Rule 120-2-45-.10 - Letters of credit - Capital and Surplus(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:
(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.Ga. Comp. R. & Regs. R. 120-2-45-.10
O.C.G.A. § 33-41-23.
Original Rule entitled "Letters of Credit" f. Feb. 9, 1989; eff. Mar. 1, 1989, as specified by the Agency.Editor's Note: In accordance with O.C.G.A. Section 50-13-21, the contents of this Rule is not filed with or published by the Secretary of State; only names and designations are filed, printed and distributed. This Regulation is on file in the Office of Commissioner of Insurance and is open for public examination and copying. (See Editor's Note, p. 88.03.)Note: "Editor's Note" rescinded. Eff. October 11, 2015.Repealed: New Rule entitled "Letters of credit - Capital and Surplus" adopted. F. Sep. 21, 2015; eff. Oct. 11, 2015.