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,
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
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
claimant in the assets of the insolvent insurer;
(2) the obligation of the insolvent insurer to the other insurer was
purchased by or
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
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
where either the insurer or the insolvent insurer has assumed risks and
the other party and then has ceded back to the party substantially the same
risks and obligations.
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
May 14, 1998.
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.
Sent to the House of Representatives for its action.
Thomas F. Birmingham, President.
Edward B. O'Neill, Clerk.
House of Representatives
July 31, 1998.
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.