Florida Senate - 2022 SB 1888 By Senator Gruters 23-01617-22 20221888__ 1 A bill to be entitled 2 An act relating to federal home loan banks; amending 3 s. 626.9541, F.S.; conforming cross-references; 4 amending s. 631.011, F.S.; defining the terms federal 5 home loan bank and insurer-member; conforming 6 cross-references; amending s. 631.025, F.S.; 7 conforming a cross-reference; amending s. 631.041, 8 F.S.; conforming a cross-reference; providing 9 construction; requiring federal home loan banks to 10 repurchase certain stock under certain circumstances; 11 requiring federal home loan banks to provide specified 12 processes and timelines within a specified timeframe; 13 requiring federal home loan banks to provide options 14 for insurer-members to renew or restructure loans 15 under certain circumstances; amending s. 631.261, 16 F.S.; prohibiting receivers for insurer-members from 17 voiding certain transfers; providing an exception; 18 providing construction; amending s. 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.Paragraph (w) of subsection (1) of section 25 626.9541, Florida Statutes, is amended to read: 26 626.9541Unfair methods of competition and unfair or 27 deceptive acts or practices defined. 28 (1)UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE 29 ACTS.The following are defined as unfair methods of competition 30 and unfair or deceptive acts or practices: 31 (w)Soliciting or accepting new or renewal insurance risks 32 by insolvent or impaired insurer prohibited; penalty. 33 1.Whether or not delinquency proceedings as to the insurer 34 have been or are to be initiated, but while such insolvency or 35 impairment exists, no director or officer of an insurer, except 36 with the written permission of the office, shall authorize or 37 permit the insurer to solicit or accept new or renewal insurance 38 risks in this state after such director or officer knew, or 39 reasonably should have known, that the insurer was insolvent or 40 impaired. Impaired includes impairment of capital or surplus, 41 as defined in s. 631.011 s. 631.011(12) and (13). 42 2.Any such director or officer, upon conviction of a 43 violation of this paragraph, is guilty of a felony of the third 44 degree, punishable as provided in s. 775.082, s. 775.083, or s. 45 775.084. 46 Section 2.Present subsections (9) through (15) and (16) 47 through (23) of section 631.011, Florida Statutes, are 48 redesignated as subsections (10) through (16) and (18) through 49 (25), respectively, new subsections (9) and (17) are added to 50 that section, and present subsections (14) and (16) of that 51 section are amended, to read: 52 631.011Definitions.For the purpose of this part, the 53 term: 54 (9)Federal home loan bank means a federal home loan bank 55 established under the Federal Home Loan Bank Act, 12 U.S.C. s. 56 1421, et seq. 57 (15)(14)Insolvency means that all the assets of the 58 insurer, if made immediately available, would not be sufficient 59 to discharge all its liabilities or that the insurer is unable 60 to pay its debts as they become due in the usual course of 61 business. When the context of any provision of this code so 62 indicates, insolvency also includes and is defined as 63 impairment of surplus, as defined in subsection (14)(13), and 64 impairment of capital, as defined in subsection (13)(12). 65 (17)Insurer-member means an insurer who is a member of a 66 federal home loan bank. 67 (18)(16)Liabilities, as used in subsections (13)(12) and 68 (15)(14), means all liabilities, including those specifically 69 required in s. 625.041. 70 Section 3.Section 631.025, Florida Statutes, is amended to 71 read: 72 631.025Persons subject to this part.Delinquency 73 proceedings authorized by this part may be initiated against any 74 insurer, as defined in s. 631.011 s. 631.011(15), if the 75 statutory grounds are present as to that insurer, and the court 76 may exercise jurisdiction over any person required to cooperate 77 with the department and office pursuant to s. 631.391 and over 78 all persons made subject to the courts jurisdiction by other 79 provisions of law. Such persons include, but are not limited to: 80 (1)A person transacting, or that has transacted, insurance 81 business in or from this state and against whom claims arising 82 from that business may exist now or in the future. 83 (2)A person purporting to transact an insurance business 84 in this state and any person who acts as an insurer, transacts 85 insurance, or otherwise engages in insurance activities in or 86 from this state, with or without a certificate of authority or 87 proper authority from the department or office, against whom 88 claims arising from that business may exist now or in the 89 future. 90 (3)An insurer with policyholders resident in this state. 91 (4)All other persons organized or in the process of 92 organizing with the intent to transact an insurance business in 93 this state. 94 Section 4.Present subsections (2) through (6) of section 95 631.041, Florida Statutes, are redesignated as subsections (3) 96 through (7), respectively, a new subsection (2) is added to that 97 section, and subsection (1) of that section is amended, to read: 98 631.041Automatic stay; relief from stay; injunctions. 99 (1)An application or petition under s. 631.031 operates as 100 a matter of law as an automatic stay applicable to all persons 101 and entities, other than the receiver and the office, which 102 shall be permanent and survive the entry of an order of 103 conservation, rehabilitation, or liquidation, and which shall 104 prohibit: 105 (a)The commencement or continuation of judicial, 106 administrative, or other action or proceeding against the 107 insurer or against its assets or any part thereof; 108 (b)The enforcement of a judgment against the insurer or an 109 affiliate obtained either before or after the commencement of 110 the delinquency proceeding; 111 (c)Any act to obtain possession of property of the 112 insurer; 113 (d)Any act to create, perfect, or enforce a lien against 114 property of the insurer, except that a secured claim as defined 115 in s. 631.011 s. 631.011(21) may proceed under s. 631.191 after 116 the order of liquidation is entered; 117 (e)Any act to collect, assess, or recover a claim against 118 the insurer, except claims as provided for under this chapter; 119 and 120 (f)The setoff or offset of any debt owing to the insurer, 121 except offsets as provided in s. 631.281. 122 (2)(a)After the seventh day following the filing of an 123 application or a petition under s. 631.031, a stay does not 124 apply to or prohibit a federal home loan banks exercise of its 125 rights regarding collateral pledged by an insurer-member. 126 (b)If a federal home loan bank exercises its rights 127 regarding collateral pledged by an insurer-member who is subject 128 to a delinquency proceeding pursuant to s. 631.031, the federal 129 home loan bank must repurchase any outstanding capital stock in 130 excess of the amount of federal home loan bank stock which the 131 insurer-member is required to hold as a minimum investment, to 132 the extent the federal home loan bank in good faith determines 133 the repurchase to be permissible under applicable laws, 134 regulations, regulatory obligations, and the federal home loan 135 banks capital plan and to be consistent with the federal home 136 loan banks current capital stock practices applicable to its 137 entire membership. 138 (c)Following the appointment of a receiver for an insurer 139 member, the federal home loan bank shall, within 10 business 140 days after a request from the receiver, provide a process and 141 establish a timeline for all of the following: 142 1.The release of collateral that exceeds the amount 143 required to support secured obligations remaining after any 144 repayment of loans, as determined in accordance with the 145 applicable agreements between the federal home loan bank and the 146 insurer-member. 147 2.The release of any of the insurer-members collateral 148 remaining in the federal home loan banks possession following 149 repayment in full of all outstanding secured obligations of the 150 insurer-member. 151 3.The payment of fees the insurer-member owes and the 152 operation of deposits and other accounts of the insurer-member 153 with the federal home loan bank. 154 4.The possible redemption or repurchase of federal home 155 loan bank stock or excess stock of any class which an insurer 156 member is required to own. 157 (d)Upon request from a receiver, the federal home loan 158 bank shall provide any available options for an insurer-member 159 subject to a delinquency proceeding to renew or restructure a 160 loan to defer associated prepayment fees, subject to market 161 conditions, the terms of any loans outstanding to the insurer 162 member, the applicable policies of the federal home loan bank, 163 and the federal home loan banks compliance with federal laws 164 and regulations. 165 Section 5.Paragraph (c) is added to subsection (1) of 166 section 631.261, Florida Statutes, to read: 167 631.261Voidable transfers. 168 (1) 169 (c)The receiver for an insurer-member may not void any 170 transfer of, or any obligation to transfer, money or any other 171 property arising under or in connection with any federal home 172 loan bank security agreement; any pledge, security, collateral, 173 or guarantee agreement; or any other similar arrangement or 174 credit enhancement relating to a federal home loan bank security 175 agreement made in the ordinary course of business and in 176 compliance with the applicable federal home loan bank agreement. 177 However, a transfer may be avoided under this section if the 178 transfer was made with intent to hinder, delay, or defraud the 179 insurer-member, the receiver for the insurer-member, or existing 180 or future creditors. This section does not affect a receivers 181 rights regarding advances to an insurer-member in delinquency 182 proceedings pursuant to 12 C.F.R. s. 1266.4. 183 Section 6.Paragraph (b) of subsection (2) and paragraph 184 (b) of subsection (3) of section 817.2341, Florida Statutes, are 185 amended to read: 186 817.2341False or misleading statements or supporting 187 documents; penalty. 188 (2) 189 (b)If the false entry of a material fact is made with the 190 intent to deceive any person as to the impairment of capital, as 191 defined in s. 631.011 s. 631.011(12), of the insurer or entity 192 or is the significant cause of the insurer or entity being 193 placed in conservation, rehabilitation, or liquidation by a 194 court, the person commits a felony of the first degree, 195 punishable as provided in s. 775.082, s. 775.083, or s. 775.084. 196 (3) 197 (b)If the material false statement or report or the 198 material overvaluation is made with the intent to deceive any 199 person as to the impairment of capital, as defined in s. 631.011 200 s. 631.011(12), of an insurer or entity organized pursuant to 201 chapter 624 or chapter 641, or is the significant cause of the 202 insurer or entity being placed in receivership by a court, the 203 person commits a felony of the first degree, punishable as 204 provided in s. 775.082, s. 775.083, or s. 775.084. 205 Section 7.This act shall take effect July 1, 2022.