CHAPTER 223

FORMERLY

HOUSE SUBSTITUTE NO. 1

TO

HOUSE BILL NO. 193

AS AMENDED BY

HOUSE AMENDMENTS NO. 1, 2, HOUSE AMENDMENT NO. 1

TO ROUSE AMENDMENT NO. 2

AND HOUSE AMENDMENTS NO. 3 AND 4

AN ACT TO AMEND CHAPTERS 1, 7, 8, 9 AND 11 OF TITLE 5, AND CHAPTERS 1, 5, 11, 23, 42, 44, 41, 49 AND 50 OF TITLE 18 OF THE DELAWARE CODE BY EXPANDING THE POWERS OF BANKS AND TRUST COMPANIES TO ENGAGE IN THE BUSINESS OF INSURANCE; AND TO PROVIDE FOR THE PROPER REGULATION THEREOF.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Two—thirds of all members elected to each House thereof concurring therein):

Section 1. This Act may be referred to as the "Bank and Trust Company Insurance Powers Act of 1989".

Section 2. Amend subsection (a) of Section 761 of Title 5, Delaware Code by renumbering subparagraph (14) thereof as subparagraph (16), and by adding thereto new subparagraphs (14) and (15) to read as follows:

"(14) Act as an insurer and transact the business of insurance in accordance with the provisions of Title 18; except that no corporation established under and In compliance with this Chapter shall have power to act as a title Insurer and transact the business of title Insurance;

(15) Act as guarantor or surety for the debt or obligation of another, including specifically but without limitation the rediscounting with recourse of commercial paper and the Issuance of letters of credit as defined in §5103(1)(a) of Title 6 and standby letters of credit. As used herein, the term 'standby letter of credit' includes every letter of credit (or similar arrangement however named or designated) which represents an obligation to the beneficiary on the part of the Issuer to repay money borrowed by or advanced to or for the account of the customer, or to make payment on account of any evidence of Indebtedness undertaken by the customer, or to make payment on account of any default by the customer in performance of an obligation. The terms 'beneficiary', 'Issuer' and 'customer' as used herein have the same meaning as in §5103(1) of Title 6;"

Section 3. Amend Section 745 of Title 5 of the Delaware Code by adding immediately after the existing language the following:

The minimum capital stock and paid—in surplus required to be maintained by such corporation in its banking or trust company business pursuant to this section may not be utilized to satisfy the capital or reserve requirements to which the corporation may be subject with respect to any activity authorized by subsection (a)(14) of Section 761 of this title."

Section 4. Amend Section 767 of Title 5 of the Delaware Code by striking it in its entirety and substituting in lieu thereof a new Section 767 as follows:

"Section 767. Limitations on powers and activities of banks and trust companies.

(a) Any bank or trust company which engages In any activity authorized by subsection (a)(14) of Section 761 of this title otherwise than through a subsidiary thereof shall engage in each such activity through a department or division which shall maintain financial records separate and distinct from other records of such bank or trust company; provided, that such division may be established and may engage In each such activity only in accordance with the provisions of Title 18.

(b) A bank or trust company which engages in any activity authorized by §761(a)(14) hereof, whether through a department, division o' subsidiary, may make loans to and transact other business with such department, division or subsidiary, provided such loan or other transaction is made on terms and under circumstances substantially the same as for comparable transactions with or involving other customers, or in the absence of comparable transactions upon terms and under circumstances that In good faith would be offered to or would apply to other customers.

(c) No department, division or subsidiary of a bank or trust company which engages in any activity authorized by §761(a)(14) of this title shall utilize in any manner or for any purpose the information contained in any insurance contract between a non-affiliated insurer and the insured which such company has obtained from the insured in connection with any request for an extension of credit.

(d) No bank or trust company which engages in any activity authorized by §761(a)(14) of this title shall, in evaluating any request or application for the extension of credit, discriminate against an applicant on the basis that such applicant is a competitor of such bank or trust company in any such activity."

Section 5. Amend Section 121(a)(1) of Title 5 of the Delaware Code by adding immediately before the semicolon (;) the following:

§ provided that with respect to any activity authorized by §761(a)(14) of this title, the Commissioner shall only have supervision to the extent such activity is not subject to the supervision of the Insurance Commissioner of this State or of another jurisdiction or, if it is subject to such supervision, when he determines that such activity is likely to have a materially adverse effect on the safety and soundness of the bank"

Section 6. Amend Section 124 of Title 5 of the Delaware Code by striking the period (".") immediately following the word "Bank", and substituting the following punctuation and language:

§ and with respect to a state bank or trust company which has established a division pursuant to §767 of this title, he shall also furnish a summary, on a confidential basis, of his report of any examination of the state bank or trust company to the Insurance Commissioner."

Section 7. Amend Section 771 of Title 5 of the Delaware Code by adding thereto a new subsection (e) to read as follows:

"(e) Any corporation established under this chapter or by Act of the Delaware General Assembly having paid-in capital and surplus exceeding $1,000,000 may open affiliated offices or places of business inside or outside this State, in the United States of America, or its possessions or in foreign countries solely to conduct activities authorized by §761(a)(14) of this title upon the issuance of a certificate of authority by the Commissioner for which he shall collect and receive a fee of $500, and upon such conditions and under such regulations as may be prescribed."

Section 8. Amend Chapter 9, Subchapter I of Title 5 of the Delaware Code by adding thereto a new Section 908A to read as follows:

"§908A. Bank Distinct from Bank Insurance Department or Division.

The assets of any bank or trust company shall be liable for and applicable to the payment and satisfaction of the liabilities, obligations and expenses of such bank or trust company only, and not to those liabilities, obligations and expenses of any insurance department or division of such bank or trust company established pursuant to Section 767(a) of this title. The liabilities, obligations and expenses of any such bank or trust company shall be applied against and paid and satisfied out of the assets of such bank or trust company only, and not out of the assets of any insurance department or division of such bank or trust company established pursuant to Section 767(a) of this title."

Section 9. Amend Section 909 of Title 5 of the Delaware Code by adding a new subsection (e) thereto as follows:

"(e) A department or division or subsidiary of a bank or trust company which engages in any activity authorized by §761(a)(14) of this title shall be deemed a corporation subject to the limitations of this Section."

Section 10. Amend Section 910 of Title 5 of the Delaware Code by striking the period (".") at the end of the existing language, immediately following the word "Section", and substituting the following:

provided further, that no bank or trust company which engages in activities authorized by §761(a) (14) of this title through subsidiaries or divisions shall initially allocate more than 25 percent of its total capital, surplus and undivided profits in the aggregate to all such subsidiaries or divisions, or shall thereafter allocate to all such subsidiaries or divisions (i) in any one year, without the approval of the Commissioner, any amount in excess of 3 percent of its total capital, surplus and undivided profits or (ii) in any event, any amount in excess of 25 percent of its then current total capital, surplus and individual profits in the aggregate; provided, further, that no bank or trust company which engages in activities authorized by §761(a) (14) of this title through subsidiaries or divisions shall allocate any of its total capital, surplus or undivided profits to any such subsidiaries or divisions unless such allocations are 'unimpaired' within the meaning of title 18 and free of all liens and encumbrances."

Section 11. Amend Chapter 9, Subchapter I of Title 5 of the Delaware Code by adding a new Section 929 as follows:

"§929. Tying Arrangements Prohibited.

(a) No bank or trust company shall, either directly or indirectly through any subsidiary, division or third person, in any manner extend credit, sell any product or furnish any service to any person, or fix or vary the consideration for any of the foregoing, on the condition or requirement that: (1) the person shall obtain some additional credit, product or service from such bank or trust company or its affiliate other than a loan, discount, deposit or trust service; or (2) the person provide some additional credit, product or service to such bank or trust company or its affiliate other than those related to and usually provided in connection with a loan, discount, deposit or trust services; or (3) the person shall not obtain some other credit, product or service from a competitor of such bank or trust company or Its affiliate, other than a condition or requirement that such bank or trust company shall reasonably impose in a credit transaction to assure the soundness of the credit.

(b) No bank or trust company which is first authorized to engage in any activity by §761(a) (14) of this title shall, while an application for a loan, credit or other services previously submitted to such bank or trust company by any person Is pending, accept from such person, either directly or through any division or subsidiary, an application for a policy of insurance directly related to the applied for loan, credit or other services, or thereafter accept such an insurance application until such person has received from such bank or trust company a commitment with respect to the applied for loan, credit or other services.

(c) The Commissioner shall by regulation promulgated after consultation with the Insurance Commissioner provide for the adequate disclosure of the prohibitions set forth in subsections (a) and (b) of this Section.

(d) For purposes of this section, the term 'affiliates' shall mean a person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. 'Control' means beneficial ownership, directly or indirectly through one or more intermediaries, of 25% or more of the voting securities or partnership interests in any person other than an individual.

(e) The prohibitions contained in this Section shall be in addition to, and not in derogation of, those provided for under the laws of the United States of America, including 12 U.S.C. §§1971, et leg., the laws of this State, including §2305 of Title 18, and all other applicable statutes, rules and regulations."

Section 12. Amend Chapter 9, Subchapter I of Title 5 of the Delaware Code by adding a new Section 930 as follows:

"§930. Right of Cancellation of Certain Insurance.

(a) Except as otherwise provided in this section, in the case of any extension of credit by the bank or trust company engaged directly or indirectly in activities first authorized under §761(a)(14) of this title to an individual borrower in connection with which insurance is obtained from such bank or trust company, or any subsidiary thereof engaged in activities first authorized under §761(a)(14) of this title, the individual borrower shall have the right to cancel the purchase of such insurance until midnight of the thirtieth calendar day following the consummation of the transaction or the delivery of the information and forms required under this section, whichever Is later. Within the first ten days, the individual borrower shall be entitled to an unconditional refund of his premium upon serving notice of cancellation as provided herein. The individual borrower shall effect such cancellation by notifying the bank or trust company or its subsidiary, in accordance with the regulations of the Commissioner, of his intention to do so. In accordance with the regulations of the Commissioner the bank or trust company or Its subsidiary shall (1) clearly and conspicuously disclose to any individual borrower in a transaction subject to this section the rights of the Individual borrower under this section, and (2) provide appropriate forms for the exercise by the individual borrower of this right to cancel any insurance subject to this section. Such forms shall contain a clear and specific statement setting forth:

(i) the cost of the insurance;

(ii)that the individual borrower may choose the person through which the insurance is to be obtained;

(iii) the Individual borrower's right to use the cancellation period to obtain price quotations for insurance from other sources;

(iv) the actions necessary for the individual borrower to cancel the insurance; and

(v) the individual borrower's right to receive a credit of the unearned portion of the insurance premium after cancellation.

(b) Within 20 days after the unconditional recision period if no liability for a loss under the insurance has been incurred, the bank or trust company or its subsidiary shall (1) credit the unearned portion of the premium, computed in accordance with applicable law, or regulation promulgated by the Insurance Commissioner to enforce the provisions of this Section, as of the date of cancellation and, where the premium has been financed, credit the unearned portion of the finance charge, if any, attributable to the insurance, computed as of the date of cancellation In accordance with the terms of the contract documents; or (2) at the option of the individual borrower, refund the unearned portion of the premium to him.

(c) When the insurance written in connection with an extension of credit Is against loss of, or damage to, or against liability arising out of ownership or use of, property used as security for the extension of credit, the bank or trust company or its subsidiary may require evidence that the individual borrower has obtained other adequate insurance before exercising the right of cancellation set forth in this subsection, For reasonable cause, a bank or trust company on its subsidiary may refuse to accept an insurer offered by the individual borrower; provided, however, that a bank or trust company shall accept a policy of Insurance issued by an authorized insurer offered by the individual borrower, so long as such insurer is not then Impaired, insolvent, the subject of any rehabilitation or liquidation proceeding, or deemed by the Insurance Commissioner to be otherwise disqualified.

(c) Any individual borrower who has the right to cancel insurance under this section in connection with an obligation which has been assigned may cancel the insurance only by delivering to the assignee of the obligation the notice of cancellation required by this section. Delivery shall be considered made who mailed, or if sent by other means, when received by the assignee.

(d) Any individual borrower who exercises the right to cancel the purchase of insurance pursuant to this section shall not be subject to the imposition of any fee, cancellation charge, or other penalty payment.

(e) For purposes of this section, 'individual borrower' means a borrower who Is a natural person borrowing for personal, household or family purposes, or business or commercial purposes where the natural person employs 500 employees or less, or a borrower who is a corporation, partnership, limited partnership or other business entity which Is borrowing for business or commercial purposes and which employs 500 employees or less."

The rights provided under this Section shall be in addition to, and not In derogation of, those provided by contract under the laws of the United States of America, the laws of this State, and all other applicable statutes, rules and regulations."

Section 13. Amend Chapter 9, Subchapter I of Title 5 of the Delaware Code by adding a new Section 930A as follows:

"5930A. Mandatory Disclosure in Bank Insurance Policies.

(a) Any bank or trust company issuing policies of insurance either directly or through a division or subsidiary, shall disclose or cause to be disclosed to all applicants for such policies and to all policyholders that such policies, if and when issued, are not direct liabilities of such bank or trust company, and that only the assets of the insurance division or subsidiary issuing such policy are applicable to the payment and satisfaction of such policies or claims made thereunder.

(b) The Commissioner shall by regulation provide for the adequate disclosure of the information set forth in subsection (a) of this Section."

Section 14. Amend subsection (a)(1) of Section 1101 of Title 5, Delaware Code, by striking the word "and" as the same appears following subparagraph e thereof; by striking the period (".") following subparagraph f thereof, by adding in lieu thereof the punctuation and word "; and"; and by adding thereto a new subparagraph g to read as follows:

"g. The gross income derived from acting as an insurer and from transacting the business of insurance pursuant to §761(a)(14) to this title."

Section 15. Amend subsection (e) of Section 1101 of Title 5, Delaware Code, by substituting immediately after the first reference to the words "any corporation" in said subsection the words "other than a subsidiary engaged in activities authorized under §161(a)(14) of this title".

Section 16. Amend Section 1108 of Title 5, Delaware Code, by adding immediately after the last sentence of said section an additional sentence to read as follows:

"A subsidiary corporation or a division of a bank or trust company engaged in activities authorized under §761(a)(14) of this title shall be taxed in the same manner as an entity engaged in such activities pursuant to Title 18 of this Code."

Section 17. Amend Section 102(3) of Title 18 of the Delaware Code by adding immediately before the period (.) at the end of the existing language the following:

provided that with respect to a corporation established under Chapter 7 of Title 5, 'insurer' means an insurance department or division of such corporation (but not the corporation itself) which maintains separate books and records in the same manner and to the same extent as if it were a separately Incorporated subsidiary of such corporation, with separate capital accounts, assets and liabilities."

Section 18. Amend Section 501 of Title 18 of the Delaware Code by adding immediately

after the existing language the following:

"Unless otherwise provided, the insurance department or division of a corporation established under Chapter 7 of Title 5 (but not the corporation Itself) shall be deemed to be a stock insurer for purposes of this title, even though It has no capital divided into shares and owned by stockholder."

Section 19. Amend Section 511(a) of Title 18 of the Delaware Code by adding after the words "(if a stock insurer)" the phrase or a capital account (if an insurance department or division of a corporation established under Chapter 7 or regulated under Chapter 9 of Title 5)".

Section 20. Amend Chapter 5 of Title 18 of the Delaware Code by adding thereto a new Section 534 which shall read as follows:

"5534. Location of Headquarters.

(d) The headquarters of day—to—day corporate activity and management of any insurer engaged in the business of insurance as a subsidiary or division of a bank or trust company, which bank or trust company is authorized to act as an insurer and transact the business of insurance pursuant to authority granted by §761(a) (14) of Title 5, shall be located within this State, and the principal books and records of each such insurer shall be located within this State.

(b) The Commissioner shall, by regulation promulgated after consultation with the 8ank Commissioner, define the term 'headquarters of day-to-day corporate activity and management', and provide for the maintenance and inspection of such headquarters and books and records to assure compliance with the provisions of §§929, 930 and 931 of title 5, and §2304(23) of this title."

Section 21. Amend Section 1102 of Title 18 of the Delaware Code by adding thereto a new subparagraph (6) to read as follows:

"(6) With respect to an insurance division of a bank or trust company established pursuant to §767(a) of Title 5, any assets of the bank or trust company other than those entered on the separate and distinct financial records of such division."

Section 22. Amend Chapter 11, Subchapter I of Title 18 of the Delaware Code by adding thereto a new Section 1102A to read as follows:

"§1102A. 8ank Insurance Department or Division Distinct from 8ank.

The assets of any insurance department or division of a bank or trust company established pursuant to §767(a) of Title 5 shall be liable for and applicable to the payment and satisfaction of the liabilities, obligations and expenses of such insurance department or division only. The liabilities, obligations and expenses of any such insurance department or division shall be applied against and paid and satisfied solely out of the assets of such insurance department or division."

Section 23. Amend Section 1103(1) of Title 18 of the Delaware Code by adding immediately before the semicolon (;) the phrase", or capital account required by §511(a) of this title".

Section 24. Amend Section 1103 of Title 18 of the Delaware Code by adding thereto a new subparagraph (7) to read as follows:

"(7) With respect to an Insurance division of a bank or trust company established pursuant to §767(a) of Title 5, only those liabilities enumerated In this Section which are entered on the separate and distinct financial records of such department or division."

Section 25. Amend Section 2304(10) of Title 18 of the Delaware Code by adding immediately before the period (".") the phrase "; provided that this provision shall not apply to charges or fees of an insurance department or division of a corporation established under Chapter 7 or regulated under Chapter 9 of Title 5."

Section 26. Amend Section 2304 of Title 18 of the Delaware Code by adding a new subsection (23) thereto as follows:

"(23) Tying arrangements; cancellation; disclosure.

(a) No person who has received the name of any actual or potential borrower from any bank or trust company which engages, directly or indirectly. In any activity authorized by §761(a) (14) of Title 5 shall, with respect to such borrower:

(i) engage in any of the activities prohibited to such bank or trust company by §929 of Title 5;

(ii) refuse to allow such borrower to exercise any rights of cancellation or refund set forth in §930 of Title 5, all of which rights shall be applicable to such borrower;

(iii) fall to take any action required of a bank or trust company under §930 of Title 5, all of which shall be required of such person; or

(iv) in connection with any application for a policy of insurance submitted to such person by such borrower, or in connection with any policy of insurance thereafter issued to such borrower by such person, fail to disclose or cause to be disclosed to such borrower that such policy, if and when issued, is not a direct liability of such bank or trust company, rid that only the assets of the insurer issuing such policy are applicable to the payment and satisfaction of claims made thereunder.

(b) The prohibitions set forth in subparagraphs a. (ii) and (iii) of this subsection (23) shall be applicable only with respect to an individual borrower,' as defined in §930(f) of Title 5.

(c) The Commissioner shall by regulation promulgated after consultation with the Bank Commissioner provide for the adequate disclosure of the prohibitions set forth in this subsection (23)."

Section 26. Amend subparagraphs (4) and (5) of Section 4205 of Title 18 of the Delaware Code by striking them in their entirety and substituting in lieu thereof new subparagraph (4) and (5) as follows:

"(4) 'Insolvent insurer' means a member insurer (including an insurance department or division of a bank or trust company established pursuant to §767(a) of Title 5) which is (a) transacting insurance in this State either at the time the policy was issued or when the insured event occurred and (b) determined to be insolvent by a court of competent jurisdiction.

(5) 'Member insurer' means any person (including any insurance department or division of a bank or trust company established pursuant to §767(a) of Title 5) who (a) writes any kind of insurance to which this chapter applies under §4203 of this title, including the exchange of reciprocal or interinsurance contracts, and (b) is licensed to transact insurance in this State."

"Section 27. Amend Section 2305 of Title 18 of the Delaware Code by adding thereto a new subparagraph (c) to read as follows:

'(c) The Commissioner shall by regulation provide for the adequate disclosure of the prohibitions set forth in subsection (a) and (b) of this Section and any other similar provisions of law.'"

Section 27. Amend Section 4208(a) of title 18 of the Delaware Code by adding a new subparagraph (10) thereto to read as follows:

"(10) Exercise all powers and do all things authorized by this chapter with respect to a division of a bank or trust company established pursuant to §767(a) of Title 5 and determined to be insolvent pursuant to §4205 (4) of this title with the same effect as If such department or division was a stock insurer."

Section 28. Amend subparagraph (8) of Section 4405 of Title 18 of the Delaware code by striking it In Its entirety and substituting in lieu thereof a new subparagraph (8) as follows:

"(8) 'Member insurer' means any person (including an insurance department or division of a bank or trust company established pursuant to §767(a) of Title 5) licensed to transact in this State any kind of insurance to which this chapter voiles under §4403 of this title."

Section 29. Amend Section 4408 of Title 18 of the Delaware Code by adding a new subparagraph (12) to read as follows:

"(12) The Association may exercise all powers and do all things authorized by this chapter with respect to a division of a bank or trust company established pursuant to §767(a) of Title 5 and determined to be an impaired or insolvent insurer pursuant to §4405 of this title with the same effect as if such division was a stock Insurer."

Section 30. Amend Section 4704 of Title 18 of the Delaware Code by adding new subsection (7) as follows:

"(7) Sales of securities of a corporation established under Chapter 7 or regulated under Chapter 9 of Title 5 which maintains an insurance department or division."

Section 3i. Amend Section 4904 of Title 18 of the Delaware Code by making existing subsection (4) subsection (5) and adding a new subsection (4) as follows:

"(4) A corporation established under Chapter 7 or regulated under Chapter 9 of Title 5 may also engage in the other activities authorized by such Chapter; and"

Section 32, Amend Section 4918(a) of Title 18 of the Delaware Code by adding a new subsection (3) as follows'

"(3) Insurance departments or divisions of corporations established under Chapter 7 of Title 5."

Section 33. Amend Section 4922 of Title 18 of the Delaware Code by adding a new subsection (d) as follows:

"(d) The insurance department or division of a corporation established under Chapter 7 of Title 5 shall only make distributions (other than for payment of expenses) to such corporation out of that part of its available and accumulated surplus funds which is derived from realized net operating profits on its business and realized capital gains."

Section 34. Amend Section 4927(a) of Title 18 of the Delaware Code by adding before the words "becomes impaired" the phrase or capital account (of an insurance department or division of a corporation established under Chapter 7 of Title 5)".

Section 35. Amend Section 5003 of Title 18 of the Delaware Code by striking subsection (j) in its entirety and substituting in lieu thereof the following:

"(j) The provisions of this section shall not apply to the insurance department or division of any corporation established under Chapter 7 of Title 5 which is deemed to be an insurer under §102(3) of this title or to any other insurer, information or transaction if, and to the extent that, the Commissioner, by rule, regulation or order, shall exempt the same from the provisions of this section; provided, however, that, notwithstanding the foregoing, the provisions of §5006 of this title shall be applicable to dividends and other distributions by an insurance division of any corporation established under Chapter 7 of Title 5 which is deemed to be an insurer under §102(3) of this title as if such division was subject to registration under this section."

Section 36. Amend Chapter 23 of Title 18, Delaware Code, by adding thereto a new Section 2305A, which Section shall read as follows:

"§2305A. Banks acting as insurance agents or brokers.

(a) Banks and subsidiaries thereof first authorized to conduct the business of insurance pursuant to §761(a) (14) of Title 5 shall not act as insurance agents or brokers unless duly licensed to act as such pursuant to the provisions of Chapter 17 of this title; provided, that such banks or subsidiaries thereof may sell-insurance pursuant to subsections (b) and (c) hereof without separate license If such sales are conducted exclusively by an individual, partnership or corporation duly licensed as an agent or broker under Chapter 17 of this Title with whom such bank or subsidiary thereof shall have contracted. All of the business of acting as an insurance agent or broker undertaken by or on behalf of a bank or subsidiary thereof shall be subject to the provisions of Chapter 17 regulating Insurance agents or brokers generally; provided, that the prohibition against sharing commissions set forth in §1739 of said Chapter shall not apply to an agent employed, or contracting with, a bank with respect to the commissions earned by such agent on insurance sold through or on behalf of said bank.

(b) Subject to subparagraph(c) of this section, banks or subsidiaries thereof first authorized to conduct the business of insurance pursuant to §761(a)(14)of Title 5 which are either licensed as insurance agents or brokers, or which shall have contracted with an independent individual, partnership or corporation so licensed, may sell insurance both on branch premises and at other, non-branch locations.

(c) Until July 1, 1994, all sales of insurance to the Delaware public by a bank or subsidiary thereof, or an individual, partnership or corporation licensed as an agent or broker with whom a bank or subsidiary has contracted for the sale of insurance, shall, at each branch office or other location, be conducted under the supervision of one or more insurance agents or brokers, located on the premises, who have been licensed and have actual experience as Insurance agents or brokers for a period of not less than five years.

(d) Nothing in this section shall be construed as derogating from the authority of any bank or subsidiary thereof whose power to conduct the business of insurance first derives from its charter, or otherwise by operation of law other than §761(a)(14) of Title 5."

Section 39. If any provision of this Act or the application thereof to any person or circumstances is held invalid such invalidity shall not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to that end the provisions of this Act are declared to be severable.

Section 38. Amend Chapter 59 of Title 18, Delaware Code, by adding thereto a new Section 5904A, which Section shall read as follows:

15904A. Proceedings against bank insurance division.

(a) The Commissioner may in his discretion forthwith take possession of the business and property, including the books and records, of any division of a bank or trust company acting as an insurer whenever it shall appear that such division:

(1) Is conducting its business in an unauthorized or unsafe manner;

(2) Is in an unsound or unsafe condition to transact its business; or

(3) Cannot with safety and expediency continue business as a result of any cause whatsoever.

(b) The Commissioner may require an examination of a bank or trust company, which bank or trust company has established and operates a division pursuant to §767 of title 5, by the Bank Commissioner as authorized under §122 of title 5, and a report of such examination shall be furnished to the Commissioner pursuant to §124 of title 5.

(c) After taking possession of the division of a bank or trust company acting as an insurer, the Commissioner shall take such steps to conserve or rehabilitate the business and property of such division as he deems practicable or desirable, or if in the Judgment of the Commissioner such conservation or rehabilitation is not practicable or desirable, he may proceed to liquidate such business and property. All proceedings of the Commissioner for the conservation, rehabilitation, or liquidation of a division of a bank or trust company acting as an insurer shall be in accordance with the provisions of this title applicable to the conservation, rehabilitation or liquidation of insurers by the Commissioner.'"

Section 38. This Act shall take effect immediately upon its adoption.

Section 40. Amend Section 2304(6)a., Title 18 of the Delaware Code by inserting the phrase "or bank acting as an insurer pursuant to Title 5, Section 761(a)(14)" after the phrase No insurer" and before the phrase "shall directly".

Approved May 30, 1990.