Virginia Administrative Code › Title 14 - INSURANCE › Agency 5 - STATE CORPORATION COMMISSION, BUREAU OF INSURANCE › Chapter 300 - RULES GOVERNING CREDIT FOR REINSURANCE › Section 14VAC5-300-130 - Letters of credit qualifying for section 38.2-1316.4 credit under 14VAC5-300-110

Current through Register Vol. 40, No. 24, July 15, 2024
A.
				The letter of credit shall be clean, irrevocable, unconditional and issued or
				confirmed by a qualified United States financial institution as defined in
				§ 38.2-1316.1 of the Act. 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
				subdivision H 1 of this section. 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).
B. The heading of the
				letter of credit may include a boxed section which contains the name of the
				applicant and other appropriate notations to provide a reference for such
				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 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 for nonrenewal.
E. The letter of credit shall state whether
				it is subject to and governed by the laws of this Commonwealth, the ceding
				insurer's state of domicile or the Uniform Customs and Practice for Documentary
				Credits of the International Chamber of Commerce Publication 600 (UCP 600) or
				International Standby Practices ISP98 of the International Chamber of Commerce,
				Publication 590, 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 or more of the occurrences specified in Article 17
				of Publication 500, or any 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 subsection A of
				this section, 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
				30 days notice prior to the expiration date for nonrenewal.