Illinois Administrative Code › Title 50 - INSURANCE › Part 807 - CUSTODY AGREEMENTS › Section 807.40 - Custody Agreement Requirements

Current through Register Vol. 48, No. 28, July 12, 2024
a) Every domestic company may, by written
			 agreement with a custodian qualified to administer trusts in this State under
			 the Corporate Fiduciary Act [205 ILCS 620 ], and that has an office in this
			 State at which the account is maintained, 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.
b) The 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 of the board. The terms
			 of the agreement shall comply with the following:
1) Securities' certificates held by the
			 custodian shall be held separate from the securities' certificates of the
			 custodian and of all of its other customers.
2) 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. The 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, the 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.
3) To the extent not inconsistent with the
			 provisions of this Part, the custody agreement shall conform to the guidelines
			 and procedures set forth in the Financial Condition Examiners
			 Handbook.
4) If the securities are
			 not located in Illinois, the company's board of directors shall adopt a
			 custodial plan and file it for approval by the Director. If there is a
			 committee or an officer with evidence of the authority from the board to act on
			 this matter, approval by the committee or officer will be sufficient. The
			 custodial plan shall acknowledge that the company and custodian have entered
			 into a custody agreement that contains the following provisions:
A) Address of custodian's Illinois office and
			 that of its main office if outside of Illinois.
B) Acknowledgment by the custodian that is
			 authorized to administer trusts in Illinois pursuant to the provisions of the
			 Illinois Corporate Fiduciary Act [205 ILCS 620].
C) Confirmation that the Illinois Division of
			 Insurance and the courts of the State of Illinois have in rem jurisdiction over
			 the securities, and that the custodian will make the records of the custodial
			 account readily available to the Illinois Division of Insurance during normal
			 business hours.
D) Confirmation
			 that the custodian submits to the jurisdiction of the Illinois Division of
			 Insurance, and to the jurisdiction of any State or federal court located in the
			 State of Illinois.
E) Designation
			 of the custodian's Illinois office as its agent for service of
			 process.
F) Designation that the
			 rights and obligations of the parties under the agreement shall be construed
			 and enforced in accordance with Illinois law.