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," further
13providing for definitions, for injunctions and order, for
14fraudulent transfers prior to petition and for voidable
15preferences and liens.

16The General Assembly of the Commonwealth of Pennsylvania
17hereby enacts as follows:

18Section 1. Section 503 of act of May 17, 1921 (P.L.789,
19No.285), known as The Insurance Department Act of 1921, is
20amended by adding a definitions to read:

21Section 503. Definitions.--The following words and phrases
22when used in this act shall have, unless the context clearly
23indicates otherwise, the meanings given to them in this section:

24* * *

1"Federal Home Loan Bank" means a bank as defined in section
<-21422 of the Home Owners' Loan Act (48 Stat. 128, 12 U.S.C. §
31422).

4"Federal Home Loan Bank Act" means the Home Owners' Loan Act
5(48 Stat. 128, 12 U.S.C. § 1422). <-2(1)(A) of the Federal Home
6Loan Bank Act (12 U.S.C. § 1422(1)(A)).

7"Federal Home Loan Bank Act" means the Federal Home Loan Bank
8Act (47 Stat. 725, 12 U.S.C. § 1421 et seq.).

9"Federal Home Loan Bank Security Agreement" means <-a any
10pledge, security, collateral or guarantee agreement or <-a any
11similar arrangement or credit enhancement in favor of a Federal
12Home Loan Bank.

13* * *

14"Insurer member" means an insurer that is a member of a
15Federal Home Loan Bank.

16* * *

17Section 2. Section 505 of the act is amended by adding a
18subsection to read:

19Section 505. Injunctions and Orders.--* * *

20(a.1) Notwithstanding subsection (a) or any other provision
21of this article to the contrary, no Federal Home Loan Bank may
22be stayed, enjoined or prohibited from exercising a right or
23enforcing an obligation under a Federal Home Loan Bank Security
24Agreement relating to collateral pledged by an insurer member to
25the Federal Home Loan Bank.

26* * *

27Section 3. Section 528(a) of the act, added December 14,
281977 (P.L.280, No.92), is amended to read:

29Section 528. Fraudulent Transfers Prior to Petition.--(a)
30Every transfer made or suffered and every obligation incurred by

1an insurer within one year prior to the filing of a successful
2petition for rehabilitation or liquidation under this article is
3fraudulent as to then existing and future creditors if made or
4incurred without fair consideration, or with actual intent to
5hinder, delay, or defraud either existing or future creditors. A
6transfer made or an obligation incurred by an insurer ordered to
7be rehabilitated or liquidated under this article, which is
8fraudulent under this section, may be avoided by the receiver,
9except as to a person who in good faith is a purchaser, lienor,
10or obligee for a present fair equivalent value, and except that
11any purchaser, lienor, or obligee, who in good faith has given a
12consideration less than fair for such transfer, lien, or
13obligation, may retain the property, lien or obligation as
14security for repayment. The court may, on due notice, order any
15such transfer or obligation to be preserved for the benefit of
16the estate, and in that event, the receiver shall succeed to and
17may enforce the rights of the purchaser, lienor, or obligee.
18Notwithstanding the foregoing or any other provision of this 
19article to the contrary, a receiver may not avoid a transfer of 
20money or other property arising under or in connection with a 
21Federal Home Loan Bank Security Agreement that is made before 
22the commencement of a formal delinquency proceeding under this 
23article, in the ordinary course of business and in compliance 
24with the Federal Home Loan Bank Security Agreement unless the 
25transfer was made with actual intent to hinder, delay or defraud 
26the insurer member, the receiver appointed for the insurer 
27member or existing or future creditors.

28* * *

29Section 4. Section 530(a) of the act, added December 14,
301977 (P.L.280, No.92), is amended and the section is amended by

1adding subsections to read:

2Section 530. Voidable Preferences and Liens.--(a) A
3preference is a transfer of any of the property of an insurer to
4or for the benefit of a creditor, for or on account of an
5antecedent debt, made or suffered by the insurer within one year
6before the filing of a successful petition for liquidation under
7this article the effect of which transfer may be to enable the
8creditor to obtain a greater percentage of this debt than
9another creditor of the same class would receive. If a
10liquidation order is entered while the insurer is already
11subject to a rehabilitation order, then transfers otherwise
12qualifying shall be deemed preferences if made or suffered
13within one year before the filing of the successful petition for
14rehabilitation or within two years before the filing of the
15successful petition for liquidation, whichever time is shorter.

16Any preference may be avoided by the liquidator, if (i) the
17insurer was insolvent at the time of the transfer; (ii) the
18transfer was made within four months before the filing of the
19petition; (iii) the creditor receiving it or to be benefited
20thereby or his agent acting with reference thereto had, at the
21time when the transfer was made, reasonable cause to believe
22that the insurer was insolvent or was about to become insolvent;
23or (iv) the creditor receiving it was an officer, any employe or
24attorney or other person who was in fact in a position of
25comparable influence in the insurer to an officer whether or not
26he held such position, or any shareholder holding directly or
27indirectly more than five per centum of any class of any equity
28security issued by the insurer, or any other person, firm,
29corporation, association, or aggregation of persons with whom
30the insurer did not deal at arm's length. [Where the preference

1is voidable, the liquidator may recover the property or, if it
2has been converted, its value from any person who has received
3or converted the property, except where a bona fide purchaser or
4lienor has given less than fair equivalent value, he shall have
5a lien upon the property to the extent of the consideration
6actually given by him. Where a preference by way of lien or
7security title is voidable, the court may on due notice order
8the lien or title to be preserved for the benefit of the estate,
9in which event the lien or title shall pass to the liquidator.]

10(a.1) Notwithstanding subsection (a) or any other provision
11of this act to the contrary, (i) a receiver may not avoid a
12transfer of money or other property arising under or in
13connection with a Federal Home Loan Bank Security Agreement that
14is made before the commencement of a formal proceeding under
15this article in the ordinary course of business and in
16compliance with the Federal Home Loan Bank Security Agreement
17unless the transfer was made with the intent to hinder, delay or
18defraud the insurer member, a receiver appointed for the insurer
19member or existing or future creditors; and (ii) a receiver
20shall not void a redemption or repurchase of a stock or equity
21security which was made by the Federal Home Loan Bank within
22four months of a formal commencement of the delinquency
23proceedings which received prior approval of the receiver.

24(a.2) Following the appointment of a receiver for an insurer
25member and upon request of the receiver, the Federal Home Loan
26Bank shall, within ten days of the request, provide a process
27and establish timing for (i) the release of collateral that
28exceeds the lending value as determined in accordance with the
29Federal Home Loan Bank Security Agreement required to support
30secured obligations remaining after repayment of any advances;

1(ii) the release of collateral remaining in the Federal Home
2Loan Bank's possession following repayment of all outstanding
3secured obligations in full; (iii) the payment of fees and the
4operation of deposits and other accounts with the Federal Home
5Loan Bank; and (iv) the possible redemption or repurchase of the
6Federal Home Loan Bank stock or excess stock of any class that
7an insurer member is required to own.

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

16(a.4) Nothing in this section shall affect the receiver's
17rights pursuant to 12 C.F.R. § 1266.4 (relating to limitations
18on access to advances).

19* * *

20Section 5. This act shall take effect in 60 days.