Required Conditions. (a) The trust agreement must be entered into between the benefi- ciary, the grantor, and a trustee which must be a qualified United States financial institution as defined in RCW 48.12.465(2). (b) The trust agreement must create a trust account into which assets must be deposited. (c) All assets in the trust account must be held by the trustee at the trustee's office in the United States. (d) The trust agreement must provide that: (i) The beneficiary must have the right to withdraw assets from the trust account at any time, without notice to the grantor, subject only to written notice from the beneficiary to the trustee; (ii) No other statement or document is required to be presented to withdraw assets, except that the beneficiary may be required to ac- knowledge receipt of withdrawn assets; (iii) It is not subject to any conditions or qualifications out- side of the trust agreement; and (iv) It must not contain references to any other agreements or documents except as provided for under (k) and (l) of this subsection. (e) The trust agreement must be established for the sole benefit of the beneficiary. (f) The trust agreement must require the trustee to: (i) Receive assets and hold all assets in a safe place; (ii) Determine that all assets are in such form that the benefi- ciary, or the trustee upon direction by the beneficiary, may whenever necessary negotiate the assets, without consent or signature from the grantor or any other person or entity; (iii) Furnish to the grantor and the beneficiary a statement of all assets in the trust account upon its inception and at intervals no less frequent than the end of each calendar quarter; (iv) Notify the grantor and the beneficiary within ten days, of any deposits to or withdrawals from the trust account; (v) Upon written demand of the beneficiary, immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title, and interest in the assets held in the trust account to the beneficiary and deliver physical custody of the assets to the ben- eficiary; and (vi) Allow no substitutions or withdrawals of assets from the trust account, except on written instructions from the beneficiary, except that the trustee may, without the consent of but with notice to the beneficiary, upon call or maturity of any trust asset, withdraw the asset upon condition that the proceeds are paid into the trust ac- count. (g) The trust agreement must provide that at least thirty days, but not more than forty-five days, prior to termination of the trust account, written notification of termination must be delivered by the trustee to the beneficiary. (h) The trust agreement must be made subject to and governed by the laws of the state in which the trust is domiciled. (i) The trust agreement must prohibit invasion of the trust cor- pus for the purpose of paying compensation to, or reimbursing the ex- penses of, the trustee. In order for a letter of credit to qualify as an asset of the trust, the trustee must have the right and the obliga- tion under the deed of trust or some other binding agreement (as duly approved by the commissioner), to immediately draw down the full amount of the letter of credit and hold the proceeds in trust for the beneficiaries of the trust if the letter of credit will otherwise ex- pire without being renewed or replaced. (j) The trust agreement must provide that the trustee is liable for its own negligence, willful misconduct, or lack of good faith. The failure of the trustee to draw against the letter of credit in circum- stances where the draw would be required is either negligence, or willful misconduct, or both. (k) Notwithstanding other provisions of WAC ▇▇▇-▇▇-▇▇▇ through ▇▇▇-▇▇-▇▇▇, when a trust agreement is established in conjunction with a reinsurance agreement covering risks other than life, annuities, and disability, where it is customary practice to provide a trust agree- ment for a specific purpose, the trust agreement may provide that the ceding insurer must undertake to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, only for the following purpo- ses: (i) To pay or reimburse the ceding insurer for the assuming in- surer's share under the specific reinsurance agreement regarding any losses and allocated loss expenses paid by the ceding insurer, but not recovered from the assuming insurer, or for unearned premiums due to the ceding insurer if not otherwise paid by the assuming insurer; (ii) To make payment to the assuming insurer of any amounts held in the trust account that exceed one hundred two percent of the actual amount required to fund the assuming insurer's obligations under the specific reinsurance agreement; or (iii) Where the ceding insurer has received notification of ter- mination of the trust and where the assuming insurer's entire obliga- tions under the specific reinsurance agreement remain unliquidated and undischarged ten days prior to the termination date, to withdraw amounts equal to the obligations and deposit those amounts in a sepa- rate account, in the name of the ceding insurer in any qualified Uni- ▇▇▇ States financial institution as defined in RCW 48.12.465(2), apart from its general assets, in trust for the uses and purposes specified in (k)(i) and (ii) of this subsection as may remain executory after the withdrawal and for any period after the termination date. (l) Notwithstanding other provisions of WAC ▇▇▇-▇▇-▇▇▇ through ▇▇▇-▇▇-▇▇▇, when a trust agreement is established to meet the require- ments of WAC ▇▇▇-▇▇-▇▇▇ in conjunction with a reinsurance agreement covering life, annuities, and disability risks, where it is customary to provide a trust agreement for a specific purpose, the trust agree- ment may provide that the ceding insurer must undertake to use and ap- ply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, only for the following purposes: (i) To pay or reimburse the ceding insurer for: (A) The assuming insurer's share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assum- ing insurer, to the owners of policies reinsured under the reinsurance agreement on account of cancellations of the policies; and (B) The assuming insurer's share under the specific reinsurance agreement of surrenders and benefits or losses paid by the ceding in- surer, but not yet recovered from the assuming insurer, under the terms and provisions of the policies reinsured under the reinsurance agreement. (ii) To pay to the assuming insurer amounts held in the trust ac- count in excess of the amount necessary to secure the credit or reduc- tion from liability for reinsurance taken by the ceding insurer; or (iii) Where the ceding insurer has received notification of ter- mination of the trust and where the assuming insurer's entire obliga- tions under the specific reinsurance agreement remain unliquidated and undischarged ten days prior to the termination date, to withdraw amounts equal to the assuming insurer's share of liabilities, to the extent that the liabilities have not been funded by the assuming in- surer, and deposit those amounts in a separate account, in the name of the ceding insurer in any qualified United States financial institu- tion apart from its general assets, in trust for such uses and purpo- ses specified in (l)(i) and (ii) of this subsection as may remain ex- ecutory after withdrawal and for any period after the termination date. (m) Either the reinsurance agreement or the trust agreement must stipulate that assets deposited in the trust account must be valued according to their current fair market value and must consist only of cash in United States dollars, certificates of deposit issued by a United States bank and payable in United States dollars, and invest- ments permitted by Title 48 RCW or any combination of the above, pro- vided investments in or issued by an entity controlling, controlled by or under common control with either the grantor or the beneficiary of the trust must not exceed five percent of total investments. The agreement may further specify the types of investments to be depos- ited. If the reinsurance agreement covers life, annuities or accident and disability risks, then the provisions required by this subsection (2)(m) of this section must be included in the reinsurance agreement.
Appears in 4 contracts
Sources: Trust Agreement, Trust Agreement, Trust Agreement
Required Conditions. (a) The trust agreement must be entered into between the benefi- ciarybeneficiary, the grantor, and a trustee which must be a qualified United States financial institution as defined in RCW 48.12.465(2)section 60A.091.
(b) The trust agreement must create a trust account into which assets must be deposited.
(c) All assets in the trust account must be held by the trustee at the trustee's office in the United States, except that a bank may apply for the commissioner's permission to use a foreign branch office of the bank as trustee for trust agreements established pursuant to this section. If the commissioner approves the use of the foreign branch office as trustee, then its use must be approved by the beneficiary in writing and the trust agreement must provide that the written notice described in paragraph (d), clause (1), must also be presentable, as a matter of legal right, at the trustee's principal office in the United States.
(d) The trust agreement must provide that:
(i1) The the beneficiary must shall have the right to withdraw assets from the trust account at any time, without notice to the grantor, subject only to written notice from the beneficiary to the trustee;
(ii2) No no other statement or document is required to be presented in order to withdraw assets, except that the beneficiary may be required to ac- knowledge acknowledge receipt of withdrawn assets;
(iii3) It it is not subject to any conditions or qualifications out- side outside of the trust agreement; and
(iv4) It must it shall not contain references to any other agreements or documents except as provided for under paragraph (k) and (l) of this subsection).
(e) The trust agreement must be established for the sole benefit of the beneficiary.
(f) The trust agreement must require the trustee to:
(i1) Receive receive assets and hold all assets in a safe place;
(ii2) Determine determine that all assets are in such form that the benefi- ciarybeneficiary, or the trustee upon direction by the beneficiary, may whenever necessary negotiate the assets, without consent or signature from the grantor or any other person or entity;
(iii3) Furnish furnish to the grantor and the beneficiary a statement of all assets in the trust account upon its inception and at intervals no less frequent than the end of each calendar quarter;
(iv4) Notify notify the grantor and the beneficiary within ten days, days of any deposits to or withdrawals from the trust account;
(v5) Upon upon written demand of the beneficiary, immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title, and interest in the assets held in the trust account to the beneficiary and deliver physical custody of the assets to the ben- eficiarybeneficiary; and
(vi6) Allow allow no substitutions or withdrawals of assets from the trust account, except on written instructions from the beneficiary, except that the trustee may, without the consent of but with notice to the beneficiary, upon call or maturity of any trust asset, withdraw the asset upon condition that the proceeds are paid into the trust ac- countaccount.
(g) The trust agreement must provide that at least thirty 30 days, but not more than forty-five 45 days, prior to before termination of the trust account, written notification of termination must be delivered by the trustee to the beneficiary.
(h) The trust agreement must be made subject to and governed by the laws of the state in which the trust is domiciledestablished.
(i) The trust agreement must prohibit invasion of the trust cor- pus corpus for the purpose of paying compensation to, or reimbursing the ex- penses expenses of, the trustee. In order for a letter of credit to qualify as an asset of the trust, the trustee must have the right and the obliga- tion under the deed of trust or some other binding agreement (as duly approved by the commissioner), to immediately draw down the full amount of the letter of credit and hold the proceeds in trust for the beneficiaries of the trust if the letter of credit will otherwise ex- pire without being renewed or replaced.
(j) The trust agreement must provide that the trustee is liable for its own negligence, willful misconduct, or lack of good faith. The failure of the trustee to draw against the letter of credit in circum- stances where the draw would be required is either negligence, or willful misconduct, or both.
(k) Notwithstanding other provisions of WAC ▇▇▇-▇▇-▇▇▇ through ▇▇▇-▇▇-▇▇▇this section, when a trust agreement is established in conjunction with a reinsurance agreement covering risks other than life, annuities, and disabilityaccident and health, where it is customary practice to provide a trust agree- ment agreement for a specific purpose, the trust agreement may may, notwithstanding any other conditions in this section, provide that the ceding insurer must undertake to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, only insurer for the following purpo- sespurposes:
(i1) To to pay or reimburse the ceding insurer for the assuming in- surerinsurer's share under the specific reinsurance agreement regarding any losses and allocated loss expenses paid by the ceding insurer, but not recovered from the assuming insurer, or for unearned premiums due to the ceding insurer if not otherwise paid by the assuming insurer;
(ii2) To to make payment to the assuming insurer of any amounts held in the trust account that exceed one hundred two 102 percent of the actual amount required to fund the assuming insurer's obligations under the specific reinsurance agreement; or
(iii3) Where where the ceding insurer has received notification of ter- mination termination of the trust account and where the assuming insurer's entire obliga- tions obligations under the specific reinsurance agreement remain unliquidated and undischarged ten days prior to before the termination date, to withdraw amounts equal to the obligations and deposit those amounts in a sepa- rate account, in the name of the ceding insurer in any qualified Uni- ▇▇▇ States financial institution as defined in RCW 48.12.465(2), apart from its general assets, in trust for the uses and purposes specified in (k)(i) and (ii) of this subsection as may remain executory after the withdrawal and for any period after the termination date.
(l) Notwithstanding other provisions of WAC ▇▇▇-▇▇-▇▇▇ through ▇▇▇-▇▇-▇▇▇, when a trust agreement is established to meet the require- ments of WAC ▇▇▇-▇▇-▇▇▇ in conjunction with a reinsurance agreement covering life, annuities, and disability risks, where it is customary to provide a trust agreement for a specific purpose, the trust agree- ment may provide that the ceding insurer must undertake to use and ap- ply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, only for the following purposes:
(i) To pay or reimburse the ceding insurer for:
(A) The assuming insurer's share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assum- ing insurer, to the owners of policies reinsured under the reinsurance agreement on account of cancellations of the policies; and
(B) The assuming insurer's share under the specific reinsurance agreement of surrenders and benefits or losses paid by the ceding in- surer, but not yet recovered from the assuming insurer, under the terms and provisions of the policies reinsured under the reinsurance agreement.
(ii) To pay to the assuming insurer amounts held in the trust ac- count in excess of the amount necessary to secure the credit or reduc- tion from liability for reinsurance taken by the ceding insurer; or
(iii) Where the ceding insurer has received notification of ter- mination of the trust and where the assuming insurer's entire obliga- tions under the specific reinsurance agreement remain unliquidated and undischarged ten days prior to the termination date, to withdraw amounts equal to the assuming insurer's share of liabilities, to the extent that the liabilities have not been funded by the assuming in- surer, and deposit those amounts in a separate account, in the name of the ceding insurer in any qualified United States financial institu- tion institution as defined in section 60A.091 apart from its general assets, in trust for such the uses and purpo- ses purposes specified in paragraphs (l)(i1) and (ii2) of this subsection as may that remain ex- ecutory executory after the withdrawal and for any period after the termination date.
(ml) Either the The reinsurance agreement or entered into in conjunction with the trust agreement must stipulate that assets deposited in the trust account must be valued according to their current fair market value and must consist only of cash in United States dollarsmay, certificates of deposit issued by a United States bank and payable in United States dollarsbut need not, and invest- ments permitted by Title 48 RCW or any combination of the above, pro- vided investments in or issued by an entity controlling, controlled by or under common control with either the grantor or the beneficiary of the trust must not exceed five percent of total investments. The agreement may further specify the types of investments to be depos- ited. If the reinsurance agreement covers life, annuities or accident and disability risks, then contain the provisions required by this subsection subdivision 5, paragraph (2)(m) of this section must be a), clause (2), so long as these required conditions are included in the reinsurance trust agreement.
Appears in 3 contracts
Sources: Qualifying Trust Agreement, Qualifying Trust Agreement, Qualifying Trust Agreement
Required Conditions. (a) The trust agreement must be entered into between the benefi- ciarybeneficiary, the grantor, and a trustee which must be a qualified United States financial institution as defined in RCW 48.12.465(2)section 60A.091.
(b) The trust agreement must create a trust account into which assets must be deposited.
(c) All assets in the trust account must be held by the trustee at the trustee's office in the United States.
(d) The trust agreement must provide that:
(i1) The the beneficiary must shall have the right to withdraw assets from the trust account at any time, without notice to the grantor, subject only to written notice from the beneficiary to the trustee;
(ii2) No no other statement or document is required to be presented in order to withdraw assets, except that the beneficiary may be required to ac- knowledge acknowledge receipt of withdrawn assets;
(iii3) It it is not subject to any conditions or qualifications out- side outside of the trust agreement; and
(iv4) It must it shall not contain references to any other agreements or documents except as provided for under paragraph (k) and (l) of this subsection).
(e) The trust agreement must be established for the sole benefit of the beneficiary.
(f) The trust agreement must require the trustee to:
(i1) Receive receive assets and hold all assets in a safe place;
(ii2) Determine determine that all assets are in such form that the benefi- ciarybeneficiary, or the trustee upon direction by the beneficiary, may whenever necessary negotiate the assets, without consent or signature from the grantor or any other person or entity;
(iii3) Furnish furnish to the grantor and the beneficiary a statement of all assets in the trust account upon its inception and at intervals no less frequent than the end of each calendar quarter;
(iv4) Notify notify the grantor and the beneficiary within ten days, days of any deposits to or withdrawals from the trust account;
(v5) Upon upon written demand of the beneficiary, immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title, and interest in the assets held in the trust account to the beneficiary and deliver physical custody of the assets to the ben- eficiarybeneficiary; and
(vi6) Allow allow no substitutions or withdrawals of assets from the trust account, except on written instructions from the beneficiary, except that the trustee may, without the consent of but with notice to the beneficiary, upon call or maturity of any trust asset, withdraw the asset upon condition that the proceeds are paid into the trust ac- countaccount.
(g) The trust agreement must provide that at least thirty 30 days, but not more than forty-five 45 days, prior to before termination of the trust account, written notification of termination must be delivered by the trustee to the beneficiary.
(h) The trust agreement must be made subject to and governed by the laws of the state in which the trust is domiciledestablished.
(i) The trust agreement must prohibit invasion of the trust cor- pus corpus for the purpose of paying compensation to, or reimbursing the ex- penses expenses of, the trustee. In order for a letter of credit to qualify as an asset of the trust, the trustee must have the right and the obliga- tion under the deed of trust or some other binding agreement (as duly approved by the commissioner), to immediately draw down the full amount of the letter of credit and hold the proceeds in trust for the beneficiaries of the trust if the letter of credit will otherwise ex- pire without being renewed or replaced.
(j) The trust agreement must provide that the trustee is liable for its own negligence, willful misconduct, or lack of good faith. The failure of the trustee to draw against the letter of credit in circum- stances where the draw would be required is either negligence, or willful misconduct, or both.
(k) Notwithstanding other provisions of WAC ▇▇▇-▇▇-▇▇▇ through ▇▇▇-▇▇-▇▇▇this section, when a trust agreement is established in conjunction with a reinsurance agreement covering risks other than life, annuities, and disabilityaccident and health, where it is customary practice to provide a trust agree- ment agreement for a specific purpose, the trust agreement may may, notwithstanding any other conditions in this section, provide that the ceding insurer must undertake to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, only insurer for the following purpo- sespurposes:
(i1) To to pay or reimburse the ceding insurer for the assuming in- surerinsurer's share under the specific reinsurance agreement regarding any losses and allocated loss expenses paid by the ceding insurer, but not recovered from the assuming insurer, or for unearned premiums due to the ceding insurer if not otherwise paid by the assuming insurer;
(ii2) To to make payment to the assuming insurer of any amounts held in the trust account that exceed one hundred two 102 percent of the actual amount required to fund the assuming insurer's obligations under the specific reinsurance agreement; or
(iii3) Where where the ceding insurer has received notification of ter- mination termination of the trust account and where the assuming insurer's entire obliga- tions obligations under the specific reinsurance agreement remain unliquidated and undischarged ten days prior to before the termination date, to withdraw amounts equal to the obligations and deposit those amounts in a sepa- rate account, in the name of the ceding insurer in any qualified Uni- ▇▇▇ States financial institution as defined in RCW 48.12.465(2), apart from its general assets, in trust for the uses and purposes specified in (k)(i) and (ii) of this subsection as may remain executory after the withdrawal and for any period after the termination date.
(l) Notwithstanding other provisions of WAC ▇▇▇-▇▇-▇▇▇ through ▇▇▇-▇▇-▇▇▇, when a trust agreement is established to meet the require- ments of WAC ▇▇▇-▇▇-▇▇▇ in conjunction with a reinsurance agreement covering life, annuities, and disability risks, where it is customary to provide a trust agreement for a specific purpose, the trust agree- ment may provide that the ceding insurer must undertake to use and ap- ply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, only for the following purposes:
(i) To pay or reimburse the ceding insurer for:
(A) The assuming insurer's share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assum- ing insurer, to the owners of policies reinsured under the reinsurance agreement on account of cancellations of the policies; and
(B) The assuming insurer's share under the specific reinsurance agreement of surrenders and benefits or losses paid by the ceding in- surer, but not yet recovered from the assuming insurer, under the terms and provisions of the policies reinsured under the reinsurance agreement.
(ii) To pay to the assuming insurer amounts held in the trust ac- count in excess of the amount necessary to secure the credit or reduc- tion from liability for reinsurance taken by the ceding insurer; or
(iii) Where the ceding insurer has received notification of ter- mination of the trust and where the assuming insurer's entire obliga- tions under the specific reinsurance agreement remain unliquidated and undischarged ten days prior to the termination date, to withdraw amounts equal to the assuming insurer's share of liabilities, to the extent that the liabilities have not been funded by the assuming in- surer, and deposit those amounts in a separate account, in the name of the ceding insurer in any qualified United States financial institu- tion institution as defined in section 60A.091 apart from its general assets, in trust for such the uses and purpo- ses purposes specified in paragraphs (l)(i1) and (ii2) of this subsection as may that remain ex- ecutory executory after the withdrawal and for any period after the termination date.
(ml) Either Assets in the reinsurance agreement or trust account must meet the requirements of section 60A.093, subdivision 1. The trust agreement must stipulate that assets deposited in the trust account must shall be valued according to their current fair market value and must consist only of cash in United States dollars, certificates of deposit issued by a United States bank and payable in United States dollars, and invest- ments permitted by Title 48 RCW or any combination of the above, pro- vided investments in or issued by an entity controlling, controlled by or under common control with either the grantor or the beneficiary of the trust must not exceed five percent of total investmentsvalue. The agreement may further specify the types of investments to be depos- iteddeposited. If the reinsurance agreement covers life, annuities annuities, or accident and disability health risks, then the provisions required by this subsection (2)(m) of this section paragraph must be included in the reinsurance agreement.
(m) A letter of credit may be a trust asset if the trust agreement, deed of trust, or other binding agreement, as approved by the commissioner, provides that if the letter of trust expires without being renewed or replaced, the trustee must immediately draw down the full amount of the letter of credit and hold the proceeds in trust for the beneficiary.
Appears in 1 contract
Sources: Qualifying Trust Agreement
Required Conditions. (a) The trust agreement must be entered into between the benefi- ciarybeneficiary, the grantor, and a trustee which must be a qualified United States financial institution as defined in RCW 48.12.465(2)section 60A.091.
(b) The trust agreement must create a trust account into which assets must be deposited.
(c) All assets in the trust account must be held by the trustee at the trustee's office in the United States, except that a bank may apply for the commissioner's permission to use a foreign branch office of the bank as trustee for trust agreements established pursuant to this section. If the commissioner approves the use of the foreign branch office as trustee, then its use must be approved by the beneficiary in writing and the trust agreement must provide that the written notice described in paragraph (d), clause (1), must also be presentable, as a matter of legal right, at the trustee's principal office in the United States.
(d) The trust agreement must provide that:
(i1) The the beneficiary must shall have the right to withdraw assets from the trust account at any time, without notice to the grantor, subject only to written notice from the beneficiary to the trustee;
(ii2) No no other statement or document is required to be presented in order to withdraw assets, except that the beneficiary may be required to ac- knowledge acknowledge receipt of withdrawn assets;
(iii3) It it is not subject to any conditions or qualifications out- side outside of the trust agreement; and
(iv4) It must it shall not contain references to any other agreements or documents except as provided for under paragraph (k) and (l) of this subsection).
(e) The trust agreement must be established for the sole benefit of the beneficiary.
(f) The trust agreement must require the trustee to:
(i1) Receive receive assets and hold all assets in a safe place;
(ii2) Determine determine that all assets are in such form that the benefi- ciarybeneficiary, or the trustee upon direction by the beneficiary, may whenever necessary negotiate the assets, without consent or signature from the grantor or any other person or entity;
(iii3) Furnish furnish to the grantor and the beneficiary a statement of all assets in the trust account upon its inception and at intervals no less frequent than the end of each calendar quarter;
(iv4) Notify notify the grantor and the beneficiary within ten days, days of any deposits to or withdrawals from the trust account;
(v5) Upon upon written demand of the beneficiary, immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title, and interest in the assets held in the trust account to the beneficiary ben- eficiary and deliver physical custody of the assets to the ben- eficiarybeneficiary; and
(vi6) Allow allow no substitutions or withdrawals of assets from the trust account, except on written instructions from the beneficiary, except that the trustee may, without the consent of but with notice to the beneficiary, upon call or maturity of any trust asset, withdraw the asset upon condition that the proceeds are paid into the trust ac- countaccount.
(g) The trust agreement must provide that at least thirty 30 days, but not more than forty-five 45 days, prior to before termination of the trust account, written notification of termination must be delivered by the trustee to the beneficiary.
(h) The trust agreement must be made subject to and governed by the laws of the state in which the trust is domiciledestablished.
(i) The trust agreement must prohibit invasion of the trust cor- pus corpus for the purpose of paying compensation to, or reimbursing the ex- penses expenses of, the trustee. In order for a letter of credit to qualify as an asset of the trust, the trustee must have the right and the obliga- tion under the deed of trust or some other binding agreement (as duly approved by the commissioner), to immediately draw down the full amount of the letter of credit and hold the proceeds in trust for the beneficiaries of the trust if the letter of credit will otherwise ex- pire without being renewed or replaced.
(j) The trust agreement must provide that the trustee is liable for its own negligence, willful misconduct, or lack of good faith. The failure of the trustee to draw against the letter of credit in circum- stances where the draw would be required is either negligence, or willful misconduct, or both.
(k) Notwithstanding other provisions of WAC ▇▇▇-▇▇-▇▇▇ through ▇▇▇-▇▇-▇▇▇this section, when a trust agreement is established in conjunction with a reinsurance agreement covering risks other than life, annuities, and disabilityaccident and health, where it is customary practice to provide a trust agree- ment agreement for a specific purpose, the trust agreement may may, notwith- standing any other conditions in this section, provide that the ceding insurer must undertake to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, only insurer for the following purpo- sespurposes:
(i1) To to pay or reimburse the ceding insurer for the assuming in- surerinsurer's share under the specific reinsurance agreement regarding any losses and allocated loss expenses paid by the ceding insurer, but not recovered from the assuming insurer, or for unearned premiums due to the ceding insurer if not otherwise paid by the assuming insurer;
(ii2) To to make payment to the assuming insurer of any amounts held in the trust account that exceed one hundred two 102 percent of the actual amount required to fund the assuming insurer's obligations under the specific reinsurance agreement; or
(iii3) Where where the ceding insurer has received notification of ter- mination termination of the trust account and where the assuming insurer's entire obliga- tions obligations under the specific reinsurance agreement remain unliquidated and undischarged ten days prior to before the termination date, to withdraw amounts equal to the obligations and deposit those amounts in a sepa- rate account, in the name of the ceding insurer in any qualified Uni- ▇▇▇ States financial institution as defined in RCW 48.12.465(2), apart from its general assets, in trust for the uses and purposes specified in (k)(i) and (ii) of this subsection as may remain executory after the withdrawal and for any period after the termination date.
(l) Notwithstanding other provisions of WAC ▇▇▇-▇▇-▇▇▇ through ▇▇▇-▇▇-▇▇▇, when a trust agreement is established to meet the require- ments of WAC ▇▇▇-▇▇-▇▇▇ in conjunction with a reinsurance agreement covering life, annuities, and disability risks, where it is customary to provide a trust agreement for a specific purpose, the trust agree- ment may provide that the ceding insurer must undertake to use and ap- ply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, only for the following purposes:
(i) To pay or reimburse the ceding insurer for:
(A) The assuming insurer's share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assum- ing insurer, to the owners of policies reinsured under the reinsurance agreement on account of cancellations of the policies; and
(B) The assuming insurer's share under the specific reinsurance agreement of surrenders and benefits or losses paid by the ceding in- surer, but not yet recovered from the assuming insurer, under the terms and provisions of the policies reinsured under the reinsurance agreement.
(ii) To pay to the assuming insurer amounts held in the trust ac- count in excess of the amount necessary to secure the credit or reduc- tion from liability for reinsurance taken by the ceding insurer; or
(iii) Where the ceding insurer has received notification of ter- mination of the trust and where the assuming insurer's entire obliga- tions under the specific reinsurance agreement remain unliquidated and undischarged ten days prior to the termination date, to withdraw amounts equal to the assuming insurer's share of liabilities, to the extent that the liabilities have not been funded by the assuming in- surer, and deposit those amounts in a separate account, in the name of the ceding insurer in any qualified United States financial institu- tion institution as defined in section 60A.091 apart from its general assets, in trust for such the uses and purpo- ses purposes specified in paragraphs (l)(i1) and (ii2) of this subsection as may that remain ex- ecutory executory after the withdrawal and for any period after the termination date.
(ml) Either the The reinsurance agreement or entered into in conjunction with the trust agreement must stipulate that assets deposited in the trust account must be valued according to their current fair market value and must consist only of cash in United States dollarsmay, certificates of deposit issued by a United States bank and payable in United States dollarsbut need not, and invest- ments permitted by Title 48 RCW or any combination of the above, pro- vided investments in or issued by an entity controlling, controlled by or under common control with either the grantor or the beneficiary of the trust must not exceed five percent of total investments. The agreement may further specify the types of investments to be depos- ited. If the reinsurance agreement covers life, annuities or accident and disability risks, then contain the provisions required by this subsection subdivision 5, paragraph (2)(m) of this section must be a), clause (2), so long as these required conditions are included in the reinsurance trust agreement.
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Sources: Qualifying Trust Agreement