FEDERAL HOME LOAN BANK/INSURER RECEIVERSHIP.

View NCGA Bill Details2017-2018 Session
House Bill 440 (Public) Filed Wednesday, March 22, 2017
AN ACT TO CLARIFY OBLIGATIONS AND THE RELATIONSHIP BETWEEN A FEDERAL HOME LOAN BANK AND A NORTH CAROLINA INSURANCE COMPANY DURING THE CONSERVATORSHIP AND REHABILITATION PROCESS.
Intro. by Collins, Bradford, Rogers, Millis.

Status: Ch. SL 2017-164 (House Action) (Jul 21 2017)
H 440/S.L. 2017-164

Bill Summaries:

  • Summary date: Jul 25 2017 - More information

    AN ACT TO CLARIFY OBLIGATIONS AND THE RELATIONSHIP BETWEEN A FEDERAL HOME LOAN BANK AND A NORTH CAROLINA INSURANCE COMPANY DURING THE CONSERVATORSHIP AND REHABILITATION PROCESS. Enacted July 21, 2017. Effective July 1, 2017.


  • Summary date: Jun 28 2017 - More information

    Senate committee substitute makes the following changes to the 2nd edition.

    Amends GS 58-7-163 to provide that for an asset that is used as collateral to secure access to advances from a federal home loan bank, the amount of the asset's par value that exceeds the par amount of any outstanding obligations to the federal home loan bank shall be considered an unencumbered admitted asset (was, shall not be considered encumbered).


  • Summary date: Apr 19 2017 - More information

    House committee substitute makes the following change to the 1st edition.

    Deletes proposed amendments to GS 58-13-15 (Definitions) and GS 58-13-20 (Exception).

    Amends GS 58-7-163 (Assets not allowed). Provides that assets used as collateral to secure access to advances from a federal home loan bank are not considered encumbered to the extent the asset's par value exceeds the par amount of any outstanding obligations to the federal home loan bank, and those portions are not excluded in determining the financial condition of an insurer.


  • Summary date: Mar 22 2017 - More information

    Makes technical and clarifying changes to GS 58-30-10, setting out the defined terms for Article 1 of GS Chapter 58 (Insurance). Adds the term federal home loan bank and defines the term to mean a federal home loan bank as defined and established under the federal Home Loan Bank Act (12 USC 1421, et seq.). Also adds the term insurer-member and defines the term to mean an insurer that is a member of a federal home loan bank.

    Amends GS 58-30-20 (injunctions and orders) providing that a federal home loan bank is not stayed or prohibited from exercising its rights regarding collateral pledged by an insurer-member after the seventh day following the filing of a delinquency proceeding. Existing law, GS 58-30-10, defines delinquency proceeding to mean any proceeding instituted against an insurer for the purpose of supervising, rehabilitating, conserving, or liquidating the insurer. Requires the federal home loan bank exercising its rights regarding collateral pledged by an insurer-member to repurchase any outstanding capital stock in excess of the amount of its stock that the insurer-member is required to hold as a minimum investment to the extent the federal home loan bank determines in good faith the repurchase is: (1) permissible under applicable law, regulations, obligations arising under regulations, and the federal home loan bank's capital plan and (2) consistent with the capital stock practices currently applicable to the federal home loan bank's entire membership. 

    Requires the federal home loan bank to provide the receiver with a process and time line, as specified, within 10 days of the appointment of a receiver for an insurer-member in a proceeding under Article 30 of GS Chapter 58 (Insurers Supervision, Rehabilitation, and Liquidation). Specifies that the federal home loan bank must include a process and time line for: (1) the release of collateral that exceeds the amount required to support secured obligations remaining after any repayment of loans as determined under applicable agreements between the federal home loan bank and the insurer-member; (2) the release of any collateral of the insurer-member remaining in the federal home loan bank's possession following repayment in full of all outstanding secured obligations of the insurer-member; (3) the payment of fees owed by the insurer-member and the operation, maintenance, closure, or disposition of deposits and other accounts of the insurer-member as agreed upon by the receiver and federal home loan bank; and (4) any redemption or repurchase of federal home loan bank stock or excess stock of any class that the insurer-member is required to own.

    Requires the federal home loan bank to provide, upon request of an appointed receiver, any available options for the insurer-member subject to a delinquency processing to renew or restructure a loan. Details considerations the federal home loan bank can take into account in determining available options to renew or restructure a loan.

    Enacts GS 30-147, prohibiting the receiver for an insurer-member of a federal home loan bank from voiding any obligation to transfer, or transfer of money or other property arising under a federal home loan bank security, pledge, collateral, or guarantee agreement or any other similar agreement or credit enhancement related to a federal home loan bank security agreement, so long as the agreement or arrangement is made (1) in the ordinary course of business and (2) in compliance with the applicable federal home loan bank agreement. Allows a transfer to be voided if the transfer is made with the intent to hinder, delay, or defraud the insurer-member, the receiver for the insurer-member, existing creditors, or future creditors. Clarifies that the statute does not affect a receiver's rights regarding advances to an insurer-member in delinquency proceedings under 12 CFR 1266.4.

    Makes technical changes to GS 58-13-15, setting forth the defined terms for Article 13 of GS Chapter 58 (Asset Protection Act). Adds the terms federal loan bank and insurer-member, and defines those terms as they are defined in GS 58-30-10 as amended by this act. 

    Amends GS 58-13-20 to add a new exception from the provisions of Article 13. Excepts reserve assets of an insurer that are held, deposited, pledged, hypothecated, or otherwise encumbed as collateral to secure access to advances from a federal home loan bank for an insurer-member of that bank so long as the collateral's par value is in excess of the par amount of any outstanding obligations to the federal home loan bank. Authorizes the Commissioner of Insurance to examine any insurer-member agreements with federal home loan banks at any time in accordance with the Commissioner's authority to make examinations of insurers as conferred by other provisions of GS Chapter 58

    Effective July 1, 2017.


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