Connecticut Administrative Code › Title 38a - Insurance Department › 88 - Credit for Reinsurance › Section 38a-88-8 - Letters of credit used to qualify for reduction from liability for reinsurance ceded to an unauthorized assuming insurer

Current through July 10, 2024
(a) The letter of
			 credit shall be clean, irrevocable, unconditional and issued or confirmed by a
			 qualified United States financial institution as defined in section
			 38a-86(3)
			  of the Connecticut General Statutes. 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 shall also 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 (h)(1) 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).
(b)
			 The heading of the letter of credit may include a boxed section which contains
			 the name of the applicant and other appropriate notations to provide a
			 reference for such letter of credit. The boxed section shall be clearly marked
			 to indicate that such information is for internal identification purposes
			 only.
(c) 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.
(d) The term of the letter of credit shall be
			 for at least one year and shall contain an "evergreen clause" which 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 30 days' notice
			 prior to expiration date or non-renewal.
(e) 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 thereunder shall be presentable at an office in the
			 United States of a qualified United States financial institution.
(f) If the letter of credit is made subject
			 to the Uniform Customs and Practice for Documentary Credits of the
			 International Chamber of Commerce (Publication 600), 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 600 or
			 any other successor publication occur.
(g) 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 (a) of
			 this section, then the following additional requirements shall be met:
(1) 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
(2) The "evergreen clause" shall provide for
			 30 days notice prior to expiration date for non-renewal.