Deposit of Securities Under a Book-Entry System

PURPOSE: This rule provides the procedures to verify insurance company-owned securities being held by a clearing corporation or a federal reserve bank in book-entry form and for withdrawal procedures where these securities are on deposit with the Department of Commerce and Insurance pursuant to section 400.8-108.3, RSMo. (1) Securities Not Placed on Deposit. (A) A custodial agreement between the depository (commercial bank or clearing corporation) and the insurance company must be in effect. 1. This custodial agreement must contain provisions which require the depository to provide verification that securities actually are on deposit. 2. The division may require verification from the custodian at any time it deems that verification is appropriate. Examples of appropriate verification documents are attached as Exhibits A—C. (B) A copy of the custodial agreement must be furnished to the insurance department for its records on request. (2) Securities Placed on Deposit. (A) An insurance company which deposits securities in the form of book-entry receipts in order to meet its deposit requirements shall deposit the securities or the certificates representing the securities in a depository (commercial bank or clearing corporation) designated by the director of the Department of Commerce and Insurance for safekeeping. (B) The designated depository shall hold the securities or the certificates representing the securities separate and apart from the general assets of the depository and shall provide to the insurance company and the director verification of securities or certificates representing the securities from time-to-time as requested by the insurance company or the director. (C) The depository shall receive and collect all income from the deposited property and shall deposit the income to the credit of the insurance company’s account. (D) All or any part of the securities or certificates representing the securities on deposit with the depository may be withdrawn only on prior written request for withdrawal signed in the name of the insurance company and the depository and by the director or his/her designee. (E) The treasurer of the company or other officer authorized to act on his/her behalf from time-to-time shall certify to the depository the names and signatures of officers of the insurance company qualified to execute written withdrawal requests. (F) The depository shall enter into custodial agreements with all insurance companies depositing securities in the form of bookentry receipts under this rule. (G) The depository shall enter into a master agreement with the department setting out the terms and conditions under which the depository will act as custodian of amounts deposited pursuant to this rule. (H) In order to comply with the provisions of this rule, insurance companies which have securities deposited in the form of book-entry receipts shall transfer these securities to the depository designated by the director within ninety (90) days of the date of the designation. AUTHORITY: sections 374.045 and 400.8108.3, RSMo Supp. 1998 and 375.460, RSMo 1994.* This rule was previously filed as 4 CSR 190-11.150. Original rule filed Jan. 15, 1980, effective Aug. 1, 1980. Amended: Filed Jan. 3, 1990, effective May 1, 1990. Amended: Filed April 23, 1999, effective Nov. 30, 1999. Non-substantive change filed Sept. 11, 2019, published Oct. 31, 2019. *Original authority: 374.045, RSMo 1967, amended 1993, 1995; 375.460, RSMo 1939; and 400.8–108.3, RSMo 1992, amended 1997. AND INSURANCE AND INSURANCE