Insurance, Administration

Rule R590-114

Letters of Credit

Five-Year Notice of Review and Statement of Continuation

DAR File No.: 35644
Filed: 01/10/2012 10:52:23 AM

NOTICE OF REVIEW AND STATEMENT OF CONTINUATION

Concise explanation of the particular statutory provisions under which the rule is enacted and how these provisions authorize or require the rule:

Subsection 31A-2-201(3) provides broad rulemaking authority to implement the provisions of Title 31A, the Insurance Code. Subsection 31A-17-404(3) provides for a rule to determine the form letters of credit are to take to be used as security to protect a ceding insurer in a transaction of reinsurance. This rule sets the standards and form for letters of credit.

Summary of written comments received during and since the last five-year review of the rule from interested persons supporting or opposing the rule:

There have been no written comments regarding this rule in the past five years.

Reasoned justification for continuation of the rule, including reasons why the agency disagrees with comments in opposition to the rule, if any:

Without Rule R590-114, letters of credit may not be of adequate quality to ensure the effectiveness of certain reinsurance agreements. The rule protects the ceding insurer's security interest in reinsurance ceded by means of the letter of credit. This rule may also affect other areas of statutory accounting such as credit for reinsurance ceded. Therefore, this rule should be continued.

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Direct questions regarding this rule to:

• Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at jwhitby@utah.gov

Authorized by:

Jilene Whitby, Information Specialist

Effective:

01/10/2012