Section 031-740-16 - Reinsurers utilizing letters of creditA. A letter of credit may be used to reduce a ceding insurer's liability in its financial statements for reinsurance ceded to an unauthorized assuming insurer, pursuant to Title 24 A M.R.S.A. §731- B(1)(D), if the reinsurance contract complies with Sections 14 and 15, and the letter of credit qualifies under this section, names the ceding insurer as beneficiary, and has been in force at all times for which statutory financial statement credit is claimed under this section. The reduction in liabilities of the ceding insurer is limited to the lesser of the value of the specific obligations under the reinsurance agreement or the amount available under the letter of credit.B. A letter of credit must be clean, irrevocable, and unconditional and issued or confirmed by a qualified United States financial institution as defined in Title 24-A M.R.S.A. §731-B(4). The letter of credit shall specify an issue date and date of expiration and shall 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. The letter of credit shall also state that it is not subject to any condition or qualifications not contained therein. In addition, the letter of credit itself shall not contain reference to any other agreements, documents, or entities, except as provided in Subsection F.C. The heading of the letter of credit may include a boxed section containing the name of the applicant and other appropriate notations to provide a reference for the letter of credit. The boxed section shall be clearly marked to indicate that such information is for internal identification purposes only.D. A letter of credit shall contain a statement to the effect that the obligation of the qualified United States financial institution which issues a letter of credit is in no way contingent upon reimbursement with respect thereto.E. The term of a letter of credit shall be for at least one year and shall contain an "evergreen clause" which prevents the expiration of the letter of credit without due notice from the issuer. The "evergreen clause" shall provide for a period of no less than thirty (30) days' notice prior to expiration date or at nonrenewal.F. A letter of credit shall state that it is subject to and governed by one of the following: (1) The laws of this State;(2) The Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce Publication 600 (UCP 600), or any successor publication; or(3) International Standby Practices of the International Chamber of Commerce Publication 590 (ISP98), or any successor publication.G. The letter of credit shall designate one or more offices in the United States of a qualified United States financial institution, as defined in Title 24-A M.R.S.A. §731-B(4), and it shall state that all drafts drawn thereunder shall be presentable at the designated office or offices.H. The letter of credit shall specifically address and make provision for a reasonable extension of time to draw against the letter of credit in the event that the designated place for presentation is closed for any reason on the last business day for presentation and no reasonable alternative place for presentation was designated by the issuer with timely notice.I. If the issuer of the letter of credit is not a qualified United States financial institution, then: (1) The letter of credit shall formally designate the confirming qualified United States financial institution as the issuing financial institution's agent for the receipt and payment of the drafts; and(2) The "evergreen clause" shall require thirty (30) days' notice by the confirming financial institution if the confirmation is nonrenewed.J. Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance (or confirmation) may at the discretion of the Superintendent, notwithstanding the issuing (or confirming) institution's subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification, or amendment, whichever first occurs.02-031 C.M.R. ch. 740, § 16