Client Alert
| June 28, 2011
New York Bills Clarifying Treatment of Derivatives in Insurer Insolvencies and Broadening Commercial Lines Deregulation Await the Governor's Signature
On June 22, 2011, the New York Assembly voted to pass Assembly Bill 6603A/Senate Bill 2713A (the "Derivatives Bill"), which clarifies the ability to close-out "qualified financial contracts" and "netting agreements" in the context of insurer insolvency proceedings. The Senate had passed the Derivatives Bill on June 20th and it now awaits the Governor's signature. A "qualified financial contract" is a commodity contract, forward contract, repurchase agreement, securities contract, swap agreement or any similar agreement as determined by the Superintendent by regulation. A "netting agreement" is a contract, including a master agreement, bridge agreement or security arrangement, that documents one or more transactions involving qualified financial contracts and provides for the netting, offset, liquidation, termination or close out of such qualified financial contracts. The Derivatives Bill is largely consistent with the provisions of the NAIC's Insurer Receivership Model Act relating to the treatment of qualified financial contracts and netting agreements.
This memorandum is intended only as a general discussion of these issues. It is not considered to be legal advice. We would be pleased to provide additional details or advice about specific situations. For additional information on this important topic, please feel free to call upon your Dewey & LeBoeuf relationship partner. No part of this publication may be reproduced, in whole or in part, in any form, without our prior written consent.
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