1063.70. The California Insurance Guarantee Association is
authorized to pay and discharge certain claims of insolvent insurers
as defined in Section 1063.1 through the collection of premiums from
its members, which amounts are limited by law and take time to assess
and collect. This article provides for the ability of CIGA to
request the issuance of bonds by the California Infrastructure and
Economic Development Bank pursuant to Article 8 (commencing with
Section 63049.6) of Chapter 2 of Division 1 of Title 6.7 of the
Government Code to more expeditiously and effectively provide for the
payment of covered claims that arise as a result of the insolvencies
of insurance companies providing workers' compensation insurance.
The bonds are to be paid from the special bond assessments assessed
by CIGA for those purposes and the other funds provided pursuant to
Section 1063.74. Special bond assessments to repay bonds issued for
payment of workers compensation benefits shall be assessed, to the
extent necessary, for the claims category. It is a public purpose and
in the best interest of the public health, safety, and general
welfare of the residents of this state to provide for the issuance of
bonds to pay claimants and policyholders having covered claims
against insolvent insurers operating in this state.
1063.71. (a) The terms "member insurer," "insolvent insurer," and
"covered claims" have the meanings assigned those terms in Section
1063.1.
(b) The terms "CIGA," "commissioner," "board," and "department"
have the meanings assigned those terms in Section 1063.51.
(c) "Bank" means the California Infrastructure and Economic
Development Bank created pursuant to Article 1 (commencing with
Section 63020) of Chapter 2, Division 1 of Title 6.7 of the
Government Code.
(d) "Bonds" means bonds issued by the Bank pursuant to Article 8
(commencing with Section 63049.6) of Chapter 2 of Division 1 of Title
6.7 of the Government Code to provide funds for the payment of the
covered claims and the adjusting and defense expenses relating to
those claims that are issued at the request of the board pursuant to
Section 1063.73.
(e) "Collateral" means the special bond assessments, the right of
CIGA to be paid the special bond assessments, all revenues therefrom,
the separate account of the Workers' Comp Bond Fund into which
special bond assessments are deposited, and the proceeds thereof.
(f) "Special bond assessment" means the premiums collected by CIGA
pursuant to Section 1063.74.
(g) "Workers' Comp Bond Fund" means the fund created pursuant to
Section 1063.72.
1063.72. The Workers' Comp Bond Fund is hereby created. Proceeds
from the sale of bonds shall be deposited in a separate account in
the Workers' Comp Bond Fund. Only CIGA, and with respect to payment
of the bonds, the trustee for the bonds, shall have the ability to
authorize disbursements from the separate account. Special bond
assessments shall be deposited in a separate account in the Workers'
Comp Bond Fund and shall not be commingled with any other moneys.
Only the trustee for the bonds shall have the ability to authorize
disbursements from this separate account, and CIGA shall have no
right or authority to authorize disbursements from this separate
account. The Workers' Comp Bond Fund shall be maintained with the
trustee for the bonds. Following payment or provision for payment of
the bonds, amounts in the Workers' Comp Bond Fund shall be
transferred to the fund that is designated in the indenture. All
money in the Workers' Comp Bond Fund and all special bond assessments
shall be used by CIGA for the exclusive purpose of carrying out the
purposes of this part, and, notwithstanding any other provisions of
law, the Workers' Comp Bond Fund shall not be a state fund, shall not
be subject to the rules or procedures of any fund in the State
Treasury, and application of the fund shall not be subject to the
supervision or budgetary approval of any officer or division of state
government. CIGA and the trustee for the bonds may as necessary or
convenient to the accomplishment of any other purpose under this
article, divide the fund into separate accounts.
1063.73. In the event CIGA determines that the insolvency of one or
more member insurers providing workers' compensation insurance will
result in covered claim obligations for workers' compensation claims
in excess of CIGA's capacity to pay from current funds, the board, in
its sole discretion, may by resolution request the Bank to issue
bonds pursuant to Article 8 (commencing with Section 63049.6) of
Chapter 2 of Division 1 of Title 6.7 of the Government Code to
provide funds for the payment of the covered claims and the adjusting
and defense expenses relating to those claims. Notwithstanding any
other provision of law, CIGA is hereby authorized to borrow proceeds
of the bonds to provide for those purposes. CIGA may request the Bank
to issue bonds pursuant to Article 8 (commencing with Section
63049.6) of Chapter 2 of Division 1 of Title 6.7 of the Government
Code. CIGA shall provide the commissioner with a copy of the request
and the commissioner may, within 30 days of receipt of the request,
modify, cancel, or require a delay in the requested issuance. The
proceeds of bonds issued for workers' compensation benefits may be
used by CIGA to reimburse funds advanced or temporarily loaned from
other categories to fund workers' compensation claims.
1063.74. (a) Notwithstanding any other limits on assessments, CIGA
shall have the authority to levy upon member insurers special bond
assessments in the amount necessary to pay the principal of and
interest on the bonds, and to meet other requirements established by
agreements relating to the bonds. The assessments shall be collected
only from the member insurers providing workers' compensation
insurance, in the same manner as separate premium payments are used
to pay the claims and costs allocated to that category pursuant to
Section 1063.5. Special bond assessments made pursuant to this
section shall also be subject to the surcharge provisions in Sections
1063.14 and 1063.145.
(b) In addition to the special bond assessments provided for in
this section, the board in its discretion and subject to other
obligations of the association, may utilize current funds of CIGA,
premium assessments made under Section 1063.5, and advances or
dividends received from the liquidators of insolvent insurers to pay
the principal and interest on any bonds issued at the board's request
and shall utilize, to the extent feasible, the recoveries from the
liquidators of the estates of insolvent workers' compensation
carriers to pay bonds issued at the board's request to fund workers'
compensation claims.
1063.75. Any bonds issued to provide funds for covered claim
obligations for workers' compensation claims shall be issued prior to
January 1, 2013, in an aggregate principal amount outstanding at any
one time not to exceed $1.5 billion, and any bonds issued or issued
to refund bonds shall not have a final maturity exceeding 20 years
from the date of issuance. The bonds shall be issued at the request
of CIGA, shall be in the form, shall bear the date or dates, and
shall mature at the time or times as the indenture authorized by the
request may provide. The bonds may be issued in one or more series,
as serial bonds or as term bonds, or as a combination thereof, and,
notwithstanding any other provision of law, the amount of principal
of, or interest on, bonds maturing at each date of maturity need not
be equal. The bonds shall bear interest at the rate or rates,
variable or fixed or a combination thereof, be in the denominations,
be in the form, either coupon or registered, carry the registration
privileges, be executed in the manner, be payable in the medium of
payment at the place or places within or without the state, be
subject to the terms of redemption, contain the terms and conditions,
and be secured by the covenants as the indenture may provide. The
indenture may provide for the proceeds of the bonds and funds
securing the bonds to be invested in any securities and investments,
including investment agreements, as specified therein. CIGA may enter
into or authorize any ancillary obligations or derivative agreements
as it determines necessary or desirable to manage interest rate risk
or security features related to the bonds. The bonds shall be sold
at public or private sale by the Treasurer at, above, or below the
principal amount thereof, on the terms and conditions and for the
consideration in the medium of payment that the Treasurer shall
determine prior to the sale.
1063.76. (a) The collateral shall be used solely for the purpose of
paying the principal and redemption price of, and interest on, the
bonds and any amounts owing by CIGA under contracts entered into
pursuant to Section 1063.77, and shall not be used for any other
purpose. Member insurers shall pay the special bond assessments
directly to the trustee for the bonds. Any collateral in the
possession of CIGA shall be held by CIGA in trust for the benefit of
the trustee for the bonds.
(b) Upon the issuance of the first bond, the collateral shall be
subject to a first priority statutory lien in favor of the trustee
for the bonds, for the benefit of the holders of the bonds and the
parties to the contracts entered into pursuant to Section 1063.77, to
secure the payment of the principal and redemption price of, and
interest on, the bonds and any amounts owing by CIGA under contracts
entered into pursuant to Section 1063.77. This lien shall arise by
operation of law automatically without any action on the part of
CIGA, the bank, or any other person. This lien is a continuous lien
on all collateral effective from the time the first bond is issued,
whether or not a particular item of collateral exists at the time of
the issuance. From the time the first bond is issued, this lien shall
be valid, effective, prior, perfected, binding, and enforceable
against CIGA, its successors, purchasers of the collateral,
creditors, and all others asserting rights in the collateral,
irrespective of whether those parties have notice of the lien and
without the need for any physical delivery, recordation, filing, or
further act. Upon default in the payment of the principal or
redemption price of, or interest on, the bonds, or any amounts owing
by CIGA under contracts entered into pursuant to Section 1063.77, the
trustee for the bonds shall be entitled to foreclose or otherwise
enforce this lien on the collateral.
(c) No person acting under any provision of law or principle of
equity shall be permitted in any way to impede or in any manner
interfere with (1) the full and timely payment of the principal and
redemption price of, and interest on, the bonds and any amounts owing
by CIGA under contracts entered into pursuant to Section 1063.77, or
(2) the statutory lien created by this section and the full and
timely application of the collateral to the payment of the principal
and redemption price of, and interest on, the bonds and any amounts
owing by CIGA under contracts entered into pursuant to Section
1063.77.
(d) None of the collateral shall be subject to garnishment, levy,
execution, attachment, or other process, writ (including writ of
mandate), or remedy in connection with the assertion or enforcement
of any debt, claim, settlement, or judgment against the state, the
department, the commissioner, the bank, CIGA, or the board, nor shall
any of the collateral be subject to the claims of any creditor of
the state, the department, the commissioner, the bank, CIGA, or the
board. This paragraph shall not limit the rights or remedies of the
trustee for the bonds, the holders of the bonds, or the parties to
contracts entered into pursuant to Section 1063.77.
(e) As long as any bond is outstanding, CIGA shall not be subject
to Article 14 (commencing with Section 1010) or Article 14.3
(commencing with Section 1064.1) of Chapter 1 of Part 2 of Division 1
of the Insurance Code.
1063.77. CIGA is authorized to enter into those contracts or
agreements with those banks, insurers, or other financial
institutions or parties that it determines are necessary or desirable
to improve the security and marketability of, or to manage interest
rates or other risks associated with, the bonds issued pursuant to
Article 8 (commencing with Section 63049.6) of Chapter 2 of Division
1 of Title 6.7 of the Government Code. Those contracts or agreements
may contain an obligation to reimburse, with interest, any of those
banks, insurers, or other financial institutions or parties for
advances used to pay the purchase price of, or principal or interest
on, the bonds or other obligations.
1063.70. The California Insurance Guarantee Association is
authorized to pay and discharge certain claims of insolvent insurers
as defined in Section 1063.1 through the collection of premiums from
its members, which amounts are limited by law and take time to assess
and collect. This article provides for the ability of CIGA to
request the issuance of bonds by the California Infrastructure and
Economic Development Bank pursuant to Article 8 (commencing with
Section 63049.6) of Chapter 2 of Division 1 of Title 6.7 of the
Government Code to more expeditiously and effectively provide for the
payment of covered claims that arise as a result of the insolvencies
of insurance companies providing workers' compensation insurance.
The bonds are to be paid from the special bond assessments assessed
by CIGA for those purposes and the other funds provided pursuant to
Section 1063.74. Special bond assessments to repay bonds issued for
payment of workers compensation benefits shall be assessed, to the
extent necessary, for the claims category. It is a public purpose and
in the best interest of the public health, safety, and general
welfare of the residents of this state to provide for the issuance of
bonds to pay claimants and policyholders having covered claims
against insolvent insurers operating in this state.
1063.71. (a) The terms "member insurer," "insolvent insurer," and
"covered claims" have the meanings assigned those terms in Section
1063.1.
(b) The terms "CIGA," "commissioner," "board," and "department"
have the meanings assigned those terms in Section 1063.51.
(c) "Bank" means the California Infrastructure and Economic
Development Bank created pursuant to Article 1 (commencing with
Section 63020) of Chapter 2, Division 1 of Title 6.7 of the
Government Code.
(d) "Bonds" means bonds issued by the Bank pursuant to Article 8
(commencing with Section 63049.6) of Chapter 2 of Division 1 of Title
6.7 of the Government Code to provide funds for the payment of the
covered claims and the adjusting and defense expenses relating to
those claims that are issued at the request of the board pursuant to
Section 1063.73.
(e) "Collateral" means the special bond assessments, the right of
CIGA to be paid the special bond assessments, all revenues therefrom,
the separate account of the Workers' Comp Bond Fund into which
special bond assessments are deposited, and the proceeds thereof.
(f) "Special bond assessment" means the premiums collected by CIGA
pursuant to Section 1063.74.
(g) "Workers' Comp Bond Fund" means the fund created pursuant to
Section 1063.72.
1063.72. The Workers' Comp Bond Fund is hereby created. Proceeds
from the sale of bonds shall be deposited in a separate account in
the Workers' Comp Bond Fund. Only CIGA, and with respect to payment
of the bonds, the trustee for the bonds, shall have the ability to
authorize disbursements from the separate account. Special bond
assessments shall be deposited in a separate account in the Workers'
Comp Bond Fund and shall not be commingled with any other moneys.
Only the trustee for the bonds shall have the ability to authorize
disbursements from this separate account, and CIGA shall have no
right or authority to authorize disbursements from this separate
account. The Workers' Comp Bond Fund shall be maintained with the
trustee for the bonds. Following payment or provision for payment of
the bonds, amounts in the Workers' Comp Bond Fund shall be
transferred to the fund that is designated in the indenture. All
money in the Workers' Comp Bond Fund and all special bond assessments
shall be used by CIGA for the exclusive purpose of carrying out the
purposes of this part, and, notwithstanding any other provisions of
law, the Workers' Comp Bond Fund shall not be a state fund, shall not
be subject to the rules or procedures of any fund in the State
Treasury, and application of the fund shall not be subject to the
supervision or budgetary approval of any officer or division of state
government. CIGA and the trustee for the bonds may as necessary or
convenient to the accomplishment of any other purpose under this
article, divide the fund into separate accounts.
1063.73. In the event CIGA determines that the insolvency of one or
more member insurers providing workers' compensation insurance will
result in covered claim obligations for workers' compensation claims
in excess of CIGA's capacity to pay from current funds, the board, in
its sole discretion, may by resolution request the Bank to issue
bonds pursuant to Article 8 (commencing with Section 63049.6) of
Chapter 2 of Division 1 of Title 6.7 of the Government Code to
provide funds for the payment of the covered claims and the adjusting
and defense expenses relating to those claims. Notwithstanding any
other provision of law, CIGA is hereby authorized to borrow proceeds
of the bonds to provide for those purposes. CIGA may request the Bank
to issue bonds pursuant to Article 8 (commencing with Section
63049.6) of Chapter 2 of Division 1 of Title 6.7 of the Government
Code. CIGA shall provide the commissioner with a copy of the request
and the commissioner may, within 30 days of receipt of the request,
modify, cancel, or require a delay in the requested issuance. The
proceeds of bonds issued for workers' compensation benefits may be
used by CIGA to reimburse funds advanced or temporarily loaned from
other categories to fund workers' compensation claims.
1063.74. (a) Notwithstanding any other limits on assessments, CIGA
shall have the authority to levy upon member insurers special bond
assessments in the amount necessary to pay the principal of and
interest on the bonds, and to meet other requirements established by
agreements relating to the bonds. The assessments shall be collected
only from the member insurers providing workers' compensation
insurance, in the same manner as separate premium payments are used
to pay the claims and costs allocated to that category pursuant to
Section 1063.5. Special bond assessments made pursuant to this
section shall also be subject to the surcharge provisions in Sections
1063.14 and 1063.145.
(b) In addition to the special bond assessments provided for in
this section, the board in its discretion and subject to other
obligations of the association, may utilize current funds of CIGA,
premium assessments made under Section 1063.5, and advances or
dividends received from the liquidators of insolvent insurers to pay
the principal and interest on any bonds issued at the board's request
and shall utilize, to the extent feasible, the recoveries from the
liquidators of the estates of insolvent workers' compensation
carriers to pay bonds issued at the board's request to fund workers'
compensation claims.
1063.75. Any bonds issued to provide funds for covered claim
obligations for workers' compensation claims shall be issued prior to
January 1, 2013, in an aggregate principal amount outstanding at any
one time not to exceed $1.5 billion, and any bonds issued or issued
to refund bonds shall not have a final maturity exceeding 20 years
from the date of issuance. The bonds shall be issued at the request
of CIGA, shall be in the form, shall bear the date or dates, and
shall mature at the time or times as the indenture authorized by the
request may provide. The bonds may be issued in one or more series,
as serial bonds or as term bonds, or as a combination thereof, and,
notwithstanding any other provision of law, the amount of principal
of, or interest on, bonds maturing at each date of maturity need not
be equal. The bonds shall bear interest at the rate or rates,
variable or fixed or a combination thereof, be in the denominations,
be in the form, either coupon or registered, carry the registration
privileges, be executed in the manner, be payable in the medium of
payment at the place or places within or without the state, be
subject to the terms of redemption, contain the terms and conditions,
and be secured by the covenants as the indenture may provide. The
indenture may provide for the proceeds of the bonds and funds
securing the bonds to be invested in any securities and investments,
including investment agreements, as specified therein. CIGA may enter
into or authorize any ancillary obligations or derivative agreements
as it determines necessary or desirable to manage interest rate risk
or security features related to the bonds. The bonds shall be sold
at public or private sale by the Treasurer at, above, or below the
principal amount thereof, on the terms and conditions and for the
consideration in the medium of payment that the Treasurer shall
determine prior to the sale.
1063.76. (a) The collateral shall be used solely for the purpose of
paying the principal and redemption price of, and interest on, the
bonds and any amounts owing by CIGA under contracts entered into
pursuant to Section 1063.77, and shall not be used for any other
purpose. Member insurers shall pay the special bond assessments
directly to the trustee for the bonds. Any collateral in the
possession of CIGA shall be held by CIGA in trust for the benefit of
the trustee for the bonds.
(b) Upon the issuance of the first bond, the collateral shall be
subject to a first priority statutory lien in favor of the trustee
for the bonds, for the benefit of the holders of the bonds and the
parties to the contracts entered into pursuant to Section 1063.77, to
secure the payment of the principal and redemption price of, and
interest on, the bonds and any amounts owing by CIGA under contracts
entered into pursuant to Section 1063.77. This lien shall arise by
operation of law automatically without any action on the part of
CIGA, the bank, or any other person. This lien is a continuous lien
on all collateral effective from the time the first bond is issued,
whether or not a particular item of collateral exists at the time of
the issuance. From the time the first bond is issued, this lien shall
be valid, effective, prior, perfected, binding, and enforceable
against CIGA, its successors, purchasers of the collateral,
creditors, and all others asserting rights in the collateral,
irrespective of whether those parties have notice of the lien and
without the need for any physical delivery, recordation, filing, or
further act. Upon default in the payment of the principal or
redemption price of, or interest on, the bonds, or any amounts owing
by CIGA under contracts entered into pursuant to Section 1063.77, the
trustee for the bonds shall be entitled to foreclose or otherwise
enforce this lien on the collateral.
(c) No person acting under any provision of law or principle of
equity shall be permitted in any way to impede or in any manner
interfere with (1) the full and timely payment of the principal and
redemption price of, and interest on, the bonds and any amounts owing
by CIGA under contracts entered into pursuant to Section 1063.77, or
(2) the statutory lien created by this section and the full and
timely application of the collateral to the payment of the principal
and redemption price of, and interest on, the bonds and any amounts
owing by CIGA under contracts entered into pursuant to Section
1063.77.
(d) None of the collateral shall be subject to garnishment, levy,
execution, attachment, or other process, writ (including writ of
mandate), or remedy in connection with the assertion or enforcement
of any debt, claim, settlement, or judgment against the state, the
department, the commissioner, the bank, CIGA, or the board, nor shall
any of the collateral be subject to the claims of any creditor of
the state, the department, the commissioner, the bank, CIGA, or the
board. This paragraph shall not limit the rights or remedies of the
trustee for the bonds, the holders of the bonds, or the parties to
contracts entered into pursuant to Section 1063.77.
(e) As long as any bond is outstanding, CIGA shall not be subject
to Article 14 (commencing with Section 1010) or Article 14.3
(commencing with Section 1064.1) of Chapter 1 of Part 2 of Division 1
of the Insurance Code.
1063.77. CIGA is authorized to enter into those contracts or
agreements with those banks, insurers, or other financial
institutions or parties that it determines are necessary or desirable
to improve the security and marketability of, or to manage interest
rates or other risks associated with, the bonds issued pursuant to
Article 8 (commencing with Section 63049.6) of Chapter 2 of Division
1 of Title 6.7 of the Government Code. Those contracts or agreements
may contain an obligation to reimburse, with interest, any of those
banks, insurers, or other financial institutions or parties for
advances used to pay the purchase price of, or principal or interest
on, the bonds or other obligations.
1063.70. The California Insurance Guarantee Association is
authorized to pay and discharge certain claims of insolvent insurers
as defined in Section 1063.1 through the collection of premiums from
its members, which amounts are limited by law and take time to assess
and collect. This article provides for the ability of CIGA to
request the issuance of bonds by the California Infrastructure and
Economic Development Bank pursuant to Article 8 (commencing with
Section 63049.6) of Chapter 2 of Division 1 of Title 6.7 of the
Government Code to more expeditiously and effectively provide for the
payment of covered claims that arise as a result of the insolvencies
of insurance companies providing workers' compensation insurance.
The bonds are to be paid from the special bond assessments assessed
by CIGA for those purposes and the other funds provided pursuant to
Section 1063.74. Special bond assessments to repay bonds issued for
payment of workers compensation benefits shall be assessed, to the
extent necessary, for the claims category. It is a public purpose and
in the best interest of the public health, safety, and general
welfare of the residents of this state to provide for the issuance of
bonds to pay claimants and policyholders having covered claims
against insolvent insurers operating in this state.
1063.71. (a) The terms "member insurer," "insolvent insurer," and
"covered claims" have the meanings assigned those terms in Section
1063.1.
(b) The terms "CIGA," "commissioner," "board," and "department"
have the meanings assigned those terms in Section 1063.51.
(c) "Bank" means the California Infrastructure and Economic
Development Bank created pursuant to Article 1 (commencing with
Section 63020) of Chapter 2, Division 1 of Title 6.7 of the
Government Code.
(d) "Bonds" means bonds issued by the Bank pursuant to Article 8
(commencing with Section 63049.6) of Chapter 2 of Division 1 of Title
6.7 of the Government Code to provide funds for the payment of the
covered claims and the adjusting and defense expenses relating to
those claims that are issued at the request of the board pursuant to
Section 1063.73.
(e) "Collateral" means the special bond assessments, the right of
CIGA to be paid the special bond assessments, all revenues therefrom,
the separate account of the Workers' Comp Bond Fund into which
special bond assessments are deposited, and the proceeds thereof.
(f) "Special bond assessment" means the premiums collected by CIGA
pursuant to Section 1063.74.
(g) "Workers' Comp Bond Fund" means the fund created pursuant to
Section 1063.72.
1063.72. The Workers' Comp Bond Fund is hereby created. Proceeds
from the sale of bonds shall be deposited in a separate account in
the Workers' Comp Bond Fund. Only CIGA, and with respect to payment
of the bonds, the trustee for the bonds, shall have the ability to
authorize disbursements from the separate account. Special bond
assessments shall be deposited in a separate account in the Workers'
Comp Bond Fund and shall not be commingled with any other moneys.
Only the trustee for the bonds shall have the ability to authorize
disbursements from this separate account, and CIGA shall have no
right or authority to authorize disbursements from this separate
account. The Workers' Comp Bond Fund shall be maintained with the
trustee for the bonds. Following payment or provision for payment of
the bonds, amounts in the Workers' Comp Bond Fund shall be
transferred to the fund that is designated in the indenture. All
money in the Workers' Comp Bond Fund and all special bond assessments
shall be used by CIGA for the exclusive purpose of carrying out the
purposes of this part, and, notwithstanding any other provisions of
law, the Workers' Comp Bond Fund shall not be a state fund, shall not
be subject to the rules or procedures of any fund in the State
Treasury, and application of the fund shall not be subject to the
supervision or budgetary approval of any officer or division of state
government. CIGA and the trustee for the bonds may as necessary or
convenient to the accomplishment of any other purpose under this
article, divide the fund into separate accounts.
1063.73. In the event CIGA determines that the insolvency of one or
more member insurers providing workers' compensation insurance will
result in covered claim obligations for workers' compensation claims
in excess of CIGA's capacity to pay from current funds, the board, in
its sole discretion, may by resolution request the Bank to issue
bonds pursuant to Article 8 (commencing with Section 63049.6) of
Chapter 2 of Division 1 of Title 6.7 of the Government Code to
provide funds for the payment of the covered claims and the adjusting
and defense expenses relating to those claims. Notwithstanding any
other provision of law, CIGA is hereby authorized to borrow proceeds
of the bonds to provide for those purposes. CIGA may request the Bank
to issue bonds pursuant to Article 8 (commencing with Section
63049.6) of Chapter 2 of Division 1 of Title 6.7 of the Government
Code. CIGA shall provide the commissioner with a copy of the request
and the commissioner may, within 30 days of receipt of the request,
modify, cancel, or require a delay in the requested issuance. The
proceeds of bonds issued for workers' compensation benefits may be
used by CIGA to reimburse funds advanced or temporarily loaned from
other categories to fund workers' compensation claims.
1063.74. (a) Notwithstanding any other limits on assessments, CIGA
shall have the authority to levy upon member insurers special bond
assessments in the amount necessary to pay the principal of and
interest on the bonds, and to meet other requirements established by
agreements relating to the bonds. The assessments shall be collected
only from the member insurers providing workers' compensation
insurance, in the same manner as separate premium payments are used
to pay the claims and costs allocated to that category pursuant to
Section 1063.5. Special bond assessments made pursuant to this
section shall also be subject to the surcharge provisions in Sections
1063.14 and 1063.145.
(b) In addition to the special bond assessments provided for in
this section, the board in its discretion and subject to other
obligations of the association, may utilize current funds of CIGA,
premium assessments made under Section 1063.5, and advances or
dividends received from the liquidators of insolvent insurers to pay
the principal and interest on any bonds issued at the board's request
and shall utilize, to the extent feasible, the recoveries from the
liquidators of the estates of insolvent workers' compensation
carriers to pay bonds issued at the board's request to fund workers'
compensation claims.
1063.75. Any bonds issued to provide funds for covered claim
obligations for workers' compensation claims shall be issued prior to
January 1, 2013, in an aggregate principal amount outstanding at any
one time not to exceed $1.5 billion, and any bonds issued or issued
to refund bonds shall not have a final maturity exceeding 20 years
from the date of issuance. The bonds shall be issued at the request
of CIGA, shall be in the form, shall bear the date or dates, and
shall mature at the time or times as the indenture authorized by the
request may provide. The bonds may be issued in one or more series,
as serial bonds or as term bonds, or as a combination thereof, and,
notwithstanding any other provision of law, the amount of principal
of, or interest on, bonds maturing at each date of maturity need not
be equal. The bonds shall bear interest at the rate or rates,
variable or fixed or a combination thereof, be in the denominations,
be in the form, either coupon or registered, carry the registration
privileges, be executed in the manner, be payable in the medium of
payment at the place or places within or without the state, be
subject to the terms of redemption, contain the terms and conditions,
and be secured by the covenants as the indenture may provide. The
indenture may provide for the proceeds of the bonds and funds
securing the bonds to be invested in any securities and investments,
including investment agreements, as specified therein. CIGA may enter
into or authorize any ancillary obligations or derivative agreements
as it determines necessary or desirable to manage interest rate risk
or security features related to the bonds. The bonds shall be sold
at public or private sale by the Treasurer at, above, or below the
principal amount thereof, on the terms and conditions and for the
consideration in the medium of payment that the Treasurer shall
determine prior to the sale.
1063.76. (a) The collateral shall be used solely for the purpose of
paying the principal and redemption price of, and interest on, the
bonds and any amounts owing by CIGA under contracts entered into
pursuant to Section 1063.77, and shall not be used for any other
purpose. Member insurers shall pay the special bond assessments
directly to the trustee for the bonds. Any collateral in the
possession of CIGA shall be held by CIGA in trust for the benefit of
the trustee for the bonds.
(b) Upon the issuance of the first bond, the collateral shall be
subject to a first priority statutory lien in favor of the trustee
for the bonds, for the benefit of the holders of the bonds and the
parties to the contracts entered into pursuant to Section 1063.77, to
secure the payment of the principal and redemption price of, and
interest on, the bonds and any amounts owing by CIGA under contracts
entered into pursuant to Section 1063.77. This lien shall arise by
operation of law automatically without any action on the part of
CIGA, the bank, or any other person. This lien is a continuous lien
on all collateral effective from the time the first bond is issued,
whether or not a particular item of collateral exists at the time of
the issuance. From the time the first bond is issued, this lien shall
be valid, effective, prior, perfected, binding, and enforceable
against CIGA, its successors, purchasers of the collateral,
creditors, and all others asserting rights in the collateral,
irrespective of whether those parties have notice of the lien and
without the need for any physical delivery, recordation, filing, or
further act. Upon default in the payment of the principal or
redemption price of, or interest on, the bonds, or any amounts owing
by CIGA under contracts entered into pursuant to Section 1063.77, the
trustee for the bonds shall be entitled to foreclose or otherwise
enforce this lien on the collateral.
(c) No person acting under any provision of law or principle of
equity shall be permitted in any way to impede or in any manner
interfere with (1) the full and timely payment of the principal and
redemption price of, and interest on, the bonds and any amounts owing
by CIGA under contracts entered into pursuant to Section 1063.77, or
(2) the statutory lien created by this section and the full and
timely application of the collateral to the payment of the principal
and redemption price of, and interest on, the bonds and any amounts
owing by CIGA under contracts entered into pursuant to Section
1063.77.
(d) None of the collateral shall be subject to garnishment, levy,
execution, attachment, or other process, writ (including writ of
mandate), or remedy in connection with the assertion or enforcement
of any debt, claim, settlement, or judgment against the state, the
department, the commissioner, the bank, CIGA, or the board, nor shall
any of the collateral be subject to the claims of any creditor of
the state, the department, the commissioner, the bank, CIGA, or the
board. This paragraph shall not limit the rights or remedies of the
trustee for the bonds, the holders of the bonds, or the parties to
contracts entered into pursuant to Section 1063.77.
(e) As long as any bond is outstanding, CIGA shall not be subject
to Article 14 (commencing with Section 1010) or Article 14.3
(commencing with Section 1064.1) of Chapter 1 of Part 2 of Division 1
of the Insurance Code.
1063.77. CIGA is authorized to enter into those contracts or
agreements with those banks, insurers, or other financial
institutions or parties that it determines are necessary or desirable
to improve the security and marketability of, or to manage interest
rates or other risks associated with, the bonds issued pursuant to
Article 8 (commencing with Section 63049.6) of Chapter 2 of Division
1 of Title 6.7 of the Government Code. Those contracts or agreements
may contain an obligation to reimburse, with interest, any of those
banks, insurers, or other financial institutions or parties for
advances used to pay the purchase price of, or principal or interest
on, the bonds or other obligations.
