Oregon Administrative Rules › Chapter 836 - DEPARTMENT OF CONSUMER AND BUSINESS SERVICES, INSURANCE REGULATION › Division 12 - CREDIT FOR REINSURANCE › Section 836-012-0080 - Letters of Credit Qualified under OAR 836-012-0060

Current through Register Vol. 63, No. 7, July 1, 2024
(1) A letter of credit for purposes of OAR
			 836-012-0060  must be clean, irrevocable, unconditional and issued or confirmed
			 by a qualified U.S. financial institution as defined in ORS
			 731.510(2). 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 section (9)(a) 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 U.S. 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 not 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 this state or the Uniform Customs
			 and Practice for Documentary Credits of the International Chamber of Commerce
			 (Publication 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 U.S. 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 500), or any successor
			 publication, 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 17 of Publication 600, or any
			 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 U.S. financial institution as
			 described in section (7) of this rule, the following additional requirements
			 must be met:
(a) The issuing financial
			 institution shall formally designate the confirming qualified U.S. 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.