North Dakota Administrative Code › Title 45 - Insurance, Commissioner of › Article 45-03 - Regulation of Insurance Companies › Chapter 45-03-07.1 - Credit for Reinsurance Model Regulation › Section 45-03-07.1-08 - Letters of credit qualified under section 45-03-07.1-06

Current through Supplement No. 393, July, 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 subsection 1 of
				North Dakota Century Code section 26.1-31.2-03. The letter of credit must
				contain an issue date and expiration date and 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
				must 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 may
				not contain reference to any other agreements, documents, or entities, except
				as provided in subdivision a of subsection 9. As used in this section,
				"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 must be clearly marked to indicate that the
				information is for internal identification purposes only.
3. The letter of credit must 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 must be
				for at least one year and must contain an "evergreen clause" that prevents the
				expiration of the letter of credit without due notice from the issuer. The
				"evergreen clause" must provide for a period of no less than thirty days'
				notice prior to the expiration date or nonrenewal.
5. The letter of credit must 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 (UCP 600) or international standby practices of the
				international chamber of commerce publication 590 (ISP98), and all drafts drawn
				thereunder must 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 must 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 subsection 1,
				then the following additional requirements must 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" must provide for
				thirty days' notice prior to the expiration date for nonrenewal.