Compilation of Rules and Regulations of the State of Georgia › Department 120 - OFFICE OF COMMISSIONER OF INSURANCE, SAFETY FIRE COMMISSIONER AND INDUSTRIAL LOAN COMMISSIONER › Chapter 120-2 - RULES OF COMMISSIONER OF INSURANCE › Subject 120-2-78 - CREDIT FOR REINSURANCE › Rule 120-2-78-.13 - Letters of Credit Qualified under Section 11

Current through Rules and Regulations filed through June 27, 2024
(1) The letter of credit must be clean,
				irrevocable, unconditional and issued or confirmed by a qualified United States
				financial institution as defined in O.C.G.A. §
									33-7-14(c)(1).
				The letter of credit shall contain an issue date and expiration date and shall
				stipulate that the beneficiary need only draw a sight draft under the letter of
				credit and present it to obtain funds and that no other document need be
				presented. The letter of credit also shall indicate that it is not subject to
				any condition or qualifications outside of the letter of credit. In addition,
				the letter of credit itself shall not contain reference to any other
				agreements, documents or entities, except as provided in Subsection (8)(a) of
				this section. As used in this section, "beneficiary" means the domestic insurer
				for whose benefit the letter of credit has been established and any successor
				of the beneficiary by operation of law. If a court of law appoints a successor
				in interest to the named beneficiary, then the named beneficiary includes and
				is limited to the court appointed domiciliary receiver (including conservator,
				rehabilitator or liquidator).
(2)
				The heading of the letter of credit may include a boxed section containing the
				name of the applicant and other appropriate notations to provide a reference
				for the letter of credit. The boxed section shall be clearly marked to indicate
				that such information is for internal identification purposes only.
(3) The letter of credit shall contain a
				statement to the effect that the obligation of the qualified United States
				financial institution under the letter of credit is in no way contingent upon
				reimbursement with respect thereto.
(4) The term of the letter of credit shall be
				for at least one year and shall contain an "evergreen clause" that prevents the
				expiration of the letter of credit without due notice from the issuer. The
				"evergreen clause" shall provide for a period of no less than thirty (30) days
				notice prior to expiration date or nonrenewal.
(5) The letter of credit shall state whether
				it is subject to and governed by the laws of this state or the Uniform Customs
				and Practice for Documentary Credits of the International Chamber of Commerce
				Publication 600 (UCP 600) or International Standby Practices of the
				International Chamber of Commerce Publication 590 (ISP98), or any successor
				publication, and all drafts drawn thereunder shall be presentable at an office
				in the United States of a qualified United States financial
				institution.
(6) If the letter of
				credit is made subject to the Uniform Customs and Practice for Documentary
				Credits of the International Chamber of Commerce (Publication 500), or any
				successor publication, then the letter of credit shall specifically address and
				provide for an extension of time to draw against the letter of credit in the
				event that one or more of the occurrences specified in Article 17 of
				Publication 500 or any other successor publication, occur.
(7) If the letter of credit is issued by a
				financial institution authorized to issue letters of credit, other than a
				qualified United States financial institution as described in Subsection (1) of
				this section, then the following additional requirements shall be met:
(a) The issuing financial institution shall
				formally designate the confirming qualified United States financial institution
				as its agent for the receipt and payment of the drafts; and
(b) The "evergreen clause" shall provide for
				thirty (30) days notice prior to expiration date for nonrenewal.