Administrative Rules of Montana › Department 6 - STATE AUDITOR › Chapter 6.6 - INSURANCE DEPARTMENT › Subchapter 6.6.38 - Credit for Reinsurance › Rule 6.6.3863 - ASSUMING INSURER - TRUST AGREEMENT CONDITIONS - MANDATORY

Current through Register Vol. 13, July 5, 2024
(1) The trust
				agreement required by
				33-2-1217(2),
				MCA, shall be entered into between the beneficiary, the grantor, and a trustee
				which shall be a qualified United States financial institution as defined in
				33-2-1217, MCA, and include all of
				the following conditions:
(a) the trust
				agreement shall create a trust account into which assets shall be
				deposited;
(b) all assets in the
				trust account shall be held by the trustee at the trustee's office in the
				United States;
(c) the trust
				agreement shall provide that:
(i) 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;
(ii) no other statement or document is
				required to be presented in order to withdraw assets, except that the
				beneficiary may be required to acknowledge receipt of withdrawn assets;
				and
(iii) it is not subject to any
				conditions or qualifications outside the trust agreement; and it shall not
				contain references to any other agreements to documents except as provided for
				under (j).
(d) the trust
				agreement shall be established for the sole benefit of the
				beneficiary;
(e) the trust
				agreement shall require the trustee to:
(i)
				receive assets and hold all assets in a safe place;
(ii) 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;
(iii) 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;
(iv) notify the grantor
				and the beneficiary within 10 days of any deposits to or withdrawals from the
				trust account;
(v) upon written
				demand of the beneficiary, immediately take any and 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
(vi) 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.
(f) the trust
				agreement shall provide that at least 30 days, but not more than 45 days, prior
				to termination of the trust account, written notification of termination must
				be delivered by the trustee to the beneficiary;
(g) the trust agreement shall be made subject
				to and governed by the laws of the state in which the trust is
				established;
(h) the trust
				agreement shall prohibit invasion of the trust corpus for the purpose of paying
				compensation to, or reimbursing the expenses of, the trustee;
(i) the trust agreement shall provide that
				the trustee shall be liable for its own 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 and/or willful misconduct; and
(j) either the reinsurance agreement or the
				trust agreement must stipulate that assets deposited in the trust account shall
				be valued according to their current fair market value and shall consist only
				of cash in U.S. dollars, certificates of deposit issued by a U.S. bank and
				payable in U.S. dollars, and investments permitted by the Insurance Code or any
				combination of the above, provided investments in or issued by an entity
				controlling, controlled by, or under common control with either the grantor or
				the beneficiary of the trust shall not exceed five percent of total
				investments. The agreement may further specify the types of investments to be
				deposited. If the reinsurance agreement covers life, annuities, or accident and
				health or disability risks, then the provisions required by this paragraph must
				be included in the reinsurance agreement.