205
(1) COVERED
PARTY.—The term ‘‘covered
party’’ means a national insurer, including any offi-
cer, director, or employee of such national insurer.
(2) STATE LAW.—The term ‘‘State law’’ means
any law, rule, regulation, interpretation, or order
adopted by a State legislature or promulgated by a
State regulatory or enforcement agency, and any
provision of a State constitution.
SEC. 702. GENERAL PROHIBITION.
No State may prevent or interfere with the ability
of a covered party to engage in any activity authorized
under this Act.
SEC. 703. STATE LICENSE NOT REQUIRED.
No covered person shall be required to obtain any
State license or similar authorization in order to engage
in any State in any business or activity authorized by this
Act.
SEC. 704. STATE INSURANCE LAW.
Except as otherwise provided in this Act, no State
law that relates to the formation, chartering, supervision,
regulation, or business practices of an insurer, or any
other matter related to the business of insurance, includ-
ing issuance or revocation of a license to conduct the busi-
ness of insurance, regulation of solvency and financial con-
dition, mergers and acquisitions, any policy form and en-
206
dorsement, marketing and sales practice, underwriting,
damage appraisal and claims adjustment, any claims han-
dling and settlement practice, and unfair insurance trade
practices and market conduct activity (including any re-
quirement related to nonrenewal, cancellation, and change
in policy terms, including rates) shall apply to a covered
party, except to the extent consistent with the provisions
of this Act.
SEC. 705. PROHIBITION OF DISCRIMINATION.
(a) IN GENERAL.—Any State law that is not pre-
empted by section 704 may not discriminate against a cov-
ered party or a State-licensed insurance producer selling
a product of a national insurer or be applied to a covered
party in a manner different than it is applied to a State
insurer, State-licensed agency, affiliate of any such insurer
or agency, or any officer, director, employee, or agent of
such insurer, agency, or affiliate.
(b) STATE INSURERS.—No State may discriminate
against a State insurer that is affiliated with a national
insurer on the basis of that affiliation.
SEC. 706. PERMISSIBLE STATE REGULATION.
The following State laws are not preempted by sub-
section 704 or any other provision of this Act, and the
following activities of a covered party shall be subject to
State regulation, to the extent applicable: Provided, That
207
such laws shall be subject to the antidiscrimination stand-
ard set forth in section 705:
(1) 
RESIDUAL
MARKET
INSURANCE
PRO-
GRAMS.—Any State law that requires participation
in an assigned risk plan, mandatory joint under-
writing association, or any other mandatory residual
market mechanism designed to make insurance
available to those unable to obtain it in the vol-
untary market: Provided, That this paragraph shall
not apply to any State law governing participation
in any voluntary joint underwriting association or
similar arrangement: Provided further, That the Di-
rector may review any State law regulating any ac-
tivity described in this subsection and may preempt
such law if the Director determines it to be incon-
sistent with any provision or purpose of this Act.
(2) TAXES.—Any State law that imposes liabil-
ity for State and local taxes and assessments on in-
surers, including premium taxes, retaliatory taxes,
tax credits, deductions, and offsets related thereto,
as provided in section 401.
(3) CORPORATE GOVERNANCE.—Except to the
extent inconsistent with any provision or purpose of
this Act, any State governing insurance company in-
208
corporation, organization, corporate governance, vot-
ing rights, and related matters.
(4) REPARATION REQUIREMENTS.—Any State
law that prescribes the requirements of the repara-
tions that every insurer must provide if it under-
writes and sells policies of a particular type in a
State.
(5) ADVISORY ORGANIZATIONS.—Any State law
that mandates the participation of insurers in an ad-
visory or statistical organization: Provided, That
such participation does not require a national in-
surer to use any particular rate, rating element,
price, or form.
(6) WORKERS’ COMPENSATION.—Any State law
that regulates participation in a workers’ compensa-
tion administration mechanism, provided such par-
ticipation is not inconsistent with any provision of
this Act.
(7) RATE REGULATION.—Any State law that
regulates insurance rates.
(8) CONVERSION TO STOCK FORM.—Any State
law that regulates the conversion of a mutual State
insurer to an insurer in stock form.
209
(9) INSURANCE
PRODUCER
LICENSING.—Any
State law that regulates the licensing of insurance
producers.
SEC. 707. SALES ACTIVITIES BY STATE-LICENSED INSUR-
ANCE PRODUCERS.
No State may—
(1) prevent a State-licensed insurance producer
from selling, soliciting, or negotiating an insurance
policy or annuity contract issued by a national in-
surer;
(2) impose any condition on a State-licensed
producer that significantly interferes with the ability
of selling, soliciting, or negotiating an insurance pol-
icy or annuity contract issued by a national insurer;
or
(3) discriminate, in any manner, against a
State-licensed producer because it sells, solicits, or
negotiates an insurance policy or annuity contract
issued by a national insurer.
210
TITLE 
VIII—CONFORMING
AMENDMENTS 
AND 
OTHER
PROVISIONS
SEC. 801. FEDERAL COURT JURISDICTION.
(a) IN GENERAL.—Chapter 85 of title 28, United
States Code, is amended by adding at the end the fol-
lowing new section:
‘‘§ 1369. National insurer as party
‘‘The district courts shall have original jurisdiction
of any civil action—
‘‘(1) commenced by the United States, or by di-
rection of any officers thereof, against any national
insurer;
‘‘(2) to wind up the affairs of a national in-
surer; and
‘‘(3) to enjoin the Director of the Office of Na-
tional Insurers of the Department of the Treasury,
or any receiver acting under the direction of the Di-
rector, as provided in the Insurance Industry Mod-
ernization and Consumer Protection Act.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 85 of title 18, United States Code, is amended
by adding at the end the following new item:
‘‘1369. National insurer as party.’’.
211
SEC. 802. FEDERAL COURT VENUE.
IN GENERAL.—Chapter 87 of title 28, United States
Code, is amended by adding at the end the following new
section:
‘‘§ 1414. National insurer action against Director of
National Insurers.
‘‘Any civil action by a national insurer to enjoin the
Director of National Insurers of the Department of the
Treasury, under the provisions of any Act of Congress re-
lating to such insurers, may be prosecuted in the judicial
district where such insurer is located.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 87 of title 18, United States Code, is amended
by adding at the end the following new item:
‘‘1414. National insurer action against Director of National Insurers.’’.
SEC. 803. JUDICIAL REVIEW.
Except as otherwise expressly provided in this Act,
any party aggrieved by an order or other agency action
(as such terms are defined in section 551 of title 5, United
States Code) of the Director under this Act may obtain
a review of such order or other action in the United States
Court of Appeals within any circuit wherein such party
has its main office, or in the Court of Appeals for the
District of Columbia, by filing in the court, within 30 days
after the entry of the Director’s order, a petition praying
that the order or other action of the Director be set aside,
212
modified or terminated. A copy of such petition shall be
forthwith transmitted to the Director by the clerk of the
court, and thereupon the Director shall file in the court
the record made before the Director, as provided in section
2112 of title 28, United States Code. Upon the filing of
such petition, the court shall have jurisdiction to affirm,
set aside, modify, or terminate the order or other action
of the Director and to require the Director to take such
action with regard to the matter under review as the court
deems proper. Review of such proceedings shall be had as
provided in chapter 7 of title 5, United States Code. The
judgment and decree of the court shall be final, except
that the same shall be subject to review by the Supreme
Court upon certiorari, as provided in section 1254 of title
28, United States Code.
SEC. 804. AMENDMENT TO FREEDOM OF INFORMATION
ACT.
Section 552(b)(8) of title 5, United States Code, is
amended by inserting ‘‘(including national insurers, as
such term is defined in section 101 of the Insurance In-
dustry Modernization and Consumer Protection Act)’’
after ‘‘financial institutions’’.
213
SEC. 805. AMENDMENTS TO INTERNAL REVENUE CODE OF
1986.
(a) 5-YEAR MORATORIUM ON FEDERAL TAX LAW
CHANGES APPLICABLE SOLELY
TO NATIONAL INSUR-
ERS.—For a period of 5 calendar years beginning on Jan-
uary 1 of the first full calendar year beginning on or after
transition commencement date—
(1) an insurer that has converted from being a
State insurer into a national insurer under this Act
shall compute its liability for all Federal income and
excise taxes under the Internal Revenue Code of
1986 and the Treasury Regulations promulgated
thereunder as if such insurance company had contin-
ued to prepare and file an annual statement in ac-
cordance with the requirements of the NAIC and of
the State in which such insurer was domiciled imme-
diately prior to such conversion; and
(2) all parties to any contract, including any in-
surance, annuity, health, and other contracts, writ-
ten by a national insurer, shall be treated for all
purposes of the Internal Revenue Code, and for pur-
poses of all Treasury regulations promulgated there-
under, as if such contract were an insurance, annu-
ity, health, or other contract under the applicable
law of the State in which such national insurer was
domiciled immediately prior to such conversion.
214
For purposes of this section, any national insurer that was
not domiciled in any State immediately before it was
issued a charter as a national insurer shall be deemed to
have been domiciled in the State designated by such na-
tional insurer pursuant to section 401 of this Act.
(b) CONFORMING AMENDMENTS.—For purposes of
computing the tax liability of a national insurer following
the 5-year period described in subsection (a) of this sec-
tion, the Internal Revenue Code of 1986 is amended as
follows:
(1) Section 264(f)(3) is amended by inserting
‘‘or, in the case of a national insurer, by the Direc-
tor of the Office of National Insurers of the Depart-
ment of the Treasury’’ after ‘‘National Association
of Insurance Commissioners’’.
(2) Section 807(d)(2)(C) is amended by insert-
ing ‘‘or, in the case of a national insurer, such
standard tables for mortality and morbidity pre-
scribed by the Director of the Office of National In-
surers of the Department of the Treasury,’’ after
‘‘mortality and morbidity’’.
(3) Section 807(d)(3)(A) is amended by insert-
ing ‘‘or, in the case of a national insurer, such re-
serve method prescribed by the Director of the Of-
215
fice of National Insurers of the Department of the
Treasury’’—
(A) in clause (i), after ‘‘covered by the
CVRM’’;
(B) in clause (ii), after ‘‘covered by the
CARVM’’; and
(C) in clause (iv)(I), after ‘‘National Asso-
ciation of Insurance Commissioners’’.
(4) Sections 807(d)(3)(A)(iv)(II), 809(g)(4)
and 811(a) are amended by inserting ‘‘or, in the
case of a national insurer, by the Director of the Of-
fice of National Insurers of the Department of the
Treasury’’ after ‘‘National Association of Insurance
Commissioners’’ each place such term appears.
(5) Section 807(d)(4)(B)(i) is amended by in-
serting ‘‘or, in the case of a national insurer, such
rate determined by the Director of the Office of Na-
tional Insurers of the Department of the Treasury’’
after ‘‘at least 26 States’’.
(6) Section 816(b)(3)(B) is amended by insert-
ing ‘‘or, in the case of a national insurer, by the Di-
rector of the Office of National Insurers of the De-
partment of the Treasury’’ after ‘‘State insurance
commissioner’’.
216
(7) Sections 817(d)(1) and 817A(d)(1) are
amended by inserting ‘‘or, in the case of a national
insurer, by law or regulation of the United States’’
after ‘‘State law or regulation’’ each place such term
appears.
(8) Section 818 is amended by adding at the
end the following new subsection:
‘‘(h) DEFINITIONS RELATING TO NATIONAL INSUR-
ERS.—For purposes of this title:
‘‘(1) NATIONAL INSURER.—The term ‘national
insurer’ means any insurer chartered under the In-
surance Industry Modernization and Consumer Pro-
tection Act.
‘‘(2) NATIONAL LIFE INSURER.—The term ‘na-
tional life insurer’ means any national insurer that
is a life insurance company within the meaning of
section 816(a).’’.
(9) Section 846(f)(3) is amended by inserting
‘‘or, in the case of a national insurer, the annual
statement approved by the Director of the Office of
National Insurers which the taxpayer is required to
file with the Director of the Office of National In-
surers of the Department of the Treasury’’ after
‘‘authorities of a State’’.
217
(10) Section 7702(c)(3)(B)(i) shall be amended
by inserting ‘‘or, in the case of a national insurer,
in such standard tables prescribed by the Director of
National Insurers of the Department of the Treas-
ury’’ after ‘‘in section 807(d)(5))’’.
(11) Section 7702B(g)(4)(B)(ii) is amended by
inserting ‘‘or, in the case of a national insurer, by
the Director of National Insurers of the Department
of the Treasury’’ after ‘‘appropriate State regulatory
agency’’.
(12) Section 9832(b)(2) is amended by insert-
ing ‘‘or, in the case of a national insurer, which is
licensed to engage in the business of insurance by
the United States and which is subject to regulation
by the Director of the Office of National Insurers of
the Department of the Treasury and to regulations
promulgated under the authority of such Director’’
after ‘‘the enactment of this section)’’.
(c) DEFINITION OF APPLICABLE LAW.—In the case
of any national insurer, for purposes of sections 7702(a)
and (h) of the Internal Revenue Code of 1986, the term
‘‘applicable law’’ shall include the law of the United
States, or, in the case of a national insurer that has con-
verted from a State insurer into a national insurer, any
State law under which any policy was written by such na-
218
tional insurer either before or after such national insurer
was converted from a State insurer into a national insurer.
SEC. 806. AMENDMENTS TO FEDERAL SECURITIES LAWS.
(a) AMENDMENTS TO SECURITIES ACT OF 1933.—
(1) Section 2(a)(13) of the Securities Act of
1933 (15 U.S.C. 77b(a)(13)) is amended by insert-
ing ‘‘the Director of the Office of National Insurers
of the Department of the Treasury or’’ after ‘‘sub-
ject to supervision by’’.
(2) Section 3(a)(8) of the Securities Act of
1933 (15 U.S.C. 77c(a)(8)) is amended by inserting
‘‘the Director of the Office of National Insurers of
the Department of the Treasury or’’ after ‘‘subject
to the supervision of’’.
(3) Section 4(5)(A)(ii) of the Securities Act of
1933 (15 U.S.C. 77d(5)(A)(ii)) is amended by in-
serting ‘‘the Director of the Office of National In-
surers of the Department of the Treasury or’’ after
‘‘subject to the supervision of’’.
(b) AMENDMENTS TO SECURITIES EXCHANGE ACT
OF 1934.—Section 17(i) of the Securities Exchange Act
of 1934 (15 U.S.C. 78q(i)) is amended—
(1) in paragraph (3)(C)(iii), by inserting ‘‘or by
the Director of the Office of National Insurers of the
219
Department of the Treasury’’ before the period at
the end; and
(2) in paragraph (4)—
(A) in subparagraph (A), by striking
‘‘and’’ after the semicolon;
(B) in subparagraph (B), by striking the
period at the end and inserting ‘‘; and’’; and
(C) by adding at the end the following new
subparagraph:
‘‘(C) the Director of the Office of National
Insurers of the Department of the Treasury
with regard to all interpretations of, and the
enforcement of, the Insurance Industry Mod-
ernization and Consumer Protection Act relat-
ing to the activities, conduct, and operations of
national insurers and federally licensed insur-
ance producers.’’.
(c) AMENDMENTS TO INVESTMENT COMPANY ACT OF
1940.—
(1) Section 2(a)(17) of the Investment Com-
pany Act of 1940 (15 U.S.C. 80a–2(a)(17)) is
amended by inserting ‘‘the Director of the Office of
National Insurers of the Department of the Treas-
ury or’’ after ‘‘subject to supervision by’’.
220
(2) The last sentence of section 12(g) of the In-
vestment Company Act of 1940 (15 U.S.C. 80a–
12(g)) is amended—
(A) by inserting ‘‘the Director of the Office
of National Insurers of the Department of the
Treasury or’’ after ‘‘affect or derogate from the
powers of’’; and
(B) by inserting ‘‘Federal or’’ after ‘‘affect
the right under’’.
(3) Section 26(f)(2)(B) of the Investment Com-
pany Act of 1940 (15 U.S.C. 80a–14(f)(2)(B)) is
amended—
(A) in clause (ii), by inserting ‘‘or, in the
case of a national insurer chartered under the
Insurance Industry Modernization and Con-
sumer Protection Act, files with the Director of
the Office of National Insurers of the Depart-
ment of the Treasury,’’ after the first comma;
and
(B) in clause (iii), by inserting ‘‘or, in the
case of a national insurer chartered under the
Insurance Industry Modernization and Con-
sumer Protection Act, the Director of the Office
of National Insurers of the Department of the
Treasury’’ before the period at the end.
221
SEC. 807. AMENDMENTS TO EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974.
The Employee Retirement Income Security Act of
1974 is amended as follows:
(1) 
Section 
401(b)(2)(A) 
(29 
U.S.C.
1101(b)(2)(A)) is amended by inserting ‘‘or licensed
as a national insurer’’ before the period at the end.
(2) The first sentence of section 733(b)(2) (29
U.S.C. 1191b(b)(2)) is amended by inserting ‘‘or
which is licensed as a national insurer and which is
subject to the authority of the Director of the Office
of National Insurers of the Department of the
Treasury’’ before the period.
SEC. 608. AMENDMENTS TO GRAMM-LEACH-BLILEY ACT.
(a) INTERAGENCY CONSULTATION.—Section 307 of
the Gramm-Leach-Bliley Act (15 U.S.C. 6716) is amend-
ed by adding at the end the following new subsection:
‘‘(g) OFFICE OF NATIONAL INSURERS.—
‘‘(1) REGULATORS.—For purposes of this sec-
tion, the terms ‘State insurance regulator’, ‘State in-
surance regulators’, and ‘insurance regulator of any
State’ shall include the Office of National Insurers
of the Department of the Treasury.
‘‘(2) PROVISION OF INFORMATION.—The provi-
sion of information or material by the Office of Na-
tional Insurers of the Department of the Treasury
222
to a Federal banking agency (as such term is de-
fined in section 3 of the Federal Deposit Insurance
Act) shall not constitute a waiver of, or otherwise af-
fect, any privilege or other form of legal protection
or exemption from public disclosure to which such
information or material is otherwise subject.’’.
(b) PRIVACY.—The Gramm-Leach-Bliley Act is
amended as follows:
(1) Section 504 (15 U.S.C. 6804(a)) is
amended—
(A) in paragraph (1), by inserting ‘‘the Di-
rector of the Office of National Insurers of the
Department of the Treasury,’’ after ‘‘The Fed-
eral banking agencies’’; and
(B) in paragraph (3), by inserting ‘‘, ex-
cept that, in the case of the Director of the Of-
fice of National Insurers of the Department of
the Treasury, such regulations shall be issued
in final form not later than 12 months after the
date of the enactment of the Insurance Indus-
try Modernization and Consumer Protection
Act’’ before the period at the end.
(3) Section 505 (15 U.S.C. 6805) is amended—
(A) in subsection (a)—
223
(i) in paragraph (6) by inserting
‘‘(other than a person subject to the juris-
diction of the Office of National Insurers
of the Department of the Treasury under
paragraph (8) of this subsection)’’ after
‘‘providing insurance’’; and
(ii) by adding at the end the following
new paragraph:
‘‘(8) Under section 204 of the Insurance Indus-
try Modernization and Consumer Protection Act, by
the Director of the Office of National Insurers of the
Department of the Treasury with respect to any na-
tional insurer, any subsidiaries of such an entity,
and any federally licensed insurance producer.’’; and
(B) in subsection (b)(2), by striking ‘‘and
(7)’’ and inserting ‘‘(7), and (8)’’.
(3) Section 509 (15 U.S.C. 6809(2)) is
amended—
(A) by redesignating subparagraphs (E)
and (F) as subparagraphs (F) and (G), respec-
tively; and
(B) by inserting after subparagraph (D)
the following new subparagraph:
‘‘(E) the Director of the Office of National
Insurers of the Department of the Treasury;’’.
224
(4) Section 521(e) (15 U.S.C. 6821(e)) is
amended by inserting ‘‘or Federal’’ after ‘‘such insti-
tution under State’’.
(5) Section 522(b)(1) (15 U.S.C. 6822(b)(1)) is
amended—
(A) in subparagraph (A), by striking
‘‘and’’ after the semicolon at the end;
(B) in subparagraph (B), by striking the
period at the end and inserting ‘‘; and’’; and
(C) by adding at the end the following new
subparagraph:
‘‘(C) section 205 of the Insurance Industry
Modernization and Consumer Protection Act,
by the Director of the Office of National Insur-
ers of the Department of the Treasury with re-
spect to any national insurer and any federally
licensed insurance producer.’’.
(6) Section 525 (15 U.S.C. 6825) is amended
by inserting ‘‘the Director of the Office of National
Insurers of the Department of the Treasury,’’ after
‘‘National Credit Union Administration,’’.
(c) 
OTHER
CONFORMING
AMENDMENTS.—The
Gramm-Leach-Bliley Act is amended as follows:
(1) Section 104(b) (15 U.S.C. 6701(b)) is
amended by inserting ‘‘, or as required by the Direc-
225
tor of the Office of National Insurers of the Depart-
ment of the Treasury in accordance with the Insur-
ance Industry Modernization and Consumer Protec-
tion Act’’ before the period at the end.
(2) Section 301 (15 U.S.C. 6711) is amended
by inserting ‘‘; except that the insurance activities of
a national insurer and a federally licensed insurance
producer shall be functionally regulated by the Of-
fice of National Insurers of the Department of the
Treasury’’ before the period at the end.
(3) Section 311 (15 U.S.C. 6731) is amended
by adding at the end the following new sentence:
‘‘This subtitle shall not apply to a national insurer
in mutual form that is reorganizing into a mutual
holding company.’’.
SEC. 809. AMENDMENT TO ACT OF OCTOBER 28, 1974.
Section 111 of the Act of Public Law 93–495 (12
U.S.C. 250) is amended by inserting ‘‘the Director of the
Office of National Insurers of the Department of the
Treasury,’’ after ‘‘the Director of the Office of Thrift Su-
pervision,’’.
SEC. 810. AMENDMENTS TO FEDERAL DEPOSIT INSURANCE
ACT.
The Federal Deposit Insurance Act is amended as
follows:
226
(1) The section heading for section 45 (12
U.S.C. 1831v) is amended by inserting ‘‘, DIREC-
TOR OF OFFICE OF NATIONAL INSURERS’’ after
‘‘STATE INSURANCE REGULATOR’’.
(2) Section 47(g)(1) (12 U.S.C. 1831x(g)(1) is
amended—
(A) in subparagraph (A), by striking ‘‘or’’
after the semicolon;
(B) in subparagraph (B), by striking the
period at the end and inserting ‘‘; or’’; and
(C) by adding at the end the following new
subparagraph:
‘‘(C) any authority of the Director of the
Office of National Insurers of the Department
of the Treasury under the Insurance Industry
Modernization and Consumer Protection Act.’’.
SEC. 811. AMENDMENTS TO BANK HOLDING COMPANY ACT
OF 1956.
The Bank Holding Company Act of 1956 is amended
as follows:
(1) 
Section 
4(k)(4)(I)(iii) 
(12 
U.S.C.
1843(k)(4)(I)(iii)) is amended by inserting ‘‘or Fed-
eral’’ after ‘‘relevant State’’; and
(2) Section 5 (12 U.S.C. 1844) is amended—
(A) in subsection (c)—
227
(i) in paragraph (2)(E)(iii), by insert-
ing ‘‘or by or on behalf of the Director of
the Office of National Insurers of the De-
partment of the Treasury’’ before the
semicolon;
(ii) in paragraph (3)(A)(ii)(I), by in-
serting ‘‘or the Office of National Insurers
of the Department of the Treasury’’ after
‘‘Securities and Exchange Commission’’;
(iii) in paragraph (4)(B), by inserting
‘‘or the Director of the Office of National
Insurers of the Department of the Treas-
ury’’ after ‘‘a State insurance authority’’;
and
(iv) in paragraph (5)(B)(iv), by in-
serting ‘‘or by the Director of the Office of
National Insurers of the Department of
the Treasury’’ before the semicolon; and
(B) in subsection (g)—
(i) in the subsection heading, by in-
serting ‘‘, DIRECTOR OF THE OFFICE OF
NATIONAL INSURERS,’’ after ‘‘STATE IN-
SURANCE REGULATOR’’.
(ii) in paragraph (1)(B), by inserting
‘‘or the Director of the Office of National
228
Insurers of the Department of the Treas-
ury’’ after ‘‘State insurance authority’’;
(iii) in paragraph (2)—
(I) in the paragraph heading, by
inserting ‘‘, DIRECTOR OF THE OF-
FICE OF NATIONAL INSURERS,’’ after
‘‘State Insurance Authority’’; and
(II) by inserting ‘‘or the Director
of the Office of National Insurers of
the Department of the Treasury’’
after ‘‘the Board shall promptly notify
the State insurance authority’’; and
(iv) in paragraph (3), by inserting ‘‘,
the Director of the Office of National In-
surers of the Department of the Treas-
ury,’’ after ‘‘State insurance authority’’.
SEC. 812. AMENDMENTS TO TITLE 18, UNITED STATES
CODE.
(a) SECTION 1033.—Section 1033(b) of title 18,
United States Code, is amended—
(1) in paragraph (1)—
(A) by inserting ‘‘removes, conceals, alters,
destroys,’’ after ‘‘willfully embezzles, abstracts,
purloins,’’; and
229
(B) by inserting ‘‘assets,’’ after ‘‘moneys,
funds, premiums, credits,’’; and
(2) in paragraph (2)—
(A) in the first sentence, by inserting ‘‘re-
moval, concealment, alteration, destruction,’’
after ‘‘embezzlement, abstraction, purloining,’’;
and
(B) in the second sentence by inserting
‘‘removed, concealed, altered, destroyed,’’ after
‘‘embezzled, abstracted, purloined,’’.
(b) INSURANCE FRAUD.—
(1) IN
GENERAL.—Chapter 47 of title 18,
United States Code, is amended by adding at the
end the following new section:
‘‘§ 1037. Insurance fraud.
‘‘(a) Whoever—
‘‘(1) commits a fraudulent insurance act; or
‘‘(2) knowingly and intentionally interferes with
the enforcement of the provisions of section 206 of
the Insurance Industry Modernization and Con-
sumer Protection Act or investigations of suspected
or actual violations of such section,
shall be punished as provided in subsection (b).
‘‘(b)(1) Except as provided in paragraph (2), the
punishment for an offense under subsection (a) is a fine
232
‘‘(A) Presenting, causing to be presented
or preparing with knowledge or belief that it
will be presented to or by a national insurer or
an insurance producer acting with respect to a
policy of insurance written by a national in-
surer, false information as part of, in support
of or concerning a fact material to one or more
of the following:
‘‘(i) An application for a new or re-
newal of an insurance policy or reinsurance
contract.
‘‘(ii) The rating of a national insurer
that writes an insurance policy or enters
into a reinsurance contract.
‘‘(iii) A claim for payment or benefit
pursuant to an insurance policy or reinsur-
ance contract.
‘‘(iv) Premiums paid on an insurance
policy or reinsurance contract.
‘‘(v) Payments made in accordance
with the terms of an insurance policy or
reinsurance contract.
‘‘(vi) A document filed with the Direc-
tor.
233
‘‘(vii) The financial condition of a na-
tional insurer.
‘‘(viii) The formation, acquisition,
merger, consolidation, dissolution or with-
drawal from one or more lines of insurance
or reinsurance by a national insurer.
‘‘(ix) The issuance of evidence of in-
surance, whether in writing, electronic
form or otherwise.
‘‘(x) The reinstatement of an insur-
ance policy.
‘‘(B) Solicitation or acceptance of new or
renewal insurance risks on behalf of a national
insurer or other persons engaged in insurance
operations by a person who knows or should
know that the national insurer or other person
responsible for the risk is insolvent at the time
of the transaction.
‘‘(C) Removal, concealment, alteration or
destruction of the records of a national insurer
or other person engaged in insurance oper-
ations.
‘‘(D) Transaction of insurance operations
in violation of laws requiring a license therefore
234
under the Insurance Industry Modernization
and Consumer Protection Act.
‘‘(E) Attempting to commit, aiding or
abetting in the commission of, or conspiracy to
commit the acts or omissions specified in, this
paragraph.
‘‘(3) The term ‘insurance person’ means offi-
cers, directors, agents, or employees of national in-
surers, or other persons authorized to act on behalf
of national insurers.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 47 of title 18, United States Code,
is amended by adding at the end the following new
item:
‘‘1037. Insurance fraud.’’.
SEC. 813. AMENDMENTS TO AMERICANS WITH DISABIL-
ITIES ACT OF 1990.
Section 501(c) of the Americans With Disabilities Act
of 1990 (42 U.S.C. 12201(c)) is amended—
(1) in paragraph (1), by inserting ‘‘or Federal’’
before ‘‘law’’;
(2) in paragraph (2), by inserting ‘‘or Federal’’
before ‘‘law’’; and
(3) in paragraph (3), by inserting ‘‘or Federal’’
before ‘‘laws’’.
235
TITLE IX—RECEIVERSHIP
Subtitle A—Definitions
SEC. 901. DEFINITIONS.
For purposes of this title:
(1) ALIEN REPRESENTATIVE.—The term ‘‘alien
representative’’ means a trustee, receiver, liquidator,
provisional liquidator, administrator or other rep-
resentative of a non-U.S. insurer in receivership or
equivalent proceedings in a foreign country who has
been appointed judicially or pursuant to statute.
(2) ASSOCIATION.—The term ‘‘association’’
means an insurance guaranty fund or association or
any similar entity created under the laws of the rel-
evant State.
(3) CONTINGENT
CLAIM.—The term ‘‘contin-
gent claim’’ means a claim for which the insurer’s
obligation to pay has not yet been established.
(4) CORPORATION.—The term ‘‘corporation’’
means the National Life Insurance Guaranty Cor-
poration established pursuant to Title X or the Na-
tional Property and Casualty Insurance Guaranty
Corporation established pursuant to such title (as
the case may be).
(5) CREDITOR.—The term ‘‘creditor’’ means a
person having a claim against the insurer, whether
236
matured or unmatured, liquidated or unliquidated,
secured or unsecured, absolute, fixed, or contingent.
(6) COURT.—The term ‘‘court’’ means the
court described in section 903(a).
(7) ESTATE.—The term ‘‘estate’’ means the as-
sets and liabilities of any insurer in receivership.
(8) FAIR
CONSIDERATION.—The term ‘‘fair
consideration’’ 
is 
given 
for 
property 
or 
an
obligation—
(A) when in exchange for the property or
obligation, as a fair equivalent of the property
or obligation and in good faith, property is con-
veyed or services are rendered or an obligation
is incurred or an antecedent debt is satisfied; or
(B) when the property or obligation is re-
ceived in good faith to secure a present advance
or antecedent debt in an amount not dispropor-
tionately small as compared to the value of the
property or obligation obtained.
(9) GENERAL ASSETS.—The term ‘‘general as-
sets’’ means all property, real, personal, or other-
wise, not specifically mortgaged, pledged, deposited,
or otherwise encumbered for the security or benefit
of specified persons or a limited class or classes of
persons, and as to such specifically encumbered
237
property the term includes all such property or its
proceeds in excess of the amount necessary to dis-
charge the sum or sums secured thereby. Assets held
in trust and assets held on deposit for the security
or benefit of all policyholders, or all policyholders
and creditors in the United States shall be deemed
general assets.
(10) 
GUARANTY
ASSOCIATION.—The 
term
‘‘guaranty association’’ means either corporation or
any association.
(11) INSOLVENCY.—The terms ‘‘insolvency’’
and ‘‘insolvent’’ mean—
(A) for a national insurer issuing only as-
sessable policies—
(i) the inability to pay an obligation
within 30 days after it becomes payable; or
(ii) the inability to pay an obligation
for an assessment 30 days following the
date specified in the first assessment notice
issued after the date of loss; and
(B) for a national insurer, other than a na-
tional insurer under paragraph (1), the inability
of an insurer to pay its obligations when they
are due or when admitted assets do not exceed
238
liabilities plus the greater of either of the
following—
(i) any capital and surplus required
by law for its organization; or
(ii) the total par or stated value of its
authorized and issued capital stock.
For purposes of this paragraph, the term ‘‘liabil-
ities’’ shall include reserves required by statute or by
rule or specific requirements imposed by the Direc-
tor upon an insurer.
(12) INSURER.—The term ‘‘insurer’’ includes a
State insurer, a national insurer, and all other enti-
ties subject to this title under section 910.
(13) MULTIPLE
BENEFICIARY
TRUST.—The
term ‘‘multiple beneficiary trust’’ means a trust es-
tablished pursuant to this Act for the benefit of
more than one beneficiary except trusts established
by a U.S. branch.
(14) NETTING AGREEMENT.—The term ‘‘net-
ting agreement’’ means a contract or agreement (in-
cluding terms and conditions incorporated by ref-
erence therein), including a master agreement
(which master agreement, together with all sched-
ules, confirmations, definitions and addenda thereto
and transactions under any thereof, shall be treated
239
as one netting agreement), that documents one or
more transactions between the parties for or involv-
ing one or more qualified financial contracts and
that provides for the netting of qualified financial
contracts or present or future payment obligations
or payment entitlements thereunder (including liq-
uidation or close-out values relating to such obliga-
tions or entitlements) among the parties to the net-
ting agreement.
(15) PARTY IN INTEREST.—The term ‘‘party in
interest’’ means the Director, an insurer, policy-
holder, third-party claimant, creditor, equity security
holder, the corporation, any affected guaranty asso-
ciation, a State commissioner or other principal reg-
ulatory official in a State in which the insurer was
doing business, an advisory committee appointed
under this title, an insurer that ceded to or assumed
business from the insurer, and any person, including
any indenture trustee, with a financial or regulatory
interest in the receivership proceeding.
(16) PLAN.—The term ‘‘plan’’ means a plan
provided in subtitle H.
(17) QUALIFIED
FINANCIAL
CONTRACT.—The
term ‘‘qualified financial contract’’ means a com-
modity contract, forward contract, repurchase agree-
240
ment, securities contract, swap agreement and any
similar agreement that the Director determines by
regulation, or order to be a qualified financial con-
tract for the purposes of this title. For purposes of
this subsection:
(A) 
The 
term 
‘‘commodity 
contract’’
means—
(i) a contract for the purchase or sale
of a commodity for future delivery on, or
subject to the rules of, a board of trade
designated as a contract market by the
Commodity Futures Trading Commission
under the Commodity Exchange Act (7
U.S.C. 1 et seq.) or board of trade outside
the United States;
(ii) an agreement that is subject to
regulation under section 19 of the Com-
modity Exchange Act (7 U.S.C. 23) and
that is commonly known to the commod-
ities trade as a margin account, margin
contract, leverage account or leverage con-
tract; or
(iii) an agreement or transaction that
is subject to regulation under section 4c(b)
of the Commodity Exchange Act (7 U.S.C.
241
6c(b)) and that is commonly known to the
commodities trade as a commodity option.
(B) The term ‘‘forward contract’’ means a
contract (other than a commodity contract) for
the purchase, sale, or transfer of any com-
modity, as defined in section 1 of the Com-
modity Exchange Act (7 U.S.C. 1), or any simi-
lar good, article, service, right or interest that
is presently or in the future becomes the subject
of dealing in the forward contract trade, or
product or byproduct thereof, with a maturity
date more than 2 days after the date the con-
tract is entered into, including, but not limited
to, a repurchase transaction, reverse repurchase
transaction, consignment, lease, swap, hedge
transaction, deposit, loan, option, allocated
transaction, unallocated transaction or any
combination of these or option on any of them.
(C) The term ‘‘repurchase agreement’’
(which also applies to a reverse repurchase
agreement) means an agreement, including re-
lated terms, that provides for the transfer of
certificates of deposit, eligible bankers’ accept-
ances, or securities that are direct obligations
of, or that are fully guaranteed as to principal
242
and interest by, the United States or any agen-
cy of the United States against the transfer of
funds by the transferee of such certificates of
deposit, eligible bankers’ acceptances, or securi-
ties with a simultaneous agreement by the
transferee to transfer to the transferor certifi-
cates of deposit, eligible bankers’ acceptances or
securities as described above, at a date certain
not later than 1 year after the transfers or on
demand, against the transfer of funds. For the
purposes of this definition, the items that may
be subject to an agreement include mortgage-
related securities, a mortgage loan, and an in-
terest in a mortgage loan, and shall not include
any participation in a commercial mortgage
loan, unless the Director determines by regula-
tion, resolution or order to include the partici-
pation within the meaning of the term.
(D) The term ‘‘securities contract’’ means
a contract for the purchase, sale or loan of a
security, including an option for the repurchase
or sale of a security, certificate of deposit, or
group or index of securities (including an inter-
est therein or based on the value thereof), or an
option entered into on a national securities ex-
243
change relating to foreign currencies, or the
guarantee of any settlement of cash or securi-
ties by or to a securities clearing agency. For
the purposes of this paragraph (4), the term
‘‘security’’ includes a mortgage loan, mortgage-
related securities, and an interest in any mort-
gage loan or mortgage-related security.
(E) The term ‘‘swap agreement’’ means an
agreement, including the terms and conditions
incorporated by reference in an agreement, that
is a rate swap agreement, basis swap, com-
modity swap, forward rate agreement, interest
rate future, interest rate option, forward for-
eign exchange agreement, spot foreign exchange
agreement, rate cap agreement, rate floor
agreement, rate collar agreement, currency
swap agreement, cross-currency rate swap
agreement, currency future, or currency option
or any other similar agreement, and includes
any combination of agreements and an option
to enter into an agreement.
(18) RECEIVER.—The term ‘‘receiver’’ means
receiver, liquidator, rehabilitator, or conservator as
the context requires.
244
(19) RECEIVERSHIP
PROCEEDING.—The term
‘‘receivership proceeding’’ means any liquidation, re-
habilitation or conservation as the context requires.
(20) SECURED
CLAIM.—The term ‘‘secured
claim’’ means a claim secured by mortgage, trust
deed, pledge, deposit as security, escrow, or other-
wise, but not including a special deposit claim or
claim against general assets. The term also includes
claims that have become liens upon specific assets by
reason of judicial process.
(21) SEPARATE ACCOUNT.—The term ‘‘separate
account’’ means an account authorized under section
321 and established in accordance with the terms of
a written agreement or a contract on a variable
basis.
(22) SINGLE BENEFICIARY TRUST.—The term
‘‘single beneficiary trust’’ means a trust established
pursuant to this title for the benefit of a single bene-
ficiary.
(23) SPECIAL DEPOSIT CLAIM.—The term ‘‘spe-
cial deposit claim’’ means a claim secured by a de-
posit made pursuant to a statute for the security or
benefit of a limited class or classes of persons, but
not including a class secured by general assets.
245
(24) TRANSFER.—The term ‘‘transfer’’ means
every mode, direct or indirect, absolute or condi-
tional, voluntary or involuntary, of disposing of or
parting with property or with an interest in prop-
erty, including retention of title as a security inter-
est and foreclosure of an insurer’s equity of redemp-
tion.
(25) UNLIQUIDATED CLAIM.—The term ‘‘unliq-
uidated claim’’ means a claim for which the amount
of the claim has not been determined.
(26) 
UNMATURED
CLAIM.—The 
term
‘‘unmatured claim’’ means a claim for which pay-
ment is not yet due.
SEC. 902. CONSTRUCTION.
Except as provided at section 914, this title shall not
be interpreted to limit the powers granted the Director
by laws or regulations other than this title.
Subtitle B—The Court
SEC. 903. JURISDICTION.
(a) IN GENERAL.—A receivership proceeding under
this title shall be filed in the United States district court,
or the United States court of any territory, within the ju-
risdiction of which the main office of the national insurer
is located.
246
(b) EXCLUSIVE JURISDICTION.—The court shall, as
of the commencement of a receivership proceeding under
this title, have exclusive jurisdiction of all property of the
national insurer, wherever located.
(c) ARBITRATION.—Except as provided at section
914, and except as to claims filed against the estate pursu-
ant to section 964, nothing in this title shall deprive a
party in interest of any contractual right to pursue arbi-
tration of any dispute under any law.
(d) PERSONS SUBJECT
TO PERSONAL JURISDIC-
TION.—In addition to grounds otherwise provided by law,
the following persons are subject to the personal jurisdic-
tion of the court:
(1) Current and former insurance producers of
the national insurer.
(2) Policyholders and reinsurers of the national
insurer.
(3) Current and former officers, directors, man-
agers, trustees, organizers, promoters and persons in
control of the national insurer.
(4) Any third party administrator for a national
insurer and any person (such as a data processing
firm) that maintains information for a national in-
surer.
247
(e) ASSOCIATIONS.—The foregoing provisions of this
section notwithstanding, the provisions of this title do not
confer jurisdiction on the court to resolve coverage dis-
putes between guaranty associations and those asserting
claims against them resulting from the initiation of a re-
ceivership proceeding under this title, except to the extent
that the guaranty association has otherwise expressly con-
sented pursuant to a plan of rehabilitation or liquidation
that resolves its obligations to covered policyholders.
(f) DETERMINATION.—The determination of any dis-
pute with respect to the statutory obligations of any guar-
anty association by a court or administrative agency shall
be binding and conclusive as to the parties in a receiver-
ship proceeding initiated in the court, including, without
limitation, the policyholders of the national insurer.
SEC. 904. POWERS.
(a) IN GENERAL.—The court may issue any order,
process or judgment, including such injunctions or other
orders as are necessary or appropriate to carry out the
provisions of this title or an approved plan.
(b) ENFORCEMENT.—No provision of this title pro-
viding for the raising of an issue by a party in interest
shall be construed to preclude the court from, sua sponte,
taking any action or making any determination necessary
248
or appropriate to enforce or implement court orders or to
prevent an abuse of process.
SEC. 905. APPEALS.
(a) IN GENERAL.—Appeal from orders of the court
may be taken—
(1) as of right, by any of the following parties
in interest who have appeared and participated in
the hearing on the matter in question—
(A) by the Director or the national insurer
from any order of rehabilitation or liquidation
or finding of insolvency, or any order refusing
rehabilitation, liquidation, or a finding of insol-
vency;
(B) by the receiver or any such party from
any order approving or refusing to approve a
plan;
(C) by the receiver, the claimant or any re-
insurer from any order allowing or disallowing
a claim;
(D) by the person asserting any interest in
an asset from any order finally determining
such interest; or
(E) by a guaranty association from any
order which may substantially affect its rights;
or
249
(2) by leave of court, by any interested party
whose substantial rights may be affected, from any
order of the court, upon a showing that such rights
are not amenable to protection by any appeal as of
right; or
(3) by the receiver, from any order substantially
affecting the operations of the receivership which is
not otherwise appealable; provided, however, that
leave shall be sought in the first instance from the
court.
(b) PROCEDURE.—Any appeal from the entry or re-
fusal of an order of receivership must be taken within 5
days of its entry. No request for reconsideration, review
or appeal, and no posting of a bond shall dissolve or stay
such order. Appeals from such orders shall be expedited
by the court of appeals for the circuit in which the court
is located.
(c) PROCEDURE SAME AS CIVIL APPEALS.—Except
as specifically provided in this section and section 906,
the procedure on appeal of an order entered under this
title shall be as for other civil appeals.
SEC. 906. APPEAL PENDENCY PLANS.
(a) PLAN REQUIRED.—Within 5 days after the filing
of a notice of appeal of an order of liquidation, the liqui-
dator shall present for the court’s approval a plan for the
250
continued performance of the defendant national insurer’s
insurance policy claims obligations, including the duty to
defend insureds under liability insurance policies, during
the pendency of an appeal.
(b) CONTENT OF PLAN.—Such plan may provide for
the continued performance and payment of insurance pol-
icy claims obligations in the normal course of events, not-
withstanding the grounds alleged in support of the order
of liquidation, including the ground of insolvency. In the
event the defendant national insurer’s financial condition
will not, in the judgment of the liquidator, support the
full performance of all insurance policy claims obligations
during the appeal pendency period, the plan may prefer
the claims of certain policyholders and claimants over
creditors and parties in interest as well as other policy-
holders and claimants (1) if the liquidator finds that such
preference is in the interests of policyholders and other
creditors as a whole or that such preference is necessary
to prevent hardship to particular policyholders and claim-
ants; and (2) if the liquidator finds that such preference
is fair and equitable considering the relative circumstances
of such policyholders and claimants. The court shall exam-
ine the plan submitted by the liquidator and if it finds
the plan is in the best interests of the parties and that
the liquidator’s findings are supported by substantial evi-
251
dence, it shall approve the plan. No action shall lie against
the liquidator or any of his deputies, agents, clerks, assist-
ants or attorneys by any party based on preference in an
appeal pendency plan approved by the court.
(c) GUARANTY ASSOCIATION OBLIGATIONS.—The
appeal pendency plan shall not supersede or affect the ob-
ligations of the National Life Insurance Guaranty Cor-
poration or the National Property and Casualty Insurance
Guaranty Corporation under title X or any association
which under relevant State law is required to pay covered
claims obligations during the appeal pendency period.
Subtitle C—General Provisions
SEC. 907. DUTY TO PROVIDE INFORMATION TO CORPORA-
TION, STATE COMMISSIONERS, AND ASSOCIA-
TIONS.
(a) IN GENERAL.—The receiver shall provide affected
State commissioners with relevant receivership informa-
tion, including reports and analysis of financial condition
and the status of development of a plan when requested.
(b) KIND OF INFORMATION.—The receiver shall pro-
vide the affected guaranty association with all information
necessary to carry out statutory obligations, including
without limitation, any information reasonably necessary
or appropriate to evaluate and participate in the develop-
ment of the plan.
252
(c) LISTING OF POLICYHOLDERS.—The receiver shall
also permit a State commissioner, and a guaranty associa-
tion to obtain a listing of relevant policyholders and certifi-
cate holders, including current addresses and summary in-
surance policy information, provided that the requestor
agrees to maintain the confidentiality of the records and
that the records will be used only for regulatory, or guar-
anty association purposes.
(d) RESTRICTION ON ACCESS AND DISCLOSURE.—In
the event the receiver believes that certain information is
sensitive or that disclosure might cause a diminution in
recovery, the receiver may apply to the court for a protec-
tive order imposing additional restrictions on access and
disclosure.
(e) OTHER DISCLOSURE PERMITTED.—Except as
otherwise provided in section 931, nothing contained in
this title shall preclude or prohibit disclosure or discussion
of information or documents relevant to proceedings here-
under between and among the national insurer, the re-
ceiver, guaranty associations and State commissioners. No
such disclosure or discussion shall compromise the privi-
lege or confidential nature of such information or docu-
ments.
253
SEC. 908. COOPERATION OF OFFICERS, OWNERS, AND EM-
PLOYEES.
(a) IN GENERAL.—
(1) An officer, manager, director, trustee,
owner, employee, or agent of a national insurer, or
any other persons with authority over or in charge
of any segment of the national insurer’s affairs,
shall cooperate with the receiver in a proceeding
under this title.
(2) For purposes of this section:
(A) The term ‘‘person’’ includes a person
who exercises control directly or indirectly over
activities of the national insurer through a hold-
ing company or other affiliate of the national
insurer.
(B) The term ‘‘to cooperate’’ includes—
(i) to reply promptly in writing to any
inquiry from the receiver requesting such a
reply; and
(ii) to make available to the receiver
books, accounts, documents, and other
records, information, or property of, or
pertaining to, the national insurer and in
his or her possession, custody, or control.
254
(b) NO INTERFERENCE.—No person shall obstruct or
interfere with the receiver in the conduct of a receivership
proceeding.
(c) OTHER RIGHTS.—This section shall not be con-
strued to abridge otherwise existing legal rights, including
the right to resist a petition for receivership proceedings
or requests for other orders.
SEC. 909. RIGHT TO APPEAR AND BE HEARD.
(a) PARTY IN INTEREST.—A party in interest may
raise and may appear and be heard on any issue in a re-
ceivership proceeding under this title, without reimburse-
ment of attorneys’ fees or expenses unless such reimburse-
ment is expressly authorized elsewhere by the laws of the
United States. This subsection shall not affect any right
of a reinsurer under a reinsurance contract to recover rea-
sonable fees and expenses to which it is entitled in connec-
tion with the interposing of defenses to a claim against
the national insurer.
(b) GUARANTY ASSOCIATION.—Any guaranty asso-
ciation which is or may become liable to act as a result
of the entry of an order of receivership shall have standing
to intervene as of right or otherwise appear and partici-
pate in a receivership proceeding under this title. Exercise
by any guaranty association of the standing rights con-
255
ferred under this subsection shall not constitute a submis-
sion to the general jurisdiction of the court.
Subtitle D—Administration
SEC. 910. ENTITIES SUBJECT TO THIS TITLE.
The receivership proceedings authorized by this title
may be initiated against—
(1) any national insurer; and
(2) any person, if not an insurer, including—
(A) insurance producers, managing general
agents, premium finance companies, insurance
holding companies and all other non risk bear-
ing entities engaged in any aspect of the busi-
ness of insurance, whether or not such entities
are licensed to engage in the business of insur-
ance under this Act, if such person is an affil-
iate of the national insurer against which a re-
ceivership proceeding has been or is being filed
under this title; and
(B) any other entity which is made subject
to this title by statute.
SEC. 911. COMMENCEMENT OF RECEIVERSHIP.
(a) WHO MAY INSTITUTE PROCEEDING.—Only the
Director may institute a receivership proceeding under
this title by filing a petition with the court.
256
(b) SUBJECT OF PROCEEDING.—The Director may
initiate a receivership proceeding against—
(1) a national insurer;
(2) a United States branch established pursu-
ant to this Act; or
(3) any other entity under the provisions of sec-
tion 910: Provided, That as to any non-U.S. insurer
that holds a Federal license but does not hold a
charter issued pursuant to this Act or is not domi-
ciled in any State, such receivership proceeding shall
be only as to assets and records of such entity in the
United States.
(c) CONTENT
OF PETITION.—Any petition filed
under this title shall state the grounds upon which the
relief is sought and the relief requested and may request
entry of such injunctive orders as may be appropriate.
(d) NO DELEGATION PERMITTED.—The Director
may not delegate to any insurance self-regulatory organi-
zation any authority under this section with respect to in-
stituting a receivership proceeding.
SEC. 912. GROUNDS FOR ENTRY OF A REHABILITATION OR
LIQUIDATION ORDER.
(a) IN GENERAL.—Upon the filing of a petition, the
court shall forthwith issue an order of rehabilitation or
liquidation if the national insurer consents thereto, if the
257
national insurer fails to contest such petition or if the
court finds—
(1) the national insurer is in such condition
that the further transaction of business would be
hazardous, financially or otherwise, to its policy-
holders, its creditors, or the public;
(2) there is reasonable cause to believe that
there has been embezzlement from the national in-
surer, wrongful sequestration or diversion of the na-
tional insurer’s assets, forgery or fraud affecting the
national insurer, or other illegal conduct in, by, or
with respect to the national insurer that, if estab-
lished, would endanger assets in an amount threat-
ening the national insurer’s solvency;
(3) the national insurer has failed to remove a
person who in fact has executive authority with the
national insurer, whether an officer, manager, gen-
eral agent, employee, or other person, if the person
has been found after notice and hearing by the Di-
rector to be dishonest or untrustworthy in a way af-
fecting the national insurer’s business;
(4) control of the national insurer, whether by
stock ownership or otherwise, and whether direct or
indirect, is in a person found after notice and hear-
ing by the Director to be untrustworthy;
258
(5) a person who in fact has executive authority
with the national insurer, whether an officer, man-
ager, general agent, director or trustee, employee, or
other person, has refused to be examined under oath
by the Director concerning the person’s affairs and
after reasonable notice of the fact, the national in-
surer has failed promptly and effectively to termi-
nate the employment and status of the person and
all of his or her influence on management;
(6) after demand by the Director, the national
insurer has failed to promptly make available for ex-
amination its property, books, accounts, documents,
or other records, or those of a subsidiary or com-
pany within the control of the national insurer, or
those of a person having executive authority with the
company and pertaining to the company;
(7) without first obtaining the Director’s writ-
ten consent, the national insurer has transferred, or
attempted to transfer, in a manner contrary to law,
substantially its entire property or business, or has
entered into a transaction the effect of which is to
merge, consolidate, or reinsure substantially its en-
tire property or business in or with the property or
business of any other person;
259
(8) the national insurer has concealed, removed,
altered, destroyed or failed to establish and maintain
books, records, documents, accounts, vouchers and
other pertinent material adequate for the determina-
tion of its financial condition by examination or has
failed to properly administer claims and to maintain
claims records which are adequate for the deter-
mination of its outstanding claims liability;
(9) the national insurer or its property has been
or is the subject of an application for the appoint-
ment of a receiver, trustee, custodian, conservator,
or sequestrator or similar fiduciary of the national
insurer or its property otherwise than as authorized
under this title, and the appointment has been made
or is imminent;
(10) within the previous 5 years, the national
insurer has willfully and continuously violated its
charter or articles of incorporation, its bylaws, this
Act, or a valid order of the Director;
(11) the national insurer has failed to pay a
judgment entered against it by a court with personal
jurisdiction over the national insurer within 60 days
of the date the judgment becomes final;
(12) the national insurer has failed to file its
annual report or other financial report required by
260
this Act within the time allowed by law and, after
written demand by the Director, has failed to give
immediately an adequate explanation;
(13) the national insurer is found, after exam-
ination, to be in a condition so that it could not
presently meet the requirements for chartering, in-
corporation (if applicable) and licensing to under-
write and sell insurance under this Act; or
(14) the national insurer is insolvent.
(b) ADMINISTRATION OF REINSURANCE TRUST.—In
addition to the grounds stated in subsection (a) of this
section, if the Director or a court of competent jurisdiction
has ordered a trustee to turn over to the Director, assets
held in trust pursuant to subsection (b) of section 322
requiring security in the form of trusteed assets for rein-
surance ceded to a non federally-qualified reinsurer, the
court may direct the establishment of a receivership for
the purpose of administering said assets; provided, how-
ever that any such trust assets shall be administered in
accordance with section 922.
SEC. 913. SERVICE OF SUMMONS AND RETURN.
(a) IN GENERAL.—Except with respect to a pro-
ceeding pursuant to section 925, upon the filing of a peti-
tion, a summons shall forthwith issue, returnable in 3 days
after its date, and a copy of the summons together with
261
the petition in any receivership proceeding under this title
shall be served upon the national insurer named in such
petition by delivering the same to its president, vice presi-
dent, secretary, treasurer, director, or to its managing
agent, or if the national insurer lacks any of the aforesaid
officers, or if they cannot be found within the United
States, to the officer performing corresponding functions
under another name. Upon request of the Director, the
court shall appoint a special process server.
(b) SERVICE.—When it is satisfactorily proved by the
report of an examiner of the Director made in accordance
with the provisions of this title, or by affidavit of anyone
familiar with the facts, that the officers, directors, trustees
or managing agents or members of any national insurer
named in said petition upon whom service is required to
be made as above provided, have departed from the United
States or keep themselves concealed therein, or if such of
the persons residing in the United States and upon whom
service is required to be made as above provided have re-
signed from their offices, or that service cannot be made
immediately by the exercise of reasonable diligence, such
service may be had by the mailing of a copy of the petition
and summons to the last known address of the national
insurer, or by publication in such form and in such man-
ner as the court shall order.
262
SEC. 914. AUTOMATIC STAY.
(a) IN GENERAL.—Except as provided in subsections
(c) and (d) of this section or as otherwise provided in this
title, the commencement of a receivership proceeding
under this title operates as a stay, applicable to all enti-
ties, 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 arbitration
proceedings, that was or could have been commenced
before the commencement of the receivership pro-
ceeding under this title, or to recover a claim against
the national insurer that arose before the commence-
ment 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 national
insurer or to exercise control over property or
records of the national insurer;
(4) any act to create, perfect, or enforce any
lien against property of the national insurer;
263
(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
which are contractually due to the national insurer.
(b) OTHER STAY.—Except as provided in subsections
(c) and (d) of this section or as otherwise provided in this
title, the commencement of a receivership proceeding
under this title operates as a stay, applicable to all enti-
ties, of the commencement or continuation, including the
issuance or employment of process, of a judicial, adminis-
trative or other action or proceeding, including, without
limitation, 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 receiver-
ship proceedings under this title and for which the na-
tional insurer is or may be liable under a policy of insur-
ance or is obligated to defend a party. The stay provided
by this subsection shall terminate 90 days after appoint-
264
ment of the receiver unless extended by order of the court,
for good cause shown, after notice to any affected parties
and such hearing as the court determines is appropriate;
provided, however, that any applicable statute of limitation
with respect to any claim against an insured 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 section 958;
(4) termination of reinsurance contracts cov-
ering policies of insurance as provided under sub-
section (f) of section 962;
(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;
265
(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 pro-
vided at section 959;
(10) discharge by a guaranty associations of
statutory responsibilities or the pursuit of claims
against a guaranty associations to the extent per-
mitted by law other than this title; or
(11) any—
(A) audit by a governmental unit to deter-
mine tax liability;
(B) issuance to the national insurer by a
governmental unit of a notice of tax deficiency;
(C) demand for tax returns; or
(D) making of an assessment for any tax
and issuance of a notice and demand for pay-
ment of such an assessment.
(d) CONSERVATION ORDER.—In the event the Direc-
tor seeks an order of conservation under section 925, the
provisions of subsections (a) and (b) shall be applicable
only to those entities with actual notice or knowledge of
266
the initiation of the receivership proceeding until such
time as the record of the receivership proceeding is made
public under section 926.
(e) LENGTH OF STAY.—Except as provided in sub-
section (g)—
(1) the stay of an act against property of the
national insurer under subsection (a) continues until
such property is no longer property of the receiver-
ship estate; and
(2) the stay of any other act under subsection
(a) continues until the earliest of—
(A) the time the receivership proceeding is
closed; or
(B) the time the receivership proceeding is
dismissed.
(f) 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
267
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.
(g) RELIEF FROM STAY.—On request of a party in
interest and after notice and such hearing as the court
determines appropriate, the court may grant relief from
the stay in effect pursuant to subsection (a), such as by
terminating, annulling, modifying, or conditioning such
stay—
(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.
(h) BURDEN OF PROOF.—In any hearing under sub-
section (g), the party seeking relief from the stay shall
have the burden of proof on each issue which must be es-
tablished by clear and convincing evidence.
(i) DAMAGES FOR WILLFUL VIOLATION OF STAY.—
The estate of a national insurer which is injured by any
willful violation of a stay provided by this section shall
be entitled to actual damages, including costs and attor-
268
neys’ fees, and, in appropriate circumstances, the court
may impose additional sanctions.
(j) OTHER.—No statute of limitations or defense of
laches shall run with respect to any action by or against
a national insurer between the filing of a petition for con-
servation, rehabilitation or liquidation against a national
insurer and the order granting or denying that petition.
Any action against the national insurer that might have
been commenced when the petition was filed may be com-
menced for at least 60 days after an order is denied.
SEC. 915. ANSWER AND HEARING.
(a) ANSWER.—The respondent national insurer shall
file its answer to the Director’s petition within 10 days
after service of the summons, exclusive of the day of serv-
ice. On timely motion of the respondent, the court shall
extend the time for answering for a period not to exceed
an additional 10 days.
(b) HEARING.—The court, on the return day of the
summons as originally fixed or extended hereunder, shall
set the cause for hearing within 20 days from the return
day or the extended return day.
(c) NO OTHER MOTIONS AND PLEADINGS.—Except
as provided in section 927, no motions or other pleadings,
whether to dissolve, modify or continue any injunction or
otherwise, shall be filed by, or permitted on behalf of the
269
respondent prior to the filing of an answer to the com-
plaint.
(d) DOCUMENT TO BE RECEIVED BY COURT.—The
court shall receive as self-authenticated any of the fol-
lowing when offered by the Director—
(1) certified copies of the financial statements
made by the national insurer; and
(2) certified copies of examination reports of
the national insurer made by or on behalf of the Di-
rector.
(e) PRIMA FACIE EVIDENCE.—At any hearing, the
verified petition and any exhibits filed therewith shall be
received as prima facie evidence of the facts therein con-
tained.
(f) ENTERING JUDGMENT.—The court shall enter
judgment within 15 days after the conclusion of the evi-
dence.
SEC. 916. NOTICE OF ENTRY OF ORDER OF REHABILITA-
TION OR LIQUIDATION.
Unless the court otherwise directs, the receiver shall
give or cause to be given notice of the order of rehabilita-
tion or liquidation as soon as possible by—
(1) first-class mail to the State commissioner of
each jurisdiction in which the national insurer is
doing business;
270
(2) first-class mail to each guaranty association
which is or may become obligated as a result of the
receivership proceeding;
(3) first-class mail to all known insurance pro-
ducers and reinsurers of the national insurer at their
last known address as indicated by the records of
the national insurer;
(4) first-class mail to all persons known or rea-
sonably expected to have claims against the national
insurer including all policyholders, at their last
known address as indicated by the records of the na-
tional insurer; and
(5) publication in a newspaper of general cir-
culation in the county in which the national insurer
has its principal place of business and in other loca-
tions as the receiver considers appropriate.
SEC. 917. CONTENTS OF NOTICE OF RECEIVERSHIP.
The notice of the entry of an order of rehabilitation
or liquidation shall—
(1) contain a statement that the national in-
surer has been placed in rehabilitation or liquidation;
(2) advise that an automatic stay is in effect to-
gether with a reference to section 914 and a state-
ment that certain acts against the national insurer
and its assets are stayed as well as a description of
271
any additional injunctive relief of general application
ordered by the court;
(3) state whether and to what extent the na-
tional insurer’s insurance policies continue in effect;
(4) include the deadline for filing claims if one
has been established;
(5) state the date, time and location of the ini-
tial status hearing established pursuant to section
918; and
(6) include such other information as the re-
ceiver or the court deems appropriate.
SEC. 918. INITIAL STATUS HEARING.
An initial status hearing shall be held within 120
days of the entry of an order of rehabilitation or liquida-
tion. The receiver shall discuss the condition of the estate
and may be questioned by parties in interest or their rep-
resentatives concerning the matters discussed. The hear-
ing shall be conducted informally under the supervision
of the court.
SEC. 919. DISMISSAL OF RECEIVERSHIP PROCEEDING.
(a) IN GENERAL.—Except as provided in subsection
(c), until all payments of or on account of the national
insurer’s contractual obligations by all guaranty associa-
tions and interest thereon and all reasonable expenses in-
curred by them in connection therewith are repaid to the
272
guaranty associations or a plan of repayment by the na-
tional insurer is approved by the guaranty associations,
an national insurer that is subject to any receivership pro-
ceeding shall not—
(1) be released from a receivership proceeding;
(2) be permitted to solicit or accept new busi-
ness or request or accept the restoration of a sus-
pended or revoked license or certificate of authority;
or
(3) be returned to the control of its share-
holders or management.
(b) FOLLOWING CONSERVATION ORDER.—If the Di-
rector, having obtained an ex parte order of conservation,
fails to file a motion in the receivership proceeding re-
questing entry of an order of rehabilitation or liquidation
after having had a reasonable opportunity to do so, the
receivership proceeding shall on motion of a party in inter-
est or on the court’s own motion, be dismissed and va-
cated.
(c) EXCEPTION.—A receivership proceeding may be
dismissed without complying with the requirements of sub-
section (a) if the court, on motion of the receiver, deter-
mines that the receivership estate has no assets or the es-
tate’s assets are insufficient to cover the costs of admin-
istering the receivership.
273
(d) DISSOLUTION.—In the event a receivership pro-
ceeding is dismissed pursuant to subsection (c), the na-
tional insurer shall be dissolved as of entry of the order
of dismissal.
SEC. 920. RECEIVERSHIP PROCEEDINGS FOR NON-U.S. IN-
SURERS.
The court, after notice and hearing, may dismiss or
suspend a receivership proceeding against a non-U.S. in-
surer under this title at any time, taking into consider-
ation the following interests of insured claimants, creditors
and the public:
(1) Whether the order requested, and any gov-
erning legislation upon which it is based, is con-
sistent with the objectives of this title.
(2) The effect the order requested would have
or could reasonably be expected to have on the abil-
ity of the liquidator to use assets of non-U.S. insur-
er’s estate under the liquidation order to transfer in-
surance policy obligations to a solvent assuming in-
surer.
(3) Any agreements with a receiver or State
commissioner or like official of another State in
which the non-U.S. insurer was doing business, or of
the country under the laws of which the non-U.S. in-
274
surer is domiciled, relating to the receivership or dis-
solution of the non-U.S. insurer.
(4) The adequacy of information available to
the court upon which to make a determination.
(5) The costs that could reasonably be expected
to be incurred as a result of the order.
SEC. 921. TRUSTEED ASSETS OF A UNITED STATES BRANCH
OF A NON-U.S. INSURER.
(a) MOTION TO TRANSFER.— Any person having an
interest in the trusteed assets of the United States branch
established pursuant to section 302 and subject to a re-
ceivership proceeding under this title, may, by motion,
seek an order directing that all or part of the trusteed
assets of such non-U.S. insurer be transferred to such per-
son.
(b) ACTION ON MOTION.—After providing notice and
hearing, the court may grant, deny, or suspend a motion
made pursuant to subsection (a) on terms and conditions,
or make such other order, as the court considers appro-
priate, considering the following:
(1) The factors set forth in section 920.
(2) Whether the order requested is consistent
with the terms, conditions and objectives of the trust
agreement or agreements.
275
SEC. 922. TRUST FUND CLAIMS.
(a) MOTION BY ALIEN REPRESENTATIVE.—An alien
representative having an interest in the trusteed assets of
a non-U.S. insurer secured by a multiple beneficiary trust
may, by motion, seek an order directing that all or part
of such trusteed assets of such insurer be transferred to
such person.
(b) CONDITIONS FOR RELIEF.—Notwithstanding sec-
tion 920, the court shall not grant relief under this section
unless the Director has determined that—
(1) the assets of such a trust exceed the
amount necessary to satisfy the claims of United
States beneficiaries of the trust; or
(2) United States beneficiaries of the trust will
receive a greater percentage of their claim if the
trust fund assets are returned to the grantor’s coun-
try of domicile and a receiver has been appointed for
the grantor in that domicile.
(c) 
MULTIPLE
BENEFICIARY
TRUST.—Claims
against the assets of a multiple beneficiary trust shall be
filed and allowed and shall receive distribution of assets
in accordance with the laws of the State in which the trust
is organized that are applicable to the receivership of na-
tional insurers.
276
SEC. 923. LIMITED APPEARANCE.
(a) IN GENERAL.—An alien representative may seek
dismissal or suspension of a receivership proceeding under
section 920.
(b) APPEARANCE LIMITED.—An appearance in a
court by an alien representative in connection with a mo-
tion or request under section 920, 921, or 922 does not
submit such alien representative to the jurisdiction of the
court for any other purpose, but the court may condition
any order under such sections on compliance by such alien
representative with the orders of the court.
SEC. 924. ADVISORY COMMITTEES.
The court, on motion of the receiver or for good cause
shown, may appoint one or more advisory committees of
policyholders, claimants or other creditors. Any advisory
committee shall serve without compensation and without
reimbursement of expenses.
SEC. 925. EX PARTE ORDERS OF CONSERVATION AND SEI-
ZURE.
(a) IN GENERAL.—At the time the Director initiates
a receivership proceeding under this title, he or she may
request entry of an ex parte conservation order by verified
petition alleging—
(1) that there exist grounds for entry of an
order of rehabilitation or liquidation; and
277
(2) that the interests of policyholders, creditors,
or the public will be endangered by delay.
(b) NO NOTICE OF HEARING.—The court shall issue
the ex parte conservation order immediately without prior
notice or a hearing.
(c) 
SERVICE
ON
NATIONAL
INSURER.—Upon
issuance of an ex parte conservation order, the order, to-
gether with a copy of the verified petition and a summons,
shall be promptly served on the national insurer as pro-
vided in section 913. The conservator may also serve the
order upon persons transacting business with the national
insurer or dealing with its assets and such others as may
be necessary to obtain compliance therewith. All persons
served with the order and all persons having actual knowl-
edge thereof shall be bound by it.
(d) CONTENT OF ORDER.—At the request of the Di-
rector, any order entered pursuant to this section shall—
(1) appoint the Director as conservator;
(2) direct the conservator to take possession
and control of all or a part of the property, books,
accounts, documents, and other records of a national
insurer, and of the premises occupied by the national
insurer for the transaction of its business;
(3) direct any officer or director or other person
or entity that possesses or controls any documents
278
or recorded information of any nature, including
books, claims files, records, and papers of the na-
tional insurer or of any affiliate of the national in-
surer that relate to the national insurer’s assets, li-
abilities, financial affairs or business, shall imme-
diately disclose and, on request of the conservator,
turn over such documents and recorded information
to the conservator;
(4) enjoin the national insurer and its officers,
managers, agents, and employees from disposing of
its property and from transacting business except
with the conservator’s written consent;
(5) contain such other relief as the Director
considers necessary; and
(6) specify the duration of the order, which
shall be such time as the court considers necessary
for the conservator to ascertain the condition of the
national insurer.
(e) MODIFICATION OF ORDER.—On motion of the na-
tional insurer, the conservator or in its own discretion, the
court may at any time modify such order on such notice
and after such hearing, if any, as the court determines
to be appropriate.
(f) HEARINGS.—Upon entry of an order under this
section, the conservator may hold hearings, subpoena wit-
279
nesses to compel their attendance, administer oaths, exam-
ine persons under oath, and compel persons to subscribe
to his or her testimony after it has been correctly reduced
to writing; and in connection with these powers may re-
quire the production of books, papers, records, or other
documents that he or she considers relevant to the per-
formance of his or her duties.
(g) NO ANTICIPATORY BREACH.—Entry of an order
under this section shall not constitute an anticipatory
breach of any contract to which the national insurer is
a party.
(h) LAW ENFORCEMENT OFFICER ASSISTANCE.—On
request of the conservator, those law enforcement officers
with authority to process orders of the court shall provide
the conservator such assistance as is required to carry out
the terms of the order entered under this section.
SEC. 926. CONFIDENTIALITY OF HEARINGS.
In all proceedings and judicial review of proceedings
under section 925, all records of the national insurer,
other documents, department of insurance files, and court
records and papers, so far as they are a part of the record
of the proceedings under this subtitle, are confidential and
shall be held by the clerk of the court in a confidential
file except as is necessary to obtain compliance therewith,
unless the court, after hearing arguments from the parties
280
in chambers, orders otherwise or the insurer requests that
the matter be made public. Unless privileged or confiden-
tial under law other than this title, all such records shall
become public upon filing of a petition for rehabilitation
or liquidation under this title.
SEC. 927. MODIFICATION OF ORDERS.
A national insurer against which an order of con-
servation has been entered under section 925 may move
for modification of the order at any time prior to the entry
of an order of rehabilitation or liquidation under this title.
The court shall hear such motion not more than 15 days
after it is filed. A hearing under this section may be held
privately in chambers and shall be held privately in cham-
bers if so requested by the national insurer proceeded
against.
SEC. 928. AUTHORITY TO OPERATE AND RESTRUCTURE IN-
SURER’S BUSINESS.
If the court has entered an order of rehabilitation,
the rehabilitator—
(1) may take such action as he or she considers
necessary or appropriate to reform and revitalize the
national insurer, subject to any specific limitations
of this title;
281
(2) may operate the business of the national in-
surer, including the retention or dismissal of the na-
tional insurer’s employees; and
(3) shall propose a plan.
SEC. 929. CONVERSION TO LIQUIDATION.
(a) GROUNDS FOR CONVERSION.—If, in the exercise
of administrative discretion, the Director determines that
further attempts to rehabilitate a national insurer would—
(1) substantially increase the risk of loss to
creditors, policyholders, other parties in interest or
the public,
(2) be futile, or
(3) not be in the best interests of creditors, pol-
icyholders, other parties in interest or the public, the
Director may petition the court for an order of liq-
uidation and finding of insolvency under section 930.
(b) OTHER GROUNDS
FOR CONVERSION.—If the
rehabilitator suspends payment of all or substantially all
direct insurance policy obligations for a period of 6 months
at any time after the entry of an order for relief and has
not filed a plan within that time, unless the court, for good
cause shown, extends such period, the Director shall re-
quest that the court enter a final order of liquidation with
a finding of insolvency.
282
SEC. 930. ORDER OF LIQUIDATION.
(a) LIQUIDATOR’S DUTIES.—If the court has entered
an order of liquidation, the liquidator shall—
(1) marshal the assets of the national insurer;
and
(2) propose a plan.
(b) DIRECTOR REQUEST FOR FINAL ORDER.—The
Director, as part of an initial petition filed under this title,
or the receiver, by motion filed in a pending receivership
proceeding, may request that the court enter a final order
of liquidation with a finding of insolvency.
SEC. 931. CONTINUATION OF COVERAGE.
(a) GENERAL RULE.—Notwithstanding any insur-
ance policy language or any other statute, all reinsurance
contracts by which the national insurer has reinsured the
insurance obligations of another person are canceled upon
entry of an order of liquidation. All policies of insurance
(other than reinsurance contracts), surety bonds or surety
undertakings, other than life, disability income or long-
term care insurance or annuities, in effect at the time of
issuance of an order of liquidation shall continue in force
as provided in this section until the earliest of—
(1) 30 days from the date of entry of the liq-
uidation order;
(2) the expiration of the insurance policy;
283
(3) the date when the insured has replaced the
insurance coverage with equivalent insurance in an-
other national insurer or State-insurer or otherwise
terminated the insurance policy;
(4) the date the liquidator has effected a trans-
fer of the insurance policy obligation; or
(5) the date proposed by the liquidator and ap-
proved by the court to cancel coverage.
(b) TERMINATION OF COVERAGES.—An order of liq-
uidation shall terminate coverages at the time provided
under subsection (a) for purposes of any other statute.
(c) POLICIES OF INSURANCE COVERED BY GUAR-
ANTY ASSOCIATIONS.—Notwithstanding subsections (a)
and (b), policies of life insurance or annuities covered by
a guaranty association and any portion of policies of life
insurance or annuities covered by a guaranty association
shall continue in force to the extent necessary to permit
the guaranty association to discharge its statutory obliga-
tions.
(d) POLICIES
OF INSURANCE NOT COVERED
BY
GUARANTY ASSOCIATIONS.—Policies of life insurance or
annuities not covered by a guaranty association, and any
portion of policies of life insurance or annuities not cov-
ered by a guaranty association, shall terminate as under
subsections (a) and (b), except to the extent that the liqui-
284
dator proposes and the court approves the continuation
of such contracts or coverage. Those policies of insurance
that are not cancelable or nonrenewable by the insolvent
national insurer pursuant to their terms, and that are not
covered in whole or in part under subtitle A of title X
may be continued in force pursuant to a plan approved
by the court under section 979.
(e) SURETY.—The cancellation of any bond or surety
undertaking shall not release any cosurety or guarantor.
(f) REINSURANCE CONTRACTS.—Reinsurance con-
tracts by which the insurer has reinsured obligations aris-
ing under policies of insurance shall continue or terminate
as provided in section 962.
Subtitle E—Office of the Receiver
SEC. 932. APPOINTMENT OF RECEIVER.
An order of conservation, rehabilitation or liquidation
shall appoint the Director and his or her successors in of-
fice as receiver.
SEC. 933. TITLE TO AND POSSESSION OF ASSETS AND
RECORDS.
(a) IN GENERAL.—Upon entry of an order of reha-
bilitation or liquidation, the rehabilitator or liquidator
shall be vested with title to all of the property, books, ac-
counts, documents and other records of the national in-
surer, wherever located.
285
(b) TIMING.—To the extent reasonable, and in the
receiver’s sole discretion, the receiver may immediately
take possession and control of all of the property, books,
accounts, documents and other records of the national in-
surer and of the premises occupied by the national insurer
for transaction of its business.
SEC. 934. IMMUNITY AND INDEMNIFICATION OF THE RE-
CEIVER AND EMPLOYEES.
(a) PERSONS PROTECTED.—For the purposes of this
section, the persons entitled to protection under this sec-
tion are—
(1) all receivers responsible for the conduct of
a receivership proceeding under this title including
present and former receivers; and
(2) their employees, meaning all present and
former special deputies and assistant special depu-
ties appointed by the Director and all persons whom
the Director, special deputies, or assistant special
deputies have employed to assist in a receivership
proceeding under this title. Attorneys, accountants,
auditors, actuaries, investment bankers, financial ad-
visors, other consultants and any other persons or
firms who are retained by the receiver as inde-
pendent contractors and their employees shall not be
286
considered employees of the receiver for purposes of
this section.
(b) IMMUNITY.—The receiver and his or her employ-
ees shall have official immunity and shall be immune from
suit and liability, both personally and in their official ca-
pacities, for any claim for damage to or loss of property
or personal injury or other civil liability caused by or re-
sulting from any alleged act, error or omission of the re-
ceiver or any employee arising out of or by reason of their
duties or employment; provided that nothing in this provi-
sion shall be construed to hold the receiver or any em-
ployee immune from suit and/or liability for any damage,
loss, injury or liability caused by the intentional or willful
and wanton misconduct of the receiver or any employee.
(c) INDEMNIFICATION.—If any legal action is com-
menced against the receiver or any employee, whether
against him or her personally or in his or her official ca-
pacity, alleging property damage, property loss, personal
injury or other civil liability caused by or resulting from
any alleged act, error or omission of the receiver or any
employee arising out of or by reason of their duties or
employment, the receiver and any employee shall be in-
demnified from the assets of the national insurer for all
expenses, attorneys’ fees, judgments, settlements, decrees
or amounts due and owing or paid in satisfaction of or
287
incurred in the defense of such legal action unless it is
determined upon a final adjudication on the merits that
the alleged act, error or omission of the receiver or em-
ployee giving rise to the claim did not arise out of or by
reason of his or her duties or employment, or was caused
by intentional or willful and wanton misconduct.
(d) ADVANCEMENT OF ATTORNEYS’ FEES.—Attor-
neys’ fees and any and all related expenses incurred in
defending a legal action for which immunity or indemnity
is available under this section shall be paid from the assets
of the national insurer, as they are incurred, in advance
of the final disposition of such action upon receipt of an
undertaking by or on behalf of the receiver or employee
to repay the attorneys’ fees and expenses if it shall ulti-
mately be determined upon a final adjudication on the
merits that the receiver or employee is not entitled to im-
munity or indemnity under this section.
(e) ADMINISTRATION EXPENSE.—Any indemnifica-
tion for expense payments, judgments, settlements, de-
crees, attorneys’ fees, surety bond premiums or other
amounts paid or to be paid from the national insurer’s
assets pursuant to this section shall be an administrative
expense of the national insurer.
(f) SEGREGATION
OF
FUNDS
GENERALLY
RE-
QUIRED.—In the event of any actual or threatened litiga-
288
tion against a receiver or any employee for which immu-
nity or indemnity may be available under this section, a
reasonable amount of funds which in the judgment of the
Director may be needed to provide immunity or indemnity
shall be segregated and reserved from the assets of the
national insurer as security for the payment of indemnity
until such time as all applicable statutes of limitation shall
have run and all actual or threatened actions against the
receiver or any employee have been completely and finally
resolved, and all obligations of the national insurer and
the Director under this section shall have been satisfied.
(g) SURETY BOND IN LIEU OF SEGREGATION OF
FUNDS.—In lieu of segregation and reserving of funds,
the Director may, in his or her discretion, obtain a surety
bond or make other arrangements which will enable the
Director to fully secure the payment of all obligations
under this section.
(h) SETTLEMENT.—If any legal action against an
employee for which indemnity may be available under this
section is settled prior to final adjudication on the merits,
the national insurer shall pay the settlement amount on
behalf of the employee, or indemnify the employee for the
settlement amount, unless the Director determines—
(1) that the claim did not arise out of or by
reason of the employee’s duties or employment; or
289
(2) that the claim was caused by the intentional
or willful and wanton misconduct of the employee.
(i) APPROVAL OF SETTLEMENT.—In any legal action
in which the receiver is a defendant, that portion of any
settlement relating to the alleged title, error or omission
of the receiver shall be subject to the approval of the court.
The court shall not approve that portion of the settlement
if it determines—
(1) that the claim did not arise out of or by
reason of the receiver’s duties or employment; or
(2) that the claim was caused by the intentional
or willful and wanton misconduct of the receiver.
(j) NO DEPRIVATION
OF RIGHTS.—Nothing con-
tained or implied in this section shall operate, or be con-
strued or applied to deprive the receiver or any employee
of any immunity, indemnity, benefits of law, rights or any
defense otherwise available.
(k) OTHER GENERAL RULES.—
(1) Subsection (b) shall apply to any suit based
in whole or in part on any alleged act, error or omis-
sion which takes place on or after the effective date
of this title.
(2) No legal action shall lie against the receiver
or any employee based in whole or in part on any
alleged act, error or omission which took place prior
290
to the effective date of this title, unless suit is filed
and valid service of process is obtained within 12
months after the effective date of this title.
(3) Subsections (c) through (i) shall apply to
any suit which is pending on or filed after the effec-
tive date of this title without regard to when the al-
leged act, error or omission took place.
SEC. 935. EMPLOYMENT OF PROFESSIONAL PERSONS.
The receiver may—
(1) appoint 1 or more qualified persons to serve
as deputy receiver which persons shall have all the
powers and responsibilities of the receiver granted
under this title and shall serve at the pleasure of the
receiver;
(2) employ and fix the compensation of employ-
ees and agents;
(3) retain attorneys, actuaries, accountants, ap-
praisers, consultants, and such other personnel as he
or she considers necessary to assist in the receiver-
ship; and
(4) subject to the requirements of section 945,
fix the compensation of those whom he or she ap-
points or retains under subsection (a) or (b) of this
section.
291
SEC. 936. POWERS OF REHABILITATORS AND LIQUIDATORS.
(a) IN GENERAL.—The rehabilitator or liquidator
shall have all the powers of the directors, officers and
managers of the national insurer, whose authority shall
be suspended, except as they are redelegated by the
rehabilitator or liquidator.
(b) OTHER SPECIFIC POWERS.—In addition to those
powers otherwise provided by this title, the rehabilitator
or liquidator shall have the power to—
(1) use, sell or lease property of the national in-
surer;
(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 that transaction for the
purpose of facilitating the liquidation;
(3) collect all debts and money due and claims
belonging to the national insurer, wherever located;
(4) institute and pursue legal actions and con-
tinue any pending action, in any jurisdiction;
(5) suspend, limit or permit insurance policy
withdrawals in connection with policies of insurance;
(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
292
terms and conditions as he or she 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, to administer oaths, examine a
person under oath, and compel a person to subscribe
to his or her testimony after it has been correctly re-
duced to writing; and, in connection with these pow-
ers, require the production of books, papers, records,
or other documents that he or she considers relevant
to the inquiry; and
(9) exercise all powers now held or hereafter
conferred upon receivers by the laws of this State
not inconsistent with the provisions of this title.
(c) ORDER OF DISSOLUTION.—The liquidator may
petition the court for an order dissolving the corporate ex-
istence of a national insurer or a U.S. branch established
pursuant to section 302 of this Act at any time after entry
of the order of liquidation.
(d) CONSTRUCTION.—The enumeration in this sec-
tion of the powers and authority of the rehabilitator or
liquidator shall not be construed as a limitation upon him
or her, and it shall not exclude in any manner his or her
right to do other acts not specifically enumerated in this
293
section or otherwise provided for if necessary or appro-
priate for the accomplishment of or in aid of the purpose
of rehabilitation or liquidation.
SEC. 937. ADVANCES TO THE RECEIVER.
If the property of the national insurer does not con-
tain sufficient cash or liquid assets to defray the costs in-
curred, the Director may advance the incurred costs out
of an appropriation for the Office. Amounts advanced for
expenses of administration shall be repaid to the Director
for the use of the Office out of the first available money
of the national insurer with priority over all other costs
of administration.
SEC. 938. EXECUTORY CONTRACTS.
(a) 
POWER
TO
ASSUME
OR
REJECT.—The
rehabilitator or liquidator, subject to the court’s approval,
may assume or reject any executory contract or unexpired
lease of the national insurer.
(b) EXCEPTIONS.—This section shall not apply to an
insurance policy or reinsurance contract.
(c) NO ANTICIPATORY BREACH.—Neither the filing
of a petition under this title nor the entry of an order
of rehabilitation or liquidation shall constitute an antici-
patory breach of any contract or lease of the national in-
surer.
294
(d) CONTRACT OR LEASE IN DEFAULT.—If there has
been a default in an executory contract or unexpired lease
of the national insurer, the receiver may not assume such
contract or lease unless, at the time of the assumption
of such contract or lease, the receiver—
(1) cures or provides adequate assurance that
the receiver will promptly cure such default; and
(2) provides adequate assurance of future per-
formance under such contract or lease.
(e) EXCEPTIONS.—Subsection (d) does not apply to
a default that is a breach of a provision relating to—
(1) the insolvency or financial condition of the
national insurer at any time before the closing of the
receivership proceeding;
(2) the commencement of a receivership pro-
ceeding under this title;
(3) the appointment of or taking possession by
a receiver in a case under this title or a custodian
before such commencement; or
(4) the satisfaction of any penalty rate or provi-
sion relating to a default arising from any failure of
the insurer to perform nonmonetary obligations
under the executory contract or unexpired lease.
295
SEC. 939. ABANDONMENT OF PROPERTY AND RECORDS.
The receiver may, at any time, abandon any property
or records that are burdensome to the estate or that are
of inconsequential value and benefit to the receivership es-
tate.
SEC. 940. EXTENSION OF TIME.
(a) IN GENERAL.—The rehabilitator or liquidator
may institute any action or proceeding on behalf of the
estate of the national insurer while any statute of limita-
tion is tolled pursuant to this section. Unless an applicable
limitation period has expired before a successful petition
for rehabilitation or liquidation was filed, any applicable
statute of limitation is tolled for 2 years. Tolling of the
running of any applicable statute of limitation shall begin
with the entry of an order of rehabilitation or liquidation.
The tolling shall be in addition to any other applicable
tolling provision.
(b) OTHER ACTIONS.—For actions not covered by
subsection (a), where any unexpired time period is fixed,
by any agreement or in any proceeding, for doing any title
for the benefit of the estate, the rehabilitator or liquidator
shall have 180 days or such longer period as the court
may allow for good cause shown, from the entry of the
order of rehabilitation or liquidation to perform the title.
296
SEC. 941. PERIODIC REPORTS.
(a) REPORTS BY REHABILITATOR OR LIQUIDATOR.—
A rehabilitator or liquidator shall file periodic reports with
the court containing such information as is reasonably
available and at such intervals as the court specifies,
including—
(1) cash receipts and disbursements for the pe-
riod; and
(2) a balance sheet which includes known and
estimated assets and liabilities of the estate.
(b) REPORTS
BY CONSERVATOR.—A conservator
shall file with the court a report reflecting the national
insurer’s—
(1) cash receipts and disbursements for the pe-
riod; and
(2) such other information, reasonably available
to the conservator, as the court specifies.
(c) EXCEPTIONS.—The reports required by sub-
sections (a) and (b) need not be filed more than once for
each calendar year if the national insurer’s cash and in-
vested assets are less than $250,000.
SEC. 942. DOCUMENT DEPOSITORY.
(a) 
DOCUMENT
DEPOSITORY
REQUIRED.—The
rehabilitator or liquidator shall maintain, during the pend-
ency of the receivership proceedings, a document deposi-
tory containing—
298
copies thereof, in addition to service copies, for inclusion
in the depository.
(d) OTHER.—Nothing in this section shall preclude
the receiver from including additional nonprivileged and
nonconfidential items in the document depository.
(e) DOCUMENTS PUBLIC.—Except as otherwise or-
dered by the court, all records contained in the depository
are public. The receiver shall make available the materials
contained in the depository, during regular business hours
at the principal office of the receiver or such other location
as the receiver shall specify, and shall provide copies of
depository materials at reasonable cost.
SEC. 943. AUDIT OF RECEIVERSHIP RECORDS.
(a) IN GENERAL.—The pendency of any receivership
proceeding under this title shall in no way affect the power
and authority of the Director to conduct any examination
provided for in section 202(a) in connection with the busi-
ness, conduct or affairs of a national insurer.
(b) AUDIT REQUIRED.—An annual audit of any na-
tional insurer which is in rehabilitation or liquidation pur-
suant to this title and which has assets of more than
$500,000 shall be performed by an independent outside
certified public accountant. The cost of this audit shall
be paid by the receiver as an expense of administration.
299
SEC. 944. GENERAL SERVICE LIST.
(a) SERVICE LIST TO BE MAINTAINED.—The re-
ceiver shall maintain a general service list for each receiv-
ership proceeding. It shall be the responsibility of the per-
son listed to inform the receiver, in writing, of any changes
in his or her address, or to request that his or her name
be deleted from the general service list. Any person shall
be placed on the general service list upon written request
to the receiver.
(b) CONTINUATION REQUEST FORMS.—The receiver
may require that listed persons return continuation re-
quest forms which the receiver may serve upon them at
intervals, but not more frequently than every 12 months.
Any person who fails to return the continuation request
may be purged from the service list.
(c) NO STANDING CONFERRED.—Inclusion on the
general service list does not confer standing in the receiv-
ership proceeding to raise, appear or be heard on any
issue.
SEC. 945. ROUTINE MATTERS.
(a) NOTICE OF FILING BY RECEIVER.—Notice of the
filing of any routine matter in the court shall be provided
by the receiver by depositing a copy of the item filed in
the depository, including the same in the index and send-
ing notice by U.S. mail on the same date that the copy
was deposited in the depository to those persons on the
300
general service list and to any other person known to the
receiver to be directly affected, that the matter has been
filed and the date of its filing and the date that it was
deposited in the depository.
(b) OBJECTIONS.—Any party in interest may object
to any routine matter by filing a motion with the court
and serving a copy thereof on the receiver not later than
30 days after the copy of the filing was deposited in the
depository. If no objection has been received during such
time, no court approval of the matter is required. If an
objection has been filed within the prescribed time, the
court shall set the matter for hearing and, after hearing,
enter such orders concerning the matter as it finds appro-
priate.
(c) ROUTINE MATTERS DEFINED.—For the purpose
of the application of this section, the following matters are
routine matters, unless the court otherwise orders:
(1) Periodic reports of the receiver, as required
by section 941.
(2) The establishment of a basis of compensa-
tion of deputy receivers, attorneys, actuaries, ac-
countants, appraisers, consultants, and such other
personnel as the receiver retains.
(3) The disposition of property or choices in ac-
tion of the estate the value of which does not exceed
301
the lesser of $250,000 or 10 percent of the last re-
ported total asset value of the estate.
SEC. 946. MATTERS REQUIRING PRIOR COURT APPROVAL.
(a) NOTICE OF FILING BY RECEIVER.—Except as
hereinafter set out, notice of the filing of any nonroutine
matter shall be provided by the receiver by depositing a
copy of the item filed in the depository, including the same
in the index and sending notice to those persons on the
general service list and any other person known to the re-
ceiver to be directly affected that the matter has been
filed, the date of its filing, the deadline for the filing of
objections, and the date on which the receiver will present
the matter for hearing by the court.
(b) ADDITIONAL NOTICE REQUIRED.—In addition to
the notice called for in subsection (a), the following mat-
ters require additional notice:
(1) Notice of the filing of a plan, or of any
amendment to such a plan shall be furnished to all
known parties in interest.
(2) Notice of the entry of an order of liquida-
tion or finding of insolvency, other than as part of
the initial order of receivership, shall be provided to
all persons entitled to notice under section 916.
302
(3) Notice of the proposed allowance or dis-
allowance of the claims of any policyholder or other
creditor shall be provided pursuant to section 947.
(c) NOTICE OF CLOSURE.—Notice of the proposed
closure of the estate or final distribution shall be sufficient
if mailed to all persons having allowed claims which have
not been paid in full, all claimants whose claims have not
been adjudicated, all shareholders of the national insurer,
if any, and all guaranty associations interested in the es-
tate, and the general service list.
(d) OBJECTIONS.—Any party in interest may object
to any action proposed to be taken by the court in connec-
tion with a nonroutine matter by filing a statement show-
ing that he or she has an interest in the matter and setting
out the grounds of the objection not later than 30 days
after the sending of notice under subsection (a), or such
other period as the court shall direct for good cause
shown.
(e) HEARING; ORDER.—Upon the presentation of any
nonroutine matter, the court may determine any prelimi-
nary issues, and shall set the matter for hearing. Upon
hearing the receiver and any party in interest who has
filed a timely objection, the court may issue such orders
concerning the matter as it finds appropriate.
303
(f) NONROUTINE MATTER DEFINED.—Any action
proposed to be taken by the receiver and which requires
court approval and which is not defined as a routine mat-
ter, is a nonroutine matter, including, without limitation,
the following:
(1) The disposition of any asset or chose in ac-
tion (including the settlement of any suit or tort
claim of the estate) which is property of the estate
and which exceeds in value the lesser of $250,000 or
10 percent of the last reported total asset value of
the estate.
(2) The allowance of any claim or disallowance
of a claim.
(3) Borrowing or lending of any sum, except for
debts incurred in the ordinary course of the oper-
ations of the receivership and not exceeding $50,000
per obligee.
(4) Conversion of a rehabilitation into a liquida-
tion, or the issuance of a finding of insolvency or the
imposition of a deadline for the filing of claims at
any time after the entry of an order of rehabilitation
or liquidation.
(5) The adoption of any plan.
(g) OTHER COURT POWERS.—After notice and a
hearing, the court may designate additional categories of
304
routine and nonroutine matters, and may, for good cause
shown, provide alternate notice, or require the service of
additional notice of any specific matter.
SEC. 947. NOTICE OF PROPOSED CLAIMS DISPOSITION.
Except as otherwise ordered by the court, notice of
the proposed allowance or disallowance of any claim is suf-
ficient if the receiver serves—
(1) each policyholder under whose insurance
policy the claim arises, any third party directly in-
terested in the insurance policy, each guaranty asso-
ciation which is or may be responsible for the claim
or any portion thereof, and any reinsurer which is
or would be liable to the receiver in respect of the
claim if it were allowed, with a description of the
claim proposed to be allowed or denied, the rationale
for such allowance or denial, and the procedures for
objecting; and
(2) notice of the filing of the motion on those
on the general service list.
Subtitle F—The Estate
SEC. 948. TURNOVER OF PROPERTY TO RECEIVER.
(a) IN GENERAL.—Except as provided in subsections
(c) and (d), any person or entity in possession, custody,
or control of property of the national insurer shall deliver
such property to the receiver.
305
(b) PAYMENT
TO
REHABILITATOR
OR
LIQUI-
DATOR.—Any person or entity that owes a debt that is
property of the national insurer and that is matured, pay-
able on demand, or payable on order, shall pay such debt
to, or on the order of, the receiver, except to the extent
that such debt may be offset under section 958.
(c) DISCLOSURE
BY ATTORNEYS, ACCOUNTANTS,
ETC.—Subject to any applicable privilege, and unless the
court orders otherwise, any attorney, accountant, agent,
management company, data processing company, or affil-
iate of the national insurer or entity that possesses or con-
trols any documents or recorded information of any na-
ture, including books, claims files, records, and papers of
the national insurer or of any affiliate of the national in-
surer that relate to the national insurer’s assets, liabilities,
financial affairs, or business, immediately shall disclose
and, on request of the receiver, turn over such documents
and recorded information, or if the court shall so order,
copies thereof, to the receiver.
(d) PROHIBITIONS.—As of the date of the order di-
recting rehabilitation or liquidation, no possessory lien
held by any attorney, including common law retaining
liens, may be asserted or enforced against the receiver or
the national insurer as a basis for withholding files or oth-
erwise. Further, no attorney shall be granted secured sta-
306
tus, security or payment for his or her claim against the
national insurer in exchange for the release of files or the
extinguishment of any such lien.
SEC. 949. TURNOVER OF PREMIUMS OWED.
(a) IN GENERAL.—Unless otherwise instructed by
the receiver in writing, an insurance producer, premium
finance company, or any other person, other than the na-
tional insurer, who is responsible for the payment of pre-
mium who has possession or control of such premium shall
immediately turn over to the receiver, and be obligated to
pay any unpaid earned premium due the national insurer,
whether collected or uncollected, and any collected, un-
earned premium and any part of an unearned premium
representing commission on or before the date of the entry
of a conservation, liquidation, or rehabilitation order.
Credits, setoffs, or both, shall not be allowed to an insur-
ance producer or premium finance company for an amount
advanced to the national insurer by the insurance pro-
ducer or premium finance company on behalf of, but in
the absence of a payment by, the insured.
(b) UNPAID EARNED PREMIUMS.—An insured shall
be obligated to pay to the receiver any unpaid earned pre-
mium and any retrospectively rated premium due the na-
tional insurer.
307
(c) PENALTIES.—Upon satisfactory evidence of a vio-
lation of subsection (a), the Director may impose a civil
penalty of no more than $1,000 for each and every act
in violation of this section by each offending party.
(d) NOTICE
AND HEARING.—Before the Director
takes action under subsection (c), the Director shall give
written notice to the person, national insurer, guaranty
association, or exchange accused of violating the law, stat-
ing specifically the nature of the alleged violation and fix-
ing a time and place, at least 10 days thereafter, for a
hearing on the matter. After the hearing, or upon failure
of the accused to appear at the hearing, the Director shall
upon finding a violation, impose the penalties under sub-
section (c) at its his or her discretion.
SEC. 950. LIMITATION ON AVOIDING POWERS.
An action or proceeding under section 951, 952, 953,
955, or 956 may not be commenced after the earlier of—
(1) 5 years after the entry of the initial order
of rehabilitation or liquidation under this title; or
(2) the time the receivership proceeding is
closed or dismissed.
308
SEC. 951. RECEIVER AS LIEN CREDITOR AND AS SUC-
CESSOR 
TO 
CERTAIN 
CREDITORS, 
PUR-
CHASERS AND FIDUCIARIES.
(a) IN GENERAL.—The receiver may avoid any trans-
fer of or lien upon the property of, or obligation incurred
by, a national insurer that the national insurer or a policy-
holder, creditor, member, or shareholder of the national
insurer may have avoided without regard to any knowledge
of the receiver, the Director, the national insurer or any
policyholder, creditor, member, or shareholder of the na-
tional insurer and whether or not such a creditor, member,
or shareholder exists.
(b) RECEIVER DEEMED CREDITOR.—The receiver
shall be deemed a creditor without knowledge for purposes
of pursuing claims under the Uniform Fraudulent Trans-
fer Act.
SEC. 952. PREFERENCES.
(a) PREFERENCE DEFINED.—A preference is a
transfer of any property of a national insurer or of an
interest in property of a national insurer—
(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt;
(3) made or suffered within the 2 years pre-
ceding the filing of a successful petition for rehabili-
tation or liquidation under this title; and
314
the national insurer could obtain rights superior to
the rights of the transferee;
(3) a transfer which creates an equitable lien
shall not be deemed to be perfected if there are
available means by which a legal lien could be cre-
ated;
(4) a transfer not perfected prior to the filing
of a petition for liquidation shall be deemed to be
made immediately before the filing of the successful
petition; and
(5) the provisions of this subsection apply
whether or not there are or were creditors who
might have obtained liens or persons who might have
become bona fide purchasers.
(g) BURDEN OF PROOF.—For the purposes of this
section, the receiver has the burden of proving the avoid-
ability of a transfer under subsection (b), and the person
against whom recovery or avoidance is sought has the bur-
den of proving the non-avoidability of a transfer under
subsection (c). The national insurer is presumed to have
been insolvent on and during the 120 day period imme-
diately preceding the date of the commencement of the
rehabilitation or liquidation proceeding.
(h) NEW VALUE DEFINED.—For the purposes of this
section, the term ‘‘new value’’ means money or money’s
315
worth in goods, services or new credit, or release by a
transferee of property previously transferred to such
transferee in a transaction that is neither void nor void-
able by the receiver under any applicable law, including
proceeds of such property, but does not include an obliga-
tion substituted for an existing obligation.
SEC. 953. FRAUDULENT TRANSFERS AND OBLIGATIONS.
(a) POWER TO AVOID.—The rehabilitator or liqui-
dator may avoid any transfer of an interest of the national
insurer in property, or any obligation incurred by the na-
tional insurer, that was made or incurred on or within 1
year before the date of the filing of the petition for pro-
ceedings under this title, if the national insurer voluntarily
or involuntarily—
(1) made such transfer or incurred such obliga-
tion with actual intent to hinder, delay, or defraud
any person to which it was or became indebted on
or after the date that such transfer was made or
such obligation was incurred; or
(2)(A) received less than a reasonably equiva-
lent value in exchange for such transfer or obliga-
tion; and
(B)(i) was insolvent on the date that such
transfer was made or such obligation was in-
334
nated such contract or contracts pursuant to their terms
prior to the order of liquidation (in this section referred
to as the ‘‘coverage date’’). From and after the coverage
date, the guaranty association is deemed to have assumed
the rights and obligations of the reinsurance contracts,
subject only to its right to terminate pursuant to sub-
section (f) of this section. The following paragraphs (1)
through (4) shall apply to reinsurance contracts so as-
sumed until terminated under subsection (f) of this sub-
section:
(1) The guaranty association shall be respon-
sible for all unpaid premiums due under the reinsur-
ance contracts (for periods both before and after the
coverage date), and shall be responsible for the per-
formance of all other obligations to be performed
after the coverage date, in each case which relates
to policies of insurance covered (in whole or in part)
under Title X or XI. The guaranty association may
charge policies of insurance covered in part by the
guaranty association, through reasonable allocation
methods, the costs for reinsurance in excess of the
obligations of the guaranty association.
(2) The guaranty association shall be entitled to
any amounts payable by the reinsurer under the re-
insurance contracts with respect to losses or events