Compilation of Rules and Regulations of the State of Georgia
Department 120 - OFFICE OF COMMISSIONER OF INSURANCE, SAFETY FIRE COMMISSIONER AND INDUSTRIAL LOAN COMMISSIONER
Chapter 120-2 - RULES OF COMMISSIONER OF INSURANCE
Subject 120-2-45 - CAPTIVE INSURANCE COMPANIES
Rule 120-2-45-.10 - Letters of credit - Capital and Surplus
Universal Citation: GA Rules and Regs r 120-2-45-.10
Current through Rules and Regulations filed through March 20, 2024
(1) Compliance Generally.
Letters of credit must comply with this Regulation.
(2) Defined Terms.
As used in this Rule, the terms below shall have the following meaning:
(a) "Applicant"
means the party who applies for and causes the bank to issue the letter of
credit.
(b) "Beneficiary" means the
Commissioner.
(c) "Clean and
unconditional letter of credit" or "clean and unconditional confirmation" means
a letter of credit or confirmation which makes no reference to any other
agreement, document, or entity, and provides that a beneficiary need only draw
a sight draft under the letter of credit or confirmation and present it to
promptly obtain funds and that no other document need be presented.
(d) "Evergreen clause" means a provision in a
letter of credit or its confirmation which prevents the expiration of the
letter of credit or its confirmation without due written notice to the
beneficiary and the Commissioner from the issuing or confirming bank.
(e) "Qualified United States financial
institution" or "qualified bank" has the same meaning as set forth in O.C.G.A.
§
33-7-14(c)(1).
(3) Specific Requirements.
For a letter of credit to be acceptable, it must:
(a) Be irrevocable;
(b) Be clean and unconditional;
(c) Be issued, presentable, and payable at an
office of the qualified bank in the State of Georgia;
(d) Contain a statement that identifies the
beneficiary and includes the definition set forth in Regulation
120-2-45-.10(2)(b);
(e) Contain a statement that is not subject
to any agreement, condition, or qualification outside of the letter of
credit;
(f) Contain a statement
that authorizes only the Commissioner to draw the letter of credit;
(g) Contain a statement to the effect that
the obligation of the issuing bank under the letter of credit is an individual
obligation of such bank and is in no way contingent upon reimbursement with
respect thereto;
(h) Contain an
issue date and a date of expiration;
(i) Have a term of at least one year and
contain an evergreen clause which provides at least sixty (60) days written
notice to the beneficiary and the Commissioner prior to expiry date for
nonrenewal;
(j) Shall state whether
it is subject to and governed by the laws of the State of Georgia and 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 (ISP 98), 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..
(k) Be issued by a
qualified bank. The aggregate of all letters of credit issued or confirmed to
one beneficiary by any one qualified bank on behalf of any one applicant must
not exceed five percent (5%) of such bank's consolidated capital and surplus as
shown in its annual report as of the end of its preceding fiscal year, as filed
with the federal or state regulatory authority having jurisdiction over such
bank; and
(l) The heading of the
letter of credit may include a boxed section identifying the applicant and
containing other appropriate notations as a reference for such letter of
credit. The boxed section must be clearly marked to indicate that such
information is "For Internal Identification Purposes Only" and does not affect
the terms of the letter of credit or the bank's obligations
thereunder.
(4) Example Provided. An example of an acceptable letter of credit and confirmation letter can be found on the Commissioner's website.
O.C.G.A. § 33-41-23.
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