Code of Massachusetts Regulations › 211 CMR - DIVISION OF INSURANCE › Title 211 CMR 130.00 - Credit For Reinsurance › Section 130.14 - Letters of Credit Qualified under 211 CMR 130.12

Current through Register 1525, July 5, 2024
(1) The letter of credit must be clean,
			 irrevocable, unconditional and issued or confirmed by a qualified United States
			 financial institution as defined in M.G.L. c. 175, § 20A(3)(A). The letter
			 of credit shall contain an issue date and expiration date 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 also shall 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 211 CMR 130.14(8)(a). As used in
			 211 CMR 130.14,
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" that 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 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 the Commonwealth or the
Uniform Customs and Practice for Documentary Credits
of the
			 International Chamber of Commerce Publication 600 (UCP 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 (UCP 600) or
International Standby Practices
of the International Chamber
			 of Commerce Publication 590 (ISP98), or any successor publication, then the
			 letter of credit shall specifically address and provide 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 36 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 211 CMR 130.14(1), 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;
			 and
(b) The "evergreen clause"
			 shall provide for 30 days notice prior to expiration date for
			 nonrenewal.