Current through Register Vol. 54, No. 38, September 21, 2024
The security required in §
125.134(d)(2)
(relating to decision on application) shall be in one of the following
forms:
(1) A surety bond on a form
prescribed by the Bureau issued by a company authorized to transact surety
business in this Commonwealth by the Insurance Department.
(i) The surety company shall possess a
current A.M. Best Rating of B+ or better or a Standard and Poor's rating of
claims paying ability of A or better.
(ii) The fund shall replace the bond with a
new bond issued by a surety company with an acceptable rating or with another
acceptable form of security if the surety company's rating falls below the
acceptable rating after the bond is issued. If the bond is not replaced within
60 days, the Bureau will have discretion to draw on the surety bond and deposit
the proceeds with the State Treasurer to secure the fund's
obligation.
(2) A
security deposit held under a trust agreement prescribed by the Bureau.
(i) The deposit shall consist of cash; bonds
or other evidence of indebtedness issued, assumed or guaranteed by the United
States, or by an agency or instrumentality of the United States; investments in
common funds or regulated investment companies which invest primarily in United
States Government or Government agency obligations; or bonds or other security
issued by the Commonwealth and backed by the Commonwealth's full faith and
credit.
(ii) The securities shall
be held in a Commonwealth chartered bank and trust company or trust company as
defined in section 102 of the Banking Code of 1965 (7 P. S. §
102) or a Federally chartered bank or foreign
bank with a branch office and trust powers in this
Commonwealth.
(3) An
irrevocable letter of credit using language required by the Bureau issued by
and payable at a branch office of a commercial bank located in the continental
United States, Alaska or Hawaii. The letter of credit shall state that the
terms of the letter of credit automatically renew annually unless the letter of
credit is specifically nonrenewed by the issuing bank 60 days or more prior to
the anniversary date of its issuance.
(i) At
the time of issuance of the letter of credit, the issuing bank or its holding
company shall have a B/C or better rating or 2.5 or better score by Thomson
BankWatch or the issuing bank shall have a CD rating of BBB or better by
Standard & Poor's Corporation.
(ii) The fund shall replace the letter of
credit with a new letter of credit issued by a bank with an acceptable credit
rating, or with another acceptable form of security, if the bank's rating falls
below the acceptable rating after the letter of credit is issued. If the letter
of credit is not replaced within 60 days, the Bureau will draw on the letter of
credit and will deposit the proceeds to secure the fund's
obligations.
(iii) The fund shall
execute a standby trust agreement on a form prescribed by the Bureau with a
Commonwealth chartered bank and trust company or trust company as defined in
section 102 of the Banking Code of 1965 or a Federally chartered bank or
foreign bank with a branch office and trust powers in this Commonwealth. The
trust agreement will accommodate proceeds from a letter of credit drawn on by
the Bureau.
