Pennsylvania Code
Title 31 - INSURANCE
Part VIII - Miscellaneous Provisions
Chapter 163 - REQUIREMENTS FOR FUNDS HELD AS SECURITY FOR THE PAYMENT OF OBLIGATIONS OF UNLICENSED, UNQUALIFIED REINSURERS
Section 163.15 - Requirements for letters of credit
Universal Citation: 31 PA Code ยง 163.15
Current through Register Vol. 54, No. 12, March 23, 2024
(a) A letter of credit shall:
(1) Be clean, irrevocable, unconditional and
evergreen as provided under section 319.1(b)(3)(i) of the act (40 P. S. §
442.1(b)(3)(i)).
(2) Contain an issue date and date of
expiration with a term of at least 1 year.
(3) Contain an evergreen clause which
prevents the expiration of the letter of credit without due notice from the
issuer and provides for at least 30 days notice prior to expiration date or
nonrenewal.
(4) 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.
(5) Indicate that it is not subject to any
condition or qualifications outside of the letter of credit.
(6) Be conditioned upon no other agreement,
document or entity, except for the reinsurance agreement for which the letter
of credit is issued.
(7) Include a
clearly marked section which indicates that it contains information for
internal identification purposes only and which contains the name of the
applicant and other appropriate notations to provide a reference for the letter
of credit.
(8) Contain a statement
to the effect that the obligation of the qualified United States financial
institution, as defined in section
319.1(g) of the
act, under the letter of credit is in no way contingent upon reimbursement of
the issuer by the applicant with respect thereto.
(9) Contain a statement that the letter of
credit is subject to and governed by the Uniform Customs and Practice for
Documentary Credits of the International Chamber of Commerce (Publication 500
or subsequent updates) and the laws of the Commonwealth, and drafts drawn
thereunder shall be presentable at an office of a qualified United States
financial institution.
(10) Contain
a provision 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 subsequent updates) occur.
(b) A letter of credit shall be issued or confirmed by a qualified United States financial institution authorized to issue letters of credit under section 319.1(g)(1) of the act.
(c) A letter of credit may be issued by a qualified United States financial institution authorized to issue letters of credit under section 319.1(g)(2) of the act if the following conditions are met:
(1) The letter of credit is confirmed by a
qualified United States financial institution authorized to issue letters of
credit under section 319.1(g)(1) of the act.
(2) The issuing qualified United States
financial institution formally designates the confirming qualified United
States financial institution as its agent for the receipt and payment of the
drafts.
(3) The letter of credit
meets other requirements of this chapter relating to letters of
credit.
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