KRS 304.33-330: Set-offs and counterclaims.

(1) Set-offs allowed in general. Mutual debt or mutual credits between the insurer and

another person in connection with any action or proceeding under this subtitle shall

be set off and the balance only shall be allowed or paid, except as provided in

subsection (2) of this section.

(2) Exceptions. Except as provided in KRS 304.33-055, no set-off or counterclaim shall

be allowed in favor of any person where:

(a) The obligation of the insurer to the person would not at the date of the filing

of a petition for li quidation entitle him or her to share as a claimant in the

assets of the insurer;

(b) The obligation of the insurer to the person was purchased by or transferred to

the person with a view to its being used as a set-off;

(c) The obligation of the person is to pay an assessment levied against the

members or subscribers of the insurer, or is to pay a balance upon a

subscription to the capital stock of the insurer, or is in any other way in the

nature of a capital contribution; or

(d) The obligation of the pers on is to pay earned premiums to the insurer.

However, the provisions of this paragraph shall only apply to reinsurance

contracts entered into prior to July 13, 2004.