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Texas Insurance Code - Not Codified - Section 21A.209. Setoffs

Legal Research Home > Texas Lawyer > Insurance Code - Not Codified > Texas Insurance Code - Not Codified - Section 21A.209. Setoffs

Sec. 21A.209. SETOFFS.  (a) All 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, must be set off and only the balance
shall be allowed or paid, except as provided by Subsection (b).
	(b)  A setoff may not be allowed in favor of any person if:
	(1)  the obligation of the insurer to the person:
	(A)  would not, at the date of the commencement of the
delinquency proceeding, entitle the person to share as a claimant
in the assets of the insurer;  or
	(B)  was purchased by or transferred to the person:
	(i)  after the commencement of the delinquency proceeding;
or
	(ii)  for the purpose of increasing setoff rights;
	(2)  the obligation of the insurer is owed to an affiliate of
the person, or any other entity or association other than the
person;
	(3)  the obligation of the person:
	(A)  is as a trustee or fiduciary;  or
	(B)  is to pay:
	(i)  an assessment levied against the members of a mutual
insurer, reciprocal or interinsurance exchange, or Lloyd's plan;
or
	(ii)  a balance upon a subscription to the capital stock of a
capital stock insurance company;  or
	(4)  the obligations between the person and the insurer arise
from reinsurance transactions in which either the person or the
insurer has assumed risks and obligations from the other party and
then has ceded back to that party substantially the same risks and
obligations.
	(c)  The receiver shall provide an interested person with
accounting statements identifying all debts that are due and
payable.  If a person owes the insurer amounts that are due and
payable against which the person asserts a setoff of mutual credits
that, in the future, may become due and payable from the insurer,
the person shall promptly pay the amounts due and payable to the
receiver.  Notwithstanding any other provision of this chapter, the
receiver shall promptly and fully refund, to the extent of a
person's prior payments under this section, any mutual credits that
become due and payable to the person by the insurer.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.

Last modified: August 11, 2007