Alabama Administrative Code › Title 482 - ALABAMA DEPARTMENT OF INSURANCE › Chapter 482-1-156 - CREDIT FOR REINSURANCE › Section 482-1-156-.12 - Letters Of Credit Qualified Under Rule 482-1-156-10

Current through Register Vol. 42, No. 9, June 28, 2024
(1) The letter of credit must be clean,
			 irrevocable, and unconditional and issued or confirmed by a qualified United
			 States financial institution as defined in the Act. 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 subparagraph (a) of paragraph (9) of this rule.
			 As used in this rule, "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).
(2)
			 The heading of the letter of credit may include a boxed section containing 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.
(3) 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.
(4) 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 (30) days'
			 notice prior to expiration date or nonrenewal.
(5) 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)(UPC 600) or 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.
(6) 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), 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 17 of
			 Publication 600, or any other successor publication, occur.
(7) 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 paragraph (1) of
			 this rule, then the following additional requirements shall be met:
(a) 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.
(b) The "evergreen clause" shall provide for
			 thirty (30) days' notice prior to expiration date for nonrenewal.