MISSISSIPPI LEGISLATURE

1999 Regular Session

To: Insurance

By: Representative Stevens

AN ACT TO AMEND SECTION 83-24-7, MISSISSIPPI CODE OF 1972, TO REVISE CERTAIN DEFINITIONS UNDER THE INSURERS REHABILITATION AND LIQUIDATION ACT; TO AMEND SECTION 83-24-19, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE ENFORCEMENT OF SEIZURES IN FORMAL DELINQUENCY PROCEEDINGS AGAINST AN INSURER UNDER THE INSURERS REHABILITATION AND LIQUIDATION ACT; TO AMEND SECTION 83-24-23, MISSISSIPPI CODE OF 1972, TO PROVIDE GROUNDS TO REHABILITATE OR LIQUIDATE AN INSURER DOMICILED IN THE STATE OF MISSISSIPPI; TO AMEND SECTION 83-24-25, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR EXPEDITED APPEAL OF A REHABILITATION ORDER; TO AMEND SECTION 83-24-27, MISSISSIPPI CODE OF 1972, TO REVISE THE POWERS AND DUTIES OF THE REHABILITATOR; TO AMEND SECTION 83-24-31, MISSISSIPPI CODE OF 1972, IN CONFORMITY THERETO; TO AMEND SECTION 83-24-35, MISSISSIPPI CODE OF 1972, IN CONFORMITY THERETO; TO AMEND SECTION 83-24-37, MISSISSIPPI CODE OF 1972, TO CLARIFY THE CONTINUATION AND TERMINATION OF COVERAGE; TO AMEND SECTION 83-24-41, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE DEFENSE OF ACTIONS AGAINST THE INSURER OR INSURED BY THE LIQUIDATOR; TO AMEND SECTION 83-24-43, MISSISSIPPI CODE OF 1972, TO REVISE THE REQUIREMENTS FOR NOTICE OF LIQUIDATION ORDERS; TO AMEND SECTION 83-24-47, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE TREATMENT OF JUDGMENTS OR ORDERS TAKEN AGAINST AN INSURER AFTER THE DATE OF LIQUIDATION IN CERTAIN COURTS; TO AMEND SECTION 83-24-59, MISSISSIPPI CODE OF 1972, TO PROHIBIT SETOFFS BY REINSURERS WHERE THE REINSURER BOTH ASSUMED FROM AND CEDED TO THE INSOLVENT INSURER AND TO PROHIBIT SETOFFS BETWEEN AFFILIATED COMPANIES; TO AMEND SECTION 83-24-63, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE CONSTRUCTION OF CERTAIN REINSURANCE CONTRACTS; TO AMEND SECTION 83-24-65, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE PAYMENT AND COLLECTION OF PREMIUMS; TO AMEND SECTION 83-24-67, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR DISTRIBUTIONS TO GUARANTY ASSOCIATIONS AND TO PROVIDE FOR THE OFFSET OF CERTAIN DEPOSITS; TO AMEND SECTION 83-24-69, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR ALTERNATIVE PROCEDURES FOR FILING PROOFS OF CLAIM; TO AMEND SECTION 83-24-71, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR ADDITIONAL INFORMATION TO BE INCLUDED IN PROOFS OF CLAIM; TO AMEND SECTION 83-24-73, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR SPECIAL CLAIMS; TO AMEND SECTION 83-24-75, MISSISSIPPI CODE OF 1972, TO PROVIDE TIME LIMIT FOR THIRD PARTY FILING CLAIM WITH LIQUIDATOR; TO AMEND SECTION 83-24-77, MISSISSIPPI CODE OF 1972, TO PROVIDE PROCEDURES FOR HANDLING DISPUTED CLAIMS; TO AMEND SECTION 83-24-79, MISSISSIPPI CODE OF 1972, IN CONFORMITY THERETO; TO AMEND SECTION 83-24-83, MISSISSIPPI CODE OF 1972, TO REVISE THE PROVISION ESTABLISHING PRIORITY AND ORDER OF DISTRIBUTIONS OF CLAIMS; TO AMEND SECTION 83-24-85, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR REVIEW OF CLAIMS IN LIQUIDATION; TO AMEND SECTION 83-24-89, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR AN ALTERNATIVE METHOD OF HANDLING UNCLAIMED FUNDS; TO AMEND SECTION 83-24-99, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR ANCILLARY PROCEEDINGS; TO AMEND SECTION 83-24-103, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR VESTING OF PROPERTY; TO AMEND SECTION 83-24-105, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR ACTIONS OF ANCILLARY RECEIVER; TO AMEND SECTION 83-24-107, MISSISSIPPI CODE OF 1972, IN CONFORMITY THERETO; TO AMEND SECTION 83-24-109, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE COORDINATION OF ACTIVITIES WHEN ANCILLARY RECEIVERS ARE APPOINTED; TO AMEND SECTION 83-24-111, MISSISSIPPI CODE OF 1972, TO ALLOW FOR ANCILLARY CLAIM FILING PROCEDURES; TO AMEND SECTION 83-24-115, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR SECURED CLAIMS; TO AMEND SECTION 83-24-117, MISSISSIPPI CODE OF 1972, IN CONFORMITY THERETO; TO CREATE A NEW SECTION TO BE CODIFIED AS SECTION 83-24-18, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR CERTAIN PROTECTIONS REGARDING RECEIVERS; TO CREATE A NEW SECTION TO BE CODIFIED AS SECTION 83-24-20, MISSISSIPPI CODE OF 1972, TO PROVIDE PROCEDURES FOR FORMAL DELINQUENCY PROCEEDINGS; TO CREATE A NEW SECTION TO BE CODIFIED AS SECTION 83-24-36, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR RECORDS OF DELINQUENT INSURERS; TO CREATE A NEW SECTION TO BE CODIFIED AS SECTION 83-24-52, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR RECOUPMENT FROM AFFILIATES; TO CREATE A NEW SECTION TO BE CODIFIED AS SECTION 83-24-82, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE TREATMENT OF QUALIFIED FINANCIAL CONTRACTS; TO CREATE A NEW SECTION TO BE CODIFIED AS SECTION 83-24-104, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE HANDLING OF SPECIAL OR STATUTORY DEPOSITS; TO CREATE A NEW SECTION TO BE CODIFIED AS SECTION 83-24-119, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE SHARING OF INFORMATION; TO REPEAL SECTION 83-24-29, MISSISSIPPI CODE OF 1972, WHICH PROVIDES FOR A STAY OF ACTIONS OR PROCEEDINGS DURING REHABILITATION; TO REPEAL SECTION 83-24-33, MISSISSIPPI CODE OF 1972, WHICH AUTHORIZES THE COMMISSIONER OF INSURANCE TO PETITION THE COURT FOR AN ORDER TO LIQUIDATE A DOMESTIC INSURER OR AN ALIEN INSURER DOMICILED IN THIS STATE; TO REPEAL SECTION 83-24-101, MISSISSIPPI CODE OF 1972, WHICH AUTHORIZES THE COMMISSIONER OF INSURANCE TO PETITION THE COURT FOR AN ORDER TO LIQUIDATE THE ASSETS FOUND IN THIS STATE OF A FOREIGN INSURER OR AN ALIEN INSURER NOT DOMICILED IN THIS STATE; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 83-24-7, Mississippi Code of 1972, is amended as follows:

83-24-7. For the purposes of this chapter:

(a) "Affiliate" of, or person "affiliated" with, a specific person, means a person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.

(b) "Ancillary state" means any state other than a domiciliary state.

(c) "Commissioner" means the Commissioner of Insurance.

(d) "Control" (including the terms "controlling," "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or non-management services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, ten percent (10%) or more of the voting securities of any other person. This presumption may be rebutted by a showing that control does not, in fact, exist.

(e) "Creditor" is a person having any claim, whether matured or unmatured, liquidated or unliquidated, secured or unsecured, absolute, fixed or contingent.

(f) "Delinquency proceeding" means any proceeding instituted against an insurer for the purpose of liquidating, rehabilitating, reorganizing or conserving such insurer, and any summary proceeding under Section 83-24-19. "Formal delinquency proceeding" means any liquidation or rehabilitation proceeding.

(g) "Doing business" includes any of the following acts, whether effected by mail or otherwise:

(i) The issuance or delivery of contracts of insurance, either to persons resident, or covering risk in this state;

(ii) The solicitation of applications for such contracts, or other negotiations preliminary to the execution of such contracts;

(iii) The collection of premiums, membership fees, assessments or other consideration for such contracts;

(iv) The transaction of matters subsequent to execution of such contracts and arising out of them; or

(v) Operating under a license or certificate of authority, as an insurer, issued by the Department of Insurance.

(h) "Domiciliary state" means the state in which an insurer is incorporated or organized; or, in the case of an alien insurer, its state of entry.

(i) "Fair consideration" is given for property or obligation:

(i) When in exchange for such property or obligation, as a fair equivalent therefor, and in good faith, property is conveyed or services are rendered or an obligation is incurred or an antecedent debt is satisfied; or

(ii) When such property or obligation is received in good faith to secure a present advance or antecedent debt in amount not disproportionately small as compared to the value of the property or obligation obtained.

(j) "Foreign country" means any other jurisdiction not in any state.

(k) "General assets" means all property, real, personal, or otherwise, not * * *:

(i) Specifically subject to a perfected security interest as defined in the Uniform Commercial Code or its equivalent in this state;

(ii) Specifically mortgaged or otherwise subject to a lien and recorded in accordance with applicable real property law;

(iii) Specifically subject to a valid and existing express trust for the security or benefit of specified persons or classes of persons; or

(iv) Required by the insurance laws of this state or any other state to be held for the benefit of specified persons or classes of persons.

As to specifically encumbered property, "general assets" includes all such property or its proceeds in excess of the amount necessary to discharge the sum or sums secured thereby. Assets held in trust and on deposit pursuant to a state statute for the security or benefit of all policyholders or all policyholders and creditors, in more than a single state, shall be treated as general assets.

(l) "Guaranty association" means any mechanism mandated by state statute which is created for the payment of claims or continuation of policy obligations of financially impaired or insolvent insurers.

(m) "Insolvency" or "insolvent" means:

(i) For an insurer issuing only assessable fire insurance policies:

(A) The inability to pay any obligation within thirty (30) days after it becomes payable; or

(B) If an assessment be made within thirty (30) days after such date, the inability to pay such obligation thirty (30) days following the date specified in the first assessment notice issued after the date of loss.

(ii) For any other insurer, that the insurer is unable to pay its obligations when they are due, or when its admitted assets do not exceed its liabilities plus the greater of:

(A) Any capital and surplus required by law for its organization and continued operation; or

(B) The total par or stated value of its authorized and issued capital stock.

 * * *

(iii) For purposes of this subsection, "liabilities" shall include but not be limited to reserves required by statute or by insurance department general regulations or specific requirements imposed by the commissioner upon a subject company at the time of admission or subsequent thereto.

(n) "Insurer" means any person who has done, purports to do, is doing or is licensed to do an insurance business, and is or has been subject to the authority of, or to liquidation, rehabilitation, reorganization, supervision, or conservation by, any insurance commissioner. For purposes of this chapter, any other persons included under Section 83-24-5 shall be deemed to be insurers.

(o) "Netting agreement" means a contract or agreement (including terms and conditions incorporated by reference therein), including a master agreement (which master agreement, together with all schedules, confirmations, definitions and addenda thereto and transactions under any thereof, shall be treated as one (1) netting agreement), that documents one or more transactions between the parties to the agreement for or involving one or more qualified financial contracts and that provides for the netting or liquidation of qualified financial contracts or present or future payment obligations or payment entitlements thereunder (including liquidation or close-out values relating to such obligations or entitlements) among the parties to the netting agreement.

(p) "Preferred claim" means any claim with respect to which the terms of this chapter accord priority of payment from the general assets of the insurer.

(q) "Qualified financial contract" means a commodity contract, forward contract, repurchase agreement, securities, contract, swap agreement and any similar agreement that the commissioner determines by regulation, resolution or order to be a qualified financial contract for the purposes of this chapter.

(i) "Commodity contract" means:

(A) A contract for the purchase of a sale of a commodity for future delivery on, or subject to the rules of, a board of trade designated as a contract market by the Commodity Futures Trading Commission under the Commodity Exchange Act (7 USCS Section 1 et seq.) or board of trade outside the United States;

(B) An agreement that is subject to regulation under Section 19 of the Commodity Exchange Act (7 USCS Section 1 et seq.) and that is commonly known to the commodities trade as a margin account, margin contract, leverage account or leverage contract; or

(C) An agreement or transaction that is subject to regulation under Section 4c(b) of the Commodity Exchange Act (7 USCS Section 1 et seq.) and that is commonly known to the commodities trade as a commodity option.

(ii) "Forward contract" means a contract (other than a commodity contract) for the purchase, sale or transfer of a commodity, as defined in Section 1 of the Commodity Exchange

(iii) "Repurchase agreement" (which also applies to a reverse repurchase agreement) means an agreement, including related terms, that provides for the transfer of certificates of deposit, eligible bankers' acceptances, or securities that are direct obligations of, or that are fully guaranteed as to principal and interest by, the United States or an agency of the United States against the transfer of funds by the transferee of the certificates of deposit, eligible bankers' acceptances or securities with a simultaneous agreement by the transferee to transfer to the transferor certificates of deposit, eligible bankers' acceptances or securities as described above, at a date certain not later than one (1) year after the transfers or on demand, against the transfer of funds. For the purposes of this definition, the items that may be subject to an agreement include mortgage-related securities, a mortgage loan, and an interest in a mortgage loan, and shall not include any participation in a commercial mortgage loan, unless the commissioner determines by regulation, resolution or order to include the participation within the meaning of the term.

(iv) "Securities contract" means a contract for the purchase, sale or loan of a security, including an option for the repurchase or sale of a security, certificate of deposit, or group or index of securities (including an interest therein or based on the value thereof), or an option entered into on a national securities exchange relating to foreign currencies, or the guarantee of a settlement of cash or securities by or to a securities clearing agency. For the purposes of this definition, the term "security" includes a mortgage loan, mortgage-related securities and an interest in any mortgage loan or mortgage-related security.

(v) "Swap agreement" means an agreement, including the terms and conditions incorporated by reference in an agreement, that is a rate swap agreement, basis swap, commodity swap, forward rate agreement, interest rate future, interest rate option, forward foreign exchange agreement, spot foreign exchange agreement, rate cap agreement, rate floor agreement, rate collar agreement, currency swap agreement, cross-currency rate swap agreement, currency future or currency option or any other similar agreement, and includes any combination of agreements and an option to enter into an agreement.

(r) "Receiver" means receiver, liquidator, rehabilitator or conservator as the context requires.

(s) "Reciprocal state" means any state other than this state in which in substance and effect Sections 83-24-35, 83-24-103, 83-24-105, 83-24-109, 83-24-111 and 83-24-113 are in force, and in which provisions are in force requiring that the commissioner or equivalent official be the receiver of a delinquent insurer, and in which some provision exists for the avoidance of fraudulent conveyances and preferential transfers.

(t) "Secured claim" means any claim secured by an asset that is not a general asset, but not including special deposit claims * * *. The term also includes claims which have become liens upon specific assets by reason of judicial process more than four (4) months before the commencement of delinquency proceedings. A secured claim shall not include any claim arising from a constructive or resulting trust.

(u) "Special deposit claim" means any claim secured by a deposit made pursuant to statute for the security or benefit of a limited class or classes of persons, but not including any claim secured by general assets.

(v) "State" means any state, district or territory of the United States and the Panama Canal Zone.

(w) "Transfer" shall include the sale and every other and different mode, direct or indirect, of disposing of or of parting with property or with an interest therein, or with the possession thereof or of fixing a lien upon property or upon an interest therein, absolutely or conditionally, voluntarily, by or without judicial proceedings. The retention of a security title to property delivered to a debtor shall be deemed a transfer suffered by the debtor.

SECTION 2. Section 83-24-19, Mississippi Code of 1972, is amended as follows:

83-24-19. (1) The commissioner may file in the chancery court a petition alleging, with respect to a domestic insurer:

(a) That there exists any grounds that would justify a court order for a formal delinquency proceeding against an insurer under this chapter;

(b) That the interests of policyholders, creditors or the public will be endangered by delay; and

(c) The contents of an order deemed necessary by the commissioner.

(2) Upon a filing under subsection (1), the court may issue forthwith, ex parte and without a hearing, the requested order which shall direct the commissioner to take possession and control of all or a part of the property, books, accounts, documents and other records of an insurer, and of the premises occupied by it for transaction of its business; and until further order of the court enjoin the insurer and its officers, managers, agents and employees from disposition of its property and from the transaction of its business except with the written consent of the commissioner.

(3) The court shall specify in the order what its duration shall be, which shall be such time as the court deems necessary for the commissioner to ascertain the condition of the insurer. On motion of either party or on its own motion, the court may from time to time hold such hearings as it deems desirable after such notice as it deems appropriate, and may extend, shorten or modify the terms of the seizure order. The court shall vacate the seizure order if the commissioner fails to commence a formal proceeding under this chapter after having had a reasonable opportunity to do so. An order of the court pursuant to a formal proceeding under this chapter shall ipso facto vacate the seizure order.

(4) Entry of a seizure order under this section shall not constitute an anticipatory breach of any contract of the insurer.

(5) An insurer subject to an ex parte order under this section may petition the court at any time after the issuance of such order for a hearing and review of the order. The court shall hold such a hearing and review not more than fifteen (15) days after the request. A hearing under this subsection may be held privately in chambers and it shall be so held if the insurer proceeded against so requests.

(6) If, at any time after the issuance of such an order, it appears to the court that any person whose interest is or will be substantially affected by the order did not appear at the hearing and has not been served, the court may order that notice be given. An order that notice be given shall not stay the effect of any order previously issued by the court.

(7) Whenever the commissioner makes any seizure as provided in subsection (2), it shall, on the demand of the commissioner, be the duty of the sheriff of any county of this state, and of the police department of any municipal corporation therein, to furnish the commissioner with such deputies, patrolmen or officers as may be necessary to assist the commissioner in making and enforcing the seizure.

(8) The foregoing provisions of this section shall be applied to insurers not domiciled in this state to the extent of the insurers' assets and activities in this state.

SECTION 3. Section 83-24-23, Mississippi Code of 1972, is amended as follows:

83-24-23. The commissioner may apply by petition to the chancery court for an order authorizing the commissioner to rehabilitate or liquidate a domestic insurer or an alien insurer domiciled in this state on any one or more of the following grounds:

(a) The insurer is insolvent;

(b) The insurer has neglected or refused to observe an order of the commissioner to make good within the time prescribed by law any deficiency, whenever its capital and minimum required surplus, if a stock company, or its surplus, if a company other than stock, has become impaired;

(c) The insured is in such condition that it could not meet the requirements for organization and authorization as required by law, except as to the amount of the original surplus required of a stock company under Section 83-19-31, and except as to the amount of the surplus required of a company other than a stock company in excess of the minimum surplus required to be maintained;

(d) The insurer has concealed, removed, altered, destroyed or failed to establish and maintain books, records, documents, accounts, vouchers and other pertinent material adequate for the determination of its financial condition by examination under this section or has failed to properly administer claims or maintain claims records which are adequate for the determination of its outstanding claims liability;

(e) At any time after the issuance of an order under this section or at the time of instituting any proceeding under this article, it appears to the commissioner that upon good cause shown, it would not be in the best interest of the policyholders, creditors or the public to proceed with the conduct of the business of the insurer;

(f) The insurer is in such condition that the further transaction of business would be hazardous, financially or otherwise, to its policyholders, creditors or the public;

(g) There is reasonable cause to believe that there has been embezzlement from the insurer, wrongful sequestration or diversion of the insurer's assets, forgery or fraud affecting the insurer, or other illegal conduct in, by, or with respect to the insurer that if established would endanger assets in an amount threatening the solvency of the insurer;

(h) The insurer has failed to remove any person who in fact has executive authority in the insurer, whether an officer, manager, general agent, employee, or other person; if the person has been found after notice and hearing by the commissioner to be dishonest or untrustworthy in a way affecting the insurer's business;

(i) Control of the insurer, whether by stock ownership or otherwise, and whether direct or indirect, is in a person or persons found after notice and hearing to be untrustworthy in a way affecting the insurer's business;

(j) Any person who in fact has executive authority in the insurer, whether an officer, manager, general agent, director or trustee, employee, or other person, has refused to be examined under oath by the commissioner concerning its affairs, whether in this state or elsewhere; and after reasonable notice of the fact, the insurer has failed promptly and effectively to terminate the employment and status of the person and all his influence on management;

(k) After demand by the commissioner under Sections 83-5-201 through 83-5-217, Mississippi Code of 1972, or under this chapter, the insurer has failed to promptly make available for examination any of its own property, books, accounts, documents or other records, or those of any subsidiary or related company within the control of the insurer, or those of any person having executive authority in the insurer so far as they pertain to the insurer;

(l) Without first obtaining the written consent of the commissioner, the insurer has transferred, or attempted to transfer, in a manner contrary to Sections 83-6-1 through 83-6-43, * * *, Mississippi Code of 1972, or other applicable law, substantially its entire property or business, or has entered into any transaction the effect of which is to merge, consolidate or reinsure substantially its entire property or business in or with the property or business of any other person;

(m) The insurer or its property has been or is the subject of an application for the appointment of a receiver, trustee, custodian, conservator or sequestrator or similar fiduciary of the insurer or its property otherwise than as authorized under the insurance laws of this state * * *;

(n) Within the previous five (5) years the insurer has willfully and continuously violated its charter or articles of incorporation, its bylaws, any insurance law of this state, or any valid order of the commissioner;

(o) The insurer has failed to pay within sixty (60) days after the due date any obligation to any state or any subdivision thereof or any judgment entered in any state, if the court in which the judgment was entered had jurisdiction over the subject matter except that * * * nonpayment shall not be a ground until sixty (60) days after any good faith effort by the insurer to contest the obligation has been terminated, whether it is before the commissioner or in the courts, or the insurer has systematically attempted to compromise or renegotiate previously agreed settlements with its creditors on the ground that it is financially unable to pay its obligations in full;

(p) The insurer has failed to file its annual report or other financial report required by statute within the time allowed by law * * *;

(q) The board of directors or the holders of a majority of the shares entitled to vote, or a majority of those individuals entitled to the control of those entities specified in Section 83-24-5, request or consent to rehabilitation or liquidation under this chapter; or

(r) The insurer does not comply with its domiciliary state's requirements for issuance to it of a certificate of authority, or that its certificate of authority has been revoked by its state of domicile.

SECTION 4. Section 83-24-25, Mississippi Code of 1972, is amended as follows:

83-24-25. (1) An order to rehabilitate the business of a domestic insurer, or an alien insurer domiciled in this state, shall appoint the commissioner and his successors in office the rehabilitator, and shall direct the rehabilitator forthwith to take possession of the assets of the insurer, and to administer them under the general supervision of the court. The filing or recording of the order with the Clerk of the Chancery Court of the First Judicial District of Hinds County or of the county in which the principal business of the company is conducted, or the county in which its principal office or place of business is located, shall impart the same notice as a deed, bill of sale, or other evidence of title duly filed or recorded with that clerk would have imparted. The order to rehabilitate the insurer shall by operation of law vest title to all assets of the insurer in the rehabilitator.

(2) Any order issued under this section shall require accountings to the court by the rehabilitator. Accountings shall be at such intervals as the court specifies in its order, but no less frequently than semiannually. Each accounting shall include a report concerning the rehabilitator's opinion as to the likelihood that a plan under Section 83-24-27 will be prepared by the rehabilitator and the timetable for doing so.

(3) Entry of an order of rehabilitation shall not constitute an anticipatory breach of any contracts of the insurer nor shall it be grounds for retroactive revocation or retroactive cancellation of any contracts of the insurer, unless such revocation or cancellation is done by the rehabilitator pursuant to Section 83-24-27.

(4) In recognition of the need for a prompt and final resolution for all affected by a plan of rehabilitation, any appeal from an order of rehabilitation or an order approving a plan of rehabilitation shall be heard on an expedited basis. A stay of an order of rehabilitation or an order approving a plan of rehabilitation shall not be granted unless the appellant demonstrates that extraordinary circumstances warrant delaying the recovery under the plan of rehabilitation of all other persons, including policyholders. If the plan provides an appropriate mechanism for adjustment in the event of any adverse ruling from an appeal, no stay shall be granted.

SECTION 5. Section 83-24-27, Mississippi Code of 1972, is amended as follows:

83-24-27. (1) The commissioner as rehabilitator may appoint one or more special deputies, who shall have all the powers and responsibilities of the rehabilitator granted under this section, and the commissioner may employ such counsel, clerks and assistants as deemed necessary. The compensation of the special deputy, counsel, clerks and assistants and all expenses of taking possession of the insurer and of conducting the proceedings shall be fixed by the commissioner, with the approval of the court, and shall be paid out of the funds or assets of the insurer. The persons appointed under this section shall serve at the pleasure of the commissioner. The commissioner, as rehabilitator, may, with the approval of the court, appoint an advisory committee of policyholders, claimants, or other creditors including guaranty associations should such a committee be deemed necessary. Such committee shall serve at the pleasure of the commissioner and shall serve without compensation other than reimbursement for reasonable travel and per diem living expenses. No other committee of any nature shall be appointed by the commissioner or the court in rehabilitation proceedings conducted under this chapter.

(2) In the event that the property of the insurer does not contain sufficient cash or liquid assets to defray the costs incurred, the commissioner may advance the costs so incurred out of any appropriation for the maintenance of the insurance department. Any amounts so advanced for expenses of administration shall be repaid to the commissioner for the use of the insurance department out of the first available money of the insurer.

(3) The rehabilitator may take such action as he deems necessary or appropriate to reform and revitalize the insurer. He shall have all the powers of the directors, officers and managers, whose authority shall be suspended, except as they are redelegated by the rehabilitator. He shall have full power to direct and manage, to hire and discharge employees subject to any contract rights they may have, and to deal with the property and business of the insurer.

(4) If it appears to the rehabilitator that there has been criminal or tortious conduct, or breach of any contractual or fiduciary obligation detrimental to the insurer by any officer, manager, agent, broker, employee or other person, he may pursue all appropriate legal remedies on behalf of the insurer.

(5) If the rehabilitator determines that reorganization, consolidation, conversion, reinsurance, merger or other transformation of the insurer is appropriate, the rehabilitator shall prepare a plan to effect such changes and shall file it with the court within six (6) months after the entry of the rehabilitation order or such further time as the court may allow for good cause. Upon application of the rehabilitator for approval of the plan, and after such notice and hearings as the court may prescribe, the court may either approve or disapprove the plan proposed, or may modify it and approve it as modified. Any plan approved under this section shall be, in the judgment of the court, fair and equitable to all parties concerned. If the plan is approved, the rehabilitator shall carry out the plan. In the case of a life insurer, the plan proposed may include the imposition of liens upon the policies of the company, if all rights of shareholders are first relinquished. A plan for a life insurer may also propose imposition of a moratorium upon loan and cash surrender rights under policies, for such period not to exceed six (6) months from the entry of the rehabilitation order, unless the court, for good cause shown, shall extend the moratorium.

(6) The rehabilitator shall have the power under Sections 83-24-51 and 83-24-53 to avoid fraudulent transfers and may exercise any of the powers under Section 83-24-41, as necessary or appropriate, including, but not limited to, the power to affirm or disaffirm any contract to which the insurer is a party. However, the rehabilitator of an insurer may, as part of a court approved plan of rehabilitation, modify or restructure the policies or contracts of insurance. In the event the rehabilitator proposes to modify or restructure the policies or contracts of insurance, the rehabilitator may, with the concurrence of the court, approve payment of certain expenses incurred by an advisory committee appointed pursuant to subsection (1) of this section, the expenses to be limited to the reasonable and necessary expenses incurred in obtaining an expert evaluation of the effect upon policyholders of any proposed modification or restructuring of policies or contracts of insurance.

(7) The enumeration, in this section, of the powers and authority of the rehabilitator shall not be construed as a limitation upon the rehabilitator, nor shall it exclude in any manner the right to do other acts not specifically enumerated or otherwise provided for, as may be necessary or appropriate for the accomplishment of or in aid of the purpose of rehabilitation.

SECTION 6. Section 83-24-31, Mississippi Code of 1972, is amended as follows:

83-24-31. (1) Whenever the commissioner believes further attempts to rehabilitate an insurer would substantially increase the risk of loss to creditors, policyholders or the public, or would be futile, the commissioner may petition the court for an order of liquidation. A petition under this subsection shall have the same effect as a petition under Section 83-24-23 * * *.

(2) The protection of the interests of insureds, claimants and the public requires the timely performance of all insurance policy obligations. If the payment of policy obligations is suspended in substantial part for a period of six (6) months at any time after the appointment of the rehabilitator and the rehabilitator has not filed an application for approval of a plan under Section 83-24-27, the rehabilitator shall petition the court for an order of liquidation * * *.

(3) The rehabilitator may at any time petition the court for an order terminating rehabilitation of an insurer. The court shall also permit the directors of the insurer to petition the court for an order terminating rehabilitation of the insurer and may order payment from the estate of the insurer of such costs and other expenses of such petition as justice may require. If the court finds that rehabilitation has been accomplished and that grounds for rehabilitation under Section 83-24-23 no longer exist, it shall order that the insurer be restored to possession of its property and the control of the business. The court may also make that finding and issue that order at any time upon its own motion.

SECTION 7. Section 83-24-35, Mississippi Code of 1972, is amended as follows:

83-24-35. (1) An order to liquidate the business of a domestic insurer shall appoint the commissioner and his successors in office as liquidator, and shall direct the liquidator forthwith to take possession of the assets of the insurer and to administer them under the general supervision of the court. The liquidator shall be vested by operation of law with the title to all of the property, contracts and rights of action, and all of the books and records of the insurer ordered liquidated, wherever located, as of the entry of the final order of liquidation. The filing or recording of the order with the Clerk of the Chancery Court of the First Judicial District of Hinds County and of the county in which its principal office or place of business is located, or, in the case of real estate, of the county where the property is located, shall impart the same notice as a deed, bill of sale or other evidence of title duly filed or recorded with that chancery court would have imparted.

(2) Upon issuance of the order, the rights and liabilities of any such insurer and of its creditors, policyholders, shareholders, members and all other persons interested in its estate shall become fixed as of the date of entry of the order of liquidation, except as provided in Sections 83-24-37 and 83-24-73.

(3) An order to liquidate the business of an alien insurer domiciled in this state shall be in the same terms and have the same legal effect as an order to liquidate a domestic insurer * * *.

(4) At the time of petitioning for an order of liquidation, or at any time thereafter, the commissioner, after making appropriate findings of an insurer's insolvency, may petition the court for a judicial declaration of such insolvency. After providing such notice and hearing as it deems proper, the court may make the declaration.

(5) Any order issued under this section shall require the liquidator to submit financial reports to the court. Financial reports shall include (at a minimum) the assets and liabilities of the insurer and all funds received or disbursed by the liquidator during the current period. Financial reports shall be filed within one (1) year of the liquidation order and at least annually thereafter, unless the court for good cause allows a longer reporting period.

(6) * * * In the event an order of liquidation is set aside upon any appeal, the company shall not be released from delinquency proceedings unless and until all funds advanced by any guaranty association, including reasonable administrative expenses in connection therewith relating to obligations of the company, shall be repaid in full, together with interest at the judgment rate of interest or unless an arrangement for repayment thereof has been made with the consent of all applicable guaranty associations.

SECTION 8. Section 83-24-37, Mississippi Code of 1972, is amended as follows:

83-24-37. (1) Notwithstanding any policy or contract language or any other statute, all policies, insurance contracts (other than reinsurance), surety bonds or surety undertakings, other than life or health insurance or annuities, in effect at the time of issuance of an order of liquidation shall continue in force only for the lesser of:

(a) A period of thirty (30) days from the date of entry of the liquidation order;

(b) The expiration of the policy coverage;

(c) The date when the insured has replaced the insurance coverage with equivalent insurance in another insurer or otherwise terminated the policy;

(d) The liquidator has effected a transfer of the policy obligation pursuant to Section 83-24-41; or

(e) The date proposed by the liquidator and approved by the court to cancel coverage.

(2) An order for liquidation under Section 83-24-39 shall terminate coverages at the time specified in subsection (1) of this section for purposes of any other statute.

(3) Policies of life or health insurance or annuities shall continue in force for such period and under such terms as is provided for by any applicable guaranty association * * *.

(4) Policies of life or health insurance or annuities or any period or coverage of such policies not covered by a * * * guaranty association shall terminate under subsections (1) and (2).

(5) The cancellation of any bond or surety undertaking shall not release any co-surety or guarantor.

(6) The obligations of the insolvent insurer's reinsurers shall not be affected by a cancellation, under this section, of the insurance ceded to the reinsurers.

SECTION 9. Section 83-24-41, Mississippi Code of 1972, is amended as follows:

83-24-41. (1) The liquidator shall have the power:

(a) To appoint a special deputy or deputies to act for him under this chapter, and to determine his reasonable compensation. The special deputy shall have all powers of the liquidator granted by this section. The special deputy shall serve at the pleasure of the liquidator.

(b) To employ employees and agents, legal counsel, actuaries, accountants, appraisers, consultants and such other personnel as he may deem necessary to assist in the liquidation.

(c) To appoint, with the approval of the court, an advisory committee of policyholders, claimants or other creditors including guaranty associations should such a committee be deemed necessary. Such committee shall serve at the pleasure of the commissioner and the decision to appoint an advisory committee shall be at the sole discretion of the commissioner. Such committee shall serve without compensation other than reimbursement for reasonable travel and per diem living expenses. No other committee of any nature shall be appointed by the commissioner or the court in liquidation proceedings conducted under this chapter.

(d) To fix the reasonable compensation of employees and agents, legal counsel, actuaries, accountants, appraisers and consultants with the approval of the court.

(e) To pay reasonable compensation to persons appointed and to defray from the funds or assets of the insurer all expenses of taking possession of, conserving, conducting, liquidating, disposing of, or otherwise dealing with the business and property of the insurer. In the event that the property of the insurer does not contain sufficient cash or liquid assets to defray the costs incurred, the commissioner may advance the costs so incurred out of any appropriation for the maintenance of the insurance department. Any amounts so advanced for expenses of administration shall be repaid to the commissioner for the use of the insurance department out of the first available monies of the insurer.

(f) To hold hearings, to subpoena witnesses to compel their attendance, to administer oaths, to examine any person under oath, and to compel any person to subscribe to his testimony after it has been correctly reduced to writing; and in connection therewith to require the production of any books, papers, records or other documents which he deems relevant to the inquiry.

(g) To audit the books and records of all agents of the insurer insofar as those records relate to the business activities of the insurer.

(h) To collect all debts and monies due and claims belonging to the insurer, wherever located, and for this purpose:

(i) To institute timely action in other jurisdictions in order to forestall garnishment and attachment proceedings against such debts;

(ii) To do such other acts as are necessary or expedient to collect, conserve or protect its assets or property, including the power to sell, compound, compromise or assign debts for purposes of collection upon such terms and conditions as he deems best; and

(iii) To pursue any creditor's remedies available to enforce his claims.

(i) To conduct public and private sales of the property of the insurer.

(j) To use assets of the estate of an insurer under a liquidation order to transfer policy obligations to a solvent assuming insurer, if the transfer can be arranged without prejudice to applicable priorities under Section 83-24-83.

(k) To acquire, hypothecate, encumber, lease, improve, sell, transfer, abandon or otherwise dispose of or deal with, any property of the insurer at its market value or upon such terms and conditions as are fair and reasonable. He shall also have power to execute, acknowledge and deliver any and all deeds, assignments, releases and other instruments necessary or proper to effectuate any sale of property or other transaction in connection with the liquidation.

(l) To borrow money on the security of the insurer's assets or without security and to execute and deliver all documents necessary to that transaction for the purpose of facilitating the liquidation. Any such funds borrowed may be repaid as an administrative expense and have priority over any other claims in Class 1 under the priority of distribution.

(m) To enter into such contracts as are necessary to carry out the order to liquidate, and to affirm or disavow any contracts to which the insurer is a party.

(n) To continue to prosecute and to institute in the name of the insurer or in his own name any and all suits and other legal proceedings in this state or elsewhere, and to abandon the prosecution of claims he deems unprofitable to pursue further. If the insurer is dissolved under Section 83-24-39, he shall have the power to apply to any court in this state or elsewhere for leave to substitute himself for the insurer as plaintiff.

(o) To prosecute any action which may exist in behalf of the creditors, members, policyholders or shareholders of the insurer against any officer of the insurer, or any other person.

(p) To remove any or all records and property of the insurer to the offices of the commissioner or to such other place as may be convenient for the purposes of efficient and orderly execution of the liquidation. Guaranty associations * * * shall have such reasonable access to the records of the insurer as is necessary for them to carry out their statutory obligations.

(q) To deposit in one or more banks in this state such sums as are required for meeting current administration expenses and dividend distributions.

(r) To invest all sums not currently needed, unless the court orders otherwise.

(s) To file any necessary documents for record in the office of any chancery clerk or record office in this state or elsewhere where property of the insurer is located.

(t) To assert all defenses available to the insurer as against third persons, including statutes of limitation, statutes of frauds, and the defense of usury. A waiver of any defense by the insurer after a petition in liquidation has been filed shall not bind the liquidator. Whenever a guaranty association * * * has an obligation to defend any suit, the liquidator shall give precedence to such obligation and may defend only in the absence of a defense by such guaranty associations.

(u) To exercise and enforce all the rights, remedies and powers of any creditor, shareholder, policyholder or member, including any power to avoid any transfer or lien that may be given by the general law and that is not included with Sections 83-24-51 through 83-24-55.

(v) To intervene in any proceeding wherever instituted that might lead to the appointment of a receiver or trustee, and to act as the receiver or trustee whenever the appointment is offered.

(w) To enter into agreements with any receiver or commissioner of any other state relating to the rehabilitation, liquidation, conservation or dissolution of an insurer doing business in both states.

(x) To exercise all powers now held or hereafter conferred upon receivers by the laws of this state not inconsistent with the provisions of this chapter.

(2) (a) If a company placed in liquidation issued liability policies on a claims-made basis, which provided an option to purchase an extended period to report claims, then the liquidator may make available to holders of such policies, for a charge, an extended period to report claims as stated herein. The extended reporting period shall be made available only to those insureds who have not secured substitute coverage. The extended period made available by the liquidator shall begin upon termination of any extended period to report claims in the basic policy and shall end at the earlier of the final date for filing of claims in the liquidation proceeding or eighteen (18) months from the order of liquidation.

(b) The extended period to report claims made available by the liquidator shall be subject to the terms of the policy to which it relates. The liquidator shall make available such extended period within sixty (60) days after the order of liquidation at a charge to be determined by the liquidator subject to approval of the court. Such offer shall be deemed rejected unless the offer is accepted in writing and the charge is paid within ninety (90) days after the order of liquidation. No commissions, premium taxes, assessments or other fees shall be due on the charge pertaining to the extended period to report claims.

(3) The enumeration, in this section, of the powers and authority of the liquidator shall not be construed as a limitation upon him, nor shall it exclude in any manner his right to do such other acts not herein specifically enumerated or otherwise provided for, as may be necessary or appropriate for the accomplishment of or in aid of the purpose of liquidation.

(4) The liquidator shall not be obligated to defend any action against the insurer or insured and may enforce injunctions, stays and the claims procedure set forth in this chapter. The liquidator may elect to defend any actions against the insurer or insureds if it is in the best interest of the estate. Otherwise any insureds not defended by a guaranty association shall provide their own defense, and include the cost of the defense as part of their claims, if the defense was an obligation of the insurer. The right of the liquidator to contest coverage on a particular claim shall be deemed preserved without the necessity for an express reservation of rights.

SECTION 10. Section 83-24-43, Mississippi Code of 1972, is amended as follows:

83-24-43. (1) Unless the court otherwise directs, the liquidator shall give or cause to be given notice of the liquidation order as soon as possible:

(a) By first class mail and electronic communication to the insurance commissioner of each jurisdiction in which the insurer is doing business;

(b) By first class mail to any guaranty association * * * which is or may become obligated as a result of the liquidation;

(c) By first class mail to all the insurer's agents, brokers, or producers of record, with current appointments or current licenses to represent the insurer, and to all other agents, brokers or producers as the liquidator deems appropriate at their last known address;

(d) By first class mail to all persons or entities known or reasonably expected to have claims against the insurer, including all policyholders and reinsurers, at their last known address as indicated by the records of the insurer; and

(e) By publication in a newspaper of general circulation in the county in which the insurer has its principal place of business and in such other locations as the liquidator deems appropriate.

(2) Whenever the commissioner of this state is appointed receiver for an insurer domiciled in another state, the notice of the liquidation order given by the domiciliary liquidator in compliance with the laws of that state shall be sufficient notice, and the ancillary receiver shall not be required to give any notice unless the domiciliary liquidator fails to give notice. The ancillary receiver may request that the domiciliary liquidators notice mention the existence of any applicable guaranty association laws in this state, and inform claimants that any claims which the guaranty association of this state may cover may be filed with the domiciliary liquidator and will be forwarded to the applicable guaranty association. If notice by the domiciliary liquidator in another state does not mention the possibility of guaranty association coverage in this state, then the ancillary receiver shall arrange to give notice to those who may have rights under applicable guaranty association laws in this state, together with a citation to the guaranty association statute in this state. The notice may include a brief summary of claimants' rights under the guaranty association laws in this state and any other information deemed appropriate.

(3) Except as otherwise established by the liquidator with approval of the court, notice to potential claimants under subsection (1) shall require claimants to file with the liquidator their claims, together with proper proofs thereof under Section 83-24-71, on or before a date the liquidator shall specify in the notice. The liquidator need not require persons claiming cash surrender values or other investment values in life insurance and annuities to file a claim. All claimants shall have a duty to keep the liquidator informed of any changes of address.

(4) (a) Notice under subsection (1) to agents of the insurer and to potential claimants who are policyholders shall include, where applicable, notice that coverage by state guaranty associations may be available for all or part of policy benefits in accordance with applicable state guaranty laws.

(b) The liquidator shall promptly provide to the guaranty associations such information concerning the identities and addresses of such policyholders and their policy coverages as may be within the liquidator's possession or control, and otherwise cooperate with guaranty associations to assist them in providing to such policyholders timely notice of the guaranty associations' coverage of policy benefits, including, as applicable, coverage of claims and continuation or termination of coverages.

(5) If notice is given in accordance with this section, the distribution of assets of the insurer under this chapter shall be conclusive with respect to all claimants, whether or not they received notice.

(6) Notwithstanding the foregoing, the liquidator shall have no duty to locate any persons or entities if no address is found in the records of the insurer, or if mailings are returned to the liquidator because of inability to deliver at the address shown in the company's books and records. In such circumstances the notice by publication as required by this chapter or actual notice received is sufficient notice. Written certification by the liquidator, or other knowledgeable person acting for the liquidator, that the notices were deposited in the United States mail, postage prepaid, shall be prima facie evidence of mailing and receipt.

(7) Upon application of the liquidator and for good cause shown, the court may find that notice by publication as required in this section is sufficient notice to those persons holding an occurrence policy which expired more than four (4) years prior to the entry of the order of liquidation, and under which there are no pending claims; or the court may order such other notice to those persons as it deems appropriate.

SECTION 11. Section 83-24-47, Mississippi Code of 1972, is amended as follows:

83-24-47. (1) An allegation by the receiver of improper or fraudulent conduct against an officer of the insurer, or any other person, shall not be the basis of a defense to the enforcement of a contractual obligation owed to the insurer by a third party, unless the conduct is found to have been materially and substantially related to the contractual obligation for which enforcement is sought.

(2) Unless the otherwise applicable stay provisions or injunctive provisions are lifted or modified by the domiciliary receivership court, any judgment or order taken by any person against the insurer after the date of the liquidation in any court other than the domiciliary receivership court or a court in which an ancillary proceeding is pending in a reciprocal state, or in contravention of the terms of the injunctive provisions of the court of this state's order of liquidation or rehabilitation shall automatically place the claim in a priority of Class 6 as described in Section 83-24-83, irrespective of what class the claim would have been entitled to without such an order or judgment. Any claimant possessing such a judgment may set aside the judgment as to the insurer and the claims will not be subject to this provision.

SECTION 12. Section 83-24-59, Mississippi Code of 1972, is amended as follows:

83-24-59. (1) Mutual debts or mutual credits, whether arising out of one or more contracts between the insurer and another person in connection with any action or proceeding under this chapter, shall be set off and the balance only shall be allowed or paid, except as provided in Section 83-24-65.

(2) No setoff shall be allowed in favor of any person where:

(a) The obligation of the insurer to the person would not at the date of the filing of a petition for liquidation entitle the person to share as a claimant in the assets of the insurer; or

(b) The obligation of the insurer to the person was purchased by or transferred to the person with a view to its being used as a setoff; or

(c) The obligation of the insurer is owed to an affiliate of such person, or any other entity or association other than the person; or

(d) The obligation of the person is owed to an affiliate of the insurer, or any other entity or association other than the insurer; or

(e) The obligation of the person is to pay an assessment levied against the members or subscribers of the insurer, or is to pay a balance upon a subscription to the capital stock of the insurer, or is in any other way in the nature of a capital contribution; or

(f) The obligations between the person and the insurer arise from business which is both ceded to and assumed from the insurer except that the rehabilitator may, with regard to such business, allow certain setoffs in rehabilitation if he/she shall find the allowance of said setoffs appropriate.

(3) The liquidator shall provide persons that assumed business from the insurer with accounting statements identifying debts which are currently due and payable. Such persons may set off against such debts only mutual credits which are currently due and payable by the insurer to such persons for the period covered by the accounting statement.

(4) A person that ceded business to the insurer may set off debts due the insurer against only those mutual credits which the person has paid or which have been allowed in the insurer's delinquency proceeding.

(5) Notwithstanding the foregoing, a setoff of sums due on obligations in the nature of those set forth in subsection 2(f) shall be allowed for those sums accruing from business written where the contracts were entered into, renewed or extended with the express written approval of the commissioner of insurance of the state of domicile of the now solvent insurer, when in the judgment of such commissioner it was necessary to provide reinsurance in order to prevent or mitigate a threatened impairment or insolvency of a domiciliary insurer in connection with the exercise of the commissioner's regulatory responsibilities.

(6) These amendments shall become effective six (6) months from the date of enactment and shall apply to all contracts entered into, renewed, extended or amended on or after that date, and to debts or credits arising from any business written or transactions occurring after the effective date pursuant to any contract including those in existence prior to the effective date, and shall supersede any agreements or contractual provisions which might be construed to enlarge the setoff rights of any person under any contract with the insurer. For purposes of this section any change in the terms of, or consideration for, any such contract shall be deemed an amendment.

SECTION 13. Section 83-24-63, Mississippi Code of 1972, is amended as follows:

83-24-63. (1) The amount recoverable by the liquidator from reinsurers shall not be reduced as a result of the delinquency proceedings, regardless of any provision in the reinsurance contract or other agreement. * * *

(2) All reinsurance contracts to which an insurer domiciled in this state is a party that do not contain the provisions required with respect to the obligation of reinsurers in the event of insolvency of the reinsured in order to obtain credit for reinsurance or other applicable statutes, shall be construed to contain the following provisions:

(a) In the event of insolvency and the appointment of a receiver, the reinsurance obligation shall be payable to the receiver upon demand, with reasonable provision for verification, on the basis of claims allowed pursuant to Section 83-24-85 of this chapter, without diminution because of the insolvency or because the receiver has failed to pay all or a portion of any claims. Payments by the reinsurer as set forth above shall be made directly to the ceding insurer or to its receiver; and

(b) The receiver of a reinsured company shall give written notice of the pendency of a claim against the reinsured company indicating the policy or bond reinsured, within a reasonable time after the claim is filed. The receiver of a reinsured company may arrange for the giving of notice of the pendency of claims on reinsured policies by guaranty funds or by other persons responsible for the adjustment and settlement of the reinsured company's claims. Failure to give notice shall not excuse the obligation of the reinsurer unless it is substantially prejudiced thereby. The reinsurer may interpose, at its own expense, in the proceeding where the claim is to be adjudicated, any defense or defenses which it may deem available to the reinsured company or its receiver.

(3) Payments by the reinsurer as set forth shall be made directly to the ceding insurer or its receiver, except where the contract of insurance or reinsurance specifically provides for another payee in the event of insolvency of the ceding insurer in accordance with any applicable requirements of statutes, rules or orders of the domiciliary state of the ceding insurer. The receiver shall be entitled to recover from any person, who unsuccessfully makes a claim directly against the reinsurer, the receiver's attorney's fees and expenses incurred in preventing any collection by such person.

(4) These amendments shall become effective six (6) months from the date of enactment and shall apply to all contracts entered into, renewed, extended or amended on or after that date, and to obligations arising from any business written or transaction occurring covered by reinsurance after the effective date pursuant to any contract including those in existence prior to the effective date.

SECTION 14. Section 83-24-65, Mississippi Code of 1972, is amended as follows:

83-24-65. (1) (a) An insured is obligated to pay, either directly to the liquidator or to any agent that has paid or is obligated to pay the liquidator on behalf of the insured, any unpaid earned premium or retrospectively rated premium due the insurer based on the termination of coverage under Section 83-24-37 of this chapter. Premium on surety business is deemed earned at inception if no policy term can be determined. All other premium will be deemed earned and will be prorated over the determined policy term, regardless of any provision in the bond, guaranty, contract or other agreement. If a claim for losses incurred under a policy is approved by the court under Section 83-24-85(2), then all premium for the full policy term is deemed earned.

(b) Any person, other than the insured, responsible for the payment of a premium is obligated to pay any unpaid premium, including any amount representing commissions, for the full policy term due the insurer at the time of the entry of the liquidation order, whether earned or unearned, based on the termination of coverage under Section 83-24-37, as shown on the records of the insurer. The unpaid premium due the insurer from any person other than the insured excludes any premium not collected from the insured and not earned based on the termination of coverage under Section 83-24-37 of this chapter.

(c) The liquidator shall also have the right to recover from any person, other than the insured, responsible for the payment of a premium, any * * * unearned * * * commission of such person based on the termination of coverage under Section 83-24-37. Credits or setoffs or both shall not be allowed to an agent, broker, or premium finance company or any other person against unpaid premium due the insurer for any amounts advanced to the insurer by such person on behalf of, but in the absence of a payment by, the insured, or for any other amount paid by such person to any other person after the entry of the order of liquidation.

(d) Persons that collect premium, or finance premium under a premium finance contract, that is due the insurer in liquidation are deemed to hold that premium in trust as a fiduciary for the benefit of the insurer and to have availed themselves of the laws of this state, regardless of any provision in any agency contract or other agreement.

(e) Any premium finance company is obligated to pay any amounts due the insurer from premium finance contracts, whether the premium is earned or unearned. The liquidator has the right to collect any unpaid financed premium directly from the premium finance company by taking an assignment of the underlying premium finance contracts, or directly from the insured that is a party to the premium finance contract.

(2) Upon satisfactory evidence of a violation of this section, by a person other than an insured, the commissioner may pursue either one or all of the following courses of action:

(a) Suspend or revoke or refuse to renew the licenses of such offending party or parties.

(b) Impose a penalty of not more than One Thousand Dollars ($1,000.00) for each and every act in violation of this section by the party or parties.

(c) Impose any other sanction or penalty allowed for by the commissioner.

(3) Before the commissioner shall take any action as set forth in subsection (2), he shall give written notice to the person, company, association or exchange accused of violating the law, stating specifically the nature of the alleged violation; and fixing a time and place, at least ten (10) days thereafter, when a hearing on the matter shall be held. After such hearing, or upon failure of the accused to appear at such hearing, the commissioner, if he shall find such violation, shall impose such of the penalties under subsection (2) as he deems advisable.

(4) When the commissioner shall take action in any or all of the ways set out in subsection (2), the party aggrieved may appeal the action to the court.

SECTION 15. Section 83-24-67, Mississippi Code of 1972, is amended as follows:

83-24-67. (1) Within one hundred twenty (120) days of a final determination of insolvency of an insurer by a court of competent jurisdiction of this state, the liquidator shall apply to the court for approval of a proposal to disburse assets out of marshalled assets, from time to time as such assets become available, to a guaranty association or foreign guaranty association having obligations because of such insolvency. If the liquidator determines that there are insufficient assets to disburse, the application required by this section shall be considered satisfied by a filing by the liquidator stating the reasons for this determination.

(2) Such proposal shall at least include provisions for:

(a) Reserving amounts for the payment of expenses of administration and the payment of claims of secured creditors, to the extent of the value of the security held, and claims falling within the priorities established in Classes 1 and 2 in Section 83-24-83;

(b) Disbursement of the assets marshalled to date and subsequent disbursement of assets as they become available;

(c) Equitable allocation of disbursements to each of the guaranty associations * * * entitled thereto;

(d) The securing by the liquidator from each of the associations entitled to disbursements pursuant to this section of an agreement to return to the liquidator such assets, together with income earned on assets previously disbursed, as may be required to pay claims of secured creditors and claims falling within the priorities established in Section 83-24-83 in accordance with such priorities. No bond shall be required of any such association; and

(e) A full report to be made by each association to the liquidator accounting for all assets so disbursed to the association, all disbursements made therefrom, any interest earned by the association on such assets, and any other matter as the court may direct.

(3) The liquidator's proposal shall provide for disbursements to the associations in amounts estimated at least equal to the claim payments and allocated loss adjustment expenses made or to be made thereby for which such associations could assert a claim against the liquidator, and shall further provide that if the assets available for disbursement from time to time do not equal or exceed the amount of * * * claim payments made or to be made by the association, then disbursements shall be in the amount of available assets. The liquidator shall annually make disbursements to the associations to the extent of available assets subject to the provisions of subsection (2)(a). The liquidator shall liquidate the assets of the insurer in an expeditious manner, but is not required to make forced or quick sales that would result in obtaining less than market value for assets. Unless otherwise provided for by the court, the reserves of the insolvent insurer as reflected in its records on the date of the order of liquidation shall be used for purposes of determining the pro rata allocations of funds among eligible associations.

(4) The liquidator's proposal shall, with respect to an insolvent insurer writing life or health insurance or annuities, provide for disbursements of assets to any guaranty association * * * covering life or health insurance or annuities or to any other entity or organization reinsuring, assuming or guaranteeing policies or contracts of insurance under the acts creating such associations.

(5) Notice of such application shall be given to the association in and to the commissioners of insurance of each of the states. Any such notice shall be deemed to have been given when deposited in the United States certified mail, first class postage prepaid, at least thirty (30) days prior to submission of such application to the court. Action on the application may be taken by the court, provided the above required notice has been given and provided further that the liquidator's proposal complies with subsections (2)(a) and (b).

(6) The liquidator may offset the amount to be disbursed to the applicable guaranty association and any entity or person performing a function in any state similar to that function performed by Mississippi Life and Health Insurance Guaranty Association by the amount of any "special deposit" and any other statutory deposit or asset of the insolvent insurer held in that state unless the state or ancillary receiver agrees to promptly return the asset to the domiciliary liquidator in this state.

SECTION 16. Section 83-24-69, Mississippi Code of 1972, is amended as follows:

83-24-69. (1) Proof of all claims shall be filed with the liquidator in the form required by Section 83-24-71 on or before the last day for filing specified in the notice required under Section 83-24-43, except that proof of claims for cash surrender values or other investment values in life insurance and annuities need not be filed unless the liquidator expressly so requires. Provided, however, only upon application of the liquidator, the court may allow alternative procedures and requirements for the filing of proofs of claim or for allowing or proving claims. Upon such application, if the court dispenses with the requirements of filing a proof of claim by a person, class or group of persons, a proof of claim for such persons shall be deemed as having been filed for all purposes, including the application of guaranty association or foreign guaranty association laws.

(2) The liquidator may permit a claimant making a late filing to share in distributions, whether past or future, as if he were not late, to the extent that any such payment will not prejudice the orderly administration of the liquidation, under the following circumstances:

(a) The existence of the claim was not known to the claimant and that he filed his claim as promptly thereafter as reasonably possible after learning of it;

(b) A transfer to a creditor was avoided under Sections 83-24-51 through 83-24-55, or was voluntarily surrendered under Section 83-24-57, and that the filing satisfies the conditions of Section 83-24-57; or

(c) The valuation under Section 83-24-81, of security held by a secured creditor shows a deficiency, which is filed within thirty (30) days after the valuation.

(3) The liquidator may consider any claim filed late which is not covered by subsection (2), and permit it to receive distributions which are subsequently declared on any claims of the same or lower priority if the payment does not prejudice the orderly administration of the liquidation. The late-filing claimant shall receive, at each distribution, the same percentage of the amount allowed on his claim as is then being paid to claimants of any lower priority. This shall continue until his claim has been paid in full.

SECTION 17. Section 83-24-71, Mississippi Code of 1972, is amended as follows:

83-24-71. (1) Proof of claim shall consist of a statement signed by the claimant that includes all of the following that are applicable:

(a) The particulars of the claim including the consideration given for it;

(b) The identity and amount of the security on the claim;

(c) The payments made on the debt, if any;

(d) That the sum claimed is justly owing and that there is no setoff, counterclaim or defense to the claim;

(e) Any right of priority of payment or other specific right asserted by the claimants;

(f) A copy of the written instrument which is the foundation of the claim; * * *

(g) The name and address of the claimant and the attorney who represents him, if any; and

(h) The Social Security or federal employer identification number of the claimant.

(2) No claim need be considered or allowed if it does not contain all the information in subsection (1) which may be applicable. The liquidator may require that a prescribed form be used, and may require that other information and documents be included.

(3) At any time the liquidator may request the claimant to present information or evidence supplementary to that required under subsection (1) and may take testimony under oath, require production of affidavits or depositions, or otherwise obtain additional information or evidence.

(4) No judgment or order against an insured or the insurer entered after the date of filing of a successful petition for liquidation, and no judgment or order against an insured or the insurer entered at any time by default or by collusion, need be considered as evidence of liability or of quantum of damages. No judgment or order against an insured or the insurer entered within four (4) months before the filing of the petition need be considered as evidence of liability or of the quantum of damages.

(5) * * * A guaranty association shall be permitted to file a single omnibus proof of claim for all claims of the association in connection with payment of claims of the insolvent insurer. The omnibus proof of claim may be periodically updated by the association, and the association may be required to submit a reasonable amount of documentation in support of the claim.

SECTION 18. Section 83-24-73, Mississippi Code of 1972, is amended as follows:

83-24-73.

(1) Claims made under employment contracts by directors, principal officers, or persons in fact performing similar functions or having similar powers are limited to payment for services rendered prior to the issuance of any order of rehabilitation or liquidation under Section 83-24-25 or Section 83-24-35.

(2) When a liquidation order has been entered in a proceeding against an insurer, any insured, reinsured, reinsurer, third party person who has a cause of action against an insured of the insurer, or any other person or entity that has a claim or cause of action against the insurer, shall have the right to file a claim in the proceeding, regardless of the fact that the claim may be contingent, unliquidated or immature. For purposes of this section:

(a) A claim is contingent if the accident, casualty, disaster or loss insured or reinsured against occurred on or before the date fixed under Section 83-24-35, but the act or event triggering the company's obligation to pay has not occurred as of that date;

(b) A claim is unliquidated if the amount of the claim has not been determined;

(c) A claim is immature if payment on the claim is not yet due.

(3) A contingent, unliquidated or immature claim may share in a distribution of assets provided that, as of the time of the allowance or disallowance of the claim by the court:

(a) If the claim was a contingent claim against the insurer as of the date established under Section 83-24-35, the claimant has presented proof of the insurer's obligation to pay reasonably satisfactory to the receiver.

(b) If the claim was a contingent claim as of the date established under Section 83-24-35 of this chapter and was based upon a cause of action against an insured of the insurer,

1. It may be reasonably inferred from proof presented upon the claim that the claimant would be able to obtain a judgment;

2. The person has furnished suitable proof, unless the court for good cause shown shall otherwise direct, that no further valid claims can be made against the insurer arising out of the cause of action other than those already presented; and

3. The total liability of the insurer to all claimants arising out of the same act shall be no greater than its total liability would be were it not in liquidation. In those cases, insureds may include in contingent claims reasonable attorney fees for services rendered after the date of liquidation, in defense of claims or suits covered by the insured's policy, provided the attorney fees have been paid by the insured and evidence of payment is presented to the receiver.

(c) If the claim was unliquidated as of the date established under Section 83-24-35, its amount has been determined. In those cases, the determination and allowance of unliquidated claims may be made by estimate whenever the receiver determines that either liquidation of the claim would unduly delay the administration of the liquidation proceeding, or that the administrative expenses of processing and adjudicating the claims or group of claims of a similar type would be unduly excessive when compared with the assets that are estimated to be available for distribution with respect to the claim. Any estimate shall be based upon an accepted method of valuing claims with reasonable certainty, such as actuarial evaluation; or

(d) If the claim was immature as of the date established under Section 83-24-35, it shall be discounted at the higher of the legal rate of interest accruing on judgments or the rate of interest available on United States Treasury securities of approximately the same maturity.

(4) Notwithstanding the foregoing, any insured shall have the right to file a claim for the protection afforded under the insured's policy, irrespective of whether a claim is then known, if the policy is an occurrence policy. Thereafter, at such time that a specific claim is made by or against the insurer, the insured shall supplement his claim and the receiver shall treat the same as a contingent, unliquidated or immature claim. Any such claims of policyholders for the protection under an occurrence policy remaining at or near the closing of the estate shall be disposed of in accordance with Section 83-24-85(3).

SECTION 19. Section 83-24-75, Mississippi Code of 1972, is amended as follows:

83-24-75. (1) Whenever any third party asserts a cause of action against an insured of an insurer in liquidation, the third party may file a claim with the liquidator on or before the last day for filing claims.

(2) Whether or not the third party files a claim, the insured may file a claim on his own behalf in the liquidation. To the extent the insured files a claim, it is sufficient to cover all related third party claims. If the insured fails to file a claim by the date for filing claims specified in the order of liquidation or within sixty (60) days after mailing of the notice required by Section 83-24-43, whichever is later, he is an unexcused late filer.

(3) The liquidator shall make his recommendations to the court under Section 83-24-83, for the allowance of an insured's claim under subsection (2) after consideration of the probable outcome of any pending action against the insured on which the claim is based, the probable damages recoverable in the action and the probable costs and expenses of defense. After allowance by the court, the liquidator shall withhold any dividends payable on the claim, pending the outcome of litigation and negotiation with the insured. Whenever it seems appropriate, he shall reconsider the claim on the basis of additional information and amend his recommendations to the court. The insured shall be afforded the same notice and opportunity to be heard on all changes in the recommendation as in its initial determination. The court may amend its allowance as it thinks appropriate. As claims against the insured are settled or barred, the insured shall be paid from the amount withheld the same percentage dividend as was paid on other claims of like property, based on the lesser of (a) the amount actually recovered from the insured by action or paid by agreement plus the reasonable costs and expense of defense, or (b) the amount allowed on the claims by the court. After all claims are settled or barred, any sum remaining from the amount withheld shall revert to the undistributed assets of the insurer. Delay in final payment under this subsection shall not be a reason for unreasonable delay of final distribution and discharge of the liquidator.

(4) If several claims founded upon one (1) policy are filed, whether by third parties or as claims by the insured under this section, and the aggregate allowed amount of the claims to which the same limit of liability in the policy is applicable exceeds that limit, each claim as allowed shall be reduced in the same proportion so that the total equals the policy limit. Claims by the insured shall be evaluated as in subsection (3). If any insured's claim is subsequently reduced under subsection (3), the amount thus freed shall be apportioned ratably among the claims which have been reduced under this subsection.

(5) No claim may be presented under this section if it is or may be covered by any guaranty association * * *.

SECTION 20. Section 83-24-77, Mississippi Code of 1972, is amended as follows:

83-24-77. (1) When a claim is denied in whole or in part by the liquidator, written notice of the determination shall be given to the claimant or his attorney by first class mail at the address shown in the proof of claim. Within sixty (60) days from the mailing of the notice, the claimant may file his objections with the liquidator. Any filed objections shall clearly set out all facts and the legal basis, if any, for the objections and the reasons why the claim should be allowed. If no such filing is made, the claimant may not further object to the determination.

(2) Whenever objections are filed with the liquidator and the liquidator does not alter the determination of the claim as a result of the objections, the liquidator shall ask the court for a hearing as soon as practicable and give notice of the hearing by first class mail to the claimant or the claimant's attorney and to any other persons directly affected not less than ten (10) nor more than thirty (30) days before the date of the hearing. The matter may be heard by the court or by a court-appointed referee * * *. The hearing shall be conducted on the record in an informal manner and the formal rules of evidence and civil procedure need not be strictly applied. Hearings shall be held without a jury. Prehearing discovery shall be limited to such pretrial discovery as expressly permitted in arbitration proceedings.

(3) When a disputed claim is heard by a referee, the referee shall submit written findings of fact and conclusions of law along with the recommendation for disposition to the court. The referee's recommendation shall become the final judgment of the court, unless objections to the referee's recommendation are filed by the liquidator or claimant with the court within fifteen (15) days after the recommendation is mailed to the liquidator and claimant.

(4) The final disposition by the court of a disputed claim, whether after a hearing by the court or after a recommendation by a referee, shall be deemed a final judgment for purposes of appeal.

(5) The courts of this state may make special rules of civil procedure for disputed claims, provided that the rules are not inconsistent with this chapter.

SECTION 21. Section 83-24-79, Mississippi Code of 1972, is amended as follows:

83-24-79. Whenever an obligee whose claim against an insurer is secured, in whole or in part, by the undertaking of another person, fails to prove and file that claim, the other person may do so in the obligee's name, and shall be subrogated to the rights of the obligee, whether the claim has been filed by the obligee or by the other person in the obligee's name, to the extent that the obligee discharges the undertaking. In the absence of an agreement with the obligee to the contrary, the other person shall not be entitled to any distribution; however, until the amount paid to the obligee on the undertaking plus the distributions paid on the claim from the insurer's estate to the obligee equals the amount of the entire claim of the obligee. Any excess received by the obligee shall be held by the obligee in trust for such other person. The term "other person," as used in this section is not intended to apply to a guaranty association * * *.

SECTION 22. Section 83-24-83, Mississippi Code of 1972, is amended as follows:

83-24-83. The priority of distribution of claims from the insurer's estate shall be in accordance with the order in which each class of claims is * * * set forth in this section. Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment. Once such funds are retained by the liquidator and approved by the court, the insurer's estate shall have no further liability to members of that class except to the extent of the retained funds and any other undistributed funds. No subclasses shall be established within any class except as provided in Section 83-24-41(1). No claim by a shareholder, policyholder or other creditor shall be permitted to circumvent the priority classes through the use of equitable remedies. The order of distribution of claims shall be:

(1) Class 1. The costs and expenses of administration expressly approved by the receiver, including but not limited to the following:

(a) The actual and necessary costs of preserving or recovering the assets of the insurer;

(b) Compensation for all authorized services rendered in the conservation, rehabilitation or liquidation;

(c) Any necessary filing fees;

(d) The fees and mileage payable to witnesses; and

(e) Authorized reasonable attorney's fees and other professional services rendered in the conservation, rehabilitation or liquidation.

(2) Class 2. The administrative expenses of guaranty associations. For purposes of this section these expenses shall be the reasonable expenses incurred by guaranty associations where the expenses are not payments or expenses which are required to be incurred as direct policy benefits in fulfillment of the terms of the insurance contract or policy, and that are of the type and nature that, but for the activities of the guaranty association otherwise would have been incurred by the receiver, including, but not limited to, evaluations of policy coverage, activities involved in the adjustment and settlement of claims under policies, including those of in-house or outside adjusters, and the reasonable expenses incurred in connection with the arrangements for ongoing coverage through transfer to other insurers, policy exchanges or maintaining policies in force. The receiver may, in his or her sole discretion, approve as an administrative expense under this section any other reasonable expenses of the guaranty association if the receiver finds:

(a) The expenses are not expenses required to be paid or incurred as direct policy benefits by the terms of the policy, and

(b) The expenses were incurred in furtherance of activities that provided a material economic benefit to the estate as a whole, irrespective of whether the activities resulted in additional benefits to covered claimants. The court shall approve such expenses unless it finds the receiver abused his or her discretion in approving the expenses.

If the receiver determines that the assets of the estate will be sufficient to pay all Class 1 claims in full, Class 2 claims shall be paid currently, provided that the liquidator shall secure from each of the associations receiving disbursements pursuant to this section an agreement to return to the liquidator such disbursements, together with investment income actually earned on such disbursements, as may be required to pay Class 1 claims. No bond shall be required of any such association.

(3) Class 3. All claims under policies including * * * claims of the federal or any state or local government for losses incurred, ("loss claims") including third party claims, claims for unearned premiums, and all claims of a guaranty association * * *, for payment of covered claims or covered obligations of the insurer. All claims of a guaranty association for reasonable expenses other than those included in Class 2. All claims under life and health insurance and annuity policies, whether for death proceeds, health benefits, annuity proceeds, or investment values shall be treated as loss claims. That portion of any loss, indemnification for which is provided by other benefits or advantages recovered by the claimant, shall not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligation of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment by an employer to his employee shall be treated as a gratuity.

Notwithstanding the foregoing, the following claims shall be excluded from Class 3 priority:

(a) Obligations of the insolvent insurer arising out of reinsurance contracts;

(b) Obligations incurred after the expiration date of the insurance policy or after the policy has been replaced by the insured or canceled at the insured's request or after the policy has been cancelled as provided in this chapter;

(c) Obligations to insurers, insurance pools or underwriting associations and their claims for contribution, indemnity or subrogation, equitable or otherwise;

(d) Any claim which is in excess of any applicable limits provided in the insurance policy issued by the insolvent insurer;

(e) Any amount accrued as punitive or exemplary damages unless expressly covered under the terms of the policy; and

(f) Tort claims of any kind against the insurer, and claims against the insurer for bad faith or wrongful settlement practices.

(4) Class 4. * * * Claims of the federal government other than those claims included in Class 3.

(5) Class 5. Debts due employees for services, benefits, contractual or otherwise due arising out of such reasonable

compensation to employees for services performed to the extent that they do not exceed two (2) months of monetary compensation and represent payment for services performed within six (6) months before the filing of the petition for liquidation or, if rehabilitation preceded liquidation, within one (1) year before the filing of the petition for rehabilitation. Principal officers and directors shall not be entitled to the benefit of this priority except as otherwise approved by the liquidator and the court. This priority shall be in lieu of any other similar priority which may be authorized by law as to wages or compensation of employees.

(6) Class 6. Claims of any person, including claims of state or local governments, except those specifically classified elsewhere in this section. Claims of attorneys for fees and expenses owed them by a person for services rendered in opposing a formal delinquency proceeding. In order to prove the claim, the claimant must show that the insurer which is the subject of the delinquency proceeding incurred such fees and expenses based on its best knowledge, information and belief, formed after reasonable inquiry indicating opposition was in the best interests of the person, was well grounded in fact and was warranted by existing law or a good faith argument for the extension, modification or reversal of existing law, and that opposition was not pursued for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of the litigation.

(7) Class 7. Claims, of * * * any state or local government * * * for a penalty or forfeiture but only to the extent of the pecuniary loss sustained from the act, transaction, or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby. The remainder of such claims shall be postponed to the class of claims under subsection (8) of this section.

(8) Class 8. Surplus or contribution notes, or similar obligations, * * * premium refunds on assessable policies, interest on claims of Classes 1 through 7 and any other claims specifically subordinated to this class.

(9) Class 9. * * * Claims of shareholders or other owners arising out of their capacity as shareholders or other owners, or any other capacity except as they may be qualified in Class 3 or 6 above.

If any claimant of this state, another state or foreign country shall be entitled to or shall receive a dividend upon his or her claim out of a statutory deposit or the proceeds of any bond or other asset located in another state or foreign country, unless such deposit or proceeds shall have been delivered to the domiciliary liquidator pursuant to Section 83-24-104, then the claimants shall not be entitled to any further dividend from the receiver until and unless all other claimants of the same class, irrespective of residence or place of the acts or contracts upon which their claims are based, shall have received an equal dividend upon their claims, and after such equalization, such claimants shall be entitled to share in the distribution of further dividends by the receiver, along with and like all other creditors of the same class, wheresoever residing.

Upon the declaration of a dividend, the receiver shall apply the amount of the dividend against any indebtedness owed to the insurer by the person entitled to the dividend. There shall be no claim allowed for any deductible charged by a guaranty association or entity performing a similar function.

SECTION 23. Section 83-24-85, Mississippi Code of 1972, is amended as follows:

83-24-85. (1) The liquidator shall review all claims duly filed in the liquidation and shall make such further investigation as deemed necessary. The liquidator may compound, compromise or in any other manner negotiate the amount for which claims will be recommended to the court except when the liquidator is required by law to accept claims as settled by any person or organization, including any guaranty association * * *. Unresolved disputes shall be determined under Section 83-24-77. As soon as practicable, the liquidator shall present to the court a report of the claims against the insurer with his recommendations. The report shall include the name and address of each claimant and the amount of the claim finally recommended, if any. If the insurer has issued annuities or life insurance policies, the liquidator shall report the persons to whom, according to the records of the insurer, amounts are owed as cash surrender values or other investment value and the amounts owed.

(2) The court may approve, disapprove or modify the report on claims by the liquidator. * * * Reports * * * not modified by the court within a period of sixty (60) days following submission by the liquidator shall be treated by the liquidator as allowed claims, subject * * * to later modification or to rulings made by the court pursuant to Section 83-24-77. No claim under a policy of insurance shall be allowed for an amount in excess of the applicable policy limits.

(3) After giving due consideration to the nature of the policies that were sold by the insurer, and the number of claims by policyholders for protection under their policies, and having considered actuarial estimates that substantial amounts of incurred-but-not-reported losses exist, the liquidator may, but need not, formulate a proposal, subject to approval of the court to allow such claims. The proposal may allocate or attribute all or a portion of the incurred-but-not-reported losses to individual policyholder claimants on a basis of reasonable expert opinion. The court shall approve the proposal and the allowance of the claims unless it finds that the basis of allocation is arbitrary or capricious.

(4) The liquidator is not required to process claims for any class until it appears reasonably likely that assets will be available for a distribution to that class. If there are insufficient assets to justify processing all claims for any class listed in Section 83-24-83, the liquidator shall report the facts to the court and make such recommendations as may be appropriate for handling the remainder of the claims.

SECTION 24. Section 83-24-89, Mississippi Code of 1972, is amended as follows:

83-24-89. (1) All unclaimed funds subject to distribution remaining in the liquidator's hands when the liquidator is ready to apply to the court for discharge, including the amount distributable to any creditor, shareholder, member or other person who is unknown or cannot be found, shall be deposited with the State Treasurer, and shall be paid without interest except in accordance with Section 83-24-83 to the person entitled thereto or that person's legal representative upon proof satisfactory to the State Treasurer of his right thereto. Any amount on deposit not claimed within six (6) years from the discharge of the liquidator shall be deemed to have been abandoned and shall be escheated without formal escheat proceedings and shall be deposited into the General Fund. Alternatively, the liquidator may elect to apply to the court for authority to hold the unclaimed funds subject to distribution for a period of two (2) years. Thereafter, any unclaimed funds may be distributed to approved claimants who have previously received a distribution, if it is economically feasible for the liquidator to make the distribution, or the liquidator may apply to the court for permission for the funds to be held by the commissioner for the purpose of defraying the costs and expenses of administration of other insolvent insurers for which there are insufficient assets to fund the costs and expenses of administration. With the approval of the supervising court, the liquidator may deposit unclaimed and withheld funds into a segregated account to be known as the Closed Estate Fund. The commissioner may thereafter use monies held in the account to fund the administrative expenses of proceedings against persons subject to this chapter that lack sufficient assets to fund administration. The commissioner shall maintain complete records with respect to all transactions involving the Closed Estate Fund and shall prepare an annual accounting of the Closed Estate Fund. If subsequent to disbursement of monies from the Closed Estate Fund, assets of the person become available to fund administration, the Closed Estate Fund shall be reimbursed before other administrative expenses are paid.

(2) All funds withheld under Section 83-24-73 and not distributed shall upon discharge of the liquidator be deposited with the State Treasurer and paid * * * in accordance with Section 83-24-83. Any sums remaining which under Section 83-24-85 would revert to the undistributed assets of the insurer shall be transferred to the State Treasurer and become the property of the state under subsection (1), unless the commissioner, in his discretion, petitions the court to reopen the liquidation under Section 83-24-93.

SECTION 25. Section 83-24-99, Mississippi Code of 1972, is amended as follows:

83-24-99. (1) If a domiciliary liquidator has not been appointed, the commissioner may apply to the court by verified petition for an order directing the commissioner to act as conservator to conserve the property found in this state of an alien insurer not domiciled in this state or property found in this state of a foreign insurer on any one or more of the following grounds:

(a) Any of the grounds in Section 83-24-23;

(b) That any of the insurer's property has been sequestered by official action in its domiciliary state, or in any other state;

(c) That enough of the insurer's property has been sequestered in a foreign country to give reasonable cause to fear that the insurer is or may become insolvent;

(d) (i) That the insurer's certificate of authority to do business in this state has been revoked or that none was ever issued; and

(ii) That there are residents of this state with outstanding claims or outstanding policies.

(2) When an order is sought under subsection (1), the court shall cause the insurer to be given such notice and time to respond thereto as is reasonable under the circumstances.

(3) The court may issue the order in whatever terms it shall deem appropriate. The filing or recording of the order with the Clerk of the Chancery Court of the First Judicial District of Hinds County or of the county in which the principal business of the company is located shall impart the same notice as a deed, bill of sale or other evidence of title duly filed or recorded with that chancery court would have imparted.

(4) The conservator shall hold and conserve the assets until such time as the commissioner in the domiciliary state begins formal delinquency proceedings against the insurer or until an order terminating conservation is entered under subsection (5). Once a delinquency proceeding is instituted in the domiciliary state, the conservator may either turn the property over to the domiciliary commissioner or petition for an order under Section 83-24-105 to be appointed ancillary receiver. In the event the insurer is an alien insurer that has not established a domicile in the United States under an appropriate port of entry statute, the conservator may petition the court for an order of liquidation under any ground specified in Section 83-24-83. The application may seek, and the order of liquidation shall provide, that all property and assets, affairs and claims against the alien insurer shall be vested in the liquidator in this state as if the insurer was domiciled in this state. Provided, however, that if an order of liquidation of the alien insurer has been entered by a court of competent jurisdiction in a reciprocal state, which provides for the reciprocal state's receiver to be treated as if it is the domiciliary liquidator, then the order of liquidation in this state shall be issued as an order appointing an ancillary receiver.

(5) The conservator may at any time petition the court for an order terminating conservation of the property of an insurer. If the court finds that the conservation is no longer necessary, it shall order that the insurer be restored to possession of its property and the control of its business. The court may also make such finding and issue such order at any time upon motion of any interested party, but if such motion is denied all costs shall be assessed against such party.

SECTION 26. Section 83-24-103, Mississippi Code of 1972, is amended as follows:

83-24-103. (1) The domiciliary liquidator of an insurer domiciled in a reciprocal state shall * * * be vested by operation of law with the title to all of the assets, property, contracts and rights of action, agents' balances, and all of the books, accounts and other records of the insurer located in this state. The date of vesting shall be the date of the filing of the petition, if that date is specified by the domiciliary law for the vesting of property in the domiciliary state. Otherwise, the date of vesting shall be the date of entry of the order directing possession to be taken. The domiciliary liquidator shall have the immediate right to recover all such vested property, assets and causes of action * * * of the insurer located in this state, subject to Section 83-24-105.

(2) If a domiciliary liquidator is appointed for an insurer not domiciled in a reciprocal state, the commissioner of this state shall be vested by operation of law with the title to all of the property, contracts and right of action, and all of the books, accounts and other records of the insurer located in this state, at the same time that the domiciliary liquidator is vested with title in the domicile. The commissioner of this state may petition for an order under Section 83-24-99 * * *, or for an ancillary receivership under Section 83-24-105 or after approval by the court may transfer title to the domiciliary liquidator, as the interests of justice and the equitable distribution of the assets require.

(3) When a domiciliary liquidator is appointed in a reciprocal state, claimants residing in this state must file in the domiciliary proceeding subject to its deadlines, and may have claims contested under Section 83-24-111 or a similar section of the domiciliary state's laws. When a domiciliary liquidator is appointed in a nonreciprocal state, claimants residing in this state may file and contest claims with the liquidator or ancillary receiver, if any, in this state or with the domiciliary liquidator, if the domiciliary law permits. * * *

SECTION 27. Section 83-24-105, Mississippi Code of 1972, is amended as follows:

83-24-105. (1) If a domiciliary liquidator has been appointed for an insurer not domiciled in this state, the commissioner may file a petition with the court requesting appointment as ancillary receiver in this state:

(a) If he finds that there are sufficient assets of the insurer located in this state to justify the appointment of an ancillary receiver;

(b) If the protection of creditors or policyholders in this state so requires; or

(c) If the domiciliary liquidator requests the commissioner to file for appointment as ancillary receiver.

(2) The court may issue an order appointing an ancillary receiver in whatever terms it shall deem appropriate in accordance with the domiciliary liquidation order. The filing or recording of the order with the chancery court in this state imparts the same notice as a deed, bill of sale or other evidence of title duly filed or recorded with that chancery court.

(3) When a domiciliary liquidator has been appointed in a reciprocal state, then the ancillary receiver appointed in this state may, whenever necessary, aid and assist the domiciliary liquidator in recovering assets of the insurer located in this state. The ancillary receiver shall render only such assistance as is requested from the domiciliary liquidator or rehabilitator. Any action taken by the ancillary receiver at the request of the domiciliary liquidator shall entitle the ancillary receiver to payment of his or her costs or expenses in connection with such activities from the domiciliary liquidator. The domiciliary liquidator and ancillary receiver may enter into agreements regarding the payment or advancement of expenses. When acting at the request of the domiciliary liquidator, the ancillary receiver and his or her deputies shall have the same powers and be subject to the same duties with respect to the administration of assets as a liquidator of an insurer domiciled in this state.

(4) When a domiciliary liquidator has been appointed in this state, ancillary receivers appointed in reciprocal states shall have, as to assets and books, accounts, and other records in their respective states, corresponding rights, duties and powers to those provided in subsection (3) for ancillary receivers appointed in this state.

SECTION 28. Section 83-24-107, Mississippi Code of 1972, is amended as follows:

83-24-107. The commissioner in his sole discretion may institute proceedings under Sections 83-24-19 through 83-24-21 at the request of the commissioner or other appropriate insurance official of the domiciliary state of any foreign or alien insurer having property located in this state.

SECTION 29. Section 83-24-109, Mississippi Code of 1972, is amended as follows:

83-24-109. (1) * * * All claimants * * * must file their claims in * * * the domiciliary liquidation * * * on or before the last date fixed for the filing of claims in the domiciliary liquidation proceeding.

(2) Controverted claims * * * shall be proved * * * or determined in the domiciliary state unless the claimant notifies the domiciliary liquidator in writing that the claimant elects to determine or prove the claim in the claimant's respective reciprocal state where an ancillary receiver has been appointed. An election by an insured shall be binding on all claimants interested in the claim as to the place of determining or proving the claim. In the event a claimant elects to prove the claimant's claim in ancillary proceedings, * * * if at least thirty (30) days' notice of the claim and an opportunity to appear and be heard is afforded the domiciliary liquidator of this state * * *, the final allowance of the claim by the courts of the ancillary state shall be accepted in this state as conclusive as to its amount and validity but not as to the priority of distribution, which shall be determined in the domiciliary proceeding. The domiciliary liquidator is not required to notify claimants of their right to make such an election.

SECTION 30. Section 83-24-111, Mississippi Code of 1972, is amended as follows:

83-24-111. (1) Promptly after the appointment of the commissioner as ancillary receiver for an insurer not domiciled in this state, the commissioner shall determine whether there are claimants residing in this state who are not protected by guaranty funds and, if so, whether the protection of the claimants requires the establishing of a controverted claim procedure in the ancillary proceeding. If a controverted claim procedure is established, claimants who have made the election provided for in Section 83-24-109(2) who reside within this state may controvert denied claims either with the ancillary controverted claim procedure, if any, in this state, or with the domiciliary liquidator. * * *

(2) Claims belonging to claimants who have made the election in Section 83-24-109(2) residing in this state may be controverted either in the domiciliary state under the law of that state, or in ancillary proceedings, if any, in this state, provided a controverted claim procedure is established in the ancillary proceeding.

(3) The final allowance of the claim by the courts of this state shall be accepted as conclusive as to validity and amount. All issues of priority shall be determined in the domiciliary state.

SECTION 31. Section 83-24-115, Mississippi Code of 1972, is amended as follows:

83-24-115. (1) In a liquidation proceeding in this state involving one or more reciprocal states, the order of distribution of the domiciliary state shall control as to all claims of residents of this and reciprocal states. All claims of residents of reciprocal states shall be given equal priority of payment from general assets regardless of where such assets are located.

(2) The owners of secured claims * * * against an insurer for which a liquidator has been appointed in this or any other state may surrender their security and file their claims as * * * general creditors, or the claims may be discharged by resort to the security in accordance with Section 83-24-81, in which case the deficiency, if any, shall be treated as a claim against the general assets of the insurer on the same basis as claims of unsecured creditors in the same class.

SECTION 32. Section 83-24-117, Mississippi Code of 1972, is amended as follows:

83-24-117. If an ancillary receiver in another state or foreign country, whether called by that name or not, fails to transfer to the domiciliary liquidator in this state any assets within his control * * * diminished only by the expenses of the ancillary receivership in accordance with Section 83-24-105, if any, the claims filed by residents of the ancillary receiver's state or foreign country, including those contested in the ancillary receivership contested claims proceeding, shall be placed in the class of claims under Section 83-24-83(7).

SECTION 33. This section shall be codified as Section 83-24-18, Mississippi Code of 1972:

83-24-18. (1) For the purposes of this section, the persons entitled to protection under this section are:

(a) All receivers responsible for the conduct of a delinquency proceeding under this chapter including present and former receivers; and

(b) Their employees meaning all present and former special deputies and assistant special deputies appointed by the commissioner and all persons whom the commissioner, special deputies, or assistant special deputies have employed to assist in a delinquency proceeding under this chapter. Attorneys, accountants, auditors and other professional persons or firms, who are retained by the receiver as independent contractors and their employees, shall not be considered employees of the receiver for purposes of this section.

(2) The receiver and his employees shall have official immunity and shall be immune from suit and liability, both personally and in their official capacities, for any claim for damage to or loss of property or personal injury or other civil liability caused by or resulting from any alleged act, error or omission of the receiver or any employee arising out of or by reason of their duties or employment; provided that nothing in this provision shall be construed to hold the receiver or any employee immune from suit and/or liability for any damage, loss, injury or liability caused by the intentional or willful and wanton misconduct of the receiver or any employee.

(3) If any legal action is commenced against the receiver or any employee, whether against him personally or in his official capacity, alleging property damage, property loss, personal injury or other civil liability caused by or resulting from any alleged act, error or omission of the receiver or any employee arising out of or by reason of their duties or employment, the receiver and any employee shall be indemnified from the assets of the insurer for all expenses, attorneys' fees, judgments, settlements, decrees or amounts due and owing or paid in satisfaction of or incurred in the defense of such legal action unless it is determined upon a final adjudication on the merits that the alleged act, error or omission of the receiver or employee giving rise to the claim did not arise out of or by reason of his duties or employment, or was caused by intentional or willful and wanton misconduct.

(a) Attorneys' fees and any and all related expenses incurred in defending a legal action for which immunity or indemnity is available under this section shall be paid from the assets of the insurer, as they are incurred, in advance of the final disposition of such action upon receipt of an undertaking by or on behalf of the receiver or employee to repay the attorneys' fees and expenses if it shall ultimately be determined upon a final adjudication on the merits that the receiver or employee is not entitled to immunity or indemnity under this section.

(b) Any indemnification for expense payments, judgments, settlements, decrees, attorneys' fees, surety bond premiums or other amounts paid or to be paid from the insurer's assets pursuant to this section shall be an administrative expense of the insurer.

(c) In the event of any actual or threatened litigation against a receiver or any employee for which immunity or indemnity may be available under this section, a reasonable amount of funds which in the judgment of the commissioner may be needed to provide immunity or indemnity shall be segregated and reserved from the assets of the insurer as security for the payment of indemnity until such time as all applicable statutes of limitation shall have run and all actual or threatened actions against the receiver or any employee have been completely and finally resolved, and all obligations of the insurer and the commissioner under this section shall have been satisfied.

(d) In lieu of segregation and reserving of funds, the commissioner may, in his discretion, obtain a surety bond or make other arrangements which will enable the commissioner to fully secure the payment of all obligations under this section.

(4) If any legal action against an employee for which indemnity may be available under this section is settled prior to final adjudication on the merits, the insurer must pay the settlement amount on behalf of the employee, or indemnify the employee for the settlement amount, unless the commissioner determines:

(a) That the claim did not arise out of or by reason of the employee's duties or employment; or

(b) That the claim was caused by the intentional or willful and wanton misconduct of the employee.

(5) In any legal action in which the receiver is a defendant, that portion of any settlement relating to the alleged act, error or omission of the receiver shall be subject to the approval of the court before which the delinquency proceeding is pending. The court shall not approve that portion of the settlement if it determines:

(a) That the claim did not arise out of or by reason of the receiver's duties or employment; or

(b) That the claim was caused by the intentional or willful and wanton misconduct of the receiver.

(6) Nothing contained or implied in this section shall operate, or be construed or applied to deprive the receiver or any employee of any immunity, indemnity, benefits of law, rights or any defense otherwise available.

(7) (a) Subsection (2) of this section shall apply to any suite based in whole or in part on any alleged act, error or omission which takes place on or after the effective date of this chapter.

(b) No legal action shall lie against the receiver or any employee based in whole or in part on any alleged act, error or omission which took place prior to the effective date of this chapter, unless suit is filed and valid service of process if obtained within twelve (12) months after the effective date of this chapter.

(c) Subsections (3), (4) and (5) of this section shall apply to any suit which is pending on or filed after the effective date of this chapter without regard to when the alleged act, error or omission took place.

SECTION 34. The following section shall be codified as Section 83-24-20, Mississippi Code of 1972:

83-24-20. (1) Any formal delinquency proceeding against a person shall be commenced by filing a petition in the name of the commissioner.

(2) The petition shall state the grounds upon which the proceeding is based and the relief requested, and may include a prayer for restraining orders and injunctive relief as described in Section 83-24-11.

(3) Any petition that prays for a temporary restraining order must be verified by the commissioner or his designee, but need not plead or prove irreparable harm or inadequate remedy by law. The commissioner shall provide only such notice as the court may require.

(4) If any temporary restraining order is prayed for:

(a) The court may issue an initial order containing the relief requested;

(b) The order shall state the time and date of its issuance;

(c) The court shall set a time and date for the return of summons, not more than ten (10) days from the time and date of the issuance of the initial order, at which time the person proceeded against may appear before the court for a summary hearing;

(d) The order shall not continue in effect beyond the time and date set for the return of summons, unless the court shall expressly enter one or more orders extending such restraining order; and

(e) The verified petition and the initial order shall be filed with the clerk of the court and maintained as confidential, except for good cause shown, until personal service is made.

(5) If no temporary restraining order is requested, the court shall cause summons to be issued. The summons shall specify a return date not more than thirty (30) days after issuance and that an answer must be filed at or before the return date.

(6) The court shall hold a summary hearing at the time and date for the return of summons.

(7) If a person is not served with summons and fails to appear for the summary hearing, the court shall:

(a) Continue the summary hearing not more than ten (10) days;

(b) Provide for alternative service of summons upon the person; and

(c) Extend any restraining order.

(8) Upon a showing of good faith efforts to effect personal service upon a person who has failed to appear for a continued summary hearing, the court shall order notice of the petition to be published. The order and notice shall specify a return date not less than ten (10) nor more than twenty (20) days after the publication and that the restraining order has been extended to the continued hearing date.

(9) If a person fails to appear for a summary hearing after service of summons, the court shall enter judgment in favor of the commissioner against that person.

(10) A person who appears for the summary hearing shall file its answer at the hearing and the court shall: (a) determine whether to extend any temporary restraining orders pending final judgment; and (b) set the case for trial on a date not more than ten (10) days from the summary hearing. The court shall grant no continuance for filing an answer.

(11) The court shall proceed to hear the case at the time and date set forth for trial without a jury and without unnecessary delays. To the extent not inconsistent with other laws, the court shall give precedence to the matter over all other matters. To the extent otherwise authorized by law, the court may assign the matter to other judges if necessary to comply with the need for expedited proceedings under this chapter.

(12) Continuances for trial shall be granted only in extreme circumstances.

(13) The court shall receive as self-authenticated any of the following when offered by the commissioner:

(a) Certified copies of the financial statements made by the person; and

(b) Certified copies of examination reports of the person made by or on behalf of the commissioner.

(14) The facts contained in any such examination report shall be presumed to be true as of the date of the hearing if such examination was made as of a date not more than two hundred seventy (270) days before the petition was filed. The presumption shall be rebuttable and shall shift the burden of production and persuasion.

(15) Discovery shall be limited to grounds alleged in the petition, and shall be concluded on an expedited basis.

(16) The court shall enter judgment within fifteen (15) days after the conclusion of the evidence.

(17) The judgment shall be final when entered. Any appeal shall be prosecuted on an expedited basis and must be taken within five (5) days of entry. No request for reconsideration, review or appeal, and no posting of a bond shall dissolve or stay the judgment.

SECTION 35. The following section shall be codified as Section 83-24-36, Mississippi Code of 1972:

83-24-36. (1) All books, records, documents and papers of any delinquent insurer which come into the possession of the receiver and are held by the receiver in the course of the delinquency proceedings, or certified copies thereof, shall be received in evidence in all cases without proof of the correctness of the same and without other proof, except the certificate of the receiver that the same were received from the custody of the delinquent insurer or found among its effects.

(2) The receiver shall have the authority to certify to the correctness of any paper, document or record of his office and to make certificates of the receiver certifying any fact contained in the papers, documents or records of the office of the receiver; and the same shall be received in evidence in all cases in which the original would be evidence.

(3) Original books, records, documents and papers, or certified copies thereof, when received in evidence shall be prima facie evidence of the facts disclosed.

(4) The appointment of the commissioner as receiver shall in no way operate to bring records of a delinquent insurer under the Mississippi Public Records Act of 1983. In the event a third party successfully pursues a records request in the receivership court, the receiver shall be reimbursed for the reasonable cost of producing such records.

SECTION 36. The following section shall be codified as Section 83-24-52, Mississippi Code of 1972:

83-24-52. (1) If an order instituting a delinquency proceeding against an insurer authorized to do business in this state is entered under this chapter, the receiver appointed under the order has a right to recover on behalf of the insurer from any affiliate that controlled the insurer the amount of distributions, other than stock dividends paid by the insurer on its capital stock, made at any time during the five (5) years preceding the petition for liquidation, rehabilitation or conservation. This recovery is subject to the limitations of subsections (2) through (7).

(2) No dividend is recoverable if the recipient shows that, when paid, the distribution was lawful and reasonable, and that the insurer did not know and could not reasonably have known that the distribution might adversely affect its solvency.

(3) The maximum amount recoverable under this section is the amount needed, in excess of all other available assets, to pay all claims under the receivership, reduced for each recipient by any amount the recipient has already paid to receivers under similar laws of other states.

(4) Any person who was an affiliate that controlled the insurer at the time the distributions were paid is liable up to the amount of distributions received. Any person who was an affiliate that controlled the insurer at the time the distributions were declared is liable up to the amount of distributions the person would have received if the distributions had been paid immediately. If two (2) or more persons are liable regarding the same distributions, they are jointly and severally liable.

(5) If any person liable under subsection (4) is insolvent, all affiliates that controlled that person at the time the dividend was declared or paid are jointly and severally liable for any resulting deficiency in the amount recovered from the insolvent affiliate.

(6) This section does not enlarge the personal liability of a director under existing law.

(7) An action or proceeding under this section may not be commenced after the earlier of:

(a) Two (2) years after the appointment of a rehabilitator under Section 83-24-25 or a liquidator under Section 83-24-35; or

(b) The date the rehabilitation is terminated under Section 83-24-31(3) or the liquidation is terminated under Section 83-24-91.

SECTION 37. The following section shall be codified as Section 83-24-82, Mississippi Code of 1972:

83-24-82. (1) Notwithstanding any other provision of this chapter, including any other provision of this chapter permitting the modification of contracts, or other law of a state, no person shall be stayed or prohibited from exercising:

(a) A contractual right to terminate, liquidate or close out any netting agreement or qualified financial contract with an insurer because of:

(i) The insolvency, financial condition or default of the insurer at any time, provided that the right is enforceable under applicable law other than this chapter; or

(ii) The commencement of a formal delinquency proceeding under this chapter.

(b) Any right under a pledge, security, collateral or guarantee agreement or any other similar security arrangement or credit support document relating to a netting agreement or qualified financial contract.

(c) Subject to any provision of Section 83-24-59(2) of this chapter, any right to set off or net out any termination value, payment amount, or other transfer obligation arising under or in connection with a netting agreement or qualified financial contract where the counterparty or its guarantor is organized under the laws of the United States or a state or foreign jurisdiction approved by the Securities Valuation Office (SVO) of the NAIC as eligible for netting.

(2) Upon termination of a netting agreement, the net or settlement amount, if any, owed by a nondefaulting party to an insurer against which an application or petition has been filed under this chapter shall be transferred to or on the order of the receiver for the insurer, even if the insurer is the defaulting party, notwithstanding any provision in the netting agreement that may provide that the nondefaulting party is not required to pay any net or settlement amount due to the defaulting party upon termination. Any limited two-way payment provision in a netting agreement with an insurer that has defaulted shall be deemed to be a full two-way payment provision as against the defaulting insurer. Any such property or amount shall, except to the extent it is subject to one or more secondary liens or encumbrances, be a general asset of the insurer.

(3) In making any transfer of a netting agreement or qualified financial contract of an insurer subject to a proceeding under this chapter, the receiver shall either:

(a) Transfer to one (1) party (other than an insurer subject to a proceeding under this chapter) all netting agreements and qualified financial contracts between a counterparty or any affiliate of the counterparty and the insurer that is the subject of the proceeding, including:

(i) All rights and obligations of each party under each such netting agreement and qualified financial contract; and

(ii) All property, including any guarantees or credit support documents, securing any claims of each party under each such netting agreement and qualified financial contract; or

(b) Transfer none of the netting agreements, qualified financial contracts, rights, obligations or property referred to in subparagraph (a) (with respect to the counterparty and any affiliate of the counterparty).

(4) If a receiver for an insurer makes a transfer of one or more netting agreements or qualified financial contracts, then the receiver shall use its best efforts to notify any person who is party to the netting agreements or qualified financial contracts of the transfer by 12:00 noon (the receiver's local time) on the business day following the transfer. For purposes of this subsection, "business day" means a day other than a Saturday, Sunday or any day on which either the New York Stock Exchange or the Federal Reserve Bank of New York is closed.

(5) Notwithstanding any other provision of this chapter, a receiver may not avoid a transfer of money or other property arising under or in connection with a netting agreement or qualified financial contract (or any pledge, security, collateral or guarantee agreement or any other similar security arrangement or credit support document relating to a netting agreement or qualified financial contract) that is made before the commencement of a formal delinquency proceeding under this chapter. However, a transfer may be avoided under Section 83-24-51 of this chapter if the transfer was made with actual intent to hinder, delay or defraud the insurer, a receiver appointed for the insurer, or existing or future creditors.

(6) In exercising any of its powers under this chapter to disaffirm or repudiate a netting agreement or qualified financial contract, the receiver must take action with respect to each netting agreement or qualified financial contract and all transactions entered into in connection therewith, in its entirety. Notwithstanding any other provision of this chapter, any claim of a counterparty against the estate arising from the receiver's disaffirmance or repudiation of a netting agreement or qualified financial contract that has not been previously affirmed in the liquidation or immediately preceding rehabilitation case shall be determined and shall be allowed or disallowed as if the claim had arisen before the date of the filing of the petition for liquidation or, if a rehabilitation proceeding is converted to a liquidation proceeding, as if the claim had arisen before the date of the filing of the petition for rehabilitation. The amount of the claim shall be the actual direct compensatory damages determined as of the date of the disaffirmance or repudiation of the netting agreement or qualified financial contract. The term "actual direct compensatory damages" does not include punitive or exemplary damages, damages for lost profit or lost opportunity or damages for pain and suffering, but does include normal and reasonable costs of cover or other reasonable measures of damages utilized in the derivatives market for the contract and agreement claims.

(7) The term "contractual right" as used in this section includes any right, whether or not evidenced in writing, arising under statutory or common law, a rule or bylaw of a national securities exchange, national securities clearing organization or securities clearing agency, a rule or bylaw, or a resolution of the governing body, of a contract market or its clearing organization, or under law merchant.

(8) The provisions of this section shall not apply to persons who are affiliates of the insurer that is the subject of the proceeding.

(9) All rights of counter parties under this chapter shall apply to netting agreements and qualified financial contracts entered into on behalf of the general account or separate accounts if the assets of each separate account are available only to counterparties to netting agreements and qualified financial contracts entered into on behalf of that separate account.

SECTION 38. The following section shall be codified as Section 83-24-104, Mississippi Code of 1972:

83-24-104. Notwithstanding any other provision of this chapter, or any other law of this state, upon the entry of a final order of liquidation or order approving a rehabilitation plan of an insurer domiciled in this state or in a reciprocal state, any deposit held in this state, which is a special or statutory deposit held pursuant to any statute, or as required by any order of the commissioner, for the benefit of any creditors, including policyholders, of the insurer shall be delivered to the domiciliary liquidator. The proceeds of the deposit shall then be held by the domiciliary liquidator as a general asset for the benefit of all creditors no matter where they reside, in accordance with the priorities set by the laws of the domiciliary state. The holder of the deposit in this state shall, upon the receipt of a certified copy of an order approving the plan of rehabilitation or liquidation, deliver the deposit to the domiciliary state's conservator, rehabilitator or liquidator, and when so delivered shall become part of the general assets of the insurer.

SECTION 39. The following section shall be codified as Section 83-24-119, Mississippi Code of 1972:

83-24-119. The domiciliary receiver shall provide information to other state insurance regulators and guaranty associations, including reports and analyses of financial condition and the status of development of a plan of rehabilitation. The domiciliary receiver shall also permit a state insurance regulator or guaranty association to obtain a listing of policyholders and certificate holders residing in the requestor's state, including current addresses and summary policy information, provided that the regulator or guaranty association agrees to maintain the confidentiality of the records, and that the records will be used only for regulatory or guaranty association purposes. Access to financial records shall be at least equivalent to that to which a state insurance regulator was entitled prior to the commencement of a formal delinquency proceeding. Access to records may be limited to normal business hours. In the event that the domiciliary receiver believes that certain information is sensitive, and disclosure might cause a diminution in recovery, the receiver may apply for a protective order imposing additional restrictions on access.

SECTION 40. Section 83-24-29, Mississippi Code of 1972, which provides for a stay of actions or proceedings during rehabilitation, is hereby repealed.

SECTION 41. Section 83-24-33, Mississippi Code of 1972, which authorizes the Commissioner of Insurance to petition the court for an order to liquidate a domestic insurer or an alien insurer domiciled in this state and provides grounds for the petition, is hereby repealed.

SECTION 42. Section 83-24-101, Mississippi Code of 1972, which authorizes the Commissioner of Insurance to petition the court for an order to liquidate the assets found in this state of a foreign insurer or an alien insurer not domiciled in this state and provides grounds for the petition, is hereby repealed.

SECTION 43. This act shall take effect and be in force from and after its passage.