Florida Administrative Code › 69 - DEPARTMENT OF FINANCIAL SERVICES › 69O - OIR - Insurance Regulation › Chapter 69O-143 - DOMESTIC INSURERS › Section 69O-143.042 - Custody Agreement; Requirements

Current through Reg. 50, No. 138; July 16, 2024
(1) A
				domestic insurance company may, by written agreement with a custodian, provide
				for the custody of its securities with that custodian. The securities that are
				the subject of the agreement may be held by the custodian or its agent or in a
				clearing corporation.
(2) Any such
				agreement shall be in writing and shall be authorized by a resolution of the
				Board of Directors of the insurance company or of an authorized committee
				thereof. The terms of the agreement shall comply with the following:
(a) Securities' certificates held by the
				custodian shall be held separate from the securities certificates of the
				custodian and of all of its other customers.
(b) Securities held indirectly by the
				custodian and securities in a clearing corporation shall be separately
				identified on the custodian's official records as being owned by the insurance
				company. Said records shall identify which securities are held by the custodian
				or by its agent and which securities are in a clearing corporation. If the
				securities are in a clearing corporation, said records shall also identify
				where the securities are and if in a clearing corporation, the name of the
				clearing corporation and if through an agent, the name of the agent.
(c) All custodied securities that are
				registered shall be registered in the name of the company or in the name of a
				nominee of the company or in the name of the custodian or its nominee or, if in
				a clearing corporation, in the name of the clearing corporation or its
				nominee.
(d) Custodied securities
				shall be held subject to the instructions of the insurance company and shall be
				withdrawable upon the demand of the insurance company, except that custodied
				securities used to meet the deposit requirements set forth in section
				624.411, F.S., shall, to the
				extent required by that section, be under the control of the Office and shall
				not be withdrawn by the insurance company without the approval of the
				Office.
(e) The custodian shall be
				required to send or cause to be sent to the insurance company a confirmation of
				all transfers of custodied securities to or from the account of the insurance
				company. In addition, the custodian shall be required to furnish no less than
				monthly the insurance company with reports of holdings of custodied securities
				at such times and containing such information as may be reasonably requested by
				the insurance company. The custodian's trust committee's annual report of its
				review of the insurer's trust accounts shall also be provided to the insurance
				company. Reports and verifications may be transmitted in electronic or paper
				form.
(f) During the course of the
				custodian's regular business hours, any officer or employee of the insurance
				company, any independent accountant selected by the insurance company and any
				representative of an appropriate regulatory body shall be entitled to examine,
				on the premises of the custodian, the custodian's records relating to custodied
				securities, but only upon furnishing the custodian with written instructions to
				that effect from an appropriate officer of the insurance company.
(g) The custodian and its agents shall be
				required to send to the insurance company all reports which they receive from a
				clearing corporation their respective systems of internal accounting control
				and reports prepared by outside auditors on the custodians or its agent's
				internal accounting control of custodied securities that the insurance company
				may reasonably request.
(h) The
				custodian shall maintain records sufficient to determine and verify information
				relating to custodied securities that may be reported in the insurance
				company's Annual Statement and supporting Schedules and information required in
				any audit of the financial statements of the insurance company.
(i) The custodian shall provide, upon written
				request from the Office or from an appropriate officer of the insurance
				company, the appropriate affidavits, on Forms OIR-A1-341 (A), (B), or (C) (rev.
				12-07), or substantially similar forms with respect to custodied securities.
				Forms OIR-A1-341 (A), (B) and (C) (rev. 12-07), entitled "Custodian Affidavit,"
				are hereby incorporated by reference. Forms are available at
				http://www.floir.com/iportal.
(j) A
				national bank, state bank or trust company shall secure and maintain insurance
				protection in an adequate amount covering the bank's or trust company's duties
				and activities as custodian for the insurer's assets, and shall state in the
				custody agreement that protection is in compliance with the requirements of the
				custodian's banking regulator. A broker/dealer shall secure and maintain
				insurance protection for each insurance company's custodied securities in
				excess of that provided by the Securities Investor Protection Corporation in an
				amount equal to or greater than the market value of each respective insurance
				company's custodied securities.
(k)
				The custodian shall be obligated to indemnify the insurance company for any
				loss of custodied securities occasioned by the negligence or dishonesty of the
				custodian's officers or employees, or burglary, robbery, holdup, theft or
				mysterious disappearance, including loss by damage or destruction.
(l) In the event that there is a loss of
				custodied securities for which the custodian shall be obligated to indemnify
				the insurance company as provided in paragraph (2)(k), above, the custodian
				shall promptly replace the securities or the value thereof and the value of any
				loss of rights or privileges resulting from said loss of securities.
(m) The agreement may provide that the
				custodian will not be liable for any failure to take any action required to be
				taken under the agreement in the event and to the extent that the taking of
				such action is prevented or delayed by war (whether declared or not and
				including existing wars), revolution, insurrection, riot, civil commotion, act
				of God, accident, fire, explosion, stoppage of labor, strikes or other
				differences with employees, laws, regulations, orders or other acts of any
				governmental authority, or any other cause whatever beyond its reasonable
				control.
(n) In the event that the
				custodian gains entry in a clearing corporation through an agent, there shall
				be an agreement between the custodian and the agent under which the agent shall
				be subject to the same liability for loss of custodied securities as the
				custodian, provided, however, that, if the agent shall be subject to regulation
				under the laws of a jurisdiction which is different from the jurisdiction the
				laws of which regulate the custodian, the Director may accept a standard of
				liability applicable to the agent which is different from the standard of
				liability applicable to the custodian.
(o) The custodian shall provide written
				notification to the Office if the custodial agreement with the insurer has been
				terminated or if 100% of the account assets in any one custody account have
				been withdrawn. This notification shall be remitted to the Office within three
				(3) business days of the receipt by the custodian of the insurer's written
				notice of termination or within three (3) business days of the withdrawal of
				100% of the account assets. All filings shall be submitted electronically to
				http://www.floir.com/iportal.