Chapter 258

AN ACT REGULATING SET OFF OF MUTUAL DEBTS AND CREDITS INVOLVING AN INSOLVENT INSURER.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 180C of chapter 175 of the General Laws, as appearing in the 1996 Official Edition, is hereby amended by adding the following paragraph:-

Mutual debts or mutual credits, whether arising out of one or more contracts between an insolvent insurer and another insurer, in connection with any action or proceeding under this chapter shall be set off and the balance shall be allowed or paid except as hereinafter provided. No set off shall be allowed in favor of any insurer where:

(1) the obligation of the insolvent insurer to the other insurer would not, as of the date of the filing of the petition for receivership, entitle the other insurer to share as a claimant in the assets of the insolvent insurer;

(2) the obligation of the insolvent insurer to the other insurer was purchased by or transferred to the other insurer with a view to its being used as a set off;

(3) the obligation of the insolvent insurer is owed to an affiliate of such insurer, or any other entity or association other than the insurer;

(4) the obligation of the insurer is owed to an affiliate of the insolvent insurer or any other entity or association other than the insolvent insurer;

(5) the obligation of the insurer is to pay an assessment levied against the members or subscribers of the insolvent insurer or is to pay a balance upon a subscription to the capital stock of the insolvent insurer or is any other way in the nature of a capital contribution; or

(6) the obligations between the insurer and the insolvent insurer arise from business where either the insurer or the insolvent insurer has assumed risks and obligations from the other party and then has ceded back to the party substantially the same risks and obligations.

SECTION 2. This act shall apply to all contracts entered into, renewed, extended or amended on or after the effective date of this act and shall not otherwise apply to contracts entered into prior to its effective date.

This Bill having been returned by the Lieutenant-Governor, Acting Governor with his objections thereto in writing (see Senate 2148) has been passed by the Senate, the objections of the Lieutenant-Governor, Acting Governor to the contrary notwithstanding, two-thirds of the Senate (35 yeas to 0 nays) having agreed to the same.

Thomas F. Birmingham, President.
Edward B. O'Neill, Clerk.

Passed by the House of Representatives, notwithstanding the objections of the Lieutenant-Governor, Acting Governor, two-thirds of the members present (142 yeas to 3 nays) having approved the same.

Thomas M. Finneran, Speaker.
Robert E. MacQueen, Clerk.