Alaska Administrative Code › Title 3 - Commerce, Community, and Economic Development › Part 2 - Division of Insurance › Chapter 21 - Insurer - Financial › Article 9 - Custodian of Insurer Assets › 3 AAC 21.865 - Requirements for custodial agreements

Current through May 31, 2024
(a) An agreement
				  between an authorized insurer and a custodian must require that
(1) a security certificate held by the
				  custodian for the insurer be held separate from other security certificates
				  owned by the custodian or other customers of the custodian;
(2) a security held indirectly by the
				  custodian or a security in a clearing corporation
(A) be separately identified on the
				  custodian's official records as being owned by the insurer;
(B) have records identifying which security
				  is held by the custodian or by its agent and which security is in a clearing
				  corporation; and
(C) if the
				  security is in a clearing corporation, have records that identify
(i) where the security is;
(ii) the name of the clearing corporation;
				  and
(iii) if through an agent, the
				  name of the agent;
(3) a custodied security that is registered
(A) be registered in the name of the insurer
				  or its nominee;
(B) be registered
				  in the name of the custodian or its nominee; or
(C) if in a clearing corporation, be
				  registered in the name of the clearing corporation or its nominee;
(4) a custodied security be held
				  subject to the instructions of the insurer and be withdrawable upon the demand
				  of the insurer, except that a custodied security used to meet the deposit
				  requirements of AS 21 that is under the control of the director may not be
				  withdrawn by the insurer without the approval of the director under the
				  requirements of AS 21.24;
(5) the
				  custodian send or cause to be sent to the insurer an electronic or paper
				  confirmation of each transfer of custodied securities to or from the account of
				  the insurer;
(6) the custodian
				  furnish the insurer no less than monthly electronic or paper reports of
				  holdings of custodied securities containing information reasonably required by
				  the insurer;
(7) the custodian's
				  trust committee's electronic or paper annual reports of its review of the
				  insurer's trust accounts be provided to the insurer;
(8) upon written instructions from an
				  appropriate officer of the insurer, a representative of an appropriate
				  regulatory body, an independent accountant selected by the insurer, or an
				  officer or employee of the insurer be entitled to examine the custodian's
				  records relating to custodied securities of the insurer on the premises of the
				  custodian and during the custodian's regular business hours;
(9) the custodian and its agent send to the
				  insurer
(A) reports received from a clearing
				  corporation on their respective systems of internal accounting control;
				  and
(B) reports that the insurer
				  may reasonably request, prepared by outside auditors on the custodian's or its
				  agent's internal accounting control over custodied securities;
(10) the custodian maintain
				  records sufficient to determine and verify information relating to a custodied
				  security that may be reported in the insurer's annual statement required under
				  AS
				  21.09.200 and supporting schedules and
				  information required in an examination or audit of the financial statements of
				  the insurer;
(11) the custodian
				  provide, upon written request from an appropriate officer of the insurer, the
				  appropriate affidavits, substantially in the form under
				  3 AAC 21.875,
				  3 AAC 21.880, or
				  3 AAC 21.885 with respect to custodied
				  securities;
(12) the custodian
				  secure and maintain insurance protection in an adequate amount covering the
				  duties and activities as a custodian for the insurer's assets and in an amount
				  in compliance with the custodian's state or federal regulator;
(13) a custodian that is a broker-dealer
				  secure and maintain insurance protection for each insurer's custodied
				  securities in excess of that provided by the Securities Investor Protection
				  Corporation and in an amount equal to or greater than the market value of each
				  respective insurer's custodied securities;
(14) the custodian be obligated to indemnify
				  the insurer for any loss of custodied securities by
(A) the negligence or dishonesty of the
				  custodian's officers or employees;
(B) burglary;
(C) robbery;
(D) holdup;
(E) theft;
(F) mysterious disappearance;
(G) damage; or
(H) destruction; and
(15) if a loss of custodied securities occurs
				  for which the custodian is obligated to indemnify the insurer, the custodian
				  will replace promptly the
(A) securities or
				  the value of the securities; and
(B) the value of any loss of rights or
				  privileges resulting from the loss of securities.