Subject 120-2-35 BOOK-ENTRY SECURITIES
The purpose of this Regulation Chapter is to set forth guidelines for book-entry securities eligible for deposit under O.C.G.A. §§ 33-11-1et seq. and 33-12-4 and for deposits required under O.C.G.A. §§ 33-3-8 through 33-3-10.
For the purpose of this Regulation Chapter, book-entry securities shall mean the following:
|(a)||Any United States obligations as specified in § 33-11-9 of the Official Code of Georgia Annotated which are issued in the form of any entry on the records of a Federal Reserve Bank or the records of the Department of the Treasury; or|
|(b)||Any other securities as allowed by Chapters 10 and 11 of Title 33 of the Official Code of the Georgia Annotated which are issued in the form of an entry on the records of The Depository Trust Company or other similar programs approved by the Commissioner of Insurance.|
When any company licensed in Georgia is required to have a deposit of securities in this state in accordance with O.C.G.A. §§ 33-12-7 or pursuant to any rule or regulation of the Office of Commissioner of Insurance, the amount of such deposit required shall be at the market value thereof and shall be increased from time to time as necessary to maintain the required amount of deposit.
Interest checks from issuing agents or institutions on bonds, notes, debentures or other securities on deposit shall be forwarded to the custodian bank. The interest shall be transmitted to the insurance company in a manner as previously agreed to by the Office of Commissioner of Insurance and the custodian bank.
The Commissioner of Insurance may receive and retain the interest on deposit of a company licensed in Georgia which is placed in conservatorship, rehabilitation or receivership by its state of domicile and when the Commissioner has reason to believe that such company may potentially be unable to meet its claims and obligations in Georgia or when the market value of deposits falls below the amount required by O.C.G.A. §§ 33-3-8 through 33-3-10. Such interest may be placed in an interest bearing account established by the Commissioner in an institution of the Commissioner's choice and will be held in trust by the Commissioner for policyholders and creditors of the company.
The custodian bank may process and release securities that are matured without written request from the company and where adequate replacement has been made. Bonds or notes eligible for book-entry or DTC will be converted to shares of the cash management account on the day of maturity. The custodian bank is authorized to use the Biltmore U.S. Treasury Money Market Fund as a transitional account. Such Fund is an acceptable asset for purposes of O.C.G.A. § 33-11-1et seq.
|(1)|| Any company that has previously deposited
securities may have its deposit returned provided that all of the following
conditions have been met:
|(2)||No consideration will be given to the return of deposits if a withdrawing company has its Georgia business assumed by an unlicensed company until the Commissioner of Insurance has determined to his or her satisfaction that its liabilities, whether fixed or contingent upon its contracts to persons residing in this state or having policies upon property situated in this state, have been satisfied or terminated.|
Any company that has previously deposited securities may have its deposit partially released provided that all of the following conditions have been met:
|(a)||The company makes a written request to the custodian bank asking that its deposit be returned; and|
|(b)||The Commissioner of Insurance and the custodian bank must verify that the amount of excess deposit requested to be released will not cause the company's deposit to fall below the minimum amount of deposit required by law; and|
|(c)||The Commissioner of Insurance determines the remaining security deposits appropriate in relation to the insurer's risks and financial stability; and|
|(d)||The Commissioner of Insurance or his or her designee gives final authorization to the partial release of the security deposit.|
Any company which has an existing deposit of securities with the Commissioner of Insurance or the custodian bank may make a substitution of all or part of its deposit, provided that all of the following conditions have been met:
|(a)||The company desiring to replace securities shall make a written request for replacement to the custodian bank or the Commissioner of Insurance; and|
|(b)||The replacement deposit shall be of an equal or a greater market value to the securities being replaced; and|
|(c)||The company must submit the official receipt or other appropriate documentation for the securities it desires to be replaced.|
Deposits of securities of a licensed company which is merged into another company will be transferred to the account of the surviving company by the amount of the deposit of the merged company. The custodian bank shall combine deposits in this manner only when instructed to do so in writing by the Commissioner of Insurance.
Insurance companies are prohibited from selling securities which are on deposit with the Commissioner of Insurance or the custodian bank without the express written consent of the Commissioner prior to the sale and only after arrangements for replacements of equal value have been finalized.
The Commissioner of Insurance and a designated custodian bank may enter into a contract detailing the services to be performed by the custodian bank. The Commissioner of Insurance and the custodian bank will jointly develop procedures and instructions detailing the rights and responsibilities of both parties.
If any provision of this Regulation Chapter or the application thereof to any particular person or any particular circumstances is held invalid by a court of competent jurisdiction, the remainder of the Regulation Chapter or the applicability of such provision to other persons or other circumstances shall not be affected.