Illinois Administrative Code › Title 50 - INSURANCE › Part 1104 - CREDIT FOR REINSURANCE CEDED › Section 1104.80 - Letters of Credit Qualified Under Section 1104.60

Current through Register Vol. 48, No. 28, July 12, 2024
a) The letter of credit must be clean,
			 irrevocable and unconditional and issued or confirmed by a qualified U.S.
			 financial institution as defined in Section 173.1(3)(A) of the Code. The letter
			 of credit shall contain an issue date and date of expiration 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 (i)(1). 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 that contains
			 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 the 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 U.S.
			 financial institution under the letter of credit is in no way contingent upon
			 reimbursement of the letter of credit.
d) 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 30 days' notice
			 prior to the expiration date or nonrenewal.
e) The letter of credit shall state whether
			 it is subject to and governed by the laws of this State or the "ICC Uniform
			 Customs and Practice for Documentary Credits" (ICC Publication No. 600, July
			 2007) (UCP 600) or the "International Standby Practices of the International
			 Chamber of Commerce" (ICC Publication No. 590, January 1999) (ISP98) (ICC
			 Publishing, Inc., 1212 Avenue of the Americas, New York NY 10036 (no later
			 amendments or editions)), and all drafts drawn under the letter of credit shall
			 be presentable at an office in the U.S. of a qualified U.S. financial
			 institution.
f) If the letter of
			 credit is made subject to the UCP 600 or ISP98, the letter of credit shall
			 specifically address and make provision 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 36 of UCP 600 occur.
g) The letter of credit shall be issued or
			 confirmed by a qualified U.S. financial institution authorized to issue letters
			 of credit, pursuant to Section 173.1(3)(A) of the Code.
h) If the letter of credit is issued by a
			 nonqualified financial institution and is confirmed by a qualified U.S.
			 financial institution as described in subsection (a), then the following
			 additional requirements shall be met:
1) The
			 issuing financial institution shall formally designate the confirming qualified
			 U.S. financial institution as its agent for the receipt and payment of the
			 drafts; and
2) The "evergreen
			 clause" shall provide for not less than 60 days' notice of nonrenewal prior to
			 the expiration date.