Section 7427. Offsets

(a) In all cases of mutual debts or mutual credits
  between the insurer and another person in connection with any action  or
  proceeding  under  this article, such credits and debts shall be set off
  and the balance only shall be allowed or paid,  except  as  provided  in
  subsection (b) hereof.
    (b)  No  offset shall be allowed in favor of any such person, however,
  where:
    (1) the obligation of the insurer to such person would not at the date
  of the entry of any liquidation order,  or  otherwise,  as  provided  in
  section seven thousand four hundred five of this article, entitle him to
  share as a claimant in the assets of such insurer, or
    (2)  the  obligation of the insurer to such person was purchased by or
  transferred to such person with a view of its being used as  an  offset,
  or
    (3)  the  obligation  of  such  person  is to pay an assessment levied
  against the members of a mutual insurer or  to  pay  a  balance  upon  a
  subscription to the shares of a stock insurance corporation.