1Amending the act of May 17, 1921 (P.L.789, No.285), entitled, as
2amended, "An act relating to insurance; establishing an
3insurance department; and amending, revising, and
4consolidating the law relating to the licensing,
5qualification, regulation, examination, suspension, and
6dissolution of insurance companies, Lloyds associations,
7reciprocal and inter-insurance exchanges, and certain
8societies and orders, the examination and regulation of fire
9insurance rating bureaus, and the licensing and regulation of
10insurance agents and brokers; the service of legal process
11upon foreign insurance companies, associations or exchanges;
12providing penalties, and repealing existing laws," in
13suspension of business - involuntary dissolutions, further
14providing for definitions, for injunctions and orders, for
15fraudulent transfers prior to petition and for voidable
16preferences and liens.

17The General Assembly of the Commonwealth of Pennsylvania
18hereby enacts as follows:

19Section 1. Section 503 of the act of May 17, 1921 (P.L.789,
20No.285), known as The Insurance Department Act of 1921, is
21amended by adding definitions to read:

22Section 503. Definitions.--The following words and phrases
23when used in this act shall have, unless the context clearly
24indicates otherwise, the meanings given to them in this section:

1* * *

2"FHLBank" means a bank as defined in section 2(1)(A) of the<-
3Federal Home Loan Bank Act (47 Stat. 725, 12 U.S.C. § 1422(1)
4(A)).

5"Federal Home Loan Bank Act" means the Federal Home Loan Bank
6Act (47 Stat. 725, 12 U.S.C. § 1421 et seq.).

7"FHLBank" mean<-s a bank as defined in section 2(1)(A) of the
8Federal Home Loan Bank Act (47 Stat. 725, 12 U.S.C. § 1422(1)
9(A)).

10"FHLBank security agreement" means any pledge, security,
11collateral or guarantee agreement or any similar arrangement or
12credit enhancement in favor of an FHLBank.

13* * *

14"Insurer-member" means an insurer that is a member of an
15FHLBank.

16* * *

<-17Section 2. Sections 505(b), 528(a) and 530(b), (c), (d) and
18(e) of the act, added December 14, 1977 (P.L.280, No.92), are
19amended to read:

<-20Section 2. Section 505 of the act is amended by adding a
21subsection to read:

22Section 505. Injunctions and Orders.--* * *

<-23(b) [The receiver may apply to any court outside of the 
24Commonwealth for the relief described in subsection (a) or 
25suspension of any insurance licenses issued by the 
26commissioner.] Notwithstanding subsection (a) or any other

<-27(a.1) Notwithstanding subsection (a) or any other provision 
28of this article to the contrary, no FHLBank shall be stayed, 
29enjoined or prohibited from exercising any right or enforcing 
30any obligation under an FHLBank security agreement, relating to
 

1collateral pledged by an insurer-member to the FHLBank.

<-2* * *

3Section 3. Section 528(a) of the act, added December 14,
41977 (P.L.280, No.92), is amended to read:

5Section 528. Fraudulent Transfers Prior to Petition.--(a)
6Every transfer made or suffered and every obligation incurred by
7an insurer within one year prior to the filing of a successful
8petition for rehabilitation or liquidation under this article is
9fraudulent as to then existing and future creditors if made or
10incurred without fair consideration, or with actual intent to
11hinder, delay, or defraud either existing or future creditors. A
12transfer made or an obligation incurred by an insurer ordered to
13be rehabilitated or liquidated under this article, which is
14fraudulent under this section, may be avoided by the receiver,
15except as to a person who in good faith is a purchaser, lienor,
16or obligee for a present fair equivalent value, and except that
17any purchaser, lienor, or obligee, who in good faith has given a
18consideration less than fair for such transfer, lien, or
19obligation, may retain the property, lien or obligation as
20security for repayment. The court may, on due notice, order any
21such transfer or obligation to be preserved for the benefit of
22the estate, and in that event, the receiver shall succeed to and
23may enforce the rights of the purchaser, lienor, or obligee.
24Notwithstanding this subsection or any other provision of this 
25article to the contrary, a receiver shall not avoid a transfer 
26of money or other property arising under or in connection with 
27an FHLBank security agreement that is made before the 
28commencement of a formal delinquency proceeding under this 
29article in the ordinary course of business and in compliance 
30with the FHLBank security agreement unless such transfer was
 

1made with actual intent to hinder, delay or defraud the insurer-
2member, the receiver appointed for the insurer-member or 
3existing or future creditors.

4* * *

<-5Section 4. Section 530 of the act is amended by adding
6subsections to read:

7Section 530. Voidable Preferences and Liens.--* * *

<-8[(b) A transfer of property other than real property shall
9be deemed to be made or suffered when it becomes so far
10perfected that no subsequent lien obtainable by legal or
11equitable proceedings on a simple contract could become superior
12to the rights of the transferee.

13A transfer of real property shall be deemed to be made or
14suffered when it becomes so far perfected that no subsequent
15bona fide purchaser from the insurer could obtain rights
16superior to the rights of the transferee.

17A transfer which creates an equitable lien shall not be
18deemed to be perfected if there are available means by which a
19legal lien could be created.

20A transfer not perfected prior to the filing of a petition
21for liquidation shall be deemed to be made immediately before
22the filing of the successful petition.

23The provisions of this subsection apply whether or not there
24are or were creditors who might have obtained liens or persons
25who might have become bona fide purchasers.

26(c) A lien obtainable by legal or equitable proceedings upon
27a simple contract is one arising in the ordinary course of such
28proceedings upon the entry or docketing of a judgment or decree,
29or upon attachment, garnishment, execution, or like process,
30whether before, upon, or after judgment or decree and whether

1before or upon levy. It does not include liens which under
2applicable law are given a special priority over other liens
3which are prior in time.

4A lien obtainable by legal or equitable proceedings could
5become superior to the rights of a transferee, or a purchaser
6could obtain rights superior to the rights of a transferee
7within the meaning of subsection (b), if such consequences would
8follow only from the lien or purchase itself, or from the lien
9or purchase followed by any step wholly within the control of
10the respective lienholder or purchaser, with or without the aid
11of ministerial action by public officials. Such a lien could
12not, however, become superior and such a purchase could not
13create superior rights for the purpose of subsection (b) through
14any acts subsequent to the obtaining of such a lien or
15subsequent to such a purchase which require the agreement or
16concurrence of any third party or which require any further
17judicial action, or ruling.

18(d) A transfer of property for or on account of a new and
19contemporaneous consideration which is deemed under subsection
20(b) to be made or suffered after the transfer because of delay
21in perfecting it does not thereby become a transfer for or on
22account of an antecedent debt if any acts required by the
23applicable law to be performed in order to perfect the transfer
24as against liens or bona fide purchasers' rights are performed
25within twenty-one days or any period expressly allowed by the
26law, whichever is less. A transfer to secure a future loan, if
27such a loan is actually made, or a transfer which becomes
28security for a future loan, shall have the same effect as a
29transfer for or on account of a new and contemporaneous
30consideration.

1(e) If any lien deemed voidable under the second paragraph 
2of subsection (a) has been dissolved by the furnishing of a bond 
3or other obligation, the surety on which has been indemnified 
4directly or indirectly by the transfer of or the creation of a 
5lien upon any property of an insurer before the filing of a 
6petition under this article which results in a liquidation 
7order, the indemnifying transfer or lien shall also be deemed 
8voidable.] (b) Notwithstanding subsection (a) or any other

<-9(a.1) Notwithstanding subsection (a) or any other provision 
10of this article to the contrary, (i) a receiver shall not avoid 
11a transfer of money or other property arising under or in 
12connection with an FHLBank security agreement that is made 
13before the commencement of a formal proceeding under this 
14article in the ordinary course of business and in compliance 
15with the security agreement unless such transfer was made with 
16actual intent to hinder, delay or defraud the insurer-member, a 
17receiver appointed for the insurer-member or existing or future 
18creditors; and (ii) a receiver shall not void a redemption or 
19repurchase of any stock or equity securities which was made by 
20the FHLBank within four months of a formal commencement of the 
21delinquency proceedings or which received prior approval of the 
22receiver.

<-23(c) (a.2) Following the appointment of a receiver for an
24insurer-member and upon request of the receiver, the FHLBank
25shall, within ten days of such request, provide a process and
26establish timing for all of the following:

27(1) The release of collateral that exceeds the lending
28value, as determined in accordance with the FHLBank security
29agreement, required to support secured obligations remaining
30after any repayment of advances.

1(2) The release of any collateral remaining in the FHLBank's
2possession following repayment of all outstanding secured
3obligations in full.

4(3) The payment of fees and the operation of deposits and
5other accounts with the FHLBank.

6(4) The possible redemption or repurchase of FHLBank stock
7or excess stock of any class that an insurer-member is required
8to own.

<-9(d) (a.3) Upon the request of the receiver for an insurer-
10member, the FHLBank shall provide any available options for such
11insurer-member to renew or restructure an advance to defer
12associated prepayment fees, to the extent that market
13conditions, the terms of the advance outstanding to the insurer-
14member, the applicable policies of the FHLBank and compliance
15with the Federal Home Loan Bank Act and corresponding
16regulations permit.

<-17(e) (a.4) Nothing in this section shall affect the
18receiver's rights pursuant to section 12 CFR § 1266.4 (relating
19to limitations on access to advances) regarding advances to an
20insurer-member in delinquency proceedings.

21* * *

22Section <-3 5. This act shall take effect immediately.