2023 New York Laws › ISC - Insurance › Article 74 - Rehabilitation, Liquidation, Conservation and Dissolution of Insurers › 7435 - Distribution for Life Insurers.

§   7435.   Distribution  for  life  insurers.  (a)  The  priority  of
distribution of claims from the estate of a life  insurance  company  in
any  proceeding  subject to this article shall be in accordance with the
order in which each class of claims is herein set forth. Every claim  in
each  class  shall,  subject to such limitations as may be prescribed by
law and do not directly conflict with the  express  provisions  of  this
section,  be  paid  in  full or adequate funds retained for such payment
before the members of the next class receive any payment. No  subclasses
shall  be  established  within  any  class. The order of distribution of
claims shall be:
(1) Class one. Claims with respect to the actual and  necessary  costs
and   expenses   of   administration,   incurred   by   the  liquidator,
rehabilitator,  conservator  or  ancillary  rehabilitator   under   this
article,  or  by The Life Insurance Guaranty Corporation or The Life and
Health Insurance Company Guaranty Corporation of New  York,  and  claims
described  in  subsection  (d)  of  section seven thousand seven hundred
thirteen of this chapter.
(2) Class two. Debts due to employees for services  performed  to  the
extent  that  they  do  not  exceed one thousand two hundred dollars and
represent payment for services performed  within  one  year  before  the
commencement  of a proceeding under this article. Such priority shall be
in lieu of any other similar priority which may be authorized by law  as
to wages or compensation of employees.
(3)  Class  three.  All  claims  for  payment  for  goods furnished or
services rendered to the impaired or insolvent insurer in  the  ordinary
course  of  business  within  ninety days prior to the date on which the
insurer was  determined  to  be  impaired  or  insolvent,  whichever  is
applicable.
(4) Class four. All claims under insurance policies, annuity contracts
and  funding agreements, and all claims of The Life and Health Insurance
Company  Guaranty  Corporation  of  New  York  or  any  other   guaranty
corporation  or association of this state or another jurisdiction, other
than claims provided for in paragraph one of this subsection and  claims
for interest.
(5)  Class  five.  Claims  of  the  federal  or  any  state  or  local
government.   Claims, including those of any  governmental  body  for  a
penalty or forfeiture, shall be allowed to this class only to the extent
of  the pecuniary loss sustained from the act, transaction or proceeding
out of which the penalty or forfeiture arose, with reasonable and actual
costs  occasioned  thereby.  The  remainder  of  such  claims  shall  be
postponed  to  the  class  of  claims  under  paragraph  eight  of  this
subsection.
(6) Class six. Claims of general creditors and any other claims  other
than claims under paragraphs seven and eight of this subsection.
(7)  Class  seven.  Surplus, capital or contribution notes, or similar
obligations.
(8) Class eight. The claims of (i) policyholders,  other  than  claims
under  paragraph four of this subsection, and (ii) shareholders or other
owners.
(b) Every claim under  a  separate  account  agreement  providing,  in
effect,  that the assets in the separate account shall not be chargeable
with liabilities arising out of any other business of the insurer  shall
be  satisfied  out  of  the  assets in the separate account equal to the
reserves maintained in such account  for  such  agreement  and,  to  the
extent,  if  any,  not  fully  discharged thereby, shall be treated as a
class four claim against the estate of the life insurance company.
(c) For purposes of this section:
(1) "The estate of the life insurance company" shall mean the  general
assets  of  such company less any assets held in separate accounts that,
pursuant to section four thousand two hundred forty of this chapter, are
not chargeable with liabilities arising out of any other business of the
insurer.
(2) "Insurance  policies,  annuity  contracts  and funding agreements"
shall mean all policies and contracts of any of the kinds  of  insurance
specified  in  paragraph  one, two or three of subsection (a) of section
one thousand one hundred  thirteen  of  this  chapter  and  all  funding
agreements described in section three thousand two hundred twenty-two of
this  chapter,  including  all  separate account agreements, except that
separate account agreements  referred  to  in  subsection  (b)  of  this
section shall be included only to the extent referred to therein.
(3) "Separate   account   agreement  or  agreements"  shall  mean  any
agreement or agreements for separate accounts  referred  to  in  section
four thousand two hundred forty of this chapter.