[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3766 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 3766

 To establish an Office of the National Insurers within the Department 
   of the Treasury to authorize the issuance of Federal charters for 
   carrying out the underwriting and sale of insurance or any other 
             insurance operations, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 14, 2002

    Mr. LaFalce (for himself and Mrs. Jones of Ohio) introduced the 
   following bill; which was referred to the Committee on Financial 
 Services, and in addition to the Committees on the Judicary, and Ways 
 and Means, for a period to be subsequently determined by the Speaker, 
 in each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
 To establish an Office of the National Insurers within the Department 
   of the Treasury to authorize the issuance of Federal charters for 
   carrying out the underwriting and sale of insurance or any other 
             insurance operations, and for other purposes.

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Insurance Industry 
Modernization and Consumer Protection Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.
                    TITLE I--PURPOSE AND DEFINITIONS

Sec. 101. Purposes.
Sec. 102. Definitions.
         TITLE II--DIRECTOR OF THE OFFICE OF NATIONAL INSURERS

Sec. 201. Director of the Office of National Insurers.
Sec. 202. Supervision of national insurers.
Sec. 203. Authority to prescribe regulations.
Sec. 204. Examination, assessments, and fees.
Sec. 205. Enforcement.
Sec. 206. Insurance fraud.
Sec. 207. International regulatory support.
                      TITLE III--NATIONAL INSURERS

          Subtitle A--Organization, Licensing, and Operations

Sec. 301. Organization, operation, and regulation of national insurers.
Sec. 302. U.S branches of non-U.S. insurers.
Sec. 303. Federal licensing of national insurers.
Sec. 304. Corporate governance.
Sec. 305. Main office.
Sec. 306. Conversion of State insurer to national insurer.
Sec. 307. Conversion of national insurer to State insurer.
                           Subtitle B--Powers

Sec. 321. Powers of national insurers.
Sec. 322. Separate accounts.
Sec. 323. Protected cells.
                    Subtitle C--Financial Regulation

Sec. 331. Accounting principles and auditing standards.
Sec. 332. Investments.
Sec. 333. Asset valuation and rating.
Sec. 334. Valuation of liabilities.
Sec. 335. Continuing and alternate benefits.
Sec. 336. Actuarial opinion.
Sec. 337. Risk-based capital standards.
Sec. 338. Dividends to shareholders.
                        Subtitle D--Reinsurance

Sec. 351. Definitions.
Sec. 352. Reserve credit.
Sec. 353. Risk transfer regulation.
Sec. 354. International standards; host country reserves.
Sec. 355. Reinsurance contract terms.
Sec. 356. Licensing of Federally qualified reinsurers.
Sec. 357. Transition.
Sec. 358. Applicability of other subtitles and laws.
                     Subtitle E--Insurance Business

Sec. 361. Product regulation.
Sec. 362. Underwriting standards for life insurers.
Sec. 363. Group, blanket, and franchise insurance.
Sec. 364. Insurable interests under life insurance policies.
Sec. 365. Law applicable to life insurance policies or other products 
                            of national life insurers.
                       Subtitle F--Market Conduct

Sec. 371. Purposes and regulations.
Sec. 372. Unfair or deceptive practices.
Sec. 373. Replacement of life insurance policies.
Sec. 374. Unfair discrimination, unfair claims settlement practices, 
                            and unlawful inducements.
Sec. 375. HIV written informed consent, discrimination against abuse 
                            victims, and Holocaust victims claims.
Sec. 376. Minimum national standards.
   Subtitle G--Acquisitions of Control, Mergers, Bulk Transfers, and 
                             Domestication

Sec. 381. Acquisition of control.
Sec. 382. Mergers, consolidations, and acquisitions.
Sec. 383. Bulk transfers.
Sec. 384. Domestication of U.S. branch of a non-U.S. insurer.
                      Subtitle H--Health Insurance

Sec. 391. Recommendations for health insurance.
                        TITLE IV--STATE TAXATION

Sec. 401. State taxation.
              TITLE V--TREATMENT OF MCCARRAN-FERGUSON ACT

Sec. 501. Repeal of antitrust exemption for business of insurance.
                      TITLE VI--HOLDING COMPANIES

Sec. 601. Definitions
Sec. 602. Registration.
Sec. 603. Standards and management of national insurer within an 
                            insurance holding company system.
Sec. 604. Conflict with other Federal laws.
                TITLE VII--RELATIONSHIPS WITH STATE LAW

Sec. 701. Definitions.
Sec. 702. General prohibition.
Sec. 703. State license not required.
Sec. 704. State insurance law.
Sec. 705. Prohibition of discrimination.
Sec. 706. Permissible State regulation.
Sec. 707. Sales activities by State-licensed insurance producers.
         TITLE VIII--CONFORMING AMENDMENTS AND OTHER PROVISIONS

Sec. 801. Federal court jurisdiction.
Sec. 802. Federal court venue.
Sec. 803. Judicial review.
Sec. 804. Amendment to Freedom of Information Act.
Sec. 805. Amendments to Internal Revenue Code of 1986.
Sec. 806. Amendments to Federal securities laws.
Sec. 807. Amendments to Employee Retirement Income Security Act of 
                            1974.
Sec. 608. Amendments to Gramm-Leach-Bliley Act.
Sec. 809. Amendment to Act of October 28, 1974.
Sec. 810. Amendments to Federal Deposit Insurance Act.
Sec. 811. Amendments to Bank Holding Company Act of 1956.
Sec. 812. Amendments to title 18, United States Code.
Sec. 813. Amendments to Americans With Disabilities Act of 1990.
                         TITLE IX--RECEIVERSHIP

                        Subtitle A--Definitions

Sec. 901. Definitions.
Sec. 902. Construction.
                         Subtitle B--The Court

Sec. 903. Jurisdiction.
Sec. 904. Powers.
Sec. 905. Appeals.
Sec. 906. Appeal pendency plans.
                     Subtitle C--General Provisions

Sec. 907. Duty to provide information to corporation, State 
                            commissioners, and associations.
Sec. 908. Cooperation of officers, owners, and employees.
Sec. 909. Right to appear and be heard.
                       Subtitle D--Administration

Sec. 910. Entities subject to this title.
Sec. 911. Commencement of receivership.
Sec. 912. Grounds for entry of a rehabilitation or liquidation order.
Sec. 913. Service of summons and return.
Sec. 914. Automatic stay.
Sec. 915. Answer and hearing.
Sec. 916. Notice of entry of order of rehabilitation or liquidation.
Sec. 917. Contents of notice of receivership.
Sec. 918. Initial status hearing.
Sec. 919. Dismissal of receivership proceeding.
Sec. 920. Receivership proceedings for non-U.S. States insurers.
Sec. 921. Trusteed assets of a United States branch of a non-U.S. 
                            insurer.
Sec. 922. Trust fund claims.
Sec. 923. Limited appearance.
Sec. 924. Advisory committees.
Sec. 925. Ex parte orders of conservation and seizure.
Sec. 926. Confidentiality of hearings.
Sec. 927. Modification of orders.
Sec. 928. Authority to operate and restructure insurer's business.
Sec. 929. Conversion to liquidation.
Sec. 930. Order of liquidation.
Sec. 931. Continuation of coverage.
                   Subtitle E--Office of the Receiver

Sec. 932. Appointment of receiver.
Sec. 933. Title to and possession of assets and records.
Sec. 934. Immunity and indemnification of the receiver and employees.
Sec. 935. Employment of professional persons.
Sec. 936. Powers of rehabilitators and liquidators.
Sec. 937. Advances to the receiver.
Sec. 938. Executory contracts.
Sec. 939. Abandonment of property and records.
Sec. 940. Extension of time.
Sec. 941. Periodic reports.
Sec. 942. Document depository.
Sec. 943. Audit of receivership records.
Sec. 944. General service list.
Sec. 945. Routine matters.
Sec. 946. Matters requiring prior court approval.
Sec. 947. Notice of proposed claims disposition.
                         Subtitle F--The Estate

Sec. 948. Turnover of property to receiver.
Sec. 949. Turnover of premiums owed.
Sec. 950. Limitation on avoiding powers.
Sec. 951. Receiver as lien creditor and as successor to certain 
                            creditors, purchasers and fiduciaries.
Sec. 952. Preferences.
Sec. 953. Fraudulent transfers and obligations.
Sec. 954. Transfer of national insurer's property to good faith 
                            purchaser.
Sec. 955. Recoupment from affiliates.
Sec. 956. Liability of transferee of an avoided transfer.
Sec. 957. Automatic preservation of avoided transfer.
Sec. 958. Setoff.
Sec. 959. Qualified financial contracts.
Sec. 960. Recovery from reinsurers.
Sec. 961. Cut-through provisions.
Sec. 962. Life reinsurance.
                    Subtitle G--Creditors and Claims

Sec. 963. Rights and liabilities of creditors fixed upon liquidation.
Sec. 964. Claims filing; late filing.
Sec. 965. Proof of claim.
Sec. 966. Allowance of claims.
Sec. 967. Allowance of contingent and unliquidated claims.
Sec. 968. Reserve for third party claims against insured.
Sec. 969. Allowance of secured claims.
Sec. 970. Preliminary notice of claims determination.
Sec. 971. Claims of co-debtors.
Sec. 972. Approval of agreed claims.
Sec. 973. Denial of a claim.
Sec. 974. Claim by creditor in receipt of voidable transfer.
Sec. 975. Priority of distribution.
Sec. 976. Liquidator's proposal for early access disbursements.
                          Subtitle H--The Plan

Sec. 977. Who may file a plan.
Sec. 978. Contents of a plan.
Sec. 979. Court approval of plan.
Sec. 980. Effect of court approval of plan.
Sec. 981. Partial and final distributions or dividends.
Sec. 982. Transfer of assets and liabilities to liquidating trust.
Sec. 983. Collateralization of case reserves and incurred but not 
                            reported losses.
Sec. 984. Commutations.
Sec. 985. Mandatory negotiation and arbitration.
Sec. 986. Reinsurance recoverable trust provisions.
Sec. 987. Liquidating trust provisions.
                         Subtitle I--Post Plan

Sec. 988. Unclaimed and undistributed funds.
Sec. 989. Termination of receivership proceedings and discharge of 
                            receiver.
Sec. 990. Petition to reopen proceedings.
                     TITLE X--INSOLVENCY PROTECTION

                       Subtitle A--Life Insurance

Sec. 1001. Definitions.
Sec. 1002. National insurer participation in qualified State 
                            associations.
Sec. 1003. Qualified State defined.
Sec. 1004. Transition rules when association preempted.
Sec. 1005. Establishment of the National Life Insurance Guaranty 
                            Corporation; protection for residents in 
                            preempted States.
Sec. 1006. Protections against insolvency: coverage and limitations.
Sec. 1007. Accounts for administration and assessments.
Sec. 1008. Board of directors.
Sec. 1009. Powers and duties of the corporation.
Sec. 1010. Assessments.
Sec. 1011. Appeal by national insurer of assessments.
Sec. 1012. Duties and powers of Director.
Sec. 1013. Cooperation between Director and State commissioners.
Sec. 1014. Prohibited discrimination in tax treatment.
Sec. 1015. Miscellaneous provisions.
Sec. 1016. Examination of the corporation; annual report.
Sec. 1017. Immunity.
Sec. 1018. Stay of proceedings; reopening default judgments.
Sec. 1019. Prohibited advertisement of State association or the 
                            corporation in insurance sales; notice to 
                            policyowners.
              Subtitle B--Property and Casualty Insurance

Sec. 1020. Definitions.
Sec. 1021. National insurer participation in qualified State 
                            associations.
Sec. 1022. Qualified State defined.
Sec. 1023. Transition rules when association preempted.
Sec. 1024. Establishment of National Property and Casualty Insurance 
                            Guaranty Corporation; protection for 
                            residents in preempted States.
Sec. 1025. Protections against insolvency; coverage and limitations.
Sec. 1026. Board of directors.
Sec. 1027. Powers and duties of the corporation.
Sec. 1028. Duties and powers of Director.
Sec. 1029. Effect of paid claim.
Sec. 1030. Exhaustion of other coverage.
Sec. 1031. Cooperation between Director and State commissioners.
Sec. 1032. Prohibited discrimination in tax treatment.
Sec. 1033. Examination of the corporation; annual report.
Sec. 1034. Immunity.
Sec. 1035. Stay of proceedings
                        TITLE XI--EFFECTIVE DATE

Sec. 1101. Effective date.

                    TITLE I--PURPOSE AND DEFINITIONS

SEC. 101. PURPOSES.

    The purposes of this Act are to--
            (1) provide for the chartering of national insurers;
            (2) provide for the licensing of national insurers;
            (3) provide for the regulation of the underwriting and sale 
        of insurance and other insurance operations as conducted by 
        national insurers and insurance producers; and
            (4) provide for the establishment of the Office of National 
        Insurers and the position of Director of the Office of National 
        Insurers with responsibility for administering and enforcing 
        this Act, including with respect to such chartering, licensing, 
        and regulatory activities.

SEC. 102. DEFINITIONS.

    For purposes of this Act:
            (1) Acquiring and/or assuming insurer.--The term 
        ``acquiring and/or assuming insurer'' means a national insurer 
        that is the acquiring and/or assuming insurer in an acquisition 
        of assets and/or an assumption of liabilities pursuant to 
        subsection (a) of section 382.
            (2) Affiliate.--Except as specifically provided otherwise 
        in this Act, the term ``affiliate'' means any person that 
        controls, is controlled by, or is under common control with, a 
        national insurer.
            (3) Business entity.--The term ``business entity'' means a 
        corporation, association, partnership, limited liability 
        company, limited liability partnership, or other legal entity.
            (4) Conduct.--The term ``conduct'' includes acts, action, 
        omissions, and inaction.
            (5) Control.--The terms ``control'', ``controlling'', 
        ``controlled by'', and ``under common control with'', means the 
        possession, direct or indirect, of the power to direct or cause 
        the direction of the management and policies of a business 
        entity, whether through the ownership of voting securities, by 
        contract or otherwise, unless the power is the result of an 
        official position with or corporate office held by a person. 
        For purposes of section 381 and title VI, control shall be 
        presumed to exist if any person, directly or indirectly, owns, 
        controls, holds with the power to vote, or holds proxies 
        representing, 10 percent or more of the voting securities of 
        any other person.
            (6) Corporate form.--The term ``corporate form'' means, 
        with respect to an insurer, stock, mutual, or fraternal form.
            (7) Director.--The term ``Director'' means the Director of 
        the Office of National Insurers.
            (8) Domestication.--The term ``domestication'' means the 
        reorganization pursuant to subtitle G of the U.S. branch of a 
        non-U.S. insurer whereby a national insurer succeeds to all 
        business and assets and assumes all liabilities of such U.S. 
        branch.
            (9) Federal banking agencies.--The term ``Federal banking 
        agencies'' means the Office of the Comptroller of the Currency, 
        the Board of Governors of the Federal Reserve System, and the 
        Federal Deposit Insurance Corporation.
            (10) Federal license.--The term ``Federal license'' means a 
        license issued under section 303.
            (11) Foreign governmental authority.--The term ``foreign 
        governmental authority'' means a governmental authority of a 
        foreign jurisdiction.
            (12) Foreign jurisdiction.--The term ``foreign 
        jurisdiction'' means any jurisdiction other than the United 
        States or a State.
            (13) Insurance.--Except as specifically provided otherwise 
        in this Act, the term ``insurance'' includes life insurance and 
        property and casualty insurance. Such term does not include 
        health insurance.
            (14) Insurance operations.--The term ``insurance 
        operations'' includes the business of insurance.
            (15) Insurance producer.--The term ``insurance producer'' 
        means any person that sells, solicits or negotiates policies of 
        insurance, except that none of the following is an insurance 
        producer:
                    (A) A national insurer.
                    (B) An officer, director or employee of a national 
                insurer or of an insurance producer, if--
                            (i) the officer, director or employee does 
                        not receive any commission or other 
                        compensation on insurance policies written or 
                        sold by the national insurer which commission 
                        or other compensation is directly dependent 
                        upon the amount of insurance policies written 
                        or sold; and
                            (ii)(I) the officer, director or employee's 
                        activities are executive, administrative, 
                        managerial, clerical or a combination of these, 
                        and are only indirectly related to the sale, 
                        solicitation or negotiation of insurance;
                            (II) the officer, director or employee's 
                        function relates to underwriting, loss control, 
                        inspection or the processing, adjusting, 
                        investigating or settling of a claim on a 
                        policy of insurance; or
                            (III) the officer, director or employee is 
                        acting in the capacity of a special agent or 
                        agency supervisor assisting insurance producers 
                        where the person's activities are limited to 
                        providing technical advice and assistance to 
                        State licensed insurance producers and do not 
                        include the sale, solicitation or negotiation 
                        of insurance.
                    (C) A person who secures and furnishes information 
                for the purpose of group insurance policies; or for the 
                purpose of enrolling individuals under plans, or 
                issuing certificates under plans or otherwise assisting 
                in administering plans, where no commission or other 
                compensation directly dependent upon the amount of 
                insurance policies written or sold is paid to the 
                person for the service.
                    (D) An employer or association or its officers, 
                directors, employees, or the trustees of an employee 
                trust plan, to the extent that the employer, officer, 
                employee, director or trustee is engaged in the 
                administration or operation of a program of employee 
                benefits for the employer's or association's own 
                employees or the employees of its subsidiaries or 
                affiliates, which program involves the use of insurance 
                written by the national insurer, as long as the 
                employers, associations, officers, directors, employees 
                or trustees are not in any manner compensated, directly 
                or indirectly, by the national insurer.
                    (E) An employee of a national insurer or an 
                organization employed by a national insurer that is 
                engaging in the inspection, rating or classification of 
                risks, or in the supervision of the training of 
                insurance producers and that is not individually 
                engaged in the sale, solicitation or negotiation of 
                insurance.
                    (F) A person whose activities are limited to 
                advertising without the intent to solicit insurance 
                through communications in printed publications or other 
                forms of electronic mass media, provided that the 
                person does not sell, solicit or negotiate insurance.
                    (G) A salaried full-time employee who counsels or 
                advises his or her employer relative to the insurance 
                interests of the employer or of the subsidiaries or 
                business affiliates of the employer provided that the 
                employee does not sell or solicit insurance or receive 
                a commission or other compensation directly dependent 
                upon the amount of insurance policies written or sold.
                    (H) A person that sells, solicits or negotiates a 
                funding agreement.
                    (I) Any other kind of person identified by the 
                Director, by regulation, as not being an insurance 
                producer within the meaning of this paragraph.
            (16) Insurance securitization.--The term ``insurance 
        securitization'' means the issuance of debt instruments, the 
        proceeds from which support the exposures attributed to a 
        protected cell, by a national insurer where repayment of 
        principal or interest, or both, to investors pursuant to the 
        transaction terms is contingent upon the occurrence or 
        nonoccurrence of an event with respect to which the national 
        insurer is exposed to loss under insurance policies or 
        reinsurance contracts it has written.
            (17) Insurer-affiliated party.--The term ``insurer-
        affiliated party'' means--
                    (A) any director, officer, employee, or controlling 
                shareholder (other than a holding company) of, or agent 
                for, a national insurer;
                    (B) any other person who has filed or is required 
                to file a statement with the Director under section 
                381;
                    (C) any shareholder (other than a holding company), 
                consultant, joint venture partner, and any other person 
                as determined by the Director (by regulation or case-
                by-case) who participates in the conduct of the affairs 
                of a national insurer; and
                    (D) any independent contractor (including any 
                attorney, actuary, or accountant) of a national insurer 
                who in that capacity knowingly or recklessly 
                participates in--
                            (i) any violation of any law or regulation;
                            (ii) any breach of fiduciary duty; or
                            (iii) any conduct that involves an undue 
                        risk of loss to a national insurer's 
                        policyholders as a whole, which violation, 
                        breach or conduct caused or is likely to cause 
                        more than a minimal financial loss to, or a 
                        significant adverse effect on, a national 
                        insurer or the policyholders of a national 
                        insurer.
            (18) Life insurance.--
                    (A) In general.--The term ``life insurance'' means 
                insurance for which the probabilities of the duration 
                of human life or the rate of mortality are an element 
                or condition of insurance.
                    (B) Included insurance.--Life insurance includes 
                the granting of--
                            (i) endowment benefits;
                            (ii) additional benefits in the event of 
                        death by accident or accidental means;
                            (iii) disability income benefits;
                            (iv) additional disability benefits that 
                        operate to safeguard the contract from lapse or 
                        to provide a special surrender value, or 
                        special benefit in the event of total and 
                        permanent disability;
                            (v) benefits that provide payment or 
                        reimbursement for long-term home health care, 
                        or long-term care in a nursing home or other 
                        related facility;
                            (vi) burial insurance; and
                            (vii) optional modes of settlement of 
                        proceeds of life insurance.
                    (C) Exclusions.--Life insurance does not include 
                workers compensation insurance.
            (19) Main office.--The term ``main office'' means the 
        office of a national insurer designated as its main office in 
        accordance with section 305.
            (20) NAIC.--The term ``NAIC'' means the National 
        Association of Insurance Commissioners.
            (21) National insurer.--The term ``national insurer'' means 
        an insurer chartered under section 301 and the regulations 
        thereunder.
            (22) National life insurer.--The term ``national life 
        insurer'' means a life insurer chartered under section 301 and 
        the regulations thereunder.
            (23) National property and casualty insurer.--The term 
        ``national property and casualty insurer'' means a property and 
        casualty insurer chartered under section 301 and the 
        regulations thereunder.
            (24) Negotiate.--The term ``negotiate'' means, with respect 
        to a policy of insurance, to engage in the act of conferring 
        directly with or offering advice directly to a purchaser or 
        prospective purchaser of a particular policy of insurance 
        concerning any of the substantive benefits, terms or conditions 
        of the contract, provided that the person engaged in that act 
        either sells insurance or obtains insurance from insurers for 
        purchasers.
            (25) Non-U.S. insurer.--The term ``non-U.S. insurer'' means 
        an insurer organized under the laws of a foreign jurisdiction.
            (26) Office.--The term ``Office'' means the Office of 
        National Insurers.
            (27) Parent.--The term ``parent'' means a business entity 
        that, directly or indirectly, controls another business entity.
            (28) Person.--The term ``person'' means any natural person 
        and any corporation, partnership, limited liability company, 
        limited liability partnership, trust, association, governmental 
        body or entity, voluntary organization or similar organization.
            (29) Person associated with a member.--The term ``person 
        associated with a member'' means any director, officer, 
        employee, controlling shareholder, agent, or independent 
        contractor (including any attorney, actuary or accountant) of a 
        national insurer that is a member of an insurance self-
        regulatory organization.
            (30) Policy of insurance.--The term ``policy of insurance'' 
        or ``insurance policy'' means a policy, contract, or 
        certificate or evidence of insurance, an annuity contract, and 
        a funding agreement.
            (31) Policyholder.--The term ``policyholder'' of an 
        insurance policy means the person who is identified as the 
        legal owner under the terms of the insurance policy or who is 
        otherwise vested with legal title to the insurance policy 
        through an assignment, absolute on its face, completed in 
        accordance with the terms of the insurance policy and properly 
        recorded as the policyholder on the books of the insurer. Such 
        term does not include a person with a mere beneficial interest 
        in an insurance policy or a person to which an insurance policy 
        is assigned for collateral security purposes.
            (32) Property and casualty insurance.--
                    (A) In general.--The term ``property and casualty 
                insurance'' means insurance for persons or properties 
                in the United States against--
                            (i) loss of or damage to property;
                            (ii) loss of income or extra expense 
                        incurred because of loss of or damage to 
                        property;
                            (iii) third party liability claims caused 
                        by negligence or imposed by statute or 
                        contract, including workers compensation; or
                            (iv) loss resulting from debt or default of 
                        another, including sureties.
                    (B) Exclusions.--Such term does not include health 
                or life insurance, including group life insurance;
            (33) Protected cell.--The term ``protected cell'' means an 
        identified pool of assets and liabilities of a national insurer 
        segregated and insulated from the remainder of the national 
        insurer's assets and liabilities. The remainder of the national 
        insurer's assets and liabilities includes general account 
        assets and liabilities, separate account assets and liabilities 
        and assets and liabilities of other protected cells.
            (34) Protected cell account.--The term ``protected cell 
        account'' means a specifically identified bank or custodial 
        account established by a national insurer for the purpose of 
        segregating the protected cell assets of one protected cell 
        from the protected cell assets of other protected cells and 
        from the assets of the national insurer's general account and 
        separate accounts.
            (35) Relevant state law.--The term ``relevant State law'' 
        means, with respect to a national insurer, the law of the 
        relevant State applicable to an insurer that is chartered under 
        the law of such State and that is of the same corporate form as 
        the national insurer.
            (36) Resulting insurer.--The term ``resulting insurer'' 
        means a national insurer resulting from a merger or 
        consolidation pursuant to subsection (a) of section 382.
            (37) Sell.--The term ``sell'' means, with respect to a 
        policy of insurance, to exchange by any means, for money or its 
        equivalent, on behalf of an insurer.
            (38) Separate account.--The term ``separate account'' means 
        an account established and maintained by a national insurer 
        under which income, gains and losses, whether or not realized, 
        from assets allocated to such account, are, in accordance with 
        the applicable contract, credited to or charged against such 
        account without regard to other income, gains, or losses of the 
        national insurer.
            (39) Solicit.--The term ``solicit'' means, with respect to 
        a policy of insurance, attempting to sell insurance or asking 
        or urging a person to apply for a particular kind of insurance 
        from a particular insurer.
            (40) State.--The term ``State'' means any State of the 
        United States, the District of Columbia, any territory of the 
        United States, Puerto Rico, Guam, American Samoa, the Trust 
        Territory of the Pacific Islands, the Virgin Islands, and the 
        Northern Mariana Islands.
            (41) State insurer.--The term ``State insurer'' means an 
        insurer incorporated or organized under the laws of a State.
            (42) State licensed insurance producer.--The term ``State 
        licensed insurance producer'' means a person that is an 
        insurance producer licensed by a State, but only in those 
        circumstances in which such person is acting, in any respect, 
        with regard to a insurance policy or other product of a 
        national insurer; and such person shall not be subject to the 
        provisions of this Act when acting in any other circumstances.
            (43) Subsidiary.--The term ``subsidiary'' means a business 
        entity controlled, directly or indirectly, by another business 
        entity. For purposes of this paragraph--
                    (A) a business entity is conclusively presumed to 
                be controlled by a person that, directly or indirectly, 
                with power to vote, owns, controls or holds a majority 
                of the outstanding voting securities of such business 
                entity;
                    (B) no presumption, either of control or of absence 
                of control, arises if such ownership, control or 
                holding of voting securities is less than a majority 
                but more than 5 percent;
                    (C) absence of control is presumed if such 
                ownership, control or holding of voting securities is 5 
                percent or less; and
                    (D) in determining control, voting securities held 
                in separate accounts of a business entity shall be 
                deemed to be owned by the business entity, but voting 
                securities in an investment advisory account that are 
                not owned by a business entity but are held in an 
                account as to which the business entity is an 
                investment adviser shall not be deemed to be controlled 
                or held by such business entity.
            (44) Transition commencement date.--The term ``transition 
        commencement date'' means the date on which the first national 
        insurer is granted a Federal license by the Director under this 
        Act.
            (45) Transition termination date.--The term ``transition 
        termination date'' means the 5th anniversary of the transition 
        commencement date.
            (46) Trusteed assets.--The term ``trusteed assets'' means 
        assets required or permitted by this Act to be deposited by a 
        non-U.S. insurer with a qualified trustee for the security of 
        its policyholders and creditors in the United States.
            (47) Trusteed surplus.--The term ``trusteed surplus'' 
        means, with respect to a U.S. branch, the value of the 
        insurer's trusteed assets deposited with a trustee in 
        compliance with subsection (b) of section 302, plus accrued 
        investment income thereon where such interest is collected by 
        the States trustees, less the aggregate net amount of all of 
        its reserves and other liabilities in the United States as 
        determined in accordance with subsection (b) of section 302.
            (48) U.S. branch.--The term ``U.S. branch'' means the 
        business unit through which business is transacted within the 
        United States by a non-U.S. insurer and the assets and 
        liabilities of the insurer within the United States pertaining 
        to such business.
            (49) Violation.--The term ``violation'' includes any action 
        or inaction (alone or with another or others) for or toward 
        causing, bringing about, participating in, counseling, or 
        aiding or abetting a violation.
            (50) Voting securities.--The term ``voting securities'' 
        means securities of any class or any ownership interest having 
        voting power for the election of directors, trustees or 
        management of a business entity, other than securities having 
        such power only by reason of the happening of a contingency.

         TITLE II--DIRECTOR OF THE OFFICE OF NATIONAL INSURERS

SEC. 201. DIRECTOR OF THE OFFICE OF NATIONAL INSURERS.

    (a) Establishment of Office.--There is established the Office of 
National Insurers, which shall be an office in the Department of the 
Treasury.
    (b) Establishment of Position of Director.--There is established 
the position of the Director of the Office of National Insurers, who 
shall be the head of the Office of National Insurers and shall be 
subject to the general oversight of the Secretary of the Treasury.
    (c) Autonomy of Director.--The Secretary of the Treasury may not 
intervene in any matter or proceeding before the Director (including 
agency enforcement actions) unless otherwise specifically provided by 
law.
    (d) Appointment; Term.--
            (1) Appointment.--The Director shall be appointed by the 
        President, by and with the advice and consent of the Senate, 
        from among individuals who are citizens of the United States.
            (2) Term.--The Director shall be appointed for a term of 4 
        years that begins on August 1 of the year following the year in 
        which a Presidential election occurs. The term of the first 
        Director appointed pursuant to this section shall terminate at 
        the end of July 31 of the  year following the first 
Presidential election occurring after confirmation of such Director to 
the office of Director.
            (3) Vacancy.--A vacancy in the position of Director which 
        occurs before the expiration of the term for which a Director 
        was appointed shall be filled in the manner established in 
        paragraph (1) and the Director appointed to fill such vacancy 
        shall be appointed only for the remainder of such term.
            (4) Service after end of term.--An individual may serve as 
        Director after the expiration of the term for which appointed 
        until a successor Director has been appointed.
    (e) Prohibition on Financial Interests.--The Director shall not 
have a direct or indirect financial interest in any national insurer or 
State licensed insurance producer, except that the Director may own, 
directly or indirectly, or may have a direct or indirect beneficial 
interest in any insurance policy underwritten or sold by a national 
insurer.
    (f) Annual Report Required.--The Director shall make an annual 
report to the Congress. Such report shall include a description of any 
changes the Director has made or is considering making in any district 
offices of the Office, including a description of the geographic 
allocation of the Office's resources and personnel used to carry out 
examination and supervision functions.
    (g) Staff.--
            (1) Appointment and compensation.--The Director shall fix 
        the compensation and number of, and appoint and direct, all 
        employees of the Office of National Insurers notwithstanding 
        section 301(f)(1) of title 31, United States Code, without 
        regard to the provisions of title 5, United States Code, 
        governing appointments in the competitive service (except such 
        provisions that relate to discrimination), and without regard 
        to the provisions of chapter 51 and subchapter III of chapter 
        53 of that title relating to classification and General 
        Schedule pay rates.
            (2) Rates of basic pay.--Rates of basic pay for employees 
        of the Office may be set and adjusted by the Director without 
        regard to the provisions of chapter 51 or subchapter III of 
        chapter 53 of title 5, United States Code.
            (3) Additional compensation and benefits.--The Director may 
        provide additional compensation and benefits to employees of 
        the Office if the same type of compensation or benefits are 
        then being provided by any Federal banking agency or, if not 
        then being provided, could be provided by such an agency under 
        applicable provisions of law, rule or regulation. In setting 
        and adjusting the total amount of compensation and benefits for 
        employees of the Office, the Director shall consult, and seek 
        to maintain comparability with, the Federal banking agencies.
            (4) Delegation authority.--Except to the extent expressly 
        prohibited by the provisions of this Act, the Director may--
                    (A) designate who shall act as Director in the 
                Director's absence; and
                    (B) delegate to any employee, representative, or 
                agent any power conferred on the Director by this Act.
    (h) Litigation Authority.--The Director shall have authority to sue 
and be sued, complain and defend, and otherwise litigate, in the 
Director's own name and through the Director's own attorney, in any 
court, State or Federal.
    (i) Funding Through Assessments.--The compensation of the Director 
and employees of the Office and all other expenses of the Office may be 
paid from assessments levied under section 204.
    (j) GAO Audit.--The Director shall make available to the 
Comptroller General of the United States all books and records 
necessary to audit all of the activities of the Office of National 
Insurers.
    (k) Authority To Establish District Offices.--The Director shall 
have the authority to establish, in his discretion, such district 
offices of the Office, at such locations, as the Director deems 
necessary to perform the Office's duties.
    (l) Division of Consumer Affairs.--The Director shall establish a 
Division of Consumer Affairs within the Office.

SEC. 202. SUPERVISION OF NATIONAL INSURERS.

    (a) Examinations.--
            (1) In general.--The Director shall provide for the 
        examination of national insurers. The Director shall, not less 
        than once during each 12-month period, conduct an on-site 
        financial examination and an onsite market conduct examination 
        of each national insurer.
            (2) Exemption.--The Director may exempt a national insurer 
        from the requirement under paragraph (1) of an annual on-site 
        financial examination if the Director determines that the 
        financial condition of the national insurer warrants such an 
        exemption. The Director may not exempt any national insurer 
        from such requirement for 2 successive years.
    (b) Reports.--
            (1) In general.--The Director may require national insurers 
        to make such reports, containing such information and in such 
        form, as the Director may prescribe by regulation. Every 
        national insurer that holds a Federal license shall file with 
        the Director annual and quarterly financial statements at such 
        times and in such form as the Director may require by 
        regulation. Financial statements shall follow the accounting 
        principles specified pursuant to section 331. The Director 
        shall by regulation require that annual financial statements be 
        audited and accompanied by a report thereon of independent 
        accountants. The regulations shall specify the information that 
        must be disclosed in the financial statements and accompanying 
        notes and may specify additional schedules that need not be 
        filed with the financial statements but must be available for 
        examination by the Director upon request for a period of time 
        specified in the regulations.
            (2) Public disclosure.--
                    (A) The Director shall, by regulation, prescribe 
                the extent to which the following shall, in whole or in 
                part, be made available to the public upon request--
                            (i) reports of examinations conducted 
                        pursuant to subsection (a), and the information 
                        contained in such reports;
                            (ii) reports by national insurers pursuant 
                        to paragraph (1), and the information contained 
                        in such reports;
                            (iii) information reported pursuant to 
                        section 602 or 603 (or regulations thereunder); 
                        and
                            (iv) any workpapers or other materials of a 
                        national insurer that the Director obtains in 
                        connection with an examination conducted 
                        pursuant to subsection (a), a report pursuant 
                        to paragraph (1), a submission pursuant to 
                        section 602 or 603 (or regulations thereunder) 
                        or otherwise and that are in the Director's 
                        possession at the time of the request, and the 
                        information contained in such workpapers or 
                        other materials, except that neither the 
                        provision of such workpapers or other materials 
                        of a  national insurer to the Director nor 
anything in this Act or in any regulations issued under this Act shall 
constitute a waiver of, or otherwise affect, any privilege or other 
form of legal protection or exemption from public disclosure to which 
such workpapers or other materials, and the information contained in 
such workpapers or other materials, are otherwise subject.
                    (B) Except to the extent prescribed in regulations 
                issued by the Director in accordance with subparagraph 
                (A) and subject to clause (iv) of subparagraph (A), 
                reports of examination conducted pursuant to subsection 
                (a), reports by national insurers pursuant to paragraph 
                (1), information reported pursuant to section 602 or 
                603 (or regulations thereunder), and any workpapers or 
                other materials of a national insurer that the Director 
                obtains in connection with an examination conducted 
                pursuant to subsection (a), a report pursuant to 
                paragraph (1), a submission pursuant to section 602 or 
                603 (or regulations thereunder) or otherwise and that 
                are in the Director's possession at the time of the 
                request, and all information contained in such reports, 
                workpapers or other materials, shall be made available 
                to the public upon request unless the Director 
                determines--
                            (i) that a particular item or 
                        classification of information should not be 
                        made public in order to protect the insurer or 
                        insurers concerned, or the policyholders of 
                        such insurer or insurers; or
                            (ii) that public disclosure would otherwise 
                        not be in the public interest.
                    (C) Any determination made by the Director under 
                subparagraph (B) not to permit the public disclosure of 
                information shall be made in writing, and if the 
                Director restricts any item of information for national 
                insurers generally, the Director shall disclose the 
                reason in detail in the Federal Register.
            (3) Access by certain parties.--
                    (A) Notwithstanding paragraph (2), the persons 
                described in subparagraph (B) shall not be denied 
                access to any information contained in a report 
                required under paragraph (1), subject to reasonable 
                requirements of confidentiality. Those requirements 
                shall not prevent such information from being 
                transmitted to the Comptroller General of the United 
                States for analysis.
                    (B) The following persons are described in this 
                subparagraph for purposes of subparagraph (A)--
                            (i) the Chairman or ranking minority member 
                        of the Committee on Commerce, Science and 
                        Transportation of the Senate and their 
                        designees; and
                            (ii) the Chairman or ranking minority 
                        member of the Committee on Financial Services 
                        of the House of Representatives and their 
                        designees.
    (c) Compliance With Monetary Transaction Recordkeeping and Report 
Requirements.--
            (1) Compliance procedures required.--The Secretary of the 
        Treasury shall prescribe regulations requiring national 
        insurers to establish and maintain procedures reasonably 
        designed to ensure and monitor the compliance of such national 
        insurers with the requirements of subchapter II of chapter 53 
        of title 31, United States Code.
            (2) Examinations of national insurers to include review of 
        compliance procedures.--
                    (A) In general.--Each examination of a national 
                insurer by the Director shall include a review of the 
                procedures required to be established and maintained 
                under paragraph (1).
                    (B) Examination report requirement.--The report of 
                examination shall describe any problem with the 
                procedures maintained by the national insurer.
            (3) Order to comply with requirements.--If the Director 
        determines that a national insurer--
                    (A) has failed to establish and maintain the 
                procedures described in paragraph (1); or
                    (B) has failed to correct any problem with the 
                procedures maintained by such national insurer that was 
                previously reported to the national insurer by the 
                Director, the Director shall issue an order in the 
                manner prescribed in section 205 requiring such 
                national insurer to cease and desist from its violation 
                of this subsection or regulations implementing this 
                subsection.
    (d) Ancillary Provisions.--
            (1) In making examinations of national insurers, examiners 
        appointed by the Director shall have power--
                    (A) to require an affiliate of a national insurer 
                to make such reports and provide such material as the 
                examiners may direct, but only to the extent necessary 
                to disclose information concerning activities of the 
                affiliate that may affect the operations, management or 
                financial condition of the national insurer; and
                    (B) to make examinations of the affairs of an 
                affiliate of a national insurer, but--
                            (i) only if the examiners have reasonable 
                        cause to believe that the activities of the 
                        affiliate may affect the operations, management 
                        or financial condition of the national insurer;
                            (ii) only if the examiners are unable to 
                        obtain the necessary information from the 
                        national insurer; and
                            (iii) only to the extent necessary to 
                        disclose information concerning the activities 
                        of the affiliate that may affect the 
                        operations, management or financial condition 
                        of the national insurer.
            (2) In the course of any examination of any national 
        insurer, prompt and complete access shall be given to national 
        insurer officers, directors, employees, and agents, and to 
        relevant books, records, or documents of any type.
            (3) Upon request made in the course of supervision or 
        oversight of any national insurer, for the purpose of acting on 
        any application or determining the condition of any national 
        insurer, including whether operations are being conducted in a 
        manner that does not involve undue risk of loss to the national 
        insurer's policyholders as a whole, or in compliance with 
        charters, laws, regulations, directives, written agreements, or 
        conditions imposed in writing in connection with the granting 
        of an application or other request, the Director shall be given 
        prompt and complete access to national insurer officers, 
        directors, employees, and agents, and to relevant books, 
        records, or documents of any type.
            (4) If prompt and complete access upon request is not given 
        as required in this subsection, the Director may apply to the 
        United States district court for the judicial district (or the 
        United States court in any territory) in which the main office 
        of the national insurer is located, or in which the person 
        denying such access resides or carries on business, or in the 
        United States District Court for the District of Columbia, for 
        an order requiring that such information be promptly provided.
            (5) In connection with examinations of national insurers 
        and affiliates thereof, the Director may--
                    (A) administer oaths and affirmations and examine 
                and take and preserve testimony under oath as to any 
                matter in respect of the affairs or ownership of any 
                such national insurer or affiliate; and
                    (B) issue subpoenas and, for the enforcement 
                thereof, apply to the United States district court for 
                the judicial district (or the United States court in 
                any territory) in which the main office of the national 
                insurer or affiliate is located, or in which the 
                witness resides or carries on business, or in the 
                United States District Court for the District of 
                Columbia. Such courts shall have jurisdiction and power 
                to order and require compliance with any such subpoena.
            (6) Any national insurer and any affiliate of any national 
        insurer shall provide the Director with complete access to any 
        information or report with respect to any examination made by 
        any other State or Federal regulatory authority and furnish any 
        additional information with respect thereto as the Director may 
        reasonably require.

SEC. 203. AUTHORITY TO PRESCRIBE REGULATIONS.

    (a) In General.--The Director may prescribe such regulations and 
issue such orders and interpretations as the Director may determine to 
be appropriate to carry out this Act and all other laws within the 
Director's jurisdiction.
    (b) Scope of Authority.--The Secretary of the Treasury may not 
delay or prevent the issuance of any rule or the promulgation of any 
regulation by the Director.

SEC. 204. EXAMINATION, ASSESSMENTS, AND FEES.

    (a) Examination of National Insurers.--The cost of conducting 
examinations of national insurers pursuant to section 202, implementing 
this Act, and repaying amounts provided to the Director pursuant to 
subsection (k) of this section, shall be assessed by the Director 
against each such national insurer as the Director deems necessary or 
appropriate.
    (b) Examination of Affiliates.--The costs of conducting 
examinations of affiliates of national insurers pursuant to section 
202, implementing this Act, and repaying amounts provided to the 
Director pursuant to subsection (k) of this section, may be assessed by 
the Director against each affiliate that is examined as the Director 
deems necessary or appropriate.
    (c) Assessment Against National Insurer in Case of Affiliate's 
Refusal To Pay.--
            (1) In general.--Subject to paragraph (2), if any affiliate 
        of a national insurer--
                    (A) refuses to pay any assessment under subsection 
                (b) of this section; or
                    (B) fails to pay any such assessment before the end 
                of the 60-day period beginning on the date of the 
                assessment, the Director may assess such cost against, 
                and collect such cost from, such national insurer.
            (2) Affiliate of more than one national insurer.--If any 
        affiliate referred to in paragraph (1) is an affiliate of more 
        than one national insurer, the assessment with respect to the 
        affiliate may be assessed against, and collected from, any 
        affiliated national insurer in such proportions as the Director 
        may prescribe.
    (d) Civil Money Penalty for Affiliate's Refusal To Cooperate.--
            (1) Penalty imposed.--If any affiliate of any national 
        insurer--
                    (A) refuses to permit any examiner appointed by the 
                Director to make an examination; or
                    (B) refuses to provide any information required to 
                be disclosed in the course of any examination, the 
                national insurer shall forfeit and pay a civil penalty 
                of not more than $25,000 for each day that any such 
                refusal continues.
            (2) Assessment and collection.--Any penalty imposed under 
        paragraph (1) shall be assessed and collected by the Director, 
        in the manner provided in subsection (g)(1) of section 205.
    (e) Regulations.--The Director may prescribe regulations with 
respect to--
            (1) the computation of, and the assessment for, the cost of 
        conducting examinations pursuant to this section; and
            (2) the collection and use of such assessments and any fees 
        under this section.
Such regulations may establish formulas to determine a fee or schedule 
of fees to cover the costs of examinations and also to cover the cost 
of processing applications, filings, statements, notices, and requests 
for approvals by the Director or the Director's designee.
    (f) Treatment of Examination Assessments.--
            (1) Deposits.--Amounts received by the Director from 
        assessments under this section (other than an assessment under 
        subsection (d)(2) of this section) may be deposited in the 
        manner provided in section 5234 of the Revised Statutes of the 
        United States (12 U.S.C. 192), with respect to assessments by 
        the Comptroller of the Currency.
            (2) Assessments are not subject to apportionment of 
        funds.--Notwithstanding any other provision of law, the amounts 
        received by the Director from any assessment under this section 
        (other than an assessment under subsection (d)(2) of this 
        section) shall not be subject to apportionment for the purpose 
        of chapter 15 of title 31, United States Code, or under any 
        other authority.
    (g) Processing Fee.--The Director shall assess against any person 
that submits to the Office an application, filing, statement, notice, 
or request for approval a fee for processing such submission.
    (h) Additional Fees for Expenses of the Office.--The Director may 
assess against national insurers such additional fees to fund the 
direct and indirect expenses of the Office as the Director deems 
necessary or appropriate. Such fees may be imposed more frequently than 
annually at the discretion of the Director.
    (i) Working Capital.--The Director may impose fees and assessments 
pursuant to subsections (a), (b), (e) and (h) of this section, in 
excess of actual expenses for any given year, to permit the Director to 
maintain a working capital fund. The Director shall remit to the payers 
of such fees and assessments any funds collected in excess of what he 
deems necessary to maintain such working capital fund.
    (j) Use of Funds.--The Director may use the combined resources 
retained through fees and assessments imposed pursuant to this section 
to pay all direct and indirect salary and administrative expenses of 
the Office, including contracts and purchases of property and services, 
and the direct and indirect expenses of the examinations and 
supervisory activities of the Office.
    (k) Start-Up Funding.--
            (1) In general.--For purposes of carrying out the 
        responsibilities of the Office and the Director under this Act, 
        the Secretary of the Treasury shall pay to the Director a one-
        time payment of $10,000,000 on the date of the enactment of 
        this Act. Thereafter, expenses of the Office shall be funded 
        through the collection of fees as provided under this section.
            (2) Additional funds.--Except as provided in this section, 
        funds in addition to the funds provided under paragraph (1) may 
        be made available to the Director only if authorized and 
        appropriated by law.
            (3) Repayment of treasury loan.--Not later than the 
        expiration of the 5-year period beginning on the date of the 
        enactment of this act, the Director shall repay to the 
        Secretary of the Treasury the unpaid portion of the $10,000,000 
        paid to the Director pursuant to paragraph (1).

SEC. 205. ENFORCEMENT.

    (a) Federal License Revocation, Suspension, or Restriction.--
            (1) Involuntary revocation or restriction.--
                    (A) Notice to the national insurer.--If the 
                Director determines that--
                            (i) a national insurer or its board of 
                        directors has engaged or are engaging in 
                        conduct involving an undue risk of loss to the 
                        national insurer's policyholders as a whole;
                            (ii) a national insurer is in a financial 
                        or other condition that is not consistent with 
                        the continuation of its operations as presently 
                        conducted by the insurer; or
                            (iii) a national insurer or its board of 
                        directors has violated any applicable law, 
                        regulation, order, condition imposed in writing 
                        by the Director in connection with the approval 
                        of an application, filing, statement, notice or 
                        other request by the national insurer, or 
                        written agreement entered into between the 
                        national insurer and the Director, the Director 
                        may determine that such conduct, condition, or 
                        violation requires revocation or restriction of 
                        (including restrictions on the lines of 
                        insurance covered by) the national insurer's 
                        Federal license.
                    (B) If the Director determines that any conduct, 
                condition, or violation specified in subparagraph (A) 
                requires revocation or restriction of a national 
                insurer's Federal license, the Director shall--
                            (i) serve written notice on the national 
                        insurer of the Director's intention to revoke 
                        the Federal license of such national insurer;
                            (ii) provide the national insurer with a 
                        statement of the basis for the determination to 
                        revoke or restrict the insurer's Federal 
                        license; and
                            (iii) notify the national insurer of the 
                        date (not less than 30 days after notice under 
                        this subparagraph) and place for a hearing 
                        before the Director (or any person designated 
                        by the Director) with respect to the revocation 
                        or restriction of the national insurer's 
                        Federal license.
            (2) Hearing; revocation or restriction.--If, on the basis 
        of the evidence presented at a hearing before the Director (or 
        any person designated by the Director for such purpose), in 
        which all issues shall be determined on the record pursuant to 
        section 554 of title 5, United States Code, and the written 
        findings of the Director (or such designated person) with 
        respect to such evidence (which shall be conclusive), the 
        Director finds that any conduct, condition, or violation 
        specified in the notice to a national insurer under paragraph 
        (1)(B) has been established, the Director may issue an order 
        revoking or restricting the Federal license of the national 
        insurer effective as of a date subsequent to such finding.
            (3) Appearance; consent to revocation or restriction.--
        Unless the national insurer shall appear at the hearing by a 
        duly authorized representative, it shall be deemed to have 
        consented to the revocation or restriction of its Federal 
        license, and revocation or restriction of its Federal license 
        thereupon may be ordered by the Director.
            (4) Judicial review.--Any national insurer whose Federal 
        license has been revoked or restricted by order of the Director 
        under this subsection shall have the right of judicial review 
        of such order only to the same extent as provided for the 
        review of orders under subsection (f).
            (5) Publication of notice of revocation or restriction.--
        The Director may publish notice of such revocation or 
        restriction and the national insurer shall give notice of such 
        revocation or restriction to each of its policyholders at the 
        policyholder's last address of record on the books of the 
        national insurer, in such manner and at such time as the 
        Director may find to be necessary and may order for the 
        protection of policyholders.
            (6) Temporary suspension or restriction.--
                    (A) In general.--If the Director initiates a 
                revocation or restriction proceeding under paragraph 
                (1) with respect to a national insurer, and the 
                Director finds that the national insurer poses an 
                immediate threat to its policyholders or the public, 
                the Director may issue a temporary order suspending or 
                restricting the national insurer's Federal license.
                    (B) Effective period of temporary order.--Any 
                temporary order issued under subparagraph (A) shall 
                become effective not earlier than 10 days from the date 
                of service upon the national insurer and, unless set 
                aside, limited, or suspended by a court in proceedings 
                authorized hereunder, such temporary order shall remain 
                effective and enforceable until an order of the 
                Director under paragraph (2) or (3) becomes final or 
                until the Director dismisses the proceedings under 
                paragraph (2).
                    (C) Judicial review.--Before the close of the 10-
                day period beginning on the date any temporary order 
                has been served upon a national insurer under 
                subparagraph (A), such  national insurer may apply to 
the United States District Court for the District of Columbia, or the 
United States district court for the judicial district in which the 
main office of the insurer is located, for an injunction setting aside, 
limiting, or suspending the enforcement, operation, or effectiveness of 
such order, and such court shall have jurisdiction to issue such 
injunction.
                    (D) Publication of order.--The national insurer 
                shall give notice of a temporary order issued under 
                this paragraph in such manner and at such times as the 
                Director may find to be necessary and may order for the 
                protection of policyholders and the public.
            (7) Notice by the director.--If the Director shall 
        determine that a national insurer has not given notice of an 
        order under this subsection substantially in the manner and at 
        the times ordered by the Director, the Director may provide 
        such notice in such manner as the Director may find to be 
        necessary and proper.
            (8) Decision to revoke, suspend, or restrict.--Any decision 
        by the Director to--
                    (A) issue a temporary order suspending or 
                restricting a national insurer's Federal license; or
                    (B) issue a final order revoking or restricting a 
                national insurer's Federal license, shall be made by 
                the Director and may not be delegated, except that the 
                Director may, by order, designate an employee of the 
                Office that may make such decision in the event that 
                the Director is not able to act by reason of recusal or 
                is otherwise disqualified from acting.
    (b) Cease-and-Desist Proceedings.--
            (1) In general.--If, in the opinion of the Director, any 
        national insurer, any State licensed insurance producer, or any 
        insurer-affiliated party is engaging or has engaged, or the 
        Director has reasonable cause to believe that any national 
        insurer, any State licensed insurance producer, or any insurer-
        affiliated party is about to engage, in conduct involving an 
        undue risk of loss to such national insurer's policyholders as 
        a whole, or is violating or has violated, or the Director has 
        reasonable cause to believe that any national insurer, any 
        State licensed insurance producer, or any insurer-affiliated 
        party is about to violate, a law, rule, or regulation, or any 
        condition imposed in writing by the Director in connection with 
        the granting of any application, filing, statement, notice or 
        other request by the national insurer or the State licensed 
        insurance producer or any written agreement entered into with 
        the Director, the Director may issue and serve upon such 
        national insurer, producer or party a notice of charges in 
        respect thereof. The notice shall contain a statement of the 
        facts constituting the alleged violation or violations or the 
        conduct, and shall fix a time and place at which a hearing will 
        be held to determine whether an order to cease and desist 
        therefrom should issue against the national insurer, the State 
        licensed insurance producer or the insurer-affiliated party. 
        Such hearing shall be fixed for a date not earlier than 30 days 
        nor later than 60 days after service of such notice unless an 
        earlier or a later date is set by the Director at the request 
        of any party so served. Unless the party or parties so served 
        shall appear at the hearing personally or by a duly authorized 
        representative, they shall be deemed to have consented to the 
        issuance of the cease-and-desist order. In the event of such 
        consent, or if upon the record made at any such hearing, the 
        Director shall find that any violation or conduct specified in 
        the notice of charges has been established, the Director may 
        issue and serve upon the national insurer, the State licensed 
        insurance producer or the insurer-affiliated party, as the case 
        may be, an order to cease and desist from any such violation or 
        conduct. Such order may, by provisions which may be mandatory 
        or otherwise, require the national insurer, the State licensed 
        insurance producer or the insurer-affiliated party to cease and 
        desist from the same, and, further, to take affirmative action 
        to correct the conditions resulting from any such violation or 
        conduct.
            (2) Effective date.--A cease-and-desist order shall become 
        effective at the expiration of 30 days after the service of 
        such order upon the national insurer, the State licensed 
        insurance producer or the insurer-affiliated party, as the case 
        may be (except in the case of a cease-and-desist order issued 
        upon consent, which shall become effective at the time 
        specified therein), and shall remain effective and enforceable 
        as provided therein, except to such extent as it is stayed, 
        modified, terminated, or set aside by action of the Director or 
        a reviewing court.
            (3) Affirmative action to correct conditions resulting from 
        violations or conduct.--The authority under this subsection and 
        subsection (c) to issue an order that requires a national 
        insurer, a State licensed insurance producer or an insurer-
        affiliated party to take affirmative action to correct or 
        remedy any conditions resulting from any violation or conduct 
        with respect to which such order is issued includes the 
        authority to require such national insurer, producer or such 
        party to--
                    (A) make restitution or provide reimbursement, 
                indemnification, or guarantee against loss;
                    (B) restrict the growth of the national insurer;
                    (C) dispose of any asset or insurance contract 
                (including any insurance policy);
                    (D) rescind any other agreements or contracts, 
                other than insurance contracts (including insurance 
                policies) as to which the national insurer is the 
                issuer; and
                    (E) employ qualified officers or employees (who may 
                be subject to approval by the Director in his 
                direction); and
                    (F) take such other action as the Director 
                determines to be appropriate.
            (4) Authority to limit activities.--The authority to issue 
        an order under this subsection or  subsection (c) includes the 
authority to place limitations on the activities or functions of a 
national insurer, a State licensed insurance producer or an insurer-
affiliated party.
            (5) Standard for certain orders.--No authority under this 
        subsection or subsection (c) to prohibit any insurer-affiliated 
        party from withdrawing, transferring, removing, dissipating, or 
        disposing of any funds, assets, or other property may be 
        exercised unless the Director meets the standards of Rule 65 of 
        the Federal Rules of Civil Procedure, without regard to the 
        requirement of such rule that the applicant show that the 
        injury, loss, or damage is irreparable and immediate.
    (c) Temporary Cease-and-Desist Orders.--
            (1) In general.--Whenever the Director shall determine that 
        the violation or threatened violation or the conduct specified 
        in the notice of charges served upon a national insurer, a 
        State licensed insurance producer or an insurer-affiliated 
        party pursuant to subsection (b)(1), or the continuation 
        thereof, is likely to cause insolvency or significant 
        dissipation of assets or earnings of a national insurer, or is 
        likely to weaken the condition of a national insurer or 
        otherwise prejudice the interests of the policyholders of a 
        national insurer prior to the completion of the proceedings 
        conducted pursuant to subsection (b)(1), the Director may issue 
        a temporary order requiring such national insurer, producer or 
        party to cease and desist from any such violation or conduct 
        and to take affirmative action to prevent or remedy such 
        insolvency, dissipation, condition, or prejudice pending 
        completion of such proceedings. Such order may include any 
        requirement authorized under subsection (b)(3)(B). Such order 
        shall become effective upon service upon the national insurer, 
        producer or party and, unless set aside, limited, or suspended 
        by a court in proceedings authorized by paragraph (2), shall 
        remain effective and enforceable pending the completion of the 
        administrative proceedings pursuant to such notice and until 
        such time as the Director shall dismiss the charges specified 
        in such notice or, if a cease-and-desist order is issued 
        against such national insurer, producer or party, until the 
        effective date of such order.
            (2) Injunction.--Within 10 days after a national insurer, a 
        State licensed insurance producer or an insurer-affiliated 
        party has been served with a temporary cease-and-desist order, 
        the national insurer, producer or party may apply to the United 
        States district court for the judicial district in which the 
        main office of the national insurer is located or in which the 
        producer of party is located, as the case may be, or to the 
        United States District Court for the District of Columbia, for 
        an injunction setting aside, limiting, or suspending the 
        enforcement, operation, or effectiveness of such order pending 
        the completion of the administrative proceedings pursuant to 
        the notice of charges served upon the national insurer or such 
        party under subsection (b)(1), and such court shall have 
        jurisdiction to issue such injunction.
            (3) Incomplete or inaccurate records.--
                    (A) Temporary order.--If a notice of charges served 
                under subsection (b)(1) specifies, on the basis of 
                particular facts and circumstances, that a national 
                insurer's books and records are so incomplete or 
                inaccurate that the Director is unable, through the 
                normal supervisory process, to determine the financial 
                condition of that national insurer or the details or 
                purpose of any transaction or transactions that may 
                have a material effect on the financial condition of 
                that national insurer, the Director may issue a 
                temporary order requiring--
                            (i) the cessation of any activity or 
                        practice which gave rise, whether in whole or 
                        in part, to the incomplete or inaccurate state 
                        of the books or records; or
                            (ii) affirmative action to restore such 
                        books or records to a complete and accurate 
                        state, until the completion of the proceedings 
                        under subsection (b)(1).
                    (B) Effective period.--Any temporary order issued 
                under subparagraph (A)--
                            (i) shall become effective upon service; 
                        and
                            (ii) unless set aside, limited, or 
                        suspended by a court in proceedings under 
                        paragraph (2), shall remain in effect and 
                        enforceable until the earlier of--
                                    (I) the completion of the 
                                proceeding initiated under subsection 
                                (a)(1) in connection with the notice of 
                                charges; or
                                    (II) the date the Director 
                                determines, by examination or 
                                otherwise, that the national insurer's 
                                books and records are accurate and 
                                reflect the financial condition of the 
                                national insurer.
    (d) Removal and Prohibition Authority.--
            (1) Authority to issue order.--Whenever the Director 
        determines that--
                    (A) any insurer-affiliated party has, directly or 
                indirectly--
                            (i) violated--
                                    (I) any law or regulation;
                                    (II) any cease-and-desist order 
                                issued under this section which has 
                                become final;
                                    (III) any condition imposed in 
                                writing by the Director in connection 
                                with the grant of any application, 
                                filing, statement, notice or other 
                                request by such national insurer; or
                                    (IV) any written agreement between 
                                such national insurer and the Director;
                            (ii) engaged or participated in any conduct 
                        involving undue risk of loss to such national 
                        insurer's policyholders as a whole; or
                            (iii) committed or engaged in any act, 
                        omission, or practice which constitutes a 
                        breach of such party's fiduciary duty;
                    (B) by reason of the violation, practice, or breach 
                described in any clause of subparagraph (A)--
                            (i) such national insurer has suffered or 
                        will probably suffer financial loss or other 
                        damage;
                            (ii) the interests of the national 
                        insurer's policyholders have been or could be 
                        prejudiced; or
                            (iii) such party has received financial 
                        gain or other benefit by reason of such 
                        violation, practice, or breach; and
                    (C) such violation, practice, or breach--
                            (i) involves personal dishonesty on the 
                        part of such party; or
                            (ii) demonstrates willful or continuing 
                        disregard by such party for the condition of 
                        such national insurer or the interests of the 
                        national insurer's policyholders, the Director 
                        may serve upon such party a written notice of 
                        the Director's intention to suspend or remove 
                        such party from office or  to prohibit any 
further participation by such party, in any manner, in the conduct of 
the affairs of any national insurer.
            (2) Temporary suspension order.--
                    (A) Suspension or prohibition authorized.--If the 
                Director serves written notice under paragraph (1) on 
                any insurer-affiliated party of the Director's 
                intention to issue an order under such paragraph, the 
                Director may issue a temporary order suspending such 
                party from office or prohibiting such party from 
                further participation in any manner in the conduct of 
                the affairs of the national insurer, if the Director--
                            (i) determines that such action is 
                        necessary for the protection of the national 
                        insurer or of the interests of the national 
                        insurer's policyholders; and
                            (ii) serves such party with the temporary 
                        order of suspension or prohibition.
                    (B) Effective period.--Any temporary order issued 
                under subparagraph (A)--
                            (i) shall become effective upon service; 
                        and
                            (ii) unless a court issues a stay of such 
                        order under paragraph (5), shall remain in 
                        effect and enforceable until--
                                    (I) the date the Director dismisses 
                                the charges contained in the notice 
                                served under paragraph (1) with respect 
                                to such party; or
                                    (II) the effective date of an order 
                                issued by the Director to such party 
                                under paragraph (1).
                    (C) Copy of order.--If the Director issues a 
                temporary order under subparagraph (A) to any insurer-
                affiliated party, the Director shall serve a copy of 
                such order on any national insurer with which such 
                party is associated at the time such order is issued.
            (3) Procedures.--A notice of intention to remove an 
        insurer-affiliated party from office or to prohibit such party 
        from participating in the conduct of the affairs of a national 
        insurer that is served under paragraph (1), shall contain a 
        statement of the facts constituting grounds therefor, and shall 
        fix a time and place at which a hearing will be held thereon. 
        Such hearing shall be fixed for a date not earlier than 30 days 
        nor later than 60 days after the date of service of such 
        notice, unless an earlier or a later date is set by the 
        Director at the request of (A) such party, or (B) the Attorney 
        General of the United States. Unless such party shall appear at 
        the hearing in person or by a duly authorized representative, 
        such party shall be deemed to have consented to the issuance of 
        an order of such removal or prohibition. In the event of such 
        consent, or if upon the record made at any such hearing the 
        Director shall find that any of the grounds specified in such 
        notice have been established, the Director may issue such 
        orders of suspension or removal from office, or prohibition 
        from participation in the conduct of the affairs of the 
        national insurer, as the Director may deem appropriate. Any 
        such order shall become effective at the expiration of 30 days 
        after service upon such national insurer and such party (except 
        in the case of an order issued upon consent, which shall become 
        effective at the time specified therein). Such order shall 
        remain effective and enforceable as provided therein, except to 
        such extent as it is stayed, modified, terminated, or set aside 
        by action of the Director or a reviewing court.
            (4) Industrywide prohibition.--
                    (A) In general.--Except as provided in subparagraph 
                (B), any person who, pursuant to any order issued under 
                this subsection or subsection (e), has been removed or 
                suspended from office in a national insurer or 
                prohibited from participating in the conduct of the 
                affairs of a national insurer may not, while such order 
                is in effect--
                            (i) continue or commence to hold any office 
                        in, or participate in any manner in the conduct 
                        of the affairs of any national insurer;
                            (ii) solicit, procure, transfer, attempt to 
                        transfer, vote, or attempt to vote any proxy, 
                        consent, or authorization with respect to any 
                        voting rights in any national insurer;
                            (iii) act as an insurer-affiliated party; 
                        or
                            (iv) act as a State licensed insurance 
                        producer.
                    (B) Exception if director provides written 
                consent.--If, on or after the date an order is issued 
                under this subsection which removes or suspends from 
                office any insurer-affiliated party or prohibits such 
                party from participating in the conduct of the affairs 
                of a national insurer, such party receives the written 
                consent of the Director, subparagraph (A) shall, to the 
                extent of such consent, cease to apply to such party 
                with respect to the national insurer described in each 
                written consent.
                    (C) Violation of paragraph treated as violation of 
                order.--Any violation of subparagraph (A) by any person 
                who is subject to an order described in such 
                subparagraph shall be treated as a violation of the 
                order.
            (5) Stay of suspension and/or prohibition of insurer-
        affiliated party.--Within 10 days after any insurer-affiliated 
        party has been suspended from office or prohibited from 
        participation in the conduct of the affairs of a national 
        insurer by a temporary order issued under subsection (d)(2), 
        such party may apply to the United States district court for 
        the judicial district in which the main office of the national 
        insurer is located, or the United States District Court for the 
        District of Columbia, for a stay of such suspension or 
        prohibition pending the completion of the administrative 
        proceedings pursuant to the notice served upon such party under 
        subsection (d)(1), and such court shall have jurisdiction to 
        stay such suspension or prohibition.
    (e) Suspension or Removal of Insurer-Affiliated Party Charged With 
Felony.--
            (1) Suspension or prohibition.--
                    (A) In general.--Whenever any insurer-affiliated 
                party is charged in any information, indictment, or 
                complaint, with the commission of or participation in--
                            (i) a crime involving dishonesty or breach 
                        of trust which is punishable by imprisonment 
                        for a term exceeding 1 year under State or 
                        Federal law, or
                            (ii) a criminal violation of section 1956, 
                        1957, or 1960 of title 18, United States Code, 
                        or section 5322 or 5324 of title 31, United 
                        States Code, the Director may, if continued 
                        service or participation by such party may pose 
                        a threat to the national insurer or the 
                        interests of the national insurer's 
                        policyholders, by written notice served upon 
                        such party, suspend such party from office or 
                        prohibit such party from further participation 
                        in any  manner in the conduct of the affairs of 
the national insurer.
                    (B) Provisions applicable to notice.--
                            (i) Copy.--A copy of any notice under 
                        subparagraph (A) shall also be served upon the 
                        national insurer.
                            (ii) Effective period.--A suspension or 
                        prohibition under subparagraph (A) shall remain 
                        in effect until the information, indictment, or 
                        complaint referred to in such subparagraph is 
                        finally disposed of or until terminated by the 
                        Director.
            (2) Removal or prohibition.--
                    (A) In general.--If a judgment of conviction or an 
                agreement to enter a pretrial diversion or other 
                similar program is entered against an insurer-
                affiliated party in connection with a crime described 
                in paragraph (1)(A)(i), at such time as such judgment 
                is not subject to further appellate review, the 
                Director may, if continued service or participation by 
                such party may pose a threat to the national insurer or 
                the interests of the national insurer's policyholders, 
                issue and serve upon such party an order removing such 
                party from office or prohibiting such party from 
                further participation in any manner in the conduct of 
                the affairs of the national insurer without the prior 
                written consent of the Director.
                    (B) Required for certain offenses.--In the case of 
                a judgment of conviction or agreement against an 
                insurer-affiliated party in connection with a violation 
                described in paragraph (1)(A)(ii), the Director shall 
                issue and serve upon such party an order removing such 
                party from office or prohibiting such party from 
                further participation in any manner in the conduct of 
                the affairs of the national insurer without the prior 
                written consent of the Director.
                    (C) Copy.--A copy of any order under this paragraph 
                shall also be served upon the national insurer, 
                whereupon the insurer-affiliated party who is subject 
                to the order (if a director or an officer) shall cease 
                to be a director or officer of such national insurer.
                    (D) Effect of acquittal.--A finding of not guilty 
                or other disposition of the charge shall not preclude 
                the Director from instituting proceedings after such 
                finding or disposition to remove such party from office 
                or to prohibit further participation in national 
                insurer affairs, pursuant to paragraphs (1) or (2) of 
                subsection (d).
                    (E) Effective period.--Any notice of suspension or 
                order of removal issued under this paragraph or 
                paragraph (1) shall remain effective and outstanding 
                until the completion of any hearing or appeal 
                authorized under paragraph (3) unless terminated by the 
                Director.
            (3) Within 30 days from service of any notice of suspension 
        or order of removal issued pursuant to paragraph (1) or (2) of 
        this subsection, the insurer-affiliated party concerned may 
        request in writing an opportunity to appear before the Director 
        to show that the continued service to or participation in the 
        conduct of the affairs of the national insurer by such party 
        does not, or is not likely to, pose a threat either to the 
        national insurer or to the interests of the national insurer's 
        policyholders. Upon receipt of any such request, the Director 
        shall fix a time (not more than 30 days after receipt of such 
        request, unless extended at the request of such party) and 
        place at which such party may appear, personally or through 
        counsel, before one or more designated employees of the 
        Director to submit written materials (or, at the discretion of 
        the Director, oral testimony) and oral argument. Within 60 days 
        of such hearing, the Director shall notify such party whether 
        the notice of suspension or prohibition from participation in 
        any manner in the conduct of the affairs of the national 
        insurer will be continued, terminated, or otherwise modified, 
        or whether the order removing such party from office or 
        prohibiting such party from further participation in any manner 
        in the conduct of the affairs of the national insurer will be 
        rescinded or otherwise modified. Such notification shall 
        contain a statement of the basis for the Director's decision, 
        if adverse to such party.
    (f) Effect on Board of Directors.--If at any time, because of the 
suspension of one or more directors pursuant to this section, there 
shall be on the board of directors of a national insurer less than a 
quorum of directors not so suspended, all powers and functions vested 
in or exercisable by such board shall vest in and be exercisable by the 
director or directors on the board not so suspended, until such time as 
there shall be a quorum of the board of directors. In the event all of 
the directors of a national insurer are suspended pursuant to this 
section, the Director shall appoint persons to serve temporarily as 
directors in their place and stead pending the termination of such 
suspensions, or until such time as those who have been suspended cease 
to be directors of the national insurer and their respective successors 
take office.
    (g) Hearings and Judicial Review.--
            (1) Any hearing provided for in this section (other than 
        the hearing provided for in subsection (e)(3) of this section) 
        shall be held in the Federal judicial district in which the 
        main office of the national insurer is located or in which the 
        State licensed insurance producer or the insurer-affiliated 
        party is located, as the case may be, unless the party afforded 
        the hearing consents to another place, and shall be conducted 
        in accordance with the provisions of chapter 5 of title 5, 
        United States Code. After such hearing, and within 90 days 
        after the Director has notified the parties that the case has 
        been submitted to the Director for final decision, the Director 
        shall render a decision (which shall include findings of fact 
        upon which the Director's decision is predicated) and shall 
        issue and serve upon each party to the proceeding an order or 
        orders consistent with the provisions of this section. Judicial 
        review of any such order shall be exclusively as provided in 
        this subsection. Unless a petition for review is timely filed 
        in a court of appeals of the United States, as hereinafter 
        provided in paragraph (2), and thereafter until the record in 
        the proceeding has been filed as so provided, the Director may 
        at any time, upon such notice and in such manner as it shall 
        deem proper, modify, terminate, or set aside any such order. 
        Upon such filing of the record, the Director may modify, 
        terminate, or set aside any such order with permission of the 
        court.
            (2) Any party to any proceeding under paragraph (1) may 
        obtain a review of any order served pursuant to paragraph (1) 
        of this subsection (other than an order issued with the consent 
        of the national insurer, the State licensed insurance producer 
        or the insurer-affiliated party concerned, or an order issued 
        under paragraph (e)(1) or (e)(2)) by the filing in the court of 
        appeals of the United States for the circuit in which the main 
        office of the national insurer is located or in which the State 
        licensed insurance producer or the insurer-affiliated party is 
        located, as the case may be, or in the United States Court of 
        Appeals for the District of Columbia Circuit, within 30 days 
        after the date of service of such order, a written petition 
        praying that the order of the Office be modified, terminated, 
or set aside. A copy of such petition shall be forthwith transmitted by 
the clerk of the court to the Director, and thereupon the Director 
shall file in the court the record in the proceeding, as provided in 
section 2112 of title 28, United States Code. Upon the filing of such 
petition, such court shall have jurisdiction, which upon the filing of 
the record shall except as provided in the last sentence of said 
paragraph (1) be exclusive, to affirm, modify, terminate, or set aside, 
in whole or in part, the order of the Office. 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.
            (3) The commencement of proceedings for judicial review 
        under paragraph (2) of this subsection shall not, unless 
        specifically ordered by the court, operate as a stay of any 
        order issued by the Director.
    (h) Jurisdiction and Enforcement.--The Director may in his 
discretion apply to the United States district court for the judicial 
district in which the main office of the national insurer is located or 
in which the State licensed insurance producer or the insurer-
affiliated party is located, as the case may be, for the enforcement of 
any effective and outstanding notice or order issued under this 
section, and such court shall have jurisdiction and power to order and 
require compliance therewith; but except as otherwise provided in this 
section no court shall have jurisdiction to affect by injunction or 
otherwise the issuance or enforcement of any notice or order under any 
such section, or to review, modify, suspend, terminate, or set aside 
any such notice or order.
    (i) Penalties.--
            (1) Civil money penalty.--
                    (A) First tier.--Any national insurer, State 
                licensed insurance producer or insurer-affiliated party 
                that--
                            (i) violates any law or regulation;
                            (ii) violates any final order or temporary 
                        order issued pursuant to subsection (b), (c), 
                        (d) or (e) of this section or subsection (e) of 
                        section 201;
                            (iii) violates any written agreement 
                        between such national insurer, producer or 
                        party and the Office,
                shall forfeit and pay a civil penalty of not more than 
                $5,000 for each day during which such violation 
                continues.
                    (B) Second tier.--Notwithstanding subparagraph (A), 
                any national insurer, any State licensed insurance 
                producer or any insurer-affiliated party that--
                            (i)(I) commits any violation described in 
                        any clause of subparagraph (A);
                            (II) recklessly engages in any conduct 
                        involving an undue risk of loss to such 
                        national insurer's policyholders as a whole; or
                            (III) breaches any fiduciary duty; and
                            (ii) which violation, practice, or breach--
                                    (I) is part of a pattern of 
                                misconduct;
                                    (II) causes or is likely to cause 
                                more than a minimal loss to such 
                                national insurer; or
                                    (III) results in pecuniary gain or 
                                other benefit to such party,
                shall forfeit and pay a civil penalty of not more than 
                $25,000 for each day during which such violation, 
                practice, or breach continues.
                    (C) Third tier.--Notwithstanding subparagraphs (A) 
                and (B), any national insurer, State licensed insurance 
                producer or any insurer-affiliated party that--
                            (i) knowingly--
                                    (I) commits any violation described 
                                in any clause of subparagraph (A);
                                    (II) engages in any conduct 
                                involving an undue risk of loss to such 
                                national insurer's policyholders as a 
                                whole; or
                                    (III) breaches any fiduciary duty; 
                                and
                            (ii) knowingly or recklessly causes a 
                        substantial loss to such national insurer or a 
                        substantial pecuniary gain or other benefit to 
                        such party by reason of such violation, 
                        practice, or breach,
                shall forfeit and pay a civil penalty in an amount not 
                to exceed the applicable maximum amount determined 
                under subparagraph (D) for each day during which such 
                violation, practice, or breach continues.
                    (D) Maximum amounts of penalties for any violation 
                described in subparagraph (c).--The maximum daily 
                amount of any civil penalty which may be assessed 
                pursuant to subparagraph (C) for any violation, 
                practice, or breach described in such subparagraph is 
                an amount to not exceed $1,000,000.
                    (E) Assessment.--
                            (i) Written notice.--Any penalty imposed 
                        under subparagraph (A), (B), or (C) may be 
                        assessed and collected by the Director by 
                        written notice. Such notice shall contain a 
                        statement of the facts constituting the basis 
                        for assessment of any penalty imposed under 
                        subparagraph (A), (B), or (C).
                            (ii) Finality of assessment.--If, with 
                        respect to any assessment under clause (i), a 
                        hearing is not requested pursuant to 
                        subparagraph (H) within the period of time 
                        allowed under such subparagraph, the assessment 
                        shall constitute a final and unappealable 
                        order.
                    (F) Authority to modify or remit penalty.--The 
                Director may compromise,  modify, or remit any penalty 
which the Director may assess or had already assessed under 
subparagraph (A), (B), or (C).
                    (G) Hearing.--The national insurer or other person 
                against whom any penalty is assessed under this 
                paragraph shall be afforded a hearing by the Director 
                if such national insurer or person submits a request 
                for such hearing within 20 days after the issuance of 
                the notice of assessment.
                    (H) Collection.--
                            (i) Referral.--If any national insurer or 
                        other person fails to pay an assessment after 
                        any penalty assessed under this paragraph has 
                        become final, the Director shall recover the 
                        amount assessed by action in the appropriate 
                        United States district court.
                            (ii) Appropriateness of penalty not 
                        reviewable.--In any civil action under clause 
                        (i), the validity and appropriateness of the 
                        penalty shall not be subject to review.
                    (I) Disbursement and use.--All penalties collected 
                under authority of this paragraph shall be deposited 
                into the Treasury, and shall not be used to fund the 
                compensation of the Director or employees of the Office 
                or the expenses of the Office.
            (2) Notice under this section after separation from 
        service.--The resignation, termination of employment or 
        participation, or separation of an insurer-affiliated party 
        (including a separation caused by the closing of a national 
        insurer) shall not affect the jurisdiction and authority of the 
        Director to issue any notice and proceed under this section 
        against any such party, if such notice is served before the end 
        of the 6-year period beginning on the date such party ceased to 
        be an insurer-affiliated party with respect to such national 
        insurer.
            (3) Prejudgment attachment.--
                    (A) In general.--In any action brought by the 
                Director pursuant to this section, or in actions 
                brought in aid of, or to enforce an order in, any 
                administrative or other civil action for money damages, 
                restitution, or civil money penalties brought by the 
                Director, the court may, upon application of the 
                Director, issue a restraining order that--
                            (i) prohibits any person subject to the 
                        proceeding from withdrawing, transferring, 
                        removing, dissipating, or disposing of any 
                        funds, assets or other property; and
                            (ii) appoints a temporary receiver to 
                        administer the restraining order.
                    (B) Standard.--
                            (i) Showing.--Rule 65 of the Federal Rules 
                        of Civil Procedure shall apply with respect to 
                        any proceeding under subparagraph (A), without 
                        regard to the requirement of such rule that the 
                        applicant show that the injury, loss, or damage 
                        is irreparable and immediate.
                            (ii) State proceeding.--If, in the case of 
                        any proceeding in a State court, the court 
                        determines that rules of civil procedure 
                        available under the laws of such State provide 
                        substantially similar protections to a party's 
                        right to due process as Rule 65 (as modified 
                        with respect to such proceeding by clause (i)), 
                        the relief sought under subparagraph (A) may be 
                        requested under the laws of such State.
    (j) Criminal Penalty.--Whoever, being subject to an order in effect 
under subsection (d) or (e), without the prior written approval of the 
Director, knowingly participates, directly or indirectly, in any manner 
(including by engaging in an activity specifically prohibited in such 
an order) in the conduct of the affairs of any national insurer shall 
be fined not more than $1,000,000, imprisoned for not more than 5 
years, or both.
    (k) Notice of Service.--Any service required or authorized to be 
made by the Director under this section may be made by registered mail, 
or in such other manner reasonably calculated to give actual notice as 
the Director may by regulation or otherwise provide.
    (l) Ancillary Provisions; Subpoena Power, etc.--In the course of or 
in connection with any proceeding or other action under this section, 
the Director, or any employee or designated representative thereof, 
including any person designated to conduct any hearing under this 
section, shall have the power to administer oaths and affirmations, to 
take or cause to be taken depositions, and to issue, revoke, quash, or 
modify subpoenas and subpoenas duces tecum; and the Director is 
empowered to make rules and regulations with respect to any such 
proceedings, claims, examinations, investigations, or other actions. 
The attendance of witnesses and the production of documents provided 
for in this subsection may be required from any place in any State or 
other place subject to the jurisdiction of the United States at any 
designated place where such proceeding or other action is being 
conducted. The Director or any party to proceedings under this section 
may apply to the United States District Court for the District of 
Columbia, or the United States district court for the judicial district 
in which such proceeding or other action is being conducted, or where 
the witness resides or carries on business, for enforcement of any 
subpoena or subpoena duces tecum issued pursuant to this subsection, 
and such courts shall have jurisdiction and power to order and require 
compliance therewith. Witnesses subpoenaed under this subsection shall 
be paid the same fees and mileage that are paid witnesses in the 
district courts of the United States. Any court having jurisdiction of 
any proceeding or other action instituted under this section by a 
national insurer, a State licensed insurance producer or an insurer-
affiliated party thereof, may allow to any such party such reasonable 
expenses and attorneys' fees as it deems just and proper; and such 
expenses and fees shall be paid by the national insurer or from its 
assets. Any person who willfully shall fail or refuse to attend and 
testify or to answer any lawful inquiry or to produce books, papers, 
correspondence, memoranda, contracts, agreements, or other records, if 
in such person's power so to do, in obedience to the subpoena of the 
Director, shall be guilty of a misdemeanor and, upon conviction, shall 
be subject to a fine of not more than $1,000 or to imprisonment for a 
term of not more than 1 year or both.
    (m) Non-U.S. Insurer.--
            (1) Applicability.--Except as otherwise specifically 
        provided in this section, the provisions of this section shall 
        be applied to non-U.S. insurers in accordance with this 
        subsection.
            (2) Actions.--Any conduct or practice outside the United 
        States on the part of a non-U.S. insurer or any officer, 
        director, employee, or agent thereof may not constitute the 
        basis for any action by the Director under this section, unless 
        the Director alleges a belief that such conduct or practice has 
        been, is, or is likely to be a cause of or carried on in 
        connection with or in furtherance of an act or practice within 
        any one or more States which, in and of itself, would 
        constitute an appropriate basis for action by the Director 
        under this section.
            (3) Termination of business.--In any case in which any 
        action or proceeding is brought pursuant to an allegation under 
        paragraph (2) for the suspension or removal of any officer, 
director, or other person associated with a non-U.S. insurer, and such 
person fails to appear promptly as a party to such action or proceeding 
and to comply with any effective order or judgment therein, any failure 
by the non-U.S. insurer to secure his removal from any office he holds 
in such insurer and from any further participation in its affairs 
shall, in and of itself, constitute grounds for ordering the non-U.S. 
insurer to terminate all underwriting and sale of insurance in the 
United States and all other insurance operations in the United States.
            (4) Venue.--Where the venue of any judicial or 
        administrative proceeding under this section is to be 
        determined by reference to the location of the main office of a 
        national insurer, the venue of such a proceeding with respect 
        to a non-U.S. insurer having one or more offices in not more 
        than one judicial district or other relevant jurisdiction shall 
        be within such jurisdiction. Where such a national insurer has 
        offices in more than one such jurisdiction, the venue shall be 
        in the jurisdiction within which the office or offices involved 
        in the proceeding are located, and if there is more than one 
        such jurisdiction, the venue shall be proper in any such 
        jurisdiction in which the proceeding is brought or to which it 
        may appropriately be transferred.
            (5) Service.--Any service required or authorized to be made 
        on a non-U.S. insurer may be made on any office located within 
        any State, but if such service is in connection with an action 
        or proceeding involving one or more offices located in any 
        State, service shall be made on at least one office so 
        involved.
    (n) Public Disclosures of Final Orders and Agreements.--
            (1) In general.--The Director shall publish and make 
        available to the public on a monthly basis--
                    (A) any written agreement or other written 
                statement for which a violation may be enforced by the 
                Director;
                    (B) any final order issued with respect to any 
                administrative enforcement proceeding initiated by the 
                Director under this section or any other law; and
                    (C) any modification to or termination of any order 
                or agreement made public pursuant to this paragraph, 
                unless the Director, in the Director's discretion, 
                determines that publication of any such agreement, 
                statement, order, modification or termination would be 
                contrary to the public interest.
            (2) Hearings.--All hearings on the record with respect to 
        any notice of charges issued by the Director shall be open to 
        the public, unless the Director, in the Director's discretion, 
        determines that holding an open hearing would be contrary to 
        the public interest.
            (3) Transcript of hearing.--A transcript that includes all 
        testimony and other documentary evidence shall be prepared for 
        all hearings commenced pursuant to subsection (g) of this 
        section. A transcript of public hearings shall be made 
        available to the public pursuant to section 552 of title 5, 
        United States Code.
            (4) Documents filed under seal in public enforcement 
        hearings.--The Director may file any document or part of a 
        document under seal in any administrative hearing commenced by 
        the Director if the Director, in the Director's discretion, 
        determines that disclosure of the document, in whole or in 
        part, would be contrary to the public interest. A written 
        report shall be made part of any determination to withhold any 
        part of a document from the transcript of the hearing required 
        by paragraph (2).
            (5) Retention of documents.--The Director shall keep and 
        maintain a record, for a period of at least 6 years, of all 
        documents described in paragraph (1) and all informal 
        enforcement agreements and other supervisory actions and 
        supporting documents issued with respect to or in connection 
        with any administrative enforcement proceeding initiated by the 
        Director under this section or any other laws.
            (6) Disclosures to congress.--No provision of this 
        subsection may be construed to authorize the withholding, or to 
        prohibit the disclosure, of any information to the Congress or 
        any committee or subcommittee of the Congress.
    (o) Foreign Investigations.--
            (1) Requesting assistance from foreign governmental 
        authorities.--In conducting any investigation, examination, or 
        enforcement action under this Act, the Director may--
                    (A) request the assistance of any foreign 
                governmental authority; and
                    (B) maintain an office outside the United States.
            (2) Providing assistance to foreign governmental 
        authorities.--
                    (A) In general.--The Director may, at the request 
                of any foreign governmental authority, assist such 
                authority if such authority states that the requesting 
                authority is conducting an investigation to determine 
                whether any person has violated, is violating, or is 
                about to violate any law or regulation relating to 
                insurance matters or currency transactions administered 
                or enforced by the requesting authority.
                    (B) Investigation by the director.--The Director 
                may, in his discretion, investigate and collect 
                information and evidence pertinent to a request for 
                assistance under subparagraph (A). Any such 
                investigation shall comply with the laws of the United 
                States and the policies and procedures of the Director.
                    (C) Factors to consider.--In deciding whether to 
                provide assistance under this paragraph, the Director 
                shall consider--
                            (i) whether the requesting authority has 
                        agreed to provide reciprocal assistance with 
                        respect to insurance matters within the 
                        jurisdiction of the Director; and
                            (ii) whether compliance with the request 
                        would prejudice the public interest of the 
                        United States.
            (3) Rule of construction.--Paragraphs (1) and (2) shall not 
        be construed to limit the authority of the Director or any 
        other Federal agency to provide or receive assistance or 
        information to or from any foreign governmental authority with 
        respect to any matter.

SEC. 206. INSURANCE FRAUD.

    (a) Definitions.--For purposes of this section:
            (1) Fraudulent insurance act.--The term ``fraudulent 
        insurance act'' shall have the meaning given such term in 
        section 1036(d) of title 18, United States Code.
            (2) Insurance person.--The term ``insurance person'' shall 
        have the meaning given such term in section 1036(d) of title 
        18, United States Code.
    (b) Fraud Warning Required.--Claim forms and applications for 
insurance operations, regardless of the form of transmission, shall 
contain a fraud warning as prescribed, by regulation, by the Director.
    (c) Investigative Authority of Director.--The Director may 
investigate suspected fraudulent insurance acts and insurance persons 
engaged in insurance operations.
    (d) Mandatory Reporting of Fraudulent Insurance Acts.--A national 
insurer or an insurance person engaged in insurance operations having 
knowledge or a reasonable belief that a fraudulent insurance act is 
being, will be, or has been committed, shall provide to the Director 
the information required by, and in a manner prescribed by, the 
Director.
    (e) Immunity From Liability.--
            (1) In general.--There shall be no civil liability imposed 
        on, and no cause of action shall arise from, a person's 
        furnishing information concerning suspected, anticipated, or 
        completed fraudulent insurance acts, if the information is 
        provided to or received from--
                    (A) the Director or the Director's employees, 
                agents, or representatives;
                    (B) Federal, State, or local law enforcement or 
                regulatory officials or their employees, agents, or 
                representatives;
                    (C) a person involved in the prevention and 
                detection of fraudulent insurance acts or that person's 
                agents, employees, or representatives; or
                    (D) the NAIC or its employees, agents, or 
                representatives.
            (2) Exception for false statements.--Paragraph (1) shall 
        not apply to false statements made with actual malice. In an 
        action brought against a person for filing a report or 
        furnishing other information concerning a fraudulent insurance 
        act, the party bringing the action shall plead specifically any 
        allegation that paragraph (1) does not apply because the person 
        filing the report or furnishing the information did so with 
        actual malice.
            (3) Savings provision.--This subsection does not abrogate 
        or modify common law or statutory privileges or immunities 
        enjoyed by a person described in paragraph (1).
    (f) Confidentiality.--
            (1) In general.--Documents, materials or other information 
        in the possession or control of the Director that is provided 
        pursuant to subsection (d) or obtained by the Director in an 
        investigation of suspected or actual fraudulent insurance acts 
        shall be confidential by law and privileged, shall not be made 
        available to the public, shall not be subject to subpoena, and 
        shall not be subject to discovery or admissible in evidence in 
        any private civil action. However, the Director may use the 
        documents, materials, or other information in the furtherance 
        of any regulatory or legal action brought as a part of the 
        Director's official duties.
            (2) Restrictions on testimony.--Neither the Director nor 
        any person who received documents, materials or other 
        information while acting under the authority of the Director 
        shall be permitted or required to testify in any private civil 
        action concerning any documents, materials, or information that 
        are confidential pursuant to paragraph (1).
            (3) Authorized disclosure.--In order to assist in the 
        performance of the Director's duties, the Director may--
                    (A) share documents, materials, or other 
                information, including the confidential and privileged 
                documents, materials, or information subject to 
                paragraph (1) with other State, Federal, and 
                international regulatory agencies, with the NAIC and 
                its affiliates and subsidiaries, and with local, State, 
                Federal, and international law enforcement authorities, 
                but only if the recipient agrees to and has the 
                authority to maintain the confidentiality and 
                privileged status of the document, material, or other 
                information;
                    (B) receive documents, materials, or information, 
                including otherwise confidential and privileged 
                documents, materials, or information, from the NAIC and 
                its affiliates and subsidiaries, and from regulatory 
                and law enforcement officials of State or other foreign 
                or domestic jurisdictions, and shall maintain as 
                confidential or privileged any document, material, or 
                information received with notice or the understanding 
                that it is confidential or privileged under the laws of 
                the jurisdiction that is the source of the document, 
                material, or information; and
                    (C) enter into agreements governing sharing and use 
                of information, including the furtherance of any 
                regulatory or legal action brought as part of the 
                recipient's official duties.
            (4) No waiver.--No waiver of any applicable privilege or 
        claim of confidentiality in the documents, materials, or 
        information shall occur as a result of disclosure to the 
        Director under this subsection or as a result of sharing as 
        authorized in paragraph (3).
    (g) Division of Insurance Fraud.--
            (1) Establishment.--The Director shall establish a Division 
        of Insurance Fraud within the Office.
            (2) Powers.--The Division of Insurance Fraud shall have all 
        powers and authority necessary for the enforcement of this 
        section, except power to execute search warrants and arrest 
        warrants.
    (h) Penalties.--If the person committing an offense under 
subsection (a) or (c) of section 1036(a) of title 18, United States 
Code, is a national insurer, an insurer-affiliated party, or a State 
licensed insurance producer, the Director may, in addition to the 
punishment set forth in such section 1036--
            (1) revoke, suspend or restrict the Federal license of such 
        national insurer pursuant to section 204 of this Act; and
            (2) order such national insurer, insurer-affiliated party, 
        or State licensed insurance producer to make restitution to 
        persons aggrieved by such offenses.

SEC. 207. INTERNATIONAL REGULATORY SUPPORT.

    (a) In General.--To ensure the effectiveness of the Director's 
licensing and supervision of national insurers, the Director may engage 
in international efforts to secure improved bilateral and multilateral 
cooperation, as appropriate, with respect to improved insurance 
regulation in global markets that promotes competition and allows 
foreign participation. Such authority includes provision of appropriate 
technical assistance to and cooperation with individual overseas 
national regulators and regional and global regulatory organizations in 
matters, including development and implementation of international 
regulatory standards, and development of bilateral and multilateral 
mutual recognition agreements on licensing, registration, and 
professional standards with the objective of improving the quality and 
uniformity of insurance regulation in all countries.
    (b) Cooperation With State Insurance Regulators.--Whenever 
possible, the provisions of subsection (a) shall be implemented in 
cooperation with State insurance regulators. In matters of 
representation, the Director and any interested State insurance 
regulators shall jointly represent the United States market.
    (c) Negotiation of International Trade Agreements.--With respect to 
bilateral and multilateral trade negotiations related to the provision 
of insurance services, the United States Trade Representative shall 
have responsibility for the negotiation of international trade 
agreements associated with trade in insurance. The United States Trade 
Representative shall develop relevant negotiating strategies and 
appropriate concessions in close consultation with the Director and 
State insurance regulators.

                      TITLE III--NATIONAL INSURERS

          Subtitle A--Organization, Licensing, and Operations

SEC. 301. ORGANIZATION, OPERATION, AND REGULATION OF NATIONAL INSURERS.

    (a) In General.--Subject to the provisions of this Act, the 
Director may, under such regulations as the Director may prescribe--
            (1) provide for the organization, incorporation, operation 
        and regulation of national insurers; and
            (2) issue charters therefor.
Such regulations shall permit the organization of national insurers in 
stock, mutual, or fraternal form.
    (b) Chartering Criteria.--In determining whether to issue a charter 
for a national insurer, the Director shall consider factors which shall 
include--
            (1) the character and competency of the parties seeking the 
        charter;
            (2) and the financial resources and future prospects of the 
        proposed national insurer; and
            (3) whether the chartering of the insurer is likely to be 
        hazardous to the insurance-buying public.
    (c) Fraternal Benefit Societies.--Any charter granted to a national 
insurer in fraternal form in connection with a conversion from a State 
charter shall include provisions that allow the national insurer to 
operate as a fraternal benefit society in a manner consistent with the 
requirements of its former State charter.
    (d) Amendment of Charter.--The Director may, under such regulations 
as the Director may prescribe, provide for the amendment of charters 
issued to national insurers.

SEC. 302. U.S. BRANCHES OF NON-U.S. INSURERS.

    (a) Authorization of Entry of Non-U.S. Insurer.--A non-U.S. insurer 
may use this section as a port of entry to transact insurance in the 
United States through a U.S. branch by qualifying the U.S. branch as a 
national insurer licensed by the Director to do business under this Act 
under such regulations as the Director may prescribe.
    (b) Trust Account.--
            (1) Establishment.--The Director shall not license the U.S. 
        branch until the non-U.S. insurer establishes a trust account, 
        pursuant to a deed of trust that meets the requirements of this 
        subsection.
            (2) Trusteed assets.--The trusteed assets of a U.S. branch 
        shall be held pursuant to a deed of trust with a U.S. bank that 
        meets such requirements as the Director may prescribe, in trust 
        for the exclusive benefit, security and protection of the 
        policyholders, or policyholders and creditors, of the U.S. 
        branch in the United States maintained as long as there is 
        outstanding any liability of the U.S. branch arising out of its 
        insurance transactions in the United States.
            (3) Trusteed surplus.--The trusteed surplus of a U.S. 
        branch shall be subject to the same solvency standards required 
        of national insurers, including the risk-based capital 
        standards under section 337.
            (4) Certified statements.--The Director may from time to 
        time require a U.S. branch to file a statement, in such form as 
        the Director may prescribe, certified by the trustee.
    (c) Applicability of Laws.--Except as otherwise provided, a U.S. 
branch established under this section shall be subject to all laws 
applicable to a national insurer and shall be treated as a national 
insurer for all purposes of this Act, including subtitle D of this 
title.

SEC. 303. FEDERAL LICENSING OF NATIONAL INSURERS.

    (a) In General.--Notwithstanding any provision of State law, a 
national insurer may underwrite and sell in any State any line of 
insurance for which it holds a Federal license. A national insurer may 
not underwrite or sell any line of insurance for which it does not hold 
a Federal license.
    (b) Issuance of Federal Licenses.--The Director may, under such 
regulations as the Director may prescribe--
            (1) provide for licensing of national insurers to 
        underwrite and sell lines of insurance; and
            (2) issue to national insurers Federal licenses specifying 
        the lines of insurance they may underwrite and sell.
    (c) Duration.--A Federal license issued by the Director pursuant to 
this section shall remain in effect until surrendered by the national 
insurer or until revoked or suspended by the Director in accordance 
with the provisions of this Act.
    (d) Reinsurance.--
            (1) Limitation.--A national insurer may reinsure only the 
        lines of insurance that it is licensed to underwrite and sell 
        under its Federal license or which it is otherwise permitted to 
        reinsure by the terms of its Federal license.
            (2) Authority to sell only reinsurance.--A national insurer 
        may confine its business to reinsurance.
    (e) National Treatment Required.--
            (1) Fair treatment of subsidiaries and branches.--Except as 
        provided in section 302, the Director may not impose any 
        condition to the granting of a Federal license under this 
        section to a national insurer or the supervision of a national 
        insurer granted a Federal license under this section solely 
        because the national insurer is a subsidiary of a non-U.S. 
        person, is partially owned by a non-U.S. person, or is a U.S. 
        branch of a non-U.S. insurer.
            (2) Permissible conditions.--Notwithstanding paragraph (1), 
        the Director may impose conditions to the granting of a Federal 
        license or the supervision of a national insurer that are 
        different from those imposed on other national insurers if--
                    (A) the conditions attached are imposed on the 
                legal form in which the national insurer chooses to 
                operate; or
                    (B) the Director makes a written finding that the 
                conditions are related to the protection of 
                policyholders and are the minimum necessary to achieve 
                the purposes of this Act.

SEC. 304. CORPORATE GOVERNANCE.

    (a) In General.--With respect to corporate governance procedures, a 
national insurer shall comply with applicable provisions of this Act 
and applicable regulations issued by the Director under this Act.
    (b) Other Procedures.--To the extent not inconsistent with 
provisions of this Act or regulations issued by the Director under this 
Act, a national insurer shall adhere to corporate governance procedures 
of the relevant State law of either the State in which its main office 
is located or the State in which its holding company is incorporated, 
except that the Director may determine that any provision of such State 
law is discriminatory as applied to national insurers (in which event a 
national insurer shall not be obligated to follow such a provision of 
the relevant State law and may follow such other provision of law as 
the Director deems appropriate). A national insurer shall designate in 
its bylaws the body of relevant State law selected for its corporate 
governance procedures.

SEC. 305. MAIN OFFICE.

    (a) In General.--The charter of a national insurer shall specify 
the State in which its main office is located. Subject to the approval 
of the Director, a national insurer may designate any office at which 
it conducts insurance operations as its main office.
    (b) Change in Main Office.--With the approval of the Director, a 
national insurer may change the designation of its main office, 
including to another existing office of the national insurer.
    (c) Citizenship.--A national insurer shall, for purposes of 
jurisdiction, be deemed a citizen of the State in which its main office 
is located and of the State in which it has its principal place of 
business.

SEC. 306. CONVERSION OF STATE INSURER TO NATIONAL INSURER.

    (a) In General.--Notwithstanding any other provision of law, a 
State insurer may, with the approval of the Director, convert into a 
national insurer, and in doing so an insurer may retain a corporate 
form permitted by section 301(a) or change directly to another 
corporate form that is so permitted.
    (b) Conversion Procedures.--
            (1) Authority.--The Director may, under such regulations as 
        the Director may prescribe, provide for the conversion of State 
        insurers into national insurers and the issuance of charters to 
        such converted insurers. Any such conversion shall be carried 
        out solely in accordance with such regulations as the Director 
        may prescribe.
            (2) Terms.-- The regulations issued by the Director under 
        this section shall--
                    (A) be consistent with the regulations issued by 
                the Director under section 301;
                    (B) in the case of a change of form effected at the 
                time of a conversion of a State insurer into a national 
                insurer, shall be consistent with the provisions of 
                section 382 and any regulations issued by the Director 
                thereunder and shall require compliance with State laws 
                and procedures regarding the demutualization of State 
                insurers; and
                    (C) prohibit any conversion that, in the 
                determination of the Director, would substantially 
                prejudice the interests of policyholders and 
                shareholders of the State insurer.
    (c) Effect of Conversion.--Upon conversion from a State insurer to 
a national insurer in accordance with this section and the regulations 
issued by the Director hereunder, a national insurer shall be subject 
to the provisions of this Act and to examination and regulation under 
this Act to the same extent as other national insurers incorporated 
pursuant to this Act, and such national insurer shall be deemed to be a 
continuation of the corporate existence of the State insurer and shall, 
by operation of law and without further action, hold and be subject to 
all rights, privileges, liabilities, property interests, and other 
interests and obligations that the State insurer held or was subject to 
immediately prior to the conversion, except that the national insurer 
shall not be subject to any requirement applicable to the State insurer 
to maintain deposits with State insurance regulatory authorities, shall 
not hold any State license to underwrite and sell insurance that was 
held by the State insurer, and shall obtain, in accordance with section 
303 and the regulations issued by the Director thereunder, a Federal 
license for all lines of insurance that it underwrites and sells.
    (d) Special Authority.--The Director may, in the Director's 
discretion and subject to such conditions as the Director may 
prescribe, permit a national insurer resulting from the conversion of a 
State life insurer, upon such conversion, to retain for up to 5 years 
such assets, liabilities, and powers and authorities of the State 
insurer that do not conform to the legal requirements otherwise 
applicable to national insurers as the Director deems appropriate.

SEC. 307. CONVERSION OF NATIONAL INSURER TO STATE INSURER.

    (a) In General.--Subject to subsection (b) and such notification 
procedures as the Director may prescribe by regulation, a national 
insurer may convert into a State insurer, as permitted by the relevant 
provisions of applicable State law. Nothing in this section or in the 
conversion of a national insurer into a State insurer shall operate to 
abrogate any rights, privileges, liabilities, property interests, or 
other interests or obligations that such insurer held or was subject to 
immediately prior to the conversion.
    (b) Limitation.--The Director shall not permit any conversion of a 
national insurer into a State insurer that, in the determination of the 
Director, would substantially prejudice the interests of policyholders 
and shareholders of the national insurer.

                           Subtitle B--Powers

SEC. 321. POWERS OF NATIONAL INSURERS.

    Upon issuance of its charter, a national insurer shall have the 
power, subject to the provisions of this Act and in accordance with 
such regulations as the Director may prescribe--
            (1) to have a corporate seal, which may be altered at will, 
        and to use it, or a facsimile of it, impressing or affixing it 
        or in any other manner reproducing it;
            (2) to have perpetual succession until such time as it is 
        liquidated, dissolved, merged or otherwise wound up in 
        accordance with applicable law and regulation;
            (3) to sue or be sued, complain and defend, and otherwise 
        litigate in any court and participate, as a party or otherwise, 
        in any judicial, administrative, arbitral or other proceeding, 
        in its corporate name;
            (4) to make contracts and guarantees, incur liabilities, 
        borrow money, issue notes, bonds, and other obligations (which 
        may be convertible into or include the option to purchase other 
        securities of the national insurer), and secure any of its 
        obligations by mortgage or pledge of any of its property, 
        franchises or income;
            (5) to purchase, receive, subscribe for or otherwise 
        acquire, own, hold, vote, improve, employ, use, and otherwise 
        deal in and with real and personal property or other assets, or 
        any interest therein, and to sell, convey, mortgage, lease, 
        exchange, transfer or otherwise dispose of, or mortgage or 
        pledge, all  or any of its property and assets, or any interest 
therein;
            (6) to lend money, invest and reinvest its funds and 
        receive and hold real and personal property as security for 
        repayment;
            (7) to be a promoter, partner, member, associate or manager 
        of any partnership, joint venture, trust or other entity;
            (8) to participate with others in any corporation, 
        partnership, limited partnership, joint venture, or other 
        association of any kind, or in any transaction, undertaking, or 
        arrangement which the participating national insurer would have 
        power to conduct by itself, whether or not such participation 
        involves sharing or delegation of control with or to others;
            (9) to elect or appoint directors, officers, employees, and 
        agents of the national insurer, define their duties, fix their 
        compensation and lend them money and credit;
            (10) to pay pensions and establish pension plans, pension 
        trusts, profit sharing plans, share bonus plans, share option 
        plans, and other benefit or incentive plans for any or all 
        current or former directors, officers, employees, and agents of 
        the national insurer, its subsidiaries, or its affiliates;
            (11) to provide insurance for its benefit on the life of 
        any of its directors, officers, or employees, or on the life of 
        any shareholder for the purpose of acquiring at such 
        shareholder's death shares of its stock owned by such 
        shareholder;
            (12) to adopt, amend and repeal bylaws;
            (13) to engage in the underwriting and sale of insurance; 
        to establish and maintain one or more separate accounts and to 
        allocate amounts to such accounts (including, without 
        limitation, proceeds applied under optional modes of settlement 
        or under dividend options) to provide for insurance; to 
        establish and maintain one or more protected cells in 
        connection with an insurance securitization and attribute to 
        such cells insurance and reinsurance obligations with respect 
        to its general account, obligations relating to the insurance 
        securitization and assets to fund such obligations; to hold and 
        accumulate funds pursuant to funding agreements; to provide 
        investment advice and investment management services; to engage 
        in all other insurance operations; and to exercise all such 
        incidental powers as shall be necessary to carry on insurance 
        operations;
            (14) to provide benefits or payments to directors, 
        officers, and employees of the national insurer, its 
        subsidiaries, or its affiliates, and to their estates, 
        families, dependents, or beneficiaries, in recognition of the 
        past services of the directors, officers, and employees to the 
        national insurer, its subsidiaries, or its affiliates;
            (15) to make donations and otherwise devote its resources 
        for the public welfare or for charitable, scientific, 
        educational, humanitarian, philanthropic, or religious 
        purposes;
            (16) to be a promoter, partner, member, associate, or 
        manager of any business entity;
            (17) to do all such other things necessary or convenient to 
        further its activities and affairs; and
            (18) to exercise the powers granted by this Act in any 
        State and in any foreign jurisdiction.

SEC. 322. SEPARATE ACCOUNTS.

    Amounts allocated by a national life insurer to a separate account 
shall be owned by the national life insurer, the assets therein shall 
be the property of the national life insurer, and no national insurer 
by reason of such account shall be or hold itself out to be a trustee. 
If and to the extent so provided in the applicable agreements, the 
assets in a separate account shall not be chargeable with liabilities 
arising out of any other business of the national insurer.

SEC. 323. PROTECTED CELLS.

    (a) Establishment of Protected Cells.--A national insurer may 
establish one or more protected cells with the approval of the 
Director. The Director shall by regulation adopt standards for 
protected cells established by national insurers.
    (b) Protected Cell Assets.--Amounts attributed to a protected cell, 
including assets transferred to a protected cell account, are owned by 
the national insurer and the national insurer may not be, nor hold 
itself out to be, a trustee with respect to those protected cell assets 
of that protected cell account. The assets of a protected cell may not 
be charged with liabilities arising out of any other business the 
national insurer may conduct.
    (c) Security Interests Permitted.--A national insurer may allow for 
a security interest to attach to protected cell assets or a protected 
cell account when in favor of a creditor of the protected cell and 
otherwise allowed under applicable law.
    (d) Reach of Creditors and Other Claimants.--
            (1) Claims to certain protected cells assets.--Protected 
        cell assets shall only be available to the creditors of a 
        national insurer that are creditors in respect to that 
        protected cell, and such creditors shall have recourse only to 
        the protected cell assets attributable to that protected cell.
            (2) No recourse to other protected cell assets.--Creditors 
        with respect to a protected cell shall have no recourse against 
        the protected cell assets of other protected cells or the 
        general account assets of the national insurer.
            (3) Treatment of protected cells.--The establishment of a 
        protected cell by a national insurer shall not, in and of 
        itself, constitute or be deemed to be a fraudulent conveyance, 
        an intent by the national insurer to defraud creditors, or the 
        carrying out of business by a national insurer for any other 
        fraudulent purpose.
    (e) Effect on State Law.--No State may, by law, regulation, order, 
interpretation or otherwise, require licensing or otherwise regulate in 
any manner--
            (1) an investor in an insurance securitization, solely by 
        reason of its investment, as an insurer, reinsurer or other 
        person transacting insurance; or
            (2) an underwriter or selling agent (or its partners, 
        directors, officers, members, managers, employees, agents, 
        representatives, and advisors) in an insurance securitization 
        as an insurance or reinsurance agent, broker, producer, 
        intermediary, advisor, consultant or similar capacity by virtue 
        of its activities in connection with the insurance 
        securitization.

                    Subtitle C--Financial Regulation

SEC. 331. ACCOUNTING PRINCIPLES AND AUDITING STANDARDS.

    (a) Regulations.--
            (1) In general.--The Director shall, by regulation, specify 
        the accounting principles and auditing standards to be followed 
        by a national insurer in preparing financial statements to be 
        filed with the Director pursuant to section 202(b)(1).
            (2) Initial regulations.--The initial regulations under 
        paragraph (1) shall be promulgated on or before the transition 
        commencement date and shall require that--
                    (A) except as provided in section 333, national 
                insurers shall follow statutory accounting practices as 
                promulgated by the NAIC in its Accounting Practices and 
                Procedures Manual; and
                    (B) audited financial statements shall be in 
                accordance with guidance prescribed by the  NAIC in its 
Model Regulation Requiring Annual Audited Financial Reports;
        each as in effect as of January 1, 2001, and as amended by the 
        NAIC and in effect thereafter from time to time prior to the 
        transition termination date, except that the Director may by 
        regulation specify that any such amendment by the NAIC shall, 
        in whole or in part, be inapplicable to national insurers.
            (3) Amendment of naic standards.--The accounting principles 
        and auditing standards for national insurers in effect on the 
        transition termination date pursuant to paragraph (2) may 
        thereafter be amended by regulations promulgated pursuant to 
        paragraph (1).
    (b) Study and Hearings.--The Director shall conduct a study and 
hold hearings prior to the transition termination date and shall 
determine whether modification of the accounting principles and 
auditing standards for national insurers established pursuant to 
subsection (a) would be consistent with the public interest and the 
protection of policyholders.

SEC. 332. INVESTMENTS.

    (a) In General.--
            (1) Investments.--A national insurer may loan or invest its 
        funds, and may buy, sell, hold title to, possess, occupy, 
        pledge, convey, manage, protect, insure and deal with its 
        investments, property and other assets. Such investments shall 
        be of sufficient value, liquidity, and diversity to ensure the 
        national insurer's ability to meet its outstanding obligations 
        based on reasonable assumptions as to its business.
            (2) Subsidiaries.--A national insurer may invest in, or 
        otherwise acquire, subsidiaries engaged or organized to engage 
        in any business lawful under the laws of the jurisdictions in 
        which such subsidiaries are organized.
    (b) Investment Policy.--In acquiring, investing, exchanging, 
holding, selling, and managing investments, a national insurer shall 
establish and follow a written investment policy that shall be reviewed 
and approved by the national insurer's board of directors at least 
annually. The content and format of a national insurer's investment 
policy shall be at the national insurer's discretion, but shall include 
written guidelines appropriate to the national insurer's business as to 
the following issues:
            (1) The general investment policy of the national insurer, 
        with guidelines and specifications intended to assure that its 
        investments are appropriate for the business conducted by the 
        national insurer, its liquidity needs and its capital and 
        surplus.
            (2) Goals and objectives regarding the composition of 
        classes of investments, including maximum internal limits.
            (3) Requirements for periodic evaluation of the investment 
        portfolio as to its risk and reward characteristics, and for 
        adoption and oversight of implementation of procedures and 
        controls covering all aspects of the investment function.
    (c) Standard of Care.--In reviewing and approving the investment 
policy established pursuant to subsection (b), the directors of a 
national insurer shall perform their duties in good faith and with that 
degree of care that an ordinarily prudent individual in a like position 
would use under similar circumstances. Among the factors that the board 
of directors may consider are the following:
            (1) The national insurer's business.
            (2) General economic conditions.
            (3) The possible effect of inflation or deflation.
            (4) The expected tax consequences of investment decisions 
        or strategies.
            (5) The fairness and reasonableness of the terms of an 
        investment considering its probable risk and reward 
        characteristics and relationship to the investment portfolio as 
        a whole.
            (6) The extent of the diversification of the national 
        insurer's investments among--
                    (A) individual investments;
                    (B) classes of investments;
                    (C) industry concentrations; and
                    (D) geographic areas.
            (7) The quality and liquidity of investments in affiliates.
            (8) The investment exposure to--
                    (A) liquidity risk;
                    (B) credit and default risk;
                    (C) systemic (market) risk;
                    (D) interest rate risk;
                    (E) call, prepayment, and extension risk;
                    (F) currency risk; and
                    (G) foreign sovereign risk.
            (9) The amount of the national insurer's assets, capital 
        and surplus, premium writings, and insurance in force.
            (10) The amount and adequacy of the national insurer's 
        reported and unreported liabilities.
            (11) The relationship of the expected cash flows of the 
        national insurer's assets and liabilities, and the risk of 
        adverse changes in the national insurer's assets and 
        liabilities.
            (12) The adequacy of the national insurer's capital and 
        surplus to support the risks and liabilities of the national 
        insurer.
            (13) The amount of investments made in the communities 
        where the national life insurer sells insurance policies or has 
        offices.
    (d) Internal Controls.--A national insurer shall establish and 
implement internal controls and procedures to ensure compliance with 
its investment policy. In this respect, an evaluation and monitoring 
process shall occur periodically for assessing the effectiveness of 
such controls and procedures. Additionally, the national insurer shall 
assess management's success in meeting the stated objectives within the 
investment policy.
    (e) Minimum Financial Security Benchmark.--
            (1) Establishment.--The Director shall by regulation or 
        order establish what portion of the surplus of an individual 
        national insurer or any category of national insurers shall 
        constitute a minimum financial security benchmark that will 
        provide reasonable security against contingencies affecting a 
        national insurer's financial position that are not fully 
        covered by reserves or by reinsurance.
            (2) Minimum.--Any such minimum financial security benchmark 
        shall be not less than the authorized control level risk-based 
        capital (or, absent an authorized control level risk-based 
        capital, another comparable risk-based capital level 
        established by the Director) applicable to the national insurer 
        as established under section 337 less any asset valuation 
        reserve and voluntary investment reserves that may be required.
            (3) Failure to comply.--Notwithstanding the provisions of 
        subsection (c), if a national insurer fails to meet the minimum 
        financial security benchmark applicable to it, the national 
        insurer shall be subject to such investment standards as the 
        Director shall establish by regulation or order.

SEC. 333. ASSET VALUATION AND RATING.

    The Director shall establish such standards and means to recognize 
risk factors appropriate to the valuation and rating of assets held by 
a national insurer for purposes pertinent to the supervision of 
national insurers other than risk-based capital. The initial standards 
and means shall be promulgated on or before the transition commencement 
date.

SEC. 334. VALUATION OF LIABILITIES.

    (a) Regulations.--The Director shall, by regulation, establish 
standards for the valuation of insurer obligations and liabilities for 
national insurers. The regulations may prescribe valuation requirements 
for particular types of insurance policies and, for other types of 
insurance policies, shall require that reserves be established based on 
a valuation performed by a qualified actuary in accordance with 
generally accepted actuarial principles.
    (b) Regulations During Transition Period.--The initial regulations 
under subsection (a) shall be promulgated on or before the transition 
commencement date and shall provide that the standards be based on 
relevant NAIC model laws, regulations, and guidelines in the form 
adopted by the NAIC, including the Standard Valuation Law, Valuation of 
Life Insurance Policies Model Regulation, Universal Life Insurance 
Model Regulation, Variable Life Insurance Model Regulation, Health 
Insurance Reserves Model Regulation, and NAIC actuarial guidelines 
applicable to insurance policies that may be underwritten and sold by 
national insurers, each as in effect as of January 1, 2001, and as 
amended by the NAIC and in effect thereafter from time to time prior to 
the transition termination date, except that the Director may by 
regulation specify that any such amendment by the NAIC shall, in whole 
or in part, be inapplicable to national insurers.
    (c) Regulations After Transition Period.--The standards for the 
valuation of insurer obligations and liabilities for national insurers 
in effect on the transition termination date pursuant to subsection (b) 
may thereafter be amended by regulations promulgated pursuant to 
subsection (a).

SEC. 335. CONTINUING AND ALTERNATE BENEFITS.

    (a) Regulations.--The Director shall, by regulation, establish 
standards applicable to national life insurers for the determination of 
continuing and alternate benefits available at the election of the 
policyholder or upon insurance policy termination that are reflective 
of the accumulated remaining value in the insurance policy.
    (b) Regulations During Transition Period.--The initial regulations 
under subsection (a) shall be promulgated on or before the transition 
commencement date and shall provide that the standards be based on 
relevant NAIC model laws, regulations, and guidelines in the form 
adopted by the NAIC, including the Standard Nonforfeiture Law for Life 
Insurance, Variable Life Insurance Model Regulation, Standard 
Nonforfeiture Law for Individual Deferred Annuities, Long-Term Care 
Insurance Model Act, Long-Term Care Insurance Model Regulation, and 
NAIC actuarial guidelines applicable to insurance policies that may be 
underwritten and sold by national insurers, each as in effect as of 
January 1, 2001, and as amended by the NAIC and in effect thereafter 
from time to time prior to the transition termination date, except that 
the Director may by regulation specify that any such amendment by the 
NAIC shall, in whole or in part, be inapplicable to national insurers.
    (c) Regulations After Transition Period.--The standards applicable 
to national life insurers for the determination of continuing and 
alternate benefits in effect on the transition termination date 
pursuant to subsection (b) may thereafter be amended by regulations 
promulgated pursuant to subsection (a).

SEC. 336. ACTUARIAL OPINION.

    The Director shall, by regulation, require each national insurer to 
file an annual written opinion from a qualified actuary on the adequacy 
of the national insurer's assets to meet its reasonably expected 
obligations and liabilities. The opinion shall be based on analysis 
consistent with the nature of the national insurer's obligations and 
liabilities.

SEC. 337. RISK-BASED CAPITAL STANDARDS.

    (a) Regulations.--
            (1) Establishment.--The Director shall, by regulation, 
        establish risk-based capital standards for national insurers 
        that recognize risk factors appropriate to the business of 
        national insurers and remedies for failure to meet such 
        standards.
            (2) Regulations during transition period.--The initial 
        regulations under paragraph (1) shall be promulgated on or 
        before the transition commencement date and shall provide that 
        the standards be based on NAIC risk-based capital calculations 
        and remedies in the form adopted by the NAIC, each as in effect 
        as of January 1, 2001, and as amended by the NAIC and in effect 
        thereafter from time to time prior to the transition 
        termination date, except that the Director may by regulation 
        specify that any such amendment by the NAIC shall, in whole or 
        in part, be inapplicable to national insurers.
            (3) Regulations after transition period.--The risk-based 
        capital standards for national insurers and the remedies for 
        failure to meet such standards in effect on the transition 
        termination date pursuant to paragraph (2) may thereafter be 
        amended by regulations promulgated pursuant to paragraph (1).
    (b) Disclosure.--Except as may be required or permitted under the 
regulations promulgated pursuant to subsection (a), a national insurer 
shall not disclose its risk-based capital ratio to the general public 
for any purpose.

SEC. 338. DIVIDENDS TO SHAREHOLDERS.

    (a) Shareholder Dividends Permitted.--A national insurer may 
declare and pay dividends or make other distributions in cash or its 
bonds or its property on its outstanding shares, except when the 
national insurer is insolvent or would thereby be made insolvent, or 
when the declaration, payment or distribution would be contrary to any 
restrictions contained in its charter or any order issued by the 
Director.
    (b) Source of Shareholder Dividends.--Dividends may be declared or 
paid and other distributions may be made out of surplus only, so that 
the assets of the national insurer remaining after such declaration, 
payment, or distribution shall at least equal the amount of its 
capital.

                        Subtitle D--Reinsurance

SEC. 351. DEFINITIONS.

    For purposes of this subtitle:
            (1) Federally qualified reinsurer.--The term ``federally 
        qualified reinsurer'' means a State chartered reinsurer or a 
        reinsurer chartered in a foreign jurisdiction that holds a 
        license issued by the Director pursuant to section 356.
            (2) Federal reinsurer.--The term ``Federal reinsurer'' 
        means a reinsurer that--
                    (A) is a national insurer that holds a Federal 
                license under this title;
                    (B) is a federally qualified reinsurer; or
                    (C) maintains a trust fund pursuant to section 
                352(b).
            (3) Qualified financial institution.--The term ``qualified 
        financial institution'' means an institution that is organized 
        or licensed under the laws of the United States or any State 
        and that is regulated, supervised, and examined by United 
        States Federal or State authorities having regulatory authority 
        over banks and trust companies. Such term includes a foreign 
        branch of a qualified United States financial institution and 
        any other foreign institution as determined by the Director, 
        consistent with the purposes of this subtitle.
            (4) Reinsurer.--The term ``reinsurer'' means an insurer 
        that is in or proposes to enter the business of providing 
        wholesale insurance risk management and related financial 
        management products and services to insurers or other entities 
        that are in the business of providing insurance risk management 
        and related financial management products and services in 
        wholesale and retail markets.
            (5) Risk transfer product.--The term ``risk transfer 
        product'' means any agreement between or among parties in which 
        a party contractually assumes a specified financial uncertainty 
        from another party, for consideration.

SEC. 352. RESERVE CREDIT.

    (a) In General.--Credit for reinsurance shall be allowed under this 
Act solely under the provisions of this subtitle to a national insurer, 
federally qualified reinsurer, and a State insurer that cedes any risk 
to a Federal reinsurer.
    (b) Trust Funds.--
            (1) Required actions.--If the assuming insurer secures all 
        its liabilities attributable to reinsurance ceded by State 
        insurers and U.S. branches entered through a State or 
        established pursuant to section 302 with a trust, the assuming 
        insurer shall--
                    (A) file annually with the Director a copy of its 
                most recent audited financial statement and a copy of 
                its annual financial statement in substantially similar 
                format as those required to be filed by a national 
                insurer under this Act;
                    (B) file with the Director evidence of its 
                submission to the jurisdiction of the Director;
                    (C) submit to examination of its books and records 
                and bear the expense of the examination;
                    (D) file with the Director the form of the trust 
                and any trust amendments;
                    (E) deposit in the trust such reasonable amount in 
                excess of its liabilities for risks resident or located 
                in the United States, net of reinsurance, as shall be 
                determined in rules to be promulgated by the Director; 
                and
                    (F) comply with such other regulations as the 
                Director may issue.
            (2) Amounts.--Such a trust may be funded only with--
                    (A) cash;
                    (B) securities qualifying as admitted assets of a 
                national insurer;
                    (C) clean, irrevocable, unconditional letters of 
                credit, issued or confirmed by a qualified financial 
                institution, effective no later than December 31 of the 
                year for which the filing is being made, and in trust 
                for the ceding insurer on or before the filing date of 
                its annual financial statement; except that letters of 
                credit issued or confirmed by institutions that 
                subsequently fail to meet applicable standards shall 
                continue to be acceptable as security under this 
                subsection until the earliest of their expiration, 
                extension, renewal, modification, or amendment; or
                    (D) any other form of security acceptable to the 
                Director.
    (c) Other Asset or Reduction From Liability.--In addition to the 
reserve credit permitted under subsections (a) and (b), a national 
insurer and a federally qualified reinsurer may establish an asset or 
reduce its liabilities, in an amount not exceeding its liabilities, for 
reinsurance ceded and secured in accordance with this subsection. The 
reduction shall be in the amount of funds held by or on behalf of the 
ceding insurer, including funds held in trust for the ceding insurer, 
under a reinsurance contract with the assuming insurer as security for 
the payment of obligations thereunder, if the security is subject to 
withdrawal solely by, and under the exclusive control of, the ceding 
insurer; or in the case of a trust, held in a qualified financial 
institution. This security may be in the form only of--
            (1) cash;
            (2) securities qualifying as admitted assets of a national 
        insurer;
            (3) clean, irrevocable, unconditional letters of credit, 
        issued or confirmed by a qualified financial institution, 
        effective no later than December 31 of the year for which the 
        filing is being made, and in the possession of, or in trust 
        for, the ceding insurer on or before the filing date of its 
        annual financial statement; except that letters of credit 
        issued or confirmed by institutions that subsequently fail to 
        meet applicable standards shall continue to be acceptable as 
        security under this subsection until the earliest of their 
        expiration, extension, renewal, modification, or amendment; or
            (4) any other form of security acceptable to the Director.
    (d) Required Reinsurance.--Notwithstanding other provisions of this 
section or any regulation promulgated pursuant to this section, credit 
shall be allowed for reinsurance ceded to government-owned or 
controlled insurers or reinsurers or to pools or to guaranty 
associations or to residual market mechanisms, as may be required under 
applicable law or regulation in any jurisdiction, unless the Director 
determines otherwise, after notice and hearing.

SEC. 353. RISK TRANSFER REGULATION.

    The Director shall issue regulations that--
            (1) allow a ceding insurer to establish an asset or to 
        reduce its liability for reinsurance of risk, whether the risk 
        is mortality, morbidity, lapse, credit, investment, timing, or 
        expense and whether such risks are proportional or 
        nonproportional;
            (2) provides that a Federal reinsurer may assume any risk 
        described in paragraph (1) from any regulated financial entity, 
        as long as those risks originated in one or more financial 
        undertakings by the entity; and
            (3) implements the purposes of this subtitle so that 
        functionally equivalent risk-spreading financial arrangements 
        should be treated similarly.

SEC. 354. INTERNATIONAL STANDARDS; HOST COUNTRY RESERVES.

    (a) International Standards and Reciprocity.--The Director shall 
have the responsibility, and shall take such actions as may be 
necessary, to--
            (1) improve the United States reinsurers' ability to 
        compete internationally;
            (2) promote the development, by the transition termination 
        date, of international accounting standards for reinsurance and 
        functionally equivalent risk-transfer products;
            (3) work toward international mutual recognition on a 
        bilateral or multilateral basis; and
            (4) ensure that Federal regulation of reinsurers imposes no 
        substantial competitive disadvantage on United States 
        operations of reinsurers.
    (b) Host Country Reserves.--By the transition termination date, the 
Director shall, by regulation, establish valuation rules that allow 
Federal reinsurers to use the reserving rules of the country where the 
reinsured risk originates for any such non-United States risks to the 
extent the Director deems necessary or appropriate to protect the 
Federal reinsurer's solvency. Such regulations may require segregation 
of assets and liabilities for any such reinsured non-United States 
risks.

SEC. 355. REINSURANCE CONTRACT TERMS.

    The Director shall adopt regulations governing the provisions of 
reinsurance contracts that will be required in order for an insurer 
ceding insurance risk to the reinsurer to establish an asset or to 
reduce a liability.

SEC. 356. LICENSING OF FEDERALLY QUALIFIED REINSURERS.

    (a) In General.--The Director may license reinsurers to provide 
reinsurance for insurance and prescribe, by regulation, the standards 
and procedures for granting licenses under this Act to entities to 
provide reinsurance for insurance. Such standards shall give due 
consideration to the public interest in providing secure and sufficient 
reinsurance capacity in the United States and to the need for promoting 
effective, fair competition.
    (b) Determination and Finding.--Upon submission of an application, 
the Director shall examine the information submitted and conduct such 
further examination and investigation, as the Director finds necessary, 
to determine whether the applicant satisfies the standards for a 
license to provide reinsurance under this section. Upon conclusion of 
the examination and investigation, the Director shall publish the 
findings and determination of the examination. Upon a determination 
that the applicant has satisfied the applicable requirements of this 
section, the Director shall issue the license.
    (c) Annual Reports.--The Director shall require each reinsurer that 
holds a license to provide reinsurance under this section to submit an 
annual report of its financial condition and an annual report on the 
condition of any trust fund regulated under this subtitle in a form 
prescribed by the Director.

SEC. 357. TRANSITION.

    (a) Congressional Intent.--The Congress intends to ensure the 
protection of the American insurance-purchasing public and the fair and 
reciprocal national treatment for regulated entities.
    (b) Transition.--For the period of the transition under subsection 
(c) of this section, the Director may not, pursuant to section 356, 
license any entity that is not a State insurer.
    (c) Period of Transition.--
            (1) In general.--The period of transition under this 
        subsection shall be the period that--
                    (A) is determined by the Director in consultation 
                with the United States Trade Representative;
                    (B) ends no earlier than the transition termination 
                date; and
                    (C) is terminated on a country-by-country basis, 
                depending on the determination pursuant to subparagraph 
                (A).
            (2) Termination.--Notwithstanding paragraph (1), the 
        transition period shall not be terminated with respect to any 
        country unless the United States Trade Representative advises 
        that such country has a mutual recognition agreement with the 
        United States.

SEC. 358. APPLICABILITY OF OTHER SUBTITLES AND LAWS.

    (a) In General.--No State law, regulation, or practice relating to 
any matter addressed in this subtitle or in regulations implementing 
any provisions of this subtitle shall apply, directly or indirectly, 
to--
            (1) any Federal reinsurer; or
            (2) any State insurer purchasing a risk transfer product 
        from a Federal reinsurer.
    (b) Inapplicability of Subtitle E.--A Federal reinsurer shall be 
exempt from subtitle E of this title with respect to its reinsurance 
operations.
    (c) Applicability of Other Laws.--No provision of law of any State, 
political subdivision, or agency thereof, or franchising authority, and 
no provision of any franchise granted by such authority, which is 
inconsistent with or more restrictive than, any provision of this 
subtitle shall apply to--
            (1) any Federal reinsurer; or
            (2) any State insurer purchasing a risk transfer product 
        from a Federal reinsurer.

                     Subtitle E--Insurance Business

SEC. 361. PRODUCT REGULATION.

    (a) Definition of Policy.--For purposes of this section, the term 
``policy'' means a policy, contract, certificate, or evidence of 
insurance, or an annuity contract, and a rider or endorsement thereto, 
but does not include a funding agreement or a reinsurance contract and 
does not include an agreement, special rider or endorsement relating 
only to the manner of distributing benefits or to the reservation of 
rights and benefits used at the request of the individual policyholder.
    (b) Standards.--The Director shall, by regulation, establish 
standards for policies as to policy provisions. The standards may 
include general requirements as to policy provisions generally and 
requirements as to particular classes of policies. All policies when 
written by a national insurer shall comply with the applicable 
standards then in effect.
    (c) Product Filings.--No national insurer may issue a policy until 
the form of the policy has been filed with and approved by the 
Director. Pursuant to regulations promulgated by the Director, any 
filing of a policy form shall be accompanied by a certificate of an 
officer of the national insurer as to compliance of the policy form for 
the standards applicable to the policy form.
    (d) Interpretive Rulings.--
            (1) Procedures.--The Director shall by regulation establish 
        procedures by which national insurers may obtain interpretive 
        rulings from the Office regarding the interpretation and 
        application of the standards established pursuant to this 
        section.
            (2) Confidentiality.--Neither the request by a national 
        insurer for an interpretative ruling nor the complete text of 
        the interpretative ruling of the Office shall be made available 
        to the public.
            (3) Summaries.--Notwithstanding paragraph (2), the Director 
        shall make summaries of interpretive opinions public, without 
        the name of the national insurer or other identifying 
        information, promptly after issuance of the opinions or after 
        such delay as the Director may determine at the request of the 
        national insurer.
    (e) State Regulation of Rates.--Notwithstanding any other provision 
of this Act or any other law, each national insurer and each insurance 
policy issued by a national insurer shall be subject to State laws, 
rules, regulations, orders, and actions that regulate the rates for 
insurance.

SEC. 362. UNDERWRITING STANDARDS FOR LIFE INSURERS.

    A national life insurer may classify or underwrite risks, except 
that any decision to--
            (1) refuse to insure or to continue to insure,
            (2) limit the amount, extent or kind of coverage, or
            (3) charge a different rate for the same coverage,
shall be--
            (A) based on sound actuarial principles; or
            (B) related to actual or reasonably anticipated experience.

SEC. 363. GROUP, BLANKET, AND FRANCHISE INSURANCE.

    (a) Authority.--A national insurer may--
            (1) underwrite and sell group, blanket, and franchise 
        policies for insurance; and
            (2) extend group, blanket, or franchise policies for 
        insurance to insure the dependents of employees or members, or 
        any class or classes thereof.
    (b) Regulation.--The Director shall, by regulation, establish 
standards for kinds and qualifications of permissible groups for group 
and franchise policies for insurance.
    (c) Permissible Groups.--The regulations issued under subsection 
(b) shall provide that the permissible groups shall include the 
following groups:
            (1) Employees, including retired employees, former 
        employees, and officers, and directors of an employer.
            (2) Union members.
            (3) Creditors or vendors insuring debtors or purchasers.
            (4) Holders of a credit card, charge card, or payment card 
        that can be used to buy goods or services issued by a bank, 
        retailer, or other issuer.
            (5) Depositors, account holders, or members of a bank, 
        savings and loan association, credit union, mutual fund, money 
        market fund, stockbroker, or other similar financial 
        institution regulated under State or Federal law.
            (6) Multiple employers trusts insuring employees or union 
        members.
            (7) Employer trade associations insuring employees.
            (8) Professional or trade association members.
            (9) Association members.
            (10) A group for which there is a common enterprise or 
        economic or social affinity or relationship.
            (11) A group of individuals or businesses located in 
        underserved communities.
            (12) Any other group as the Director may provide.

SEC. 364. INSURABLE INTERESTS UNDER LIFE INSURANCE POLICIES.

    (a) Definitions and Exceptions.--
            (1) Definitions.--For purposes of subsections (c)(4), 
        (d)(1)(D), (d)(1)(E), and (d)(1)(F) of this section, the term 
        ``employee'' shall include--
                    (A) any and all directors, officers, partners, 
                employees, retired employees, or the dependents of such 
                persons; and
                    (B) any former employee not included in 
                subparagraph (A), but only for the purpose of replacing 
                existing life insurance with new life insurance in an 
                amount not exceeding the insurance being replaced.
            (2) Exceptions.--This section shall not apply to--
                    (A) an annuity contract;
                    (B) a funding agreement; or
                    (C) any other life insurance policy the Director by 
                regulation excepts from the requirements of this 
                section.
    (b) Insurable Interest Required; Violation.--
            (1) Requirement.--No person shall procure or cause to be 
        procured any life insurance policy written by a national life 
        insurer upon the person of another individual unless such 
        person has, at the time when such life insurance policy is 
        made, an insurable interest in the individual insured, or 
        unless the benefits under such life insurance policy are 
        payable to the individual insured or his or her personal 
        representatives, or to a person having, at the time when such 
        life insurance policy is made, an insurable interest in the 
        individual insured, except that an insurable interest need not 
        exist at the time loss occurs under the life insurance policy.
            (2) Violation.--If the beneficiary, assignee or other payee 
        under any life insurance policy made in violation of this 
        subsection receives from the national life insurer any benefits 
        thereunder accruing upon the death, disablement, or injury of 
        the individual insured, the individual insured or his executor 
        or administrator may maintain an action to recover such 
        benefits from the person receiving them.
    (c) Definition of Insurable Interest.--
            (1) In general.--For purposes of this section, the term 
        ``insurable interest'' means an interest based upon a 
        reasonable expectation of pecuniary advantage through the 
        continued life, health, or bodily safety of another individual 
        and consequent loss by reason of such individual's death or 
        disability or a substantial interest engendered by love and 
        affection in the case of individuals closely related by blood 
        or by law.
            (2) Insurable interest of self.--An individual has an 
        unlimited insurable interest in his or her own life, health, 
        and bodily safety and may lawfully take out an insurance policy 
        on his own life, health, or bodily safety and have the 
        insurance policy made payable to whomsoever such individual 
        pleases, regardless of whether the beneficiary designated has 
        an insurable interest.
            (3) Insurable interest of party to contract for sale of a 
        business interest.--A party to a contract or option for the 
        purchase or sale, including a redemption, of an interest in a 
        business proprietorship, partnership or firm, or of shares of 
        stock of a business entity or of an interest in these shares, 
        has an insurable interest in the life, body and health of each 
        individual party to that contract or option, and for the 
        purposes of that contract or option only, in addition to any 
        insurable interest that may otherwise exist as to that 
        individual.
            (4) Insurable interest of a business entity or trust 
        established by a business entity.--
                    (A) Business entity.--A business entity has an 
                insurable interest in the life or physical or mental 
                ability of any of its employees or the employees of any 
of its affiliates or any other person whose death or physical or mental 
disability might cause financial loss to the business entity; or, 
pursuant to any contractual arrangement with any shareholder concerning 
the reacquisition of shares owned by him or her at the time of his or 
her death or disability, on the life or physical or mental ability of 
that shareholder for the purpose of carrying out such contractual 
arrangement; or, pursuant to any contract obligating the business 
entity as part of compensation arrangements or pursuant to a contract 
obligating the business entity as guarantor or surety, on the life of 
the principal obligor.
                    (B) Trust.--
                            (i) The trustee of a trust established by a 
                        business entity substantially for the benefit 
                        of the business entity has the same insurable 
                        interest in the life or physical or mental 
                        ability of any person as does the business 
                        entity.
                            (ii) The trustee of a trust established by 
                        a business entity providing life, health, 
                        disability, retirement, or similar benefits to 
                        some or all of the employees of the business 
                        entity or its affiliates in which such business 
                        entity has an insurable interest or the 
                        beneficiaries of such employees, and acting in 
                        a fiduciary capacity with respect to such 
                        employees or their beneficiaries, has the same 
                        insurable interest in the life of such 
                        employees as does the business entity.
                    (C) Conveyance.--The insurable interest of a 
                business entity or trustee which has been established 
                pursuant to subparagraph (B) shall be conveyed 
                automatically to another business entity or to the 
                trustee of a trust established by such other business 
                entity for its sole benefit which has acquired by 
                purchase, merger, or otherwise all or part of the first 
                business entity's business. A business entity or the 
                trustee of a trust established pursuant to subparagraph 
                (B) may exchange any insurance policy issued to itself 
                or to another business entity or the trustee of a trust 
                established pursuant to subparagraph (B) from which the 
                exchanging business entity has acquired by purchase, 
                merger, or otherwise all or part of such other business 
                entity's business for a new insurance policy issued to 
                itself without establishing a new insurable interest at 
                the time of such exchange.
            (5) Charitable institutions.--A charitable institution as 
        defined under section 501(c)(3), 501(c)(6), 501(c)(8), or 
        501(c)(9) of the Internal Revenue Code of 1986 shall have an 
        insurable interest in the life of any donor.
    (d) Application and Consent of Insured.--
            (1) Required consent.--No life insurance policy upon an 
        individual, except a group insurance policy, shall be made or 
        effectuated unless at the time of the making of the life 
        insurance policy the individual insured, being of competent 
        legal capacity to contract, applies for an insurance policy or 
        consents in writing to the contract, except in the following 
        cases:
                    (A) A spouse may effectuate life insurance upon the 
                other spouse.
                    (B) Any person having an insurable interest in the 
                life of a minor or any person upon whom a minor is 
                dependent for support and maintenance may effectuate 
                life insurance upon the life of or pertaining to the 
                minor.
                    (C) An application for a family life insurance 
                policy may be signed by either parent, by a stepparent, 
                or by husband or wife.
                    (D) A business entity may effectuate life insurance 
                upon its employees in whom it has an insurable 
                interest.
                    (E) A trustee of a trust established by a business 
                entity providing life, health, disability, retirement, 
                or similar benefits may effectuate life insurance upon 
                employees for whom such benefits are to be provided. 
                For purposes of this subparagraph, any employee of a 
                group of business entities consisting of a parent 
                business entity and its directly or indirectly owned 
                subsidiaries shall be considered to be an employee of 
                each business entity within the group.
                    (F) A business entity described in subparagraph (D) 
                or the trustee of a trust established by such business 
                entity as contemplated by subparagraph (E) may exchange 
                any life insurance policy which was sold to itself on 
                the life of an employee or retiree of the business 
                entity, or which was sold to another business entity or 
                the trustee of a trust established by such other 
                business entity as contemplated by subparagraph (E) on 
                the life of an employee or retiree of such other 
                business entity, and the exchanging business entity has 
                acquired by purchase, merger, or otherwise all or part 
                of such other business entity's business for a new life 
                insurance policy on such individual's life sold to the 
                exchanging business entity.
            (2) Liability.--A national life insurer shall be entitled 
        to rely upon all statements, declarations, and representations 
        made by an applicant for insurance relative to the insurable 
        interest which such applicant has in the insured. No national 
        life insurer shall incur any legal liability except as set 
        forth in the insurance policy, by virtue of any untrue 
        statements, declarations, or representations so relied upon in 
        good faith by the national life insurer.
    (e) Conditions for New Insurance Exceeding Insurance Being 
Replaced.--Notwithstanding the provisions of subsections (c)(4), 
(d)(1)(D), (d)(1)(E), or (d)(1)(F), any new life insurance may exceed 
the life insurance being replaced only--
            (1) when an entity has an insurable interest pursuant to 
        subsection (c)(4) and the authority to effectuate life 
        insurance pursuant to the provisions of subsection (d)(1)(D), 
        (d)(1)(E), or (d)(1)(F); and
            (2)(A) to the extent application of the cash surrender 
        value from the old life insurance as a premium under the new 
        life insurance policy requires a larger amount of insurance to 
        qualify as life insurance or to be not treated as a modified 
        endowment contract for Federal income tax purposes;
            (B) to otherwise comply with applicable Federal law; or
            (C) when, upon cessation of premium payments, a former 
        employee or trustee elects under the life insurance policy to 
        use the cash value available under the life insurance policy to 
        restructure the term, face amount, or investment options under 
        the life insurance policy, even though such restructuring may 
        result in an increase in the amount of the insurance.
    (f) Insurance Policy Transfers or Assignments.--If a life insurance 
policy has been issued in compliance with this section, no transfer or 
assignment of such insurance policy or any interest thereunder shall be 
invalid by reason of a lack of insurable interest of the transferee or 
assignee in the life of the insured or the payment of premiums 
thereafter by the transferee or assignee.
    (g) Effect of State Law.--No State may, by law, regulation, order, 
interpretation or otherwise, impose any  standard, relating to any 
matter addressed in this section, on national life insurers or persons 
who purchase insurance from national life insurers.

SEC. 365. LAW APPLICABLE TO LIFE INSURANCE POLICIES OR OTHER PRODUCTS 
              OF NATIONAL LIFE INSURERS.

    (a) In General.--Subject to any applicable Federal law, the 
provisions of any life insurance policy or other product of a national 
life insurer shall be interpreted in accordance with the law of the 
jurisdiction, if any, specified by the parties in the life insurance 
policy or other product, so long as the parties have specified the law 
of--
            (1) the jurisdiction in which the national life insurer has 
        its main office;
            (2) the jurisdiction in which the national life insurer has 
        its principal place of business; or
            (3) the jurisdiction in which the life insurance policy or 
        other product is delivered.
    (b) Default Law.--Subject to any applicable Federal law, if the 
parties to a life insurance policy or other product of a national life 
insurer have not specified, as provided in subsection (a), the 
jurisdiction whose law shall govern the provisions of the insurance 
policy or other product, such provisions shall be interpreted in 
accordance with the law of the jurisdiction in which the life insurance 
policy or other product is delivered.
    (c) Regulations.--Subsection (b) shall be subject to such choice of 
law rules and standards as the Director may establish by regulation.

                       Subtitle F--Market Conduct

SEC. 371. PURPOSES AND REGULATIONS.

    (a) Purpose.--The purposes of this subtitle is to ensure 
appropriate Federal regulation of sales and marketing practices of 
national insurers and State licensed insurance producers selling the 
products of national insurers to prevent--
            (1) unfair methods of competition and unfair and deceptive 
        acts and practices in the advertising, solicitation, sale, 
        issuance, distribution, and administration of insurance 
        policies and other products of national insurers;
            (2) unfair claims practices related to insurance 
        underwritten and sold by such insurers and producers;
            (3) discrimination in the underwriting of insurance by such 
        insurers and producers; and
            (4) insurance fraud.
    (b) Rulemaking Authority.--The Director shall promulgate such rules 
and regulations, applicable to national insurers and State insurance 
producers that sell products of national insurers, as the Director 
deems necessary to carry out the purposes of this subtitle.
    (c) Annual Examinations.--The Director shall conduct annual 
examinations of the market conduct of national insurers and State 
insurance producers that sell products of national insurers.
    (d) Safe Harbor.--An immaterial clerical error or mathematical 
error made in connection with the advertising, solicitation, sale, 
issuance, distribution, or administration of insurance policies and 
other products of national insurers and State insurance producers that 
sell products of national insurers shall not constitute a violation of 
this subtitle.

SEC. 372. UNFAIR OR DECEPTIVE PRACTICES.

    (a) General Prohibition.--No person shall engage in any act or 
practice in or affecting the advertising, solicitation, sale, issuance, 
distribution, or administration of insurance or other products of 
national insurers, including such products sold by State insurance 
producers, if such act or practice--
            (1) constitutes an unfair or deceptive act or practice in 
        or affecting the advertising, solicitation, sale, issuance, 
        distribution, or administration of insurance or other products 
        of national insurers; and
            (2)(A) is committed flagrantly and in conscious disregard 
        of this subtitle or any regulations promulgated under this 
        subtitle; or
            (B) has been committed with such frequency as to indicate a 
        general business practice to engage in such conduct.
    (b) Unfair or Deceptive Acts or Practices Defined.--For purposes of 
this subtitle, the following acts or practices constitute unfair or 
deceptive acts or practices in or affecting the advertising, 
solicitation, sale, issuance, distribution, or administration of 
insurance or other products of national insurers, including such 
products sold by State insurance producers:
            (1) Misrepresentations and false advertising of insurance 
        or annuity contracts.--Making, issuing, circulating, or causing 
        to be made, issued or circulated, any estimate, illustration, 
        circular or statement, sales presentation or comparison that--
                    (A) misrepresents the benefits, advantages, 
                conditions or terms of any insurance or annuity 
                contract issued by a national insurer;
                    (B) misrepresents the dividends to be received on 
                any insurance or annuity contract issued by a national 
                insurer;
                    (C) makes a false or misleading statement as to the 
                dividends previously paid on any insurance or annuity 
                contract issued by a national insurer;
                    (D) is misleading or is a misrepresentation as to 
                the financial condition of any national insurer, or as 
                to the reserves required for a national insurer;
                    (E) uses any name or title of any insurance or 
                annuity contract issued by a national insurer that 
                misrepresents the true nature of such insurance or 
                annuity contract;
                    (F) is a misrepresentation, including any 
                intentional misquote of a premium rate, for the purpose 
                of inducing or intending to induce the purchase, lapse, 
                forfeiture, exchange, conversion or surrender of any 
                insurance or annuity contract issued by a national 
                insurer;
                    (G) is a misrepresentation for the purpose of 
                effecting a pledge or assignment of or effecting a loan 
                against any insurance or annuity contract issued by a 
                national insurer; or
                    (H) misrepresents any insurance policy issued by a 
                national insurer as stock.
            (2) False, deceptive, or misleading advertising.--Making, 
        publishing, disseminating, circulating, or placing before the 
        public, directly or indirectly, in a newspaper, magazine or 
        other publication, or in the form of a notice, circular, 
        pamphlet, letter or poster, or over the Internet or any radio 
        or television station, or in any other way, any advertisement, 
        announcement, or statement that contains any assertion or 
        representation with respect to any national insurer or State 
        insurance producer selling products of a national insurer which 
        is untrue, deceptive, or misleading.
            (3) Defamation.--Making, publishing, disseminating, or 
        circulating, directly or indirectly, or aiding, abetting, or 
        encouraging the making, publishing, disseminating, or 
        circulating of any oral or written statement or any pamphlet, 
        circular, pamphlet, letter, or poster, which is false or 
        maliciously critical of the financial condition of a national 
        insurer or State insurance producer selling products of a 
        national insurer, and which is calculated to injure such 
        insurer or producer.
            (4) False statements.--Filing with the Director, or any 
        other public official, or making, publishing, disseminating, 
        circulating, or delivering to any person, or causing, directly 
or indirectly, to be made, published, disseminated, circulated, or 
delivered to any person, or placed before the public, any material 
statement as to the financial condition of a national insurer or State 
insurance producer selling products of a national insurer that is 
false.
            (5) Twisting.--Making, issuing, or causing to be made or 
        issued an oral or written statement that misrepresents or makes 
        incomplete comparisons about the terms, conditions or benefits 
        contained in an insurance or annuity contract issued by a 
        national insurer, including such contracts sold by State 
        insurance producers, for the purpose of inducing or attempting 
        to or intending to induce the policyholder to forfeit, 
        surrender, retain, exchange, or convert an insurance or annuity 
        contract or allow an insurance or annuity contract to lapse.
            (6) Other acts and practices.--Engaging in any other act or 
        practice that the Director determines, by regulation or order, 
        to be an unfair or deceptive act or practice in or affecting 
        the advertising, solicitation, sale, issuance, distribution, or 
        administration of insurance and other products of national 
        insurers, including such products sold by State insurance 
        producers.
    (c) Tie-In Transactions.--
            (1) Real or personal property transaction.--No person 
        engaged in the business of financing the purchase of real or 
        personal property, lending money on the security thereof, or 
        servicing a mortgage thereon, and none of its trustees, 
        directors, officers, agents, or other employees, shall require, 
        as a condition precedent to financing any such purchase or 
        making any such loan or renewing or extending any such loan or 
        mortgage or performing any other act in connection therewith, 
        that the person, firm or corporation for whom the transaction 
        is undertaken negotiate any policy of insurance or renewal 
        thereof covering such property through a particular insurance 
        company, agent, or broker.
            (2) Right to approve insurance company; non-
        discrimination.--This section shall not prevent the exercise of 
        any right to approve or disapprove the insurer selected to 
        underwrite the insurance, except that in exercising such right, 
        whether pursuant to this section or any other law, no person 
        engaged in any such financing, lending or servicing business 
        and none of its trustees, directors, officers, agents, or other 
        employees shall--
                    (A) discriminate against an insurance company which 
                issues a policy of insurance that is non-assessable as 
                to any designated mortgages or any secured creditor 
                designated as a loss payee because of the insurer's 
                type of organization; or
                    (B) refuse to accept an insurance policy because it 
                was not negotiated through a particular insurance 
                company, agent, or broker.
            (3) No fee to change insurance companies.--No person 
        engaged in any such financing, lending, or servicing business, 
        and none of its trustees, directors, officers, agents, or other 
        employees shall, in connection with compliance with a covenant 
        to insure, require that the person, firm, or corporation for 
        whom the purchase of the property is financed or to whom a 
        mortgage loan is made or who owns the property shall pay a fee 
        or other charges as a condition to accepting, during the 
        unexpired term of a policy then held, another policy of 
        insurance in substitution therefore.
            (4) Banking services.--A depository institution (as such 
        term is defined in section 3 of the Federal Deposit Insurance 
        Act (12 U.S.C. 1813)) engaged, directly or indirectly, in the 
        sale of insurance products shall comply with the anti-coercion, 
        disclosure, and other consumer protections provided for in 
        section 47 of the Federal Deposit Insurance Act (12 U.S.C. 
        1831x).

SEC. 373. REPLACEMENT OF LIFE INSURANCE POLICIES.

    (a) In General.--Any replacement of individual life insurance 
policies or individual annuity contracts of a national insurer by an 
agent or representative of such insurer shall conform to standards set 
forth in regulations promulgated by the Director.
    (b) Regulations.--The regulation required by subsection (a) shall
            (1) specify what constitutes replacement and the disclosure 
        and notification required in order to replace a policy or 
        contract;
            (2) require notification to the national insurer whose 
        policies or contracts are intended to be replaced;
            (3) require the timely exchange of illustrative and cost 
        information necessary for completion of a comparison of the 
        proposed and replaced coverage; and
            (4) provide for a period following issuance of the 
        replacement policies or contracts during which the policyholder 
        or contract owner may reinstate the replaced policies or 
        contracts.

SEC. 374. UNFAIR DISCRIMINATION, UNFAIR CLAIMS SETTLEMENT PRACTICES, 
              AND UNLAWFUL INDUCEMENTS.

    (a) Unfair Discrimination.--In underwriting insurance, no national 
insurer shall commit any of the following acts:
            (1) Rates, dividends and other benefits associated with 
        life insurance and annuities.--Engage in or allow any unfair 
        discrimination between individuals of the same class and equal 
        expectation of life in the rates charged for any life insurance 
        or annuity contract issued by such national insurer or in the 
        dividends or other benefits payable thereon, or in any other 
        terms and conditions of such insurance or annuity contract.
            (2) Rates and benefits associated with accident and health 
        insurance.--Engage in or allow any unfair discrimination 
        between individuals or risks of the same class and of 
        essentially the same hazard in the rates charged for any 
        accident or health insurance issued by a national insurer or in 
        the benefits payable thereunder, or in any of the  terms or 
conditions of such insurance, or in any other manner.
            (3) Geographic location of property or casualty risk; age 
        of property.--Engage in or allow unfair discrimination between 
        individuals or risks of the same class and essentially the same 
        hazard by refusing to insure, refusing to renew, canceling, or 
        limiting the amount of insurance coverage--
                    (A) on a property or casualty risk solely because 
                of the geographic location of the risk; or
                    (B) on the residential property risk, or the 
                personal property contained therein solely because of 
                the age of the residential property;
        except that it is not unfairly discriminatory if such action is 
        based on sound actuarial principles or related to actual or 
        reasonably anticipated experience.
            (4) Termination of agent or broker.--Refuse to appoint, or 
        terminate the appointment of, an agent or broker solely because 
        such agent or broker submitted applications for property or 
        casualty risks located in a particular geographical area.
            (5) Sex, martial status, race, religion or national 
        origin.--Refuse to insure, refuse to continue to insure, or 
        limit the amount of coverage available to, an individual 
        because of the sex, marital status, race, religion or national 
        origin of the individual; except that nothing in this paragraph 
        shall prohibit a national insurer from taking marital status 
        into account for the purpose of defining persons eligible for 
        dependent benefits.
            (6) Mental or physical impairment.--Terminate or modify 
        coverage under, or refuse to issue or refuse to renew, any 
        insurance, or charge a different rate for the same coverage, 
        solely because the applicant or insured or any employee of 
        either is mentally or physically impaired; except that--
                    (A) this paragraph shall not apply to accident and 
                health insurance sold by a national insurer that is 
                chartered to issue property and casualty insurance;
                    (B) this paragraph shall not preclude any such 
                action that is based on sound actuarial principles or 
                is related to actual or reasonable anticipated 
                experience, in which case the national insurer shall, 
                subject to the limitations under section 375(a), notify 
                the insured or applicant of the right to receive, or 
                designate a medical professional to receive, the 
                specific reason or reasons for such refusal, limitation 
                or differential; and
                    (C) this paragraph shall not be interpreted to 
                modify any other provision of law related to the 
                termination, modification, issuance, or renewal of, or 
                rates charged with respect to, any contract issued by a 
                national insurer.
            (7) Refusal by another insurer.--Refuse to insure solely 
        because another national insurer or State insurer has refused 
        to write an insurance or annuity contract, or has canceled or 
        has refused to renew an existing insurance or annuity contract 
        in which that person was the named insured. Nothing in this 
        paragraph shall prevent the termination of an excess insurance 
        contract on the account of the failure of the insured to 
        maintain any required underlying insurance.
    (b) Unfair Claims Settlement Practices.--No national insurer shall 
engage in any of the following unfair claims settlement practices if 
such practice is committed without just cause and with such frequency 
as to indicate a general practice:
            (1) Knowingly misrepresent material facts or provisions 
        that relate to the claim or coverage at issue.
            (2) Refuse to pay a claim for an arbitrary or capricious 
        reason based on all available information.
            (3) Attempt to settle a claim based on an application that 
        is altered without notice to, or the knowledge or consent of, 
        the insured.
            (4) Fail to include with each claim paid to an insured or 
        beneficiary a statement of the coverage under which payment is 
        being made.
            (5) Fail to settle a claim promptly whenever liability is 
        reasonably clear under one part of an insurance or annuity 
        contract, in order to influence settlements under other parts 
        of the contract.
            (6) Fail to provide promptly on request a reasonable 
        explanation of the basis for a denial of a claim.
            (7) Engage in any other practice that the Director 
        determines, pursuant to a rule or order, to be an unfair claims 
        settlement practice.
    (c) Unlawful Inducements.--
            (1) In general.--No national insurer, nor anyone acting on 
        behalf of a national insurer, nor any State insurance producer, 
        shall pay, allow, or give, or offer to pay, allow, or give, 
        directly or indirectly, as an inducement to any person to 
        insure, or shall give, sell, or purchase, or offer to give, 
        sell, or purchase, as such inducement, or interdependent with 
        any insurance policy or annuity contract, any stocks, bonds, or 
        other securities, or any dividends or profits accruing or to 
        accrue thereon, any rebate of premium, or any other valuable 
        consideration or inducement whatever having a nominal value in 
        excess of $20, not specified in such policy or contract.
            (2) Affiliates of corporate insureds.--Within the meaning 
        of paragraph (1), the sharing of a commission with the insured 
        shall be deemed to include any case in which an insurance agent 
        or broker which is an affiliate of any corporate insured, 
        received commissions for the negotiation or procurement of any 
        policy or contract of insurance for the insured.
            (3) Dividends permitted.--This subsection shall not 
        prohibit any national insurer from equitably distributing to 
        its policyholders, at any time during the term or at the 
        termination of the contract of insurance, dividends payable 
        from such insurer's surplus, nor prohibit any national insurer 
        or insurance agent from paying commissions to a licensed 
        insurance broker for negotiating a policy or contract of 
        insurance, nor prohibit any licensed insurance broker from 
        sharing or dividing a commission earned or received by him with 
        any other licensed insurance broker or brokers who shall have 
        aided him in respect to the insurance for the negotiation of 
        which the commission has been earned or paid.
            (4) Temporary contracts permitted.--This subsection shall 
        not prohibit the making of temporary contracts of insurance, 
        either by temporary binders or other memoranda, if the premium 
        applicable to the insurance shall be due and shall be paid for 
        the time during which the insurance is in force by virtue of 
        the temporary contract.

SEC. 375. HIV WRITTEN INFORMED CONSENT, DISCRIMINATION AGAINST ABUSE 
              VICTIMS, AND HOLOCAUST VICTIMS CLAIMS.

    (a) HIV Written Informed Consent.--
            (1) In general.--No national insurer or its designee shall 
        request or require an individual proposed for insurance 
        coverage to be the subject of an HIV related test without 
        receiving the written informed consent of such individual prior 
        to such testing and without providing general information about 
        AIDS and the transmission of HIV infection.
            (2) Written consent.--Written informed consent to an HIV 
        related test shall consist of a  written authorization that is 
dated and includes at least the following:
                    (A) A general description of the test.
                    (B) A statement of the purpose of the test.
                    (C) A statement that a positive test result is an 
                indication that the individual may develop AIDS and may 
                wish to consider further independent testing.
                    (D) A statement that the individual may identify on 
                the authorization form the person to whom the specific 
                test results may be disclosed in the event of an 
                adverse underwriting decision, which person may be the 
                individual or a physician or other designee at the 
                discretion of the individual proposed for insurance.
                    (E) The signature of the applicant or individual 
                proposed for insurance, or if such individual lacks 
                capacity to consent, the signature of such other person 
                authorized to consent for such individual.
            (3) Notice to individual.--In the event that a national 
        insurer's adverse underwriting decision is based in whole or in 
        part on the result of an HIV related test, the national insurer 
        shall notify the individual of the adverse underwriting 
        decision and ask the individual to elect in writing, unless the 
        individual has already done so, whether to have the specific 
        HIV related test results disclosed directly to the individual 
        or to such other person as the individual may designate.
            (4) Definitions.--For purposes of this subsection:
                    (A) Adverse underwriting decision.--The term 
                ``adverse underwriting decision'' means--
                            (i) a declination of insurance coverage as 
                        applied for; or
                            (ii) an offer to issue insurance coverage 
                        at a higher than standard rate.
                    (B) AIDS.--The term ``AIDS'' means acquired immune 
                deficiency syndrome, as may be defined from time to 
                time by the Centers for Disease Control of the United 
                States Public Health Service.
                    (C) HIV infection.--The term ``HIV infection'' 
                means infection with the human immunodeficiency virus 
                or any other related virus identified as a probable 
                causative agent of AIDS.
                    (D) HIV related test.--The term ``HIV related 
                test'' means any laboratory test or series of tests for 
                any virus, antibody, antigen, or etiologic agent 
                whatsoever thought to cause or to indicate the presence 
                of AIDS.
            (5) Authority of director.--Nothing in this subsection 
        shall be construed to create, impair, alter, limit, modify, 
        enlarge, abrogate, or restrict the specific authority of the 
        Director to allow or prohibit the use of HIV related tests or 
        the consideration of HIV related test results for insurance 
        coverage purposes.
    (b) Discrimination Based on Being a Victim of Abuse.--
            (1) In general.--It is unfairly discriminatory on the part 
        of a national insurer to--
                    (A) deny, refuse to issue, renew or reissue, 
                cancel, or otherwise terminate, restrict, or exclude 
                insurance coverage on or add a premium differential to 
                a policy for an applicant or insured on the basis of 
                the applicant's or insured's abuse status; or
                    (B) exclude, limit, or deny benefits on a life 
                insurance policy on the basis of an insured's abuse 
                status except as otherwise permitted or required by 
                law;
        except that the prohibitions contained in this paragraph shall 
        not preclude a national insurer from taking any of the actions 
        described in this paragraph so long as the national insurer 
        relies on underwriting criteria reasonably related to the 
        physical or mental condition of a person, their property or 
        claim history and the decision was based on sound underwriting 
        and actuarial principles reasonably related to actual or 
        anticipated loss experience. In such case the selection 
        criteria permitted must be based on such principles. The 
        national insurer shall notify the insured or applicant of its 
        specific reason or reasons for such decision.
            (2) Disclosure of confidential abuse information.--When a 
        national insurer, agency, or agent has confidential abuse 
        information in its possession, the disclosure or transfer of 
        such information by a person employed by or contracting with a 
        national insurer, agency, or agent for any purpose or to any 
        person is unfairly discriminatory, except--
                    (A) to the subject of abuse or an individual 
                specifically designated in writing by the subject of 
                abuse;
                    (B) to a health care provider for the direct 
                provision of health care services;
                    (C) to a licensed physician identified and 
                designated by the subject of abuse;
                    (D) when ordered by the Director or a court of 
                competent jurisdiction or otherwise required by law;
                    (E) when necessary for a valid business purpose to 
                transfer information that includes confidential abuse 
                information that cannot reasonably be segregated 
                without undue hardship; confidential abuse information 
                may be disclosed only if the recipient has executed a 
                written agreement to be bound by the prohibitions of 
                this subsection in all respects and to be subject to 
                the enforcement of this subsection by a court of 
                competent jurisdiction for the benefit of the applicant 
                or the insured, and only to--
                            (i) a reinsurer that seeks to indemnify or 
                        indemnifies all or any part of a policy 
                        covering a subject of abuse and that cannot 
                        underwrite or satisfy its obligations under the 
                        reinsurance agreement without that disclosure;
                            (ii) a party to a proposed or consummated 
                        sale, transfer, merger, or consolidation of all 
                        or part of the business of the national 
                        insurer, agency, or agent;
                            (iii) medical or claims personnel 
                        (including affiliates of the national insurer, 
                        agency, or agent) contracting with the national 
                        insurer, agency, or agent, only where necessary 
                        to process an application or perform the duties 
                        of such national insurer, agency, or agent 
                        under the policy or to protect the safety or 
                        privacy of a subject of abuse; or
                            (iv) with respect to address and telephone 
                        number, to entities with whom the national 
                        insurer, agency, or agent transacts business 
                        when the business cannot be transacted without 
                        the address and telephone number;
                    (F) to an attorney who needs the information to 
                represent the national insurer, agency, or agent 
                effectively, Provided, That the national insurer, 
                agency, or agent notifies the attorney of its 
                obligations under this subsection and requests that the 
                attorney exercise due diligence  to protect the 
confidential abuse information consistent with the attorney's 
obligation to represent the national insurer, agency, or agent;
                    (G) to the policyholder or assignee, in the course 
                of delivery of the policy, if the policy contains 
                information about abuse status; or
                    (H) to any other entities deemed appropriate by the 
                Director.
            (3) Requests prohibited.--It is unfairly discriminatory on 
        the part of a national insurer to request information about 
        acts of abuse or abuse status, or make use of that information, 
        however obtained.
            (4) Exceptions.--Nothing in this subsection shall--
                    (A) preclude a subject of abuse from obtaining his 
                or her insurance records;
                    (B) prohibit a national insurer, agency, or agent 
                from declining to issue a life insurance policy if the 
                applicant or prospective owner of the policy is or 
                would be designated as a beneficiary of the policy, and 
                if--
                            (i) the applicant or prospective owner of 
                        the policy lacks an insurable interest in the 
                        insured;
                            (ii) the applicant or prospective owner of 
                        the policy is known, on the basis of medical, 
                        police, or court records, to have committed an 
                        act of abuse against the proposed insured; or
                            (iii) the insurance or prospective insured 
                        is a subject of abuse, and that person, or a 
                        person who has assumed the care of that person 
                        if a minor or incapacitated, has objected to 
                        the issuance of the policy on the ground that 
                        the policy would be issued to or for the direct 
                        or indirect benefit of the abuser; or
                    (C) prohibit a national insurer, agency, or agent 
                from asking about a medical condition or from using 
                medical information to underwrite or to carry out its 
                duties under the policy, even if the medical 
                information is related to a medical condition that the 
                national insurer, agency, or agent knows or has reason 
                to know is abuse-related, to the extent otherwise 
                permitted under this subsection and other applicable 
                law.
            (5) Actions taken in good faith.--A national insurer, 
        agency, or agent shall not be held civilly or criminally liable 
        for the death of or injury to an insured resulting from any 
        action taken in a good faith effort to comply with the 
        requirements of this subsection; except that this paragraph 
        does not prevent an action to investigate or enforce a 
        violation of this subsection or to assert any other claims 
        authorized by law.
            (6) Definitions.--For purposes of this subsection:
                    (A) Abuse.--The term ``abuse'' means an act that--
                            (i) would constitute a crime in the State 
                        in which the insured or applicant resides, 
                        including acts constituting disorderly conduct, 
                        harassment, menacing, reckless endangerment, 
                        kidnapping, assault, attempted assault, or 
                        attempted murder;
                            (ii) has resulted (or multiple acts that 
                        have resulted) in actual physical or emotional 
                        injury or have created a substantial risk of 
                        physical or emotional harm to such person or 
                        such person's child; and
                            (iii) is alleged (or multiple acts that are 
                        alleged) to have been committed by a family or 
                        household member.
                    (B) Confidential abuse information.--The term 
                ``confidential abuse information'' means information 
                that clearly indicates that the insured or applicant is 
                a subject of abuse.
    (c) Holocaust Victims' Claims.--Any national insurer in receipt of 
a claim against it arising from an occurrence during the period between 
January 1, 1929, and December 31, 1945, from an individual that such 
national insurer knows, or reasonably should have known, is a Holocaust 
victim shall--
            (1) diligently and expeditiously investigate such claim;
            (2) allow claimants to provide alternative documentation 
        which does not meet the usual standards of proof required by an 
        insurer to substantiate the particular claim, subject to 
        standards established for such documentation as prescribed by 
        regulations promulgated by the Director; and
            (3) attempt to resolve, settle and, if appropriate, make 
        payments on claims irrespective of any statute of limitations 
        or notice requirements imposed by any law or such insurance 
        policy issued to or covering the life of a Holocaust victim, 
        provided that the claim is submitted to the insurer within 10 
        years from the effective date of this Act.

SEC. 376. MINIMUM NATIONAL STANDARDS.

    (a) Applicability to Insurers.--The provisions of this subtitle and 
any regulations implementing this subtitle shall apply to each 
insurance company (other than a national insurer) doing business in the 
United States to the same extent as a national insurer, and shall be 
enforceable against each such company by the appropriate State 
insurance regulator of the State that would otherwise have jurisdiction 
over the transaction or activity that is alleged to constitute a 
violation of this subtitle. Each such insurance company shall be 
subject to the same penalties and sanctions that the Director may 
impose against a national insurer for violations of this subtitle.
    (b) Enforcement of More Protective State Laws.--Nothing in this 
section shall be construed to diminish the authority of any State 
insurance regulator to enforce a State statute, order, or regulation 
that provides greater protection to the policyholder, applicant, or 
claimant alleging a violation of this subtitle.

   Subtitle G--Acquisitions of Control, Mergers, Bulk Transfers, and 
                             Domestication

SEC. 381. ACQUISITION OF CONTROL.

    (a) Director Approval Required.--
            (1) In general.--No person other than the issuer shall make 
        a tender offer for or a request or invitation for tenders of, 
        or enter into any agreement to exchange securities for, or 
        acquire, in the open market or otherwise, any voting security 
        of a national insurer if, after the consummation thereof, such 
        person would, directly or indirectly (or by conversion or by 
        exercise of any right to acquire) be in control of the national 
        insurer, and no person shall enter into an agreement to merge 
        with or otherwise to acquire control of a national insurer or 
        any person controlling a national insurer unless, at the time 
        the offer, request or invitation is made or the agreement is 
        entered into, or prior to the acquisition of the securities if 
        no offer or agreement is involved--
                    (A) such person has filed with the Director and has 
                sent to the national insurer, a statement, the form and 
                content of which is prescribed in accordance with 
                subsection (b); and
                    (B) the offer, request, invitation, agreement, or 
                acquisition has been approved by the Director.
            (2) Conditional offers.--Nothing in paragraph (1) shall 
        prohibit a person from making an offer, request, or invitation 
        or entering into an agreement to acquire control of a national 
        insurer, the completion of which is conditioned upon obtaining 
        the approval of the Director as required in paragraph (1).
            (3) Definitions.--For purposes of this section:
                    (A) National insurer.--The term ``national 
                insurer'' includes any person controlling a national 
                insurer.
                    (B) Person.--The term ``person'' does not include 
                any securities broker holding, in the usual and 
                customary broker's function, less than 20 percent of 
                the voting securities of a national insurer or of any 
                person which controls a national insurer.
    (b) Content of Statement.--The Director shall, by regulation, 
prescribe the form and content of the statement to be filed pursuant to 
subsection (a).
    (c) Approval by Director.--The Director shall approve any merger or 
other acquisition of control referred to in subsection (a) unless the 
Director finds that--
            (1) after the acquisition of control, the national insurer 
        referred to in subsection (a) would not be able to satisfy the 
        requirements for the issuance of a Federal license to write the 
        line or lines of insurance for which it is presently licensed;
            (2) the financial condition of any acquiring person is such 
        as might jeopardize the financial stability of the national 
        insurer, or be hazardous to policyholders of the national 
        insurer;
            (3) the plans or proposals which the acquiring person has 
        to liquidate the national insurer, sell its assets, or 
        consolidate or merge it with any person, or to make any other 
        material change in its business or corporate structure or 
        management, are unfair and unreasonable to policyholders of the 
        national insurer and not in the public interest;
            (4) the competence, experience, and integrity of those 
        persons who would control the operation of the national insurer 
        are such that it would not be in the interest of policyholders 
        of the national insurer and of the public to permit the merger 
        or other acquisition of control; or
            (5) the acquisition is likely to be hazardous to the 
        insurance-buying public.
    (d) Disclaimer of Control.--The Director may determine upon 
application that any person does not or will not upon the taking of 
some proposed action control another person. Such determination shall 
be made within 30 days of the filing of the application or such further 
period as the Director may prescribe. The filing of the application in 
good faith by any person shall relieve the applicant from any 
obligation or liability imposed by this section with respect to the 
subject of the application until the Director has acted upon the 
application. The Director may prospectively revoke or modify the 
Director's determination, after notice and opportunity to be heard, 
whenever in the Director's judgment revocation or modification is 
consistent with this section.
    (e) Hearing Permitted.--The Director may, in the sole discretion of 
the Director, hold a hearing on a merger or other acquisition of 
control that is the subject to this section and for which a statement 
has been filed under subsection (a)(1)(A). The hearing shall be subject 
to the procedures contained in section 205(g), except that the hearing 
shall be held in such location as the Director may, in the sole 
discretion of the Director, specify.
    (f) Exemptions.--The provisions of this section shall not apply 
to--
            (1) any offer, request, invitation, agreement, or 
        acquisition that the Director by order shall exempt as not 
        having been made or entered into for the purpose and not having 
        the effect of changing or influencing the control of a national 
        insurer, or as otherwise not comprehended within the purposes 
        of this section; and
            (2) a merger, consolidation, or acquisition subject to 
        section 382.
    (g) Voting of Securities.--
            (1) In general.--No security which is the subject of any 
        agreement or arrangement regarding acquisition, or which is 
        acquired or to be acquired, in contravention of the provisions 
        of this section or of any regulation or order issued by the 
        Director hereunder may be voted at any shareholder's meeting, 
        or may be counted for quorum purposes, and any action of 
        shareholders requiring the affirmative vote of a percentage of 
        shares may be taken as though the securities were not issued 
        and outstanding; but no action taken at any such meeting shall 
        be invalidated by the voting of the securities,  unless the 
action would affect control of the national insurer or unless ordered 
by a court.
            (2) Injunction.--If a national insurer or the Director has 
        reason to believe that any security of the national insurer has 
        been or is about to be acquired in contravention of the 
        provisions of this section or of any regulation or order issued 
        by the Director hereunder, the national insurer or the Director 
        may apply to the United States district court for the judicial 
        district in which the main office of the national insurer is 
        located or the United States District Court for the District of 
        Columbia to enjoin any offer, request, invitation, agreement, 
        or acquisition made in contravention of this section or any 
        regulation or order issued by the Director thereunder to enjoin 
        the voting of any security so acquired, to void any vote of the 
        security already cast at any meeting of shareholders and for 
        such other equitable relief as the nature of the case and the 
        interest of the national insurer's policyholders, creditors, 
        and shareholders or the public may require.
    (h) Sequestration of Voting Securities.--
            (1) In general.--In any case where a person has acquired or 
        is proposing to acquire any voting securities in violation of 
        this section or any regulation or order issued by the Director 
        hereunder, the United States district court for the judicial 
        district in which the main office of the national insurer is 
        located or the United States District Court for the District of 
        Columbia may, on such notice as the court deems appropriate, 
        upon the application of the national insurer or the Director, 
        seize or sequester any voting securities of the national 
        insurer owned directly or indirectly by the person, and issue 
        such order as may be appropriate to effectuate the provisions 
        of this section.
            (2) Situs of ownership.--Notwithstanding any other 
        provisions of law, for the purposes of this section, the situs 
        of the ownership of the securities of national insurers shall 
        be deemed to be the State in which the main office of the 
        national insurer is located.
    (i) Conflict With Other Federal Laws.--This section shall be 
construed and interpreted so as not to conflict with or supersede the 
provisions of any other Federal law or regulation governing the 
regulation of holding companies, including financial holding companies 
as created under section 2 of the Bank Holding Company of 1956.
    (j) No Delegation Permitted.--The Director may not delegate to any 
insurance self-regulatory organization any authority conferred under 
this section with respect to any merger or other acquisition of control 
of a national insurer.

SEC. 382. MERGERS, CONSOLIDATIONS, AND ACQUISITIONS.

    (a) National Insurer Resulting.--
            (1) In general.--A national insurer may, with the approval 
        of the Director, merge or consolidate into, or acquire all or 
        substantially all the assets of and/or assume all or 
        substantially all the liabilities of, another national insurer 
        or a State insurer in a transaction in which a national insurer 
        is the resulting insurer or the acquiring and/or assuming 
        insurer and may do so without regard to whether the insurers 
        involved in the transaction are stock form, mutual form, or 
        fraternal form.
            (2) Merger, consolidation, and acquisition procedures.--The 
        Director may, by regulation, provide for--
                    (A) the merger or consolidation of a national 
                insurer with another national insurer or a State 
                insurer in a transaction in which a national insurer is 
                the resulting insurer; and
                    (B) the acquisition and/or assumption by a national 
                insurer of all or substantially all the assets and/or 
                all or substantially all the liabilities of another 
                national insurer or a State insurer in a transaction in 
                which the national insurer is the acquiring and/or 
                assuming insurer.
        Any such merger or consolidation, or acquisition and/or 
        assumption, shall be carried out solely in accordance with such 
        regulations as the Director may prescribe; except that in the 
        case of a transaction involving the demutualization of a State 
        insurer, State laws, regulations, and orders shall govern the 
        demutualization process.
            (3) Effect of merger or consolidation.--Upon the merger or 
        consolidation of a national insurer with another national 
        insurer or a State insurer in accordance with this section and 
        regulations issued by the Director hereunder--
                    (A) the corporate existence of each of the merging 
                or consolidating insurers shall be merged or 
                consolidated into the resulting insurer, and the 
                resulting insurer shall be deemed to be the same 
                corporation as each insurer participating in the merger 
                or consolidation; and
                    (B) the resulting insurer shall, by operation of 
                law and without further action, hold and be subject to 
                all rights, privileges, liabilities, property 
                interests, and other interests and obligations that 
                each insurer participating in the merger or 
                consolidation held or was subject to immediately prior 
                to the merger or consolidation, except that the 
                resulting insurer shall not hold, following the merger 
                or consolidation, any State license to underwrite and 
                sell insurance that was held by a State insurer 
                participating in the merger or consolidation and the 
                resulting insurer shall obtain, in accordance with 
                section 303 and the regulations issued by the Director 
                thereunder, a Federal license for all lines of 
                insurance that it underwrites and sells (except in the 
                case of those lines of insurance for which a national 
                insurer participating in the merger or consolidation 
                held a Federal license immediately prior to the merger 
                or consolidation).
            (4) Special authority.--The Director may, in the Director's 
        discretion and subject to such conditions as the Director may 
        prescribe, permit a national insurer resulting from a merger or 
        consolidation under this section to retain upon such merger or 
        consolidation such assets, liabilities, and powers and 
        authorities of any other national insurer or any State insurer 
        participating in the merger or consolidation that do not 
        conform to the legal requirements applicable to national 
        insurers as the Director deems appropriate.
    (b) State Insurer Resulting.--Subject to such notification 
procedures as the Director may prescribe by regulation, a State insurer 
may merge or consolidate with, or acquire assets of and/or assume 
liabilities of, a national insurer in a transaction in which a State 
insurer is the resulting insurer, as permitted by the relevant 
provisions of applicable State law. Nothing in this subsection or in a 
transaction pursuant to this subsection shall operate to abrogate any 
rights, privileges, liabilities, property interests, or other interests 
or obligations that the national insurer held or was subject to 
immediately prior to the transaction.
    (c) Effect of Assumption of Liabilities.--If liabilities of a 
national insurer are assumed by another national insurer or a State 
insurer in accordance with the provisions of this Act, such national 
insurer shall be released from all liabilities so assumed upon their 
assumption by the other national insurer or a State insurer.
    (d) No Delegation Permitted.--The Director may not delegate to any 
insurance self-regulatory organization any authority conferred under 
this section with respect to any merger, consolidation, acquisition of 
assets, or assumption of liabilities involving a national insurer.
    (e) Coordination.--This section shall not apply to any bulk 
transfer (as defined in section 383(a)) that is subject to approval of 
the Director in accordance with subsection (b) of such section.

SEC. 383. BULK TRANSFERS.

    (a) Definitions.--For purposes of this section:
            (1) Assuming insurer.--The term ``assuming insurer'' means 
        the insurer that purchases or otherwise acquires existing 
        insurance policies from another insurer by bulk transfer.
            (2) Bulk transfer.--The term ``bulk transfer'' means the 
        transfer by an insurer to another insurer of existing insurance 
        policies constituting all or substantially all of one or more 
        of its lines of business. Such term does not include--
                    (A) any sale in which the transferring insurer 
                retains direct or indirect control of the assets 
                supporting the transferred insurance policies;
                    (B) any transaction effected by an agreement under 
                which the transferring insurer continues to remain 
                directly liable to the policyholders under the 
                insurance policies;
                    (C) the substitution of one insurer for another 
                upon the expiration of insurance coverage pursuant to 
                statutory or contractual requirements and the issuance 
                of a new policy of insurance by that insurer;
                    (D) the transfer of policies of insurance pursuant 
                to merger or consolidation of 2 or more insurers to the 
                extent that those transactions are regulated by 
                statute;
                    (E) any transaction effected by an insurer subject 
                to a judicial order of receivership, liquidation, or 
                rehabilitation;
                    (F) any transaction to which the National Insurance 
                Guaranty Corporation or a State insurance guaranty 
                association is a party; or
                    (G) any transfer of liabilities from one insurer to 
                another under a single group insurance policy upon the 
                request of the group policyholder.
            (3) Permitted national insurer.--The term ``permitted 
        national insurer'' means--
                    (A) a State insurer that is converting to a 
                national insurer under section 306; or
                    (B) a national insurer that is being newly 
                chartered under section 301 and licensed under section 
                303.
            (4) Transferred insurance policies.--The term ``transferred 
        insurance policies'' means the insurance policies that are 
        subject to the bulk transfer.
            (5) Transferring insurer.--The term ``transferring 
        insurer'' means the insurer in privity of contract with the 
        policyholders under the existing insurance policies that are 
        subject to the bulk transfer.
    (b) Bulk Transfers Authorized.--The following bulk transfers are 
authorized:
            (1) A State insurer as the transferring insurer and a 
        permitted national insurer as the assuming insurer.
            (2) A permitted national insurer as the transferring 
        insurer and a State insurer as the assuming insurer.
            (3) A national insurer as the transferring insurer and a 
        national insurer as the assuming insurer.
            (4) A State insurer as the transferring insurer and a 
        national insurer that is not a permitted national insurer as 
        the assuming insurer.
            (5) A national insurer that is not a permitted national 
        insurer as the transferring insurer and a State insurer as the 
        assuming insurer.
    (c) Director Approval.--
            (1) Requirement.--A national insurer, before effecting a 
        bulk transfer as either the transferring insurer or the 
        assuming insurer as authorized under subsection (b)(1), (b)(2), 
        (b)(3), or (b)(5) of this section, shall obtain the prior 
        approval of the Director in accordance with such regulations as 
        the Director may prescribe.
            (2) Standard.--The Director shall approve a bulk transfer 
        under paragraph (1), after notice and a hearing, unless the 
        Director finds that the bulk transfer is likely to be hazardous 
        to policyholders of transferred insurance policies, 
        policyholders of the transferring insurer, or policyholders of 
        the assuming insurer.
    (d) Policyholder Consent.--
            (1) Transfer without consent.--Notwithstanding any other 
        provision of law, a national insurer may, following the 
        Director's approval required by subsection (c), effect a bulk 
        transfer as either the transferring insurer or the assuming 
        insurer as authorized under subsection (b)(1) or (b)(2) without 
        obtaining policyholder consent to the bulk transfer.
            (2) Consent required.--Notwithstanding any other provision 
        of law, a national insurer may, following the Director's 
        approval required by subsection (c), effect a bulk transfer as 
        either the transferring insurer or the assuming insurer as 
        authorized under subsection (b)(3) by complying with 
        requirements the Director shall prescribe by regulation 
        specifying whether policyholder consent to such a bulk transfer 
        is required and, if policyholder consent is required, the form 
        in which such consent is required to be given.
            (3) Authority to require consent.--In addition to any 
        policyholder consent required by any other applicable provision 
        of law, the Director may by regulation prescribe whether 
        policyholder consent is required for a bulk transfer authorized 
        under subsection (b)(5) and, if policyholder consent is 
        required, the form in which such consent is required to be 
        given.
    (e) Release From Liability.--Upon the effectiveness of a bulk 
transfer under this section, the transferring insurer shall be released 
from its obligations under the transferred insurance policies.
    (f) State Law.--
            (1) Consent requirements prohibited.--Except as provided in 
        paragraph (2), no State may, by law, regulation, 
        interpretation, or otherwise require a national insurer, a 
        permitted national insurer, or a State insurer to obtain 
        policyholder consent to a bulk transfer or to submit the bulk 
        transfer to State review or action (including approval and 
        nondisapproval) or prevent or significantly interfere with a 
        bulk transfer effected pursuant to this section.
            (2) Permissible state action.--Paragraph (1) does not 
        prevent any State from--
                    (A) collecting, reviewing, and taking action 
                (including approval or disapproval) on applications and 
                other documents or reports concerning a proposed bulk 
                transfer permitted under--
                            (i) subsection (b)(2), (b)(4), or (b)(5) to 
                        which a State insurer (other than a permitted 
                        national insurer) domiciled in that State is a 
                        party; or
                            (ii) subsection (b)(4) or (b)(5) to which a 
                        State insurer (other than a permitted national 
                        insurer), other than a State insurer domiciled 
                        in that State, is a party,
                if the review or action meets the standards set forth 
                in paragraph (2); or
                    (B) requiring policyholder consent of a proposed 
                bulk transfer permitted under subsection (b)(4) or 
                (b)(5).
            (3) Standards.--The standards applicable to paragraph 
        (1)(A) are that the review or action--
                    (A) is based on standards no more onerous than 
                those imposed by the Director and occurs within a 
                reasonable time frame that advances the purposes of 
                this section;
                    (B) is made in close consultation and cooperation 
                with the Director and is without bias or discrimination 
                toward either the transferring insurer or the assuming 
                insurer; and
                    (C) serves a legitimate State interest and does not 
                frustrate the proposed bulk transfer.
            (4) Failure to meet standards.--If the Director finds that 
        any State review or action under paragraph (2)(A) fails to meet 
        any of the standards set forth in paragraph (3)(A), (3)(B), or 
        (3)(C), the Director may give notice to the applicable State of 
        the reasons for such failure whereupon such State review or 
        action shall be deemed to fail to meet the standards of 
        paragraph (3).
    (g) Differential Treatment Prohibited.--No State may, by law, 
regulation, interpretation, or otherwise, treat a national insurer, a 
permitted national insurer, or a State insurer entering into a bulk 
transfer agreement with a national insurer, a permitted national 
insurer, or a State insurer, or any affiliate or subsidiary thereof, 
differently than any other insurer operating in that State.
    (h) Delegation Prohibited.--The Director may not delegate to any 
insurance self-regulatory organization any authority conferred under 
this section with respect to any bulk transfer involving a national 
insurer.

SEC. 384. DOMESTICATION OF U.S. BRANCH OF A NON-U.S. INSURER.

    (a) Domestication Permitted.--Notwithstanding any other provision 
of law, upon compliance with the provisions of this section and the 
Directors regulations hereunder, any non-U.S. insurer having its U.S. 
branch entered through a State or established pursuant to section 302 
and owning beneficially, directly or indirectly, all outstanding shares 
of a national insurer, may, subject to prior written approval of the 
Director, domesticate its U.S. branch by agreeing in writing with such 
national insurer to the acquisition of the business and assets, and the 
assumption of all liabilities, of the U.S. branch, by the national 
insurer for no consideration except such assumption.
    (b) Approval by Director.--If satisfied that the domestication is 
in accordance with the provisions of this section and that the 
interests of policyholders and creditors of the U.S. branch are not 
materially adversely affected, the Director may approve such 
domestication and authorize its consummation in compliance with the 
provisions of subsection (c).
    (c) Consummation of Domestication Agreement; Release of Deposits; 
Withdrawal of Trusteed Assets.--
            (1) Consummation of domestication agreement.--Upon the 
        filing with the Director of a certified copy of the instrument 
        of transfer and assumption--
                    (A) the domestication of the U.S. branch shall be 
                effective;
                    (B) all rights, franchises and interests of such 
                U.S. branch in and to every species of property, real, 
                personal and mixed, and things in action thereunto 
                belonging, shall be deemed transferred to and vested in 
                the acquiring national insurer and it shall be deemed 
                to have assumed all liabilities of such U.S. branch; 
                and
                    (C) all deposits of the U.S. branch held by State 
                officers or other State regulatory agencies pursuant to 
                State laws shall be released, and the non-U.S. insurer 
                and the U.S. branch shall be released from all 
                liabilities so assumed.
            (2) Release of deposits.--Contemporaneously with the 
        consummation of the domestication of a U.S. branch established 
        under this section, the Director shall transfer to the account 
        of the acquiring national insurer the securities deposited by 
        such U.S. branch in compliance with the provisions of this Act, 
        and the Director shall consent that the trustee of the trusteed 
        assets deposited by such U.S. branch in compliance with the 
        provisions of this Act shall withdraw from the trust and 
        transfer and deliver to the acquiring national insurer all 
        assets held by such trustee.
            (3) Withdrawal of trusteed assets.--Contemporaneously with 
        the consummation of the domestication of a U.S. branch 
        established under State law, the trustee of any trusteed assets 
        deposited by such U.S. branch in compliance with applicable 
        State law shall, with the consent of the Director, withdraw the 
        trusteed assets from the trust and transfer and deliver to the 
        acquiring national insurer all assets held by such trustee. No 
        State may, by statute, regulation, order, interpretation, or 
        otherwise prevent, significantly interfere with, or have the 
        authority to review, approve, or disapprove the withdrawal of 
        trusteed assets or other deposits of a U.S. branch established 
        under State law that is domesticating pursuant to this section, 
        Provided, That such withdrawal is being made contemporaneously 
        with or subsequent to the consummation of a domestication of 
        the U.S. branch pursuant to this section.
    (d) Prohibition of Delegation.--The Director may not delegate to 
any insurance self-regulatory organization any authority under this 
section with respect to the domestication of a U.S. branch of a non-
U.S. insurer.

                      Subtitle H--Health Insurance

SEC. 391. RECOMMENDATIONS FOR HEALTH INSURANCE.

    Not later than 3 years after the date of the enactment of this Act, 
the Director shall submit a report to the Congress--
            (1) making recommendations on whether national insurers 
        should be authorized to underwrite health insurance; and
            (2) including proposed legislation to authorize such 
        underwriting.

                        TITLE IV--STATE TAXATION

SEC. 401. STATE TAXATION.

    (a) In General.--Except as provided in subsection (b), a national 
insurer shall be subject to all taxes, including insurance retaliatory 
taxes, imposed under the authority of any State legislation to the same 
extent and in the same manner as an insurer chartered in the State 
where the national insurer is considered domiciled pursuant to 
subsection (c).
    (b) Exception.--No State shall have power to impose its insurance 
retaliatory tax on any national insurer unless, for any tax purpose for 
which State of domicile is relevant, every national insurer is treated 
by such State as domiciled in the State designated by each national 
insurer in accordance with subsection (c) and unless the insurance 
retaliatory tax is imposed on insurers chartered by the State to the 
same extent and in the same manner.
    (c) Designation of Domicile.--For purposes of this section, a 
national insurer may designate one of the following States as its State 
of domicile, by filing such designation in writing with the Director:
            (1) The State in which is located the national insurer's 
        principal place of business in the United States.
            (2) In the case of an insurer that has converted from being 
        a State insurer to being a national insurer under this Act, the 
        State in which such insurer was domiciled immediately prior to 
        such conversion.
If a national insurer makes no designation of a State of domicile 
pursuant to this subsection, it shall be deemed to have designated as 
its State of domicile that State in which is located its principal 
place of business in the United States.
    (d) Change in Domicile.--With the approval of the Director, a 
national insurer may change its State of domicile to any other State 
meeting the requirements of subsection (c).
    (e) Status of National Insurer.--For purposes of State taxation, a 
national insurer shall not be considered to be a department, agency, or 
instrumentality of the Federal Government, nor, except as provided in 
this section, shall a national insurer be exempt from any State tax or 
subject to a lesser burden of any State tax, solely by reason of its 
status as a national insurer under this Act.

              TITLE V--TREATMENT OF MCCARRAN-FERGUSON ACT

SEC. 501. REPEAL OF ANTITRUST EXEMPTION FOR BUSINESS OF INSURANCE.

    The antitrust laws of the United States shall apply to national 
insurers, State insurers, and all reinsurers doing business in the 
United States (regardless of the domicile of such reinsurers), to the 
same extent as other business are subject to such laws, except that the 
antitrust laws shall not apply to--
            (1) the sharing of historical loss data among insurers, 
        Provided, That this paragraph shall not be construed to permit 
        the sharing of trending data; and
            (2) the activities of insurers required to participate in 
        State mandatory residual market mechanisms designed to make 
        insurance available to those unable to obtain insurance in the 
        voluntary market and to the activities of insurers required to 
        participate in a worker's compensation administration 
        mechanism.

                      TITLE VI--HOLDING COMPANIES

SEC. 601. DEFINITIONS.

    For purposes of this title:
            (1) Affiliate.--The term ``affiliate'' means any person 
        that controls, is controlled by, or is under common control 
        with another person.
            (2) Extraordinary dividend or distribution.--Except as may 
        otherwise be specified by the Director by regulation, the term 
        ``extraordinary dividend or distribution'' means a dividend or 
        distribution of cash or other property by a national insurer, 
        whose fair market value together with that of other dividends 
        or distributions made within the preceding 12 months exceeds 
        the greater of--
                    (A) 10 percent of the national insurer's surplus as 
                regards policyholders as of the next preceding December 
                31; or
                    (B) the net income of the national insurer for the 
                12-month period ending the December 31 next preceding, 
                but does not include pro rata distributions of any 
                class of the national insurer's own securities.
            (3) Insurance holding company system.--The term ``insurance 
        holding company system'' means two or more affiliated persons, 
        one or more of which is a national insurer.
            (4) Subsidiary.--The term ``subsidiary'' means, with 
        respect to a person, an affiliate controlled, directly or 
        indirectly, by such person.

SEC. 602. REGISTRATION.

    (a) Registration.--Each national insurer that is a member of an 
insurance holding company system shall register with the Director.
    (b) Registration Statement.--The Director shall, by regulation, 
prescribe--
            (1) the form and content of the registration statement to 
        be filed pursuant to subsection (a); and
            (2) the time by which the registration statement is 
        required to be filed with the Director.
    (c) Information of National Insurers.--Any person within an 
insurance holding company system subject to registration under 
subsection (a) shall be required to provide complete and accurate 
information to a national insurer, in any case in which the information 
is reasonably necessary to enable the insurer to comply with the 
provisions of this title.
    (d) Termination of Registration.--The Director shall terminate the 
registration of any national insurer that demonstrates that it no 
longer is a member of an insurance holding company system.
    (e) Exemptions.--The provisions of this section shall not apply to 
any national insurer, information, or transaction if and to the extent 
that the Director by regulation or order provides for such 
inapplicability.
    (f) Disclaimer.--Any person may file with the Director a disclaimer 
of affiliation with any national insurer or a disclaimer may be filed 
by the national insurer or any member of an insurance holding company 
system. The disclaimer shall fully disclose all material relationships 
and bases for affiliation between the person and the national insurer 
as well as the basis for disclaiming the affiliation. After a 
disclaimer has been filed, the national insurer shall be relieved of 
any duty to register or report under this section which may arise out 
of the national insurer's relationship with the person unless and until 
the Director disallows the disclaimer. The Director shall disallow a 
disclaimer only after furnishing all parties in interest with notice 
and opportunity to be heard and after making specific findings of fact 
to support the disallowance.

SEC. 603. STANDARDS AND MANAGEMENT OF NATIONAL INSURER WITHIN AN 
              INSURANCE HOLDING COMPANY SYSTEM.

    (a) Transactions Within Insurance Holding Company System.--
            (1) Standards.--Transactions within an insurance holding 
        company system to which a national insurer subject to 
        registration is a party shall be subject to the following 
        standards:
                    (A) The terms shall be fair, reasonable and at 
                least as favorable to the national insurer as those 
                that would be offered to, or would apply to, a non-
                affiliate.
                    (B) Charges or fees for services performed shall be 
                reasonable and at least as favorable to the national 
                insurer as those that would be offered to, or would 
                apply to, a non-affiliate.
                    (C) Expenses incurred and payment received shall be 
                allocated to the national insurer in conformity with 
                customary insurance accounting practices consistently 
                applied.
                    (D) The books, accounts and records of each party 
                to all such transactions shall be so maintained as to 
                clearly and accurately disclose the nature and details 
                of the transactions, including such accounting 
                information as is necessary to support the 
                reasonableness of the charges or fees to the parties.
                    (E) The national insurer's surplus as regards 
                policyholders following any dividends or distributions 
to shareholders shall be reasonable in relation to the national 
insurer's outstanding liabilities and adequate to meet its financial 
needs.
            (2) Authority to require approval in advance of 
        transactions.--The Director may, by regulation, prescribe 
        certain transactions involving a national insurer and any 
        person in its insurance holding company system that may not be 
        entered into unless the national insurer has notified the 
        Director in writing of its intention to enter into the 
        transaction and the Director either has approved or not 
        disapproved the transaction within a specified time period.
            (3) Review by director.--The Director, in reviewing any 
        transactions for which notice is required pursuant to paragraph 
        (2), shall consider whether the transactions comply with the 
        standards set forth in paragraph (1) and whether they may 
        adversely affect the interests of policyholders.
    (b) Extraordinary Dividends.--
            (1) Notice of declaration.--No national insurer that is a 
        member of an insurance holding company system shall pay any 
        extraordinary dividend or distribution to its shareholders 
        until 30 days after the Director has received notice of the 
        declaration in a form prescribed by the Director.
            (2) Conditional declaration.--A national insurer that is a 
        member of an insurance holding company system may declare an 
        extraordinary dividend or distribution which is conditional 
        upon the Director's approval, and the declaration shall confer 
        no rights upon shareholders until--
                    (A) the Director has approved the payment of the 
                dividend or distribution; or
                    (B) the Director has not disapproved payment within 
                the 30-day period referred to in paragraph (1).

SEC. 604. CONFLICT WITH OTHER FEDERAL LAWS.

    This title shall be construed and interpreted so as not to conflict 
with or supersede the provisions of any other Federal law or regulation 
governing the regulation of holding companies, including financial 
holding companies as created under Section 2 of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1841).

                TITLE VII--RELATIONSHIPS WITH STATE LAW

SEC. 701. DEFINITIONS.

    For purposes of this title:
            (1) Covered party.--The term ``covered party'' means a 
        national insurer, including any officer, 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, including issuance or revocation of a license to conduct the 
business of insurance, regulation of solvency and financial condition, 
mergers and acquisitions, any policy form and endorsement, marketing 
and sales practice, underwriting, damage appraisal and claims 
adjustment, any claims handling and settlement practice, and unfair 
insurance trade practices and market conduct activity (including any 
requirement 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 preempted by section 704 
may not discriminate against a covered 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 subsection 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 such laws shall be subject to the antidiscrimination 
standard set forth in section 705:
            (1) Residual market insurance programs.--Any State law that 
        requires participation in an assigned risk plan, mandatory 
        joint underwriting association, or any other mandatory residual 
        market mechanism designed to make insurance available to those 
        unable to obtain it in the voluntary 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 Director may 
        review any State law regulating any activity described in this 
        subsection and may preempt such law if the Director determines 
        it to be inconsistent with any provision or purpose of this 
        Act.
            (2) Taxes.--Any State law that imposes liability for State 
        and local taxes and assessments on insurers, 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 incorporation, organization, 
        corporate governance, voting rights, and related matters.
            (4) Reparation requirements.--Any State law that prescribes 
        the requirements of the reparations that every insurer must 
        provide if it underwrites and sells policies of a particular 
        type in a State.
            (5) Advisory organizations.--Any State law that mandates 
        the participation of insurers in an advisory or statistical 
        organization: Provided, That such participation does not 
        require a national insurer to use any particular rate, rating 
        element, price, or form.
            (6) Workers' compensation.--Any State law that regulates 
        participation in a workers' compensation administration 
        mechanism, provided such participation 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.
            (9) Insurance producer licensing.--Any State law that 
        regulates the licensing of insurance producers.

SEC. 707. SALES ACTIVITIES BY STATE-LICENSED INSURANCE 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 insurer;
            (2) impose any condition on a State-licensed producer that 
        significantly interferes with the ability of selling, 
        soliciting, or negotiating an insurance policy 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.

         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 following new section:
``Sec.  1369. National insurer as party
    ``The district courts shall have original jurisdiction of any civil 
action--
            ``(1) commenced by the United States, or by direction of 
        any officers thereof, against any national insurer;
            ``(2) to wind up the affairs of a national insurer; and
            ``(3) to enjoin the Director of the Office of National 
        Insurers of the Department of the Treasury, or any receiver 
        acting under the direction of the Director, as provided in the 
        Insurance Industry Modernization 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.''.

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:
``Sec.  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 relating 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, 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 Industry Modernization and Consumer 
Protection Act)'' after ``financial institutions''.

SEC. 805. AMENDMENTS TO INTERNAL REVENUE CODE OF 1986.

    (a) 5-Year Moratorium on Federal Tax Law Changes Applicable Solely 
to National Insurers.--For a period of 5 calendar years beginning on 
January 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 
        continued to prepare and file an annual statement in accordance 
        with the requirements of the NAIC and of the State in which 
        such insurer was domiciled immediately prior to such 
        conversion; and
            (2) all parties to any contract, including any insurance, 
        annuity, health, and other contracts, written by a national 
        insurer, shall be treated for all purposes of the Internal 
        Revenue Code, and for purposes of all Treasury regulations 
        promulgated thereunder, as if such contract were an insurance, 
        annuity, health, or other contract under the applicable law of 
        the State in which such national insurer was domiciled 
        immediately prior to such conversion.
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 national 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 section, 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 Director of the Office of 
        National Insurers of the Department of the Treasury'' after 
        ``National Association of Insurance Commissioners''.
            (2) Section 807(d)(2)(C) is amended by inserting ``or, in 
        the case of a national insurer, such standard tables for 
        mortality and morbidity prescribed by the Director of the 
        Office of National Insurers of the Department of the 
        Treasury,'' after ``mortality and morbidity''.
            (3) Section 807(d)(3)(A) is amended by inserting ``or, in 
        the case of a national insurer, such reserve method prescribed 
        by the Director of the Office 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 Association 
                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 Office 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 inserting ``or, 
        in the case of a national insurer, such rate determined by the 
        Director of the Office of National Insurers of the Department 
        of the Treasury'' after ``at least 26 States''.
            (6) Section 816(b)(3)(B) is amended by inserting ``or, in 
        the case of a national insurer, by the Director of the Office 
        of National Insurers of the Department of the Treasury'' after 
        ``State insurance commissioner''.
            (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 Insurers.--For purposes of 
this title:
            ``(1) National insurer.--The term `national insurer' means 
        any insurer chartered under the Insurance Industry 
        Modernization and Consumer Protection Act.
            ``(2) National life insurer.--The term `national 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 Insurers of the Department of the Treasury'' after 
        ``authorities of a State''.
            (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 Treasury'' 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 inserting ``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 
converted from a State insurer into a national insurer, any State law 
under which any policy was written by such national 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 inserting ``the Director of 
        the Office of National Insurers of the Department of the 
        Treasury or'' after ``subject 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 inserting ``the Director of 
        the Office of National Insurers 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  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 Modernization and Consumer 
                Protection Act relating to the activities, conduct, and 
                operations of national insurers and federally licensed 
                insurance producers.''.
    (c) Amendments to Investment Company Act of 1940.--
            (1) Section 2(a)(17) of the Investment Company 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 
        Treasury or'' after ``subject to supervision by''.
            (2) The last sentence of section 12(g) of the Investment 
        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 Company 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 Consumer Protection Act, 
                files with the Director of the Office of National 
                Insurers of the Department 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 Consumer Protection Act, the 
                Director of the Office of National Insurers of the 
                Department of the Treasury'' before the period at the 
                end.

SEC. 807. AMENDMENTS TO EMPLOYEE RETIREMENT INCOME 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 amended by adding at the end the 
following new subsection:
    ``(g) Office of National Insurers.--
            ``(1) Regulators.--For purposes of this section, the terms 
        `State insurance regulator', `State insurance 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 provision of 
        information or material by the Office of National Insurers of 
        the Department of the Treasury to a Federal banking agency (as 
        such term is defined in section 3 of the Federal Deposit 
        Insurance Act) shall not constitute a waiver of, or otherwise 
        affect, 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 Director 
                of the Office of National Insurers of the Department of 
                the Treasury,'' after ``The Federal banking agencies''; 
                and
                    (B) in paragraph (3), by inserting ``, except that, 
                in the case of the Director of the Office 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 Industry 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)--
                            (i) in paragraph (6) by inserting ``(other 
                        than a person subject to the jurisdiction 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 Industry 
        Modernization and Consumer Protection Act, by the Director of 
        the Office of National Insurers of the Department of the 
        Treasury with respect to any national 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), respectively; 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;''.
            (4) Section 521(e) (15 U.S.C. 6821(e)) is amended by 
        inserting ``or Federal'' after ``such institution 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 Insurers of the 
                Department of the Treasury with respect 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 Director of the Office of 
        National Insurers of the Department of the Treasury in 
        accordance with the Insurance Industry Modernization and 
        Consumer Protection 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 Office 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 Supervision,''.

SEC. 810. AMENDMENTS TO FEDERAL DEPOSIT INSURANCE ACT.

    The Federal Deposit Insurance Act is amended as follows:
            (1) The section heading for section 45 (12 U.S.C. 1831v) is 
        amended by inserting ``, director 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 Federal'' after ``relevant 
        State''; and
            (2) Section 5 (12 U.S.C. 1844) is amended--
                    (A) in subsection (c)--
                            (i) in paragraph (2)(E)(iii), by inserting 
                        ``or by or on behalf of the Director of the 
                        Office of National Insurers of the Department 
                        of the Treasury'' before the semicolon;
                            (ii) in paragraph (3)(A)(ii)(I), by 
                        inserting ``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 Treasury'' 
                        after ``a State insurance authority''; and
                            (iv) in paragraph (5)(B)(iv), by inserting 
                        ``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 inserting 
                        ``, Director of the Office of National 
                        Insurers,'' after ``State Insurance 
                        Regulator''.
                            (ii) in paragraph (1)(B), by inserting ``or 
                        the Director of the Office of National Insurers 
                        of the Department of the Treasury'' after 
                        ``State insurance authority'';
                            (iii) in paragraph (2)--
                                    (I) in the paragraph heading, by 
                                inserting ``, Director of the Office 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 Insurers of 
                        the Department of the Treasury,'' 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
                    (B) by inserting ``assets,'' after ``moneys, funds, 
                premiums, credits,''; and
            (2) in paragraph (2)--
                    (A) in the first sentence, by inserting ``removal, 
                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:
``Sec.  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 Consumer 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 as provided under this title or 
imprisonment for not more than 10 years, or both.
    ``(2) If the person committing an offense under subsection (a) is a 
national insurer, insurer-affiliated party or a federally licensed 
insurance producer, punishment for an offense under subsection (a) is--
            ``(A) a fine, the maximum of which is the greater of--
                    ``(i) $1,000,000 per violation, or
                    ``(ii) a fine as provided under this title;
            ``(B) imprisonment for not more than 10 years; or
            ``(C) both a fine under subparagraph (A) and imprisonment 
        under subparagraph (B).
    ``(3) If the fraudulent insurance act involved an amount or value 
not exceeding $5,000, whoever violates subsection (a) shall be fined as 
provided in this title or imprisoned not more than one year, or both.
    ``(4) The punishment under this subsection shall be in addition to 
any other penalties under the Insurance Industry Modernization and 
Consumer Protection Act.
    ``(c)(1) Any individual who has been convicted of any criminal 
felony involving dishonesty or breach of trust, and who participates in 
insurance operations, shall be fined as provided in this title or 
imprisoned not more than 5 years, or both.
    ``(2) Any insurance person who is engaged in insurance operations 
who knowingly and intentionally permits the participation described in 
paragraph (1) shall be fined as provided in this title or imprisoned no 
more than 5 years, or both.
    ``(3) A person described in paragraphs (1) or (2) may participate 
in insurance operations or permit such participation, as the case may 
be, if such person has the written consent of the Director.
    ``(d) As used in this section:
            ``(1) The terms `Director', `federally licensed insurance 
        producer', `insurance operations', `insurance policy', 
        `insurance producer', `insurer-affiliated party', `national 
        insurer', `person', and `policy of insurance' shall have the 
        meanings given such terms in section 102 of the Insurance 
        Industry Modernization and Consumer Protection Act.
            ``(2) The term `fraudulent insurance act' means an act or 
        omission committed by a person who, knowingly and with intent 
        to defraud, commits, or conceals any material information 
        concerning, one or more of the following:
                    ``(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 insurer, 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 renewal 
                        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 reinsurance 
                        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 Director.
                            ``(vii) The financial condition of a 
                        national insurer.
                            ``(viii) The formation, acquisition, 
                        merger, consolidation, dissolution or 
                        withdrawal from one or more lines of insurance 
                        or reinsurance by a national insurer.
                            ``(ix) The issuance of evidence of 
                        insurance, whether in writing, electronic form 
                        or otherwise.
                            ``(x) The reinstatement of an insurance 
                        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 operations.
                    ``(D) Transaction of insurance operations in 
                violation of laws requiring a license therefore 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 officers, 
        directors, agents, or employees of national insurers, or other 
        persons authorized to act on behalf of national insurers.''.
            (2) Clerical amendment.--The table of sections 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 DISABILITIES 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''.

                         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 representative 
        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 relevant State.
            (3) Contingent claim.--The term ``contingent 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 Corporation established 
        pursuant to Title X or the National 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 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 assets 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 conveyed or 
                services are rendered or an obligation is incurred or 
                an antecedent debt is satisfied; or
                    (B) when the property or obligation is received in 
                good faith to secure a present advance or antecedent 
                debt in an amount not disproportionately small as 
                compared to the value of the property or obligation 
                obtained.
            (9) General assets.--The term ``general assets'' means all 
        property, real, personal, or otherwise, 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 
        property the term includes all such property or its proceeds in 
        excess of the amount necessary to discharge 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 assessable 
                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 national 
                insurer under paragraph (1), the inability of an 
                insurer to pay its obligations when they are due or 
                when admitted assets do not exceed 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 ``liabilities'' shall 
        include reserves required by statute or by rule or specific 
        requirements imposed by the Director upon an insurer.
            (12) Insurer.--The term ``insurer'' includes a State 
        insurer, a national insurer, and all other entities subject to 
        this title under section 910.
            (13) Multiple beneficiary trust.--The term ``multiple 
        beneficiary trust'' means a trust established 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 ``netting agreement'' 
        means a contract or agreement (including terms and conditions 
        incorporated by reference therein), including a master 
        agreement (which master agreement, together with all schedules, 
        confirmations, definitions and addenda thereto and transactions 
        under any thereof, shall be treated as one netting agreement), 
        that documents one or more transactions between the parties for 
        or involving 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 liquidation or close-out values relating 
        to such obligations or entitlements) among the parties to the 
        netting agreement.
            (15) Party in interest.--The term ``party in interest'' 
        means the Director, an insurer, policyholder, third-party 
        claimant, creditor, equity security holder, the corporation, 
        any affected guaranty association, a State commissioner or 
        other principal regulatory 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 commodity contract, forward 
        contract, repurchase agreement, securities contract, swap 
        agreement and any similar agreement that the Director 
        determines by regulation, or order to be a qualified financial 
        contract 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 Commodity 
                        Exchange Act (7 U.S.C. 23) and that is commonly 
                        known to the commodities trade as a margin 
                        account, margin contract, leverage account or 
                        leverage contract; or
                            (iii) an agreement or transaction that is 
                        subject to regulation under section 4c(b) of 
                        the Commodity Exchange Act (7 U.S.C. 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 commodity, as defined in 
                section 1 of the Commodity Exchange Act (7 U.S.C. 1), 
                or any similar 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 contract 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 related terms, that provides for 
                the transfer of certificates of deposit, eligible 
                bankers' acceptances, or securities that are direct 
                obligations of, or that are fully guaranteed as to 
                principal  and interest by, the United States or any 
agency of the United States against the transfer of funds by the 
transferee of such certificates of deposit, eligible bankers' 
acceptances, or securities with a simultaneous agreement by the 
transferee to transfer to the transferor certificates 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 interest in a mortgage loan, and 
shall not include any participation in a commercial mortgage loan, 
unless the Director determines by regulation, resolution or order to 
include the participation 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 interest therein or based on 
                the value thereof), or an option entered into on a 
                national securities exchange relating to foreign 
                currencies, or the guarantee of any settlement of cash 
                or securities 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 mortgage 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, commodity swap, forward rate 
                agreement, interest rate future, interest rate option, 
                forward foreign 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.
            (19) Receivership proceeding.--The term ``receivership 
        proceeding'' means any liquidation, rehabilitation 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 otherwise, 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 beneficiary.
            (23) Special deposit claim.--The term ``special deposit 
        claim'' means a claim secured by a deposit 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.
            (24) Transfer.--The term ``transfer'' means every mode, 
        direct or indirect, absolute or conditional, voluntary or 
        involuntary, of disposing of or parting with property or with 
        an interest in property, including retention of title as a 
        security interest and foreclosure of an insurer's equity of 
        redemption.
            (25) Unliquidated claim.--The term ``unliquidated 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 payment 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 jurisdiction of which the main 
office of the national insurer is located.
    (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 pursuant to section 964, nothing in 
this title shall deprive a party in interest of any contractual right 
to pursue arbitration of any dispute under any law.
    (d) Persons Subject to Personal Jurisdiction.--In addition to 
grounds otherwise provided by law, the following persons are subject to 
the personal jurisdiction 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, managers, 
        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 insurer.
    (e) Associations.--The foregoing provisions of this section 
notwithstanding, the provisions of this title do not confer 
jurisdiction on the court to resolve coverage disputes between guaranty 
associations and those asserting claims against them resulting from the 
initiation of a receivership proceeding under this title, except to the 
extent that the guaranty association has otherwise expressly consented 
pursuant to a plan of rehabilitation or liquidation that resolves its 
obligations to covered policyholders.
    (f) Determination.--The determination of any dispute with respect 
to the statutory obligations of any guaranty association by a court or 
administrative agency shall be binding and conclusive as to the parties 
in a receivership 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 providing 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  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 insolvency;
                    (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 reinsurer 
                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
            (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 refusal 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 liquidator shall present for the 
court's approval a plan for the 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 policy claims obligations in the 
normal course of events, notwithstanding 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 policyholders 
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 claimants; 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 examine 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 evidence, it shall approve the plan. No action 
shall lie against the liquidator or any of his deputies, agents, 
clerks, assistants 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 obligations of the National Life 
Insurance Guaranty Corporation 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 CORPORATION, STATE 
              COMMISSIONERS, AND ASSOCIATIONS.

    (a) In General.--The receiver shall provide affected State 
commissioners with relevant receivership information, including reports 
and analysis of financial condition and the status of development of a 
plan when requested.
    (b) Kind of Information.--The receiver shall provide 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 
development of the plan.
    (c) Listing of Policyholders.--The receiver shall also permit a 
State commissioner, and a guaranty association to obtain a listing of 
relevant policyholders and certificate holders, including current 
addresses and summary insurance 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 guaranty 
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 protective 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 hereunder between and among the national insurer, the 
receiver, guaranty associations and State commissioners. No such 
disclosure or discussion shall compromise the privilege or confidential 
nature of such information or documents.

SEC. 908. COOPERATION OF OFFICERS, OWNERS, AND EMPLOYEES.

    (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 holding 
                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.
    (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 construed 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 receivership proceeding under 
this title, without reimbursement of attorneys' fees or expenses unless 
such reimbursement 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 reasonable fees and 
expenses to which it is entitled in connection with the interposing of 
defenses to a claim against the national insurer.
    (b) Guaranty Association.--Any guaranty association 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 participate in a receivership proceeding under this title. 
Exercise by any guaranty association of the standing rights conferred 
under this subsection shall not constitute a submission 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 bearing entities engaged in any 
                aspect of the business of insurance, whether or not 
                such entities are licensed to engage in the business of 
                insurance under this Act, if such person is an 
                affiliate of the national insurer against which a 
                receivership 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.
    (b) Subject of Proceeding.--The Director may initiate a 
receivership proceeding against--
            (1) a national insurer;
            (2) a United States branch established pursuant to this 
        Act; or
            (3) any other entity under the provisions of section 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 domiciled 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 organization any authority under this section 
with respect to instituting 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 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 policyholders, its creditors, or the 
        public;
            (2) there is reasonable cause to believe that there has 
        been embezzlement from the national insurer, wrongful 
        sequestration or diversion of the national 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 established, would endanger assets in an amount 
        threatening 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, general agent, employee, or other 
        person, if the person has been found after notice and hearing 
        by the Director to be dishonest or untrustworthy in a way 
        affecting 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 hearing by the Director to be 
        untrustworthy;
            (5) a person who in fact has executive authority with the 
        national insurer, whether an officer, manager, 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 
        insurer has failed promptly and effectively to terminate 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 examination its property, 
        books, accounts, documents, or other records, or those of a 
        subsidiary or company 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 written 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 
        entire property or business in or with the property or business 
        of any other person;
            (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 determination of its financial condition by 
        examination or has failed to properly administer claims and to 
        maintain claims records which are adequate for the 
        determination of its outstanding claims liability;
            (9) the national insurer or its property has been or is the 
        subject of an application for the appointment 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 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 examination, to 
        be in a condition so that it could not presently meet the 
        requirements for chartering, incorporation (if applicable) and 
        licensing to underwrite 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 
reinsurance ceded to a non federally-qualified reinsurer, the court may 
direct the establishment of a receivership for the purpose of 
administering said assets; provided, however 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 proceeding pursuant to 
section 925, upon the filing of a petition, a summons shall forthwith 
issue, returnable in 3 days after its date, and a copy of the summons 
together with 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 president, 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 resigned 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 manner as the court shall order.

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 entities, of--
            (1) the commencement or continuation, including the 
        issuance or employment of process, of a judicial, 
        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 proceeding under this title, or to recover a claim 
        against the national insurer that arose before the commencement 
        of the receivership proceeding under this title;
            (2) the enforcement, against the national insurer 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;
            (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 national 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 entities, of the commencement or continuation, 
including the issuance or employment of process, of a judicial, 
administrative 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 
receivership proceedings under this title and for which the national 
insurer is or may be liable under a policy of insurance or is obligated 
to defend a party. The stay provided by this subsection shall terminate 
90 days after appointment 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 receivership proceeding 
under this title does not operate as a stay of--
            (1) criminal actions;
            (2) any act to perfect, or to maintain or continue 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 covering policies 
        of insurance as provided under subsection (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 receivership proceeding;
            (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 beneficiary 
        trusts;
            (9) termination, liquidation and netting of obligations 
        under qualified financial contracts as provided at section 959;
            (10) discharge by a guaranty associations of statutory 
        responsibilities or the pursuit of claims against a guaranty 
        associations to the extent permitted by law other than this 
        title; or
            (11) any--
                    (A) audit by a governmental unit to determine 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 payment of such an 
                assessment.
    (d) Conservation Order.--In the event the Director 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 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 subsection (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 receivership 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 provisions 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, administrative or 
        other action or proceeding is initiated by or on behalf of the 
        receiver may assert and enforce any contractual right the party 
        may have to require arbitration of any dispute under any law.
    (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 subsection (g), the 
party seeking relief from the stay shall have the burden of proof on 
each issue which must be established 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 attorneys' 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 conservation, 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 commenced 
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 service. 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 respondent prior to the filing of an answer to the 
complaint.
    (d) Document To Be Received by Court.--The court shall receive as 
self-authenticated any of the following 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 Director.
    (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 contained.
    (f) Entering Judgment.--The court shall enter judgment within 15 
days after the conclusion of the evidence.

SEC. 916. NOTICE OF ENTRY OF ORDER OF REHABILITATION OR LIQUIDATION.

    Unless the court otherwise directs, the receiver shall give or 
cause to be given notice of the order of rehabilitation 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;
            (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 producers 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 reasonably 
        expected to have claims against the national insurer including 
        all policyholders, at their last known address as indicated by 
        the records of the national insurer; and
            (5) publication in a newspaper of general circulation in 
        the county in which the national insurer has its principal 
        place of business and in other locations 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 insurer has been 
        placed in rehabilitation or liquidation;
            (2) advise that an automatic stay is in effect together 
        with a reference to section 914 and a statement that certain 
        acts against the national insurer and its assets are stayed as 
        well as a description of any additional injunctive relief of 
        general application ordered by the court;
            (3) state whether and to what extent the national 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 initial status 
        hearing established pursuant to section 918; and
            (6) include such other information as the receiver 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 liquidation. The receiver shall 
discuss the condition of the estate and may be questioned by parties in 
interest or their representatives concerning the matters discussed. The 
hearing 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 associations and interest thereon and all 
reasonable expenses incurred by them in connection therewith are repaid 
to the  guaranty associations or a plan of repayment by the national 
insurer is approved by the guaranty associations, an national insurer 
that is subject to any receivership proceeding shall not--
            (1) be released from a receivership proceeding;
            (2) be permitted to solicit or accept new business or 
        request or accept the restoration of a suspended or revoked 
        license or certificate of authority; or
            (3) be returned to the control of its shareholders or 
        management.
    (b) Following Conservation Order.--If the Director, having obtained 
an ex parte order of conservation, fails to file a motion in the 
receivership proceeding requesting 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 interest or on 
the court's own motion, be dismissed and vacated.
    (c) Exception.--A receivership proceeding may be dismissed without 
complying with the requirements of subsection (a) if the court, on 
motion of the receiver, determines that the receivership estate has no 
assets or the estate's assets are insufficient to cover the costs of 
administering the receivership.
    (d) Dissolution.--In the event a receivership proceeding is 
dismissed pursuant to subsection (c), the national insurer shall be 
dissolved as of entry of the order of dismissal.

SEC. 920. RECEIVERSHIP PROCEEDINGS FOR NON-U.S. INSURERS.

    The court, after notice and hearing, may dismiss or suspend a 
receivership proceeding against a non-U.S. insurer under this title at 
any time, taking into consideration the following interests of insured 
claimants, creditors and the public:
            (1) Whether the order requested, and any governing 
        legislation upon which it is based, is consistent with the 
        objectives of this title.
            (2) The effect the order requested would have or could 
        reasonably be expected to have on the ability of the liquidator 
        to use assets of non-U.S. insurer's estate under the 
        liquidation order to transfer insurance policy obligations to a 
        solvent assuming insurer.
            (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. insurer is domiciled, relating to the receivership 
        or dissolution 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 receivership 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 person.
    (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 appropriate, 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.

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 section 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 country 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 
national insurers.

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 motion 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 SEIZURE.

    (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
            (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, together with a copy of the verified 
petition and a summons, shall be promptly served on the national 
insurer as provided 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 knowledge thereof shall be bound by it.
    (d) Content of Order.--At the request of the Director, 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  or recorded 
information of any nature, including books, claims files, records, and 
papers of the national insurer or of any affiliate of the national 
insurer that relate to the national insurer's assets, liabilities, 
financial affairs or business, shall immediately 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 national 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 witnesses to compel their 
attendance, administer oaths, examine 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 
require the production of books, papers, records, or other documents 
that he or she considers relevant to the performance 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 
in chambers, orders otherwise or the insurer requests that the matter 
be made public. Unless privileged or confidential 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 conservation 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 chambers if so 
requested by the national insurer proceeded against.

SEC. 928. AUTHORITY TO OPERATE AND RESTRUCTURE INSURER'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;
            (2) may operate the business of the national insurer, 
        including the retention or dismissal of the national 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, 
        policyholders, other parties in interest or the public, the 
        Director may petition the court for an order of liquidation 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 request that 
the court enter a final order of liquidation with a finding of 
insolvency.

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 insurance 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 liquidation 
        order;
            (2) the expiration of the insurance policy;
            (3) the date when the insured has replaced the insurance 
        coverage with equivalent insurance in another national insurer 
        or State-insurer or otherwise terminated the insurance policy;
            (4) the date the liquidator has effected a transfer of the 
        insurance policy obligation; or
            (5) the date proposed by the liquidator and approved by the 
        court to cancel coverage.
    (b) Termination of Coverages.--An order of liquidation shall 
terminate coverages at the time provided under subsection (a) for 
purposes of any other statute.
    (c) Policies of Insurance Covered by Guaranty 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 obligations.
    (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 covered by a guaranty association, shall terminate as under 
subsections (a) and (b), except to the extent that the liquidator 
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 contracts by which the 
insurer has reinsured obligations arising 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 office as receiver.

SEC. 933. TITLE TO AND POSSESSION OF ASSETS AND RECORDS.

    (a) In General.--Upon entry of an order of rehabilitation or 
liquidation, the rehabilitator or liquidator shall be vested with title 
to all of the property, books, accounts, documents and other records of 
the national insurer, wherever located.
    (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 insurer and of the premises occupied by the national 
insurer for transaction of its business.

SEC. 934. IMMUNITY AND INDEMNIFICATION OF THE RECEIVER AND EMPLOYEES.

    (a) Persons Protected.--For the purposes of this section, the 
persons entitled to protection under this section 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 deputies 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 
        advisors, other consultants and any other persons or firms who 
        are retained by the receiver as independent contractors and 
        their employees shall not be considered employees of the 
        receiver for purposes of this section.
    (b) Immunity.--The receiver and his or her employees shall have 
official immunity and shall be immune from suit and liability, both 
personally and in their official capacities, for any claim for damage 
to or loss of property or 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; provided that nothing in this provision shall be construed 
to hold the receiver or any employee 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 commenced against the 
receiver or any employee, whether against him or her personally or in 
his or her official capacity, 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 indemnified 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 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 employee 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.--Attorneys' 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 ultimately be determined upon 
a final adjudication on the merits that the receiver or employee is not 
entitled to immunity or indemnity under this section.
    (e) Administration Expense.--Any indemnification for expense 
payments, judgments, settlements, decrees, 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 Required.--In the event of any 
actual or threatened litigation against a receiver or any employee for 
which immunity 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
            (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 contained or implied in this 
section shall operate, or be construed 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 omission 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 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 effective date of this 
        title without regard to when the alleged 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 employees and 
        agents;
            (3) retain attorneys, actuaries, accountants, appraisers, 
        consultants, and such other personnel as he or she considers 
        necessary to assist in the receivership; and
            (4) subject to the requirements of section 945, fix the 
        compensation of those whom he or she appoints or retains under 
        subsection (a) or (b) of this section.

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 insurer;
            (2) after notice and a hearing, borrow money on the 
        security of the national insurer's assets, borrow 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 continue 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 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 reduced to writing; and, in connection 
        with these powers, 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 existence 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 section 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 
section or otherwise provided for if necessary or appropriate 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 contain sufficient 
cash or liquid assets to defray the costs incurred, 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 anticipatory breach of any contract or lease of the 
national insurer.
    (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 performance 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 proceeding 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 provision 
        relating to a default arising from any failure of the insurer 
        to perform nonmonetary obligations under the executory contract 
        or unexpired lease.

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 estate.

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 limitation 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.

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 period; 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 period; and
            (2) such other information, reasonably available to the 
        conservator, as the court specifies.
    (c) Exceptions.--The reports required by subsections (a) and (b) 
need not be filed more than once for each calendar year if the national 
insurer's cash and invested assets are less than $250,000.

SEC. 942. DOCUMENT DEPOSITORY.

    (a) Document Depository Required.--The rehabilitator or liquidator 
shall maintain, during the pendency of the receivership proceedings, a 
document depository containing--
            (1) copies of the petitions and orders establishing the 
        receivership proceeding, and any amendments thereto;
            (2) copies of all reports filed by the receiver with the 
        court or the Director;
            (3) copies of all other filings made in the court;
            (4) copies of all evidentiary material submitted to the 
        court;
            (5) transcripts of any hearings or trials in the court 
        which are obtained by the receiver; and
            (6) an index of all items contained in the depository.
    (b) Documents Under Seal.--Any filing or evidentiary submission 
made in the court under seal shall not be maintained in the depository, 
subject to the contrary order of the court, but an index of such 
filings and submissions, identifying such material with reasonable 
specificity, but preserving the confidentiality of the contents of such 
material, shall be maintained in the depository.
    (c) Provisions of Documents by Other Parties.--Any party other than 
the receiver who files pleadings or documents in the court, or presents 
evidentiary materials there, shall forthwith furnish the receiver with 
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 ordered 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 business, conduct or affairs of a national insurer.
    (b) Audit Required.--An annual audit of any national insurer which 
is in rehabilitation or liquidation pursuant 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.

SEC. 944. GENERAL SERVICE LIST.

    (a) Service List To Be Maintained.--The receiver shall maintain a 
general service list for each receivership proceeding. It shall be the 
responsibility of the person 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 request 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 receivership 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 sending notice by U.S. mail on the same date that 
the copy was deposited in the depository to those persons on the 
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 appropriate.
    (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 compensation of deputy 
        receivers, attorneys, actuaries, accountants, appraisers, 
        consultants, and such other personnel as the receiver retains.
            (3) The disposition of property or choices in action of the 
        estate the value of which does not exceed  the lesser of 
$250,000 or 10 percent of the last reported 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 receiver 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 matters 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 liquidation 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.
            (3) Notice of the proposed allowance or disallowance 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 estate, and the general service list.
    (d) Objections.--Any party in interest may object to any action 
proposed to be taken by the court in connection with a nonroutine 
matter by filing a statement showing 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 preliminary 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.
    (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 matter, is a nonroutine matter, including, without 
limitation, the following:
            (1) The disposition of any asset or chose in action 
        (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 operations of the 
        receivership and not exceeding $50,000 per obligee.
            (4) Conversion of a rehabilitation into a liquidation, 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 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 sufficient if the receiver 
serves--
            (1) each policyholder under whose insurance policy the 
        claim arises, any third party directly interested in the 
        insurance policy, each guaranty association 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.
    (b) Payment to Rehabilitator or Liquidator.--Any person or entity 
that owes a debt that is property of the national insurer and that is 
matured, payable 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 affiliate of the national insurer or entity that possesses 
or controls any documents or recorded information of any nature, 
including books, claims files, records, and papers of the national 
insurer or of any affiliate of the national insurer 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 directing 
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 otherwise. Further, no attorney shall be granted secured 
status, 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 national insurer, who is responsible for the 
payment of premium 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, unearned 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 insurance producer or 
premium finance company for an amount advanced to the national insurer 
by the insurance producer 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 premium and any retrospectively rated 
premium due the national insurer.
    (c) Penalties.--Upon satisfactory evidence of a violation 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, stating specifically the nature of the alleged 
violation and fixing 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 subsection (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.

SEC. 951. RECEIVER AS LIEN CREDITOR AND AS SUCCESSOR TO CERTAIN 
              CREDITORS, PURCHASERS AND FIDUCIARIES.

    (a) In General.--The receiver may avoid any transfer of or lien 
upon the property of, or obligation incurred by, a national insurer 
that the national insurer or a policyholder, 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 national 
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 Transfer 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 preceding the 
        filing of a successful petition for rehabilitation or 
        liquidation under this title; and
            (4) that enables such creditor to receive more than such 
        creditor would receive if--
                    (A) the national insurer was liquidated under this 
                title;
                    (B) the transfer had not been made; and
                    (C) such creditor received payment of such debt to 
                the extent provided by this title.
    (b) Preference May Be Avoided.--Any preference may be avoided by 
the receiver if--
            (1) the national insurer was insolvent at the time of the 
        transfer; and
            (2)(A) the transfer was made within 120 days before the 
        filing of the petition;
            (B) the creditor receiving it or benefited thereby or his 
        agent acting with reference thereto had, at the time when the 
        transfer was made, reasonable cause to believe that the 
        national insurer was insolvent or was about to become 
        insolvent; or
            (C) the creditor receiving or benefiting from the transfer 
        was--
                    (i) an officer or director of the national insurer;
                    (ii) an employee, attorney or other person who was, 
                in fact, in a position to effect a level of control or 
                influence over the actions of the national insurer 
                comparable to that of an officer, whether or not the 
                person held such a position; or
                    (iii) any shareholder owning or controlling 
                directly or indirectly more than 10 percent of any 
                class of any equity security issued by the national 
                insurer, or any other person, firm, corporation, 
                association or aggregation of persons with whom the 
                national insurer did not deal at arm's length.
    (c) Exceptions.--The receiver may not avoid a transfer under this 
section--
            (1) to the extent that such transfer was--
                    (A) intended by the national insurer and the 
                creditor to or for whose benefit such transfer was made 
                to be a contemporaneous exchange for new value given to 
                the national insurer; and
                    (B) in fact a substantially contemporaneous 
                exchange;
            (2) to the extent that such transfer was in payment of a 
        debt incurred by the national insurer in the ordinary course of 
        business or financial affairs of the national insurer and the 
        transferee and such transfer was--
                    (A) made in the ordinary course of business or 
                financial affairs of the national insurer and the 
                transferee; or
                    (B) made according to ordinary business terms;
            (3) that creates a security interest in property acquired 
        by the national insurer--
                    (A) to the extent such security interest secures 
                new value that was--
                            (i) given at or after the signing of a 
                        security agreement that contains a description 
                        of such property as collateral;
                            (ii) given by or on behalf of the secured 
                        party under such agreement;
                            (iii) given to enable the national insurer 
                        to acquire such property;
                            (iv) in fact, used by the national insurer 
                        to acquire such property; and
                    (B) that is perfected on or before 21 days or any 
                other period expressly allowed by law, whichever is 
                less, after the national insurer receives possession of 
                such property;
            (4) to or for the benefit of a creditor, to the extent 
        that, after such transfer, such creditor gave new value to or 
        for the benefit of the national insurer--
                    (A) not secured by an otherwise unavoidable 
                security interest; and
                    (B) on account of which new value the national 
                insurer did not make an otherwise unavoidable transfer 
                to or for the benefit of such creditor; and
            (5) that creates a perfected security interest in a 
        receivable or its proceeds, except to the extent that the 
        aggregate of all such transfers to the transferee caused a 
        reduction, as of the date of the filing of the petition and to 
        the prejudice of other creditors holding unsecured claims, of 
        any amount by which the debt secured by such security interest 
        exceeded the value of all security interests for such debt on 
        the later of--
                    (A)(i) with respect to a transfer to which 
                subsection (b)(1) applies, 120 days before the date of 
                the filing of the petition; or
                    (ii) with respect to a transfer to which subsection 
                (b)(2) or (b)(3) applies, 1 year before the date of the 
                filing of the petition; or
                    (B) the date on which new value was first given 
                under the security agreement creating such security 
                interest.
    (d) Voidable Lien Dissolved by Furnishing Bond.--If a lien which is 
voidable under this section has been dissolved by the furnishing of a 
bond or other obligation, the surety on which has been indemnified 
directly or indirectly by the transfer or the creation of a lien upon 
the national insurer's property before the filing of a successful 
petition for rehabilitation or liquidation, then that indemnifying 
transfer or lien shall also be considered voidable.
    (e) Liability of Surety.--The liability of the surety under a 
releasing bond or other like obligation shall be discharged to the 
extent of the value of the indemnifying property recovered or the 
indemnifying lien to the extent of the amount paid to the liquidator.
    (f) Other Rules.--For the purposes of this section--
            (1) a transfer of property other than real property shall 
        be deemed to be made or suffered when it becomes so far 
        perfected that no subsequent lien obtainable by legal or 
        equitable proceedings on a simple contract could become 
        superior to the rights of the transferee;
            (2) a transfer of real property shall be deemed to be made 
        or suffered when it becomes so far perfected that no subsequent 
        bona fide purchaser from 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 created;
            (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 avoidability of a transfer under 
subsection (b), and the person against whom recovery or avoidance is 
sought has the burden 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 immediately 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 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 voidable 
by the receiver under any applicable law, including proceeds of such 
property, but does not include an obligation substituted for an 
existing obligation.

SEC. 953. FRAUDULENT TRANSFERS AND OBLIGATIONS.

    (a) Power To Avoid.--The rehabilitator or liquidator may avoid any 
transfer of an interest of the national insurer in property, or any 
obligation incurred by the national insurer, that was made or incurred 
on or within 1 year before the date of the filing of the petition for 
proceedings under this title, if the national insurer voluntarily or 
involuntarily--
            (1) made such transfer or incurred such obligation 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 equivalent value in 
        exchange for such transfer or obligation; and
                    (B)(i) was insolvent on the date that such transfer 
                was made or such obligation was incurred, or became 
                insolvent as a result of such transfer or obligation;
                    (ii) was engaged in business or a transaction, or 
                was about to engage in business or a transaction, for 
                which any property remaining with the insurer was an 
                unreasonably small capital; or
                    (iii) intended to incur, or believed that it would 
                incur, debts that would be beyond its ability to pay as 
                such debts matured.
    (b) Permitted Liens.--Except to the extent that a transfer or 
obligation voidable under this section is voidable under section 951 or 
952, a transferee or obligee of such a transfer or obligation that 
takes for value and in good faith has a lien on or may retain any 
interest transferred or may enforce any obligation incurred, as the 
case may be, to the extent that such transferee or obligee gave value 
to the national insurer in exchange for such transfer or obligation. a 
transfer is made when such transfer is so perfected that a bona fide 
purchaser from the national insurer against whom applicable law permits 
such transfer to be perfected cannot acquire an interest in the 
property transferred that is superior to the interest in such property 
of the transferee, but if such transfer is not so perfected before the 
commencement of the receivership proceeding, such transfer is made 
immediately before the date of the filing of the petition.
    (c) Value Defined.--For purposes of this section, the term 
``value'' means property, or satisfaction or securing of a present or 
antecedent debt of the national insurer.
    (d) Reinsurance Subject to Avoidance.--A transaction with a 
reinsurer of the national insurer is subject to avoidance under this 
section if--
            (1) the transaction released the reinsurer, in whole or in 
        part, from its obligation to pay to the national insurer the 
        reinsurer's originally specified share of those losses which 
        had occurred prior to the time of the transaction but which had 
        not been paid by the national insurer unless the reinsurer 
        gives a present fair equivalent value for the release; and
            (2) any part of the transaction was effected within 1 year 
        prior to the filing of the petition under this title.
    (e) Avoided Reinsurance.--In the event a reinsurance transaction is 
avoided under subsection (d)--
            (1) the receiver shall tender to the reinsurer the value of 
        any consideration transferred to the national insurer in 
        connection with such transaction less the amount of matured and 
        liquidated liabilities owing by the reinsurer to the estate; 
        and
            (2) the parties shall be returned to their relative 
        positions prior to the implementation of the transaction 
        avoided.

SEC. 954. TRANSFER OF NATIONAL INSURER'S PROPERTY TO GOOD FAITH 
              PURCHASER.

    (a) In General.--After a petition for receivership has been filed, 
a transfer of the national insurer's real property made to a person 
acting in good faith shall be valid against the receiver if made for a 
present fair equivalent value, or if not made for a present fair 
equivalent value, then to the extent of the present consideration 
actually paid for the property for which amount the transferee shall 
have a lien on the transferred property. Constructive notice of the 
commencement of a receivership proceeding shall be given upon the 
recording of a copy of the petition initiating a receivership 
proceeding with the register of deeds in the county where any real 
property in question is located. The exercise by a court of the United 
States or any State of jurisdiction to authorize or effect a judicial 
sale of real property of the insurer within any county in any State 
shall not be impaired by the pendency of such a proceeding unless the 
copy is recorded in the county prior to the consummation of the 
judicial sale.
    (b) Other Rules.--After a petition for receivership has been filed 
and before either the receiver takes possession of the national 
insurer's property or an order of receivership is granted--
            (1) a transfer of the national insurer's property, other 
        than real property, made to a person acting in good faith shall 
        be valid against the receiver if made for a present fair 
        equivalent value, or if not made for a present fair equivalent 
        value, then to the extent of the present consideration actually 
        paid for the property for which amount the transferee shall 
        have a lien on the transferred property;
            (2) a person indebted to the national insurer or holding 
        property of the national insurer, if acting in good faith, may 
        pay all or part of the indebtedness or deliver all or part of 
        the property to the national insurer or upon his or her order, 
        with the same effect as if the petition were not pending;
            (3) a person having actual knowledge of the pending 
        receivership shall be considered not to act in good faith; and
            (4) a person asserting the validity of a transfer under 
        this section shall have the burden of proof. Except as 
        elsewhere provided in this section, no transfer by or on behalf 
        of the national insurer after the date of the petition for 
        receivership proceeding by a person other than the receiver 
        shall be valid against the receiver.
    (c) Currency or Negotiable Instruments.--Nothing in this title 
shall impair the negotiability of currency or negotiable instruments.

SEC. 955. RECOUPMENT FROM AFFILIATES.

    If an order of liquidation or rehabilitation is entered under this 
title, the receiver shall have a right to recover from any affiliate 
that controlled the national insurer the amount of distributions, other 
than shareholder dividends paid by the national insurer on its capital 
stock, made at any time during the 5 years preceding the petition for 
liquidation or rehabilitation subject to the following limitations:
            (1) A distribution shall not be recoverable under this 
        section if the recipient or other beneficiary of distribution 
        shows that when paid the distribution was lawful and 
        reasonable, and that the national insurer did not know and 
        could not reasonably have known that the distribution would 
        adversely affect the ability of the national insurer to fulfill 
        its contractual obligations.
            (2) A person who was an affiliate that controlled the 
        national insurer at the time the distributions were paid shall 
        be liable up to the amount of distributions he or she received, 
        and a person who was an affiliate that controlled the national 
        insurer at the time the distributions were declared shall be 
        liable up to the amount of distributions he or she would have 
        received if they had been paid immediately; Provided, That--
                    (A) if two or more persons are liable with respect 
                to the same distributions, they shall be jointly and 
                severally liable; and
                    (B) if a person liable under this subdivision is 
                insolvent, all controlling affiliates at the time the 
                distribution was paid shall be jointly and severally 
                liable for any resulting deficiency in the amount 
                recovered from the insolvent affiliate.
            (3) The maximum amount recoverable under this subsection 
        shall be the amount needed in excess of all other available 
        assets of the national insurer to pay its contractual 
        obligations.

SEC. 956. LIABILITY OF TRANSFEREE OF AN AVOIDED TRANSFER.

    (a) In General.--Except as otherwise provided in this section, to 
the extent that a transfer is avoided under section 951, 952, 953, or 
955, the receiver may recover, for the benefit of the estate, the 
property transferred, or if the court so orders, the value of such 
property, from--
            (1) the initial transferee of such transfer or the entity 
        for whose benefit such transfer was made; or
            (2) any immediate or mediate transferee of such initial 
        transferee.
    (b) Participation by Officer, Director or Control Person.--An 
officer, director or other person in control of the national insurer 
who knowingly participates in making a transfer voidable under section 
951, 952, 953, or 955, if such person knew or should have known the 
national insurer was or was about to become insolvent at the time of 
the transfer, shall be personally liable to the receiver for the amount 
of the transfer. If the transfer was made within 120 days before the 
date of filing of a successful petition under this title then it shall 
be presumed that such person knew or should have known the insurer was 
or was about to become insolvent.
    (c) Exceptions.--The receiver may not recover under subsection 
(a)(2) from--
            (1) a transferee who or that takes for value, including 
        satisfaction or securing of a present or antecedent debt, in 
        good faith, and without knowledge of the voidability of the 
        transfer avoided; or
            (2) any immediate or mediate good faith transferee of such 
        transferee.
    (d) Other Exceptions.--A transfer that is voidable only under 
subsection (b)(3) of section 952 may not be recovered under this 
section from a transferee that is not--
            (1) an officer or director of the national insurer;
            (2) an employee, attorney or other person who was, in fact, 
        in a position to effect a level of control or influence over 
        the actions of the national insurer comparable to that of an 
        officer, whether or not the person held such a position; or
            (3) any shareholder owning or controlling directly or 
        indirectly more than 10 percent of any class of any equity 
        security issued by the national insurer, or any other person, 
        firm, corporation, association, or aggregation of persons with 
        whom the national insurer did not deal at arm's length.
    (e) Value of Lien.--
            (1) A good faith transferee from whom the receiver may 
        recover under subsection (a) has a lien on the property 
        received to secure the lesser of--
                    (A) the cost, to such transferee, of any 
                improvement made after the transfer, less the  amount 
of any profit realized by or accruing to such transferee from such 
property; and
                    (B) any increase in the value of such property as a 
                result of such improvement, of the property 
                transferred.
            (2) For purposes of this subsection, the term 
        ``improvement'' includes--
                    (A) physical additions or changes to the property 
                transferred;
                    (B) repairs to such property;
                    (C) payment of any tax on such property;
                    (D) payment of any debt secured by a lien on such 
                property that is superior or equal to the rights of the 
                receiver; and
                    (E) preservation of such property.
    (f) Timing of Action.--An action or proceeding under this section 
may not be commenced after the earlier of--
            (1) 1 year after the avoidance of the transfer on account 
        of which recovery under this section is sought; or
            (2) the time the receivership proceeding is closed or 
        dismissed.

SEC. 957. AUTOMATIC PRESERVATION OF AVOIDED TRANSFER.

    Any transfer avoided under section 951, 952, 953, 955, or section 
956 is preserved for the benefit of the receivership but only with 
respect to property of the national insurer.

SEC. 958. SETOFF.

    (a) Setoff Permitted.--Mutual debts or mutual credits whether 
arising out of one or more contracts between a national insurer that is 
subject to a receivership proceeding under this title and another 
person shall be set off and the balance only shall be allowed or paid 
except as provided in subsection (b) of this section and in section 949 
and subsection (b)(4) of section 962. Obligations arising out of the 
termination of reinsurance contracts pursuant to section 962 may be set 
off against other debts and credits arising out of contracts between 
the national insurer and the reinsurer.
    (b) Exceptions.--No setoff shall be allowed in favor of any person 
when--
            (1) the obligation of the national insurer to the person 
        would not at the date of the filing of a petition for 
        receivership entitle the person to share as a claimant in the 
        assets of the national insurer;
            (2) the obligation of the national insurer to the person 
        was purchased by or transferred to the person with a view to 
        its being used as a setoff;
            (3) the obligation of the national insurer is owed to an 
        affiliate of such person or any other entity or association 
        other than the person;
            (4) the obligation of the person is owed to an affiliate of 
        the national insurer or any other entity or association other 
        than the national insurer;
            (5) the obligation of the person is to pay an assessment 
        levied against the members or subscribers of the national 
        insurer, is to pay a balance upon a subscription to the capital 
        stock of the national insurer, or is in any other way in the 
        nature of a capital contribution; or
            (6) the obligations between the person and the national 
        insurer arise out of transactions by which either the person or 
        the national insurer has assumed risks and obligations from the 
        other party and then has ceded back to that party substantially 
        the same risks and obligations.
Notwithstanding the provisions of this subsection, the receiver may 
permit setoffs if in his or her discretion a setoff is appropriate 
because of specific circumstances relating to a transaction.

SEC. 959. QUALIFIED FINANCIAL CONTRACTS.

    (a) No Stay.--Notwithstanding any other provision of this title, 
including any other provision of this title permitting the modification 
of contracts, or other law of a State, no person shall be stayed or 
prohibited from exercising--
            (1) any contractual right to terminate, liquidate or close 
        out any netting agreement or qualified financial contract with 
        a national insurer because of--
                    (A) the insolvency, financial condition or default 
                of the national insurer at any time, provided that such 
                right is enforceable under applicable law other than 
                this title; or
                    (B) the commencement of a receivership proceeding 
                under this title;
            (2) any right under a pledge, security, collateral or 
        guarantee agreement or any other similar security arrangement 
        or credit support document relating to a netting agreement or 
        qualified financial contract; or
            (3) subject to any provision of section 958, any right to 
        set off or net out any termination value, payment amount, or 
        other transfer obligation arising under or in connection with a 
        netting agreement or qualified financial contract where the 
        counterparty or its guarantor is organized under the laws of 
        the United States or a State or foreign jurisdiction approved 
        by the Director as eligible for netting.
    (b) Settlement on Termination of Netting Agreement.--Upon 
termination of a netting agreement, the net or settlement amount, if 
any, owed by a non-defaulting party to a national insurer against which 
an application or petition has been filed under this title shall be 
transferred to or on the order of the receiver for such national 
insurer, even if the national insurer is the defaulting party, 
notwithstanding any provision in the netting agreement that may provide 
that the non-defaulting party is not required to pay any net or 
settlement amount due to the defaulting party upon termination. Any 
limited two-way payment provision in a netting agreement with a 
national insurer that has defaulted shall be deemed to be a full two-
way payment provision as against the defaulting national insurer. Any 
such property or amount shall, except to the extent it is subject to 
one or more secondary liens or encumbrances, be a general asset of the 
national insurer.
    (c) Transfer Netting Agreement or Qualified Financial Contract.--In 
making any transfer of a netting agreement or qualified financial 
contract of a national insurer concerning which a receivership 
proceeding is pending under this title, the receiver shall either--
            (1) transfer to one party (other than a national insurer 
        subject to a proceeding under this title) all netting 
        agreements and qualified financial contracts between a 
        counterparty or any affiliate of such counterparty and the 
        insurer that is the subject of the proceeding, including--
                    (A) all rights and obligations of each party under 
                each such netting agreement and qualified financial 
                contract; and
                    (B) all property, including any guarantees or 
                credit support documents, securing any claims of each 
                party under each such netting agreement and qualified 
                financial contract; or
            (2) transfer none of the netting agreements, qualified 
        financial contracts, rights, obligations or property referred 
        to in paragraph (1) (with respect to such counterparty and any 
        affiliate of such counterparty).
    (d) Transfer; Notice.--
            (1) If a receiver for a national insurer makes any transfer 
        of one or more netting agreements, then the receiver shall use 
        its best efforts to notify any person who is party to the 
        netting agreements of the transfer by 12:00 noon (the 
        receiver's local time) on the business day following the 
        transfer.
            (2) For purposes of this subsection, the term ``business 
        day'' means any day other than a Saturday, Sunday, or any day 
        on which either the New York Stock Exchange or the Federal 
        Reserve Bank of New York is closed.
    (e) Prereceivership Transfers.--Notwithstanding any other provision 
of this title, a receiver may not avoid any transfer of money or other 
property arising under or in connection with a netting agreement (or 
any pledge, security, collateral or guarantee agreement or any other 
similar security arrangement or credit support document relating to a 
netting agreement) that is made before the commencement of a 
receivership proceeding under this title. However, a transfer may be 
avoided under section 953 if the transfer was made with actual intent 
to hinder, delay or defraud the national insurer, a receiver appointed 
for the insurer or existing or future creditors.
    (f) Netting Agreement To Be Taken as a Whole.--
            (1) In exercising any of its powers under this title to 
        reject or repudiate a netting agreement, the receiver must take 
        such action with respect to each netting agreement and all 
        transactions entered into in connection therewith, in its 
        entirety. Notwithstanding any other provision of this title, 
        any claim of a counterparty against the estate arising from the 
        receiver's rejection or repudiation of a netting agreement that 
        has not been previously assumed by the receiver shall be 
        determined and shall be allowed or disallowed as if such claim 
        had arisen before the date of the filing of the petition under 
        this title, provided that no such claim shall be allowed to 
        have a priority greater than the claim of a general creditor. 
        The amount of the claim shall be the contractual direct 
        compensatory damages determined as of the date of the rejection 
        or repudiation of the netting agreement.
            (2) For purposes of this subsection, the term ``contractual 
        direct compensatory damages'' does not include punitive or 
        exemplary damages, damages for lost profit or lost opportunity 
        or damages for pain and suffering, but does include normal and 
        reasonable costs of cover or other reasonable measures of 
        damages utilized in the derivatives market for the contract and 
        agreement claims.
    (g) Contractual Right Defined.--For purposes of this section, the 
term ``contractual right'' includes any right, whether or not evidenced 
in writing, arising under statutory or common law, a rule or bylaw of a 
national securities exchange, national securities clearing organization 
or securities clearing agency, a rule or bylaw, or a resolution of the 
governing body, of a contract market or its clearing organization, or 
under law merchant.
    (h) No Application to Affiliates.--This section shall not apply to 
persons who are affiliates of the national insurer that is the subject 
of the receivership proceeding.
    (i) Application to the General Account, Separate Accounts, and 
Protected Cells.--All rights of counterparties under this title shall 
apply to netting agreements entered into on behalf of--
            (1) the general account;
            (2) separate accounts if the assets of each separate 
        account are available only to counterparties to netting 
        agreements entered into on behalf of that separate account; or
            (3) protected cells if the assets of each protected cell 
        are available only to counterparties to netting agreements 
        entered into on behalf of that protected cell.

SEC. 960. RECOVERY FROM REINSURERS.

    Except as provided in section 961, the amount recoverable by the 
receiver from reinsurers shall not be reduced as a result of the filing 
of a proceeding under this title, regardless of any provision in the 
reinsurance contract or other agreement.

SEC. 961. CUT-THROUGH PROVISIONS.

    If a reinsurance contract or other written agreement is entered 
into prior to the receivership proceeding and is not otherwise 
prohibited by law and expressly provides for another payee of such 
reinsurance in the event of the insolvency of the ceding national 
insurer, any payment made or due to such third party under such 
contract or other written agreement shall be a reduction to the amount 
due the receiver. Except as provided in this section, payment made 
directly to an insured or other payee shall not diminish the 
reinsurer's obligation to the national insurer's estate.

SEC. 962. LIFE REINSURANCE.

    (a) Continuation of Reinsurance Contracts Prior to Liquidation.--
Contracts reinsuring policies of insurance issued by a company that has 
not been placed in liquidation pursuant to this Act shall be continued 
or terminated pursuant to the terms and conditions of each reinsurance 
contract.
    (b) Continuation of Reinsurance Contracts Reinsuring Covered 
Policies.--Reinsurance contracts on policies of insurance that are 
covered policies (as such term is defined in section 1001) that have 
been ceded by an insolvent insurer (as such term is defined in section 
1001) subject to this title shall be assumed by affected guaranty 
associations unless the receiver shall have terminated 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 subsection (f) of this section. The 
following paragraphs (1) through (4) shall apply to reinsurance 
contracts so assumed until terminated under subsection (f) of this 
subsection:
            (1) The guaranty association shall be responsible for all 
        unpaid premiums due under the reinsurance contracts (for 
        periods both before and after the coverage date), and shall be 
        responsible for the performance 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 reinsurance 
        contracts with respect to losses or events that occur in 
        periods after the coverage date and that relate to policies of 
        insurance covered (in whole or in part) under subtitle A of 
        title X, provided that, upon receipt of any such amounts, the 
        guaranty association shall be obliged to pay to the beneficiary 
        under the insurance policy on account of which the amounts were 
        paid a portion of the amount equal to the excess of (A) the 
        amount received by the guaranty association, over (B) the 
        benefits paid by the guaranty association on account of the 
        insurance policy less the retention of the impaired or 
        insolvent member insurer (as such terms are defined in 
        paragraphs (11) and (12) of section 1001) applicable to the 
        loss or event.
            (3) Within 30 days following the coverage date, the 
        guaranty association and each reinsurer under reinsurance 
        contracts assumed by the guaranty association (in this section 
        referred to as the ``indemnity reinsurer'') shall calculate the 
        net balance due to or from the guaranty association under each 
        such reinsurance contract as of the coverage date, which 
        calculation shall give full credit to all items paid by either 
        the company or its receiver) or the indemnity reinsurer prior 
        to the coverage date. Either the guaranty association or 
        indemnity reinsurer shall pay the net balance due the other 
within 5 days of the completion of the aforementioned calculation. If 
the receiver has received any amounts due the guaranty association 
pursuant to paragraph (2), the receiver shall remit the same to the 
guaranty association as promptly as practicable.
            (4) If the guaranty association, within 60 days of the 
        coverage date, pays the premiums due for periods both before 
        and after the coverage date that relate to policies of 
        insurance covered by the guaranty association (in whole or in 
        part), the reinsurer shall not be entitled to terminate the 
        reinsurance contracts for failure to pay premium (insofar as 
        the reinsurance contracts relate to policies of insurance 
        covered by the guaranty association (in whole or in part)) and 
        shall not be entitled to set off any unpaid premium due for 
        periods prior to the coverage date against amounts due the 
        guaranty association.
    (c) Continuation of Reinsurance Contracts Reinsuring Policies of 
Insurance Not Covered Under Subtitle A of Title X Subsequent to an 
Order of Liquidation.--When, pursuant to court approval under 
subsection (c) of section 931, or pursuant to a plan approved by the 
court under section 979, a receiver continues policies of insurance in 
force following an order of liquidation, and such policies of insurance 
are not covered in whole or in part under subtitle A of title X, the 
reinsurance on such policies of insurance shall also be continued in 
force by the receiver pursuant to the terms and conditions of the 
reinsurance contract, subject only to the receiver's right to terminate 
pursuant to subsection (f) of this section. Payment of premiums on such 
contracts shall be chargeable against the estate as a Class 1 
administrative expense under subsection (b) of section 975. Amounts 
paid by the reinsurer on account of losses on the policies of insurance 
shall be to the estate of the insolvent insurer unless the court shall, 
in the interest of equity, order otherwise. Reinsurance contracts 
covering policies of insurance that are not continued or transferred 
pursuant to this section shall terminate pursuant to subsection (f) of 
this section.
    (d) Transfer of Reinsurance Contracts.--When policies of insurance, 
or other obligations covered by subtitle A of title X, are transferred 
to an assuming insurer, and other policy obligations are transferred by 
the receiver to an assuming insurer, reinsurance on such policies of 
insurance may also be transferred by the guaranty association or the 
receiver, subject to the following:
            (1) Unless the reinsurer and assuming insurer agree 
        otherwise, the reinsurance contract transferred shall not cover 
        any new policies of insurance in addition to those transferred.
            (2) The obligation described in subsection (b)(2) shall no 
        longer apply.
            (3) Notice shall be given in writing by the transferring 
        party to the affected reinsurer not less than 30 days prior to 
        the effective date of the transfer.
    (e) Supersede State Law.--The provisions of this section shall 
supersede the provisions of any law of any State or of any affected 
reinsurance contracts that provide for or require any payment of 
reinsurance proceeds, on account of losses or events that occur in 
periods after the coverage date, to the receiver of the insolvent 
insurer. The receiver or guaranty association, as the case may be, 
shall remain entitled to any amounts payable by the reinsurer under the 
reinsurance contracts with respect to losses or events that occur in 
periods prior to the coverage date (subject to the provisions of this 
Act, including applicable setoff provisions).
    (f) Termination of Reinsurance Contracts.--At any time within one 
year after the date of entry of the order of liquidation, the guaranty 
association may elect to terminate those reinsurance contracts covering 
obligations of the national insurer that relate to policies of 
insurance protected (in whole or in part) under subtitle A of title X, 
and the receiver may elect to terminate those reinsurance contracts 
covering obligations of the national insurer that relate to policies of 
insurance not protected under subtitle A of title X. The election shall 
be effected by a written notice to any affected reinsurer. Whenever 
such an election is made, or whenever this Act otherwise requires a 
reinsurance contract to be terminated, the following procedures shall 
apply:
            (1) Either the reinsurer or whichever of the receiver or 
        guaranty association that has the right to make such election 
        to terminate shall, upon written notice to the other party to 
        the reinsurance contract no later than 30 days after the 
        receipt by the reinsurer of notice of termination, commence a 
        mandatory negotiation and arbitration procedure in accordance 
        with this subsection.
            (2) Each party shall appoint an actuary to determine an 
        estimated sum due as a result of the termination of the 
        reinsurance contract calculated in a way expected to make the 
        parties economically indifferent as to whether the reinsurance 
        contract continues or terminates. The Director shall develop 
        guidelines for calculating the estimated sum and in connection 
        therewith shall consult the American Academy of Actuaries. Such 
        guidelines shall take into account the present value of future 
        cash flows expected under the reinsurance contract and be based 
        on a gross premium valuation of net liability using current 
        assumptions that reflect post-insolvency experience 
        expectations (without provision for adverse deviation), net of 
        any amounts payable and receivable, and with a market value 
        adjustment to reflect premature sale of assets to fund the 
        settlement.
            (3) Within 90 days of the written notice pursuant to 
        paragraph (1), each party shall provide the other party with 
        its estimate of the sum due as a result of the termination of 
        the reinsurance contract, together with all relevant documents 
        and other information supporting the estimate. The parties 
        shall make a good faith effort to reach agreement on the sum 
        due.
            (4) If the parties are unable to reach agreement within 90 
        days following the submission of materials required in 
        paragraph (3), either party may initiate arbitration 
        proceedings as provided in the reinsurance contract. In the 
        event that the reinsurance contract does not contain an 
        arbitration clause, either party may initiate arbitration 
        pursuant to this paragraph by providing the other party with a 
        written demand for arbitration. The arbitration shall be 
        conducted pursuant to the procedures contained in the following 
        subparagraphs (A) through (E):
                    (A) Venue for the arbitration shall be within the 
                district of the court's jurisdiction or such other 
                location as may be agreed to by the parties.
                    (B) Within 30 days of the responding party's 
                receipt of the arbitration demand, each party shall 
                appoint an arbitrator who is a disinterested active or 
                former officer or executive of a life insurance or 
                reinsurance company, or other professional with no less 
                than 10 years experience in or serving the life 
                insurance or reinsurance industry. The two arbitrators 
                shall appoint an independent, impartial, disinterested 
                umpire who is an active or former officer or executive 
                of a life insurance or reinsurance company. If the 
                arbitrators are unable to agree on an umpire, each 
                arbitrator shall provide the other with the names of 
                three qualified individuals, each arbitrator shall 
                strike two names from the other's list and the umpire 
                shall be  chosen by drawing lots from the remaining 
individuals.
                    (C) Within 60 days following the appointment of the 
                umpire, the parties shall, unless otherwise ordered by 
                the panel, submit to the arbitration panel their 
                estimates of the sum due as a result of the termination 
                of the reinsurance contract, together with all relevant 
                documents and other information supporting the 
                estimate.
                    (D) The time periods set forth in this paragraph 
                may be extended upon mutual agreement of the parties.
                    (E) The panel shall have all powers necessary to 
                conduct the arbitration proceedings in a fair and 
                appropriate manner, including the power to request 
                additional information from the parties, authorize 
                discovery, hold hearings and hear testimony. The panel 
                also may, if it deems necessary, appoint independent 
                actuarial experts, the expense of which shall be shared 
                equally between the parties.
                    (F) Any arbitration panel considering the matters 
                set forth in this section shall issue a written award 
                specifying a net settlement amount due from one party 
                or the other as a result of the termination of the 
                reinsurance contract. The court shall confirm that 
                award absent proof of statutory grounds for vacating or 
                modifying arbitration awards under the Federal 
                Arbitration Act.
                    (G) If the net settlement amount agreed or awarded 
                pursuant to this section is payable by the reinsurer, 
                the reinsurer shall pay the amount due to either the 
                estate or to the guaranty association, whichever is 
                entitled thereto, subject to any applicable set-off 
                under section 958. If the net settlement amount agreed 
                or awarded pursuant to this section is payable by the 
                national insurer, the reinsurer shall be entitled to 
                file a claim against the estate for that amount, which 
                claim shall be paid pursuant to the priorities 
                established in section 974. If the net settlement 
                amount is due the reinsurer on reinsurance contracts 
                for which the guaranty association had been paying 
                premiums and collecting recoveries from the reinsurer, 
                it shall be paid to the reinsurer by the guaranty 
                association.
    (g) Reinsurance Contracts Not Altered or Modified.--Except as 
otherwise expressly provided in this section, nothing herein shall 
alter or modify the terms and conditions of any reinsurance contract. 
Nothing herein shall abrogate or limit any rights of any reinsurer to 
claim that it is entitled to rescind a reinsurance contract. Nothing 
herein shall give a policyholder or beneficiary an independent cause of 
action against an indemnity reinsurer that is not otherwise set forth 
in the reinsurance contract.

                    Subtitle G--Creditors and Claims

SEC. 963. RIGHTS AND LIABILITIES OF CREDITORS FIXED UPON LIQUIDATION.

    The rights and liabilities of the national insurer and of its 
creditors, policyholders, shareholders, or members and all other 
persons interested in its assets, shall be fixed as of the date of the 
entry of the order of liquidation unless otherwise provided in this Act 
or by order of the court.

SEC. 964. CLAIMS FILING; LATE FILING.

    (a) Filing Proofs of Claims.--To the extent required, proof of all 
claims shall be filed with the receiver in the form required by section 
965 on or before the last day established by the court, which date 
shall not be later than 18 months after entry of the order of 
liquidation unless the court, for good cause shown, extends such time, 
and except that proofs of claim for cash surrender values or other 
investment values in life, disability income or long-term care 
insurance or annuities need not be filed unless the receiver expressly 
so requires.
    (b) List of Persons Who Have Not Filed.--Upon the rehabilitation or 
liquidation of any national insurer which has issued insurance policies 
insuring the lives of persons, the Director shall, within a reasonable 
time after the last day set for the filing of claims, make a list of 
the persons who have not filed proofs of claim and whose rights have 
not been reinsured, to whom it appears from the books of the national 
insurer, there are amounts owing on such insurance policies and the 
Director shall set opposite the name of each person such amount so 
owing to such person. The Director shall incur no personal liability by 
reason of any mistake in such list. Each person whose name shall appear 
upon said list shall be deemed to have duly filed prior to the last day 
set for filing of claims a proof of claim for the amount set opposite 
his or her name on said list.
    (c) Late Filing.--The receiver shall permit a claimant making a 
late filing to share in distributions, including a ratable share of 
distributions previously made, whether past or future, as if the claim 
were not late-filed, to the extent that the payment will not prejudice 
the orderly administration of the receivership, under the following 
circumstances:
            (1) The existence of the claim was not known to the 
        claimant and the claimant filed the claim as promptly as 
        reasonably possible after learning of it.
            (2) The claim is filed pursuant to subsection (b) of 
        section 974.
            (3) The valuation under section 968 of security held by a 
        secured creditor shows a deficiency, and the claim is filed 
        within 30 days after the valuation.
    (d) Late Claims by Guaranty Associations and by Reinsurers.--The 
receiver shall permit guaranty associations, and those reinsurers whose 
reinsurance contracts are terminated pursuant to section 962, to file 
claims late and to receive a ratable share of distributions previously 
made as if such claims were not late.
    (e) Other Late Claims.--Notwithstanding the foregoing, the receiver 
may consider and allow a late-filed claim which is not covered by 
subsection (c) of this section and permit it to receive distributions 
as if it had not been filed late, to the extent such treatment will not 
prejudice the orderly administration of the receivership. The late-
filing claimant shall receive distributions in the same percentage as 
other claimants in class 6, pursuant to subsection (g) of section 975.

SEC. 965. PROOF OF CLAIM.

    (a) Content of Proof of Claim.--A proof of claim shall consist of a 
statement signed by or on behalf of the claimant that includes all of 
the following that are applicable--
            (1) the particulars of the claim, including any 
        consideration given for it;
            (2) the identity and amount of any security for the claim;
            (3) the payments made on the debt, if any;
            (4) that the sum claimed is justly owing and that there is 
        no set off, counterclaim, or defense to the claim;
            (5) any right of priority of payment or other specific 
        right asserted by the claimants;
            (6) the name and address of the claimant and the attorney 
        who represents him or her, if any; and
            (7) the claimant's social security or Federal employer 
        identification number.
    (b) Form Permitted.--The receiver may require that a prescribed 
form be used and may require that other information and documents be 
included.
    (c) Supplementary Information or Evidence.--The receiver may 
request the claimant to present information or evidence supplementary 
to that required under subsection (a) at any time and may take 
testimony under  oath, require production of affidavits or depositions, 
or otherwise obtain additional information or evidence.
    (d) Single Omnibus Proof of Claim by Guaranty Association.--Any 
guaranty association shall be permitted to file a single omnibus proof 
of claim for all claims of the guaranty association in connection with 
the payment of claims of the insolvent national insurer. The omnibus 
proof of claim may be periodically updated by the guaranty association 
and the guaranty association may be required to submit a reasonable 
amount of documentation in support of the claim.

SEC. 966. ALLOWANCE OF CLAIMS.

    (a) Claims Review.--The receiver shall review all claims duly filed 
in the receivership proceeding and shall further investigate as he or 
she considers necessary. Consistent with the provisions of this title, 
the receiver may compound, compromise or in any other manner negotiate 
the amount for which claims will be recommended to the court unless the 
receiver is required by law to accept claims as settled by a person or 
organization, including a guaranty association, subject to any 
statutory or contractual rights of the affected reinsurers to 
participate in the claims allowance process.
    (b) Contingent or Unliquidated Claims.--Except as provided in 
section 967, a contingent or unliquidated claim may not be allowed 
unless such claim becomes absolute on or before the date established by 
the court.
    (c) Unmatured Claims.--A claim that is unmatured as of the date 
established by the court may be allowed as if it were mature, except it 
shall be discounted at the higher of the legal rate of interest 
accruing on judgments or the rate of interest available on United 
States Treasury securities of approximately the same maturity.
    (d) Judgment or Order Against an Insured or National Insurer.--A 
judgment or order against an insured or the national insurer entered 
after the date of the filing of a successful petition for 
rehabilitation or liquidation and a judgment or order against an 
insured or the national insurer entered at any time by default or by 
collusion need not be considered as evidence of liability or of the 
quantum of damages. A judgment or order against an insured or the 
national insurer entered within 120 days before the filing of the 
petition need not be considered as evidence of liability or of the 
quantum of damages.
    (e) Employment Contract Claims.--Claims under employment contracts 
by directors, principal officers or persons in fact performing similar 
functions or having similar powers are limited to payment for services 
rendered prior to any order of rehabilitation or liquidation.
    (f) Claims Arising From Transferred Policies.--No claim based on 
breach of any policy of insurance shall be allowed against a reinsurer 
where such policy has been transferred to a new assuming insurer.
    (g) Total Liability.--The total liability of the national insurer 
to all claimants arising out of the same act or policy shall be no 
greater than its total liability would be were the national insurer not 
in rehabilitation or liquidation.
    (h) Small Claims Disallowed.--Claims equal to or less than $50 
shall be disallowed.

SEC. 967. ALLOWANCE OF CONTINGENT AND UNLIQUIDATED CLAIMS.

    (a) In General.--A reported claim of an insured or third party may 
be allowed, regardless of the fact that it was contingent or 
unliquidated as of the date established under section 964, if any 
contingency is removed in accordance with subsection (b) of this 
section and the value of the claim is determined in accordance with 
subsection (c) of this section.
    (b) Contingent Claim.--A contingent claim may be allowed--
            (1) if the claimant has presented proof of the insurer's 
        obligation to pay reasonably satisfactory to the receiver; or
            (2)(A) the claim was based upon a cause of action against 
        an insured of the national insurer;
            (B) it may be reasonably inferred from proof presented upon 
        the claim that the claimant would be able to obtain a judgment; 
        and
            (C) the person has furnished suitable proof, unless the 
        court for good cause shown shall otherwise direct, that no 
        further valid claims can be made against the national insurer 
        arising out of the cause of action other than those already 
        presented.
    (c) Unliquidated Claim.--
            (1) An unliquidated claim may be allowed if--
                    (A) its amount has been determined; or
                    (B) its amount remains undetermined, the valuation 
                of the unliquidated claim may be made by estimate 
                whenever the receiver determines that either 
                liquidation of the claim would unduly delay the 
                administration of the receivership proceeding or that 
                the administrative expense of processing and 
                adjudicating the claim or group of claims of a similar 
                type would be unduly excessive when compared with the 
                assets that are estimated to be available for 
                distribution with respect to the claim.
            (2) Any estimate shall be based on an accepted method of 
        valuing claims with reasonable certainty, such as actuarial 
        evaluation.

SEC. 968. RESERVE FOR THIRD PARTY CLAIMS AGAINST INSURED.

    (a) Third Party Filers.--If a third party asserts a cause of action 
against an insured, the third party may file a claim, which claim may 
be allowed as provided in section 966.
    (b) Filing by Insured.--Whether or not the third party files a 
claim, the insured may file a claim on his or her behalf. The receiver, 
in his or her discretion, may elect to evaluate such claim under 
section 967(c) or subsection (c) of this section.
    (c) Elimination of Claim.--The receiver may estimate the amount of 
an insured's reported claim after consideration of the probably outcome 
of any pending action against the insured on which the claim is based, 
the probable damages recoverable in the action and the probable costs 
and expenses of defense. Upon the receiver's petition and after 
approval by the court, the receiver shall set aside funds equal to the 
dividend which would be payable on the claim as estimated, pending the 
outcome of litigation and negotiation between the insured and the third 
party. The receiver may reconsider the amount withheld under this 
subsection on the basis of additional information and petition the 
court as he or she deems appropriate. After notice and a hearing, the 
court may amend its allowance as appropriate. As claims against the 
insured are settled or barred, the claim of the insured shall be 
allowed and there shall be paid from the amount reserved the same 
percentage dividend as was paid on other claims of the same priority, 
based on the lesser of--
            (1) the amount actually due from the insured on the basis 
        of a judgment or by agreement with the third party, plus the 
        reasonable costs and expense of defense; or
            (2) the amount of the estimate approved by the court and 
        for which provision was made in accordance with this 
        subsection.
After all claims are settled or barred, any sum remaining from the 
amount withheld shall revert to the undistributed assets of the 
national insurer.
    (d) Multiple Claims.--If several claims founded upon one policy are 
filed, whether by third parties or as claims by the insured under this 
section, and the aggregate allowed of the claims exceeds the aggregate 
policy limits, the policy limits shall be apportioned ratably among the 
allowed claims. If any insured's claim is subsequently reduced under 
subsection (c), the amount thus freed shall  be apportioned ratably 
among the claims which have been reduced under this subsection.
    (e) Exception.--No claim may be allowed under this section to the 
extent it is covered by any guaranty association.

SEC. 969. ALLOWANCE OF SECURED CLAIMS.

    (a) Determination of Value of Security.--The value of security held 
by a secured creditor shall be determined--
            (1) by converting the same into money according to the 
        terms of the agreement pursuant to which the security was 
        delivered to the creditors; or
            (2) by agreement, arbitration, compromise, or litigation 
        between the creditor and the receiver.
    (b) Procedure.--The determination shall be under the court's 
supervision and control with due regard for the receiver's 
recommendation. The amount determined shall be credited upon the 
secured claim and any deficiency shall be treated as an unsecured 
claim. If the claimant surrenders his or her security to the receiver, 
the entire claim shall be allowed as if unsecured.

SEC. 970. PRELIMINARY NOTICE OF CLAIMS DETERMINATION.

    (a) In General.--Except as otherwise provided in this title, after 
consideration of claims in accordance with sections 966, 967, 968, and 
969 the receiver shall provide notice of his or her preliminary 
determination and of the right to object to the claimant or the 
claimant's representative and to any reinsurer which is or would be 
liable to the receiver in respect of the claim if it were allowed. 
Notice shall be sent by first class mail to the intended recipient's 
last known address, according to the receiver's records, and shall 
include a description of the claim proposed to be allowed or denied, 
the rationale for such allowance or denial, and the procedures for 
submitting objections to the receiver.
    (b) Filing of Objections.--Within 60 days from the mailing of the 
notice, the claimant or the reinsurer may file written objections with 
the receiver. Any claimant or reinsurer who fails to object on a timely 
basis may not further object to that claim determination.
    (c) Submission of Unresolved Objection to Court.--Whenever an 
objection is filed with the receiver and the matter is not resolved by 
the parties, the receiver shall submit the claim with his or her final 
determination to the court in accordance with section 973.

SEC. 971. CLAIMS OF CO-DEBTORS.

    (a) In General.--If a creditor, whose claim against an insurer is 
secured in whole or in part by the undertaking of another person, fails 
to prove and file that claim, the other person may do so in the 
creditor's name and shall be subrogated to the rights of the creditor, 
whether the claim has been filed by the creditor or by the other person 
in the creditor's name, to the extent that he or she discharges the 
undertaking. In the absence of an agreement with the creditor to the 
contrary, the other person shall not be entitled to any distribution 
until the amount paid to the creditor on the undertaking plus the 
distributions paid on the claim from the insurer's estate to the 
creditor equals the amount of the entire claim of the creditor. Any 
excess received by the creditor shall be held by him or her in trust 
for the other person.
    (b) Definitions.--For purposes of this section, the term ``other 
person'' is not intended to apply to a guaranty association.

SEC. 972. APPROVAL OF AGREED CLAIMS.

    (a) In General.--Claims with respect to which no objection is filed 
on a timely basis under 970 shall be treated as agreed claims under 
this section.
    (b) Unresolved Disputes.--Unresolved disputes shall be determined 
in accordance with section 973 or as otherwise provided in this Act.
    (c) Report of Agreed Claims.--As soon as practicable, the receiver 
shall file with the court a report of the agreed claims against the 
national insurer with his or her recommendation. The report shall 
include the name and address of each claimant and the amount of the 
claim finally recommended, if any. If the national insurer has issued 
annuities or life insurance policies, the receiver shall report the 
persons, according to the records of the national insurer, to whom 
amounts are owed as cash surrender values or other investment value and 
the amounts owed.
    (d) Notice.--Notice of the proposed allowance or disallowance of 
any claim under this section shall be given as provided at section 947.
    (e) Court Action.--The court may, not sooner than 14 days from the 
date notice was mailed pursuant to subsection (d), approve, disapprove 
or modify the receiver's claim report.

SEC. 973. DENIAL OF A CLAIM.

    (a) Notice of Denied Claim.--If the receiver denies a claim in 
whole or in part, he or she shall provide notice of the final 
determination and hearing as provided at section 947, by first class 
mail at the last known address, according to the receiver's records.
    (b) Hearing.--A hearing shall be held with respect to the claim 
determination, not sooner than 14 days from the date notice was mailed 
pursuant to subsection (a) of this section.

SEC. 974. CLAIM BY CREDITOR IN RECEIPT OF VOIDABLE TRANSFER.

    (a) In General.--The court shall disallow the claim of any entity 
from which property is recoverable under section 956 or that is the 
transferee of a transfer voidable under section 951, 952, 953, or 
section 955, or a similar provision of the laws of the United States 
other than under this title, unless such entity or transferee has paid 
the amount, or turned over any such property, for which such entity or 
transferee is liable under said sections. If the avoidance is effected 
by a proceeding in which a final judgment has been entered, the claim 
shall not be allowed unless the money is paid or the property is 
delivered to the receiver within 30 days from the date of the entering 
of the final judgment, unless the court allows further time for an 
appeal or other continuation of the proceeding.
    (b) Excused Late Filing.--A claim arising by reason of the recovery 
of property under section 949 or section 956, whether voluntary or 
involuntary, may be filed as an excused late filing under subsection 
(c) of section 964 if filed within 30 days from the date of the 
avoidance or within the further time allowed by the court.

SEC. 975. PRIORITY OF DISTRIBUTION.

    (a) In General.--The priority of distribution from the national 
insurer's general assets shall be in accordance with the order in which 
each class of claims is set forth in this section. Every claim in each 
class shall be paid in full or adequate funds retained for their 
payment before the members of the next class receive payment. Except as 
provided in subsection (b)(7) of this section, section 937, and 
subsection (e) of section 978, subclasses shall not be established 
within a class.
    (b) Class 1.--Class 1 claims shall be the costs and expenses of 
administration, including the following:
            (1) The actual and necessary costs of preserving or 
        recovering the national insurer's assets.
            (2) Reasonable compensation for all services rendered by or 
        to the receiver.
            (3) Any necessary filing fees.
            (4) The fees and mileage payable to witnesses.
            (5) The reasonable expenses of a guaranty association, 
        including overhead, salaries and other general administrative 
        expenses, allocable to such receivership, to include 
        administrative and claims handling expenses and expenses in 
        connection with arrangements for ongoing coverage, other than 
        expenses incurred in the performance of duties relating to the 
        detection and prevention of insolvencies.
            (6) Amounts described in the second sentence of subsection 
        (c) of section 962.
            (7) Unsecured loan and other credit obligations incurred by 
        the receiver. Any such obligation shall have priority over all 
        other costs of administration.
    (c) Class 2.--Class 2 claims shall be as follows:
            (1) All claims under insurance policies, including claims 
        under nonassessable policies for unearned premium; all other 
        claims of a guaranty association not included in Class 1 or 
        Class 5; and in the case of a guaranty association covering 
        life, disability income or long-term care insurance or 
        annuities, all claims as a creditor of the impaired or 
        insolvent national insurer for all payments of and liabilities 
        incurred on behalf of covered claims or covered obligations of 
        the national insurer and for the funds needed to reinsure those 
        obligations with a solvent insurer.
            (2) If it is provided by written agreement, statute or rule 
        that the assets in a separate account are not chargeable with 
        the liabilities arising out of any other business of the 
        national insurer, that part of a claim that includes a separate 
        account shall be satisfied out of the assets in the separate 
        account equal to the reserves maintained in the separate 
        account under the separate account agreement. The remainder of 
        the claim shall be treated as a Class 2 claim to the extent 
        that reserves therefore have been established in the national 
        insurer's general account pursuant to statute, rule or the 
        separate account agreement.
            (3) A claim involving liabilities and other obligations of 
        a protected cell established pursuant to section 323 shall be 
        satisfied solely out of the assets in the protected cell. The 
        remainder of the claim shall be deemed to be zero for purposes 
        of this title.
            (4) Notwithstanding the foregoing, the following claims 
        shall be excluded from Class 2 priority:
                    (A) Obligations of the insolvent national insurer 
                arising out of reinsurance contracts issued by the 
                national insurer.
                    (B) Obligations incurred after the expiration date 
                of the insurance policy or after the insurance policy 
                has been replaced by the insured or canceled at the 
                insured's request or after the insurance policy has 
                been canceled as provided in this title. 
                Notwithstanding this subsection, unearned premium 
                claims on insurance policies, other than reinsurance 
                contracts issued by the insurer, shall not be excluded.
                    (C) Any claim which is in excess of any applicable 
                limits provided in the insurance policy issued by the 
                insolvent national insurer.
                    (D) Any amount accrued as punitive or exemplary 
                damages unless expressly covered under the terms of the 
                insurance policy.
                    (E) Tort claims of any kind against the national 
                insurer and claims against the national insurer for bad 
                faith or wrongful settlement practices.
    (d) Class 3.--Class 3 claims shall be debts due to employees for 
services performed to the extent that they do not exceed $1,000 and 
represent payment for services performed within 1 year before the 
filing of the petition for receivership proceeding. Officers and 
directors are not entitled to the benefit of this priority. This 
priority is in lieu of any other similar priority that may be 
authorized by law as to wages or compensation of employees.
    (e) Class 4.--Class 4 shall be claims of general creditors not 
included in Classes 1 through 3, including claims under reinsurance 
contracts issued by the insurer, claims by reinsurers for amounts due 
under reinsurance contracts terminated pursuant to subsection (f) of 
section 962 and claims of guaranty associations for assessments not 
paid by the national insurer.
    (f) Class 5.--Class 5 claims shall be claims of the Federal 
Government and any State or local government not included in Class 2. 
Claims, including those of the Federal Government, or of any State or 
local governmental body for a penalty or forfeiture, are allowed in 
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 incurred. The remainder of the 
claims shall be postponed to the class of claims under subsection (i).
    (g) Class 6.--Class 6 claims shall be late filed claims which would 
otherwise be classified in Classes 2 through 5.
    (h) Class 7.--Class 7 claims shall be surplus, capital or 
contribution notes, or similar obligations, and premium refunds on 
assessable policies.
    (i) Class 8.--Class 8 claims shall be the claims of shareholders or 
other owners.

SEC. 976. LIQUIDATOR'S PROPOSAL FOR EARLY ACCESS DISBURSEMENTS.

    (a) In General.--Within 120 days of a final order of liquidation 
the liquidator shall make application to the court for approval of a 
proposal to make early access disbursements out of marshaled assets, to 
any guaranty association having obligations because of the insolvency 
of a national insurer.
    (b) Content of Proposal.--The proposal shall at least include 
provisions for--
            (1) reserving amounts for the payment of expenses of 
        administration and the payment of claims of secured creditors, 
        to the extent of the value of the security held, and claims 
        falling within the priorities established in Class 1 and, to 
        the extent not within guaranty association coverage, Class 2 of 
        section 975;
            (2) initial disbursement of the assets marshaled to date, 
        which shall be as soon as practicable and in any case not later 
        than 120 days after approval of the early access plan, and 
        subsequent disbursement of assets which shall be at least 
        annually;
            (3) equitable allocation of disbursements to each of the 
        guaranty associations entitled thereto;
            (4) the securing by the liquidator from each of the 
        guaranty associations entitled to disbursements pursuant to 
        this section of an agreement to return to the liquidator such 
        assets, together with investment income actually earned on 
        assets previously disbursed, as may be required to pay claims 
        of secured creditors and claims falling within the priorities 
        established in section 975 accordance with such priorities, and 
        no bond shall be required of the guaranty association;
            (5) a full report to be made by each guaranty association 
        to the liquidator accounting for all assets so disbursed to the 
        guaranty association, all disbursements made therefrom, any 
        interest earned by the guaranty association on the assets and 
        any other matter as the court may direct;
            (6) disbursements to guaranty associations in sums as large 
        as possible, subject to the limitations set forth in subsection 
        (b)(1); if the liquidator determines that there are 
        insufficient assets to disburse at the time of any required 
        disbursement, the liquidator shall make application to the 
        court, with notice to the affected guaranty associations 
        pursuant to subsection (b) of section 916 for approval of the 
        determination not to disburse, stating the reasons therefore;
            (7) the liquidator's proposal shall provide for 
        disbursements to the guaranty associations in amounts estimated 
        at least equal to the sum of--
                    (A) claim payments and allocated loss adjustment 
                expenses of the guaranty association; and
                    (B) reserves as established by the guaranty 
                association for reported unpaid claims and allocated 
                loss adjustment expenses; amounts used for (A) and (B) 
                above shall be those reported to the liquidator by the 
                guaranty association in its most recent financial 
                report to the liquidator; the liquidator's proposal 
                shall further provide that if the assets available for 
                disbursement from time to time do not equal or exceed 
                the amount of claim payments made or to be made by the 
                guaranty association then disbursements shall be in the 
                amount of available assets; the liquidator shall 
                liquidate the assets of the national insurer in an 
                expeditious manner, but is not required to make forced 
                or quick sales that would result in obtaining less than 
                market value for assets; unless otherwise provided for 
                by the court, the reserves of the insolvent national 
                insurer as reflected in its records on the date of the 
                order of liquidation shall be used for purposes of 
                determining the pro rata allocations of initial 
                disbursements among eligible guaranty associations; and
            (8) the liquidator may not offset the amount to be 
        disbursed to any guaranty association by the amount of any 
        ``special deposit'' or any other statutory deposit or asset of 
        the insolvent national insurer unless such deposit has been 
        forwarded to the association.
    (c) Guaranty Association Method.--Nothing in this section shall 
affect the method in which life insurance guaranty associations or 
property casualty associations compute their coverage obligations.

                          Subtitle H--The Plan

SEC. 977. WHO MAY FILE A PLAN.

    (a) In General.--Except as otherwise provided in this section, only 
the receiver may file a plan within 1 year after the earlier of the 
date of the order of rehabilitation or liquidation under this title.
    (b) Other Permitted Plan Filers.--Any party in interest may file a 
plan only if--
            (1) the receiver has not filed a plan within 1 year after 
        the earlier of the date of the order of rehabilitation or 
        liquidation under this title; or
            (2) the receiver has not filed a plan that has been 
        approved by the court, within 18 months after the earlier of 
        the date of the order of rehabilitation or liquidation under 
        this title.
    (c) Reduction or Increase in Time Periods.--On request of a party 
in interest made within the respective periods specified in subsections 
(b)(1) and (b)(2) and after such notice as the court deems appropriate, 
the court may for cause reduce or increase the time periods of either 
subsection.
    (d) Plan Objections or Modifications.--Once a plan has been filed, 
any party in interest may object to the plan or propose modifications 
to it.

SEC. 978. CONTENTS OF A PLAN.

    (a) Required Plan Provisions.--A plan shall--
            (1) except as provided at subsection (e), provide the same 
        treatment for each claim or interest of a particular class, 
        unless the holder of a particular claim or interest agrees to a 
        less favorable treatment of such particular claim or interest;
            (2) provide adequate means for the plan's implementation;
            (3) contain adequate information concerning the financial 
        condition of the national insurer and the operation and effect 
        of the plan, in sufficient detail as far as is reasonably 
        practicable in light of the nature and history of the national 
        insurer, the condition of the national insurer's books and 
        records and the nature of the plan. Alternatively, the plan 
        itself may identify the sources of such information as 
        contained in the document depository established pursuant to 
        section 942;
            (4) provide for the transfer of books, records, documents 
        and other information relevant to the duties and obligations 
        covered by the plan;
            (5) provide for the notice to parties in interest of the 
        provisions of the plan and an opportunity to be heard;
            (6) provide for the termination of the receivership 
        proceedings and discharge of the receiver, if appropriate; and
            (7) provide for the continuation of policies of insurance 
        (subject to the terms of the policies, including any 
        restructured provisions effected under subsection (d) of this 
        section) not protected (in whole or in part) under subtitle A 
        of title X, and for reinsurance contracts on such policies of 
        insurance, that are not terminable by the insurer under the 
        terms of the policies of insurance or by the receiver pursuant 
        to subsection (f) of section 962.
    (b) Permitted Plan Provisions.--A plan may include any other 
provisions not inconsistent with the provisions of this title, 
including--
            (1) payment of a dividend pursuant to section 981;
            (2) assumption or reinsurance of all or a portion of the 
        national insurer's remaining liabilities by, and transfer of 
        assets to, an insurer or other entity;
            (3) to the extent appropriate, provide for application of 
        the market conduct standards contained in subtitle F of title 
        III to any entity administering claims on behalf of the 
        receiver or assuming direct liabilities of the national 
        insurer;
            (4) contracting with a State guaranty association or any 
        other qualified entity to perform the administration of claims 
        covered and/or not covered by guaranty associations;
            (5) a provision for annual independent financial and 
        performance audits of any entity administering claims on behalf 
        of the receiver which is not otherwise subject to examination 
        pursuant to section 202(a); and
            (6) termination of the national insurer's liabilities as of 
        a date certain.
    (c) Liquidation Order; Liquidating Trust Permitted.--If the court 
has entered an order of liquidation pursuant to this title, any plan 
may include provisions which--
            (1) establish a liquidating trust pursuant to section 982;
            (2) establish one or more reinsurance recoverable trusts 
        pursuant to section 986; or
            (3) require mandatory negotiation and arbitration 
        procedures pursuant to section 985.
    (d) Insurers of Life, Disability Income, or Long-Term Care 
Insurance or Annuities.--If the national insurer has provided life, 
disability income, or long-term care insurance or annuities, the plan 
may modify and restructure insurance policies or provide substitute 
policies of insurance, subject to the limitations imposed under 
subsection (b)(2) of section 1009.
    (e) Certain Classified Claims.--As to claims which are classified 
under subsections (c), (e), or (f) of section 975, a plan may designate 
and separately treat one or more separate sub-classes consisting only 
of those claims within such classes that are for or reduced to de 
minimis amounts. A de minimis amount shall be any amount equal to or 
less than a maximum de minimis amount approved by the court as being 
reasonable and necessary for administrative convenience.

SEC. 979. COURT APPROVAL OF PLAN.

    (a) Conditions of Approval.--After notice and a hearing, the court 
shall approve a plan only if it finds that--
            (1) the plan complies with the applicable provisions of 
        this title; and
            (2) with respect to each class of claims, each claimant of 
        such class will receive or retain under the plan on account of 
        such claim property of a value, as of the effective date of the 
        plan, that is not less than the amount that such claimant would 
        receive or retain if the insurer were liquidated within a time 
        period that is reasonable.
    (b) Insurers of Life, Disability Income, or Long-Term Care 
Insurance or Annuities; Consent by Guaranty Associations.--
Notwithstanding any other provision of this subtitle, if the plan 
proposes to restructure or substitute life, disability income, or long-
term care insurance policies or annuity contracts, the court may not 
approve the plan unless each guaranty association whose obligations are 
affected in any way by such modification or restructuring or 
substitution has given its written consent thereto. In the event that 
obligations under the policies or contracts are reinsured by one or 
more reinsurance contracts, those reinsurance contracts may either 
remain in force with the consent of the reinsurer or be terminated 
pursuant to subsection (f) of section 962.

SEC. 980. EFFECT OF COURT APPROVAL OF PLAN.

    (a) In General.--Upon its entry, the provisions of a plan and the 
order approving it bind the national insurer, any entity acquiring 
property under the plan, all policyholders, creditors, and equity 
holders of the national insurer.
    (b) Status of Property Dealt With by Plan.--Except as provided in 
the plan or in the order approving the plan, after court approval of a 
plan, the property dealt with by the plan shall be free and clear of 
all claims and interests of creditors and equity holders of the 
national insurer.

SEC. 981. PARTIAL AND FINAL DISTRIBUTIONS OR DIVIDENDS.

    (a) In General.--Pursuant to a plan, a receiver may declare and pay 
a partial or final distribution or dividend to claimants whose claims 
have been allowed as provided in this title, or fixed as provided in 
subsection (c) of this section.
    (b) Basis for Distribution of Dividend.--In determining the 
percentage of distributions or dividends to be paid on such claims, the 
receiver may consider the estimated value of the assets (including 
estimated reinsurance recoverables and the estimated value of the 
insurer's liabilities) and the estimated value of the national 
insurer's liabilities (including estimated liabilities for unpaid 
losses and loss expenses and for incurred but not reported losses and 
loss expenses).
    (c) Estimations.--The estimation authorized pursuant to this 
section may be used for purposes of fixing a creditor's claim in the 
estate and for determining the percentage of a partial or final 
distribution or dividend.
    (d) Claims of Reinsurers; Incurred But Not Reported Losses.--
Nothing in this section or any other section of this title, shall be 
construed as authorizing the receiver, or any other entity, to compel 
payment from a reinsurer on the basis of estimated incurred but not 
reported losses or loss expenses, except with respect to claims allowed 
pursuant to section 967. The obligation of reinsurers to make payments 
to the national insurer shall be determined on the basis of reported 
claims that have been allowed pursuant to subtitle G.

SEC. 982. TRANSFER OF ASSETS AND LIABILITIES TO LIQUIDATING TRUST.

    (a) If there has been an order of liquidation entered in the 
receivership proceeding then, pursuant to a plan, a receiver may 
establish one or more liquidating trusts. In the case of a liquidating 
trust established in connection with a plan for a national insurer that 
issues property and casualty insurance: Some or all of the national 
insurer's assets and liabilities may be transferred to such trust.
    (b) For purposes of this section:
            (1) A future claim under this section is one which is 
        incurred but not reported to the national insurer as of the 
        date the liquidating trust is established pursuant to this 
        section.
            (2) A future claimant under this section is a person who 
        has, or may have, a future claim against the national insurer.
    (c) The receiver may declare and pay distributions or dividends as 
provided in section 981 while reserving for the benefit of future 
claimants a similar percentage dividend to be paid on future claims in 
accordance with subsection (d) of this section.
    (d) Future claimants may share in the proceeds of the liquidating 
trust only when, and to the extent, that any future claim is allowed 
pursuant to subtitle G.
    (e) The receiver may petition the court for the appointment of a 
future claim representative who shall have the power to represent the 
interests of those who may assert future claims against the national 
insurer. Notwithstanding this subsection, a future claimant may elect 
to represent his, her or its own interests and may opt out of being 
represented by the future claims representative.
    (f) The liquidator may terminate liquidation proceedings and/or 
dispose of property free and clear of the obligation to future 
claimants or any other individual or entity as long as such property 
was disposed of in accordance with this section and other applicable 
provisions of a plan authorized by section 978.

SEC. 983. COLLATERALIZATION OF CASE RESERVES AND INCURRED BUT NOT 
              REPORTED LOSSES.

    (a) Upon the entry of a receivership order, and continuing 
thereafter, reinsurers that are required to collateralize their 
obligations to the national insurer pursuant to contract or law shall 
be required to maintain such collateralization in accordance with the 
terms of the applicable law or contract.
    (b) Any dispute concerning the appropriate amount of collateral 
shall be determined in accordance with the procedure established in 
section 985(b).

SEC. 984. COMMUTATIONS.

    (a) The receiver may, in his or her discretion, enter into a 
voluntary commutation and release of all obligations arising from 
reinsurance agreements entered into by the national insurer, subject to 
the approval of the court.
    (b) Nothing in this section, or any other provision of this Act, 
shall be construed to override or impair any provision in a reinsurance 
agreement which establishes a commercially reasonable and actuarially 
sound method for valuing and commuting the obligations of the parties 
to the reinsurance agreement; provided, however, that such commutation 
provision shall not be effective if it is demonstrated to the court 
that at the time such provision was entered into, the parties had 
reasonable cause to believe that the national insurer was insolvent or 
was about to become insolvent. Any such contractual commutation 
provision entered into within one year of the liquidation order of the 
national insurer shall be rebuttably presumed to have been entered into 
with reasonable cause to believe that the national insurer was 
insolvent or about to become insolvent.

SEC. 985. MANDATORY NEGOTIATION AND ARBITRATION.

    (a)(1) The receiver may apply to the court, with notice to the 
other party to the reinsurance agreement, for an order requiring the 
parties to submit to a mandatory negotiation and arbitration procedure 
in accordance with subsection (b), if--
            (A) the ratio of the national insurer's actuarially 
        estimated casualty losses to the sum of (i) reported claims on 
        casualty losses allowed by the court and (ii) actuarially 
        estimated casualty losses, is 25 percent or less; or
            (B) the reinsurer's total adjusted capital is at or below 
        200 percent of its authorized control level for risk-based 
        capital purposes.
    (2) For purposes of this subsection--
            (A) the term ``casualty losses'' means the national 
        insurer's aggregate losses arising out of insurance contracts 
        in the following lines: Farm owners Multiperil, Homeowners 
        Multiperil, Commercial Multiperil, Medical Malpractice, 
        Workers' Compensation, Other Liability, Products Liability, 
        Auto Liability, Aircraft (all peril) and International (of the 
        foregoing lines); and
            (B) the term ``actuarially estimated casualty losses'' 
        means actuarially estimated incurred but not reported casualty 
        losses and estimated case reserves for claims not yet allowed 
        by the court.
    (b)(1) Within 90 days of the court's order pursuant to subsection 
(a) of this section, or from the date that either party to a 
reinsurance agreement demands arbitration pursuant to section 983(b), 
each party shall provide the other party with an estimate of the 
liabilities between the parties and all relevant documents and other 
information supporting the estimate, including but not limited to: 
underlying premium, commission and loss data; estimated incurred but 
not reported losses; projected ultimate payout; net present value and 
the discount factor proposed.
    (2) If the parties are unable to reach agreement within 90 days 
following the submission of materials required in paragraph (1) of this 
subsection, either party may initiate the arbitration procedure set 
forth in paragraph (3) of this subsection by providing the other party 
with a demand for arbitration. A copy of the demand shall be promptly 
provided to the court by the liquidator.
    (3) Venue for the arbitration shall be within the district of the 
court's jurisdiction or such other location as may be agreed to by the 
parties.
            (A) Within 30 days of the responding party's receipt of the 
        arbitration demand, each party shall appoint an arbitrator who 
        is a disinterested active or inactive officer, executive or 
        other professional with no less than 10 years' experience in or 
        serving the insurance or reinsurance industry. The two 
        arbitrators shall appoint an independent, impartial, 
        disinterested umpire who is an active or inactive officer or 
        executive of an insurance or reinsurance company. If the 
        arbitrators are unable to agree on an umpire, each arbitrator 
        shall provide the other with the names of three qualified 
        individuals, each arbitrator shall strike two names from the 
        other's list and the umpire shall be chosen by drawing lots 
        from the two remaining individuals.
            (B) Within 60 days following the appointment of the umpire, 
        the parties shall, unless otherwise ordered by the panel, 
        submit to the arbitration panel their estimates of the 
        liabilities between the parties and other documents and 
        information relevant to the determination of the parties' 
        rights and obligations under the reinsurance agreements, 
        including but not limited to: underlying premium, commission 
        and loss data; estimated incurred but not reported losses; 
        projected ultimate payout; net present value and the discount 
        factor proposed.
            (C) The arbitration panel shall issue an award with respect 
        to the parties' obligations and the court shall confirm such 
        award absent proof of statutory grounds for vacating or 
        modifying arbitration awards under the Federal Arbitration Act.
            (D) The time periods set forth in this subsection may be 
        extended upon mutual agreement of the parties.
    (c) Within 30 days of the issuance of the award pursuant to a 
receiver's application under subsection (a)(1) of this section in an 
arbitration commenced pursuant to section 983(b) over the appropriate 
amount of collateral, either the reinsurer shall post additional 
collateral or the national insurer shall release collateral, as 
necessary to bring the actual amount of the collateral to the amount 
provided for in the arbitration panel's award.
    (d) Within 30 days of issuance of the award entered pursuant to a 
receiver's application under subsection (a)(1) of this section, the 
reinsurer shall give notice to the receiver that it--
            (1) opts to voluntarily commute its liabilities to the 
        insurer for the amount of the award in return for a full and 
        complete release of all liabilities between the parties, 
        whether past, present or future; or
            (2) opts not to commute its liabilities to the insurer, in 
        which case the reinsurer shall establish a reinsurance 
        recoverable trust in the amount of 102 percent of the award. 
        The trust shall be established and maintained in accordance 
        with section 986. The reinsurer shall pay the costs and fees 
        associated with establishing and maintaining the trust.
    (e) If the reinsurer notifies the receiver that it opts to commute 
its liabilities pursuant to subsection (d)(1), the receiver shall have 
30 days to--
            (1) accept the reinsurer's offer and tender to the 
        reinsurer a proposed commutation and release agreement 
        providing for a full and complete release of all liabilities 
        between the parties, whether past, present or future; or
            (2) reject the reinsurer's offer in exchange for the 
        reinsurer's establishment of a reinsurance recoverable trust. 
        If the reinsurer's offer to commute is rejected by the receiver 
        in accordance with this paragraph, the national insurer shall 
        share equally in the costs and fees associated with 
        establishing and maintaining the trust and the receiver shall 
        not initiate procedures pursuant to this section for a period 
        of 5 years from the date of the receiver's notification 
        pursuant to this subsection, provided that the receiver and 
        reinsurer may still initiate procedures pursuant to section 
        986(e).

SEC. 986. REINSURANCE RECOVERABLE TRUST PROVISIONS.

    (a) As used in this section--
            (1) the term ``beneficiary'' means the domiciliary 
        insurance commissioner, as receiver of the insurer for whose 
        sole benefit a reinsurance recoverable trust is established;
            (2) the term ``grantor'' means the reinsurer who has 
        established a reinsurance recoverable trust for the sole 
        benefit of the beneficiary;
            (3) the term ``qualified United States financial 
        institution'' means an institution that--
                    (A) is organized, or in the case of a United States 
                branch or agency office of a foreign banking 
                organization, licensed under the laws of the United 
                States or any State thereof and has been granted 
                authority to operate with fiduciary powers; and
                    (B) is regulated, supervised and examined by 
                Federal or State authorities having regulatory 
                authority over banks and trust companies; and
            (4) the term ``reinsurance recoverable trust'' means a 
        trust established pursuant to section 985.
    (b) The trust agreement governing a reinsurance recoverable trust 
shall--
            (1) be entered into between the beneficiary, the grantor 
        and a trustee, which shall be a qualified United States 
        financial institution;
            (2) create a trust account into which assets shall be 
        deposited in accordance with section 985; all assets in the 
        trust account shall be held by the trustee at the trustee's 
        office in the United States;
            (3) provide that the beneficiary shall have the right to 
        withdraw assets from the trust, only--
                    (A) if the claim was a reported claim allowed by 
                the court pursuant to subtitle G;
                    (B) where the beneficiary has notified the grantor, 
                in writing, of the court's allowance of the claim;
                    (C) if and to the extent that the amount to be 
                withdrawn exceeds any setoff, permitted by section 958, 
                due to the grantor;
                    (D) where 60 days has expired during which the 
                grantor has failed to either pay the claim or file 
                notice of a written dispute with respect to the claim 
                in accordance with the terms of the reinsurance 
                agreement; or
                    (E) if the beneficiary has complied with any 
                different or other terms and conditions mutually agreed 
                to by the beneficiary and the grantor in the trust 
                agreement;
            (4) require the trustee to--
                    (A) receive assets and hold all assets in a safe 
                place;
                    (B) determine that all assets are in such form that 
                the beneficiary, or the trustee upon direction by the 
                beneficiary, may whenever necessary negotiate any such 
                assets, without consent or signature from the grantor 
                or any other person or entity;
                    (C) furnish to the grantor and the beneficiary a 
                statement of all assets in the trust account upon its 
                inception and at intervals no less frequent than the 
                end of each calendar quarter;
                    (D) notify the grantor and the beneficiary within 
                10 days, of any deposits to or withdrawals from the 
                trust account;
            (5) be made subject to and governed by the laws of this 
        state;
            (6) prohibit the invasion of the trust corpus for the 
        purpose of paying compensation to, or reimbursing the expenses 
        of, the trustee;
            (7) provide that the trustee shall be liable for its 
        negligence, willful misconduct or lack of good faith;
            (8) provide that the trustee may resign upon delivery of a 
        written notice of resignation, effective not less than 90 days 
        after the beneficiary and grantor receive the notice and that 
        the trustee may be removed by the grantor by delivery to the 
        trustee and the beneficiary or a written notice of removal, 
        effective not less than 90 days after the trustee and the 
        beneficiary receive the notice, Provided, That no such 
        resignation or removal shall be effective until a successor 
        trustee has been duly appointed and approved by the beneficiary 
        and the grantor and all assets in the trust have been duly 
        transferred to the new trustee;
            (9) provide that the grantor shall have the full and 
        unqualified right to vote any shares of stock in the trust 
        account; subject to other provisions of this section, any 
        interest or dividends paid on shares of stock or other 
        obligations in the trust account, shall remain in the trust;
            (10) specify categories of investments reasonably 
        acceptable to the beneficiary and authorize the trustee to 
        invest funds and to accept substitutions, by the grantor, that 
        the trustee determines are at least equal in market value to 
        the assets withdrawn, Provided, That no investment or 
        substitution shall be made without prior approval from the 
        beneficiary, which shall not be unreasonably or arbitrarily 
        withheld;
            (11) provide that the beneficiary may at any time designate 
        a party to which all or part of the trust assets are to be 
        transferred; transfer may be conditioned upon the trustee 
        receiving, prior to or simultaneously, other specified assets;
            (12) specify the types of assets that may be included in 
        the trust account which shall consist only of cash in United 
        States dollars, certificates of deposit issued by a United 
        States bank and payable in United States dollars, and 
        investments permitted by this State's Insurance Act or any 
        combination of the above, Provided, That investments in or 
        issued by any entity controlling, controlled by, or under 
        common control with either the grantor or the beneficiary of 
        the trust shall not exceed five percent of total investments; 
        assets deposited in the trust account shall be valued according 
        to their current fair market value;
            (13) give the grantor the right to seek approval from the 
        beneficiary, which shall not be unreasonably or arbitrarily 
        withheld, to withdraw from the trust account all or any part of 
        the trust assets and transfer those assets to the grantor, 
        Provided, That--
                    (A) the grantor shall, at the time of withdrawal, 
                replace the withdrawn assets with other qualified 
                assets so as to maintain at all times the deposit in 
                the required amount; or
                    (B) after withdrawal and transfer, the market value 
                of the trust account is no less than 102 percent of the 
                award made pursuant to section 985(b)(3)(c);
            (14) provide for the return of any amount withdrawn in 
        excess of the actual amounts required for payment of reported 
        allowed claims under paragraph (3), and for interest payments 
        at a rate not in excess of the prime rate of interest on the 
        excess amounts withdrawn; and
            (15) provide for termination of the reinsurance recoverable 
        trust in accordance with subsection (f).
    (c) Nothing in this section shall be construed as altering the 
rights or obligations of the parties pursuant to contractual and 
statutory provisions providing for notice and the determination of 
claims.
    (d) The grantor shall, prior to depositing assets with the trustee, 
execute assignments or endorsements in blank, or transfer legal title 
to the trustee of all shares, obligations or any other assets requiring 
assignments, in order that the beneficiary, or the trustee upon the 
direction of the beneficiary, may whenever necessary negotiate these 
assets without consent or signature from the grantor or any other 
entity.
    (e) Either party may request that an arbitration panel review the 
amount held in a reinsurance recoverable trust. The court may order 
such review upon a demonstration that the amount in trust is either 
twenty five percent or more deficient or 25 percent or more in excess 
of the reinsurer's liabilities to the national insurer. Upon such a 
demonstration, parties shall reinitiate the procedures established in 
section 985(b).
    (f) A reinsurance recoverable trust shall terminate upon the 
earlier of--
            (1) the court approval of a voluntary commutation between 
        the grantor and the beneficiary pursuant to section 985;
            (2) the mutual agreement of the grantor and the 
        beneficiary; or
            (3) a finding by the court that the grantor has discharged 
        its liabilities to the beneficiary.
Upon termination of the trust account, all assets not previously 
withdrawn by the beneficiary, pursuant to paragraph (b)(3), shall, with 
written approval of the beneficiary, be delivered over to the grantor.

SEC. 987. LIQUIDATING TRUST PROVISIONS.

    (a) As used in this section--
            (1) the terms ``beneficiary'' and ``beneficiaries'' mean 
        the creditors of the insurer for whose sole benefit the 
        liquidating trust is established;
            (2) the term ``grantor'' means the domiciliary insurance 
        commissioner, as receiver of the insurer, or his or her 
        designee;
            (3) the term ``qualified U.S. financial institution'' has 
        the same meaning given such term in section 986; and
            (4) the term ``liquidating trust'' means a trust 
        established pursuant to section 986.
    (b) A liquidating trust shall be established by the grantor for the 
benefit of the beneficiaries, subject to approval of the court.
    (c) A trust agreement governing a liquidating trust shall be 
entered into between the grantor and the trustee, which shall be a 
qualified United States financial institution.
    (d) Assets and liabilities of the national insurer may be 
transferred to the Liquidating Trust in accordance with section 982 and 
shall be held by the trustee at the trustee's office in the United 
States.
    (e) The trust agreement entered into pursuant to subsection (b) 
shall--
            (1) identify the beneficiaries of the trust;
            (2) enumerate the authority and duties of the trust;
            (3) specify the types of assets and categories of 
        investments that may be held in the trust account;
            (4) provide that the trustee shall be liable for its 
        negligence, willful misconduct or lack of good faith;
            (5) be made subject to and governed by the laws of this 
        State;
            (6) provide for the compensation of the trustee and the 
        expense of establishing and maintaining the trust account;
            (7) provide for the distribution of trust assets to 
        beneficiaries of the trust; and
            (8) provide for termination of the trust and distribution 
        of any remaining assets in the trust account--
                    (A) after payments have been made to all 
                beneficiaries,
                    (B) when insufficient assets exist to warrant 
                maintaining the trust, or
                    (C) when the amount of assets in the trust to be 
                distributed make it impractical or uneconomic to 
                distribute to beneficiaries.
    (f) The trustee shall furnish to the grantor a statement of all 
assets in the trust account upon its inception and at intervals no less 
frequent than the end of each calendar quarter.

                         Subtitle I--Post Plan

SEC. 988. UNCLAIMED AND UNDISTRIBUTED FUNDS.

    (a) In General.--Distributions or dividends remaining unclaimed or 
unpaid in the receiver's possession for 6 months after the final order 
of distribution shall be handled as other unclaimed funds and shall be 
paid by the custodian thereof without interest to the person entitled 
thereto or his or her legal representative or shall be presumed 
abandoned and handled pursuant to the provisions of relevant State law 
governing disposition of unclaimed property.
    (b) Closed Estate Fund Trust Account.--Subject to the approval of 
the court, after the completion of all post closure activities for 
which moneys were reserved, any remaining reserved assets as well as 
any other assets in the hands of the receiver, that may not be 
practicably or economically distributed to claimants, shall be 
deposited into a segregated account to be known as the closed estates 
fund trust account. The Director may use moneys held in this account 
for paying the administrative expenses of insurers subject to this 
title that lack sufficient assets to allow the Director to perform his 
or her duties and obligations under this title. An annual audit of the 
closed estate fund trust account shall be performed in accordance with 
section 943 regardless of its balance.

SEC. 989. TERMINATION OF RECEIVERSHIP PROCEEDINGS AND DISCHARGE OF 
              RECEIVER.

    (a) Petition To Close Estate.--When all assets justifying the 
expense of collection and distribution have been marshaled and 
distributed under this title, the receiver shall petition the court to 
terminate the liquidation proceedings and to close the estate. The 
court may grant such other relief as may be appropriate, including a 
full discharge of all liability and responsibility of the receiver or a 
reservation of assets for administrative expenses incurred in the 
closing of the estate. The receiver may recommend to the court and the 
court shall direct which records should be retained for what periods of 
time and which should be destroyed.
    (b) Dissolution.--If the dissolution of the insurer's corporate 
existence has not previously been ordered, it shall be effected by 
operation of law upon the discharge of the receiver, absent a contrary 
provision in the plan approved by the court.

SEC. 990. PETITION TO REOPEN PROCEEDINGS.

    The Director or other party in interest may petition the court at 
any time to reopen the proceedings for good cause, including the 
discovery of additional assets. If the court is satisfied that there is 
good cause for reopening, it shall so order.

                     TITLE X--INSOLVENCY PROTECTION

                       Subtitle A--Life Insurance

SEC. 1001. DEFINITIONS.

    For purposes of this subtitle:
            (1) Account.--The term ``account'' means either of the two 
        accounts referred to in section 1007.
            (2) Association.--The term ``association'' means the State 
        life insolvency guaranty association created under the laws of 
        the relevant State.
            (3) Authorized assessment.--The terms ``authorized 
        assessment'' and ``authorized'', when used in the context of 
        assessments, mean the Director has issued an order authorizing 
        the corporation to call an assessment immediately or in the 
        future from member insurers for a specified amount. An 
        assessment is authorized when the order is issued.
            (4) Benefit plan.--The term ``benefit plan'' means a 
        specific employee, union or association of natural persons 
        benefit plan.
            (5) Called assessment.--The terms ``called assessment'' and 
        ``called'', when used in the context of assessments, mean that 
        a notice has been issued by the corporation to member insurers 
        requiring that an authorized assessment be paid within the  
time frame set forth within the notice. An authorized assessment 
becomes a called assessment when notice is mailed by the corporation to 
member insurers.
            (6) State commissioner.--The term ``State commissioner'' 
        means the chief insurance regulatory official of a State.
            (7) Contractual obligation.--The term ``contractual 
        obligation'' means an obligation under a policy or certificate 
        under a group policy, or portion thereof for which coverage is 
        provided under section 1006.
            (8) Covered person.--The term ``covered person'' means a 
        person for whom coverage is provided under section 1006.
            (9) Covered policy.--The term ``covered policy'' means a 
        policy or portion of a policy for which coverage is provided 
        under section 1006.
            (10) Extra-Contractual claims.--The term ``extra-
        contractual claims'' includes claims relating to bad faith in 
        the payment of claims, punitive or exemplary damages or 
        attorneys' fees and costs.
            (11) Impaired insurer.--The term ``impaired insurer'' means 
        a member insurer which is not an insolvent insurer, and is 
        placed under an order of rehabilitation or conservation by a 
        court of competent jurisdiction.
            (12) Insolvent insurer.--The term ``insolvent insurer'' 
        means a member insurer which is placed under an order of 
        liquidation by a court of competent jurisdiction with a finding 
        of insolvency.
            (13) Member insurer.--
                    (A) The term ``member insurer'' means--
                            (i) a State life insurance company licensed 
                        or holding a certificate of authority to 
                        transact in a nonqualifying State any kind of 
                        insurance for which coverage is provided under 
                        section 1006, including a State insurer whose 
                        license or certificate of authority in that 
                        State may have been suspended, revoked, not 
                        renewed or voluntarily withdrawn; and
                            (ii) a national insurer that is a life 
                        insurance company and holds a Federal license 
                        to issue the kinds of insurance for which 
                        coverage is provided under section 1006, 
                        including a company whose license may have been 
                        revoked, suspended, restricted or voluntarily 
                        surrendered.
                    (B) Such term does not include--
                            (i) a non-life insurance company, other 
                        than an insurer licensed to transact only 
                        health insurance;
                            (ii) a hospital or medical service 
                        organization, whether profit or nonprofit;
                            (iii) a health maintenance organization;
                            (iv) a fraternal benefit society;
                            (v) a mandatory State pooling plan;
                            (vi) a mutual assessment company or other 
                        person that operates on an assessment basis;
                            (vii) an insurance exchange; or
                            (viii) an entity similar to any of the 
                        above.
            (14) Moody's corporate bond yield average.--The term 
        ``Moody's corporate bond yield average'' means the Monthly 
        Average Corporates as published by Moody's Investors Service, 
        Inc., or any successor thereto.
            (15) Nonqualifying state.--The term ``nonqualifying State'' 
        means a State that is not a qualified State as defined in 
        section 1003.
            (16) Policy.--The term ``policy'' means a policy or 
        contract.
            (17) Policyowner.--The term ``policyowner'' means, with 
        respect to a policy the person who is identified as the legal 
        owner under the terms of the policy or who is otherwise vested 
        with legal title to the policy through an assignment, absolute 
        on its face, completed in accordance with the terms of the 
        policy and properly recorded as the policyowner on the books of 
        the insurer. Such term does not include a person with a mere 
        beneficial interest in a policy or a person to which a policy 
        is assigned for collateral security purposes.
            (18) Premiums.--The term ``premiums'' means amounts or 
        considerations (by whatever name called) received on covered 
        policies less returned premiums, considerations and deposits 
        and less dividends and experience credits. Such term does not 
        include amounts or considerations received for policies or for 
        the portions of policies for which coverage is not provided 
        under subsection (b) of section 1006 except that assessable 
        premium shall not be reduced on account of subsection (b)(2)(C) 
        of section 1006, relating to interest limitations, and 
        subsection (e)(1)(B) of section 1006, relating to limitations 
        with respect to one individual, one participant and one 
        policyowner. Such term does not include--
                    (A) premiums on an unallocated annuity contract, or
                    (B) with respect to multiple non-group policies of 
                life insurance owned by one policyowner, whether the 
                policyowner is an individual, firm, corporation or 
                other person, and whether the persons insured are 
                officers, managers, employees or other persons, 
                premiums in excess of $5,000,000 with respect to these 
                policies, regardless of the number of policies held by 
                the policyowner.
            (19) Receivership court.--In the case of a State insurer, 
        the term ``receivership court'' means the court having 
        jurisdiction over the conservation, rehabilitation or 
        liquidation of the insurer. In the case of a national insurer, 
        such term means the United States district court or other 
        United States court having jurisdiction over the receivership 
        proceedings involving the national insurer.
            (20) Resident.--The term ``resident'' means a person to 
        whom a contractual obligation is owed and who resides in a 
        nonqualified State on the date of entry of a court order that 
        determines a member insurer to be an impaired insurer or a 
        court order that determines a member insurer to be an insolvent 
        insurer, whichever occurs first. A person may be a resident of 
        only one State, which in the case of a person other than a 
        natural person shall be its principal place of business. 
        Citizens of the United States that are either (1) residents of 
        foreign countries, or (2) residents of United States 
        possessions, territories or protectorates that do not have an 
        association similar to qualified State associations shall be 
        deemed residents of the nonqualifying State, in the case of 
        national insurers, and the State of domicile of other insolvent 
        insurers, that issued the policies.
            (21) Structured settlement annuity.--The term ``structured 
        settlement annuity'' means an annuity purchased in order to 
        fund periodic payments for a plaintiff or other claimant in 
        payment for or with respect to personal injury suffered by the 
        plaintiff or other claimant.
            (22) State.--The term ``State'' means a State, the District 
        of Columbia and Puerto Rico.
            (23) State insurance company and state life insurance 
        company.--The terms ``State insurance company'' and ``State 
        life insurance company'' mean a State-chartered insurance 
        company that underwrites and sells life insurance, health 
        insurance, disability income insurance, long-term care 
        insurance, annuity contracts, or funding agreements;
            (24) Supplemental contract.--The term ``supplemental 
        contract'' means a written agreement entered into for the 
        distribution of proceeds under a life or annuity policy.
            (25) Unallocated annuity contract.--The term ``unallocated 
        annuity contract'' means an annuity contract or group annuity 
        certificate which is not issued to and owned by an individual, 
        except to the extent of any annuity benefits guaranteed to an 
        individual by an insurer under the contract or certificate.

SEC. 1002. NATIONAL INSURER PARTICIPATION IN QUALIFIED STATE 
              ASSOCIATIONS.

    (a) Qualified State Association Membership.--A national insurer 
holding a Federal license to issue life insurance or annuities must, as 
a condition of its authority to transact business, become and continue 
as a member of a qualified State's association in each State in which 
the national insurer is doing business.
    (b) Definition of Doing Business.--A national insurer is doing 
business in a State for purposes of this subtitle if it has any 
policies on the life or lives of residents of the State, collects 
premiums from a policyowner resident in the State, or has current 
obligations to policyowners or beneficiaries of policies in that State.

SEC. 1003. QUALIFIED STATE DEFINED.

    (a) Qualified State Defined.--For purposes of this title, the term 
``qualified State'' means a State which has established an 
association--
            (1) that provides protection for covered persons in the 
        event of insolvency of any national insurer or State insurer 
        doing business in the State that meets or exceeds the standards 
        set forth in sections 1006, 1008, and 1010; and
            (2) which has been determined by the Director to comply 
        with the standards set forth in sections 1006, 1008, 1009 
        (including the definitions of ``impaired insurer'' and 
        ``insolvent insurer'' in section 1001), and 1010, and such 
        determination has not been revoked.
    (b) Deemed Compliance.--An association shall be deemed in 
compliance with and the requirements of subsection (a) until 3 years 
after the effective date of this Act, following which date an 
association must meet those requirements. An association that is 
determined by the Director not to meet the standards required in 
subsection (a) at any time on or after 3 years following the effective 
date of this Act shall be preempted by this subtitle. The Director may, 
for good cause, extend this 3-year period for not more than 6 months as 
to any association. The Director shall notify an association's board of 
directors and the relevant State's State commissioner that the 
association's qualification under subsection (a) has been revoked for 
the reasons stated, effective 90 days following the date of such 
notification.

SEC. 1004. TRANSITION RULES WHEN ASSOCIATION PREEMPTED.

    In the event an association's qualification is revoked under 
section 1003 following a date on which a member insurer of that 
association has been determined to be insolvent, for insolvencies 
occurring on or before the date on which the standard benefits of this 
title apply, and prior to a termination of receivership proceedings--
            (1) the Director shall develop a plan, in consultation with 
        the association and the relevant State's State commissioner, to 
        provide appropriate benefits and coverage to covered persons, 
        and assessments appropriate to the line of insurance affected, 
        which plan may include benefits and coverage provided in whole 
        or in part by the corporation;
            (2) such plan shall incorporate appropriate adjustments in 
        the event payments for benefits have been made under the 
        association's coverage, including the adjustment of benefits 
        transferred to, and assumption of liabilities by, succeeding 
        insurance companies; and
            (3) appropriate supplemental assessments, if necessary, may 
        be made pursuant to section 1010, by the corporation as the 
        Director finds necessary to effect the change in benefits 
        provided under this title.

SEC. 1005. ESTABLISHMENT OF THE NATIONAL LIFE INSURANCE GUARANTY 
              CORPORATION; PROTECTION FOR RESIDENTS IN PREEMPTED 
              STATES.

    (a) Establishment of the Corporation.--There is established the 
National Life Insurance Guaranty Corporation. The corporation shall be 
a nonprofit corporation and shall have succession until dissolved by 
Act of the Congress. The corporation--
            (1) shall not be an agency or instrumentality of the United 
        States Government; and
            (2) except as otherwise provided in this subtitle, shall be 
        subject to, and have all the powers conferred upon a nonprofit 
        corporation by, the District of Columbia Nonprofit Corporation 
        Act (section 29-301.01 et seq., D.C. Official Code).
    (b) Membership in the Corporation.--The membership of the 
corporation shall consist of all member insurers.
    (c) Corporate Governance.--
            (1) Board of directors.--The board of directors of the 
        corporation shall be the governing body of the corporation and 
        shall be vested with all powers necessary for the management 
        and administration of the affairs of the corporation and the 
        promotion of its purposes as authorized by this Act. The 
        board's authority shall be specified in the bylaws of the 
        corporation.
            (2) Initial board.--The initial board of the corporation 
        shall be elected by the membership of the corporation, provided 
        that if the membership fails to elect the initial board of the 
        corporation within 3 years of the effective date of this Act, 
        then the initial board shall be appointed by the Director. 
        Membership on the board shall be fairly representative of 
        member insurers of differing size and lines of business 
        written.
            (3) Bylaws.--The Director shall prescribe the initial 
        bylaws and rules governing the corporation which shall set 
        forth the composition of the board, the term of board members, 
        filling of board vacancies, board compensation, election of 
        officers and procedures to call board meetings, and all matters 
        necessary for the governance of the corporation not addressed 
        by the District of Columbia Nonprofit Corporation Act.
            (4) Amendments to bylaws and rules.--Amendments to the 
        bylaws and rules of the corporation following the establishment 
        of the initial bylaws and rules as provided in paragraph (3) 
        shall be adopted by the board of the corporation following the 
        approval thereof by the Director.
    (d) Relationship of Corporation to the Federal Government.--
            (1) The corporation shall be subject to supervision and 
        oversight of the Director.
            (2) The obligations of the corporation shall not be backed, 
        directly or indirectly, by the full faith and credit of the 
        United States. The corporation shall receive no financial 
        assistance from or have any authority to borrow from the United 
        States.
            (3) Funds held by or due to the corporation shall not be 
        included in the budget of the United States, nor may the United 
        States borrow or pledge such funds.
    (e) Corporation To Provide Protection in Preempted States.--The 
corporation shall provide the protections under this subtitle for 
covered persons, as set forth in section 1006, in any State in which 
the operations and activities of the association have been preempted 
pursuant to section 1003.
    (f) Contracting With Person To Administer Benefits.--The 
corporation may, with the approval of the Director, contract with 
another person to administer the benefits to be provided by the 
corporation under this subtitle.
    (g) Funding of Benefits.--Funds for the provision of covered 
benefits by the corporation shall be in accordance with the formulas 
and procedures, and subject to the limitations of, section 1010. 
Premiums and other considerations for purposes of such assessments 
shall include all nationwide premiums of national insurers on the 
covered lines of business.

SEC. 1006. PROTECTIONS AGAINST INSOLVENCY: COVERAGE AND LIMITATIONS.

    (a) Covered Persons.--This subtitle shall provide coverage for the 
policies specified in subsection (d)--
            (1) to persons who, regardless of where they reside (except 
        for certificate holders under group policies who are not 
        residents of a nonqualifying State), are the beneficiaries, 
        assignees or payees of the persons covered under paragraph (2);
            (2) to persons who are owners of or certificate holders 
        under the policies (other than unallocated annuity contracts, 
        and structured settlement annuities) and in each case who--
                    (A) are residents of a nonqualifying State, or
                    (B) are not residents, but only if--
                            (i) the insurer that issued the policies is 
                        domiciled in a nonqualifying State; and
                            (ii) the persons are not eligible for 
                        coverage by an association in any other State 
                        due to the fact that the insurer was not 
                        licensed in the State at the time specified in 
                        the State's association law; and
            (3) for structured settlement annuities specified in 
        subsection (b), paragraphs (1) and (2) shall not apply, and 
        this title shall (except as provided in paragraphs (5) and (6)) 
        provide coverage to a person who is a payee under a structured 
        settlement annuity (or beneficiary of a payee if the payee is 
        deceased), if the payee--
                    (A) is a resident of a nonqualifying State, 
                regardless of where the policyowner resides, or
                    (B) is not a resident of a nonqualifying State, but 
                only if--
                            (i)(I) the policyowner of the structured 
                        settlement annuity is a resident of a 
                        nonqualifying State, or
                            (II) the policyowner of the structured 
                        settlement annuity is not a resident of a 
                        nonqualifying State, but--
                                    (aa) the insurer that issued the 
                                structured settlement annuity is 
                                domiciled in a nonqualifying State; and
                                    (bb) the State in which the 
                                policyowner resides has an association; 
                                and
                            (ii) neither the payee (nor beneficiary) 
                        nor the policyowner is eligible for coverage by 
                        the association of the State in which the payee 
                        or policyowner resides.
    (b) This subtitle shall not provide coverage to a person who is a 
payee (or beneficiary) of a policyowner resident of a nonqualifying 
State, if the payee (or beneficiary) is afforded any coverage by a 
qualified State's association.
    (c) This subtitle is intended to provide coverage to persons who 
are residents of a nonqualifying State and, in special circumstances, 
to persons not resident in a nonqualifying State. In order to avoid 
duplicate coverage, if a person who would otherwise receive coverage 
under this title is provided coverage under the laws of any State other 
than the nonqualifying State, the person shall not be provided coverage 
under this title. In determining the application of the provisions of 
this subsection in situations where a person could be covered by the 
association of more than one qualifying or nonqualifying State, whether 
as a policyowner, payee, beneficiary or assignee, this title shall be 
construed in conjunction with the laws of such States to result in 
coverage by only one association.
    (d) Policies Covered.--
            (1) In general.--This subtitle shall provide coverage to 
        the persons specified in subsection (a) for direct, non-group 
        life or annuity policies and supplemental contracts to any of 
        these and for certificates under direct group policies, except 
        as limited by this title. Annuity contracts and certificates 
        under group annuity policies include allocated agreements, 
        structured settlement annuities, and any immediate or deferred 
        annuity policies.
            (2) Policies not covered.--This subtitle shall not provide 
        coverage for--
                    (A) a portion of a policy not guaranteed by the 
                insurer, or under which the risk is borne by the 
                policyowner;
                    (B) a reinsurance contract, unless assumption 
                certificates have been issued pursuant to the 
                reinsurance contract;
                    (C) a portion of a policy to the extent that the 
                rate of interest on which it is based, or the interest 
                rate, crediting rate or similar factor determined by 
                use of an index or other external reference stated in 
                the policy employed in calculating returns or changes 
                in value--
                            (i) averaged over the period of 4 years 
                        prior to the date on which the Director becomes 
                        obligated under this title with respect to the 
                        policy, exceeds a rate of interest determined 
                        by subtracting 2 percentage points from Moody's 
                        Corporate Bond Yield Average averaged for that 
                        same 4-year period or for such lesser period if 
                        the policy was issued less than 4 years before 
                        the member insurer becomes an impaired or 
                        insolvent insurer under this subtitle; and
                            (ii) on and after the date on which the 
                        Director becomes obligated with respect to the 
                        policy, exceeds the rate of interest determined 
                        by subtracting 3 percentage points from Moody's 
                        Corporate Bond Yield Average as most recently 
                        available;
                    (D) a portion of a policy issued to a plan or 
                program of an employer, membership association or other 
                person to provide life or annuity benefits to its 
                employees, members or others, to the extent that the 
                plan or program is self-funded or uninsured, including 
                but not limited to benefits payable by an employer, 
                membership association or other person under--
                            (i) a multiple employer welfare arrangement 
                        as defined in section 514 of the Employee 
                        Retirement Income Security Act of 1974 (29 
                        U.S.C. 1144);
                            (ii) a minimum premium group insurance 
                        plan;
                            (iii) a stop-loss group insurance plan; or
                            (iv) an administrative services only 
                        contract;
                    (E) a portion of a policy to the extent that it 
                provides for--
                            (i) dividends or experience rating credits;
                            (ii) voting rights; or
                            (iii) payment of any fees or allowances to 
                        any person, including the policyowner, in 
                        connection with the service to or 
                        administration of the policy;
                    (F) a policy issued in a nonqualified State by an 
                insurer (other than a national insurer) at a time when 
                it was not licensed or did not have a certificate of 
                authority to issue the policy in the nonqualified 
                State;
                    (G) a portion of a policy to the extent that the 
                assessments required by section 1010 with respect to 
                the policy are preempted by Federal or State law;
                    (H) an obligation that does not arise under the 
                express written terms of the policy issued by the 
                insurer to the policyowner, including without 
                limitation--
                            (i) claims based on marketing materials;
                            (ii) claims based on side letters, riders 
                        or other documents that were issued by the 
                        insurer without meeting applicable policy form 
                        filing or approval requirements;
                            (iii) misrepresentations of or regarding 
                        policy benefits;
                            (iv) extra-contractual claims; or
                            (v) a claim for penalties or consequential 
                        or incidental damages;
                    (I) a contractual agreement that establishes an 
                insurer's obligations to provide a book value 
                accounting guaranty for defined contribution benefit 
                plan participants by reference to a portfolio of assets 
                that is owned by the benefit plan or its trustee, which 
                in each case is not an affiliate of the insurer;
                    (J) a portion of a policy to the extent it provides 
                for interest or other changes in value to be determined 
                by the use of an index or other external reference 
                stated in the policy, but which have not been credited 
                to the policy or as to which the policyowner's rights 
                are subject to forfeiture, as of the date the member 
                insurer becomes an impaired or insolvent insurer under 
                this title, whichever is earlier. If a policy's 
                interest or changes in value are credited less 
                frequently than annually, then for purposes of 
                determining the values that have been credited and are 
                not subject to forfeiture under subsection (b)(2)(C) of 
                section 1005, the interest or change in value 
                determined by using the procedures defined in the 
                policy will be credited as if the contractual date of 
                crediting interest or changing values was the date of 
                impairment or insolvency, whichever is earlier, and 
                will not be subject to forfeiture;
                    (K) activities, assets, liabilities or obligations 
                of a protected cell established pursuant to section 
                323;
                    (L) a funding agreement; and
                    (M) an unallocated annuity contract.
    (e) Coverage Limitations.--
            (1) In general.--The benefits provided under this subtitle 
        shall in no event exceed the lesser of--
                    (A) the contractual obligations for which the 
                insurer is liable or would have been liable if it were 
                not an impaired or insolvent insurer, or
                    (B) with respect to one life, regardless of the 
                number of policies--
                            (i) $300,000 in life insurance death 
                        benefits, but not more than $100,000 in net 
                        cash surrender and net cash withdrawal values 
                        for life insurance;
                            (ii) $100,000 in the present value of 
                        annuity benefits, including net cash surrender 
                        and net cash withdrawal values;
                            (iii) with respect to each payee of a 
                        structured settlement annuity (or beneficiary 
                        or beneficiaries of the payee if deceased), 
                        $100,000 in present value annuity benefits, in 
                        the aggregate, including net cash surrender and 
                        net cash withdrawal values, if any.
            (2) Limitation.--In no event shall benefits exceed--
                    (A) an aggregate of $300,000 in benefits with 
                respect to any one life under paragraph (1)(B)(i), or
                    (B) with respect to one policyowner of multiple 
                non-group policies of life insurance, whether the 
                policyowner is an individual, firm, corporation or 
                other person, and whether the persons insured are 
                officers, managers, employees or other persons, more 
                than $5,000,000 in benefits, regardless of the number 
                of policies held by the policyowner.
            (3) Other considerations.--The limitations set forth in 
        this subsection are limitations on benefits under this subtitle 
        before taking into account either the subrogation and 
        assignment rights or the extent to which those benefits could 
        be provided out of the assets of the impaired or insolvent 
        insurer attributable to covered policies. The obligations for 
        benefits under this subtitle may be met by the use of assets 
        attributable to covered policies or reimbursed to the 
        corporation pursuant to the subrogation and assignment rights 
        in subsection (i) of section 1009.
    (f) Other Exclusions.--The corporation shall not be required to 
guarantee, assume, reinsure or perform, or cause to be guaranteed, 
assumed, reinsured or performed, the contractual obligations of the 
insolvent or impaired insurer under a covered policy that do not 
materially affect the economic values or economic benefits of the 
covered policy.

SEC. 1007. ACCOUNTS FOR ADMINISTRATION AND ASSESSMENTS.

    For purposes of administration and assessment, the corporation 
shall establish the following accounts:
            (1) A life insurance account.
            (2) An annuity account.

SEC. 1008. BOARD OF DIRECTORS.

    The board of directors of a qualifying State's association shall 
provide for representation of insurers on a basis that does not 
unfairly discriminate against national insurers or against insurers 
domiciled in other jurisdictions, and shall be fairly representative of 
insurers of differing sizes and lines of insurance written. State 
commissioners shall be member insurers and may be represented by 
officers at the discretion of the member insurer.

SEC. 1009. POWERS AND DUTIES OF THE CORPORATION.

    (a) Impaired Insurer.--Subject to the coverage limitations set 
forth in section 1006, if a member insurer is an impaired insurer, the 
corporation may, in its discretion, and subject to any conditions 
imposed by the corporation that do not impair the contractual 
obligations of the impaired insurer and that are approved by the 
Director, meet its obligation under subsection (e) of section 1005 by 
doing taking one of the following actions:
            (1) Guarantee, assume or reinsure, or cause to be 
        guaranteed, assumed, or reinsured, any or all of the policies 
        of the impaired insurer.
            (2) Provide such monies, pledges, loans, notes, guarantees 
        or other means as are proper to effectuate paragraph (1) and 
        assure payment of the contractual obligations of the impaired 
        insurer pending action under paragraph (1).
    (b) Insolvent Insurer.--Subject to the coverage limitations set 
forth in section 1006, if a member insurer is an insolvent insurer, the 
corporation shall, in its discretion, meet its obligation under 
subsection (e) of section 1005 by taking one of the actions under the 
following two paragraphs:
            (1)(A)(i) Guaranty, assume or reinsure, or cause to be 
        guaranteed, assumed or reinsured, the policies of the insolvent 
        insurer; or
            (ii) assure payment of the contractual obligations of the 
        insolvent insurer; and
            (B) provide monies, pledges, loans, notes, guarantees, or 
        other means reasonably necessary to discharge the duties 
        imposed by this section; or
            (2) Provide benefits and coverages in accordance with the 
        following provisions:
                    (A) With respect to life insurance policies and 
                annuities, assure payment of benefits for premiums 
                identical to the premiums and benefits (except for 
                terms of conversion and renewability) that would have 
                been payable under the policies of the insolvent 
                insurer, for claims incurred--
                            (i) with respect to group policies, not 
                        later than the earlier of the next renewal date 
                        under those policies or 45 days, but in no 
                        event less than 30 days, after the date on 
                        which the corporation becomes obligated under 
                        this section with respect to the policies;
                            (ii) with respect to non-group policies, 
                        not later than the earlier of the next renewal 
                        date (if any) under the policies or 1 year, but 
                        in no event less than 30 days, from the date on 
                        which the corporation becomes obligated under 
                        this section with respect to the policies.
                    (B) Make diligent efforts to provide all known 
                insureds or annuitants (for non-group policies), or 
                group policyowners with respect to group policies, 30 
                days notice of the termination (pursuant to 
                subparagraph (A)) of the benefits provided.
                    (C) With respect to non-group policies covered by 
                this title, make available to each known insured or 
                annuitant, or policyowner if other than the insured or 
                annuitant, and with respect to an individual formerly 
                insured or formerly an annuitant under a group policy 
                who is not eligible for replacement group coverage, 
                make available substitute coverage on an individual 
                basis in accordance with the provisions of subparagraph 
                (D), if the insureds or annuitants had a right under 
                law or the terminated policy or annuity to convert 
                coverage to individual coverage or to continue an 
                individual policy or annuity in force until a specified 
                age or for a specified time, during which the insurer 
                had no right unilaterally to make changes in any 
                provision of the policy or had a right only to make 
                changes in premium by class.
                    (D)(i) In providing the substitute coverage 
                required under subparagraph (C), the corporation may 
                offer either to reissue the terminated coverage or to 
                issue an alternative policy.
                    (ii) Alternative or reissued policies shall be 
                offered without requiring evidence of insurability, and 
                shall not provide for any waiting period or exclusion 
                that would not have applied under the terminated 
                policy.
                    (iii) The corporation may reinsure any alternative 
                or reissued policy.
                    (E)(i) Alternative policies adopted by the 
                corporation shall be subject to the approval of the 
                Director and the receivership court. The corporation 
                may adopt alternative policies of various types for 
                future issuance without regard to any particular 
                impairment or insolvency.
                    (ii) Alternative policies shall contain at least 
                the minimum statutory provisions required in the 
                nonqualifying State if the insolvent insurer is not a 
                national insurer; in the case of an insolvent national 
                insurer such policies shall comply, with the provisions 
                of this Act and provide benefits that shall not be 
                unreasonable in relation to the premium charged. The 
                corporation shall set the premium in accordance with a 
                table of rates that it shall adopt. The premium shall 
                reflect the amount of insurance to be provided and the 
                age and class of risk of each insured, but shall not 
                reflect any changes in the health of the insured after 
                the original policy was last underwritten.
                    (iii) Any alternative policy issued by the 
                corporation shall provide coverage of a type similar to 
                that of the policy issued by the impaired or insolvent 
                insurer, as determined by the corporation.
                    (F) If the corporation elects to reissue terminated 
                coverage at a premium rate different  from that charged 
under the terminated policy, the premium shall be set by the 
corporation in accordance with the amount of insurance provided and the 
age and class of risk, subject to approval of the nonqualifying State 
commissioner in the case of a State insurer, and the Director in the 
case of a national insurer, and the receivership court.
                    (G) Benefits under this subtitle with respect to 
                coverage under any policy of the impaired or insolvent 
                insurer or under any reissued or alternative policy 
                shall cease on the date the coverage or policy is 
                replaced by another similar policy by the policyowner, 
                the insured or the corporation.
                    (H) When proceeding under this paragraph with 
                respect to a policy carrying guaranteed minimum 
                interest rates, the corporation shall assure the 
                payment or crediting of a rate of interest consistent 
                with subsection (d)(2)(C) of section 1006.
    (c) Nonpayment of Premiums.--Nonpayment of premiums within 31 days 
after the date required under the terms of any guaranteed, assumed, 
alternative or reissued policy or substitute coverage shall terminate 
benefits under this subtitle with respect to the policy, except with 
respect to any claims incurred or any net cash surrender value which 
may be due in accordance with the provisions of this title.
    (d) Premiums Due After Entry of Order.--Premiums due for coverage 
after entry of an order of liquidation of an insolvent insurer shall 
belong to and be payable at the direction of the corporation, and the 
corporation shall be liable for unearned premiums due to policyowners 
arising after the entry of the order.
    (e) Powers of the Corporation.--In carrying out its duties under 
subsection (b), the corporation may--
            (1) subject to approval by the Director, impose permanent 
        policy liens in connection with a guarantee, assumption or 
        reinsurance contract, if the corporation finds that the amounts 
        which can be assessed under this subtitle are less than the 
        amounts needed to assure full and prompt performance of the 
        protections provided under this subtitle, or that the economic 
        or financial conditions as they affect the insurance industry 
        are sufficiently adverse to render the imposition of such 
        permanent policy liens, in the public interest; and
            (2) subject to approval by the Director, impose temporary 
        moratoriums or liens on payments of cash values and policy 
        loans, or any other right to withdraw funds held in conjunction 
        with policies, in addition to any contractual provisions for 
        deferral of cash or policy loan value. In addition, in the 
        event of a temporary moratorium or moratorium charge imposed by 
        the receivership court on payment of cash values or policy 
        loans, or on any other right to withdraw funds held in 
        conjunction with policies, out of the assets of the impaired or 
        insolvent insurer, the corporation may defer the payment of 
        cash values, policy loans or other rights by the corporation 
        for the period of the moratorium or moratorium charge imposed 
        by the receivership court, except for claims covered by this 
        title to be paid in accordance with a hardship procedure 
        established by the liquidator or rehabilitator and approved by 
        the receivership court.
    (f) Deposits.--A deposit in the nonqualifying State, held pursuant 
to State law or required by the State commissioner of the nonqualifying 
State for the benefit of creditors, including policyowners, not turned 
over to the domiciliary liquidator upon the entry of a final order of 
liquidation or order approving a rehabilitation plan of an insurer 
domiciled in the nonqualifying State or in a reciprocal State, pursuant 
to applicable State law governing receivership of State insurers, shall 
be promptly paid to the corporation. The corporation shall be entitled 
to retain a portion of any amount so paid to it equal to the percentage 
determined by dividing the aggregate amount of policyowners claims 
related to that insolvency for which the corporation has provided 
statutory benefits by the aggregate amount of all policyowners' claims 
in nonqualifying State related to that insolvency and shall remit to 
the domiciliary receiver the amount so paid to the corporation and 
retained pursuant to this subsection. Any amount so paid to the 
corporation less the amount retained by it shall be treated as a 
distribution of estate assets pursuant to applicable State law 
governing receivership of State insurers of the State of domicile of 
the impaired or insolvent insurer.
    (g) Advice to State Commissioner.--The corporation may render 
assistance and advice to the State commissioner in a nonqualifying 
State, upon the State commissioner's request, concerning 
rehabilitation, payment of claims, continuance of coverage, or the 
performance of other contractual obligations of an impaired or 
insolvent insurer.
    (h) Standing.--The corporation shall have standing to appear or 
intervene before a court or agency in the State, or United States 
district court, with jurisdiction over an impaired or insolvent insurer 
concerning which benefits under this subtitle are to be provided, or 
with jurisdiction over any person or property against which the 
corporation may have rights through subrogation or otherwise. Standing 
shall extend to all matters germane to the powers and duties under this 
subtitle, including, but not limited to, proposals for reinsuring, 
modifying or guaranteeing the policies of the impaired or insolvent 
insurer and the determination of the policies and contractual 
obligations.
    (i) Subrogation.--
            (1) Persons receiving benefits under this subtitle shall be 
        deemed to have assigned their rights under, and any causes of 
        action against any person for losses arising under, resulting 
        from or otherwise relating to, their covered policies to the 
        corporation to the extent of the benefits received because of 
        this subtitle, whether the benefits are payments of or on 
        account of contractual obligations, continuation of coverage or 
        provision of substitute or alternative coverages. The 
        corporation shall also have the right to require an assignment 
        to it of such rights and causes of action by any payee, 
        policyowner, beneficiary, insured or annuitant as a condition 
        precedent to the receipt of any right or benefits conferred by 
        this subtitle upon the person.
            (2) The subrogation rights of the corporation provided 
        under the law of a nonqualifying State shall be accorded the 
        same priority against the assets of the impaired or insolvent 
        insurer as that possessed by the person entitled to receive 
        benefits under this subtitle.
            (3) In addition to paragraphs (1) and (2), the corporation 
        shall have all common law rights of subrogation and any other 
        equitable or legal remedy that would have been available to the 
        impaired or insolvent insurer or policyowner, beneficiary or 
        payee of a policy with respect to the policy (including without 
        limitation, in the case of a structured settlement annuity, any 
        rights of the policyowner, beneficiary or payee of the annuity, 
        to the extent of benefits received pursuant to this subtitle, 
        against a person originally or by succession responsible for 
        the losses arising from the personal injury relating to the 
        annuity or payment therefore), excepting any such person 
        responsible solely by reason of serving as an assignee in 
        respect of a qualified assignment under section 130 of the 
        Internal Revenue Code of 1986.
            (4) If the preceding provisions of this subsection are 
        invalid or ineffective with respect to any person or claim for 
        any reason, the amount payable under this subtitle with respect 
        to the related benefits under this subtitle shall be reduced by 
        the amount realized by any other person with respect to the 
        person or claim that is attributable to the policies (or 
        portion thereof) protected by this subtitle.
            (5) If benefits have been provided under this subtitle with 
        respect to a covered obligation and a person recovers amounts 
        as to which the corporation has rights as described in the 
        preceding paragraphs, the person shall pay to the corporation 
        the portion of the recovery attributable to the policies (or 
        portion thereof) covered by this subtitle.
    (j) Other Corporation Powers.--In addition to the rights and powers 
provided elsewhere in this subtitle, the corporation may--
            (1) enter into such contracts as are necessary or proper to 
        carry out the provisions and purposes of this subtitle;
            (2) sue or be sued, including taking any legal actions 
        necessary or proper to recover any unpaid assessments under 
        section 1010 and to settle claims or potential claims against 
        it;
            (3) borrow money to effect the purposes of this subtitle; 
        any notes or other evidence of indebtedness of the Corporation 
        not in default shall be legal investments for Companies and may 
        be carried as admitted assets;
            (4) employ or retain such persons as are necessary or 
        appropriate to handle the financial transactions of the 
        corporation, and to perform such other functions as become 
        necessary or proper under this subtitle;
            (5) take such legal action as may be necessary or 
        appropriate to avoid or recover payment of improper claims;
            (6) exercise, for the purposes of this subtitle and to the 
        extent approved by the Director, the powers of a national 
        insurer, except that the corporation may not issue insurance 
        policies or annuity contracts other than those issued to 
        provide the protections under this subtitle;
            (7) request information from a person seeking protection 
        under this subtitle in order to aid the corporation in 
        determining its obligations under this subtitle with respect to 
        the person, and the person shall promptly comply with the 
        request;
            (8) become a member of an association of associations; and
            (9) take other necessary or appropriate action to discharge 
        its duties and obligations under this subtitle or to exercise 
        its powers under this subtitle.
    (k) Judgment.--The corporation shall have discretion and may 
exercise reasonable business judgment to determine the means by which 
the benefits and protections of this subtitle will be provided in an 
economical and efficient manner.
    (l) Other Benefits.--Where the corporation has arranged or offered 
to provide the benefits of this subtitle to a covered person under a 
plan or arrangement that fulfills obligations to provide the 
protections under this subtitle, the person shall not be entitled to 
benefits under this subtitle in addition to or other than those 
provided under the plan or arrangement.
    (m) Venue.--Venue in a suit against the corporation arising under 
this subtitle shall be in the United States district court for the 
District of Columbia.

SEC. 1010. ASSESSMENTS.

    (a) In General.--For the purpose of providing the funds necessary 
to provide the protections and benefits under this subtitle, the 
corporation shall be authorized to assess the member insurers 
separately for each account, at such time and for such amounts as the 
board of the corporation finds necessary. Assessments shall be due not 
less than 30 days after prior written notice to the member insurers and 
shall accrue interest at a rate of interest specified by law on and 
after the due date.
    (b) Classes of Assessment.--There shall be 2 classes of 
assessments, as follows:
            (1) Class A assessments shall be authorized and called for 
        the purpose of meeting administrative and legal costs and other 
        expenses. Class A assessments may be authorized and called 
        whether or not related to a particular impaired or insolvent 
        insurer. The board of the corporation may authorize the 
        corporation to make a Class A assessment only against national 
        insurers, and against national insurers and other member 
        insurers in nonqualifying States, to meet its administrative 
        and legal costs and other expenses pursuant to operating rules 
        established by the board.
            (2) Class B assessments shall be authorized and called to 
        the extent necessary to provide the protection and benefits 
        under this subtitle with regard to an impaired or an insolvent 
        insurer.
    (c) Assessment Amounts.--
            (1) The amount of a Class A assessment shall be determined 
        by the board of the corporation and may be authorized and 
        called on a pro rata or non-pro rata basis. If pro rata, the 
        board of the corporation may provide that it be credited 
        against future Class B assessments. The total of all non-pro 
        rata assessments shall not exceed $150 per assessed member 
        insurer in any one calendar year. The amount of a Class B 
        assessment shall be allocated for assessment purposes among the 
        accounts or subaccounts pursuant to an allocation formula which 
        may be based on the premiums or reserves of the impaired or 
        insolvent insurer or any other standard deemed by the board as 
        being fair and reasonable under the circumstances.
            (2) Class B assessments against member insurers for each 
        account and subaccount shall be in the proportion that the 
        premiums received on business in the nonqualifying State by 
        each assessed member insurer on policies covered by each 
        account or subaccount for the 3 most recent calendar years for 
        which information is available preceding the year in which the 
        insurer became insolvent (or, in the case of an assessment with 
        respect to an impaired insurer, the 3 most recent calendar 
        years for which information is available preceding the year in 
        which the insurer became impaired) bears to premiums received 
        on business in the nonqualifying State for those calendar years 
        by all assessed member insurers.
            (3) Assessments for funds to meet the requirements of the 
        corporation with respect to an impaired or insolvent insurer 
        shall not be authorized or called until necessary to implement 
        the purposes of this title. Classification of assessments under 
        subsection (b) and computation of assessments under this 
        subsection shall be made with a reasonable degree of accuracy, 
        recognizing that exact determinations may not always be 
        possible. The corporation shall notify each member insurer of 
        its anticipated pro rata share of an authorized assessment not 
        yet called within 180 days after the assessment is authorized.
    (d) Abated or Deferred Assessments.--The board of the corporation 
may abate or defer, in whole or in part, the assessment of a member 
insurer if, in the opinion of the board, payment of the assessment 
would endanger the ability of the member insurer to fulfill its 
contractual obligations. In the event an assessment against a member 
insurer is abated, or deferred in whole or in part, the amount by which 
the assessment is abated  or deferred may be assessed against the other 
member insurers, in a manner consistent with the basis for assessments 
set forth in this section. Once the conditions that caused a deferral 
have been removed or rectified, the member insurer shall pay all 
assessments that were deferred pursuant to a repayment plan approved by 
the board of the corporation.
    (e) Maximum Assessment.--
            (1) Amount.--
                    (A) Subject to the provisions of subparagraph (B), 
                the total of all assessments authorized by the 
                corporation with respect to a member insurer for each 
                of the life insurance and annuity accounts shall not in 
                one calendar year exceed 2 percent of that member 
                insurer's average annual premiums received in the 
                nonqualifying State on the policies covered by the 
                account during the 3 calendar years preceding the year 
                in which the insurer became an impaired or insolvent 
                insurer.
                    (B) If 2 or more assessments are authorized in one 
                calendar year with respect to insurers that become 
                impaired or insolvent in different calendar years, the 
                average annual premiums for purposes of the aggregate 
                assessment percentage limitation referenced in 
                subparagraph (A) shall be equal and limited to the 
                higher of the 3-year average annual premiums for the 
                applicable subaccount or account as calculated pursuant 
                to this section.
                    (C) If the maximum assessment, together with other 
                assets held in an account or subaccount, does not 
                provide in 1 year in either account or subaccount an 
                amount sufficient to carry out the responsibilities 
                under this title, the necessary additional funds shall 
                be assessed as soon thereafter as permitted by this 
                subtitle.
            (2) The board of the corporation may provide by operating 
        rules a method of allocating funds among claims, whether 
        relating to one or more impaired or insolvent insurers, when 
        the maximum assessment will be insufficient to cover 
        anticipated claims.
            (3) If the maximum assessment for a subaccount of the life 
        and annuity account in 1 year does not provide an amount 
        sufficient to provide the protection and benefits of this 
        subtitle, then pursuant to subsection (c)(2), the other 
        subaccounts of the life and annuity account may be accessed by 
        the corporation for the necessary additional amount, subject to 
        the maximum stated in paragraph (1).
    (f) Refunds.--The board of the corporation may, by an equitable 
method as established by operating rules, refund to member insurers, in 
proportion to the contribution of each insurer to that account or 
subaccount, the amount by which the assets of the account exceed the 
amount the board finds is necessary to carry out during the coming year 
the obligations of this subtitle with regard to that account or 
subaccount, including assets accruing from assignment, subrogation, net 
realized gains and income from investments. A reasonable amount may be 
retained in any account to provide funds for the continuing expenses of 
the corporation, and for future claims.
    (g) Rates and Dividends.--It shall be proper under this subtitle 
for any national insurer, in determining its premium rates and 
policyowner dividends as to any kind of insurance within the scope of 
this title, to consider the amount reasonably necessary to meet its 
assessment obligations under this subtitle.
    (h) Certificates of Contribution.--The corporation shall issue to 
each insurer paying an assessment under this subtitle, other than a 
Class A assessment, a certificate of contribution, in a form prescribed 
by the Director, for the amount of the assessment so paid. All 
outstanding certificates shall be of equal dignity and priority without 
reference to amounts or dates of issue. A certificate of contribution 
may be shown by a national insurer in its financial statement as an 
asset in such form and for such amount, if any, and period of time as 
the Director may approve.
    (i) Assessment Protests.--
            (1) A member insurer that wishes to protest all or part of 
        an assessment shall pay when due the full amount of the 
        assessment as set forth in the notice provided by the 
        corporation. The payment shall be available to meet obligations 
        under this subtitle during the pendency of the protest or any 
        subsequent appeal. Payment shall be accompanied by a statement 
        in writing that the payment is made under protest and setting 
        forth a brief statement of the grounds for the protest.
            (2) Within 60 days following the payment of an assessment 
        under protest by a member insurer, the corporation shall notify 
        the member insurer in writing of its determination with respect 
        to the protest unless the corporation notifies the member 
        insurer that additional time is required to resolve the issues 
        raised by the protest.
            (3) Within 30 days after a final decision has been made, 
        the corporation shall notify the protesting member insurer in 
        writing of that final decision. Within 60 days of receipt of 
        notice of the final decision, the protesting member insurer may 
        appeal that final action to the Director.
            (4) In the alternative to rendering a final decision with 
        respect to a protest based on a question regarding the 
        assessment base, the corporation may refer protests to the 
        Director for a final decision, with or without a recommendation 
        from the corporation.
            (5) If the protest or appeal on the assessment is upheld, 
        the amount paid in error or excess shall be returned to the 
        member insurer. Interest on a refund due a protesting member 
        shall be paid at the rate actually earned by the corporation.
    (j) Information Requests.--The corporation may request information 
of member insurers in order to aid in carrying out its duties under 
this section and member insurers shall promptly comply with a request.

SEC. 1011. APPEAL BY NATIONAL INSURER OF ASSESSMENTS.

    A national insurer that has paid an assessment to a qualified 
State's association shall comply with the procedures in that State for 
protesting the assessment. In the event of an adverse determination by 
the State commissioner in that State the national insurer may appeal to 
the Director.

SEC. 1012. DUTIES AND POWERS OF DIRECTOR.

    (a) Director's Duties and Powers.--In addition to the duties and 
powers enumerated elsewhere in this subtitle, the Director--
            (1) shall provide the corporation upon request with a 
        statement of the premiums in nonqualifying States for each 
        member insurer;
            (2) shall, when an impairment of a national insurer is 
        declared and the amount of the impairment is determined, serve 
        a demand upon the impaired insurer to make good the impairment 
        within a reasonable time; notice to the impaired insurer shall 
        constitute notice to its shareholders, if any; and
            (3) may either--
                    (A) suspend or revoke, after notice and hearing, a 
                Federal license of a national insurer; or
                    (B) levy a forfeiture in an amount not to exceed 5 
                percent of the unpaid assessment per month, but no 
                forfeiture shall be less than $100 per month--
                            (i) on a national insurer or other member 
                        insurer that fails to pay an assessment to the 
                        corporation when due or fails to otherwise 
                        comply with the requirements of this subtitle; 
                        or
                            (ii) on a national insurer that fails to 
                        pay an assessment to a qualified State's 
                        association or otherwise comply with its plan 
                        of operation.
    (b) Appeal by National Insurer.--A national insurer may appeal a 
final action of the board of directors of the association in a 
qualifying State to the Director if the appeal is taken within 60 days 
of its receipt of notice of the final action being appealed.
    (c) Notification of Interested Persons.--The liquidator, 
rehabilitator or conservator of an impaired insurer may notify all 
interested persons of the effect of this subtitle.

SEC. 1013. COOPERATION BETWEEN DIRECTOR AND STATE COMMISSIONERS.

    (a) Notice to State Commissioners.--The Director shall notify the 
State commissioner in each State in which a national insurer is doing 
business within 30 days of taking any of the following actions against 
a national insurer--
            (1) revocation or suspension of the national insurer's 
        authority to transact insurance;
            (2) the entry of a formal order that the national insurer 
        restrict its premium writing, obtain additional contributions 
        to surplus, reinsure all or any part of its business, or 
        increase capital, surplus, or any other account for the 
        security of policyowners or creditors; or
            (3) the Director has reasonable cause to believe from an 
        examination, whether completed or in process, of any national 
        insurer that such national insurer may be an impaired or 
        insolvent insurer.
    (b) Notice to Director.--Each State commissioner shall notify the 
Director when any action listed in subsection (a)(1) is taken or 
condition is believed to exist with respect to a State insurer that is 
a member insurer.
    (c) Report to Associations.--The Director shall also report to the 
boards of directors of the appropriate associations when the Director 
has taken any of the actions set forth in subsection (a). Any report to 
the boards of directors shall contain all significant details of the 
action taken and may be provided with the cooperation of the 
corporation.
    (d) Obligations of the Corporation.--The corporation may make 
reports and recommendations to the Director, as appropriate, upon any 
matter germane to the solvency, liquidation, rehabilitation or 
conservation of any member insurer. The reports and recommendations 
shall not be considered public documents. The corporation shall also 
provide such information and advice as requested by the Director when 
providing protection and benefits under this subtitle in a 
nonqualifying State.
    (e) Notice by the Corporation.--The corporation may notify the 
Director of any information indicating a member insurer in a 
nonqualifying State may be an impaired or insolvent insurer.

SEC. 1014. PROHIBITED DISCRIMINATION IN TAX TREATMENT.--

    No State law may discriminate between national insurers and other 
insurers with respect to deductions or offsets of assessments against 
premium, franchise or income tax liability to the State, and any State 
law that does so shall not be effective.

SEC. 1015. MISCELLANEOUS PROVISIONS.

    (a) No Reduction in Liability.--This subtitle shall not be 
construed to reduce the liability for unpaid assessments of the 
insureds of an impaired or insolvent insurer operating under a plan 
with assessment liability.
    (b) Corporation as Creditor.--
            (1) For the purpose of providing the protections and 
        benefits required under this subtitle, the corporation shall be 
        deemed to be a creditor of an impaired or insolvent national 
        insurer to the extent of assets attributable to covered 
        policies reduced by any amounts to which the corporation is 
        entitled as subrogee pursuant to subsection (i) of section 
        1009. Assets of the impaired or insolvent insurer attributable 
        to covered policies shall be used to continue all covered 
        policies and pay all contractual obligations of the impaired or 
        insolvent insurer as required by this subtitle.
            (2) For purposes of this subsection, the term ``assets 
        attributable to covered policies'' are that proportion of the 
        assets which the reserves that should have been established for 
        such policies bear to the reserves that should have been 
        established for all policies of insurance written by the 
        impaired or insolvent insurer.
    (c) Disbursements Payable to the Corporation.--As a creditor of the 
impaired or insolvent insurer as established in subsection (b) of this 
section and consistent with section 975, the corporation shall be 
entitled to receive a disbursement of assets out of the marshaled 
assets, from time to time, as the assets become available to reimburse 
it, as a credit against contractual obligations required to be covered 
under this subtitle. If the liquidator has not, within 120 days of a 
final determination of insolvency of an insurer by the receivership 
court, made an application to the court for the approval of a proposal 
to disburse assets out of marshaled assets to State associations having 
obligations because of the insolvency, then the corporation shall be 
entitled to make application to the receivership court for approval of 
its own proposal to disburse these assets.
    (d) Termination; Shareholder Distributions.--
            (1) Prior to the termination of any liquidation, 
        rehabilitation or conservation proceeding, the court may take 
        into consideration the contributions of the respective parties, 
        including the corporation, the shareholders, and policyowners 
        of the insolvent insurer, and any other party with a bona fide 
        interest, in making an equitable distribution of the ownership 
        rights of the insolvent national insurer. In such a 
        determination, consideration shall be given to the welfare of 
        the policyowners of the continuing or successor insurer.
            (2) No distribution to shareholders, if any, of an impaired 
        or insolvent insurer shall be made until and unless the total 
        amount of valid claims of the Director and the corporation when 
        acting under this subtitle, with interest thereon for funds 
        expended in carrying out their powers and duties with respect 
        to the insurer, have been fully recovered by the Director or 
        the corporation, as applicable.

SEC. 1016. EXAMINATION OF THE CORPORATION; ANNUAL REPORT.

    The corporation shall be subject to examination and regulation by 
the Director. The corporation shall submit to the Director each year, 
not later than 120 days after the end of its fiscal year, a financial 
report in a form approved by the Director and a report of its 
activities during the preceding fiscal year, as they relate to the 
duties and functions carried out under this subtitle.

SEC. 1017. IMMUNITY.

    There shall be no liability on the part of and no cause of action 
of any nature shall arise against any member insurer or its agents or 
employees, the corporation or its agents or employees, members of the 
board of directors, or the Director or the Director's representatives, 
for any action or omission by them in the performance of their powers 
and duties under this subtitle.

SEC. 1018. STAY OF PROCEEDINGS; REOPENING DEFAULT JUDGMENTS.

    All proceedings in which an insolvent national insurer is a party 
in any Federal or State court shall be stayed 60 days from the date an 
order of liquidation, rehabilitation or conservation is final to permit 
proper legal action by the associations, or by the corporation when 
acting under the provisions of this title, on any matters germane to 
their powers or duties. As to judgment under any decision, order, 
verdict or finding based on default an association, or the corporation, 
may apply to have such judgment set aside by the same court that made 
such judgment and shall be permitted to defend against such suit on the 
merits.

SEC. 1019. PROHIBITED ADVERTISEMENT OF STATE ASSOCIATION OR THE 
              CORPORATION IN INSURANCE SALES; NOTICE TO POLICYOWNERS.

    (a) In General.--No person, including a national insurer or other 
insurance producer or affiliate of a national insurer or other insurer 
shall make, publish, disseminate, circulate or place before the public, 
or cause directly or indirectly, to be made, published, disseminated, 
circulated or placed before the public, in any newspaper, magazine or 
other publication, or in the form of a notice, circular, pamphlet, 
letter or poster, or over any radio station or television station, or 
in any other way, any advertisement, announcement or statement, written 
or oral, which uses the existence of an association, or the 
corporation, for the purpose of sales, solicitation or inducement to 
purchase any form of insurance covered by the association or the 
corporation. However, such prohibition does not apply to an association 
or any other entity which does not sell or solicit insurance.
    (b) Disclaimer.--A national insurer may not deliver a policy to a 
policyowner unless a summary document describing the general purposes 
and current limitations of the appropriate association, or the 
corporation, and complying with subsection (c), is delivered to the 
policyowner at the time of delivery of the policy. The document shall 
also be available upon request by a policyowner. The distribution, 
delivery or contents or interpretation of this document does not 
guarantee that either the policy or the policyowner is covered in the 
event of the impairment or insolvency of a member insurer. Failure to 
receive this document does not give the policyowner, certificate 
holder, or insured any greater rights than those stated in this title. 
The summary document required of a national insurer under this 
subsection shall be in lieu of any similar document required by any 
State.
    (c) Form of Disclaimer.--The form and content of the disclaimer 
required by subsection (b) shall be as prescribed by the State 
commissioner in the State in which the policy is delivered or issued 
for delivery, in the case of a qualified State, or the Director, in the 
case of a nonqualified State. The disclaimer may also include a 
provision that the national insurer, other insurer and insurance 
producers are prohibited from using the existence of the association 
and the corporation for the purpose of sales, solicitation or 
inducement to purchase any form of insurance.

              Subtitle B--Property and Casualty Insurance

SEC. 1020. DEFINITIONS.

    For purposes of this subtitle:
            (1) Account.--The term ``account'' means either of the 
        three accounts referred to in section 1027.
            (2) Association.--The term ``association'' means the State 
        property and casualty insurance guaranty association created 
        under the laws of the relevant State.
            (3) Claimant.--The term ``claimant'' means any insured 
        making a first party claim or any person instituting a 
        liability claim, provided that no person who is an affiliate of 
        the insolvent insurer may be a claimant.
            (4) Covered claim.--
                    (A) In general.--The term ``covered claim'' means 
                an unpaid claim, including one for unearned premiums, 
                submitted by a claimant, which arises out of and is 
                within the coverage and is subject to the applicable 
                limits of an insurance policy to which this subtitle 
                applies issued by a member insurer, if the member 
                insurer becomes an insolvent insurer after the 
                effective date of this subtitle and--
                            (i) the claimant or insured is a resident 
                        of a nonqualifying State at the time of the 
                        insured event, provided that for entities other 
                        than an individual, the residence of a 
                        claimant, insured or policyholder is the State 
                        in which its principal place of business is 
                        located at the time of the insured event; or
                            (ii) the claim is a first party claim for 
                        damage to property with a permanent location in 
                        a nonqualifying State.
                    (B) Exclusions.--Such term shall not include--
                            (i) any amount awarded as punitive or 
                        exemplary damages;
                            (ii) any amount sought as a return of 
                        premium under any retrospective rating plan;
                            (iii) any amount due any reinsurer, 
                        insurer, insurance pool or underwriting 
                        association as subrogation recoveries, 
                        reinsurance recoveries, contribution, 
                        indemnification or otherwise; no claim for any 
                        amount due any reinsurer, insurer, insurance 
                        pool or underwriting association may be 
                        asserted against a person insured under a 
                        policy issued by an insolvent insurer other 
                        than to the extent the claim exceeds the 
                        corporation's obligation limitations set forth 
                        in section 1025;
                            (iv) any first party claims by an insured 
                        whose net worth exceeds $25,000,000 on December 
                        31 of the year prior to the year in which the 
                        member insurer becomes an insolvent insurer; 
                        provided that an insured's net worth on that 
                        date shall be deemed to include the aggregate 
                        net worth of the insured and all of its 
                        subsidiaries as calculated on a consolidated 
                        basis; or
                            (v) any first party claims by an insured 
                        which is an affiliate of the insolvent insurer.
            (5) Insolvent insurer.--The term ``insolvent insurer'' 
        means a member insurer which is placed under an order of 
        liquidation by a court of competent jurisdiction with a finding 
        of insolvency.
            (6) Member insurer.--
                    (A) The term ``member insurer'' means any person 
                who--
                            (i) writes any kind of insurance to which 
                        this subtitle applies, including the exchange 
                        of reciprocal or inter-insurance contracts; and
                            (ii) is a State insurer licensed or holding 
                        a certificate of authority to transact in a 
                        nonqualifying State any kind of insurance for 
                        which coverage is provided under section 1025, 
                        including a State insurer whose license or 
                        certificate of authority in that State may have 
                        been suspended, revoked, not renewed or 
                        voluntarily withdrawn; or
                            (iii) is a national insurer that holds a 
                        Federal license under this Act to issue the 
                        kinds of insurance for which coverage is 
                        provided under section 1025.
                    (B) A State insurer or national insurer shall cease 
                to be a member insurer effective on the day following 
                the termination or expiration  of its license to 
transact the kinds of insurance to which this subtitle applies; 
provided, however, that such State insurer or national insurer shall 
remain liable as a member insurer for any and all obligations, 
including obligations for assessments levied prior to the termination 
or expiration of the State insurer's or national insurer's license and 
assessments levied after the termination or expiration, with respect to 
such State insurer or national insurer that becomes an insolvent 
insurer prior to the termination or expiration of the State insurer's 
or national insurer's license.
            (7) Net direct written premiums.--The term ``net direct 
        written premiums'' means direct gross premiums less return 
        premiums written in a nonqualifying State to which this 
        subtitle applies and dividends paid or credited to 
        policyholders on that direct business. Such term does not 
        include premiums on contracts between insurers or reinsurers.
            (8) Non-qualifying state.--The term ``nonqualifying State'' 
        means a State that is not a qualified State as defined in 
        section 1022.
            (9) Receivership court.--In the case of a State insurer, 
        the term ``receivership court'' means the court having 
        jurisdiction over the conservation, rehabilitation or 
        liquidation of the insurer. In the case of a national insurer 
        holding a Federal license under this Act, such term means the 
        United States district court or other United States court 
        having jurisdiction over the receivership proceedings involving 
        such national insurer.
            (10) State commissioner.--The term ``State commissioner'' 
        means the chief insurance regulatory official of a State.

SEC. 1021. NATIONAL INSURER PARTICIPATION IN QUALIFIED STATE 
              ASSOCIATIONS.

    (a) Qualified State Association Membership.--A national insurer 
holding a Federal license to issue property and casualty insurance 
must, as a condition of its authority to transact business, become and 
continue as a member of a qualified State's association in each State 
in which the national insurer is doing business.
    (b) Definition of Doing Business.--A national insurer is doing 
business in a State for purposes of this subtitle if it has any 
policies on property with a permanent location in the State, collects 
premiums from a policyowner resident in the State, or has current 
obligations to policyowners or beneficiaries of policies in that State.

SEC. 1022. QUALIFIED STATE DEFINED.

    (a) Qualified State Defined.--For purposes of this subtitle, the 
term ``qualified State'' means a State which has established an 
association--
            (1) that provides protection for covered claims in the 
        event of insolvency of any national insurer or State insurer 
        doing business in the State that meets or exceeds the standards 
        set forth in sections 1025, 1026, and 1027; and
            (2) which has been determined by the Director to comply 
        with the standards set forth in sections 1025, 1026, and 1027, 
        and such determination has not been revoked.
    (b) Deemed Compliance.--An association shall be deemed in 
compliance with the requirements of subsection (a) until 3 years after 
the effective date of this Act, following which date an association 
must meet those requirements. An association that is determined by the 
Director not to meet the standards required in subsection (a) at any 
time on or after 3 years following the effective date of this Act shall 
be preempted by this subtitle. The Director may, for good cause, extend 
this 3-year period for not more than 6 months as to any association. 
The Director shall notify an association's board of directors and the 
relevant State's State commissioner that the association's 
qualification under subsection (a) has been revoked for the reasons 
stated, effective 90 days following the date of such notification.

SEC. 1023. TRANSITION RULES WHEN ASSOCIATION PREEMPTED.

    In the event an association's qualification is revoked under 
section 1022 following a date on which a member insurer of that 
association has been determined to be insolvent, for insolvencies 
occurring on or before the date on which the standard benefits of this 
title apply, and prior to a termination of receivership proceedings--
            (1) the Director shall develop a plan, in consultation with 
        the association and the relevant State's State commissioner, to 
        provide appropriate coverage to covered claims, and assessments 
        appropriate to the line of insurance affected, which plan may 
        include coverage provided in whole or in part by the 
        corporation;
            (2) such plan shall incorporate appropriate adjustments in 
        the event payments for claims have been made under the 
        association's coverage, including the adjustment of claims 
        transferred to, and assumption of liabilities by, succeeding 
        insurance companies; and
            (3) appropriate supplemental assessments, if necessary, may 
        be made pursuant to section 1027, by the corporation as the 
        Director finds necessary to effect the change in benefits 
        provided under this subtitle.

SEC. 1024. ESTABLISHMENT OF THE NATIONAL PROPERTY AND CASUALTY 
              INSURANCE GUARANTY CORPORATION; PROTECTION FOR RESIDENTS 
              IN PREEMPTED STATES.

    (a) Establishment of the Corporation.--There is established the 
National Property and Casualty Insurance Guaranty Corporation. The 
corporation shall be a nonprofit corporation and shall have succession 
until dissolved by Act of the Congress. The corporation--
            (1) shall not be an agency or instrumentality of the United 
        States Government; and
            (2) except as otherwise provided in this subtitle, shall be 
        subject to, and have all the powers conferred upon a nonprofit 
        corporation by, the District of Columbia Nonprofit Corporation 
        Act (section 29-301.01 et seq., D.C. Official Code).
    (b) Membership in the Corporation.--The membership of the 
corporation shall consist of all member insurers.
    (c) Corporate Governance.--
            (1) Board of directors.--The board of directors of the 
        corporation shall be the governing body of the corporation and 
        shall be vested with all powers necessary for the management 
        and administration of the affairs of the corporation and the 
        promotion of its purposes as authorized by this Act. The 
        board's authority shall be specified in the bylaws of the 
        corporation.
            (2) Initial board.--The initial board of the corporation 
        shall be elected by the membership of the corporation, provided 
        that if the membership fails to elect the initial board of the 
        corporation within 3 years of the effective date of this Act, 
        then the initial board shall be appointed by the Director. 
        Membership on the board shall be fairly representative of 
        member insurers of differing size and lines of business 
        written.
            (3) Bylaws and rules.--The Director shall prescribe the 
        initial bylaws and rules governing the corporation which shall 
        set forth the composition of the board, the term of board 
        members, filling of board vacancies, board compensation, 
        election of officers and procedures to call board meetings, and 
        all matters necessary for the governance of the corporation not 
        addressed by the District of Columbia Nonprofit Corporation 
        Act.
            (4) Amendments to bylaws and rules.--Amendments to the 
        bylaws and rules of the corporation following the establishment 
        of the initial bylaws and rules as provided in paragraph (3) 
        shall be adopted by the board of the corporation following the 
        approval thereof by the Director.
    (d) Relationship of Corporation to the Federal Government.--
            (1) The corporation shall be subject to supervision and 
        oversight of the Director.
            (2) The obligations of the corporation shall not be backed, 
        directly or indirectly, by the full faith and credit of the 
        United States. The corporation shall receive no financial 
        assistance from or have any authority to borrow from the United 
        States.
            (3) Funds held by or due to the corporation shall not be 
        included in the budget of the United States, nor may the United 
        States borrow or pledge such funds.
    (e) Corporation To Provide Protection in Preempted States.--The 
corporation shall provide the protections under this subtitle for 
covered claims in any State in which the operations and activities of 
the association have been preempted pursuant to section 1022.
    (f) Contracting With Person To Administer Benefits.--The 
corporation may, with the approval of the Director, contract with 
another person to administer the claims submitted to the corporation 
under this subtitle.
    (g) Funding of Claims.--Funds for the provision of covered claims 
by the corporation shall be in accordance with the formulas and 
procedures, and subject to the limitations of, section 1027. Premiums 
and other considerations for purposes of such assessments shall include 
all nationwide premiums of national insurers on the covered lines of 
business.

SEC. 1025. PROTECTIONS AGAINST INSOLVENCY; COVERAGE AND LIMITATIONS.

    (a) Covered Claims.--This subtitle shall provide coverage for 
covered claims on policies specified in subsection (b)--
            (1) existing prior to the order of liquidation,
            (2) arising within thirty (30) days after the order of 
        liquidation,
            (3) arising before the policy expiration date if less than 
        thirty (30) days after the order or liquidation, or
            (4) arising before the insured replaces the policy or 
        causes its cancellation, if the insured does so within thirty 
        (30) days of the order of liquidation.
    (b) Policies Covered.--
            (1) Scope.--This subtitle shall provide coverage to the 
        claims specified in subsection (a) for all kinds of direct 
        insurance, other than--
                    (A) life, annuity or disability insurance;
                    (B) mortgage guaranty, financial guaranty or other 
                forms of insurance offering protection against 
                investment risks;
                    (C) fidelity or surety bonds, or any other bonding 
                obligations;
                    (D) credit insurance, vendors' single interest 
                insurance, or collateral protection insurance or any 
                similar insurance protecting the interests of a 
                creditor arising out of a creditor-debtor transaction;
                    (E) insurance of warranties or service contracts 
                including insurance that provides for the repair, 
                replacement or service of goods or property, 
                indemnification for repair, replacement or service for 
                the operational or structural failure of the goods or 
                property due to a defect in materials, workmanship or 
                normal wear and tear, or provides reimbursement for the 
                liability incurred by the issuer of agreements or 
                service contracts that provide such benefits;
                    (F) title insurance;
                    (G) ocean marine insurance;
                    (H) any transaction or combination of transactions 
                between a person (including affiliates of such person) 
                and an insurer (including affiliates of such insurer) 
                which involves the transfer of investment or credit 
                risk unaccompanied by transfer of insurance risk; or
                    (I) any insurance provided by or guaranteed by 
                government.
            (2) Definitions.--For purposes of this subsection:
                    (A) The term ``financial guaranty insurance'' 
                includes--
                            (i) failure of any obligor or obligors on 
                        any debt instrument or other monetary 
                        obligation, including common or preferred 
                        stock, to pay when due the principal, interest, 
                        dividend or purchase price of such instrument 
                        or obligation, whether failure is the result of 
                        a financial default or insolvency and whether 
                        or not the obligation is  incurred directly or 
as guarantor by, or on behalf of, another obligor which has also 
defaulted;
                            (ii) changes in the level of interest rates 
                        whether short-term or long-term, or in the 
                        difference between interest rates existing in 
                        various markets;
                            (iii) changes in the rate of exchange of 
                        currency, or from the inconvertibility of one 
                        currency into another for any reason; and
                            (iv) changes in the value of specific 
                        assets or commodities, or price levels in 
                        general.
                    (B) The term ``credit insurance'' means insurance 
                on accounts receivable.
                    (C) The term ``ocean marine insurance'' means any 
                form of insurance, regardless of the name, label or 
                marketing designation of the insurance policy, which 
                insures against maritime perils or risks and other 
                related perils or risks, which are usually insured 
                against by traditional marine insurance, such as hull 
                and machinery, marine builders risk, and marine 
                protection and indemnity. Perils and risk insured 
                against include without limitation loss, damage, 
                expense or legal liability of the insured for loss, 
                damage or expense arising out of or incident to 
                ownership, operation, chartering, maintenance, use, 
                repair or construction of any vessel, craft or 
                instrumentality in use in ocean or inland waterways for 
                commercial purposes, including liability of the insured 
                for personal liability of the insured for personal 
                injury, illness or death or for loss of damage to the 
                property of the insured or another person.
    (c) Coverage Limitations.--
            (1) In general.--The obligation to a claimant under this 
        subtitle shall be satisfied by paying to the claimant--
                    (A) the full amount of a covered claim for the 
                benefits under a workers' compensation insurance 
                coverage; and
                    (B) an amount not exceeding $10,000 per policy for 
                a covered claim for the return of unearned premiums;
            (2) Other Limitations.--In no event shall a claimant be 
        entitled to an amount in excess of the obligation of the 
        insolvent insurer under the policy or coverage from which the 
        claim arises. Notwithstanding any other provisions of this 
        subtitle, a covered claim shall not include a claim filed after 
        the final date set by the receivership court for the filing of 
        claims against the liquidator or receiver of an insolvent 
        insurer.

SEC. 1026. BOARD OF DIRECTORS.

    The board of directors of a qualifying State's association shall 
provide for representation of insurers on a basis that does not 
unfairly discriminate against national insurers or against insurers 
domiciled in other jurisdictions, and shall be fairly representative of 
insurers of differing sizes and lines of insurance written. State 
commissioners shall be member insurers and may be represented by 
officers at the discretion of the member insurer.

SEC. 1027. POWERS AND DUTIES OF THE CORPORATION.

    (a) For purposes of administration and assessment, the corporation 
shall establish three separate accounts as follows:
            (1) A workers' compensation insurance account.
            (2) An automobile insurance account.
            (3) An account for all other insurance to which this 
        subtitle applies.
    (b)(1) The corporation shall be deemed the national insurer to the 
extent of its obligation on covered claims and to that extent shall 
have all rights, duties and obligations of the insolvent insurer as if 
the national insurer had not become insolvent, including but not 
limited to the right to pursue and retain salvage and subrogation 
recoverable on covered claims obligations to the extent paid by the 
corporation.
    (2) The corporation shall allocate claims paid and expenses 
incurred among the 3 accounts separately, and assess member insurers 
separately for each account, amounts necessary to pay the obligations 
of the association under section 1025(c) subsequent to an insolvency, 
the expenses of handling covered claims subsequent to an insolvency, 
and other expenses authorized by this Act, as follows:
            (A) Proportion.--The assessments of each member insurer 
        shall be in the proportion that the net direct written premiums 
        of the member insurer for the calendar year preceding the 
        assessment on the kinds of insurance in the account bears to 
        the net direct written premiums of all member insurers for the 
        calendar year preceding the assessment on the kinds of 
        insurance in the account.
            (B) Notification.--Each member insurer shall be notified of 
        the assessment not later than thirty (30) days before it is 
        due.
            (C) Limitation.--A member insurer may not be assessed in 
        any one year on any account an amount greater than two percent 
        (2%) of that member insurer's net direct written premiums for 
        the calendar year preceding the assessment on the kinds of 
        insurance in the account. If the maximum assessment, together 
        with the other assets of the corporation in any account, does 
        not provide in any one year in any account an amount sufficient 
        to make all necessary payments from that account, the funds 
        available shall be pro-rated and the unpaid portion shall be 
        paid as soon thereafter as funds become available.
            (D) Payment of claims.--The corporation shall pay claims in 
        any order which it deems reasonable, including the payment of 
        claims as they are received from the claimants or in groups or 
        categories of claims.
            (E) Exemption; deferral.--The corporation may exempt or 
        defer, in whole or in part, the assessment of a member insurer, 
        if the assessment would cause the member insurer's financial 
        statement to reflect amounts of capital or surplus less than 
        the minimum amounts required for a certificate of authority by 
        a jurisdiction in which the member insurer is authorized to 
        transact insurance. However, during the period of deferment no 
        dividends shall be paid to shareholders or policyholders. 
        Deferred assessments shall be paid when the payment will not 
        reduce capital or surplus below required minimums.
            (F) Refund.--Payments shall be refunded to those member 
        insurers receiving larger assessments by virtue of such 
        deferment, or at the election of the member insurer, credited 
        against future assessments.
            (G) Set off.--A member insurer may set off against any 
        assessment, authorized payments made on covered claims and 
        expenses incurred in the payment of claims by the member 
        insurer if they are chargeable to the account for which the 
        assessment is made.
    (3) The corporation shall investigate claims brought against the 
corporation and adjust, compromise, settle and pay covered claims to 
the extent of the corporation's obligation and deny all other claims. 
The corporation may review settlements, releases and judgments to which 
the insolvent insurer or its insureds were parties to determine the 
extent to which the settlements, releases and judgments may be properly 
contested. The corporation shall have the right to appoint or 
substitute and to direct legal counsel retained under liability 
insurance policies for the defense of covered claims.
    (4) The corporation shall notify claimants in this State as deemed 
necessary by the Director, to the extent records are available to the 
corporation.
    (5) The corporation shall handle claims through its employees or 
through one or more insurers or through one or more insurers or other 
persons designated as servicing facilities. Designation of a servicing 
facility is subject to the approval of the Director, but the 
designation may be declined by a member insurer.
    (6) The corporation shall reimburse each servicing facility for 
obligations of the corporation paid by the facility and for expenses 
incurred by the facility while handling claims on behalf of the 
corporation and shall pay the other expenses of the corporation 
authorized by this Act.
    (b) Other Powers.--The corporation may:
            (1) Employ or retain persons necessary to handle claims and 
        perform other duties of the corporation.
            (2) Borrow funds necessary to affect the purposes of this 
        Act in accordance with the plan of operation.
            (3) Sue or be sued.
            (4) Negotiate and become a party to contracts necessary to 
        carry out the purpose of this Act.
            (5) Perform other acts necessary or proper to effectuate 
        the purpose of this Act.
            (6) Refund to member insurers in proportion to the 
        contribution of each member insurer to the corporation that 
        amount by which the assets of the corporation exceed the 
        liabilities, if at the end of any calendar year, the board of 
        directors finds that the assets of the corporation exceed the 
        liabilities of the corporation as estimated by the board of 
        directors for the coming year.

SEC. 1028. DUTIES AND POWERS OF DIRECTOR.

    (a) Director's Duties and Powers.--The Director shall--
            (1) notify the corporation of the existence of an insolvent 
        insurer not later than three days after the Director receives 
        notice of the determination of the insolvency. The corporation 
        shall be entitled to a copy of a complaint seeking an order of 
        liquidation with a finding of insolvency against a member 
        insurer at the same time that the complaint is filed with a 
        court of competent jurisdiction; and
            (2) provide the corporation with a statement of the net 
        direct written premiums of each member insurer upon request of 
        the board of directors.
    (b) Additionally Duties and Powers.--The Director may--
            (1) suspend or revoke, after notice and hearing, the 
        Federal license of a national insurer that fails to pay an 
        assessment when due; or
            (2) levy a fine on a member insurer that fails to pay an 
        assessment, not to exceed five percent of the unpaid assessment 
        per month, except that a fine shall not be less than $100 per 
        month.
    (c) Judicial Review.--A final action or order of the Director under 
this subtitle shall be subject to judicial review under the terms of 
section 803.

SEC. 1029. EFFECT OF PAID CLAIMS.

    (a) In General.--A person recovering under this subtitle shall be 
deemed to have assigned any rights under the policy to the corporation 
to the extent of his or her recovery from the corporation. Every 
insured or claimant seeking the protection of this subtitle shall 
cooperate with the corporation to the same extent as the person would 
have been required to cooperate with the insolvent insurer. The 
corporation shall have no cause of action against the insured of the 
insolvent insurer for sums it has paid out except causes of action the 
insolvent insurer would have had if the sums had been paid by the 
insolvent insurer and except as provided in subsection (b). In the case 
of an insolvent insurer subject to assessment liability, the payments 
of claims of the corporation shall not operate to reduce the liability 
of the insureds to the receiver, liquidator, or statutory successor for 
unpaid assessments.
    (b) Right To Recover.--The corporation shall have the right to 
recover from the following persons the amount of any covered claim paid 
on behalf of the person pursuant to this subtitle--
            (1) an insured whose net worth on December 31 of the year 
        immediately preceding the date the member insurer becomes an 
        insolvent insurer exceeds $50 million and whose liability 
        obligations to other persons are satisfied in whole or in part 
        by payments made under this subtitle; and
            (2) any person who is an affiliate of the insolvent insurer 
        and whose liability obligations to other persons are satisfied 
        in whose or in part by payments made under this subtitle.
    (c) Corporation as Claimant.--The corporation shall be recognized 
as a claimant in the liquidation of an insolvent insurer for amounts 
paid by the corporation on covered claims as determined under this 
subtitle and shall receive dividends and other distributions at the 
priority established by section 975, or applicable state law. The 
receiver, liquidator or statutory successor of an insolvent insurer 
shall be bound by determinations of covered claim eligibility under 
this subtitle and by settlement of claims made by the corporation to 
the extent such determinations or settlements satisfy obligations of 
the corporation. The receiver shall not be bound in any way by such 
determinations or settlements to the extent there remains a claim 
against the insolvent insurer. The receivership court shall grant the 
claims priority equal to that which the claimant would have been 
entitled against the assets of the insolvent insurer in the absence of 
this subtitle.
    (d) Filings.--The corporation shall periodically file with the 
receiver or liquidator of the insolvent insurer statements of the 
covered claims paid by the corporation and estimates of anticipated 
claims on the corporation which shall preserve the rights of the 
corporation against the assets of the insolvent insurer.

SEC. 1030. EXHAUSTION OF OTHER COVERAGE.

    (a) In General.--Any person having a claim against an insolvent 
insurer, whether or not the insurer is a member insurer, under any 
provision in an insurance policy other than a policy of an insolvent 
insurer which is also a covered claim, shall be required to exhaust 
first his or her rights under the policy. An amount payable on a 
covered claim under this subtitle shall be reduced by the amount of 
recovery under the insurance policy.
    (b) Multiple Associations.--A person having a claim which may be 
recovered from more than one association in a qualifying or 
nonqualifying State, or from one or more such associations and the 
corporation, shall seek recovery first from the association of the 
place of residence of the insured (or, if the insured resides in a 
nonqualifying State, from the corporation), except that if it is a 
first party claim for damages to property with a permanent location, 
the person shall seek recovery first from the association of the 
location of the property. If it is a workers' compensation claim, the 
person shall seek recovery first from the association of the residence 
of the claimant (or, if the claimant resides in a nonqualifying State, 
from the corporation). A recovery under this subtitle shall be reduced 
by the amount of recovery from another association.

SEC. 1031. COOPERATION BETWEEN DIRECTOR AND STATE COMMISSIONERS.

    (a) Notice to State Commissioners.--The Director shall notify the 
State commissioner in each State in which a national insurer is doing 
business within 30 days of taking any of the following actions against 
a national insurer--
            (1) revocation or suspension of the national insurer's 
        authority to transact insurance;
            (2) the entry of a formal order that the national insurer 
        restrict its premium writing, obtain additional contributions 
        to surplus, reinsure all or any part of its business, or 
        increase capital, surplus, or any other account for the 
        security of policyowners or creditors; or
            (3) the Director has reasonable cause to believe from an 
        examination, whether completed or in process, of any national 
        insurer that such national insurer may be an insolvent insurer.
    (b) Notice to Director.--Each State commissioner shall notify the 
Director when any action listed in subsection (a)(1) is taken or 
condition is believed to exist with respect to a State insurer that is 
a member insurer.
    (c) Report to Associations.--The Director shall also report to the 
boards of directors of the appropriate associations when the Director 
has taken any of the actions set forth in subsection (a). Any report to 
the boards of directors shall contain all significant details of the 
action taken and may be provided with the cooperation of the 
corporation.
    (d) Obligations of the Corporation.--The corporation may make 
reports and recommendations to the Director, as appropriate, upon any 
matter germane to the solvency, liquidation, rehabilitation or 
conservation of any member insurer. The reports and recommendations 
shall not be considered public documents. The corporation shall also 
provide such information and advice as requested by the Director when 
providing protection and benefits under this title in a nonqualifying 
State.
    (e) Notice by the Corporation.--The corporation may notify the 
Director of any information indicating a member insurer in a 
nonqualifying State may be an insolvent insurer.

SEC. 1032. PROHIBITED DISCRIMINATION IN TAX TREATMENT.

    No State law may discriminate between national insurers and other 
insurers with respect to deductions or offsets of assessments against 
premium, franchise or income tax liability to the State, and any State 
law that does so shall not be effective.

SEC. 1033. EXAMINATION OF THE CORPORATION; ANNUAL REPORT.

    The corporation shall be subject to examination and regulation by 
the Director. The corporation shall submit to the Director each year, 
not later than 120 days after the end of its fiscal year, a financial 
report in a form approved by the Director and a report of its 
activities during the preceding fiscal year, as they relate to the 
duties and functions carried out under this subtitle.

SEC. 1034. IMMUNITY.

    There shall be no liability on the part of and no cause of action 
of any nature shall arise against any member insurer or its agents or 
employees, the corporation or its agents or employees, members of the 
board of directors, or the Director or the Director's representatives, 
for any action or omission by them in the performance of their powers 
and duties under this subtitle.

SEC. 1035. STAY OF PROCEEDINGS.

    (a) Stay.--All proceedings in which an insolvent insurer is a party 
in any Federal or State court shall, subject to waiver by the 
corporation in specific cases involving covered claims, be stayed for 
six (6) months and additional time that may be determined by the court 
from the date the insolvency is determined or an ancillary proceeding 
is instituted, whichever is later, to permit proper defense by the 
corporation of all pending causes of action. As to covered claims 
arising from a judgment under decision, verdict or finding based on the 
default of an insolvent insurer or its failure to defend an insured, 
the corporation, either on its own behalf or on behalf on an insured, 
may apply to have the judgment, order, decision, verdict or finding set 
aside by the same court or administrator that made the judgment, order, 
decision, verdict or finding and shall be permitted to defend the claim 
on the merits.
    (b) Records.--The liquidator, receiver or statutory successor of an 
insolvent insurer covered by this subtitle shall permit access by the 
corporation or its authorized representative to the insolvent insurer's 
records which are necessary for the corporation in carrying out its 
functions under this subtitle with regard to covered claims. The 
liquidator, receiver, or statutory successor shall provide the 
corporation or its representative with copies of those records upon the 
request of the corporation and at the expense of the corporation.

                        TITLE XI--EFFECTIVE DATE

SEC. 1101. EFFECTIVE DATE.

    Except as otherwise specifically provided in this Act, this Act 
shall take effect upon the expiration of the 12-month period beginning 
on the date of the enactment of this Act.
                                 <all>