Terms Used In Wisconsin Statutes 645.675

  • Affirmed: In the practice of the appellate courts, the decree or order is declared valid and will stand as rendered in the lower court.
  • Common law: The legal system that originated in England and is now in use in the United States. It is based on judicial decisions rather than legislative action.
  • Contract: A legal written agreement that becomes binding when signed.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
  • Delinquency proceeding: means any proceeding commenced against an insurer for the purpose of liquidating, rehabilitating, reorganizing or conserving such insurer, and any summary proceeding under ss. See Wisconsin Statutes 645.03
  • Following: when used by way of reference to any statute section, means the section next following that in which the reference is made. See Wisconsin Statutes 990.01
  • Guarantor: A party who agrees to be responsible for the payment of another party's debts should that party default. Source: OCC
  • in writing: includes any representation of words, letters, symbols or figures. See Wisconsin Statutes 990.01
  • Insured: as used in this chapter includes both the principal and obligee of a bond. See Wisconsin Statutes 645.03
  • Insurer: means any person who is doing, has done, purports to do or is licensed to do an insurance business and is or has been subject to the authority of, or to liquidation, rehabilitation, reorganization or conservation by, a commissioner. See Wisconsin Statutes 645.03
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Person: includes all partnerships, associations and bodies politic or corporate. See Wisconsin Statutes 990.01
  • Policy: as used in this chapter includes a bond issued by a surety. See Wisconsin Statutes 645.03
  • Preceding: when used by way of reference to any statute section, means the section next preceding that in which the reference is made. See Wisconsin Statutes 990.01
  • Property: includes real and personal property. See Wisconsin Statutes 990.01
  • Qualified: when applied to any person elected or appointed to office, means that such person has done those things which the person was by law required to do before entering upon the duties of the person's office. See Wisconsin Statutes 990.01
  • Receiver: means receiver, liquidator, rehabilitator or conservator, as the context requires. See Wisconsin Statutes 645.03
  • Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
  • State: when applied to states of the United States, includes the District of Columbia, the commonwealth of Puerto Rico and the several territories organized by Congress. See Wisconsin Statutes 990.01
  • Transfer: includes the sale and every other method, 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 or involuntarily, by or without judicial proceedings. See Wisconsin Statutes 645.03
  • Uniform Commercial Code: A set of statutes enacted by the various states to provide consistency among the states' commercial laws. It includes negotiable instruments, sales, stock transfers, trust and warehouse receipts, and bills of lading. Source: OCC
  • United States: includes the District of Columbia, the states, the commonwealth of Puerto Rico and the territories organized by congress. See Wisconsin Statutes 990.01
   (1)    In this section:
      (a)    “Actual direct compensatory damages” includes normal and reasonable costs of cover or other reasonable measures of damages used in the derivatives, securities, or other markets for the contract and agreement claims. “Actual direct compensatory damages” does not include punitive or exemplary damages, damages for lost profit or lost opportunity, or damages for pain and suffering.
      (b)    “Business day” means any day other than a Saturday, a Sunday, or a day on which the New York Stock Exchange, or the Federal Reserve Bank of New York is closed.
      (c)    “Commodity contract” means any of the following:
         1.    A contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a board of trade or contract market under the federal Commodity Exchange Act, 7 U.S. Code § 1, et seq., or a board of trade outside the United States.
         2.    An agreement that is subject to regulation under the federal Commodity Exchange Act, 7 U.S. Code § 23, and that is commonly known to the commodities trade as a margin account, margin contract, leverage account, or leverage contract.
         3.    An agreement or transaction that is subject to regulation under the federal Commodity Exchange Act, 7 U.S. Code § 6c, and that is commonly known to the commodities trade as a commodity option.
         4.    Any combination of agreements or transactions specified in subds. 1. to 3.
         5.    Any option to enter into an agreement or transaction specified in subds. 1. to 3.
      (d)    “Contractual right” includes any right established in a rule or bylaw, or in a resolution, of the governing board of a derivatives clearing organization or board of trade as defined in the federal Commodity Exchange Act, 7 U.S. Code § 1, et seq.; a multilateral clearing organization, as defined in the federal Deposit Insurance Corporation Improvement Act of 1991, 12 U.S. Code § 4402; a national securities exchange, a national securities association, a securities clearing agency, or a control market designated under the federal Commodity Exchange Act, 7 U.S. Code § 1, et seq.; or a derivatives transaction execution facility registered under the federal Commodity Exchange Act, 7 U.S. Code § 1, et seq., or any right, regardless whether it is in writing, arising under statutory or common law, or under the uniform commercial code, or by reason of normal business practice.
      (e)    “Counterparty” means a person who enters into a qualified financial contract with an insurer.
      (f)    “Credit insurance” means insurance against loss arising from failure of debtors to meet financial obligations to creditors, except mortgage guaranty insurance.
      (g)    “Credit life insurance” means insurance on the lives of borrowers or purchasers of goods in connection with specific loans or credit transactions when all or a portion of the insurance is payable to the creditor to reduce or extinguish the debt.
      (h)    “Disability insurance” means insurance covering injury or death of persons caused by accident or insurance covering the health of persons.
      (i)    “Financial guaranty insurance” means a surety bond, insurance policy, indemnity contract, or any similar guarantee issued by an insurer under which a loss is payable upon proof of occurrence of financial loss to an insured claimant. “Financial guaranty insurance” does not include credit insurance, credit life insurance, disability insurance, mortgage guaranty insurance, or long-term care insurance.
      (j)    “First-method provision” means a contract provision in which the nondefaulting party is not required to pay if a net or settlement amount is owed to the defaulting party.
      (k)    “Forward contract” has the meaning given in 12 U.S. Code § 1821 (e) (8) (D).
      (L)    “Mortgage guaranty insurance” means insurance against loss arising from any of the following:
         1.    Debtors to meet financial obligations to creditors under evidences of indebtedness that are secured by any of the following:
            a.    A first lien or charge on residential real estate designed for occupancy by not more than 4 families.
            b.    A first lien of charge on residential real estate designed for occupancy by 5 or more families.
            c.    A first lien or charge on real estate designed for industrial or commercial purposes.
            d.    A junior lien or charge on residential real estate.
         2.    Lessees to make payment on rentals under leases of real estate in which the lease extends for 3 years or longer.
      (m)    “Netting agreement” means any of the following:
         1.    A contract or agreement, or terms and conditions in a contract or agreement, including a master agreement together with all schedules, confirmations, definitions, and addenda, 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 either the netting, liquidation, setoff, termination, acceleration, or close-out under, or in connection with, one or more qualified financial contracts or present or future payment or delivery obligations or entitlements, including related liquidation or close-out values, among the parties to the netting agreement.
         2.    Any master agreement or bridge agreement for one or more master agreements described in subd. 1.
         3.    Any security agreement or arrangement or other credit enhancement or guarantee or reimbursement obligation related to any contract or agreement described in subd. 1. or 2.
      (n)    “Qualified financial contract” means a commodity contract, forward contract, repurchase agreement, securities contract, swap agreement, or any similar agreement that the commissioner determines by rule or order to be a qualified financial contract.
      (o)    “Repurchase agreement” has the meaning given in 12 U.S. Code § 1821 (e) (8) (D).
      (p)    “Second-method provision” means a contract provision requiring a nondefaulting party to pay if a net or settlement amount is owed to the defaulting party.
      (q)    “Securities contract” has the meaning given in 12 U.S. Code § 1821 (e) (8) (D).
      (r)    “Swap agreement” has the meaning given in 12 U.S. Code § 1821 (e) (8) (D).
      (s)    “Two-way payment provision” means a contract provision under which both parties to the contract may have payment obligations to each other.
      (t)    “Walkaway clause” means a provision in a netting agreement or a qualified financial contract that, after calculation of a value of a party’s position or an amount due to or from one of the parties in accordance with its terms upon termination, liquidation, or acceleration of the netting agreement or qualified financial contract, either does not create a payment obligation of a party or extinguishes a payment obligation of a party, in whole or in part, solely because of the party’s status as a nondefaulting party.
   (2)   
      (a)    Notwithstanding any other provision of this chapter, including any other provision permitting the modification of contracts, no person may be stayed or prohibited from exercising any of the following rights:
         1.    A contractual right to cause the termination, liquidation, acceleration, or close-out of obligations under, or in connection with, any netting agreement or qualified financial contract with an insurer on account of any of the following:
            a.    The insolvency, financial condition, or default of the insurer at any time, if the right is enforceable under applicable law other than this chapter.
            b.    The commencement of a formal delinquency proceeding under this chapter.
         2.    Any right under a pledge, security, collateral, reimbursement, or guarantee agreement or arrangement, or any other similar security agreement or arrangement or other credit enhancement, relating to one or more netting agreements or qualified financial contracts.
         3.    Subject to s. 645.56 (2), any right to set-off or net-out any termination value, payment amount, or other transfer obligation arising under, or in connection with, one or more qualified financial contracts in which the counterparty or its guarantor is organized under the laws of the United States or a state or foreign jurisdiction approved by the National Association of Insurance Commissioners office responsible for securities validation as eligible for netting.
      (b)    If a counterparty to a master netting agreement or a qualified financial contract with an insurer subject to a proceeding under this chapter terminates, liquidates, closes-out, or accelerates the agreement or contract, damages will be measured as of the date of the termination, liquidation, close-out, or acceleration. The amount of a claim for damages is the actual direct compensatory damages calculated in accordance with sub. (6).
   (3)   Upon termination of a netting agreement or qualified financial contract, notwithstanding any walkaway clause in the netting agreement or qualified financial contract, 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 the receiver of the insurer or as directed by the receiver of the insurer, even if the insurer is the defaulting party. Any limited 2-way payment provision or first-method provision in a netting agreement or qualified financial contract with an insurer that has defaulted shall be considered to be a full 2-way payment provision or 2nd-method provision as against the defaulting insurer. Any such property or amount is a general asset of the insurer, except to the extent that it is subject to one or more secondary liens or encumbrances or rights of netting or setoff.
   (4)   
      (a)    With respect to transferring a netting agreement or qualified financial contract of an insurer that is the subject of a proceeding under this chapter, the receiver of the insurer shall do one of the following:
         1.    Transfer to one party, other than an insurer subject to a proceeding under this chapter, all netting agreements and qualified financial contracts between the counterparty and the insurer that is subject to a proceeding under this chapter, including all of the following:
            a.    All rights and obligations of each party under each netting agreement and qualified financial contract.
            b.    All property, including any guarantee or other credit enhancement, securing any claims of each party under each netting agreement and qualified financial contract.
         2.    Transfer none of the netting agreements, qualified financial contracts, rights, obligations, or property referred to in subd. 1. with respect to the counterparty.
      (b)    If a receiver of an insurer transfers a netting agreement or qualified financial contract, the receiver shall use its best efforts to notify any person who is a party to the netting agreement or qualified financial contract of the transfer by noon, central time, on the business day following the transfer.
   (5)   Notwithstanding s. 645.52 or 645.54, 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.
   (6)   
      (a)    In exercising the rights of disaffirmance or repudiation with respect to a netting agreement or qualified financial contract between a counterparty and an insurer that is the subject of a proceeding under this chapter, the receiver of the insurer shall do one of the following:
         1.    Disaffirm or repudiate all netting agreements and qualified financial contracts between the counterparty and the insurer.
         2.    Disaffirm or repudiate none of the netting agreements or qualified financial contracts between the counterparty and the insurer.
      (b)    Notwithstanding any provision of this section to the contrary, 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 conservation or rehabilitation case shall be determined and shall be allowed or disallowed as if the claim had arisen before the date on which the petition for liquidation was filed or, if a conservation or rehabilitation proceeding is converted to a liquidation proceeding, as if the claim had arisen before the date on which the petition for conservation or rehabilitation was filed. The amount of the claim is the actual direct compensatory damages determined as of the date of the disaffirmance or repudiation of the netting agreement or qualified financial contract.
   (7)   All rights of counterparties under this chapter that apply to netting agreements and qualified financial contracts entered into on behalf of a general account are available only to counterparties of netting agreements and qualified financial contracts entered into on behalf of that general account. All rights of counterparties under this chapter that apply to netting agreements and qualified financial contracts entered into on behalf of a separate account are available only to counterparties of netting agreements and qualified financial contracts entered into on behalf of that separate account.
   (8)   
      (a)    This section does not apply to persons who are affiliates of an insurer subject to a proceeding under this chapter.
      (b)    This section does not apply to qualified financial contracts entered into with an insurer authorized to write financial guaranty insurance.

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