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History
- Referred to insurance
- Delivered to assembly
- Passed senateVote 58–3
- Amended on third reading (t) 8092a
- Ordered to third reading cal.1117
- Committee discharged and committed to rules
- Referred to insurance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Relates to qualified trusts and qualified reserve credits; repealer
In Assembly Committee · Rules · Sponsor Joseph Morelle
Full text
The text isn't available here yet. Check nysenate.gov.
Sponsor's memo
BILL NUMBER:S8092A
Title of bill
An act to amend the insurance law, in relation to qualified trusts and qualified reserve credits; and providing for the repeal of such provisions upon expiration thereof
Purpose
This bill would allow acquisition and management of investments by financial guaranty insurance corporations through certain dedicated trusts. It would make it clear that the financial guaranty insurance corporation may carry the net equity of such a trust as an asset on its statutory balance sheet. It would also allow the net value of a qualified trust to be counted among the specific assets that financial guaranty insurance corporations must maintain with respect to unearned premium reserves, loss reserves and loss adjustment expense reserves and that certain dedicated cash flows from the trust may be counted against contingency reserves.
Summary of provisions
Section 1 of the bill allows qualified reserve credits to reduce the aggregate net liability of a financial guaranty insurance corporation when determining the limits of the aggregate risk that it may assume.
Section 2 of the bill defines a qualified trust and qualified reserve credit.
Section 3 of the bill:
* Provides the clear authority of financial guaranty insurance corporations to recognize the net equity of a qualified trust on its books as an admitted asset.
* Limits the assets considered in determining the net equity of the qualified trust to cash and treasuries.
* Establishes the financial guaranty insurance corporation's first priority rights with respect to the assets, of a qualified trust and therefore subordinates the interests of investors, trust certificate holders and other interest holders of the support trust to the rights of such corporation.
* Allows the net entity of a support trust to be counted in the same manner as reserve investments required of financial guaranty insurance corporations generally.
* Fixes the discount rate that is applied in determining the present value of certain payments relating to a qualified trust.
Section 4 of the bill allows qualified reserve credits to cover contingency reserves that are required of financial guaranty insurance corporations.
Section 5 provides for a sunset after five years
Justification
This legislation facilitates a method to provide bond insurance to municipal bond issuers and a new bond insurer financial structure that uses a capital structure through which the acquisition and management of municipal bond's debt service payments secure payments relating to defaults on insured bonds. This is accomplished through a dedicated trust formed by the bond insurer and approved by the superintendent.
The decline of the financial health of established bond insurers, the very limited activity of new entrants to this market and the unfilled need for new bond insurers to meet current demands for bond insurance makes a strong case for a new model for the insurance industry. This legislation would facilitate a novel, yet robust method to provide bond insurance to municipal bond issuers.
Prior legislative history
New legislation.
Fiscal implications
None. Ultimately, municipalities may save through lowered bond issuance costs in the event that they are able to obtain bond insurance for their issuance.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.