Alaska Administrative Code › Title 3 - Commerce, Community, and Economic Development › Part 2 - Division of Insurance › Chapter 21 - Insurer - Financial › Article 6 - Reinsurance › 3 AAC 21.665 - Conditions required for a trust agreement for an unauthorized assuming insurer

Current through May 31, 2024
(a) A valid trust agreement shall
(1) be entered into between the beneficiary,
				  the grantor, and a trustee, which shall be a qualified United States financial
				  institution as defined in AS 21.12.020(h);
(2) create a trust account into which assets
				  shall be deposited. All assets in the trust account shall be held by the
				  trustee at the trustee's office in the United States.
(3) provide that
(A) the beneficiary shall have the right to
				  withdraw assets from the trust account at any time, without notice to the
				  grantor, subject only to written notice from the beneficiary to the
				  trustee;
(B) no other statement or
				  document is required to be presented to withdraw assets, except that the
				  beneficiary may be required to acknowledge receipt of withdrawn
				  assets;
(C) it is not subject to
				  any conditions or qualifications outside of the trust agreement;
				  and<
(D) it shall not contain
				  references to any other agreements or documents except as provided for in (b)
				  and (c) of this section;
(4) be established for the sole benefit of
				  the beneficiary.<
(5) require
				  the trustee to
(A) receive assets and hold
				  all assets in a safe place;<
(B)
				  determine that all assets are in such form that the beneficiary, or the trustee
				  upon direction by the beneficiary, may whenever necessary negotiate any such
				  assets, without consent or signature from the grantor or any other person or
				  entity;
(C) furnish to the grantor
				  and the beneficiary a statement of all assets in the trust account upon its
				  inception and at intervals no less frequent than the end of each calendar
				  quarter;
(D) notify the grantor and
				  the beneficiary within 10 days of any deposits to or withdrawals from the trust
				  account;
(E) upon written demand of
				  the beneficiary, immediately take all steps necessary to transfer absolutely
				  and unequivocally all right, title and interest in the assets held in the trust
				  account to the beneficiary and deliver physical custody of the assets to the
				  beneficiary; and
(F) allow no
				  substitutions or withdrawals of assets from the trust account, except on
				  written instructions from the beneficiary, except that the trustee may, without
				  the consent of but with notice to the beneficiary, upon call or maturity of any
				  trust asset, withdraw such asset upon condition that the proceeds are paid into
				  the trust account;
(6)
				  provide that at least 30 days, but not more than forty-five days, prior to
				  termination of the trust account, written notification of termination shall be
				  delivered by the trustee to the beneficiary;
(7) be subject to and governed by the laws of
				  the state in which the trust is domiciled;
(8) prohibit invasion of the trust corpus for
				  the purpose of paying commission to, or reimbursing the expenses of, the
				  trustee. In order for a letter of credit to qualify as an asset of the trust,
				  the trustee shall have the right and the obligation pursuant to the deed of
				  trust or some other binding agreement, as duly approved by the director, to
				  immediately draw down the full amount of the letter of credit and hold the
				  proceeds in trust for the beneficiaries of the trust if the letter of credit
				  will otherwise expire without being renewed or replaced; and
(9) provide that the trustee is liable for
				  its negligence, willful misconduct, or lack of good faith; the failure of the
				  trustee to draw against the letter of credit in circumstances where such draw
				  would be required shall be deemed to be negligence or willful misconduct.