        308A or by the holder of a reinsurance license issued pursuant 
        to section 308B shall be accorded the same treatment as is 
        accorded to such contracts issued by insurers subject to 
        regulation for financial condition by that State.
            (2) No State shall revoke, suspend, refuse to issue, or 
        refuse to renew any license, privilege, charter, certificate, 
        franchise, or any other right conferred, guaranteed, or 
        protected by law because an insurer or reinsurer obtains or 
        maintains a certificate to provide reinsurance from the 
        Director. No tax, fee, or assessment of any kind may be imposed 
        on an insurer or reinsurer certified by the Director in any 
        manner or on any basis different from that applied to other 
        insurers by that State. No corporate charter or franchise 
        issued to an insurer or reinsurer licensed by the Director 
        shall be rendered invalid or subject to revocation, lapse, or 
        forfeiture merely by reason of the failure of an insurer or 
        reinsurer licensed by the Director to obtain a license or 
        certificate of authority issued by a State in addition to the 
        license issued by the Director.

SEC. 309. FINANCIAL REPORTS BY REINSURERS.

    (a) In General.--The Director shall conduct examinations of 
reinsurers licensed under section 308A and insurers and reinsurers 
licensed under section 308B that have a Federal solvency certificate. 
Each reinsurer shall provide to the Director annual and, as deemed 
appropriate by the Director, quarterly reports of its financial 
condition and operations which shall be in such form, contain such 
information, and be made on such dates, as the Director may require.
    (b) Insurers or Reinsurers Regulated for Financial Condition by a 
State.--The State insurance regulator shall conduct the examination of 
insurers or reinsurers subject to State regulation for financial 
condition.
    (c) Contents of Annual Report.--Each annual report shall include--
            (1) financial statements;
            (2) any supplemental information or alternative 
        presentation that the Director may require; and
            (3) a report signed by the reinsurer's chief executive 
        officer and chief accounting or financial officer, that 
        assesses, as of the reinsurer's most recent fiscal year--
                    (A) the effectiveness of the reinsurer's internal 
                audit control structure and procedures;
                    (B) the reinsurer's compliance with designated 
                safety and soundness laws and requirements; and
                    (C) any other information required by the Director.
    (d) Financial Examinations.--The Commission shall establish, by 
regulation, procedures for an effective system of examining the 
activities, operations, financial condition and affairs of insurers and 
reinsurers. The Director shall follow such procedures for reinsurers 
licensed under section 308A and insurers or reinsurers licensed under 
section 308B that have a Federal solvency certificate and State 
insurance regulators shall follow such procedures for the examination 
of insurers or reinsurers under the regulator's responsibility.
    (e) Annual Independent Audits of Financial Statements.--
            (1) Audits required.--Each reinsurer shall have an annual 
        independent audit made of its financial statements by an 
        independent certified public accountant in accordance with 
        accounting standards determined by the Commission.
            (2) Scope of audit.--In conducting an audit under this 
        subsection, an independent certified public accountant shall 
        determine and report on whether the financial statements--
                    (A) are presented fairly in accordance with 
                accounting principles determined by the Commission; and
                    (B) to the extent determined necessary by the 
                Director, comply with such other disclosure 
                requirements as may be imposed under subsection (b).
    (f) Review of Audits.--At the request of the Director and the 
Commission, the Comptroller General of the United States, may review 
any audit of a financial statement conducted under this section. Upon 
such request a reinsurer and its auditors shall provide all books, 
accounts, financial records, reports, files, workpapers, and property 
that the Director or the Comptroller General considers necessary to the 
performance of any review under this subsection.
    (g) Certification of Annual and Quarterly Reports.--
            (1) Declaration.--Annual and quarterly reports shall 
        contain a declaration by the chief executive officer of the 
        reinsurer that the report is true and correct to the best of 
        his or her knowledge and belief.
            (2) Attestation.--The correctness of the annual and 
        quarterly report shall be attested by the signature of at least 
        3 of the directors or executive officers of the reinsurer other 
        than the officer making the declaration required above. Such 
        attestation shall include a declaration that the report has 
        been examined by them and to the best of their knowledge and 
        belief is true and correct.
    (h) Special Reports.--The Director may require special reports from 
a reinsurer, in such form and containing such information as the 
Director may prescribe, on dates fixed by the Director, whenever in the 
Director's judgment, such reports are necessary for the Director to 
carry out the purposes of this Act.

SEC. 309A. ACCOUNTING STANDARDS.

    The financial statements of insurers and reinsurers shall be 
prepared in conformity with accounting principles determined by the 
Commission. Insurers and reinsurers that obtain and maintain Federal 
certificates of solvency or State insurance license on the basis of 
trust fund or funding mechanisms shall prepare the financial statements 
as to such trust funds or mechanisms in conformity with these 
principles. The Commission may establish, by regulation, additional 
disclosure requirements applicable to reports required to be filed with 
it.

SEC. 310. EXAMINATIONS.

    (a) In General.--The Director shall conduct a full scope 
examination of the affairs, transactions, accounts, records and assets 
of each licensed reinsurer to assure the solidity and proper 
functioning of the reinsurer. In addition, the Director may conduct an 
examination under this section whenever the Director determines that an 
examination is necessary to determine the condition of the reinsurer 
for the purpose of ensuring its financial safety and soundness.
    (b) Initial Application and Examination.-- The Director or State 
insurance regulator shall conduct an initial examination of every 
insurer or reinsurer that applies for a Federal certificate of solvency 
or State insurance license to determine if the applicant satisfies the 
national standards established under this Act.
    (c) Examination of Holding Company, Affiliates, and Subsidiaries.--
In connection with examinations of a reinsurer, examiners selected or 
approved by the Director shall make such examinations of the affairs of 
holding companies, and all affiliates and subsidiaries of such 
reinsurer as shall be necessary to disclose fully the relations between 
the reinsurer and its holding company, affiliates or subsidiaries and 
the effect of such relations upon the affairs of the reinsurer. The 
expense of examination of such holding company, affiliates, and 
subsidiaries of any reinsurer shall be assessed against the reinsurer 
and, when so assessed, shall be paid by the reinsurer. The refusal to 
give any information requested in the course of the examination, or to 
permit such examination, or to pay any expense so assessed, is grounds 
for suspension or refusal of, or nonrenewal of any license or authority 
held by the reinsurer to engage in any business subject to the 
Director's authority. Any such proceeding for suspension, revocation or 
refusal of any license or authority shall be conducted pursuant to a 
hearing.
    (d) Information Provided to Examiner.--Each reinsurer, its 
officers, directors, agents or other persons from whom information is 
sought must provide to the examiners appointed under subsection (b) 
timely, convenient and free access at all reasonable hours at its 
office to all books, records, accounts, papers, documents and any or 
all computer or other recordings relating to the property, assets, 
business and affairs of the reinsurer being examined. The officers, 
directors, employees, agents of the reinsurer and other persons from 
whom information is sought, must facilitate the examination and aid in 
the examination so far as it is in their power to do so. The refusal of 
any reinsurer, by its officers, directors, employees, agent or other 
persons, to submit to examination or to comply with any reasonable 
written request of the examiners shall be grounds for suspension or 
refusal of, or nonrenewal of any license or authority held by the 
reinsurer to engage in any business subject to the Director's approval. 
Any such proceeding for suspension, revocation or refusal of any 
license or authority shall be conducted pursuant to a hearing.
    (e) Examination Report.--
            (1) Filing of examination report.--No later than 60 days 
        following completion of an examination, the examiner in charge 
        shall file with the Director a verified written report of 
        examination under oath. Upon receipt of the verified report, 
        the Director shall transmit the report to the reinsurer 
        examined, together with notice which shall afford the reinsurer 
        examined, a reasonable opportunity of not more than 30 days to 
        make a written submission or rebuttal with respect to any 
        matters contained in the examination report.
            (2) Adoption of report on examination.--Within 30 days of 
        the end of the period allowed for the receipt of written 
        submissions or rebuttals, the Director shall fully consider and 
        review the report, together with any written submissions or 
        rebuttals and any relevant portions of the examiner's 
        workpapers and enter an order--
                    (A) adopting the examination report as filed or 
                with modification or corrections. If the examination 
                report reveals that the reinsurer is operating in 
                violation of any law, regulation, or prior order of the 
                Director, the Director may refer such violation to the 
                Commission, or order the reinsurer to take any action 
                the Director considers necessary and appropriate to 
                cure such violation; or
                    (B) rejecting the examination report with 
                directions to the examiners to reopen the examination 
                for purposes of obtaining additional data, 
                documentation or information, and refiling the report 
                pursuant to paragraph (1) of this subsection.
    (f) Law Applicable to Examiners.--The Director and each examiner 
shall have the same authority and each examiner shall be subject to the 
same disclosures, prohibitions, obligations, and penalties as are 
applicable to examiners employed by the Federal Reserve banks.
    (g) Expenses.--Each reinsurer shall pay to the Director the expense 
attendant to conducting the examination.
    (h) Technical Experts.--The Director may obtain the services of any 
technical experts the Director considers appropriate to provide 
temporary technical assistance relating to an examination under this 
Act. The Director shall describe, in the record of each examination, 
the nature and extent of any such temporary technical assistance.
    (i) Preservation of Records by Photography.--
            (1) In general.--The Director may cause any record, paper, 
        or document to be copied or photographed, in a manner that 
        complies with the minimum standards of quality approved for 
        permanent photographic records by the National Institute of 
        Standards and Technology.
            (2) Deemed as originals.--Such copies or photographs shall 
        be deemed to be an original record for all purposes, including 
        introduction in evidence in all State and Federal courts or 
        administrative agencies.
            (3) Preservation.--Any such photograph or copy shall be 
        preserved as the Director shall prescribe, and the original may 
        be destroyed.
    (j) Publication and Use.--
            (1) Public disclosure.--Upon the adoption of the 
        examination report under subsection (f), the Director shall 
        continue to hold the content of the examination report as 
        private and confidential information for a period of 60 days 
        except to the extent provided in paragraph (2) below. 
        Thereafter, the Director may open the report for public 
        inspection so long as no court of competent jurisdiction has 
        stayed its publication.
            (2) Disclosure for enforcement purposes.--Nothing in this 
        Act shall prevent or be construed as prohibiting the Director 
        from disclosing the content of an examination report, 
        preliminary examination report or results, of any matter 
        relating thereto, to a State insurance department, to the 
        insurance department of another country, or to Federal or State 
        law enforcement officials at any time, as long as such agency 
        or office receiving the report or matters relating thereto 
        agrees in writing to hold it confidential and in a manner 
        consistent with this Act.
            (3) Disclosure to congress.--This section may not be 
        construed to authorize the withholding of any information from, 
        or to prohibit the disclosure of any information to, the 
        Congress or any committee or subcommittee thereof.
    (k) Immunity From Liability.--
            (1) The director.--No cause of action shall arise nor shall 
        liability be imposed against the Director, the Director's 
        authorized representatives or any examiner appointed by the 
        Director for any statements made or conduct performed in good 
        faith while carrying out the provisions of this Act.
            (2) Other persons.--No cause of action shall arise, nor 
        shall liability be imposed against any person for the act of 
        communicating or delivering information or data to the Director 
        or the Director's authorized representative or examiner 
        pursuant to an examination made under this Act, if such act of 
        communication or delivery was performed in good faith and 
        without fraudulent intent or the intent to deceive.

SEC. 310A. ACTUARIES.

    (a) Requirement To Use Qualified Actuaries.--The Board of Directors 
of each insurer and reinsurer shall appoint an actuary who is qualified 
to issue an opinion on the reasonableness of the reserves of such 
insurer or reinsurer. A qualified actuary is a person who is a member 
in good standing of the American Academy of Actuaries or someone who is 
otherwise qualified as determined by the Commission. The Board of 
Directors of the certified insurer or reinsurer shall notify the 
Director or the State insurance regulator of the name of the appointed 
actuary at the time of the appointment and shall notify the Director or 
such regulator within 10 days when an appointed actuary is dismissed, 
resigns, or otherwise leaves the position.

SEC. 311. LIMITATION ON SUBSEQUENT EMPLOYMENT.

    (a) In General.--Neither the Director nor any former officer or 
employee of the Office may accept compensation from any reinsurer 
during the 2-year period beginning on the date of separation from 
employment by the Reinsurance Office.
    (b) Applicability.--The limitation contained in subsection (a) 
applies only to any former officer or employee who, while employed by 
the Office, was compensated at a rate in excess of the lowest rate for 
a position classified higher than GS-15 of the General Schedule under 
section 5107 of title 5, United States Code.

SEC. 312. EXCHANGE OF INFORMATION.

    At the request of the Director, State insurance departments and 
other State authorities shall furnish the Director with any records, 
reports, results of examination, or other information in their 
possession relevant to matters under this Act.

SEC. 313. ARBITRATION CLAUSES.

    In the event of any difference of opinion between the reinsurer and 
the ceding insurer with respect to the interpretation of an agreement 
or contract to transfer obligations or risks of contract of insurance, 
such disagreements shall be resolved by arbitration under the Federal 
Arbitration Act.

SEC. 314. REINSURANCE INTERMEDIARIES.

    (a) Requirements.--A reinsurer shall not engage the services of any 
person, firm, association or corporation to act as a reinsurance 
intermediary broker or manager, either directly or indirectly, unless 
such intermediary is licensed by the Director.
    (b) Intermediary License.--
            (1) In general.--The Director may issue a reinsurance 
        intermediary's license to any person, firm, association or 
        corporation who or which has complied with the rules and 
        regulations adopted by the Commission.
            (2) Firms or association.--Any such license issued to a 
        firm or association and any employees designated to act as 
        reinsurance intermediaries under such license, shall be named 
        in the application and any supplements to the application.
            (3) Corporations.--Any such license issued to a corporation 
        shall authorize all of the officers and any designated 
        employees and directors of the corporation to act as 
        reinsurance intermediaries on behalf of such corporation, and 
        all such persons shall be named in the application and any 
        supplements to the application.
    (c) Written Applications.--
            (1) In general.--Before a reinsurance intermediary's 
        license shall be issued or renewed, the prospective licensee 
        shall properly file with the Director a written application 
        that shall be in such form or forms and supplements as the 
        Director prescribes, and pay a fee in an amount determined by 
        the Director.
            (2) Expiration.--Every reinsurance intermediary's license 
        shall expire on the thirty-first day of August next following 
        the date of issue.
            (3) Renewals.--If an application for renewal has been filed 
        with the Director before September 1 of the year of expiration, 
        license sought to be renewed shall continue in full force and 
        effect either until the issuance by the Director of the renewal 
        license applied for, or until five days after the Director has 
        refused to issue such renewal license and given notice of such 
        refusal to the applicant.
            (4) Refusal to renew.--Before refusing to renew any such 
        license, the Director shall notify the applicant of the 
        Director's intention and shall give such applicant an 
        opportunity for a hearing.
    (d) Refusal To Issue a License.--The Director may refuse to issue a 
reinsurance intermediary's license if, in his judgment, the applicant 
or any member, principal, officer or director of such applicant, is not 
trustworthy and competent to act as a reinsurance intermediary, or that 
any controlling person of such applicant is not trustworthy to act as a 
reinsurance intermediary, or that any of the foregoing has given cause 
for revocation or suspension of such license, or has failed to comply 
with any prerequisite for the issuance of such license.
    (e) Examinations.--A reinsurance intermediary shall be subject to 
examination by the Director as often as may be deemed necessary by the 
Director to assure compliance with this section and any rules and 
regulations promulgated under this title. The Director shall have 
access to all books, accounts and records of the reinsurance 
intermediary in a form usable to the Director.
    (f) Written Contract.--Transactions between a reinsurance 
intermediary broker or manager and the reinsurer it represents in such 
capacity shall only be entered into pursuant to a written 
authorization, specifying the responsibilities of each party and shall 
be specifically approved by the reinsurer's board of directors. At 
least 30 days before a reinsurer assumes or cedes business through a 
reinsurance intermediary or broker, a copy of the approved contract 
shall be filed with the Director for approval.
    (g) Fiduciary Responsibility.--Every reinsurance intermediary 
acting as such shall be responsible, in a fiduciary capacity, for all 
funds received or collected in such capacity, and shall not, without 
the express consent of the principals, mingle any such funds with the 
intermediary's own funds held by the intermediary in any other 
capacity.

SEC. 315. APPOINTMENT OF RECEIVERS.

    (a) Jurisdiction.--The Director shall act as a receiver for a 
reinsurer licensed under section 308A and those insurers or reinsurers 
licensed under section 308B who have a Federal certificate for solvency 
(hereinafter referred collectively as ``reinsurers''), for purposes of 
rehabilitation and liquidation when appointed as a receiver in 
proceedings instituted in accordance with the provisions of this Act. 
The United States District Court courts shall have exclusive 
jurisdiction of proceedings to appoint the Director as receiver for a 
reinsurer.
    (b) Petition for Appointment.--
            (1) The filing of a petition.--A proceeding to appoint the 
        Director as receiver of a reinsurer shall be commenced by the 
        filing of a petition seeking such appointment in the 
        appropriate United States district court for the district in 
        which the reinsurer has its principal office or domicile, or in 
        the United States District Court for the District of Columbia.
            (2) Who may file.--A petition may be filed by the Director.
            (3) Qualifications.--The receiver shall be--
                    (A) the Director or any person or other 
                governmental agency acting under the Director's 
                authority; and
                    (B) any person acting under the Director's 
                authority that--
                            (i) has no claim against, or financial 
                        interest in, the reinsurer or other basis of 
                        conflict of interest; and
                            (ii) has the financial and management 
                        expertise necessary to direct the operations 
                        and affairs of the reinsurer.
    (c) Judicial Review.--
            (1) Timing and jurisdiction.--A reinsurer for which a 
        receiver is appointed may bring an action in the United States 
        district court, in the district in which the court ordered the 
        appointment of a receiver, for an order requiring the Director 
        to terminate the appointment of the receiver. The court, upon 
        the merits, may dismiss such action, or may direct the Director 
        to terminate the appointment of the receiver. Such an action 
        may be commenced no later than 20 days after the date in which 
        the court ordered an appointment of a receiver.
            (2) Consensual appointments.--The appointment of a receiver 
        under subsection (b) pursuant to consent of the reinsurer shall 
        not be subject to judicial review under this subsection.
            (3) Standard of review.--A decision of the Director to 
        appoint a receiver may be set aside under this subsection only 
        if the court finds that the decision was arbitrary, capricious, 
        an abuse of discretion, or otherwise not in accordance with 
        applicable laws.
            (4) Limitation on jurisdiction.--Except as otherwise 
        provided in this subsection, no court may take any action 
        regarding the removal of a receiver or otherwise restrain or 
        affect the exercise of powers or functions of a receiver.

SEC. 316. ORDER APPOINTING RECEIVER.

    (a) In General.--An order appointing a receiver shall specify 
whether the receiver is to act to rehabilitate or to liquidate the 
reinsurer.
    (b) Regular Accounting to Court.--The order appointing the Director 
as receiver shall require regular accounting to the court of the 
receiver's administration of the reinsurer's assets including, but not 
limited to, a listing of all funds received or disbursed by the 
receiver during the period covered by the report. Accounting shall be 
at such intervals as the court specifies in its order or by rule, but 
no less frequently than every quarter.
    (c) Copy of Report to State Insurance Regulator.--A copy of the 
accounting reports shall be provided to the appropriate State insurance 
regulators in the State where the reinsurer transacts any reinsurance 
business.

SEC. 317. EFFECT OF ORDER.

    (a) Transfer of Control.--The order appointing the Director as 
receiver shall have the effect of immediately transferring to the 
receiver the possession and control and the unconditional right to 
possession and control of all the business, assets, contract and rights 
of action, books, records, and affairs of the reinsurer, wherever 
located.
    (b) No Breach of Contract.--The entry of any order appointing the 
Director as receiver shall not constitute an anticipatory breach of any 
contract of the reinsurer, nor provide grounds for revocation or 
cancellation of any such contract other than by the receiver.
    (c) Rights and Liabilities.--Upon issuance of the order under 
subsection (a), the rights, and liabilities of the reinsurer and of its 
creditors, and all other persons interested in its estate, shall be 
fixed as of the date of entry of the order.

SEC. 318. JURISDICTION OVER PROPERTY OF REINSURER.

    The filing of a petition under section 315 shall immediately vest 
the district court with exclusive jurisdiction over the reinsurer and 
its property wherever located and over all parties to the proceedings 
by which the receiver acquired the right to possession and control of 
the business, assets and affairs of the reinsurer and shall suspend the 
further jurisdiction of other courts and administrative bodies with 
respect to such proceeding.

SEC. 319. EXAMINATIONS.

    The Director may examine and supervise a reinsurer in receivership 
during the period in which the reinsurer continues to operate as a 
going concern.

SEC. 320. EXPENSES OF ESTABLISHING RECEIVERSHIP.

    All expenses of the receiver or any person acting under the 
receiver's authority and direction in the taking possession of the 
reinsurer and of conducting the proceedings placing it in receivership, 
of obtaining the appointment of the Director as receiver, in the 
administration of the receivership, and in the conduct of all 
proceedings related to it, shall be paid out of the funds or assets of 
the reinsurer.

SEC. 321. COMPENSATION OF RECEIVER AND EMPLOYEES.

    A receiver and professional employees (other than Federal 
employees) shall be compensated for activities conducted as receiver. 
Compensation may not be provided in amounts greater than the 
compensation paid to employees of the Federal Government for similar 
services.

SEC. 322. STANDING OF GUARANTY ASSOCIATIONS.

    Any guaranty association shall have standing to appear in any court 
proceeding concerning the rehabilitation or liquidation of a reinsurer 
if such association has paid guaranty obligations for which it has not 
been reimbursed or is or may become liable for as guarantor of 
obligations of the reinsurer in rehabilitation or liquidation.

SEC. 323. APPLICABILITY OF RECEIVERSHIP TO FOREIGN REINSURER.

    The Director shall be appointed as receiver under this Act for a 
foreign reinsurer or insurer licensed under section 308A or 308B to the 
extent of its assets, operations, and business in the United States. To 
the extent that such assets are insufficient to cover claims against 
the foreign reinsurer or insurer, the Director may bring an action in 
the United States district court with jurisdiction over the 
receivership to recover amounts due and owing.

SEC. 324. STAY OF ACTIONS.

    (a) In General.--The entry of an order appointing the Director as 
receiver shall operate as a stay of the commencement or continuation of 
any action or proceeding in any Federal or State court, or any 
administrative or other proceeding, against the insolvent reinsurer or 
against an insured of the insurer on a claim for which the reinsurer 
may be liable, or against the Director as receiver, except as provided 
in subsection (b).
    (b) Judicial Relief From Stay.--The district court shall have power 
to grant relief from the stay provided in subsection (a) in such cases, 
and upon such terms, as the court determines to be consistent with the 
preservation of assets and the efficient administration of the estate 
of the reinsurer. Such relief may be granted upon the application of 
any party in interest, and may be granted as to particular cases or as 
to classes of cases as may be prescribed by the court's order.
    (c) Actions by the Receiver.--Upon issuance of an order appointing 
the Director as receiver, the Director may within 2 years from such 
order, or such other longer time as applicable law may permit, 
institute an action or proceeding on behalf of the estate of the 
reinsurer upon any cause of action against which the period of 
limitation fixed by applicable law has not expired at the time of the 
filing of the petition upon which such order is entered.
    (d) Statute of Limitations.--No statute of limitations or defense 
of laches shall run with respect to any cause of action against a 
reinsurer between the filing of a petition for receivership and the 
denial of the petition. Any action against the reinsurer that might 
have been commenced when the petition was filed may be commenced within 
60 days after the petition is denied.

SEC. 325. COOPERATION OF OFFICERS, OWNERS AND EMPLOYEES.

    Any officer, manager, director, trustee, owner, employee or agent 
of any reinsurer, or any other person with authority over or in charge 
of any segment of the reinsurer's affairs including any person who 
exercises control directly or indirectly over activities of the 
reinsurer through any holding company or other affiliate of the 
reinsurer, shall cooperate with the receiver. For purposes of this 
section, the term ``cooperate'' shall include, but shall not be limited 
to, the following:
            (1) To reply promptly in writing to any inquiry from the 
        receiver requesting such a reply.
            (2) To make available to the receiver any books, accounts, 
        documents, or other records or information or property of or 
        pertaining to the reinsurer and in the possession, custody or 
        control of such persons.

SEC. 326. INJUNCTIONS AND ORDERS.

    (a) In General.--The United States District Court upon application 
of the Director, as receiver, may grant injunctions and orders directed 
to any and all courts, persons, and parties as necessary to confirm or 
secure such stays of proceedings, or to extend any such stay upon a 
showing by the Director that additional time is necessary for it to 
participate completely in the further conduct of the action or 
proceeding.
    (b) Types of Injunctions.--The Director, as receiver, may at any 
time apply for such restraining orders, preliminary and permanent 
injunctions, and other orders as may be deemed necessary and proper to 
prevent--
            (1) the transaction of further business by or on behalf of 
        the reinsurer;
            (2) the transfer of property by or on behalf of the 
        reinsurer;
            (3) interference with the receiver or with a proceeding 
        under this Act;
            (4) waste of the reinsurer's assets;
            (5) dissipation and transfer of bank accounts of the 
        reinsurer;
            (6) the institution or further prosecution of any actions 
        or proceedings against the reinsurer or the receiver;
            (7) the obtaining of preferences, judgments, attachments, 
        garnishments or liens against the reinsurer, or its assets;
            (8) the levying of execution against the reinsurer, or its 
        assets;
            (9) the making of any sale or deed for nonpayment of taxes 
        or assessments that would lessen the value of the assets of the 
        reinsurer;
            (10) the withholding from the receiver of books, accounts, 
        documents, or other records relating to the reinsurer; or
            (11) any other threatened or contemplated action that might 
        lessen the value of the reinsurer's assets or prejudice the 
        rights of creditors, shareholders, or the administration of any 
        proceeding under this title.
    (c) Bonds or Other Security.--The court shall not require the 
receiver to submit a bond or other security as a condition of issuing 
an order under this section.
    (d) Payment of Creditors.--The Director may require a receiver to 
set aside and make available for payment to creditors any amounts that 
the Director determines may safely be used for such purpose. All 
creditors who are similarly situated shall be treated in a similar 
manner.

SEC. 327. PENDING LITIGATION.

    The Director shall take such action respecting all pending 
litigation as it deems necessary in the interests of justice and for 
the protection of creditors and the public.

SEC. 328. CONFLICTS OF INTEREST AND FINANCIAL DISCLOSURE.

    A receiver shall be subject to any laws and regulations relating to 
conflicts of interest and financial disclosure that apply to employees 
of the Office.

SEC. 329. PROCEEDING AGAINST CULPABLE PERSONS.

    If it appears to the receiver that there has been criminal or 
tortious conduct, or breach of any contractual or fiduciary obligation 
detrimental to the reinsurer by any officer, manager, agent broker, 
employee or other person, the receiver may refer such matter to the 
Commission.

SEC. 330. LIABILITY PROTECTION FOR RECEIVERS.

    (a) Federal Agencies and Employees.--In any case in which a 
receiver appointed under this title is a Federal agency or an officer 
or employee of the Federal Government, the provisions of chapters 161 
and 171 of title 28, United States Code, shall apply with respect to 
the liability of the receiver for acts or omissions performed pursuant 
to and in the course of the duties and responsibilities of the 
receivership.
    (b) Other Receivers.--In any case where the receiver is not a 
receiver described in subsection (a), the receiver shall not be 
personally liable for damages in tort or otherwise for acts or 
omissions performed pursuant to and in the course of the duties and 
responsibilities of the receivership, unless such acts or omissions 
constitute gross negligence or any form of intentional tortious conduct 
or criminal conduct.
    (c) Indemnification.--The Director, with the approval of the 
Commission, may indemnify the receiver on such terms as the Commission 
considers appropriate.

SEC. 331. POWERS OF EXAMINATION; SUBPOENAS.

    The Director may take depositions, subpoena witnesses or 
documentary evidence, administer oaths and examine under oath any 
person being examined or relative to the subject of any hearing or 
investigation. The subpoena shall be served in the same manner as if 
issued by the Commission.

SEC. 332. GROUNDS FOR THE APPOINTMENT OF RECEIVER FOR REHABILITATION.

    (a) In General.--The Director may, after providing written notice 
under subsection (c), file a petition in a United States District Court 
to be appointed a receiver of a reinsurer for purposes of 
rehabilitation upon a determination in writing that--
            (1) the reinsurer is not likely to pay its obligations in 
        the normal course of business;
            (2) the reinsurer has incurred or is reasonably likely to 
        incur losses that would deplete substantially all of its 
        capital and is unlikely that the reinsurer will replenish its 
        capital within a reasonable period;
            (3) the reinsurer has concealed or is concealing books, 
        papers, records, or assets of the reinsurer that are material 
        to the discharge of the Director's responsibilities under this 
        subtitle, or has refused or is refusing to submit such books, 
        papers, records, or information regarding the affairs of the 
        reinsurer for inspection to the Director upon request;
            (4) the reinsurer has willfully violated, or is willfully 
        violating, a final cease-and-desist order;
            (5) the reinsurer is in such condition that the further 
        transaction of business would be hazardous financially to its 
        creditors, or the public;
            (6) there is reasonable cause to believe that there has 
        been embezzlement from the reinsurer, wrongful sequestration or 
        diversion of its assets, or forgery, fraud affecting it or 
        other illegal conduct in, by, or with respect to it that if 
        established would endanger assets in an amount threatening the 
        solvency of the reinsurer;
            (7) without first obtaining the written consent of the 
        Director, the reinsurer has transferred, or attempted to 
        transfer, in a manner in violation of any solvency regulation 
        or order of the Commission, substantially its entire property 
        or business, or has entered into any transaction the effect of 
        which is to merge, consolidate, or reinsure substantially its 
        entire property or business in or with the property or business 
        of any other person;
            (8) the reinsurer has failed to file its annual report or 
        other financial report required by statute within the time 
        allowed by law and, after written demand by the Director, has 
        failed to give an adequate explanation immediately;
            (9) the reinsurer has neglected or refused to comply with 
        an order of the Director to cure within the time prescribed by 
        the Director any deficiency, whenever its capital and minimum 
        required surplus, is below statutory requirements; and
            (10) the reinsurer is found to be in such condition that it 
        could not meet the requirements for organization and 
        authorization as required by applicable law.
    (b) Consent of the Reinsurer.--Notwithstanding subsection (a), the 
Director may file a petition to be appointed a receiver for a 
reinsurer, if a majority of the members of its board of directors or a 
majority of its shareholders by an affirmative vote consent to such 
appointment.
    (c) Notice.--Upon making a determination under subsection (a) of 
this subsection to file a petition to be appointed a receiver for a 
reinsurer, or upon consent of the reinsurer under subsection (b) to 
such an appointment, the Director shall provide written notice to the 
reinsurer--
            (1) that the Director will seek to be appointed as receiver 
        for the reinsurer for purposes of rehabilitation; and
            (2) stating the reasons for the appointment of such 
        receiver.

SEC. 333. REHABILITATION ORDERS.

    An order to rehabilitate a reinsurer shall direct the receiver 
forthwith to take possession of the assets of the entity and to 
administer them under the general supervision of the United States 
District Court which ordered the rehabilitation. The filing or 
recording of the order with the clerk of the court or recorder of deeds 
of the county in which the principal business of the insurer of 
reinsurer is conducted, or the county in which its principal office or 
place of business is located, shall impart the same notice as a deed, 
bill of sale, or other evidence of title duly filed or recorded with 
the recorder of deeds would have imparted.

SEC. 334. POWERS OF RECEIVER FOR PURPOSES OF REHABILITATION.

    (a) General Powers.--A receiver shall have all the powers of the 
shareholders, directors, and officers of the reinsurer under 
receivership and may operate the reinsurer in the name of the 
reinsurer. The receiver may take such action as it deems necessary or 
appropriate to reform and revitalize or rehabilitate the reinsurer. It 
shall have full power to direct and manage, to hire and discharge 
employees subject to any contract rights they may have, and to deal 
with the property of the reinsurer.
    (b) Reorganization, Consolidation, Merger and Other 
Transformation.--If the receiver determines that reorganization, 
consolidation, merger, or other transformation of the reinsurer is 
appropriate, it shall prepare a plan to effect such changes. Upon 
application of the receiver for approval of the plan, and after such 
notice and hearings as the court may prescribe, the court may either 
approve or disapprove the plan proposed, or may modify it and approve 
it as modified. Any plan approved under this section shall be, in the 
judgment of the court, fair and equitable to all parties concerned. If 
the plan is approved, the receiver shall carry out the plan.
    (c) Additional Power.--A receiver may avoid any security interest 
taken by a creditor with the intent to hinder, delay, or defraud the 
reinsurer.
    (d) Limitations.--A receiver shall be subject to any rules, 
regulations, and orders issued from time to time by the Director and, 
except as otherwise specifically provided in rules, regulations, or 
orders, shall have the same rights and privileges and be subject to the 
same duties, restrictions, penalties, conditions, and limitations 
applicable to directors, officers, or employees of the reinsurer.
    (e) Enforcement of Contracts.--
            (1) In general.--A receiver may enforce any contract 
        described in paragraph (2), notwithstanding any provision of 
        the contract providing for the termination, default, 
        acceleration or other exercise of rights upon, or solely by 
        reason of, the insolvency of the reinsurer or the appointment 
        of a receiver.
            (2) Enforceable contracts.--Any contract shall be 
        enforceable under paragraph (1), if the receiver--
                    (A) determines that the continued enforceability of 
                the contract is necessary to achieve the purpose of 
                receivership; and
                    (B) specifically provides for the enforceability of 
                the contract in a regulation or order, issued for the 
                purpose of this subsection, which describes such 
                contract.
            (3) Applicability.--This subsection and any regulation 
        issued under this subsection shall apply only to contracts 
        entered into, modified, extended, or renewed after the 
        effective date of the regulation or order.

SEC. 335. TERMINATION OF THE RECEIVERSHIP FOR REHABILITATION.

    (a) Discretionary.--At any time the receiver determines that 
termination of a receivership for purposes of rehabilitation is in the 
public interest and may safely be accomplished, the receiver may file a 
petition in United States District Court to terminate the receivership 
and permit the reinsurer to resume the transaction of business subject 
to such terms, conditions and limitations as the receiver may 
prescribe.
    (b) Terms.--Any terms, conditions, and limitations imposed by the 
receiver upon termination of a receivership shall be enforceable and 
reviewable.
    (c) Petition the Court.--
            (1) The receiver or the board of directors of the reinsurer 
        may at any time petition the district court for an order 
        terminating the receivership for purposes of rehabilitation on 
        the grounds that the reinsurer may safely recommence the 
        transaction of business.
            (2) If any such petition is denied, another such petition 
        shall not be made by the board of directors of the reinsurer 
        for at least 6 months. The district court may order payment 
        from the estate of the reinsurer of the costs and other 
        expenses of such petition.
            (3) If the district court finds that rehabilitation has 
        been accomplished and that the reinsurer may safely return to 
        the transaction of the reinsurance business under the control 
        of its owners and directors, it shall order that the reinsurer 
        and its owners be restored to possession of its property and 
        the control of the business.

SEC. 336. LIQUIDATION.

    (a) Order.--Whenever the receiver believes further efforts to 
rehabilitate the reinsurer would substantially increase the risk of 
financial loss or would be futile, it may petition the district court 
for an order of liquidation. The district court shall permit the 
directors of the reinsurer to take such actions as are reasonably 
necessary to defend against the petition and may order the payment from 
the estate of the reinsurer of such costs and other expenses of defense 
as the court deems appropriate.
    (b) Grounds for Liquidation.--The receiver may petition the 
district court for an order directing it to liquidate the reinsurer on 
the grounds--
            (1) that the reinsurer is insolvent (and unable to pay 
        debts as they become due); or
            (2) that the reinsurer is in such condition that the 
        further transaction of business would be hazardous, financially 
        or otherwise.
    (c) Receiver.--A court order to liquidate the business of the 
reinsurer shall appoint the Director as receiver for liquidation.

SEC. 337. LIQUIDATION ORDERS.

    (a) In General.--The filing or recording of the order of 
liquidation with the clerk of the court and the recorder of deeds of 
the county in which the reinsurer's principal office or place of 
business is located, or, in the case of real estate, with the recorder 
of deeds of the county where the property is located, shall impart the 
same notice as a deed, bill of sale, or other evidence of title duly 
filed or recorded with that recorder of deeds would have imparted.
    (b) Fixing of Rights and Liabilities.--Upon issuance of the order, 
the rights and liabilities of the reinsurer in liquidation and of its 
creditors, shareholders, members, and all other persons interested in 
its estate shall become fixed as of the date of entry of the order of 
liquidation.
    (c) Foreign Insurer or Reinsurer.--An order to liquidate the 
business of a foreign insurer or reinsurer shall be in the same terms 
and have the same legal effect as an order to liquidate an insurer or 
reinsurer licensed in the United States, except that the assets, 
operations, and business in the United States shall be the only assets, 
operations, and business included in the order.

SEC. 338. POWERS OF THE DIRECTOR AS RECEIVER FOR LIQUIDATION.

    The Director as receiver shall have the power--
            (1) to employ employees, agent, attorney, actuaries, 
        accountant, appraisers, consultants and such other personnel as 
        it may deem necessary to conduct the liquidation;
            (2) to appoint, with the approval of the court, an advisory 
        committee of representatives of claimants, creditors, and other 
        persons or groups with substantial interest in the liquidation 
        proceeding, if such committee be deemed necessary;
            (3) to audit the books and records of the holding company 
        (when applicable), affiliates, and all agents of the reinsurer 
        insofar as those records relate to the business activities of 
        the reinsurer;
            (4) to collect all assets, debts and moneys due and claims 
        belonging to the reinsurer, wherever located;
            (5) to conduct public and private sales of the property of 
        the reinsurer;
            (6) to continue to prosecute and to institute in the name 
        of the reinsurer or in its own name any and all suits and other 
        legal proceedings, and to abandon the prosecution of claims it 
        deems unprofitable to pursue further;
            (7) to assert all defenses available to the reinsurer as 
        against third persons, including statutes of limitation and 
        statutes of fraud and the defense of usury. A waiver of any 
        defense by the reinsurer after a petition for liquidation has 
        been filed shall not bind the Director;
            (8) to promulgate rules and regulations with the approval 
        of the Commission regarding the allowance or disallowance of 
        claims and providing for administrative determination of claims 
        and review of such determination;
            (9) to acquire, encumber, lease, improve, sell, transfer, 
        abandon, or otherwise dispose of or deal with, any property of 
        the reinsurer at its market value or upon such terms and 
        conditions as are fair and reasonable;
            (10) to execute, acknowledge, and deliver any deed, 
        assignment, release, and other instrument necessary or proper 
        to effectuate any sale of property or other transaction in 
        connection with the liquidation;
            (11) to hold hearings, to subpoena witnesses to compel 
        their attendance, to administer oaths, to examine any person 
        under oath, and, in connection therewith, to require the 
        production of any books, papers, records, or other documents 
        which the receiver deems relevant to the liquidation;
            (12) to remove any record and property of the reinsurer to 
        such place as may be convenient for the purposes of efficient 
        and orderly execution of the liquidation;
            (13) to prosecute any action or right of action which may 
        exist on behalf of the creditors, or shareholders of the 
        reinsurer against any of its officers or any other person;
            (14) to borrow money on the security of the reinsurer's 
        assets or without security and to execute and deliver all 
        documents necessary to that transaction for the purpose of 
        facilitating the liquidation. Any such funds borrowed may be 
        repaid as an administrative expense;
            (15) to enter into such contracts as are necessary to carry 
        out the order to liquidate and to affirm or disavow any 
        contract to which the reinsurer is a party;
            (16) to deposit in one or more banks such sums as are 
        required for meeting current administrative expenses and 
        dividend distributions;
            (17) to invest all sums not currently needed;
            (18) to file any necessary documents for recording in the 
        office of any recorder of deeds or record office wherever 
        property of the reinsurer is located;
            (19) to exercise and enforce all the rights, remedies, and 
        powers of any creditor, shareholder, or member, including any 
        power to avoid any transfer or lien that may be given by the 
        law;
            (20) to intervene in any proceeding wherever instituted 
        that may affect the reinsurer or its assets; and
            (21) to exercise all powers now held or hereafter conferred 
        upon a receiver by the laws of the United States.

SEC. 339. DISSOLUTION OF REINSURER.

    The receiver may petition for an order dissolving the corporate 
existence of a reinsurer, or its United States branch in the case of a 
foreign insurer or reinsurer, at the time the receiver applies for a 
liquidation order. The court shall order dissolution of the reinsurer 
upon petition by the receiver upon or after the granting of a 
liquidation order.

SEC. 340. OBLIGATION OF REINSURER.

    In the event of a receivership, the reinsurance recoverables due 
under any reinsurance contract shall be payable by the reinsurer 
directly to the receiver. Subject to the right of setoff and 
verification of coverage under the relevant contract, the assuming 
reinsurer shall pay its share of the loss at the time that the amount 
of the claim is ultimately determined in the liquidation proceeding. 
The receiver shall, within a reasonable time after the initiation of 
the receivership, provide the assuming reinsurer with claim information 
in accordance with the reinsurance contracts. During the pendency of 
any such claim, the assuming reinsurer may investigate the claim and, 
at its own expense, interpose in the proceeding where the claim is to 
be adjudicated any defenses which it may deem available to the ceding 
insurer or reinsurer, or its receiver. Expenses of investigation and 
defense incurred by the assuming reinsurer shall be chargeable against 
the ceding insurer or reinsurer as part of the administrative expense 
of liquidation, in proportion to the benefit accruing to the ceding 
insurer or reinsurer solely as a result of the defense undertaken by 
the assuming reinsurer. The reinsurance proceeds shall be payable as 
provided in the agreement, except when such assuming reinsurer has a 
valid contractual obligation to pay reinsurance proceeds to a party 
other than the ceding insurer or reinsurer.

SEC. 341. REINSURER'S LIABILITY.

    The amount recoverable by the receiver from a reinsurer shall not 
be reduced as a result of delinquency proceedings regardless of any 
provision in the reinsurance contract or other agreement. Payment made 
directly to an insured or other creditor shall not diminish the 
reinsurer's obligation to such ceding insurer's or reinsurer's estate 
except when such reinsurer has a valid contractual obligation to pay 
reinsurance proceeds to a party other than the insurer or reinsurer.

SEC. 342. NOTICE TO CREDITORS AND OTHERS.

    (a) Notice of Liquidation.--The Director shall give or cause to be 
given notice of the liquidation order as soon as possible--
            (1) by first class mail and either by telegram or telephone 
        to the State Insurance Department of each jurisdiction in which 
        the reinsurer is doing business;
            (2) by first class mail to all insurance agents or brokers 
        of the reinsurer;
            (3) by first class mail to all persons known or reasonably 
        expected to have claims against the reinsurer, at their last 
        known address as indicated by the records of the reinsurer; and
            (4) by publication in a newspaper of general circulation in 
        such other locations as the receiver deems appropriate.
    (b) Filing Claims.--Except as otherwise established by the receiver 
with approval of the court, notice to potential claimants under this 
Act shall require claimants to file with the receiver their claims 
together with proper proof, by a date specified in the notice which 
shall be not less than 90 days after the publication of such notice. 
All claimants shall have a duty to keep the liquidator informed of any 
changes of address.

SEC. 343. PROOF OF CLAIMS.

    The Commission shall promulgate rules and regulations regarding--
            (1) the filing of claims;
            (2) information that must be contained in a proof of claim, 
        including any written instruments or other documents that 
        support the claim;
            (3) third-party claims;
            (4) secured creditor's claims;
            (5) claims of surety; and
            (6) disputed claims.

SEC. 344. PAYMENT OF CLAIMS.

    (a) Payment of Claims by Director.--In the case of a liquidation of 
any insolvent reinsurer, payment of claims against the reinsurer shall 
be made by the Director as soon as possible, either by cash or any 
other means determined by the rules and regulations promulgated by the 
Commission.
    (b) Disputed Claims.--In the case of any disputed claim relating to 
an reinsurer, the Director may resolve such disputed claims in 
accordance with regulations promulgated by the Commission. If the 
Commission has not promulgated procedures for resolving disputed 
claims, the Director may require the final determination of a court of 
competent jurisdiction before paying any such claims.
    (c) Judicial Review of Final Determination.--Final determination 
made by the Director shall be reviewable in accordance with chapter 7 
of title 5, United States Code (5 U.S.C. 701 et seq.), the United 
States Court of Appeals for the District of Columbia or the Court of 
Appeals for the Federal Judicial Circuit where the district court that 
ordered the liquidation is located. Any request for review of a final 
determination by the Director shall be filed with the appropriate 
circuit court of appeals not later than 60 days after such 
determination is ordered.

SEC. 345. DUTIES OF AGENTS AND INTERMEDIARIES.

    Every person who receives notice that a reinsurer which the person 
represents as an agent or intermediary is the subject of a liquidation 
order shall within 30 days of such notice provide to the Director the 
information in the agency's or intermediary's records related to any 
contract agreed to by the reinsurer through the agent.

SEC. 346. FRAUDULENT TRANSFERS.

    (a) In General.--Every transfer made and every obligation incurred 
by a reinsurer within 3 years prior to the filing of a successful 
petition for liquidation under this Act is fraudulent as to then 
existing and future creditors if made or incurred without fair 
consideration, or with actual intent to hinder, delay, or defraud 
either existing or future creditors. A transfer made or an obligation 
incurred by an insurer ordered to be liquidated under this Act, which 
is fraudulent under this section, may be avoided by the liquidator, 
except as to a person who in good faith is a purchaser, lienor, or 
obligee for a present fair equivalent value, and except that any 
purchaser, lienor or obligee, who in good faith has given a 
consideration less than fair for such transfer, lien or obligation, may 
retain the property, lien or obligation as security for repayment. The 
court may, on due notice, order any such transfer or obligation to be 
preserved for the benefit of the estate, and in that event, the 
receiver shall succeed to and may enforce the rights of the purchaser, 
lienor, or obligee.
    (b) Personal Liability.--Every person receiving any property from 
the reinsurer or any benefit thereof which is a fraudulent transfer 
under this title shall be personally liable and shall be bound to 
account to the liquidator.
    (c) Regulations by Commission.--The Commission shall promulgate 
such rules and regulations that are necessary to implement this 
section.

SEC. 347. VOIDABLE PREFERENCES AND LIENS.

    (a) In General.--A preference is a transfer of any of the property 
of a reinsurer to or for the benefit of a creditor, for or on account 
of an antecedent debt, made by the reinsurer within 1 year before the 
filing of a successful petition for liquidation under this Act, the 
effect of which transfer may be to enable the creditor to obtain a 
greater percentage of his debt than another creditor of the same class 
would receive. If a liquidation order is entered while the reinsurer is 
already subject to a receivership order, then such transfers shall be 
deemed preferences if made within 1 year before the filing of the 
successful petition for receivership, or within 2 years before the 
filing of the successful petition for liquidation, whichever time is 
shorter.
    (b) Recovery of Property.--Where the preference is voidable, the 
receiver may recover the property or, if it has been converted, its 
value, from any person who has received or converted the property; 
except where a bona fide purchaser or lienor has given less than fair 
value, he shall have a lien upon the property to the extent of the 
consideration actually given by him. Where a preference by way of lien 
or security title is voidable, the court may on due notice order the 
lien or title to be preserved for the benefit of the estate, in which 
even the lien or title shall pass to the liquidator.
    (c) Regulations by the Commission.--The Commission shall promulgate 
rules and regulations specifying the circumstances under which a 
preference may be voided.

SEC. 348. SETOFFS.

    (a) In General.--Mutual debts or mutual credits, whether arising 
out of one or more reinsurance or other contracts between the reinsurer 
in receivership and another person shall be set off and the balance 
only shall be allowed or paid.
    (b) Limitations on Setoff.--No setoff shall be allowed in favor of 
a person if--
            (1) the circumstances creating the obligation of the 
        insurer or reinsurer in receivership occurred after the 
        effective date of the cancellation or termination of policies 
        in effect at the time of the entry of the receivership order;
            (2) the obligation of the insurer or reinsurer to the 
        person was purchased by or transferred to the person with the 
        intent of its being used as a setoff;
            (3) the obligation of the insurer or reinsurer is owed to 
        an affiliate of the person or to any other entity or 
        association other than the person;
            (4) the obligation of the person is owed to an affiliate of 
        the insurer or reinsurer, or to any other person;
            (5) the obligation of the person is to pay an assessment 
        levied against the members or subscribers of the insurer or 
        reinsurer, or is to pay a balance upon a subscription to the 
        capital stock of the insurer or reinsurer, or is in any other 
        way in the nature of a capital contribution; or
            (6) the obligations between the person and the insurer or 
        reinsurer arise out of transactions where either the person of 
        the insurer or reinsurer has assumed risks and obligations from 
        the other party and then has ceded back to that party 
        substantially the same risks and obligations.
    (c) Debts Due and Payable.--The receiver shall provide persons 
claiming a setoff with the accounting statements identifying debts 
which are due and payable. Where a person owes amounts which are due 
and payable, against which the person asserts setoff of mutual credits 
which may become due and payable from the insurer or reinsurer in 
receivership in the future, the person shall promptly pay to the 
receiver the amounts due and payable. The receiver shall promptly and 
fully refund, to the extent of the person's prior payments, any mutual 
credits that become due and payable to the person by the insurer or 
reinsurer in receivership.

SEC. 349. RECOVERY OF PREMIUMS OWED.

    The Commission shall promulgate the rules and regulations regarding 
the recovery of premiums owed to a reinsurer that is being liquidated 
by the Director.

SEC. 350. PRIORITY OF DISTRIBUTION.

    The priority of distribution of claims from the reinsurer's estate 
shall be in accordance with the order in which each class of claims is 
herein set forth. Every claim in each class shall be paid in full or 
adequate funds retained for such payment before the members of the next 
class receive any payment. No subclasses shall be established within 
any class. The order of distribution of claims shall be:
            (1) Class 1.--The costs and expenses of administration 
        during liquidation, including but not limited to--
                    (A) the actual and necessary costs of preserving or 
                recovering the assets of the insurer;
                    (B) compensation for all authorized services 
                rendered in the liquidation, including reasonable 
                compensation to the receiver as approved by the court 
                to cover the portion of the total expenses of the 
                receiver which are reasonably related to the conduct by 
                it of the rehabilitation or liquidation of the 
                reinsurer, without provision for any profit to the 
                receiver;
                    (C) any necessary filing fees;
                    (D) the fees and mileage payable to witnesses; and
                    (E) reasonable attorney's fees and other 
                professional services rendered in the rehabilitation 
                and liquidation.
            (2) Class 2.--Reasonable compensation to employees for 
        services performed to the extent that they do not exceed 2 
        months of monetary compensation and represent payment for 
        services performed within 1 year before the filing of the 
        petition for liquidation. Principal officers and directors 
        shall not be entitled to the benefit of this priority except as 
        otherwise approved by the receiver and the court. Such priority 
        shall be in lieu of any similar priority which may be 
        authorized by law as to wages or compensation of employees.
            (3) Class 3.--All claims under reinsurance contracts issued 
        by the reinsurer, unearned premiums and other premium refunds.
            (4) Class 4.--Claims for any amount due an assuming 
        reinsurer or ceding insurer for sums due under reinsurance 
        contracts entered into with the reinsurer in receivership.
            (5) Class 5.--Claims for punitive or exemplary damages and 
        any claim for any amount due an insurer, insurance pool, or 
        underwriting association as subrogated recoveries, 
        contribution, indemnification, or otherwise. All other claims 
        of general creditors not falling within any other priority 
        under this section, including claims for taxes and debts due 
        the Federal Government or any State or local government.
            (6) Class 6.--Claims filed late and all other claims other 
        than claims under classes 7 and 8.
            (7) Class 7.--Surplus or contribution notes, or similar 
        obligations, and premium refunds on assessable policies.
            (8) Class 8.--The claims of stockholders or other owners in 
        their capacity as shareholders.

SEC. 351. UNCLAIMED AND WITHHELD FUNDS.

    All unclaimed funds subject to distribution remaining in the 
receiver's possession at the time it applies to the court for discharge 
including the amount distributable to any creditor, shareholder, or 
other person who is unknown or cannot be found, shall be paid into the 
court and disposed of as under chapter 129 of title 28, United States 
Code.

SEC. 352. TERMINATION OF PROCEEDINGS.

    (a) Business Concluded.--When all business regarding the 
liquidation of a reinsurer has been concluded, the Director as receiver 
shall apply to the court for discharge.
    (b) Petition To Reopen.--After the liquidation proceeding has been 
terminated and the receiver discharged, the Director or other 
interested party may at any time petition the district court to reopen 
the proceedings for good cause, including the discovery of additional 
assets. If the court is satisfied that there is justification for 
reopening, it shall so order.

SEC. 353. CONSTRUCTION.

    Nothing in this Act may be construed as being in conflict with any 
treaty or other international agreement to which the United States is a 
party.

SEC. 354. LIMITATION ON TRANSACTION OF REINSURANCE.

    No insurer or reinsurer shall transact the business of reinsurance 
in the United States without complying with the applicable provisions 
of this Act.

SEC. 355. PREEMPTION.

    This Act is intended to preempt all State laws regulating 
reinsurers.

SEC. 356. EXISTING LICENSES AND CONTRACTS.

    (a) Disclaimer.--No provision of this title shall apply with 
respect to the transaction of reinsurance until 2 years following the 
date of enactment.
    (b) Contracts.--No provision of this title shall be deemed to 
modify or invalidate any contract lawfully in force prior to 2 years 
following the date of enactment of this title.

SEC. 357. PROTECTION OF CONFIDENTIAL INFORMATION.

    Section 1905 of title 18, United States Code, is amended by 
inserting ``a consultant to the Office of Reinsurance Regulation'' 
after ``or agency thereof,''.

           TITLE IV--NATIONAL INSURANCE GUARANTY CORPORATION

SEC. 401. ESTABLISHMENT OF THE CORPORATION.

    (a) In General.--There is hereby established a non-profit 
Corporation to be known as the ``National Insurance Guaranty 
Corporation'' (herein referred to as ``the Corporation'') which shall 
be an instrumentality of the United States.
    (b) Status.--The Corporation shall be deemed to be an agency of the 
United States for purposes of subchapter II of chapter 5 and chapter 7 
of title 5, United States Code, when it is acting as a corporation. The 
Corporation shall also be deemed to be an agency of the United States 
when it is acting as a liquidator of an insolvent member insurer.
    (c) Duties.--The Corporation shall--
            (1) provide a program for the payment of covered claims 
        under certain life, health, and property and casualty insurance 
        policies, and any other insurance policies deemed appropriate 
        by the Board of Directors;
            (2) assess the cost of such program among member insurers;
            (3) provide a uniform national system of administration for 
        the liquidation of insolvent member insurers; and
            (4) perform any other function authorized under this title.
    (d) Government Assistance.--The Corporation shall receive no 
financial assistance, direct or indirect from the United States except 
as provided by section 416 of this title.
    (e) Audit by the General Accounting Office.--The financial 
transactions of the Corporation shall be subject to audit by the 
General Accounting Office.

SEC. 402. DEFINITIONS.

    As used in this title, the term:
            (1) ``Member insurer'' or ``insurer'' means an insurer 
        which has an interstate insurance license.
            (2) ``State insurance regulator'' means State Insurance 
        Department.

SEC. 403. BOARD OF DIRECTORS.

    (a) Management.--The management of the Corporation shall be vested 
in a Board of Directors consisting of 7 members. The members shall be 
the 5 members of the Insurance Regulatory Commission, the Secretary of 
the Treasury, and the Comptroller of the Currency.
    (b) Chairperson.--The Chairperson of the Corporation shall be the 
Chairperson of the Insurance Regulatory Commission.
    (c) Compensation and Expenses.--Members of the Board of Directors 
shall receive allowances in accordance with subchapter I of chapter 57 
of title 5, United States Code, for necessary expenses of travel, 
lodging, and subsistence incurred in attending meetings and other 
activities of the Corporation, as set forth in the bylaws issued by the 
Corporation. Members of the Board of Directors shall receive no 
additional pay by reason of service on such Board.
    (d) Vacancy.--In the event of a vacancy in the Office of the 
Comptroller of the Currency or the Office of Secretary of the Treasury 
and pending the appointment of a successor, or during the absence or 
disability of the Comptroller of the Currency or the Secretary of the 
Treasury, the Acting Comptroller of the Currency or the Acting 
Secretary of the Treasury, as the case may be, shall be a member of the 
Board of Directors.

SEC. 404. DUTIES AND RESPONSIBILITIES OF THE BOARD.

    (a) In General.--The Board of Directors shall have the following 
duties and responsibilities with respect to the Corporation--
            (1) to establish the overall policies, strategies, and 
        goals for the Corporation;
            (2) to establish all rules, regulations, bylaws, 
        principles, procedures, and guidelines that may be adopted or 
        announced by the Corporation; and
            (3) to establish such national advisory and regional boards 
        as the Board of Directors determines to be appropriate.
    (b) Establishment of Fund Accounts and Claims Account.--The Board 
of Directors shall establish ``guarantee fund accounts'' (hereinafter 
referred to as ``fund accounts'') for the principal lines of insurance 
of life, health, property and casualty, and may establish within those 
fund accounts, separate ``claims accounts'' for each line of insurance 
to which this title applies. ``Line of insurance'' for purposes of this 
section shall mean a category of insurance to which premiums are 
allocated for purposes of reporting on the form of annual financial 
statement prescribed by the Insurance Regulatory Commission. The Board 
of Directors may establish claim accounts for such other lines of 
insurance as appropriate.
    (c) Directorates for Fund Accounts.--The Board of Directors shall 
appoint separate directorates for each fund account. Each directorate 
shall be responsible for the administration of the fund account under 
its authority. Each directorate shall consist of 5 members each and 
shall serve for a term of 4 years. Each directorate shall be 
compensated consistent with this Act.
    (d) Review of the Directorates.--The Board of Directors shall--
            (1) review the performance of each directorate on a 
        periodic basis including its work, management activities and 
        internal controls, and the performance of the directorates 
        relative to their approved budgets; and
            (2) require from each directorate any reports, documents, 
        and records it deems necessary to carry out its oversight 
        responsibilities.
    (e) Covered Policies and Contracts.--The Board of Directors shall 
establish the type of insurance policies and contracts that are covered 
under this title and the limits on the amount of benefits available 
pursuant to such coverage. Under no circumstances shall this title 
apply to any portion of a claim which is not based on an insurance 
policy or contract.
    (f) Reinsurance.--The Board of Directors shall determine to what 
extent, if any, reinsurance shall be covered under this title.
    (g) Assessments.--The Board of Directors shall establish the 
assessments that member insurers are required to pay pursuant to 
section 408 of this title.

SEC. 405. NATIONAL INSURANCE GUARANTY FUND.

    (a) Establishment of Fund.--There is hereby established a fund to 
be known as the National Insurance Guaranty Fund (hereinafter referred 
as ``the Fund'') which shall be used by the Corporation to carry out 
the purposes of this title. The Fund shall consist of all payments made 
by member insurers pursuant to assessments established by the Board of 
Directors under section 404(g), interest received on bank accounts or 
investments, amounts recovered under title V of this Act, and any other 
amounts consistent with this title.
    (b) Treasury Deposits.--All amounts described in paragraph (a) 
shall be deposited with the Treasurer of the United States for the 
account of the Corporation and may be expended by the Corporation to 
defray the expenses incurred in carrying out the provisions of this 
title and title V.
    (c) Availability of Fund.--Money in the Fund shall be available 
upon requisition by the Corporation without fiscal year limitation, for 
making payments on covered claims, for providing assistance and making 
expenditures in connection with the Corporation's liquidation 
responsibilities in title V, and for such administrative and other 
expenses incurred in carrying out the purposes of this title as it may 
determine to be proper. Such moneys shall be available for insolvencies 
which occur later than 2 years after the date of enactment of this Act.
    (d) Investments of the Fund.--The Board of Directors may authorize 
the Secretary of the Treasury to invest and reinvest such portions of 
the Fund as the Board may determine are not needed for current 
operations, in any interest-bearing securities of the United States or 
in any securities guaranteed as to both principal and interest by the 
United States or in bonds or other obligations which are lawful 
investments for fiduciary, trust and public funds of the United States, 
and the income therefrom shall constitute a part of the Fund.
    (e) Covered Claims.--Covered claims, including the direct expenses 
of handling such covered claims, which the Corporation pays or becomes 
obligated to pay by reason of its guaranty obligations, shall be 
allocated to the appropriate fund account, or where applicable, the 
appropriate claims account based upon rules and regulations promulgated 
by the Board of Directors. Claims covered by this title shall not 
include any amount awarded as punitive or exemplary damages, any amount 
sought as a return of premium under any retrospective rating plan, or 
any amount due any reinsurer, insurer, insurance pool, or underwriting 
association as subrogation recoveries or otherwise.
    (f) Amounts Recovered on Behalf of Fund.--Amounts recovered from 
any source as reimbursement, subrogation, deferred assessments, or 
other recovery of amounts previously paid out or incurred pursuant to 
the Corporations' guaranty obligations shall be credited to the 
appropriate fund account, or where applicable, the appropriate claims 
account which has been charged with the guaranteed claim.

SEC. 406. CORPORATE POWERS.

    (a) Corporate Body.--Upon the date of enactment of this Act, the 
Corporation shall become a corporate body and shall be an 
instrumentality of the United States, and as such shall have power--
            (1) to adopt, alter, and use a corporate seal;
            (2) to have succession until dissolved by an Act of 
        Congress;
            (3) to pay, as guarantor, claims against insolvent members 
        to the extent and in the manner provided by the rules and 
        regulations promulgated by the Corporation;
            (4) to make contracts, to execute all instruments necessary 
        and appropriate in the exercise of its power, to incur 
        liabilities, and to do any and all other acts and things as may 
        be necessary or incidental to the conduct of its business and 
        the exercise of all other rights and powers granted to the 
        Corporation by this Act;
            (5) to make advances or other payments;
            (6) to sue and be sued in its corporate capacity in any 
        court of competent jurisdiction;
            (7) to appoint such officers, employees, attorneys, agents, 
        adjusters, examiners, and other persons as may be necessary for 
        the performance of its duties, to define their duties, fix 
        their compensation, require bonds of them and fix the penalty 
        thereof, and to dismiss such officers or employees;
            (8) to conduct its business (including the carrying on of 
        operations and the maintenance of offices) and to exercise all 
        other rights and powers granted to it by this Act in any State 
        or other jurisdiction without regard to any qualification, 
        licensing or other statute in such State or other jurisdiction;
            (9) to acquire, hold, lease, purchase, improve, mortgage, 
        maintain or dispose of at public or private sale, real and 
        personal property, and otherwise exercise all the usual 
        incidents of ownership of property necessary and convenient to 
        the operations of the Corporation;
            (10) to levy assessments upon member insurers in the manner 
        and to the extent provided by the rules and regulations of the 
        Corporation, to collect, or enforce by legal proceedings, if 
        necessary, the payment of all assessment for which any insurer 
        may be liable under this title; to collect any other obligation 
        due to the Corporation or the Fund;
            (11) to pay the administrative expenses of the Corporation, 
        and to provide the funds necessary to discharge the 
        Corporation's liquidation obligations under title V of this 
        Act; and
            (12) to use the United States mails in the same manner and 
        under the same conditions as other departments and agencies of 
        the United States.
    (b) National Insurance Guaranty Corporation.--No individual, 
association, partnership, or corporation, other than the Corporation, 
shall hereafter use the words ``National Insurance Guaranty 
Corporation'' or any combination of such words, as the name or part 
thereof under which he or it shall do business. Any violation of this 
subsection shall be punishable by a fine of not more than $100,000 for 
each day during which such violation is committed.

SEC. 407. MEMBERSHIP.

    Member insurers of the Corporation shall be all insurers with an 
interstate insurance license. The Board of Directors shall prescribe 
such additional qualifications for membership as are appropriate for 
the protection of policyholders. Such additional qualifications shall 
be applicable to members 2 years after the adoption of any such 
additional qualification. Such additional qualification shall be 
reasonably related to the enhancement of the financial solidity of 
insurers and shall have uniform application.

SEC. 408. ASSESSMENTS.

    (a) In General.--All members of the Corporation shall be subject to 
assessments to cover administrative costs, guaranteed claims charged 
against the Fund, and any other expense deemed appropriate under this 
title and title V, as prescribed in the rules and regulations 
promulgated by the Corporation.
    (b) Reserve Accounts.--All member insurers shall pay the 
assessments determined under section 404(g) of this title and the 
moneys collected pursuant to such assessments shall be deposited in 
reserve accounts to be used for the purposes outlined in subsection 
(a).
    (c) Direct Premiums, Risk-Based Assessments.--Such assessments 
shall be based on an insurer's direct premiums, risk-based premiums, or 
any other standard determined by the Board of Directors.
    (d) Member Liability.--A member insurer shall have no liability, 
under any State law or State guaranty fund, for any assessments for an 
insurance insolvency which was not commenced on or before the date of 
enactment of this Act. A member insurer shall remain liable, 
notwithstanding its membership in the Corporation, for any assessments 
for which it would have been liable under any State law or State 
guaranty fund, for an insurance insolvency which was commenced on or 
before the date it became a member insurer of the Corporation.

SEC. 409. EXCHANGE OF INFORMATION.

    At the request of the Corporation, State insurance regulators and 
other State authorities shall furnish it with any records, reports, 
results of examinations and inspections, orders, recommendations, or 
other information in their possession relevant to the financial 
condition of a member.

SEC. 410. LIABILITY OF DIRECTORS AND OFFICERS OF THE CORPORATION.

    No director, officer, agent, or other representative of the 
Corporation shall be individually liable to any person, firm or 
corporation, including the Corporation for any act or omission to act, 
or for any liability incurred or assumed, on behalf of the Corporation. 
Any such liability so incurred or assumed shall be collectible only out 
of the Fund.

SEC. 411. TAX EXEMPTION.

    (a) Corporation Exempted From Taxes.--The Corporation, including 
its franchise, capital, reserves, surplus, and its income, shall be 
exempt from all taxation now or hereafter imposed by the United States, 
by any Territory, dependency, or possession thereof, or by any State, 
county, municipality, or local taxing authority, except that any real 
property of the Corporation shall be subject to State, Territorial, 
county, municipal or local taxation to the same extent according to its 
value as other real property is taxed.
    (b) Acting as Liquidator.--When acting as a liquidator, the 
following provisions shall apply:
            (1) The Corporation including its franchise its capital, 
        reserves, surplus, and its income, shall be exempt from all 
        taxation imposed by any State, county, municipally, or local 
        taxing authority, except that any real property of the 
        Corporation shall be subject to State, territorial, county, 
        municipal, or local taxation to the same extent according to 
        its value as other real property is taxed.
            (2) No property of the Corporation shall be subject to 
        levy, attachment, garnishment, foreclosure, or sale without the 
        consent of the Corporation, nor shall any involuntary lien 
        attach to the property of the Corporation.

SEC. 412. REPORTS BY THE CORPORATION.

    (a) Annual Reports.--The Corporation shall annually submit a full 
report of its operations, activities, budget, receipts, and 
expenditures for the preceding 12-month period. The report shall 
include, with respect to the Fund, an analysis by the Corporation of--
            (1) the current financial condition of each fund account;
            (2) the purpose, effect, and estimated cost of each 
        resolution action taken for a member insurer during the 
        preceding year;
            (3) the exposure of each fund account to changes in those 
        economic factors most likely to affect the condition of the 
        Fund;
            (4) the current estimate of the resources needed for the 
        Fund to achieve the purpose of this Act; and
            (5) any findings, conclusions, and recommendations for 
        legislative and administrative action considered appropriate in 
        order for the Corporation to handle future insurance 
        insolvencies.
Such report shall be submitted to the Congress and the President as 
soon as practicable after the first day of January each day.
    (b) Audits by the Comptroller General.--The Comptroller General 
shall audit annually the financial transactions of the Corporation and 
the Fund in accordance with generally accepted government auditing 
standards. All books, records, accounts, reports, files and property 
belonging to or used by the Corporation, the Fund, or by an independent 
certified public accountant retained to audit the Fund's financial 
statements, shall be made available to the Comptroller General.
    (c) GAO Audit.--The financial transaction of the Corporation shall 
be audited by the General Accounting Office, at least once in every 3 
years, in accordance with the principles and procedures applicable to 
commercial corporate transactions and under such rules and regulations 
as may be prescribed by the Comptroller General of the United States. 
The audit shall be conducted at the place or places where accounts of 
the Corporation are normally kept. The representatives of the General 
Accounting Office shall have access to all books, account, records, 
reports, files, and all other papers, things, or property belonging to 
or in use by the Corporation pertaining to its financial transactions 
and necessary to facilitate the audit, and they shall be afforded full 
facilities for verifying transactions with the balances or securities 
held by depositories, fiscal agents and custodians. All such books, 
accounts, records, reports, files, papers, and property of the 
Corporation shall remain in possession and custody of the Corporation.
    (d) Report of Audits.--A report of each audit conducted under this 
section shall be made by the Comptroller General to the Congress not 
later than 6 months following the close of the last year covered by 
such audit. The report to the Congress shall set forth the scope of the 
audit and shall include a statement of assets and liabilities and 
surplus or deficit; a statement of sources and application of funds and 
such comments and information as may be deemed necessary to inform 
Congress of the financial operations and conditions of the Corporation, 
together with such recommendations with respect thereto as the 
Comptroller General may deem advisable. The report shall also show 
specifically any program, expenditure, or other financial transaction 
or undertaking observed in the course of the audit, which in the 
opinion of the Comptroller General has been carried on or made without 
authority of law. A copy of each report shall be furnished to the 
President, to the Secretary of the Treasury, Comptroller of the 
Currency and to the Corporation at the time submitted to Congress.
    (e) Assistance in Audits.--For the purpose of conducting such 
audit, the Comptroller General is authorized to employ by contract, 
without regard to section 3709 of the Revised Statutes (41 U.S.C. 5), 
professional services of firms and organizations of certified public 
accounts, with the concurrence of the Corporation, for temporary 
periods or for special purposes. The Corporation shall reimburse the 
General Accounting Office for the cost of any such audit as billed 
thereof by the Comptroller General, and the General Accounting Office 
shall deposit the sums so reimbursed into the Treasury as miscellaneous 
receipts. The financial statements shall be examined by an independent 
public accountant or firm of independent public accountants, selected 
by the Corporation, and shall be accompanied by the report thereon of 
such accountant or firm. The report shall be submitted to the Congress, 
and to the State insurance regulators in each of the States, and shall 
be made available for dissemination to the public.

SEC. 413. PREEMPTION.

    No State shall assess an insurer with an interstate insurance 
license for any insurer insolvency occurring 2 years after the date of 
enactment of this Act.

                TITLE V--LIQUIDATION OF MEMBER INSURERS

SEC. 501. CORPORATION AS LIQUIDATOR.

    Notwithstanding any other provision of Federal law, the law of any 
State, or the constitution of any State, the Corporation shall act as 
receiver of a member insurer for purposes of liquidation. The United 
States district courts shall have exclusive jurisdiction over a 
proceeding to appoint the Corporation as liquidator of a member insurer 
and, following such appointment, to supervise the liquidation of such 
member in conformity with the provisions of this title.

SEC. 502. DEFINITIONS.

    For the purposes of this title:
            (1) ``Corporation'' means the National Insurance Guaranty 
        Fund Corporation.
            (2) ``Claimant'' means any insured making a first party 
        claim or any person instituting a liability claim, provided 
        that no person who is an affiliate of the insolvent insurer may 
        be a claimant.
            (3) ``The District Court'' and ``the Court'' means the 
        United States District Court which by order approves the 
        transfer of the receivership of an insurer to the Corporation 
        for liquidation purposes and which thereafter has general 
        jurisdiction and control over the receivership proceeding.
            (4) ``Creditor'' is a person having any claim, whether 
        matured or unmatured, liquidated or unliquidated, secured or 
        unsecured, absolute, fixed or contingent.
            (5) ``Insolvency'' or ``insolvent'' means that an insurer 
        is unable to pay its obligations when they are due, or that its 
        admitted assets (as determined under the laws and regulations 
        of the State of domicile) do not exceed its liabilities plus 
        the greater of--
                    (A) any capital and surplus required by law for its 
                organization; or
                    (B) the total par or stated value of its authorized 
                capital stock.
        For purposes of this title, liabilities shall include but not 
        be limited to reserves required by statute imposed by the State 
        insurance regulator upon a subject company at the time of 
        licensing or subsequent thereto.
            (6) ``Liquidator'' means the Corporation when acting as 
        receiver of an insurer in carrying out an order that the 
        insurer's assets, business and affairs be liquidated.
            (7) ``Member Insurer'' or ``insurer'' means an insurer 
        which has an interstate insurance license.
            (8) ``Receiver'' means a person which has possession and 
        control, or the right to possession and control, of the assets, 
        business and affairs of an insurer pursuant to appointment by a 
        court of competent jurisdiction for the purpose of liquidating 
        the affairs of the insurer.

SEC. 503. PETITION FOR APPOINTMENT.

    (a) Filing and Service of Petition.--A proceeding to appoint the 
Corporation as liquidator of a member insurer shall be commenced by the 
filing of a petition seeking such appointment in a United States 
district court and the service of a copy of the petition upon the 
Corporation.
    (b) Who May File.--A petition may be filed by a State insurance 
regulator or a receiver acting under its authority, either of which has 
the unconditional right to possession and control of the business, 
assets and affairs of the member insurer for purposes of conservation 
or rehabilitation pursuant to an order of a court of competent 
jurisdiction which has not been stayed or superseded.
    (c) Where Filed.--The petition, if filed by a State insurance 
regulator or a receiver acting under the authority of a State insurance 
regulator, shall be filed in the United States District Court for the 
district in which the member insurer has its principal office of 
domicile or in which is located the court that issued the order 
referred to in subsection (b).
    (d) Response to Petition.--Within 10 days after the service upon it 
of a petition under subsection (a) the Corporation shall file and serve 
a response thereto, accepting or rejecting the proposed appointment, 
stating the ground or grounds of such rejection. The Corporation may 
reject the proposed appointment only if the insurer was not a member of 
the Corporation on the date the petition was filed.

SEC. 504. ORDER APPOINTING CORPORATION LIQUIDATOR.

    (a) In General.--The Corporation shall accept the appointment as 
receiver for purposes of liquidation of an insolvent member insurer.
    (b) Regular Accounting to Court.--The order appointing the 
Corporation as receiver shall require regular accounting of the 
Corporation's administration of the insurer's assets to the court. 
Accounting shall be at such intervals as the court specifies in its 
order or by rule, but no less frequently than semiannually. Copies of 
the accounting shall be served upon the State insurance regulators of 
the State of the insurer's domicile and of each State in which it is or 
was licensed or transacted an insurance business.
    (c) Corporation Not Subject to Any Other Authority.--When acting as 
a receiver pursuant to an appointment described in this title, the 
Corporation shall not be subject to the direction or supervision of any 
other agency or department of the United States or any State in the 
exercise of the Corporations' rights, powers, and privileges.

SEC. 505. EFFECT OF ORDER.

    (a) Title.--The Corporation shall hold and have title to all of the 
assets, property, contracts and rights of action, books, and records of 
the insurer, wherever located. The State insurance regulator, the State 
receiver, and any ancillary State receivers shall, upon demand by the 
Corporation, promptly transfer all assets and records to the insurer, 
or of their respective receiverships to the Corporation.
    (b) Entry of Order.--The entry of an order appointing the 
Corporation as liquidator shall not constitute an anticipatory breach 
of any contract of the insurer, nor provide ground for revocation or 
cancellation of any such contract other than by the Corporation as 
liquidator.
    (c) Rights and Liabilities.--Upon issuance of the order, the rights 
and liabilities of the insurer and of its creditors, and all other 
persons interested in its estate, shall be fixed as of the date of 
entry of the order of liquidation.

SEC. 506. JURISDICTION OVER PROPERTY OF INSURER.

    The filing of a petition under section 503 shall immediately vest 
the district court with exclusive jurisdiction over the insurer and its 
property wherever located, and over all parties to the proceedings by 
which the State insurance regulator or the receiver acting under its 
authority, acquired the right to possession and control of the 
business, assets and affairs of the insurer and shall suspend the 
further jurisdiction of other courts and administrative bodies with 
respect to any such proceedings.

SEC. 507. STAY OF ACTIONS.

    (a) In General.--The entry of an order appointing the Corporation 
as liquidator shall operate as a stay of the commencement or 
continuation of any action or proceeding in any State or Federal court, 
or any administrative or other proceeding, against the insolvent 
insurer or against an insured of the insurer on a claim for which the 
insurer may be liable, or against the Corporation as liquidator, except 
as provided in subsection (b).
    (b) Judicial Relief From Stay.--The district court shall have power 
to grant relief from the stay provided in subsection (a) in such cases, 
and upon such terms, as the court determines to be consistent with the 
preservation of assets and the efficient administration of the estate 
of the insurer. Such relief may be granted upon the application of any 
party in interest, and may be granted as to particular cases or as to 
classes of cases as may be prescribed by the court's order.
    (c) Actions by the Liquidators.--Upon issuance of an order 
appointing the Corporation as liquidator, the Corporation may within 2 
years from such order, or such other longer time as applicable law may 
permit, institute an action or proceeding on behalf of the estate of 
the insurer upon any cause of action against which the period of 
limitation fixed by applicable law has not expired at the time of the 
filing of the petition upon which such order is entered.
    (d) Statute of Limitations.--No statute of limitations or defense 
of laches shall run with respect to any cause of action against an 
insurer between the filing of a petition for liquidation and the denial 
of the petition. Any action against the insurer that might have been 
commenced when the petition was filed may be commenced within 60 days 
after the petition is denied.

SEC. 508. COOPERATION OF OFFICERS, OWNERS AND EMPLOYEES.

    Any officer, manager, director, trustee, owner, employee or agent 
of any insurer, or any other person with authority over or in charge of 
any segment of the insurer's affairs including any person who exercises 
control directly or indirectly over activities of the insurer through 
any holding company or other affiliate of the insurer, shall cooperate 
with the Corporation. ``Cooperate'' shall include, but shall not be 
limited to the following:
            (1) To reply promptly in writing to any inquiry from the 
        Corporation requesting such a reply.
            (2) To make available to the Corporation any books, 
        accounts, documents, or other records or information or 
        property of or pertaining to the insurer and in the possession, 
        custody or control of such persons.

SEC. 509. EVIDENCE OF WRONGDOING.

    If there is reason to believe that there has been criminal or 
tortious conduct, or breach of any contractual or fiduciary obligation 
detrimental to the insurer by any officer, manager, agent, broker, 
employee or other person, the Corporation shall refer such matter to 
the Insurance Regulatory Commission and the appropriate State regulator 
for handling.

SEC. 510. CONTINUANCE OF COVERAGE.

    The Corporation shall issue rules and regulations regarding the 
continuance of insurance coverage once an insurer has been ordered 
liquidated.

SEC. 511. POWERS OF THE CORPORATION AS LIQUIDATOR.

    (a) Powers.--The Corporation as liquidator shall have the power--
            (1) to employ employees, agent, attorney, actuaries, 
        accountant, appraisers, consultants and such other personnel as 
        it may deem necessary to conduct the liquidation;
            (2) to appoint, with the approval of the court, an advisory 
        committee of representatives of policy holders, claimants, 
        creditors, and other persons or groups with substantial 
        interest in the liquidation proceeding, if such committee be 
        deemed necessary;
            (3) to audit the books and records of all agents of the 
        insurer insofar as those records relate to the business 
        activities of the insurer;
            (4) to collect all debts and moneys due and claims 
        belonging to the insurer, wherever located;
            (5) to conduct public and private sales of the property of 
        the insurer;
            (6) to continue to prosecute and to institute in the name 
        of the insurer or in its own name any and all suits and other 
        legal proceedings, and to abandon the prosecution of claims it 
        deems unprofitable to pursue further;
            (7) to assert all defenses available to the insurer as 
        against third persons, including statutes of limitation and 
        statutes of fraud; and
            (8) to promulgate rules and regulations regarding the 
        allowance or disallowance of claims and providing for 
        administrative determination of claims and review of such 
        determination.
    (b) Additional Powers.--In addition to and not in derogation of the 
powers conferred and duties imposed by this title on the Corporation as 
receiver for purposes of liquidation, the Corporation, to the extent 
not inconsistent with such powers and duties shall have any other power 
conferred on or any duty (which is related to the exercise of such 
power) imposed on a receiver for any insolvent insurer under any other 
provision of law.

SEC. 512. NOTICE TO CREDITORS AND OTHERS.

    (a) Notice of Liquidation.--The Corporation shall give or cause to 
be given notice of the liquidation order as soon as possible--
            (1) by first class mail and either by telegram or telephone 
        to the Department of Insurance of each jurisdiction in which 
        the insurer is doing business;
            (2) by first class mail to all insurance agents of the 
        insurer;
            (3) by first class mail to all persons known or reasonably 
        expected to have claims against the insurer including all 
        policyholders, at their last known address as indicated by the 
        records of the insurer; and
            (4) by publication in a newspaper of general circulation in 
        the county in which the insurer has its principal place of 
        business and in such other locations as the Corporation deems 
        appropriate.
    (b) Filing Claims.--Except as otherwise established by the 
liquidator with approval of the Court, notice to potential claimants 
under this title shall require claimants to file with the liquidator 
their claims together with proper proof, by a date specified in the 
notice which shall be not less than 90 days after the publication of 
such notice. All claimants shall have a duty to keep the liquidator 
informed of any changes of address.

SEC. 513. PROOF OF CLAIMS.

    (a) Rules and Regulations.--The Corporation shall promulgate rules 
and regulations regarding--
            (1) the filing of claims;
            (2) information that must be contained in a proof of claim;
            (3) third-party claims;
            (4) secured Creditor's claims;
            (5) claims of surety; and
            (6) disputed claims.
    (b) Additional Rules and Regulations.--The Corporation shall 
promulgate any other such rules and regulations it deems necessary 
regarding claims.

SEC. 514. PAYMENT OF CLAIMS.

    (a) Payment of Claims by Corporation.--In the case of a liquidation 
of any insolvent member insurer, payment of claims against the 
insolvent insurer shall be made by the Corporation as soon as possible, 
either by cash or by transferring the policy to a new insurer, or any 
other means determined by the rules and regulations promulgated by the 
Corporation.
    (b) Disputed Claims.--In the case of any disputed claim relating to 
an insolvent insurer, the Corporation may resolve such disputed claims 
in accordance with regulations promulgated by the Corporation. If the 
Corporation has not promulgated procedures for resolving disputed 
claims, the Corporation may require the final determination of a court 
of competent jurisdiction before paying any such claims.
    (c) Judicial Review of Final Determination.--Final determination 
made by the Corporation shall be reviewable in accordance with chapter 
7 of title 5, United States Code (5 U.S.C. 701 et seq.), the United 
States Court of Appeals for the District of Columbia or the Court of 
Appeals for the Federal Judicial Circuit where the district court that 
ordered the liquidation is located. Any request for review of a final 
determination by the Corporation shall be filed with the appropriate 
Circuit Court of Appeals not later than 60 days after such 
determination is ordered.

SEC. 515. DUTIES OF AGENTS.

    (a) In General.--Every person who receives notice that an insurer 
which the person represents as an agent is the subject of a liquidation 
order shall within 30 days of such notice provide to the Corporation 
the information in the agency's records related to any policy issued by 
the insurer through the agent, and, if the agent is a general agent, 
the information in the general agent's records related to any policy 
issued by the insurer through an agent under contract to the general 
agent, including the name and address of such subagent.
    (b) Regulations by Corporation.--The Corporation shall promulgate 
rules and regulations defining an agent and any other rule or 
regulation regarding the duties of an agent as deemed necessary by the 
Board of Directors.

SEC. 516. FRAUDULENT TRANSFERS.

    (a) In General.--Every transfer made and every obligation incurred 
by an insurer within 3 years prior to the filing of a successful 
petition for liquidation under this title is fraudulent as to then 
existing and future creditors if made or incurred without fair 
consideration, or with actual intent to hinder, delay, or defraud 
either existing or future creditors. A transfer made or an obligation 
incurred by an insurer ordered to be liquidated under this title, which 
is fraudulent under this section, may be avoided by the liquidator, 
except as to a person who in good faith is a purchaser, lienor, or 
obligee for a present fair equivalent value, and except that any 
purchaser, lienor or obligee, who in good faith has given a 
consideration less than fair for such transfer, lien or obligation, may 
retain the property, lien or obligation as security for repayment. The 
Court may, on due notice, order any such transfer or obligation to be 
preserved for the benefit of the estate, and in that event, the 
receiver shall succeed to and may enforce the rights of the purchaser, 
lienor, or obligee.
    (b) Personal Liability.--Every person receiving any property from 
the insurer or any benefit thereof which is a fraudulent transfer under 
this title shall be personally liable and shall be bound to account to 
the liquidator.
    (c) Regulations by Corporation.--The Corporation shall promulgate 
such rules and regulations that are necessary to implement this 
section.

SEC. 517. VOIDABLE PREFERENCES AND LIENS.

    (a) In General.--A preference is a transfer of any of the property 
of an insurer to or for the benefit of a creditor, for or on account of 
an antecedent debt, made by the insurer within 1 year before the filing 
of a successful petition for liquidation under this Act, the effect of 
which transfer may be to enable the creditor to obtain a greater 
percentage of his debt than another creditor of the same class would 
receive. If a liquidation order is entered while the insurer is already 
subject to a rehabilitation order, then such transfers shall be deemed 
preferences if made within 1 year before the filing of the successful 
petition for rehabilitation, or within 2 years before the filing of the 
successful petition for liquidation, whichever time is shorter.
    (b) Recovery of Property.--Where the preference is voidable, the 
liquidator may recover the property or, if it has been converted, its 
value, from any person who has received or converted the property; 
except where a bona fide purchaser or lienor has given less than fair 
value, he shall have a lien upon the property to the extent of the 
consideration actually given by him. Where a preference by way of lien 
or security title is voidable, the court may on due notice order the 
lien or title to be preserved for the benefit of the estate, in which 
even the lien or title shall pass to the liquidator.
    (c) Regulations by the Corporation.--The Corporation shall 
promulgate rules and regulations specifying the circumstances under 
which a preference may be avoided.

SEC. 518. SETOFFS AND COUNTERCLAIMS.

    Mutual debts or mutual credits, whether arising out of one or more 
contracts between the insurer and another person in connection with any 
action or proceeding under this title shall be set off and the balance 
only shall be allowed or paid, except as otherwise provided by the 
rules and regulations promulgated by the Corporation.

SEC. 519. RECOVERY OF PREMIUMS OWED.

    The Corporation shall promulgate the rules and regulations 
regarding the recovery of premiums owed to an insolvent member insurer 
that is being liquidated by the Corporation.

SEC. 520. PRIORITY OF DISTRIBUTION.

    The priority of distribution of claims from the insurer's estate 
shall be in accordance with the order in which each class of claims is 
herein set forth. Every claim in each class shall be paid in full or 
adequate funds retained for such payment before the members of the next 
class receive any payment. No subclasses shall be established within 
any class. The order of distribution of claims shall be:
            (1) Class 1.--The costs and expenses of administration 
        during liquidation, including but not limited to--
                    (A) the actual and necessary costs of preserving or 
                recovering the assets of the insurer;
                    (B) compensation for all authorized services 
                rendered in the liquidation, including reasonable 
                compensation to the Corporation as approved by the 
                court to cover the portion of the total expenses of the 
                Corporation which are reasonably related to the conduct 
                by it of the rehabilitation or liquidation of the 
                insurer, without provision for any profit to the 
                Corporation;
                    (C) any necessary filing fees;
                    (D) the fees and mileage payable to witnesses; and
                    (E) authorized reasonable attorney's fees and other 
                professional services rendered in the rehabilitation 
                and liquidation.
            (2) Class 2.--Reasonable compensation to employees for 
        services performed to the extent that they do not exceed 2 
        months of monetary compensation and represent payment for 
        services performed within 1 year before the filing of the 
        petition for liquidation. Principal officers and directors 
        shall not be entitled to the benefit of this priority except as 
        otherwise approved by the Liquidator and the court. Such 
        priority shall be in lieu of any similar priority which may be 
        authorized by law as to wages or compensation of employees.
            (3) Class 3.--All claims under policies, including such 
        claims of the Federal or any State or local government, for 
        losses incurred (``loss claims'') and including third party 
        claims and such claims of the Corporation for claims paid by it 
        except the first $300 of any claim, other than claims for 
        workers' compensation, where the obligation of the insurer is 
        direct to the insured (or ``first party''). That portion of any 
        loss, indemnification for which is provided by other benefits 
        or advantages recovered or recoverable in discharge of familial 
        obligation of support or by way of succession at death or as 
        proceeds of life insurance, or as gratuities. No payment by an 
        employer to its employee shall be treated as a gratuity.
            (4) Class 4.--Claims under nonassessable policies for 
        unearned premium or other premium refunds, claims of general 
        creditors including claims of ceding and assuming insurers and 
        reinsurers in their capacity as such, claims for the first $300 
        of any claim excepted from payment by the deduction in 
        subsection (c) above, and claims of the Federal or any State or 
        local government except those under class 3 above. Claims, 
        including those of any 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 such claims shall be postponed to class of claims under 
        subsection (g).
            (5) Class 5.--Claims filed late and all other claims other 
        than claims under classes 6 and 7.
            (6) Class 6.--Surplus or contribution notes, or similar 
        obligations, and premium refunds on assessable policies. 
        Payments to members of domestic mutual insurance companies 
        shall be limited in accordance with applicable State law.
            (7) Class 7.--The claims of stockholders or other owners in 
        their capacity as shareholders.

SEC. 521. UNCLAIMED AND WITHHELD FUNDS.

    The Corporation shall promulgate rules and regulations for the 
handling of unclaimed and withheld funds.

SEC. 522. TERMINATION OF PROCEEDINGS.

    (a) Business Concluded.--When all business regarding the 
liquidation of a member insurer has been concluded, the Corporation as 
liquidator shall apply to the court for discharge.
    (b) Petition To Reopen.--After the liquidation proceeding has been 
terminated and the Liquidator discharged, the Corporation or other 
interested party may at any time petition the district court to reopen 
the proceedings for good cause, including the discovery of additional 
assets. If the court is satisfied that there is justification for 
reopening, it shall so order.

SEC. 523. STUDY BY THE BOARD.

    The Board of Directors for the Corporation shall make 
recommendations, including proposing legislation to the Congress, not 
later than 12 months after the date of enactment of this Act, on how to 
better achieve a uniform system of liquidation of insolvent insurers to 
be handled exclusively by the Corporation.

SEC. 524. PREEMPTION.

    Effective 2 years after enactment of this Act, the Corporation 
shall be the exclusive liquidator of insolvent member insurers.

                 TITLE VI--CRIMINAL AND CIVIL PENALTIES

SEC. 601. SHORT TITLE.

    This title may be cited as the ``Insurance Fraud Prevention Act of 
1993''.

SEC. 602. CRIMES BY OR AFFECTING PERSONS ENGAGED IN THE BUSINESS OF 
              INSURANCE WHOSE ACTIVITIES AFFECT INTERSTATE COMMERCE.

    (a) In General.--Chapter 47 of title 18, United States Code, is 
amended by adding at the end thereof the following new sections:
``Sec. 1033. Crimes by or affecting persons engaged in the business of 
              insurance whose activities affect interstate commerce
    ``(a)(1) Whoever is engaged in the business of insurance whose 
activities affect interstate commerce and knowingly, with the intent to 
deceive, makes any false material statement or report or willfully and 
materially overvalues any land, property or security--
            ``(A) in connection with any reports or documents presented 
        to any insurance regulatory official or agency or an agent or 
        examiner appointed by such official or agency to examine the 
        affairs of such person, and
            ``(B) for the purpose of influencing the actions of such 
        official or agency or such an appointed agent or examiner,
shall be punished as provided in paragraph (2).
    ``(2) The punishment for an offense under paragraph (1) is a fine 
of not more than $1,000,000 or imprisonment for not more than 10 years, 
or both, except that the term of imprisonment shall be not more than 15 
years if the statement or report or overvaluing of land, property, or 
security jeopardized the safety and soundness of an insurer.
    ``(b)(1) Whoever--
            ``(A) acting as, or being an officer, director, agent, or 
        employee of, any person engaged in the business of insurance 
        whose activities affect interstate commerce, or
            ``(B) is engaged in the business of insurance whose 
        activities affect interstate commerce or is involved (other 
        than as an insured or beneficiary under a policy of insurance) 
        in a transaction relating to the conduct of affairs of such a 
        business,
willfully embezzles, abstracts, purloins, or misappropriates any of the 
moneys, funds, premiums, credits, or other property of such person so 
engaged shall be punished as provided in paragraph (2).
    ``(2) The punishment for an offense under paragraph (1) is a fine 
of not more than $1,000,000 or imprisonment for not more than 10 years, 
or both, except that if such embezzlement, abstraction, purloining, or 
misappropriation described in paragraph (1) jeopardized the safety and 
soundness of an insurer, such imprisonment shall be not more than 15 
years. If the amount or value so embezzled, abstracted, purloined, or 
misappropriated does not exceed $5,000, whoever violates paragraph (1) 
shall be fined as provided in this title or imprisoned not more than 1 
year, or both.
    ``(c)(1) Whoever is engaged in the business of insurance and whose 
activities affect interstate commerce or is involved (other than as an 
insured or beneficiary under a policy of insurance) in a transaction 
relating to the conduct of affairs of such a business, knowingly makes 
any false entry of material fact in any book, report, or statement of 
such person engaged in the business of insurance with intent to deceive 
any person, including any officer, employee, or agent of such person 
engaged in the business of insurance, any insurance regulatory official 
or agency, or any agent or examiner appointed by such official or 
agency to examine the affairs of such person, about the financial 
condition or solvency of such business shall be punished as provided in 
paragraph (2).
    ``(2) The punishment for an offense under paragraph (1) is a fine 
of not more than $1,000,000 or imprisonment for not more than 10 years, 
or both, except that if the false entry in any book, report, or 
statement of such person jeopardized the safety and soundness of an 
insurer, such imprisonment shall be not more than 15 years.
    ``(d) Whoever, by threats or force or by any threatening letter or 
communication, corruptly influences, obstructs, or impedes or endeavors 
corruptly to influence, obstruct, or impede the due and proper 
administration of the law under which any proceeding involving the 
business of insurance whose activities affect interstate commerce is 
pending before any insurance regulatory official or agency or any agent 
or examiner appointed by such official or agency to examine the affairs 
of a person engaged in the business of insurance whose activities 
affect interstate commerce, shall be fined as provided in this title or 
imprisoned not more than 10 years, or both.
    ``(e)(1)(A) Any individual who has been convicted of any criminal 
felony involving dishonesty or a breach of trust, or who has been 
convicted of an offense under this section, and who willfully engages 
in the business of insurance whose activities affect interstate 
commerce or participates in such business, shall be fined as provided 
in this title or imprisoned not more than 5 years, or both.
    ``(B) Any individual who is engaged in the business of insurance 
whose activities affect interstate commerce and who willfully permits 
the participation described in subparagraph (A) shall be fined as 
provided in this title or imprisoned not more than 5 years, or both.
    ``(2) A person described in paragraph (1)(A) may engage in the 
business of insurance or participate in such business if such person 
has the written consent of any insurance regulatory official authorized 
to regulate the insurer, which consent specifically refers to this 
subsection.
    ``(f) As used in this section--
            ``(1) the term `business of insurance' means--
                    ``(A) the writing of insurance, or
                    ``(B) the reinsuring of risks,
        by an insurer, including all acts necessary or incidental to 
        such writing or reinsuring and the activities of persons who 
        act as, or are, officers, directors, agents, or employees of 
        insurers or who are other persons authorized to act on behalf 
        of such persons;
            ``(2) the term `insurer' means any entity the business 
        activity of which is the writing of insurance or the reinsuring 
        of risks, and includes any person who acts as, or is, an 
        officer, director, agent, or employee of that business;
            ``(3) the term `interstate commerce' means--
                    ``(A) commerce within the District of Columbia, or 
                any territory or possession of the United States;
                    ``(B) all commerce between any point in the State, 
                territory, possession, or the District of Columbia and 
                any point outside thereof;
                    ``(C) all commerce between points within the same 
                State through any place outside such State; or
                    ``(D) all other commerce over which the United 
                States has jurisdiction; and
            ``(4) the term `State' includes any State, the District of 
        Columbia, the Commonwealth of Puerto Rico, the Northern Mariana 
        Islands, the Virgin Islands, American Samoa, and the Trust 
        Territory of the Pacific Islands.
``Sec. 1034. Civil penalties and injunctions for violations of section 
              1033
    ``(a) The Attorney General may bring a civil action in the 
appropriate United States district court against any person who engages 
in conduct constituting an offense under section 1033 and, upon proof 
of such conduct by a preponderance of the evidence, such person shall 
be subject to a civil penalty of not more than $50,000 for each 
violation or the amount of compensation which the person received or 
offered for the prohibited conduct, whichever amount is greater. If the 
offense has contributed to the decision of a court of appropriate 
jurisdiction to issue an order directing the conservation, 
rehabilitation, or liquidation of an insurer, such penalty shall be 
remitted to the appropriate regulatory official for the benefit of the 
policyholders, claimants, and creditors of such insurer. The imposition 
of a civil penalty under this subsection does not preclude any other 
criminal or civil statutory, common law, or administrative remedy, 
which is available by law to the United States or any other person.
    ``(b) If the Attorney General has reason to believe that a person 
is engaged in conduct constituting an offense under section 1033, the 
Attorney General may petition an appropriate United States district 
court for an order prohibiting that person from engaging in such 
conduct. The court may issue an order prohibiting that person from 
engaging in such conduct if the court finds that the conduct 
constitutes such an offense. The filing of a petition under this 
section does not preclude any other remedy which is available by law to 
the United States or any other person.''.
    (b) Clerical Amendment.--The table of sections for chapter 47 of 
such title is amended by adding at the end the following new items:

``1033. Crimes by or affecting persons engaged in the business of 
                            insurance whose activities affect 
                            interstate commerce.
``1034. Civil penalties and injunctions for violations of section 
                            1033.''.

SEC. 603. MISCELLANEOUS AMENDMENTS TO TITLE 18, UNITED STATES CODE.

    (a) Tampering With Insurance Regulatory Proceedings.--Section 
1515(a)(1) of title 18, United States Code, is amended--
            (1) by striking ``or'' at the end of subparagraph (B);
            (2) by inserting ``or'' at the end of subparagraph (C); and
            (3) by adding at the end thereof the following new 
        subparagraph:
                    ``(D) a proceeding involving the business of 
                insurance whose activities affect interstate commerce 
                before any insurance regulatory official or agency or 
                any agent or examiner appointed by such official or 
                agency to examine the affairs of any person engaged in 
                the business of insurance whose activities affect 
                interstate commerce; or''.
    (b) Limitations.--Section 3293 of such title is amended by 
inserting ``1033,'' after ``1014,''.
    (c) Obstruction of Criminal Investigations.--Section 1510 of title 
18, United States Code, is amended by adding at the end the following 
new subsection:
    ``(d)(1) Whoever--
            ``(A) acting as, or being, an officer, director, agent or 
        employee of a person engaged in the business of insurance whose 
        activities affect interstate commerce, or
            ``(B) is engaged in the business of insurance whose 
        activities affect interstate commerce or is involved (other 
        than as an insured or beneficiary under a policy of insurance) 
        in a transaction relating to the conduct of affairs of such a 
        business,
with intent to obstruct a judicial proceeding, directly or indirectly 
notifies any other person about the existence or contents of a subpoena 
for records of that person engaged in such business or information that 
has been furnished to a Federal grand jury in response to that 
subpoena, shall be fined as provided by this title or imprisoned not 
more than 5 years, or both.
    ``(2) As used in paragraph (1), the term `subpoena for records' 
means a Federal grand jury subpoena for records that has been served 
relating to a violation of, or a conspiracy to violate, section 1033 of 
this title.''.

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