I 

111TH CONGRESS 

2D SESSION H. R. 6529 

To amend title 31, United States Code, to provide for a Federal license 

for reinsurers, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 16, 2010 

Mr. MOORE of Kansas introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To amend title 31, United States Code, to provide for a 

Federal license for reinsurers, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Federal License for 

5 Reinsurers Act of 2010’’. 

6 SEC. 2. AMENDMENTS TO TITLE 31, UNITED STATES CODE. 

7 Section 313 of title 31, United States Code, is 

8 amended— 

9 (1) in subsection (b)— 


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1 (A) by striking ‘‘The Office’’ and inserting 

2 the following: 

3 ‘‘(1) LEADERSHIP.—The Office’’; and 

4 (B) by adding at the end the following new 

5 paragraph: 

6 ‘‘(2) EMPLOYEES.— 

7 ‘‘(A) NUMBER AND COMPENSATION.—The 

8 Director shall fix the number of employees of 

9 the Office and the compensation of such em10 ployees, as necessary to carry out the provisions 

11 of this section without regard to chapter 51 or 

12 subchapter III of chapter 53 of title 5. 

13 ‘‘(B) ADDITIONAL COMPENSATION AND

14 BENEFITS.—Notwithstanding subparagraph 

15 (A), the Director may provide additional com16 pensation and benefits if the same type of com17 pensation or benefits are then being provided by 

18 any Federal banking agency or, if not then 

19 being provided, could be provided by any such 

20 agency under applicable provisions of law or 

21 regulation. In setting and adjusting the total 

22 amount of compensation and benefits for em23 ployees of the Office, the Director shall consult, 

24 and seek to maintain comparability with, the 

25 Federal banking agencies.’’; 


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1 (2) in subsection (c)(1)— 

2 (A) in subparagraph (E), by striking ‘‘sub3 section (r)’’ and inserting ‘‘subsection (s)’’; 

4 (B) by redesignating subparagraphs (G) 

5 and (H) as subparagraphs (H) and (I), respec6 tively; and 

7 (C) by inserting after subparagraph (F) 

8 the following new subparagraph: 

9 ‘‘(G) with respect to the business of rein10 surance— 

11 ‘‘(i) to license entities to transact the 

12 business of reinsurance as a national rein13 surer pursuant to subsection (h)(1); 

14 ‘‘(ii) to revoke, suspend, or restrict a 

15 Federal license pursuant to (h)(1)(B); 

16 ‘‘(iii) to coordinate Federal efforts 

17 and establish Federal policy on inter18 national matters related to reinsurance, in19 cluding working with international regu20 latory and standard-setting bodies; 

21 ‘‘(iv) to assist the Secretary in enter22 ing into supervisory arrangements author23 ized under subsection (h); 

24 ‘‘(v) to establish and enforce appro25 priate standards and requirements govVerDate Mar 15 2010 06:37 Dec 17, 2010 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H6529.IH H6529

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1 erning national reinsurers consistent with 

2 criteria in subsection (h)(5); 

3 ‘‘(vi) to determine that any State law, 

4 regulation, or action is preempted as being 

5 contrary to or inconsistent with the pur6 poses of subsection (h) and this subpara7 graph; 

8 ‘‘(vii) to assess and collect reasonable 

9 fees from authorized foreign reinsurers for 

10 reimbursement of costs incurred by the Di11 rector related to supervisory arrangements; 

12 and 

13 ‘‘(viii) to assess and collect reasonable 

14 fees from national reinsurers for the reim15 bursement of costs incurred by the Direc16 tor for licensing and examination of na17 tional reinsurers;’’; 

18 (3) in subsection (f)— 

19 (A) in paragraph (1), by striking ‘‘A 

20 State’’ and inserting ‘‘Except as provided in 

21 subsection (h), a State’’; and 

22 (B) in paragraph (2)(B), by inserting after 

23 ‘‘insurance measures,’’ the following: ‘‘except as 

24 provided in subsection (h),’’; 


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1 (4) in subsection (g), by inserting after ‘‘deter2 mination of inconsistency,’’ the following: ‘‘except as 

3 provided in subsection (h),’’; 

4 (5) by redesignating subsections (h), (i), (j), 

5 (k), (l), (m), (n), (o), (p), (q), (r), and (s) as sub6 sections (i), (j), (k), (l), (m), (n), (o), (p), (q), (r), 

7 (s), and (t), respectively; 

8 (6) by inserting after subsection (g) the fol9 lowing new subsection: 

10 ‘‘(h) AUTHORITY WITH RESPECT TO REINSUR11 ANCE.— 

12 ‘‘(1) LICENSING OF NATIONAL REINSURERS.— 

13 ‘‘(A) LICENSING.— 

14 ‘‘(i) IN GENERAL.—The Director shall 

15 establish criteria necessary for the licens16 ing and operation of a national reinsurer. 

17 ‘‘(ii) ELIGIBILITY.—A United States 

18 entity shall be eligible to apply for a Fed19 eral license under this subsection to trans20 act the business of reinsurance upon dem21 onstration to the Director that the entity 

22 meets the definition of reinsurer under this 

23 section and all other criteria established by 

24 the Director. 


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1 ‘‘(iii) NON-UNITED STATES ENTI2 TIES.—A non-United States entity may ob3 tain a Federal license under this sub4 section through the establishment of a 

5 United States branch which meets the eli6 gibility requirements under clause (ii) and 

7 such other regulations as the Director may 

8 prescribe. 

9 ‘‘(iv) ISSUANCE OF LICENSE.—If the 

10 Director determines that the applicant has 

11 satisfied the applicable eligibility require12 ments, the Director shall issue a Federal 

13 license to the applicant to transact the 

14 business of reinsurance. 

15 ‘‘(B) REVOCATION, SUSPENSION, OR RE16 STRICTION OF FEDERAL LICENSE.—The Direc17 tor may revoke, suspend, or restrict a Federal 

18 license whenever the Director determines that 

19 the licensed entity is no longer operating in a 

20 manner consistent with the criteria for licensing 

21 and operation established by the Director. 

22 ‘‘(C) CONVERSION TO STATE LICENSE.—A 

23 national reinsurer may convert to a State-li24 censed reinsurer in accordance with applicable 

25 State law if— 


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1 ‘‘(i) such entity notifies the Director 

2 of its intention to convert in accordance 

3 with such procedures as the Director may 

4 prescribe by regulation; 

5 ‘‘(ii) after conducting an appropriate 

6 review, the Director approves the conver7 sion. 

8 ‘‘(D) APPLICABILITY OF THE BANKRUPTCY

9 CODE.—A delinquency proceeding for the liq10 uidation or reorganization of a United States 

11 national reinsurer shall proceed under the pro12 visions of title 11. 

13 ‘‘(2) SUPERVISORY ARRANGEMENTS.— 

14 ‘‘(A) AUTHORITY.—In order to realize the 

15 efficiencies and consumer benefits of a more 

16 harmonized international reinsurance regulatory 

17 system, the Secretary and the United States 

18 Trade Representative, jointly, shall be author19 ized to enter into supervisory arrangements for 

20 the recognition of qualified reinsurance super21 visory authorities of non-United States jurisdic22 tions that provide a level of protection for 

23 United States reinsurance consumers that is 

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1 tion achieved by the Director pursuant to the 

2 provisions of this subsection. 

3 ‘‘(B) EXCHANGE OF INFORMATION.—The 

4 entry into supervisory arrangements with quali5 fied supervisory authorities of non-United 

6 States jurisdictions shall be preceded by an ex7 change and evaluation of relevant information 

8 regarding the form and nature of regulation in 

9 each such jurisdiction and the Secretary’s de10 termination that such jurisdiction’s supervisory 

11 authority maintains and applies legal standards, 

12 regulatory requirements, and enforcement capa13 bilities substantially equivalent to those applied 

14 by the Director, and that the awards of arbitra15 tion panels and judgments of appropriate 

16 United States courts are enforceable and col17 lectable in the jurisdiction, pursuant to treaty, 

18 other agreement, or operation of that jurisdic19 tion’s law. 

20 ‘‘(C) REQUIREMENTS FOR VALIDITY.—The 

21 Secretary and the United States Trade Rep22 resentative may enter into supervisory arrange23 ments only in cases in which the Secretary has 

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1 graph (B) have been satisfied and the arrange2 ment explicitly provides for all of the following: 

3 ‘‘(i) Identification of areas of regula4 tion that will be the exclusive responsibility 

5 of the respective jurisdictions. 

6 ‘‘(ii) The reciprocal treatment of rein7 surance entities in accordance with each 

8 subject jurisdiction’s rules and regulations. 

9 ‘‘(iii) A commitment to exchange rel10 evant information on an on-going basis. 

11 ‘‘(iv) A process for resolving disputed 

12 issues. 

13 ‘‘(v) The application of chapter 15 of 

14 title 11 to cross-border insolvency cases in15 volving entities from the subject jurisdic16 tion. 

17 ‘‘(vi) The terms and conditions for 

18 terminating the supervisory arrangement. 

19 ‘‘(D) STATUS OF AUTHORIZED FOREIGN

20 REINSURERS.—An authorized foreign reinsurer 

21 shall be authorized to transact the business of 

22 reinsurance to the extent authorized by the ap23 plicable supervisory arrangement. 

24 ‘‘(3) PREEMPTION OF STATE LAW.— 


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1 ‘‘(A) INCONSISTENT LAWS.—All laws, reg2 ulations, provisions, or other actions of a State 

3 contrary to or inconsistent with the purposes of 

4 this subsection, except those which may be ap5 plicable to corporate taxes generally, are pre6 empted to the extent that they apply to national 

7 reinsurers or authorized foreign reinsurers, or 

8 to their reinsurance agreements. 

9 ‘‘(B) LAWS WITH DISPARATE TREAT10 MENT.—All laws, regulations, provisions, or 

11 other actions of a State are preempted to the 

12 extent that national reinsurers or authorized 

13 foreign reinsurers receive more or less favorable 

14 treatment than State licensed insurers or rein15 surers pursuant to such laws, regulations, pro16 visions, or other actions, solely on the basis of 

17 an entity’s status as a national reinsurer or au18 thorized foreign reinsurer. 

19 ‘‘(C) PROHIBITION OF INTERFERENCE.— 

20 No State shall interfere, directly or indirectly, 

21 with a United States insurer or reinsurer— 

22 ‘‘(i) applying for a Federal license or 

23 operating as a national reinsurer; or 

24 ‘‘(ii) ceding insurance to a national 

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1 surer for any purpose under this sub2 section. 

3 ‘‘(D) CREDIT FOR REINSURANCE.—No 

4 State shall deny credit, either as an asset or a 

5 reduction of liabilities, on account of reinsur6 ance ceded to a national reinsurer or an author7 ized foreign reinsurer under this subsection. 

8 ‘‘(E) PROHIBITION OF ENFORCEMENT.— 

9 No State shall enforce a State law, regulation, 

10 provision, or other action to the extent that it 

11 is preempted pursuant to this paragraph. 

12 ‘‘(F) DETERMINATIONS BY DIRECTOR.— 

13 ‘‘(i) PREEMPTION.—The Director 

14 shall be authorized to determine that any 

15 State law, regulation, provision, or action 

16 shall be preempted pursuant to this para17 graph. 

18 ‘‘(ii) JUDICIAL REVIEW.—Any State 

19 or any other person aggrieved by action of 

20 the Director under this paragraph may 

21 seek judicial review in the manner specified 

22 in chapter 7 of title 5. 

23 ‘‘(4) COOPERATION BETWEEN THE DIRECTOR

24 AND STATE INSURANCE REGULATORS.—The Direc25 tor shall— 


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1 ‘‘(A) consult, as the Director deems appro2 priate, with the relevant State insurance regu3 lators concerning regulatory matters; 

4 ‘‘(B) notify all State insurance regulators 

5 of supervisory arrangements entered into pursu6 ant to paragraph (2); and 

7 ‘‘(C) notify the relevant State insurance 

8 regulators of a change in the status of, or any 

9 administrative action taken by the Director 

10 against, a national reinsurer or an authorized 

11 foreign reinsurer. 

12 ‘‘(5) RULES AND REGULATIONS.— 

13 ‘‘(A) IN GENERAL.—The Director shall 

14 adopt regulations implementing the provisions 

15 of this subsection. The Director may issue any 

16 other rules, regulations, orders, or interpreta17 tions as the Director determines to be necessary 

18 to carry out the purposes of this subsection. 

19 ‘‘(B) CRITERIA.—The rules and regula20 tions prescribed under subparagraph (A) shall 

21 give due consideration to— 

22 ‘‘(i) promoting financially secure rein23 surance recoverables and capacity that pro24 tects the solvency of United States ceding 

25 insurers; 


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1 ‘‘(ii) the need for a competitive and 

2 healthy reinsurance market that provides 

3 sufficient capacity to meet ceding compa4 nies’ risk management needs through open 

5 market contracting and pricing practices; 

6 ‘‘(iii) global capital and risk manage7 ment, taking into account capital ade8 quacy, assessment of internal controls, rec9 ognition of qualified internal capital mod10 els, and effective corporate governance; 

11 ‘‘(iv) financial transparency that en12 courages and supports the cedents’ ability 

13 to assess counter party credit risk, includ14 ing information regarding the national re15 insurer’s financial condition and the na16 tional reinsurer’s performance in paying 

17 covered claims; 

18 ‘‘(v) access to all necessary financial 

19 information, with appropriate provision for 

20 the confidentiality of that information; and 

21 ‘‘(vi) harmonization with international 

22 standards for the prudential regulation of 

23 the business of reinsurance. 

24 ‘‘(6) IMPLEMENTATION.— 


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1 ‘‘(A) LICENSING.—The Director shall com2 mence licensing of national reinsurers and the 

3 entry into supervisory arrangements after pro4 mulgation of final rules and regulations under 

5 this subsection, which shall occur not later than 

6 the expiration of the 2-year period beginning on 

7 the date of the enactment of this subsection. 

8 ‘‘(B) APPLICABILITY.—The provisions of 

9 this subsection shall apply only to reinsurance 

10 agreements and supervisory arrangements en11 tered into on or after the date of the enactment 

12 of this subsection. 

13 ‘‘(7) EFFECT OF STATUS.—There shall be no 

14 determination under section 113 of the Dodd-Frank 

15 Wall Street Reform and Consumer Protection Act 

16 that an entity is subject to supervision by the Board 

17 of Governors of the Federal Reserve System and 

18 subject to prudential standards (as such term is de19 fined in such Act), in accordance with title I of such 

20 Act, on account of an entity’s status as a national 

21 reinsurer or authorized foreign reinsurer.’’; 

22 (7) in subsection (k)(1), as so redesignated, by 

23 inserting ‘‘except as provided in subsection (h),’’ be24 fore ‘‘preempt—’’; 


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1 (8) in subsection (l), as so redesignated, by 

2 striking ‘‘Nothing’’ and inserting ‘‘Except as pro3 vided in subsections (c) and (h), nothing’’; and 

4 (9) in subsection (s), as so redesignated— 

5 (A) by redesignating paragraphs (2), (3), 

6 (4), (5), (6), (7), (8), (9), and (10) as para7 graphs (3), (4), (6), (8), (9), (12), (13), (14), 

8 and (15), respectively; 

9 (B) by inserting after paragraph (1) the 

10 following new paragraph: 

11 ‘‘(2) AUTHORIZED FOREIGN REINSURER.—The 

12 term ‘authorized foreign reinsurer’ means a rein13 surer that is domiciled in and subject to the regula14 tion of a non-United States jurisdiction’s supervisory 

15 authority that has entered into a supervisory ar16 rangement with the Director.’’; 

17 (C) by inserting after paragraph (4), as so 

18 redesignated, the following new paragraph: 

19 ‘‘(5) FEDERAL BANKING AGENCY.—The term 

20 ‘Federal banking agency’ shall have the meaning 

21 give such term under section 2 of the Dodd-Frank 

22 Wall Street Reform and Consumer Protection Act.’’; 

23 (D) by inserting after paragraph (6), as so 

24 redesignated, the following new paragraph: 


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1 ‘‘(7) NATIONAL REINSURER.—The term ‘na2 tional reinsurer’ means an entity to which the Direc3 tor has issued a Federal license under subsection 

4 (h)(1) to transact the business of reinsurance.’’; and 

5 (E) by inserting after paragraph (9), as so 

6 redesignated, the following new paragraphs: 

7 ‘‘(10) REINSURANCE.—The term ‘reinsurance’ 

8 means the assumption by an insurer of all or part 

9 of a risk undertaken originally by another insurer. 

10 ‘‘(11) REINSURER.—The term ‘reinsurer’ 

11 means, as determined by the Director, an insurer, to 

12 the extent that the insurer— 

13 ‘‘(A) is principally engaged in the business 

14 of reinsurance; 

15 ‘‘(B) does not conduct significant amounts 

16 of direct insurance as a percentage of its net 

17 premiums; and 

18 ‘‘(C) is not engaged in an ongoing basis in 

19 the business of soliciting direct insurance.’’. 

20 SEC. 3. AMENDMENTS TO DODD-FRANK. 

21 (a) SECTION 111.—Section 111(b) of the Dodd22 Frank Wall Street Reform and Consumer Protection Act 

23 is amended— 

24 (1) in paragraph (1)— 


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1 (A) in subparagraph (I), by striking ‘‘and’’ 

2 at the end; 

3 (B) by redesignating subparagraph (J) as 

4 subparagraph (K); and 

5 (C) by inserting after subparagraph (I) the 

6 following new subparagraph: 

7 ‘‘(J) the Director of the Federal Insurance 

8 Office; and’’; and 

9 (2) in paragraph (2)— 

10 (A) by striking subparagraph (B); and 

11 (B) by redesignating subparagraphs (C), 

12 (D), and (E) as subparagraphs (B), (C), and 

13 (D), respectively. 

14 (b) SECTION 112.—Section 112 of such Act is 

15 amended— 

16 (1) in subsection (a)(2), by striking ‘‘the Fed17 eral Insurance Office’’; and 

18 (2) in subsection (d)— 

19 (A) in paragraph (1), by striking ‘‘, mem20 ber agencies, and the Federal Insurance Office’’ 

21 and inserting ‘‘and member agencies’’; 

22 (B) in paragraph (2), by striking ‘‘, any 

23 member agency, and the Federal Insurance Of24 fice,’’ and inserting ‘‘and any member agency’’. 

Æ 


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