§ 44-4830.01 — Netting agreement; qualified financial contract; net or settlement amount; treatment; receiver; powers; duties; notice; claim of counterparty; rights of counterparty

Nebraska § 44-4830.01

• Jurisdiction: Nebraska
• Ch. 44: Insurance

Text

(1) Notwithstanding any other provision
of the Nebraska Insurers Supervision, Rehabilitation, and Liquidation Act
to the contrary, including any other provision of the act that permits the
modification of contracts, or another law of this state, a person shall not
be stayed or prohibited from exercising any of the following:
(a) A contractual right
to terminate, liquidate, or close out any netting agreement or qualified financial
contract with an insurer because of one of the following:
(i) The insolvency, financial
condition, or default of the insurer at any time, if the right is enforceable
under applicable law other than the act; or
(ii) The commencement of a formal delinquency proceeding
under the act;
(b)
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
(c) Subject to any provision
of subsection (2) of section 44-4830 , any right to setoff 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 if the counterparty
or its guarantor is organized under the laws of the United States or a state
or foreign jurisdiction approved by the Securities Valuation Office of the
National Association of Insurance Commissioners as eligible for netting.
(2) Upon termination
of a netting agreement or qualified financial contract, the net or settlement
amount, if any, owed by a nondefaulting party to an insurer against which
an application or petition has been filed under the act shall be transferred
to or on the order of the receiver for the insurer, even if the insurer is
the defaulting party, notwithstanding any provision in the netting agreement
or qualified financial contract that may provide that the 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 or qualified financial contract with an insurer that has defaulted
shall be deemed to be a full two-way payment provision as against the defaulting
insurer. Any such amount, except to the extent it is subject to one or more
secondary liens or encumbrances, shall be a general asset of the insurer.
(3) In making any transfer
of a netting agreement or qualified financial contract of an insurer subject
to a proceeding under the act, the receiver shall do one of the following:
(a) Transfer to one party,
other than an insurer subject to a proceeding under the act, all netting agreements
and qualified financial contracts between a counterparty or any affiliate
of the counterparty and the insurer that is the subject of the proceeding,
including all of the following:
(i) All rights and obligations of each party under
each netting agreement and qualified financial contract; and
(ii) 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
(b) Transfer none of
the netting agreements, qualified financial contracts, rights, obligations,
or property referred to in subdivision (a) of this subsection with respect
to the counterparty and any affiliate of the counterparty.
(4) If a receiver for
an insurer makes a transfer of one or more netting agreements or qualified
financial contracts, the receiver shall use his or her best efforts to notify
any person who is party to the netting agreement or qualified financial contract
of the transfer by noon of the receiver's local time on the business day following
the transfer. For purposes of this subsection, business day means a 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.
(5) Notwithstanding any other provision
of the act to the contrary, a receiver shall not avoid a transfer of money
or other property arising under or in connection with a netting agreement
or qualified financial contract or any 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 that is made
before the commencement of a formal delinquency proceeding under the act.
However, a transfer may be avoided under section 44-4828 if the transfer was
made with actual intent to hinder, delay, or defraud the insurer, a receiver
appointed for the insurer, or an existing or future creditor.
(6)(a) In exercising
any of its powers under the act to disaffirm or repudiate a netting agreement
or qualified financial contract, the receiver shall take action with respect
to each netting agreement or qualified financial contract and all transactions
entered into in connection therewith in its entirety.
(b) Notwithstanding any other provision
of the act to the contrary, any claim of a counterparty against the estate
arising from the receiver's disaffirmance or repudiation of a netting agreement
or qualified financial contract that has not been previously affirmed in the
liquidation or in the immediately preceding rehabilitation case shall be determined
and allowed or disallowed as if the claim had arisen before the date of the
filing of the petition for liquidation or, if a rehabilitation proceeding
is converted to a liquidation proceeding, as if the claim had arisen before
the date of the filing of the petition for rehabilitation. The amount of the
claim shall be the actual direct compensatory damages determined as of the
date of the disaffirmance or repudiation of the netting agreement or qualified
financial contract. For purposes of this subdivision, actual 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.
(7) For purposes of this
section, contractual right includes any right, whether or not evidenced in
writing, arising under (a) statutory or common law, (b) a rule or bylaw of
a national securities exchange, a national securities clearing organization,
or a securities clearing agency, (c) a rule or bylaw or a resolution of the
governing body of a contract market or its clearing organization, or (d) law
merchant.
(8)
This section does not apply to persons who are affiliates of the insurer that
is the subject of the proceeding.
(9) All rights of a counterparty under the act shall
apply to netting agreements and qualified financial contracts entered into
on behalf of the general account or separate accounts, if the assets of each
separate account are available only to counterparties to netting agreements
and qualified financial contracts entered into on behalf of that separate
account.

Legislative History

Source: Laws 2011, LB72, § 7.