[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6529 Introduced in House (IH)]

111th CONGRESS
  2d Session
                                H. R. 6529

To amend title 31, United States Code, to provide for a Federal license 
                for reinsurers, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           December 16, 2010

 Mr. Moore of Kansas introduced the following bill; which was referred 
                 to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
To amend title 31, United States Code, to provide for a Federal license 
                for reinsurers, 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.

    This Act may be cited as the ``Federal License for Reinsurers Act 
of 2010''.

SEC. 2. AMENDMENTS TO TITLE 31, UNITED STATES CODE.

    Section 313 of title 31, United States Code, is amended--
            (1) in subsection (b)--
                    (A) by striking ``The Office'' and inserting the 
                following:
            ``(1) Leadership.--The Office''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(2) Employees.--
                    ``(A) Number and compensation.--The Director shall 
                fix the number of employees of the Office and the 
                compensation of such employees, as necessary to carry 
                out the provisions of this section without regard to 
                chapter 51 or subchapter III of chapter 53 of title 5.
                    ``(B) Additional compensation and benefits.--
                Notwithstanding subparagraph (A), the Director may 
                provide additional compensation and benefits 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 any such agency 
                under applicable provisions of law 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.'';
            (2) in subsection (c)(1)--
                    (A) in subparagraph (E), by striking ``subsection 
                (r)'' and inserting ``subsection (s)'';
                    (B) by redesignating subparagraphs (G) and (H) as 
                subparagraphs (H) and (I), respectively; and
                    (C) by inserting after subparagraph (F) the 
                following new subparagraph:
                    ``(G) with respect to the business of reinsurance--
                            ``(i) to license entities to transact the 
                        business of reinsurance as a national reinsurer 
                        pursuant to subsection (h)(1);
                            ``(ii) to revoke, suspend, or restrict a 
                        Federal license pursuant to (h)(1)(B);
                            ``(iii) to coordinate Federal efforts and 
                        establish Federal policy on international 
                        matters related to reinsurance, including 
                        working with international regulatory and 
                        standard-setting bodies;
                            ``(iv) to assist the Secretary in entering 
                        into supervisory arrangements authorized under 
                        subsection (h);
                            ``(v) to establish and enforce appropriate 
                        standards and requirements governing national 
                        reinsurers consistent with criteria in 
                        subsection (h)(5);
                            ``(vi) to determine that any State law, 
                        regulation, or action is preempted as being 
                        contrary to or inconsistent with the purposes 
                        of subsection (h) and this subparagraph;
                            ``(vii) to assess and collect reasonable 
                        fees from authorized foreign reinsurers for 
                        reimbursement of costs incurred by the Director 
                        related to supervisory arrangements; and
                            ``(viii) to assess and collect reasonable 
                        fees from national reinsurers for the 
                        reimbursement of costs incurred by the Director 
                        for licensing and examination of national 
                        reinsurers;'';
            (3) in subsection (f)--
                    (A) in paragraph (1), by striking ``A State'' and 
                inserting ``Except as provided in subsection (h), a 
                State''; and
                    (B) in paragraph (2)(B), by inserting after 
                ``insurance measures,'' the following: ``except as 
                provided in subsection (h),'';
            (4) in subsection (g), by inserting after ``determination 
        of inconsistency,'' the following: ``except as provided in 
        subsection (h),'';
            (5) by redesignating subsections (h), (i), (j), (k), (l), 
        (m), (n), (o), (p), (q), (r), and (s) as subsections (i), (j), 
        (k), (l), (m), (n), (o), (p), (q), (r), (s), and (t), 
        respectively;
            (6) by inserting after subsection (g) the following new 
        subsection:
    ``(h) Authority With Respect to Reinsurance.--
            ``(1) Licensing of national reinsurers.--
                    ``(A) Licensing.--
                            ``(i) In general.--The Director shall 
                        establish criteria necessary for the licensing 
                        and operation of a national reinsurer.
                            ``(ii) Eligibility.--A United States entity 
                        shall be eligible to apply for a Federal 
                        license under this subsection to transact the 
                        business of reinsurance upon demonstration to 
                        the Director that the entity meets the 
                        definition of reinsurer under this section and 
                        all other criteria established by the Director.
                            ``(iii) Non-united states entities.--A non-
                        United States entity may obtain a Federal 
                        license under this subsection through the 
                        establishment of a United States branch which 
                        meets the eligibility requirements under clause 
                        (ii) and such other regulations as the Director 
                        may prescribe.
                            ``(iv) Issuance of license.--If the 
                        Director determines that the applicant has 
                        satisfied the applicable eligibility 
                        requirements, the Director shall issue a 
                        Federal license to the applicant to transact 
                        the business of reinsurance.
                    ``(B) Revocation, suspension, or restriction of 
                federal license.--The Director may revoke, suspend, or 
                restrict a Federal license whenever the Director 
                determines that the licensed entity is no longer 
                operating in a manner consistent with the criteria for 
                licensing and operation established by the Director.
                    ``(C) Conversion to state license.--A national 
                reinsurer may convert to a State-licensed reinsurer in 
                accordance with applicable State law if--
                            ``(i) such entity notifies the Director of 
                        its intention to convert in accordance with 
                        such procedures as the Director may prescribe 
                        by regulation;
                            ``(ii) after conducting an appropriate 
                        review, the Director approves the conversion.
                    ``(D) Applicability of the bankruptcy code.--A 
                delinquency proceeding for the liquidation or 
                reorganization of a United States national reinsurer 
                shall proceed under the provisions of title 11.
            ``(2) Supervisory arrangements.--
                    ``(A) Authority.--In order to realize the 
                efficiencies and consumer benefits of a more harmonized 
                international reinsurance regulatory system, the 
                Secretary and the United States Trade Representative, 
                jointly, shall be authorized to enter into supervisory 
                arrangements for the recognition of qualified 
                reinsurance supervisory authorities of non-United 
                States jurisdictions that provide a level of protection 
                for United States reinsurance consumers that is 
                substantially equivalent to the level of protection 
                achieved by the Director pursuant to the provisions of 
                this subsection.
                    ``(B) Exchange of information.--The entry into 
                supervisory arrangements with qualified supervisory 
                authorities of non-United States jurisdictions shall be 
                preceded by an exchange and evaluation of relevant 
                information regarding the form and nature of regulation 
                in each such jurisdiction and the Secretary's 
                determination that such jurisdiction's supervisory 
                authority maintains and applies legal standards, 
                regulatory requirements, and enforcement capabilities 
                substantially equivalent to those applied by the 
                Director, and that the awards of arbitration panels and 
                judgments of appropriate United States courts are 
                enforceable and collectable in the jurisdiction, 
                pursuant to treaty, other agreement, or operation of 
                that jurisdiction's law.
                    ``(C) Requirements for validity.--The Secretary and 
                the United States Trade Representative may enter into 
                supervisory arrangements only in cases in which the 
                Secretary has determined that the requirements of 
                subparagraph (B) have been satisfied and the 
                arrangement explicitly provides for all of the 
                following:
                            ``(i) Identification of areas of regulation 
                        that will be the exclusive responsibility of 
                        the respective jurisdictions.
                            ``(ii) The reciprocal treatment of 
                        reinsurance entities in accordance with each 
                        subject jurisdiction's rules and regulations.
                            ``(iii) A commitment to exchange relevant 
                        information on an on-going basis.
                            ``(iv) A process for resolving disputed 
                        issues.
                            ``(v) The application of chapter 15 of 
                        title 11 to cross-border insolvency cases 
                        involving entities from the subject 
                        jurisdiction.
                            ``(vi) The terms and conditions for 
                        terminating the supervisory arrangement.
                    ``(D) Status of authorized foreign reinsurers.--An 
                authorized foreign reinsurer shall be authorized to 
                transact the business of reinsurance to the extent 
                authorized by the applicable supervisory arrangement.
            ``(3) Preemption of state law.--
                    ``(A) Inconsistent laws.--All laws, regulations, 
                provisions, or other actions of a State contrary to or 
                inconsistent with the purposes of this subsection, 
                except those which may be applicable to corporate taxes 
                generally, are preempted to the extent that they apply 
                to national reinsurers or authorized foreign 
                reinsurers, or to their reinsurance agreements.
                    ``(B) Laws with disparate treatment.--All laws, 
                regulations, provisions, or other actions of a State 
                are preempted to the extent that national reinsurers or 
                authorized foreign reinsurers receive more or less 
                favorable treatment than State licensed insurers or 
                reinsurers pursuant to such laws, regulations, 
                provisions, or other actions, solely on the basis of an 
                entity's status as a national reinsurer or authorized 
                foreign reinsurer.
                    ``(C) Prohibition of interference.--No State shall 
                interfere, directly or indirectly, with a United States 
                insurer or reinsurer--
                            ``(i) applying for a Federal license or 
                        operating as a national reinsurer; or
                            ``(ii) ceding insurance to a national 
                        reinsurer or an authorized foreign reinsurer 
                        for any purpose under this subsection.
                    ``(D) Credit for reinsurance.--No State shall deny 
                credit, either as an asset or a reduction of 
                liabilities, on account of reinsurance ceded to a 
                national reinsurer or an authorized foreign reinsurer 
                under this subsection.
                    ``(E) Prohibition of enforcement.--No State shall 
                enforce a State law, regulation, provision, or other 
                action to the extent that it is preempted pursuant to 
                this paragraph.
                    ``(F) Determinations by director.--
                            ``(i) Preemption.--The Director shall be 
                        authorized to determine that any State law, 
                        regulation, provision, or action shall be 
                        preempted pursuant to this paragraph.
                            ``(ii) Judicial review.--Any State or any 
                        other person aggrieved by action of the 
                        Director under this paragraph may seek judicial 
                        review in the manner specified in chapter 7 of 
                        title 5.
            ``(4) Cooperation between the director and state insurance 
        regulators.--The Director shall--
                    ``(A) consult, as the Director deems appropriate, 
                with the relevant State insurance regulators concerning 
                regulatory matters;
                    ``(B) notify all State insurance regulators of 
                supervisory arrangements entered into pursuant to 
                paragraph (2); and
                    ``(C) notify the relevant State insurance 
                regulators of a change in the status of, or any 
                administrative action taken by the Director against, a 
                national reinsurer or an authorized foreign reinsurer.
            ``(5) Rules and regulations.--
                    ``(A) In general.--The Director shall adopt 
                regulations implementing the provisions of this 
                subsection. The Director may issue any other rules, 
                regulations, orders, or interpretations as the Director 
                determines to be necessary to carry out the purposes of 
                this subsection.
                    ``(B) Criteria.--The rules and regulations 
                prescribed under subparagraph (A) shall give due 
                consideration to--
                            ``(i) promoting financially secure 
                        reinsurance recoverables and capacity that 
                        protects the solvency of United States ceding 
                        insurers;
                            ``(ii) the need for a competitive and 
                        healthy reinsurance market that provides 
                        sufficient capacity to meet ceding companies' 
                        risk management needs through open market 
                        contracting and pricing practices;
                            ``(iii) global capital and risk management, 
                        taking into account capital adequacy, 
                        assessment of internal controls, recognition of 
                        qualified internal capital models, and 
                        effective corporate governance;
                            ``(iv) financial transparency that 
                        encourages and supports the cedents' ability to 
                        assess counter party credit risk, including 
                        information regarding the national reinsurer's 
                        financial condition and the national 
                        reinsurer's performance in paying covered 
                        claims;
                            ``(v) access to all necessary financial 
                        information, with appropriate provision for the 
                        confidentiality of that information; and
                            ``(vi) harmonization with international 
                        standards for the prudential regulation of the 
                        business of reinsurance.
            ``(6) Implementation.--
                    ``(A) Licensing.--The Director shall commence 
                licensing of national reinsurers and the entry into 
                supervisory arrangements after promulgation of final 
                rules and regulations under this subsection, which 
                shall occur not later than the expiration of the 2-year 
                period beginning on the date of the enactment of this 
                subsection.
                    ``(B) Applicability.--The provisions of this 
                subsection shall apply only to reinsurance agreements 
                and supervisory arrangements entered into on or after 
                the date of the enactment of this subsection.
            ``(7) Effect of status.--There shall be no determination 
        under section 113 of the Dodd-Frank Wall Street Reform and 
        Consumer Protection Act that an entity is subject to 
        supervision by the Board of Governors of the Federal Reserve 
        System and subject to prudential standards (as such term is 
        defined in such Act), in accordance with title I of such Act, 
        on account of an entity's status as a national reinsurer or 
        authorized foreign reinsurer.'';
            (7) in subsection (k)(1), as so redesignated, by inserting 
        ``except as provided in subsection (h),'' before ``preempt--'';
            (8) in subsection (l), as so redesignated, by striking 
        ``Nothing'' and inserting ``Except as provided in subsections 
        (c) and (h), nothing''; and
            (9) in subsection (s), as so redesignated--
                    (A) by redesignating paragraphs (2), (3), (4), (5), 
                (6), (7), (8), (9), and (10) as paragraphs (3), (4), 
                (6), (8), (9), (12), (13), (14), and (15), 
                respectively;
                    (B) by inserting after paragraph (1) the following 
                new paragraph:
            ``(2) Authorized foreign reinsurer.--The term `authorized 
        foreign reinsurer' means a reinsurer that is domiciled in and 
        subject to the regulation of a non-United States jurisdiction's 
        supervisory authority that has entered into a supervisory 
        arrangement with the Director.'';
                    (C) by inserting after paragraph (4), as so 
                redesignated, the following new paragraph:
            ``(5) Federal banking agency.--The term `Federal banking 
        agency' shall have the meaning give such term under section 2 
        of the Dodd-Frank Wall Street Reform and Consumer Protection 
        Act.'';
                    (D) by inserting after paragraph (6), as so 
                redesignated, the following new paragraph:
            ``(7) National reinsurer.--The term `national reinsurer' 
        means an entity to which the Director has issued a Federal 
        license under subsection (h)(1) to transact the business of 
        reinsurance.''; and
                    (E) by inserting after paragraph (9), as so 
                redesignated, the following new paragraphs:
            ``(10) Reinsurance.--The term `reinsurance' means the 
        assumption by an insurer of all or part of a risk undertaken 
        originally by another insurer.
            ``(11) Reinsurer.--The term `reinsurer' means, as 
        determined by the Director, an insurer, to the extent that the 
        insurer--
                    ``(A) is principally engaged in the business of 
                reinsurance;
                    ``(B) does not conduct significant amounts of 
                direct insurance as a percentage of its net premiums; 
                and
                    ``(C) is not engaged in an ongoing basis in the 
                business of soliciting direct insurance.''.

SEC. 3. AMENDMENTS TO DODD-FRANK.

    (a) Section 111.--Section 111(b) of the Dodd-Frank Wall Street 
Reform and Consumer Protection Act is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (I), by striking ``and'' at the 
                end;
                    (B) by redesignating subparagraph (J) as 
                subparagraph (K); and
                    (C) by inserting after subparagraph (I) the 
                following new subparagraph:
                    ``(J) the Director of the Federal Insurance Office; 
                and''; and
            (2) in paragraph (2)--
                    (A) by striking subparagraph (B); and
                    (B) by redesignating subparagraphs (C), (D), and 
                (E) as subparagraphs (B), (C), and (D), respectively.
    (b) Section 112.--Section 112 of such Act is amended--
            (1) in subsection (a)(2), by striking ``the Federal 
        Insurance Office''; and
            (2) in subsection (d)--
                    (A) in paragraph (1), by striking ``, member 
                agencies, and the Federal Insurance Office'' and 
                inserting ``and member agencies'';
                    (B) in paragraph (2), by striking ``, any member 
                agency, and the Federal Insurance Office,'' and 
                inserting ``and any member agency''.
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