Hawaii Administrative Rules › Title 16 - DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS › Chapter 168 - CREDIT FOR REINSURANCE › Section 16-168-11 - Letters of credit qualified under section 16-168-9

Current through June, 2024
(a)
			 The letter of credit must be clean, irrevocable, and unconditional and issued
			 or confirmed by a qualified United States financial institution as defined in
			 section
			 431:4A-103(a),
			 HRS. 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 (h)(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, 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 the 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 thirty days'
			 notice prior to expiry 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 Uniform Customs
			 and Practice for Documentary Credits of the International Chamber of Commerce
			 Publication 600 (UCP 600), 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.
(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, (UCP 600), International
			 Standby Practices of the International Chamber of Commerce Publication 590
			 (ISP98), or any successor publication, then 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 Publication 600 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),
			 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
			 thirty days' notice prior to expiry date or nonrenewal.