Rhode Island Code of Regulations › Title 230 - Department of Business Regulation › Chapter 20 - Insurance › Subchapter 45 - Financial Standards and Corporate Operations › Part 3 - Credit for Reinsurance › Section 230-RICR-20-45-3.13 - Letters of Credit Qualified Under Section 3.11 of this Part

Current through June 14, 2024
A. The letter of credit must be clean,
				  irrevocable and unconditional and issued or confirmed by a qualified United
				  States financial institution as defined in R.I. Gen. Laws §
										27-1.1-3(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 §
										3.13(H)(1)   of
				  this Part. As used in §
										3.13   of this Part, "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.
B. 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.
C. 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.
D. The term of the letter of credit shall be
				  for at least one (1) 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 thirty (30) days'
				  notice prior to expiration date or nonrenewal.
E. 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 (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.
F. 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, 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 (1) or more of the occurrences specified in Article 17 of
				  Publication 500 or any other successor publication, occur.
G. 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 §
										3.13(A)   of
				  this Part, then the following additional requirements shall be met:
1. 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
2. The "evergreen clause" shall provide for
				  thirty (30) days' notice prior to expiration date for nonrenewal.