104 
(1) IN
GENERAL.—Chapter 21 of title 18, 
United States Code, is amended by adding at the 
end the following: 
‘‘§ 404. Violation of order by Commissioner of Na-
tional Insurance 
‘‘Any person who, being subject to an order under 
section 145 or 146 of the National Insurance Act of 2006, 
without the prior written approval of the Commissioner 
of National Insurance, knowingly participates, directly or 
indirectly, in any manner (including by engaging in an ac-
tivity specifically prohibited in such an order) in the con-
duct of the affairs of any National Insurer or National 
Agency shall be fined not more than $1,000,000, impris-
oned for not more than 5 years, or both.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions at the beginning of chapter 21 of title 18, 
United States Code, is amended by adding at the 
end the following: 
‘‘Sec. 404. Violation of order by Commissioner of National Insurance.’’. 
SEC. 150. PUBLIC DISCLOSURES OF FINAL ORDERS AND 
AGREEMENTS. 
(a) IN GENERAL.—Unless the Commissioner deter-
mines that publication of any such agreement, statement, 
order, modification, or termination would be contrary to 
the public interest, the Commissioner shall, on a monthly 
basis, publish and make publicly available— 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00104
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
105 
(1) any written agreement or other written 
statement for which a violation may be enforced by 
the Commissioner; 
(2) any final order issued with respect to any 
administrative enforcement proceeding initiated by 
the Commissioner under this section or any other 
law; and 
(3) any modification to or termination of any 
order or agreement made public pursuant to this 
paragraph. 
(b) HEARINGS.—All hearings on the record with re-
spect to any notice of charges issued by the Commissioner 
shall be open to the public, unless the Commissioner deter-
mines that holding an open hearing would be contrary to 
the public interest. 
(c) TRANSCRIPT OF HEARING.—A transcript con-
taining all testimony and other documentary evidence shall 
be prepared for all hearings commenced pursuant to sec-
tion 148. A transcript of public hearings shall be made 
available to the public pursuant to section 552 of title 5, 
United States Code. 
(d) DOCUMENTS FILED UNDER SEAL.— 
(1) IN GENERAL.—The Commissioner may file 
any document or part of a document under seal in 
any administrative hearing commenced by the Com-
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00105
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
106 
missioner if the Commissioner determines that dis-
closure of all or part of the document would be con-
trary to the public interest. 
(2) WRITTEN REPORT.—A written report shall 
be made part of any determination to withhold any 
part of a document from the transcript of the hear-
ing required under subsection (b). 
(e) RETENTION
OF DOCUMENTS.—The Commis-
sioner shall maintain a record for not less than 6 years 
of— 
(1) all the documents described in subsection 
(a); and 
(2) all informal enforcement agreements and 
other supervisory actions and supporting documents 
issued in connection with any administrative enforce-
ment proceeding initiated by the Commissioner. 
(f) DISCLOSURES TO CONGRESS.—No provision of 
this section may be construed to authorize the with-
holding, or to prohibit the disclosure, of any information 
to Congress. 
SEC. 151. FOREIGN INVESTIGATIONS. 
(a) REQUESTING ASSISTANCE FROM FOREIGN GOV-
ERNMENTS.—In conducting any investigation, examina-
tion, or enforcement action under this subtitle, the Com-
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00106
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
107 
missioner may request the assistance of any foreign gov-
ernment. 
(b) PROVIDING ASSISTANCE TO FOREIGN GOVERN-
MENTS.— 
(1) IN GENERAL.—The Commissioner may as-
sist any foreign government that is conducting an 
investigation to determine whether any person has 
violated, is violating, or is about to violate any law 
or regulation relating to insurance matters or cur-
rency transactions administered or enforced by such 
foreign government. 
(2) INVESTIGATION
BY
COMMISSIONER.—The 
Commissioner may investigate and collect informa-
tion and evidence pertinent to a request for assist-
ance under paragraph (1). Any such investigation 
shall comply with the laws of the United States and 
the policies and procedures of the Commissioner. 
(3) FACTORS
TO
CONSIDER.—In deciding 
whether to provide assistance under this section, the 
Commissioner shall consider— 
(A) whether the requesting authority has 
agreed to provide reciprocal assistance with re-
spect to insurance matters within the jurisdic-
tion of the Commissioner; and 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00107
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
108 
(B) whether compliance with the request 
would prejudice the public interest of the 
United States. 
(c) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed to limit the authority of the Com-
missioner or any other Federal agency to provide or re-
ceive assistance or information to or from any foreign gov-
ernmental authority with respect to any matter. 
SEC. 152. ACTION OR PROCEEDING AGAINST NON-UNITED 
STATES INSURERS. 
(a) IN GENERAL.—The Commissioner may not take 
any action under this subtitle against a non-United States 
insurer or any officer, director, employee, or agent of such 
insurer unless the Commissioner believes that conduct or 
practice of such insurer or individual has been, is, or is 
likely to be, carried on in connection with an act or prac-
tice within 1 or more States, which constitutes an appro-
priate basis for action by the Commissioner under this 
subtitle. 
(b) REMOVAL OF OFFICER OR DIRECTOR.—If an of-
ficer, director, or other person associated with a non- 
United States insurer fails to appear promptly as a party 
in any case in which an action or proceeding is brought, 
pursuant to an allegation under subsection (a), for the 
suspension or removal of such officer, director, or other 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00108
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
109 
person, or fails to comply with any effective order or judg-
ment therein, any failure by the non-United States insurer 
to secure the removal of the officer, director, or other per-
son from any office such person holds in such insurer and 
from any further participation in its affairs shall con-
stitute grounds for ordering the non-United States Insurer 
to terminate all sale, solicitation, negotiation, and under-
writing of insurance and all other insurance operations in 
the United States. 
(c) VENUE.— 
(1) IN GENERAL.—Except as provided under 
paragraph (2), if the venue of any judicial or admin-
istrative proceeding under this section is to be deter-
mined by reference to the location of the main office 
of a National Insurer, the venue of such a pro-
ceeding shall be within the judicial district or other 
relevant jurisdiction in which the non-United States 
insurer has 1 or more offices. 
(2) MULTIPLE JURISDICTIONS.—If a National 
Insurer has offices in more than 1 jurisdiction, the 
venue of a proceeding under this section— 
(A) shall be in the jurisdiction within 
which the office or offices involved in the pro-
ceeding are located; and 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00109
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
110 
(B) if there is more than 1 jurisdiction 
under subparagraph (A), shall be proper in any 
such jurisdiction in which the proceeding is 
brought or to which it may appropriately be 
transferred. 
(d) SERVICE OF PROCESS.— 
(1) IN GENERAL.—Any service required or au-
thorized to be made on a non-United States insurer 
may be made on any office located within any State. 
(2) EXCEPTION.—If any service of process 
under paragraph (1) is in connection with an action 
or proceeding involving 1 or more offices located in 
any State, service shall be made on at least 1 office 
so involved. 
SEC. 153. COOPERATION BETWEEN COMMISSIONER AND 
STATE COMMISSIONERS. 
(a) NOTICE TO STATE COMMISSIONERS.—The Com-
missioner shall notify the State commissioner in each 
State in which a National Insurer or National Agency is 
doing business not later than 30 days after the date of 
taking any of the following actions: 
(1) Revocation, suspension, or restriction of the 
National Insurer’s or National Agency’s authority to 
transact insurance. 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00110
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
111 
(2) The entry of a formal order that the Na-
tional Insurer restrict its premium writing, obtain 
additional contributions to surplus, reinsure all or 
any part of its business, or increase capital, surplus, 
or any other account for the security of policyowners 
or creditors. 
(3) The placement of a National Insurer into 
receivership. 
Subtitle D—Insurance Fraud 
SEC. 161. INVESTIGATION OF INSURANCE FRAUD. 
(a) 
INVESTIGATIVE
AUTHORITY
OF
COMMIS-
SIONER.—The Commissioner may investigate suspected 
fraudulent insurance acts by insurance persons engaged 
in the business of insurance or by other persons. 
(b) FRAUD WARNING REQUIRED.—The Commis-
sioner, by regulation, shall require each National Insurer 
to place a fraud warning on claim forms and applications 
for policies of insurance written, or to be written, by a 
National Insurer, regardless of the form of transmission. 
(c) MANDATORY REPORTING OF FRAUDULENT IN-
SURANCE ACTS.—A National Insurer, or an insurance 
person engaged in the business of insurance, that knows 
or reasonably believes that a fraudulent insurance act is 
being, will be, or has been committed, shall submit such 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00111
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
112 
information to the Commissioner in a form and manner 
prescribed by the Commissioner. 
(d) IMMUNITY FROM LIABILITY.— 
(1) IN GENERAL.—Except as provided under 
paragraphs (2) and (3), any person who furnishes 
information concerning suspected, anticipated, or 
completed fraudulent insurance acts shall not be lia-
ble to any person under any law or regulation of the 
United States, any constitution, law, or regulation of 
any State or political subdivision of any State, or 
under any contract or other legally enforceable 
agreement (including any arbitration agreement), for 
such act, if the information is provided to or re-
ceived from— 
(A) the Commissioner or any employee, 
agent, or representative of the Commissioner; 
(B) Federal, State, or local enforcement or 
regulatory officials or their employees, agents, 
or representatives; 
(C) a self-regulatory organization or its 
employees, agents, or representatives; 
(D) a person involved in the prevention 
and detection of fraudulent insurance acts or 
that person’s agents, employees, or representa-
tives; or 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00112
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
113 
(E) the NAIC or its employees, agents, or 
representatives. 
(2) MALICE.— 
(A) IN GENERAL.—Paragraph (1) shall not 
apply to false statements made with actual mal-
ice. 
(B) CONTENTS OF COMPLAINT.—In an ac-
tion brought against a person for filing a report 
or furnishing other information concerning a 
fraudulent insurance act, the party bringing the 
action shall plead specifically any allegation 
that paragraph (1) does not apply because the 
person filed the report or furnished the infor-
mation with actual malice. 
(3) PRESERVATION OF PRIVILEGE AND IMMUNI-
TIES.—This subsection does not abrogate or modify 
common law or statutory privileges or immunities 
enjoyed by a person described in paragraph (1). 
SEC. 162. PENALTIES. 
If a person committing an offense under subsection 
(a) or (c) of section 1037A of title 18, United States Code, 
is a National Insurer, a National Agency, or other feder-
ally licensed insurance producer, or an insurer-affiliated 
party, the Commissioner may, in addition to the punish-
ment set forth in such section 1037A— 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00113
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
114 
(1) revoke, suspend, or restrict the Federal li-
cense of such National Insurer, National Agency, or 
other federally licensed insurance producer, or in-
surer-affiliated party pursuant to subtitle C; and 
(2) order such National Insurer, National 
Agency, or other federally licensed insurance pro-
ducer, or insurer-affiliated party to make restitution 
to persons aggrieved by such offenses. 
TITLE II—NATIONAL INSURANCE 
COMPANIES AND NATIONAL 
INSURANCE AGENCIES 
Subtitle A—Organization, 
Licensing, and Operations 
SEC. 201. ORGANIZATION, OPERATION, AND REGULATION 
OF NATIONAL INSURANCE COMPANIES AND 
NATIONAL INSURANCE AGENCIES. 
(a) AUTHORIZATION.— 
(1) IN GENERAL.—The Commissioner may, in 
accordance with the provisions of this Act, and 
under regulations prescribed by the Commissioner 
pursuant to paragraph (2)— 
(A) provide for the organization, incorpora-
tion, operation, and regulation of National In-
surance Companies and National Insurance 
Agencies; and 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00114
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
115 
(B) issue charters therefore. 
(2) RULEMAKING.—The Commissioner shall 
issue regulations that permit the organization of Na-
tional Insurers in stock, mutual, reciprocal, or fra-
ternal form, and address such other matters related 
to the chartering and licensing of National Insurers 
and National Agencies, as the Commissioner deter-
mines appropriate. 
(3) ORGANIZATION.—The Commissioner shall 
require National Agencies to be organized in stock 
form. 
(b) CHARTERING CRITERIA.— 
(1) FACTORS.—In determining whether to issue 
a charter for a National Insurer or National Agency, 
the Commissioner shall consider— 
(A) the character and competency of the 
parties seeking the charter; and 
(B) the financial resources and future 
prospects of the proposed National Insurer or 
proposed National Agency. 
(2) INFORMATION.—The Commissioner shall re-
quest such information from the applicant as the 
Commissioner determines necessary to make the 
evaluation required under paragraph (1). 
(3) CORPORATE NAME.— 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00115
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
116 
(A) NATIONAL INSURERS.—The corporate 
name of each National Insurer shall include at 
the end the words ‘‘National Insurer’’ or the 
initials ‘‘N.I.’’. 
(B) NATIONAL AGENCIES.—The corporate 
name of each National Agency shall include at 
the end the words ‘‘National Insurance Agency’’ 
or the initials ‘‘NIA’’. 
(C) SAVINGS PROVISION.—Nothing in this 
Act shall preclude a State insurer or State in-
surance agency from using the word ‘‘national’’ 
or ‘‘Federal’’ in its corporate name if such word 
was included in the State insurer’s or agency’s 
corporate name on or before the date of enact-
ment of this Act. 
(c) ISSUANCE OR DENIAL OF CHARTER.— 
(1) DETERMINATION.—Not later than 60 days 
after the receipt of the articles of incorporation or 
other organization document from a proposed Na-
tional Insurer or National Agency, and such other 
information required under subsection (b)(2), the 
Commissioner shall— 
(A) issue a charter certificate to the appli-
cant; or 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00116
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
117 
(B) provide the applicant with a written 
explanation of the grounds for denying a char-
ter. 
(2) FEDERAL
PRODUCER
LICENSE.—If the 
Commissioner issues a charter certificate to a Na-
tional Agency, the Commissioner shall concurrently 
issue a Federal producer license to the applicant 
pursuant to section 301. A National Agency may not 
sell, solicit, or negotiate any line of insurance for 
which it does not hold a Federal producer license. 
(3) GROUNDS FOR DENIAL.—The Commissioner 
shall not grant a charter to an applicant if— 
(A) the applicant fails to— 
(i) comply with all applicable forma-
tion requirements; and 
(ii) provide any information requested 
by the Commissioner under subsection 
(b)(2); 
(B) the applicant lacks— 
(i) the financial resources necessary to 
comply with the standards under this Act; 
or 
(ii) the character or competence to op-
erate the National Insurer or National 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00117
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
118 
Agency in accordance with the standards 
under this Act; or 
(C) the Commissioner determines that the 
National Insurer or National Agency is being 
formed for an illegitimate purpose. 
(d) AMENDMENT OF CHARTER.—The Commissioner 
may, under such regulations as the Commissioner may 
prescribe, provide for the amendment of charters issued 
to National Insurers and National Agencies. 
(e) NO DELEGATION PERMITTED.—The Commis-
sioner may not delegate to any insurance self-regulatory 
organization any authority conferred under this section 
with respect to— 
(1) the organization, incorporation, and powers 
of National Insurers or National Agencies; or 
(2) the issuance and amendment of charters to 
a National Insurer or National Agency. 
(f) MAIN OFFICE.— 
(1) DESIGNATION.—Subject to the approval of 
the Commissioner, a National Insurer or National 
Agency may designate any office at which it con-
ducts insurance operations as its main office. 
(2) CHARTER
TO
SPECIFY
MAIN
OFFICE.—A 
National Insurer or National Agency shall specify 
the State in which its main office is located. 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00118
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
119 
(3) CHANGE IN MAIN OFFICE.—With the ap-
proval of the Commissioner, a National Insurer or 
National Agency may change the designation of its 
main office, including to another existing office of 
the National Insurer or National Agency. 
(4) CITIZENSHIP.—For purposes of jurisdiction, 
a National Insurer or National Agency shall be 
deemed a citizen of the State in which its main of-
fice is located and of the State in which it has its 
principal place of business. 
SEC. 202. UNITED STATES BRANCHES OF NON-UNITED 
STATES INSURERS. 
(a) AUTHORIZATION OF NON-UNITED STATES IN-
SURER.—A non-United States insurer may transact insur-
ance in the United States through a United States branch 
by qualifying and licensing the United States branch to 
do business as a National Insurer under this Act, under 
such regulations as the Commissioner may prescribe. 
(b) TRUST ACCOUNT.— 
(1) IN GENERAL.—The Commissioner shall not 
license a United States branch until the non-United 
States insurer establishes a trust account, pursuant 
to a deed of trust that meets the requirements of 
this subsection. 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00119
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
120 
(2) ASSETS.—The trusteed assets of a United 
States branch shall be held pursuant to a deed of 
trust with a United States bank that meets such re-
quirements as the Commissioner may prescribe, in 
trust for the exclusive benefit, security, and protec-
tion of the policyholders, or policyholders and credi-
tors, of the United States branch in the United 
States maintained as long as there is outstanding 
any liability of the United States branch arising out 
of its insurance transactions in the United States. 
(3) SURPLUS.—The trusteed surplus of a 
United States branch shall be subject to the same 
solvency standards required of National Insurers, in-
cluding the risk-based capital standards described in 
section 211. 
(4) FILING.—The Commissioner may require a 
United States branch to file a statement, in such 
form as the Commissioner may prescribe, that has 
been certified by the trustee. 
(c) SUBJECT TO APPLICABLE LAWS.—Except as oth-
erwise provided under this section, a United States branch 
established under this section— 
(1) shall be subject to all laws applicable to a 
National Insurer; and 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00120
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
121 
(2) shall be treated as a National Insurer for 
all purposes of this Act. 
SEC. 203. FEDERAL LICENSING OF NATIONAL INSURERS. 
(a) IN GENERAL.—A National Insurer may not sell, 
solicit, negotiate, or underwrite any line of insurance for 
which it does not hold a Federal license. 
(b) ISSUANCE OF FEDERAL LICENSES.— 
(1) IN
GENERAL.—The Commissioner may, 
under such regulations as the Commissioner may 
prescribe, issue Federal licenses that— 
(A) permit National Insurers to sell, so-
licit, negotiate, and underwrite lines of insur-
ance; and 
(B) specify the lines of insurance that each 
National Insurer may sell, solicit, negotiate, 
and underwrite. 
(2) RULEMAKING.—The regulations prescribed 
by the Commissioner pursuant to paragraph (1) 
shall provide that— 
(A) a National Insurer may hold a license 
to sell, solicit, negotiate, and underwrite prop-
erty/casualty insurance; 
(B) a National Insurer that holds a license 
to sell, solicit, negotiate, and underwrite life in-
surance may also sell, solicit, negotiate, and un-
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00121
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
122 
derwrite disability income insurance, long-term 
care insurance, annuities, and funding agree-
ments; and 
(C) no National Insurer may obtain— 
(i) a Federal license to engage in the 
sale, solicitation, negotiation, and under-
writing of property/casualty insurance; and 
(ii) a Federal license to engage in the 
sale, solicitation, negotiation, and under-
writing of life insurance, annuities, or 
funding agreements. 
(3) AUTHORITY
TO
LIMIT
SCOPE
OF
INSUR-
ANCE.—Subject to paragraph (2), the regulations 
prescribed by the Commissioner pursuant to para-
graph (1) may provide that a National Insurer that 
holds a license to sell, solicit, negotiate, and under-
write specified lines of insurance may not hold a li-
cense to sell, solicit, negotiate, and underwrite other 
specified lines of insurance. 
(4) DURATION.—A Federal license issued by 
the Commissioner pursuant to this subsection shall 
remain in effect until the license is— 
(A) surrendered by the National Insurer; 
or 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00122
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
123 
(B) revoked or suspended by the Commis-
sioner in accordance with the provisions of this 
Act. 
(c) REINSURANCE.—A National Insurer may— 
(1) only reinsure the lines of insurance that the 
National Insurer is— 
(A) licensed to sell, solicit, negotiate, and 
underwrite under its Federal license; or 
(B) otherwise permitted to reinsure by the 
terms of its Federal license; and 
(2) confine its business to reinsurance. 
(d) NONDISCRIMINATION.— 
(1) IN GENERAL.—Except as provided in para-
graph (2) and section 202, the Commissioner may 
not impose any condition for the granting of a Fed-
eral license to a National Insurer under this section 
solely because the National Insurer is— 
(A) a subsidiary of a non-United States 
person; 
(B) partially owned by a non-United States 
person; or 
(C) a United States branch of a non- 
United States insurer. 
(2) EXCEPTION.—Notwithstanding paragraph 
(1), the Commissioner may impose conditions for the 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00123
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
124 
granting of a Federal license that are different from 
those imposed on other National Insurers— 
(A) if the conditions attached are imposed 
on the legal form in which the National Insurer 
chooses to operate; or 
(B) if the Commissioner makes a written 
finding that the conditions are related to the 
protection of policyholders and are the min-
imum conditions necessary to achieve the pur-
poses of this Act. 
SEC. 204. CORPORATE GOVERNANCE. 
(a) COMPLIANCE WITH THIS ACT AND APPLICABLE 
REGULATIONS.—The corporate governance procedures of 
a National Insurer and a National Agency shall be con-
sistent with the provisions of this Act and all regulations 
issued by the Commissioner under this Act. 
(b) ADHERENCE TO STATE LAW.— 
(1) IN GENERAL.—Except as provided under 
paragraph (3), each National Insurer and National 
Agency shall adhere to corporate governance proce-
dures of the relevant State law of the State in which 
its main office is located or the State in which 1 of 
its United States holding companies is organized or 
incorporated. 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00124
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
125 
(2) DESIGNATION.—Each National Insurer and 
National Agency shall designate in its bylaws the 
body of relevant State law selected for its corporate 
governance procedures. 
(3) DISCRIMINATORY PROVISION.—If the Com-
missioner determines that any provision of a State 
corporate governance law is discriminatory as ap-
plied to National Insurers or National Agencies, 
such Insurer or Agency— 
(A) shall not be obligated to follow such a 
provision of the relevant State law; and 
(B) may follow such other provision of law 
as the Commissioner determines to be appro-
priate. 
(c) INDEPENDENT AUDIT COMMITTEE
FOR NA-
TIONAL INSURERS.— 
(1) ESTABLISHMENT.—Each National Insurer 
shall establish an audit committee of its board of di-
rectors, which shall be composed entirely of outside 
directors who are independent of management of the 
National Insurer. 
(2) SATISFACTION.—The requirement described 
in paragraph (1) will be satisfied if— 
(A) any person that controls the National 
Insurer has established an audit committee of 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00125
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
126 
its board of directors entirely composed of out-
side directors who are independent of manage-
ment of such controlling person; and 
(B) the role of the audit committee of the 
controlling person in subparagraph (A) includes 
review of financial statements of the National 
Insurer. 
SEC. 205. CONVERSION OF STATE INSURER TO NATIONAL 
INSURER OR STATE INSURANCE AGENCY TO 
NATIONAL AGENCY. 
(a) AUTHORIZATION TO CONVERT.— 
(1) IN GENERAL.—Notwithstanding any other 
provision of law and subject to the approval of the 
Commissioner, a State insurer may convert to a Na-
tional Insurer and a State insurance agency may 
convert to a National Agency. 
(2) ORGANIZATIONAL FORM.—A State insurer 
that converts to a National Insurer under paragraph 
(1) may— 
(A) retain an organizational form per-
mitted under section 201(a)(2); or 
(B) change directly to another organiza-
tional form that is permitted under section 
201(a)(2). 
(b) CONVERSION PROCEDURES.— 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00126
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
127 
(1) IN
GENERAL.—The Commissioner may, 
under such regulations as the Commissioner may 
prescribe, provide for— 
(A) the conversion of State insurers into 
National Insurers; 
(B) the conversion of State insurance 
agencies to National Agencies; and 
(C) the issuance of charters to such con-
verted insurers and agencies. 
(2) RULEMAKING.—The regulations issued by 
the Commissioner under this section shall be con-
sistent with— 
(A) the regulations issued by the Commis-
sioner under section 201; and 
(B) the provisions of section 242 or 243, 
in the case of a change of form effected at the 
time of a conversion of a State insurer into a 
National Insurer. 
(c) EFFECT OF CONVERSION.— 
(1) IN GENERAL.—Except as provided under 
paragraph (2), a State insurer or State insurance 
agency that converts under this section— 
(A) shall be subject to the provisions of 
this Act and to examination and regulation as 
provided under this Act to the same extent as 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00127
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
128 
other National Insurers and National Agencies 
organized under this Act; 
(B) shall be deemed to be a continuation 
of the corporate existence of the State insurer 
or State insurance agency, as applicable; and 
(C) shall, by operation of law and without 
further action, hold and be subject to all rights, 
privileges, liabilities, property interests, and 
other interests and obligations that the State 
insurer or State insurance agency held, or was 
subject to, immediately before the conversion. 
(2) EXCEPTIONS.—Notwithstanding paragraph 
(1), a State insurer or State insurance agency that 
converts under this section— 
(A) shall not be subject to any requirement 
to maintain deposits with State insurance regu-
latory authorities; 
(B) shall not hold any State license to sell, 
solicit, negotiate, and underwrite insurance that 
was held by the State insurer or State insur-
ance agency; and 
(C) shall obtain, in accordance with section 
203 or 301, as applicable, a Federal license for 
all lines of insurance that it sells, solicits, nego-
tiates, or underwrites. 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00128
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
129 
(d) SPECIAL AUTHORITY.—The Commissioner may, 
subject to such conditions as the Commissioner may pre-
scribe by regulation, permit a National Insurer or Na-
tional Agency resulting from the conversion of a State in-
surer or State insurance agency, as applicable, to retain, 
hold, or exercise assets, liabilities, powers, and authorities 
that do not conform to the legal requirements otherwise 
applicable to National Insurers or National Agencies to 
the extent the Commissioner determines is appropriate. 
(e) MUTUAL
HOLDING
COMPANY
CONTROLLING 
STATE INSURERS IN STOCK FORM.— 
(1) IN GENERAL.—If a State insurer converting 
under this section is an insurer in stock form that 
is controlled by a mutual holding company as a re-
sult of a previous conversion under State law from 
an insurer in mutual form to an insurer in stock 
form, and, after the conversion under this section, 
the mutual holding company would not control any 
other State insurers having policies in force that give 
rise to membership in the mutual holding company, 
then, notwithstanding any other provision of law, in 
accordance with this section and regulations issued 
by the Commissioner— 
(A) upon the conversion under this section, 
the mutual holding company may remain a cor-
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00129
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
130 
poration organized under the law of the State 
under which it was incorporated or may merge 
into a mutual holding company incorporated 
under the law of another State; and 
(B) upon and after the conversion under 
this section, the mutual holding company— 
(i) shall, to the extent provided in reg-
ulations issued by the Commissioner, be 
subject to— 
(I) title V; and 
(II) examination, reporting, regu-
lation, and other supervision under 
this Act; and 
(ii) shall not be subject to any form of 
licensing, examination, reporting, regula-
tion, or other supervision by reason of 
being a mutual holding company or relat-
ing to the rights of members, the sale, so-
licitation, negotiation, or underwriting of 
insurance (including all products of Na-
tional Insurers) or any other insurance op-
erations except as authorized under Fed-
eral law and except as provided in section 
125(b), as if the mutual holding company 
were a National Insurer under this Act. 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00130
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
131 
(2) CONVERSION TO A CORPORATION IN STOCK 
FORM.—Notwithstanding any other provision of law 
and in accordance with this subsection and regula-
tions issued by the Commissioner, a mutual holding 
company described in paragraph (1) may convert to 
a corporation in stock form in a manner that— 
(A) is found by the Commissioner to be 
fair and equitable to the mutual holding com-
pany and its members; and 
(B) is generally similar to conversion of an 
insurer in mutual form to a National Insurer in 
stock form pursuant to section 243. 
(f) NO DELEGATION PERMITTED.—The Commis-
sioner may not delegate any authority under this section 
involving the conversion of a State insurer into a National 
Insurer or a State insurance agency into a National Agen-
cy to any insurance self-regulatory organization. 
SEC. 206. CONVERSION OF NATIONAL INSURER TO STATE 
INSURER OR NATIONAL AGENCY TO STATE 
AGENCY. 
(a) IN GENERAL.—Subject to such notification proce-
dures as the Commissioner may prescribe by regulation, 
a National Insurer may convert into a State insurer and 
a National Agency may convert into a State insurance 
agency, in accordance with applicable State law. 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00131
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
132 
(b) SAVINGS PROVISION.—Nothing in this section or 
in the conversion of a National Insurer into a State in-
surer or a National Agency into a State insurance Agency 
shall operate to abrogate any rights, privileges, liabilities, 
property interests, or other interests or obligations that 
a National Insurer or National Agency held or was subject 
to immediately before the conversion. 
SEC. 207. POWERS. 
(a) IN GENERAL.—Upon issuance of its charter, a 
National Insurer or National Agency shall have the power, 
subject to such regulations as the Commissioner may pre-
scribe, to— 
(1) have, alter, use, and reproduce a corporate 
seal, or a facsimile of it; 
(2) have perpetual succession until such time as 
it is liquidated, dissolved, merged, or otherwise 
wound up in accordance with applicable law; 
(3) adopt, amend, and repeal by-laws; 
(4) sue or be sued, complain and defend, and 
otherwise litigate in any court and participate, as a 
party or otherwise, in any judicial, administrative, 
arbitral, or other proceeding, in its corporate name; 
(5) make contracts and guarantees, incur liabil-
ities, borrow money, issue notes, bonds, and other 
obligations (which may be convertible into or include 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00132
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS
133 
the option to purchase other securities of the Na-
tional Insurer or National Agency), and secure any 
of its obligations by mortgage or pledge of any of its 
property, franchises, or income; 
(6) purchase, receive, subscribe for, or other-
wise acquire, own, hold, vote, improve, employ, use, 
and otherwise deal in and with real and personal 
property or other assets, or any interest therein, and 
sell, convey, mortgage, lease, exchange, transfer, or 
otherwise dispose of, or mortgage or pledge, all or 
any of its property and assets, or any interest there-
in; 
(7) lend money, invest, and reinvest its funds 
and receive and hold real and personal property as 
security for repayment; 
(8) participate with others in any corporation, 
partnership, limited partnership, joint venture, or 
other association, or in any transaction, under-
taking, or arrangement, which the National Insurer 
or National Agency would have power to conduct by 
itself, whether or not such participation involves 
sharing or delegating control with or to others; 
(9) elect or appoint directors, officers, employ-
ees, and agents of the National Insurer or National 
VerDate Aug 31 2005 
03:49 Oct 03, 2006
Jkt 049200
PO 00000
Frm 00133
Fmt 6652
Sfmt 6201
E:\BILLS\H6225.IH
H6225
hmoore on PROD1PC68 with HMBILLS