044-50 Wyo. Code R. §§ 50-13 - Letters of Credit Qualified Under Section 11
(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
W.S.
26-5-114(a). 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. The letter of
credit itself shall not contain reference to any other agreements, documents,
or entities, except as provided in subsection (h)(i) 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 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 the
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" which 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 the expiration date or nonrenewal.
(e) The letter of credit shall state whether
it is subject to and governed by the laws of Wyoming 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 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 subsection (a) of
this section, then the following additional requirements shall be met:
(i) 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
(ii) The "evergreen clause" shall provide for
thirty (30) days notice prior to expiration date for nonrenewal.
(h) Reinsurance agreement
provisions.
(i) The reinsurance agreement in
conjunction with which the letter of credit is obtained may contain provisions
which:
(A) Require the assuming insurer to
provide letters of credit to the ceding insurer and specify what they are to
cover;
(B) Stipulate that the
assuming insurer and ceding insurer agree that the letter of credit provided by
the assuming insurer pursuant to the provisions of the reinsurance agreement
may be drawn upon at any time, notwithstanding any other provisions in the
agreement, and shall be utilized by the ceding insurer or its successors in
interest only for one or more of the following reasons:
(I) To pay or reimburse the ceding insurer
for:
(1.) The assuming insurer's share under
the specific reinsurance agreement of premiums returned, but not yet recovered
from the assuming insurers, to the owners of policies reinsured under the
reinsurance agreement on account of cancellations of such policies;
(2.) The assuming insurer's share, under the
specific reinsurance agreement, of surrenders and benefits or losses paid by
the ceding insurer, but not yet recovered from the assuming insurers, under the
terms and provisions of the policies reinsured under the reinsurance agreement;
and
(3.) Any other amounts
necessary to secure the credit or reduction from liability for reinsurance
taken by the ceding insurer;
(II) Where the letter of credit will expire
without renewal or be reduced or replaced by a letter of credit for a reduced
amount and where the assuming insurer's entire obligations under the
reinsurance agreement remain unliquidated and undischarged ten (10) days prior
to the termination date, to withdraw amounts equal to the assuming insurer's
share of the liabilities, to the extent that the liabilities have not yet been
funded by the assuming insurer and exceed the amount of any reduced or
replacement letter of credit, and deposit those amounts in a separate account
in the name of the ceding insurer in a qualified U.S. financial institution
apart from its general assets, in trust for such uses and purposes specified in
subsection (h)(i)(B)(I) of this section as may remain after withdrawal and for
any period after the termination date.
(C) All of the provisions of paragraph (i) of
this subsection shall be applied without diminution because of insolvency on
the part of the ceding insurer or assuming insurer.
(ii) Nothing contained in paragraph (i) of
this subsection shall preclude the ceding insurer and assuming insurer from
providing for:
(A) An interest payment, at a
rate not in excess of the prime rate of interest, on the amounts held pursuant
to subparagraph (i)(B) of this subsection; or
(B) The return of any amounts drawn down on
the letters of credit in excess of the actual amounts required for the above or
any amounts that are subsequently determined not to be due.
Notes
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