PURPOSE: This ruleprouides theprocedures to uerify insurance companyownedsecurities 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 lnsuralzce pursuant to section 400.8-108.3., RSMo. (1) Securities Not Placed on Deposit.

1. (A) A custodial agreement between the depository (commercial bank or clearing corporation) and the insurance company must be in effect.

   1. 1. This custodial agreement must contain

provisions which require the depository to provide verification that securities actually are on deposit.

1. 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.

1. (B) A copy of the custodial agreement must be furnished to the insurance department for its records on request.

1. (2) Securities Placed on Deposit.

   1. (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 Insurance for safekeeping.
   2. (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.

   3. (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

      Judith K. Moriarty serretary Of state 20 CSR 200-7

   4. (D) All or any part of the securities or certificates representing the securities on deposit with the depository may be withdrawn only on prior written request for withdrawal signed in the name of the insurance company and the depository and by the director or his/ her designee.
   5. (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.
   6. (F) The depository shall enter into custodial ageeements with all insurance companies depositing securities in the form of book-entry receipts under this rule.
   7. (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.

   8. (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. Auth: sections 374.045, 375.460 and 400.8.108.3,, RSMo (1986).” This rule was preuioussly filed as 4 CSR 190-11.150. Original rule filed Jan. 15,1980, effective Aug. 1, 1980. Amended: Filed Jan. 3, 1990, effective May 1,199O. “Original authority: 374.045, RSMo 119671; 376.460,RSMo (1939);and400.8-108.3.,RSMo (19741, amended 1979.

      CODEOFSTATE REGULATIONS 3 Division 2004inancial Examination

m 20CSR200-74NSURANCE

EXHIBIT A

Custodian Affidavit

(For use where ownership is evidenced by book entry at Federal Reserve Bank of STATE OF ) )ss.: COUNTY OF )

,, being duly sworn deposes and says that s/he _

is of the , a banking corporation organized under and pursuant to the laws of the with its principal place of business at (hereinafter called the “bank”); That his/her duties involve supervision of activities of the bank as custodian and records relating thereto; That the bank is custodian for certain securities of with a place of business at the “insurance company”) pursuant to an agreement between the bank and the insurance company (NOTE: Insert Department of Insurance as party if securities are to be placed on deposit); That it has caused certain of such securities to be credited to its book-entry account with the Federal Reserve Bank of under the Federal Reserve book-entry procedure; and that the schedule attached hereto is a true and complete statement of the securities of the insurance company of which the bank was custodian as of the close of business on entry account maintained in the name of the bank on the books and records of of at such date; That the bank has the same responsibility for the safekeeping of such securities whether in the possession of the bank or in said “General” irdk-entry account as that responsibility is specifically set forth in the agreement between the bank as custodian and the insurance company;

That, to the best of his/her knowledge and belief, unless otherwise shown on the schedule, said securities were the property of said insurance company and were free of all liens, claims or encumbrances whatsoever.

Subscribed and sworn to before me this ~ day of 19 -’ J

- (hereinafter called

which were in a “General” bookthe Federal Reserve Bank

(3/29/93)’ Judith K. Moriarty secretarv Of state (For use in instances where a custodian bank maintains securities on deposit with a Clearing Corporation.) STATE OF

COUNTY OF

;bs of the That his/her duties involve supervision of activities of the bank as custodian and records relating thereto; That the bank is custodian for certain securities of the “insurance company”) pursuant to an agreement between the bank and the insurance company (NOTE: Insert Department of Insurance as party if securities are to be placed on deposit); That the bank is custodian for certain of such securities to be deposited with a Clearing Corporation; and the schedule attached hereto is a true and complete statement of the securities of the insurance company of which the bank was custodian as of the close of business on

That the bank as custodian has the same responsibility for the safe-keeping of such securities whether in the possession of the bank or deposited with a Clearing Corporation as that responsibility is specifically set forth in the agreement between the bank as custodian and the insurance company; and That, to the best of his/her knowledge and belief, unless otherwise shown on the schedule, said securities were the property of said insurance company and were free of all liens, claims or encumbrances whatsoever.

Subscribed and sworn to before me this ~ day of

Judith K. Moriarty 20 CSR 200-7

EXHIBIT B

Custodian Affidavit

) )ss.: ) ,, being duly sworn deposes and says that s/he _ of the , a banking corporation organized under and pursuant to the with its principal place of business at (hereinafter called the “bank”), a-

(hereinafter called

with a place of business at

, and which were so deposited with a Clearing Corporation at such date;

19 A

20 CSR 200-74NSURANCE

EXHIBIT C

Custodian Affidavit

(For use in instances where securities are deposited directly with a Clearing Corporation.)

STATE OF ) )ss.: COUNTY OF ) , being duly sworn deposes and says that s/he is of a Clearing Corporation;

That his/her duties involve supervision of activities of a Clearing Corporation as custodian and records relating thereto; -~ , having a place of business That a Clearing Corporation is custodian for certain securities of

g ereinafter called the “insurance company”) pursuant to an agreement between a Clearing Corporation and the insurance company (NOTE: Insert Department of Insurance as party if securities are to be placed on deposit); That the schedule attached hereto is a true and complete statement of securities which were in the custody of a Clearing Corporation for the account of the insurance company as of the close of business on That a Clearing Corporation as custodian has the responsibility for the safekeeping of such securities (whether in the possession of a Clearing Corporation, deposited with the Federal Reserve Bank of or deposited with another person acting as custodian for a Clearing Corporation) as that responsibility is specifically set forth in the agreement between a Clearing Corporation as custodian and the insurance company. That, to the best of his/her knowledge and belief, unless otherwise shown on the schedule, said securities were the property of said insurance company and were free of all liens, claims or encumbrances whatsoever.

Subscribed and sworn to before me this ~ day of 19-.

Judith K. Moriarty

Ckapter7-Security Deposits