507C.28A Qualified financial contracts. 1. Notwithstanding any other provision of this chapter to the contrary, including any other provision of this chapter permitting the modification of contracts, or other law of a state, aperson 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 any of the following: (1) The insolvency, financial condition, or default of the insurer at any time, provided that the right is enforceable under applicable law other than this chapter. (2) The commencement of a formal delinquency proceeding under this chapter.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 orqualified financial contract. c. Subject to any provision of section 507C.30, subsection 2, any right to set off or net out any termination value, payment amount, or other transfer obligation arising under or inconnection with a netting agreement or qualified financial contract where the counterpartyor its off or net out any termination value, payment amount, or other transfer obligation arising under or inconnection with a netting agreement or qualified financial contract where the counterpartyor its guarantor is organized under the laws of the United States or a state or foreignjurisdiction approved by the securities valuation office or the national association ofinsurance commissioners as eligible for netting. 2. Upon termination of a netting agreement, the net or settlement amount, if any, owed by a nondefaulting party to an insurer against which an application or petition has been filedunder this chapter shall be transferred to or on the order of the receiver for the insurer, evenif the insurer is the defaulting party, notwithstanding any provision in the netting agreementthat may provide that the nondefaulting party is not required to pay any net or settlementamount due to the defaulting party upon termination. Any limited two-way payment provisionin a netting agreement with an insurer that has defaulted shall be deemed to be a full two-waypayment provision as against the defaulting insurer. on termination. Any limited two-way payment provisionin a netting agreement with an insurer that has defaulted shall be deemed to be a full two-waypayment provision as against the defaulting insurer. Any such amount shall, except to theextent it is subject to one or more secondary liens or encumbrances, be a general asset of theinsurer. 3. In making any transfer of a netting agreement or qualified financial contract of an insurer subject to a proceeding under this chapter, the receiver shall do either of the following: a. Transfer to one party, other than an insurer subject to a proceeding under this chapter, all netting agreements and qualified financial contracts between a counterparty or anyaffiliate of the counterparty and the insurer that is the subject of the proceeding, includingall of the following: (1) All rights and obligations of each party under each such netting agreement and qualified financial contract. (2) All property, including any guarantees or credit support documents, securing any claims of each party under each such netting agreement and qualified financial contract. b. ed financial contract. (2) All property, including any guarantees or credit support documents, securing any claims of each party under each such netting agreement and qualified financial contract. b. Transfer none of the netting agreements, qualified financial contracts, rights, obligations, or property referred to in paragraph 'a' with respect to the counterparty andany 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 the receiver’s best efforts to notify anyperson who is a party to the netting agreements or qualified financial contracts of the transferby noon of the receiver’s local time on the business day following the transfer. For purposesof this subsection, 'business day' means a day other than a Saturday, Sunday, or any day onwhich either the New York stock exchange or the federal reserve bank of New York is closed. 5. Notwithstanding any other provision of this chapter to the contrary, a receiver shall not avoid a transfer of money or other property arising under or in connection with a nettingagreement or qualified financial contract, or any pledge of this chapter to the contrary, a receiver shall not avoid a transfer of money or other property arising under or in connection with a nettingagreement or qualified financial contract, or any pledge security, collateral, or guaranteeagreement or any other similar security arrangement or credit support document relating toa netting agreement or qualified financial contract, that is made before the commencementof a formal delinquency proceeding under this chapter. However, a transfer may be avoidedunder section 507C.28 if the transfer was made with actual intent to hinder, delay, or defraudthe insurer, a receiver appointed for the insurer, or existing or future creditors. 6. In exercising any of its powers under this chapter to disaffirm or repudiate a netting Sat Dec 23 00:39:45 2023 Iowa Code 2024, Section 507C.28A (19, 0) §507C.28A, INSURERS SUPERVISION, REHABILITATION, AND LIQUIDATION 2 agreement or qualified financial contract, the receiver must take action with respect toeach netting agreement or qualified financial contract and all transactions entered into inconnection therewith, in its entirety. fied financial contract, the receiver must take action with respect toeach netting agreement or qualified financial contract and all transactions entered into inconnection therewith, in its entirety. Notwithstanding any other provision of this chapterto the contrary, any claim of a counterparty against the estate arising from the receiver’sdisaffirmance or repudiation of a netting agreement or qualified financial contract that hasnot been previously affirmed in the liquidation or in the immediately preceding rehabilitationcase shall be determined and shall be allowed or disallowed as if the claim had arisenbefore the date of the filing of the petition for liquidation or, if a rehabilitation proceeding isconverted to a liquidation proceeding, as if the claim had arisen before the date of filing thepetition for rehabilitation. The amount of the claim shall be the actual direct compensatorydamages determined as of the date of the disaffirmance or repudiation of the nettingagreement or qualified financial contract. The term 'actual direct compensatory damages'does not include punitive or exemplary damages, damages for lost profit or lost opportunity,or damages for pain and suffering, alified financial contract. The term '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 coveror other reasonable measures of damages utilized in the derivatives market for the contractand agreement claims. 7. The term 'contractual right' as used in this section includes any right, whether or not evidenced in writing, arising under statutory or common law, a rule or bylaw of a nationalsecurities 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 clearingorganization, or under law merchant. 8. This section shall not apply to persons who are affiliates of the insurer that is the subject of the proceeding. 9. All rights of a counterparty under this chapter shall apply to netting agreements and qualified financial contracts entered into on behalf of the general account orseparate accounts, provided that the assets of each separate account are available only tocounterparties to netting agreements and qualified contracts entered into on behalf of the general account orseparate accounts, provided that the assets of each separate account are available only tocounterparties to netting agreements and qualified financial contracts entered into on behalfof that separate account. 10. Notwithstanding any other provision of this chapter to the contrary, the receiver for an insurer-member shall not void any transfer of, or any obligation to transfer, money orany other property arising under or in connection with any federal home loan bank securityagreement, or any pledge, security, collateral, or guarantee agreement, or any other similararrangement or credit enhancement relating to a federal home loan bank security agreementmade in the ordinary course of business and in compliance with the applicable federal homeloan bank agreement. However, a transfer may be avoided under this subsection if thetransfer was made with intent to hinder, delay, or defraud the insurer-member, the receiverfor the insurer-member, or existing or future creditors. This subsection shall not affecta receiver’s rights regarding advances to an insurer-member in delinquency proceedingspursuant to 12 C.F.R. §1266.4. e insurer-member, or existing or future creditors. This subsection shall not affecta receiver’s rights regarding advances to an insurer-member in delinquency proceedingspursuant to 12 C.F.R. §1266.4. 2005 Acts, ch 70, §5; 2014 Acts, ch 1008, §3 Sat Dec 23 00:39:45 2023 Iowa Code 2024, Section 507C.28A (19, 0)
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