Section 180L1/2. (a) Notwithstanding any other provision of sections 180A to 180L1/2, inclusive, including any other provision of said sections 180A to 180L1/2, inclusive, permitting the modification of contracts, or other law of a state, no person shall be stayed or prohibited from exercising:

(1) a contractual right to cause the termination, liquidation, acceleration 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, however, that the right is enforceable under applicable law other than sections 180A to 180L1/2, inclusive; or

(ii) the commencement of a rehabilitation proceeding under section 180B or a liquidation proceeding under section 180C;

(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 1 or more netting agreements or qualified financial contracts;

(3) subject to the last paragraph of section 180C, any right to set off or net out any termination value, payment amount, or other transfer obligation arising under or in connection with 1 or more qualified financial contracts 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 of the National Association of Insurance Commissioners as eligible for netting; or

(4) if a counterparty to a master netting agreement or a qualified financial contract with an insurer subject to a rehabilitation proceeding under section 180B or a liquidation proceeding under section 180C terminates, liquidates, closes out or accelerates the agreement or contract, damages shall be measured as of the date or dates of termination, liquidation, close out or acceleration. The amount of a claim for damages shall be actual direct compensatory damages calculated in accordance with subsection (f).

(b) Upon termination of a netting agreement or qualified financial contract, the net or settlement amount, if any, owed by a non-defaulting party to an insurer which is the subject of a rehabilitation proceeding under section 180B or a liquidation proceeding under section 180C shall be transferred to or on the order of the receiver for the insurer, even if the insurer is the defaulting party, notwithstanding any walkaway clause in the netting agreement or qualified financial contract. For purposes of this subsection, the term ''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 1 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 non-defaulting party. Any limited 2–way payment 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 or ''second method'' provision as against the defaulting insurer. Any such property or amount shall, except to the extent it is subject to 1 or more secondary liens or encumbrances or rights of netting or setoff, be a general asset of the insurer.

(c) In making any transfer of a netting agreement or qualified financial contract of an insurer which is the subject of a rehabilitation proceeding under section 180B or a liquidation proceeding under section 180C, the receiver shall either:

(1) transfer to 1 party, other than an insurer which is the subject of either such proceeding, all netting agreements and qualified financial contracts between a counterparty or any affiliate of the counterparty and the insurer which is the subject of the proceeding, including:

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

(ii) all property, including any guarantees or other credit enhancement, securing any claims of each party under each netting agreement and qualified financial contract; or

(2) transfer none of the netting agreements, qualified financial contracts, rights, obligations or property referred to in paragraph (1), with respect to the counterparty and any affiliate of the counterparty.

(d) If a receiver for an insurer makes a transfer of 1 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 noon, the receiver's local time, on the business day following the transfer. For purposes of this subsection, ''business day'' shall mean 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.

(e) Notwithstanding any other provision of sections 180A to 180L1/2, inclusive, 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 rehabilitation proceeding under section 180B or a liquidation proceeding under section 180C; provided, however, that a transfer may be avoided under chapter 109A 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.

(f)(1) In exercising the rights of disaffirmance or repudiation of a receiver with respect to a netting agreement or qualified financial contract to which an insurer is a party, the receiver for the insurer shall either:

(i) disaffirm or repudiate all netting agreements and qualified financial contracts between a counterparty or an affiliate of a counterparty with the insurer that is the subject of a rehabilitation or liquidation proceeding; or

(ii) disaffirm or repudiate none of the netting agreements and qualified financial contracts referred to in clause (i), with respect to the person or any affiliate of the person.

(2) Notwithstanding any other provision of sections 180A to 180L1/2, 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 proceeding shall be determined and shall be allowed or disallowed as if the claim had arisen before the date of the filing of the application 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 application 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'' shall 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, securities or other market for the contract and agreement claims.

(g) The term ''contractual right'', as used in this section, shall include any right set forth in a rule or by-law of a derivatives clearing organization, as defined in the Commodity Exchange Act, a multilateral clearing organization, as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991, a national securities exchange, a national securities association, a national securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade, as defined in the Commodity Exchange Act, or in a resolution of the governing board thereof and any right, whether or not evidenced in writing, arising under statutory or common law, or under law merchant, or by reason of normal business practice.

(h) This section shall not apply to a person who is an affiliate of the insurer that is the subject of the proceeding.

(i) All rights of counterparties under sections 180A to 180L1/2, inclusive, 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.