Wisconsin Administrative Code › Office of the Commissioner of Insurance › Chapter Ins 52 - Credit For Reinsurance › Subchapter I - Requirements for Credit for Reinsurance › Section Ins 52.06 - Letters of credit

Current through June 24, 2024
(1) In this section "beneficiary" means the
				insurer for whose benefit the letter of credit has been established and any
				successor of the beneficiary by operation of law, including, but not limited
				to, a court-appointed domiciliary receiver, including, but not limited to, a
				conservator, rehabilitator or liquidator.
(2) A ceding insurer may take credit under s.
				Ins
				52.04(4) only if the letter of credit
				complies with all of the following:
(a) The
				letter of credit is clean, irrevocable and unconditional.
(b) The letter of credit contains an issue
				date and date of expiration and stipulates 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.
(c) The letter of credit states that it is
				not subject to any condition or qualifications outside of the letter of
				credit.
(d) The letter of credit
				itself shall not contain reference to any other agreements, documents or
				entities, except as provided in sub. (3) (a) and (b).
(e) If the heading of the letter of credit
				includes a section which includes notations to provide a reference for the
				letter of credit, the section shall be boxed section and clearly marked to
				indicate that the information is for internal identification purposes
				only.
(f) The letter of credit
				states that the obligation of the qualified United States financial institution
				under the letter of credit is in no way contingent upon
				reimbursement.
(g) The term of the
				letter of credit is for at least one year and the letter of credit contains a
				clause which prevents the expiration of the letter of credit unless the issuer
				gives written notice to the ceding insurer. The "evergreen clause" shall
				provide for a period of no less than 30 days' notice to the ceding insurer
				prior to the expiration date for nonrenewal.
(h) The letter of credit states 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) and that all drafts drawn under the letter of credit are
				presentable at an office in the United States of a qualified United States
				financial institution.
(i) 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),
				the letter of credit specifically addresses and makes provision for an
				extension of time to draw against the letter of credit if any of the
				occurrences specified in Article 36 of Publication 600 occur.
(j) The letter of credit is issued or
				confirmed by a qualified United States financial institution authorized to
				issue letters of credit.
(k) If the
				letter of credit is issued by a financial institution which is not a qualified
				United States financial institution:
1. The
				issuing financial institution formally designates the confirming qualified
				United States financial institution as its agent for the receipt and payment of
				the drafts; and
2. The letter of
				credit "evergreen clause" under par. (g) requires the confirming qualified
				United States financial institution to give written notice to the ceding
				insurer at least 30 days prior to expiration date for nonrenewal.