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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
A bill to be entitled 1
An act relating to insurer -members of federal home 2
loan banks; amending s. 631.011, F.S.; defining the 3
terms "federal home loan bank" and "insurer -member"; 4
amending s. 631.041, F.S.; providing that automatic 5
stays in delinquency proceedings initiated by the 6
Department of Financial Services against federal home 7
loan bank insurer-members prohibit the bank from being 8
stayed or from being precluded from certain r ights; 9
providing duties of such banks; requiring such banks 10
to provide specified processes and to establish 11
specified timelines under certain circumstances; 12
amending s. 631.261, F.S.; prohibiting receivers for 13
federal home loan bank insurer -members from voiding 14
specified transfers or obligations to make specified 15
transfers relating to federal home loan security 16
agreements made under certain circumstances; providing 17
exceptions; providing construction; amending ss. 18
626.9541, 631.025, 631.041, and 817.2341, F. S.; 19
conforming cross-references; providing an effective 20
date. 21
22
Be It Enacted by the Legislature of the State of Florida: 23
24
Section 1. Subsections (9) through (15) and (16) through 25
HB 1405 2022
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
(23) of section 631.011, Florida Statutes, are renumbered as 26
subsections (10) through (16) and (18) through (25), 27
respectively, present subsections (14) and (16) are amended, and 28
new subsections (9) and (17) are added to that section, to read: 29
631.011 Definitions. —For the purpose of this part, the 30
term: 31
(9) "Federal home loan bank" means a bank established 32
under the Federal Home Loan Bank Act, 12 U.S.C. ss. 1421 et seq. 33
(14) "Insolvency" means that all the assets of the 34
insurer, if made immediately available, would not be sufficient 35
to discharge all its liabilities or that the insurer is unable 36
to pay its debts as they become due in the usual course of 37
business. When the context of any provision of this code so 38
indicates, insolvency also includes and is defined as 39
"impairment of surplus," as defined in subsection (14) (13), and 40
"impairment of capital," as defined in subsection (13) (12). 41
(17) "Insurer-member" means an insurer who is a member of 42
a federal home loan bank. 43
(18)(16) "Liabilities," as used in subsections (13) (12) 44
and (15) (14), means all liabilities, inc luding those 45
specifically required in s. 625.041. 46
Section 2. Paragraphs (e) and (f) of subsection (1) of 47
section 631.041, Florida Statutes, are amended, and paragraph 48
(g) is added to that subsection, to read: 49
631.041 Automatic stay; relief from stay; injunctions.— 50
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(1) An application or petition under s. 631.031 operates 51
as a matter of law as an automatic stay applicable to all 52
persons and entities, other than the receiver and the office, 53
which shall be permanent and survive the entry of an order of 54
conservation, rehabilitation, or liquidation, and which shall 55
prohibit: 56
(e) Any act to collect, assess, or recover a claim against 57
the insurer, except claims as provided for under this chapter; 58
and 59
(f) The setoff or offset of any debt owing to the insu rer, 60
except offsets as provided in s. 631.281 ; and 61
(g) A federal home loan bank, 7 days after the 62
department's filing of a delinquency proceeding against the 63
bank's insurer-member, from being stayed or from being precluded 64
from exercising its rights rega rding collateral pledged by the 65
insurer-member. 66
1. If a federal home loan bank exercises its rights 67
regarding collateral pledged by an insurer -member who is subject 68
to a delinquency proceeding, the federal home loan bank shall 69
repurchase any outstanding capital stock that is in excess of 70
that amount of federal home loan bank stock that the insurer -71
member is required to hold as a minimum investment to the extent 72
that the federal home loan bank in good faith determines the 73
repurchase to be permissible under applicable laws, regulations, 74
and regulatory obligations and the federal home loan bank's 75
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capital plan and consistent with the federal home loan bank's 76
current capital stock practices applicable to its entire 77
membership. 78
2. After the appointment of a receiver for the insurer -79
member, the federal home loan bank shall, within 10 business 80
days after a request from the receiver, provide a process and 81
establish a timeline for all of the following: 82
a. The release of collateral that exceeds the amount 83
required to support secured obligations remaining after any 84
repayment of loans as determined in accordance with the 85
applicable agreements between the federal home loan bank and the 86
insurer-member. 87
b. The release of any of the insurer -member's collateral 88
remaining in the federal home loan bank's possession after 89
repayment in full of all outstanding secured obligations of the 90
insurer-member. 91
c. The payment of fees owed by the insurer -member and the 92
operation of deposits and other accounts of the insurer -member 93
with the federal home loan bank. 94
d. The possible redemption or repurchase of federal home 95
loan bank stock or excess stock of any class that the insurer -96
member is required to own. 97
3. Upon request of the receiver, the federal home loan 98
bank shall provide any available option for the insurer -member 99
subject to the delinquency proceeding to renew or restructure a 100
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loan to defer associated prepayment fees, subject to market 101
conditions; the terms of any loans outstanding to the insurer -102
member; the applicable po licies of the federal home loan bank; 103
and the federal home loan bank's compliance with federal laws 104
and regulations. 105
Section 3. Subsections (3) and (4) of section 631.261, 106
Florida Statutes, are renumbered as subsections (4) and (5), 107
respectively, and a new subsection (3) is added to that section, 108
to read: 109
631.261 Voidable transfers. — 110
(3) The receiver for an insurer -member may not void any 111
transfer of, or any obligation to transfer, money or any other 112
property arising under or in connection with any federal home 113
loan bank security agreement; any pledge, security, collateral, 114
or guarantee agreement; or any other similar arrangement or 115
credit enhancement relating to a federal home loan bank security 116
agreement made in the ordinary course of business and in 117
compliance with the applicable federal home loan bank agreement. 118
However, a transfer may be voided under this section if the 119
transfer was made with the intent to hinder, delay, or defraud 120
the insurer-member, the receiver for the insurer -member, or 121
existing or future creditors. This subsection does not affect a 122
receiver's rights regarding advances to an insurer -member in a 123
delinquency proceeding pursuant to 12 C.F.R. s. 1266.4. 124
Section 4. Paragraph (w) of subsection (1) of section 125
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626.9541, Florida St atutes, is amended to read: 126
626.9541 Unfair methods of competition and unfair or 127
deceptive acts or practices defined. — 128
(1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE 129
ACTS.—The following are defined as unfair methods of competition 130
and unfair or deceptive acts or practices: 131
(w) Soliciting or accepting new or renewal insurance risks 132
by insolvent or impaired insurer prohibited; penalty. — 133
1. Whether or not delinquency proceedings as to the 134
insurer have been or are to be initiated, but while s uch 135
insolvency or impairment exists, no director or officer of an 136
insurer, except with the written permission of the office, shall 137
authorize or permit the insurer to solicit or accept new or 138
renewal insurance risks in this state after such director or 139
officer knew, or reasonably should have known, that the insurer 140
was insolvent or impaired. "Impaired" includes impairment of 141
capital or impairment of surplus, as those terms are defined in 142
s. 631.011 s. 631.011(12) and (13) . 143
2. Any such director or officer, upon conviction of a 144
violation of this paragraph, is guilty of a felony of the third 145
degree, punishable as provided in s. 775.082, s. 775.083, or s. 146
775.084. 147
Section 5. Section 631.025, Florida Statutes, is amended 148
to read: 149
631.025 Persons subject to this part.—Delinquency 150
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proceedings authorized by this part may be initiated against any 151
insurer, as defined in s. 631.011 s. 631.011(15), if the 152
statutory grounds are present as to that insurer, and the court 153
may exercise jurisdiction over any person requ ired to cooperate 154
with the department and office pursuant to s. 631.391 and over 155
all persons made subject to the court's jurisdiction by other 156
provisions of law. Such persons include, but are not limited to: 157
(1) A person transacting, or that has transact ed, 158
insurance business in or from this state and against whom claims 159
arising from that business may exist now or in the future. 160
(2) A person purporting to transact an insurance business 161
in this state and any person who acts as an insurer, transacts 162
insurance, or otherwise engages in insurance activities in or 163
from this state, with or without a certificate of authority or 164
proper authority from the department or office, against whom 165
claims arising from that business may exist now or in the 166
future. 167
(3) An insurer with policyholders resident in this state. 168
(4) All other persons organized or in the process of 169
organizing with the intent to transact an insurance business in 170
this state. 171
Section 6. Paragraph (d) of subsection (1) of section 172
631.041, Florida Statutes, is amended to read: 173
631.041 Automatic stay; relief from stay; injunctions. — 174
(1) An application or petition under s. 631.031 operates 175
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
as a matter of law as an automatic stay applicable to all 176
persons and entities, other than the receiver and the office, 177
which shall be permanent and survive the entry of an order of 178
conservation, rehabilitation, or liquidation, and which shall 179
prohibit: 180
(d) Any act to create, perfect, or enforce a lien against 181
property of the insurer, except that a secured cla im as defined 182
in s. 631.011 s. 631.011(21) may proceed under s. 631.191 after 183
the order of liquidation is entered; 184
Section 7. Paragraph (b) of subsection (2) and paragraph 185
(b) of subsection (3) of section 817.2341, Florida Statutes, are 186
amended to read: 187
817.2341 False or misleading statements or supporting 188
documents; penalty.— 189
(2) 190
(b) If the false entry of a material fact is made with the 191
intent to deceive any person as to the impairment of capital, as 192
defined in s. 631.011 s. 631.011(12), of the insurer or entity 193
or is the significant cause of the insurer or entity being 194
placed in conservation, rehabilitation, or liquidation by a 195
court, the person commits a felony of the first degree, 196
punishable as provided in s. 775.082, s. 775.083, or s. 775.084. 197
(3) 198
(b) If the material false statement or report or the 199
material overvaluation is made with the intent to deceive any 200
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
person as to the impairment of capital, as defined in s. 631.011 201
s. 631.011(12), of an insurer or entity organized pursuant to 202
chapter 624 or chapter 641, or is the significant cause of the 203
insurer or entity being placed in receivership by a court, the 204
person commits a felony of the first degree, punishable as 205
provided in s. 775.082, s. 775.083, or s. 775.084. 206
Section 8. This act shall take effect July 1, 2022. 207