223 
report required under subsection (b)(3)(B) to ensure that 
prompt corrective action is taken to resolve any hazardous 
financial condition of a National Insurer. Such rules may 
include such capital measures and categories, capital 
standards, supervisory criteria, restrictions on permissible 
actions of such Insurers, requirements for such Insurers, 
procedures, provisions regarding conservatorship and re-
ceivership of such Insurers, and other provisions as the 
Commissioner considers are appropriate to carry out such 
purpose and are consistent with the recommendation in 
the report submitted pursuant to subsection (b)(3). 
(b) GAO STUDY AND REPORT.— 
(1) IN GENERAL.—The Comptroller General of 
the United States shall conduct a study to identify 
an appropriate structure of procedures and require-
ments for taking prompt corrective actions with re-
spect to National Insurers, to ensure that any haz-
ardous financial condition of such a National In-
surer is resolved effectively and efficiently with the 
fewest possible losses. 
(2) 
REQUIREMENTS.—In 
conducting 
such 
study, the Comptroller General shall analyze and 
evaluate various proposals, structures, methods, and 
systems for taking prompt corrective actions with re-
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spect to various financial entities and institutions, 
including the following: 
(A) The prompt corrective action require-
ments under section 38 of the Federal Deposit 
Insurance Act (12 U.S.C. 1831o) with respect 
to insured depository insitutions. 
(B) The NAIC’s ‘‘Model Regulation to De-
fine Standards and Commisioner’s Authority 
for Companies Deemed to be in Hazardous Fi-
nancial Condition’’, as updated in 2006. 
(3) REPORT.— 
(A) IN GENERAL.—Not later than the ex-
piration of the 6-month period beginning on the 
date of the enactment of this Act, the Comp-
troller General shall submit a report to the 
Commissioner, the Committee on Financial 
Services of the House of Representatives, and 
the Committee on Banking, Housing, and 
Urban Affairs of the Senate, regarding the 
study under this subsection. 
(B) CONTENTS.—The report shall describe 
the study and the results of the evaluations 
conducted under the study, and shall include a 
specific recommendation to the Commissioner 
for establishment of an appropriate structure of 
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procedures and requirements for taking prompt 
corrective actions with respect to National In-
surers, to ensure that any hazardous financial 
condition of a National Insurer is resolved ef-
fectively and efficiently with the fewest possible 
losses. 
Subtitle B—Receivership 
SEC. 551. APPOINTMENT OF OFFICE AS RECEIVER. 
(a) IN GENERAL.—Notwithstanding any other provi-
sion of Federal or State law, if any of the grounds under 
subsection (c) exist, at the discretion of the Commissioner, 
the Commissioner may establish a receivership for a Na-
tional Insurer for the purpose of rehabilitation or liquida-
tion, as appropriate. 
(b) APPOINTMENT.—In any receivership established 
under this title, the Commissioner shall appoint the Office 
as receiver. 
(c) GROUNDS FOR APPOINTMENT.—The grounds for 
appointing receivership for the purpose of rehabilitating 
or liquidating a National Insurer are as follows: 
(1) INSOLVENCY.—The National Insurer is in-
solvent. 
(2) SUBSTANTIAL DISSIPATION.—The National 
Insurer has substantial dissipation of assets or earn-
ings due to— 
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(A) any violation of any provision of Fed-
eral or State law; or 
(B) any hazardous practice. 
(3) HAZARDOUS CONDITION.—The National In-
surer is in such condition that the further trans-
action of business would be hazardous, financially or 
otherwise, to policyholders, creditors, or the public. 
(4) CEASE-AND-DESIST ORDERS.—The National 
Insurer has willfully violated a cease-and-desist 
order that has become final. 
(5) CONCEALMENT.—The National Insurer has 
concealed the books, papers, records, or assets of the 
National Insurer, or has refused to submit the 
books, papers, records, or affairs of the National In-
surer, for inspection to any examiner or to any law-
ful agent of the Commissioner. 
(6) INABILITY
TO
MEET
OBLIGATIONS..—The 
National Insurer is likely to be unable to pay its ob-
ligations or meet the demands of its creditors in the 
normal course of business. 
(7) LOSSES.—The National Insurer has in-
curred or is likely to incur losses that will deplete all 
or substantially all of its capital, and there is no rea-
sonable prospect for the National Insurer to replen-
ish its capital. 
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227 
(8) VIOLATIONS
OF
LAW.—The National In-
surer has violated any law or regulation, or com-
mitted any hazardous practice or condition, that is 
likely to— 
(A) cause insolvency or substantial dissipa-
tion of assets or earnings; or 
(B) weaken the condition of the National 
Insurer. 
(9) CONSENT.—The National Insurer, by reso-
lution of its board of directors or its shareholders or 
members, consents to the appointment. 
(10) MONEY
LAUNDERING..—The Attorney 
General notifies the Commissioner in writing that 
the National Insurer has been found guilty of a 
criminal offense under section 1956 or 1957 of title 
18, United States Code, or section 5322 or 5324 of 
title 31, United States Code. 
(d) DIRECTORS NOT LIABLE.—The members of the 
board of directors of a National Insurer shall not be liable 
to the shareholders, members, policyholders, or creditors 
of the insurer for acquiescing in, or consenting in good 
faith to, the appointment of the Office as a receiver. 
(e) OFFICE NOT SUBJECT TO ANY OTHER FEDERAL 
AGENCY.—When acting as receiver, the Office shall not 
be subject to the direction or supervision of any other 
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228 
agency of the United States or any State in the exercise 
of the rights, powers, and privileges of the Office. 
SEC. 552. AUTOMATIC STAY. 
(a) AUTOMATIC STAY.—Except as provided in sub-
section (c) or as otherwise provided in this title, the com-
mencement of a receivership proceeding under this title 
operates as a stay, applicable to all entities, of— 
(1) the commencement or continuation, includ-
ing the issuance or employment of process, of a judi-
cial, administrative, or other action or proceeding 
against the National Insurer, including an arbitra-
tion proceeding, that was or could have been com-
menced before the commencement of the receivership 
proceeding under this title, or to recover a claim 
against the National Insurer that arose before the 
commencement of the receivership proceeding under 
this title; 
(2) the enforcement, against the National In-
surer or against property of the National Insurer, of 
a judgment obtained before the commencement of 
the receivership proceeding under this title; 
(3) any act to obtain possession of property of 
the National Insurer or of property from the Na-
tional Insurer or to exercise control over property or 
records of the National Insurer; 
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(4) any act to create, perfect, or enforce any 
lien against property of the National Insurer; 
(5) any act to collect, assess, or recover a claim 
against the National Insurer that arose before the 
commencement of a receivership proceeding under 
this title; and 
(6) the commencement or continuation of an 
action or proceeding against a reinsurer of the Na-
tional Insurer, by the holder of a claim against the 
National Insurer, seeking reinsurance recoveries that 
are contractually due to the National Insurer. 
(b) OTHER STAY.—Except as provided in subsections 
(c) and (d) or as otherwise provided in this title, the com-
mencement of a receivership proceeding under this title 
operates as a stay, applicable to all entities, of the com-
mencement or continuation, including the issuance or em-
ployment of process, of a judicial, administrative, or other 
action or proceeding, including the enforcement of any 
judgment against any insured that was or could have been 
commenced before the commencement of the receivership 
proceeding under this title or to recover a claim against 
any insured that arose before or after the commencement 
of the receivership proceedings under this title and for 
which the insurer is or may be liable under an insurance 
policy or is obligated to defend a party. The stay provided 
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by this subsection shall terminate 90 days after appoint-
ment of the receiver unless extended by order of the Com-
missioner, for good cause shown, after notice to any af-
fected parties and such hearing as the Commissioner de-
termines is appropriate, provided that any applicable stat-
ute of limitation with respect to any claim against an in-
sured shall be tolled during the period of the stay provided 
by this subsection and any extensions. 
(c) EXCEPTIONS.—The commencement of a receiver-
ship proceeding under this title does not operate as a stay 
of— 
(1) criminal actions; 
(2) any act to perfect, or to maintain or con-
tinue the perfection of, an interest in property to the 
extent such act is accomplished within any relation 
back period under applicable law; 
(3) setoff as permitted by regulations issued by 
the Commissioner; 
(4) termination of reinsurance contracts cov-
ering insurance policies; 
(5) pursuit and enforcement of nonmonetary 
governmental claims, judgments, and proceedings; 
(6) enforcement of a lessor’s rights under a 
lease that expired prior to the filing of the receiver-
ship proceeding; 
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(7) presentment of a negotiable instrument and 
the giving of notice of and protesting dishonor of 
such an instrument; 
(8) enforcement of rights against single bene-
ficiary trusts; 
(9) termination, liquidation, and netting of obli-
gations under qualified financial contracts as such 
contracts are defined by regulations issued by the 
Commissioner; 
(10) discharge by a guaranty association of 
statutory responsibilities or the pursuit of claims 
against a guaranty association to the extent per-
mitted by law other than this title; or 
(11) an action that is— 
(A) an audit by a governmental unit to de-
termine tax liability; 
(B) the issuance to the insurer by a gov-
ernmental unit of a notice of tax deficiency; 
(C) a demand for tax returns; or 
(D) the making of an assessment for any 
tax and issuance of a notice and demand for 
payment of such an assessment. 
(d) LENGTH OF STAY.—Except as provided in sub-
section (f)— 
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232 
(1) the stay of an act against property of the 
insurer under subsection (a) continues until such 
property is no longer property of the receivership; 
and 
(2) the stay of any other act under subsection 
(a) continues until the receivership is terminated. 
(e) OTHER EXCEPTIONS.—Notwithstanding the pro-
visions of subsection (a)— 
(1) claims against the National Insurer that 
arose before the commencement of the receivership 
proceeding under this title may be asserted as a 
counterclaim in any judicial, administrative, or other 
action or proceeding initiated by or on behalf of the 
receiver against the holder of such claims; and 
(2) a party against whom a judicial, adminis-
trative, or other action or proceeding is initiated by 
or on behalf of the receiver may assert and enforce 
any contractual right the party may have to require 
arbitration of any dispute under any law. 
(f) RELIEF FROM STAY.—On request of a party in 
interest and after notice and such hearing as the Commis-
sioner determines appropriate, the Commissioner may 
grant relief from the stay in effect pursuant to subsection 
(a), such as by terminating, annulling, modifying, or con-
ditioning such stay— 
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(1) for cause; or 
(2) with respect to a stay of an action against 
property under subsection (a) if— 
(A) the National Insurer does not have an 
equity in such property; and 
(B) such property is not necessary to an 
effective plan. 
(g) BURDEN OF PROOF.—In any hearing under sub-
section (a), the party seeking relief from the stay shall 
have the burden of proof on each issue that must be estab-
lished by clear and convincing evidence. 
(h) DAMAGES FOR WILLFUL VIOLATION OF STAY.— 
The estate of a National Insurer that is injured by any 
willful violation of a stay provided by this section shall 
be entitled to actual damages, including costs and attor-
neys’ fees, and, in appropriate circumstances, the Court 
may impose additional sanctions. 
SEC. 553. POWERS AND DUTIES. 
(a) IN GENERAL.—The receiver shall have all the 
powers of the directors, officers, and managers of the in-
surer, whose authority shall be suspended, except as they 
are redelegated by the receiver or liquidator. 
(b) SPECIFIC POWERS.—In addition to those powers 
otherwise provided by this title, the receiver or liquidator 
shall have the power to— 
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(1) use, sell, or lease property of the insurer; 
(2) after notice and a hearing, borrow money 
on the security of the National Insurer’s assets, bor-
row money without security, and execute and deliver 
all documents necessary to such transaction for the 
purpose of facilitating the receiver; 
(3) collect all debts and money due and claims 
belonging to the National Insurer, wherever located; 
(4) institute and pursue legal actions and to 
continue any pending action, in any jurisdiction; 
(5) suspend, limit, or permit insurance policy 
withdrawals in connection with insurance policies; 
(6) do other acts as are necessary or expedient 
to collect, marshal, or protect the assets or property, 
including the power to sell, compound, compromise, 
or assign debts for purposes of collection upon such 
terms and conditions as the receiver considers best 
and that are consistent with this title; 
(7) enter into contracts necessary to carry out 
the order of rehabilitation or liquidation; 
(8) hold hearings, subpoena witnesses to compel 
their attendance, administer oaths, examine a person 
under oath, and compel a person to subscribe to the 
person’s testimony after it has been correctly re-
duced to writing and, in connection with these pow-
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235 
ers, require the production of books, papers, records, 
or other documents that the receiver considers rel-
evant to the inquiry; and 
(9) exercise all powers held or conferred upon 
receivers by the laws of the United States that are 
not inconsistent with the provisions of this title. 
SEC. 554. RULEMAKING. 
(a) IN GENERAL.—The Commissioner shall establish, 
by regulation, standards and procedures for receivership 
proceedings commenced under this title, including proce-
dures and priorities for the allowance or disallowance of 
claims, standards for the treatment of reinsurance, and 
such other matters as the Commissioner determines ap-
propriate. 
(b) MODEL.—The regulations issued by the Commis-
sioner under subsection (a) shall be based upon the Uni-
form Receivership Law adopted by the Interstate Insur-
ance Receivership Compact Commission in September 
1998. 
SEC. 555. JUDICIAL REVIEW. 
(a) NATIONAL INSURERS.— 
(1) IN GENERAL.—Whenever the Office is ap-
pointed as a receiver for a National Insurer, the Na-
tional Insurer may, within 30 days of such appoint-
ment, bring an action in the United States District 
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Court for the judicial district in which the principal 
place of business of such insurer is located, or in the 
United States District Court for the District of Co-
lumbia, for an order requiring the Office to remove 
itself as receiver. 
(2) REVIEW.—Upon the filing of an action 
under paragraph (1), the court shall, upon the mer-
its dismiss such action or direct the Office to remove 
itself as such receiver. 
(b) CLAIMANTS.—If the Office, acting as a receiver, 
disallows a claim against the receivership, a claimant may, 
within 60 days of the notice of disallowance, bring an ac-
tion in the United States District Court for the judicial 
district in which the principal place of business of the Na-
tional Insurer is located, or in the United States District 
Court for the District of Columbia, to challenge the dis-
allowance. 
TITLE VI—INSOLVENCY 
PROTECTION 
SEC. 601. PARTICIPATION IN GUARANTY ASSOCIATIONS. 
(a) PARTICIPATION IN STATE GUARANTY ASSOCIA-
TIONS.— 
(1) NATIONAL
LIFE
INSURERS.—A National 
Life Insurer shall become and continue as a member 
of the life and health guaranty association in each 
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qualified State in which the National Insurer is 
doing business. 
(2) NATIONAL
PROPERTY/CASUALTY
INSUR-
ERS.—A National Property/Casualty Insurer shall 
become and continue as a member of the property/ 
casualty guaranty association in each qualified State 
in which the National Insurer is doing business. 
(3) ASSESSMENTS.—Associations in qualified 
States shall be authorized to levy assessments on 
National Insurers doing business in such States. Na-
tional Insurers shall be obligated to pay such assess-
ments to the extent that they are levied on the same 
terms that State insurers are obligated to pay as-
sessments to the association under applicable State 
law. 
(b) PARTICIPATION IN NATIONAL INSURANCE GUAR-
ANTY ASSOCIATION.—A National Insurer that does busi-
ness in 1 or more nonqualified States shall become and 
continue to be a member of the National Insurance Guar-
anty Corporation. 
SEC. 602. QUALIFIED AND NONQUALIFIED STATE. 
(a) QUALIFIED STATE DEFINED.—In this title, the 
term ‘‘qualified State’’ means a State in which the Com-
missioner has determined that, pursuant to State law— 
(1) the State has established— 
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(A) an association that admits as members 
both State life insurers and National Life In-
surers, and that, in the event a member is 
placed into receivership for purposes of rehabili-
tation or liquidation, may provide benefits to 
the policyholders of such National Life Insurers 
that are not less than the benefits provided to 
policyholders of State life insurers; and 
(B) an association that admits as members 
both State property/casualty insurers and Na-
tional Property/Casualty Insurers, and that, in 
the event a member is placed into receivership 
for purposes of liquidation, may provide cov-
erage to policyholders of such National Prop-
erty/Casualty Insurers that is not less than the 
coverage provided to policyholders of State 
property/casualty insurers; 
(2) the boards of directors of the associations 
described in paragraph (1) are required to— 
(A) be representative of insurers on a basis 
that does not unfairly discriminate against Na-
tional Insurers; and 
(B) be fairly representative of insurers of 
different sizes and lines of insurance written; 
and 
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239 
(3) the bylaws of the associations described in 
paragraph (1) provide that if either such association 
fails to act within a reasonable period of time with 
respect to a National Insurer, the Commissioner 
shall have the powers and the duties of the associa-
tion under the laws of the State that established the 
association with respect to the National Insurer. 
(b) DETERMINATION.— 
(1) IN GENERAL.—The Commissioner shall es-
tablish, by regulation, a procedure for determining 
whether a State is a qualified State. 
(2) CERTIFICATION.—The Commissioner shall 
determine that a State is a qualified State upon re-
ceipt of a— 
(A) written request that is jointly filed by 
the life and health guaranty association and the 
property/casualty guaranty association estab-
lished by a State; and 
(B) certification by the State’s insurance 
regulator that such State and such associations 
satisfy the terms of the definition of a qualified 
State, as set forth in subsection (a). 
(c) REVOCATION.—The Commissioner shall revoke a 
determination that a State is a qualified State if the Com-
missioner determines that a State is a nonqualified State. 
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