(A) Assets of the SPFC held in trust to secure obligations under the SPFC contract must at all times be held in:

1. (1) cash and cash equivalents;
2. (2) securities listed by the securities Valuation Office of the NAIC and qualifying as admitted assets under statutory accounting convention in its state of domicile; or
3. (3) another form of security acceptable to the director.

(D) The provisions for withdrawal by the counterparty of assets from the trust must be clean and unconditional, subject only to the following requirements:

1. (1) the counterparty has the right to withdraw assets from the trust account at any time, without notice to the SPFC, subject only to written notice to the trustee from the counterparty that funds in the amount requested are due and payable by the SPFC, pursuant to the terms of the SPFC contract.
2. (2) a statement or document does not need to be presented in order to withdraw assets, except the counterparty may be required to acknowledge receipt of withdrawn assets;
3. (3) the trust agreement must indicate that it is not subject to any conditions or qualifications outside of the trust agreement;
4. (4) the trust agreement must not contain references to any other agreements or documents.

(F) The trust agreement must provide for the trustee to:

1. (1) receive assets and hold all assets in a safe place;
2. (2) determine that all assets are in a form that the counterparty or the trustee, upon direction by the counterparty, may negotiate, whenever necessary, the assets, without consent or signature from the SPFC or another person or entity;
3. (3) furnish to the SPFC, the director, and the counterparty a statement of all assets in the trust account reported at fair value upon its inception and at intervals no less frequent than the end of each calendar quarter;
4. (4) notify the SPFC and the counterparty, within ten days, of any deposits to or withdrawals from the trust account;
5. (5) upon written demand of the counterparty, immediately take the necessary steps to transfer absolutely and unequivocally all right, title, and interest in the assets held in the trust account to the counterparty and deliver physical custody of the assets to the counterparty; and
6. (6) allow no substitutions or withdrawals of assets from the trust account, except pursuant to the trust agreement or SPFC contract, or as otherwise permitted by the counterparty.

(K)

1. (1) Notwithstanding the provisions of subsection (D)(3) and (4), or of Section 38-90-755(C)(5), when a trust agreement is established in conjunction with a SPFC contract, then the trust agreement or SPFC contract, or both, may provide that the counterparty shall undertake to use and apply any amounts drawn upon the trust account, without diminution because of the insolvency of the counterparty or the SPFC, only for one or more of the following purposes:

   1. (a) to pay or reimburse the counterparty for payment of the SPFC's share of premiums to be returned to owners of counterparty's policies covered under the SPFC contract on account of cancellations of the policies under the counterparties policies;
   2. (b) to pay or reimburse the counterparty for payment of the SPFC's share of surrenders, benefits, losses, or other benefits covered and payable pursuant to the provisions of the SPFC contract;
   3. (c) to fund an account with the counterparty in an amount to secure the credit or reduction from liability for reinsurance coverage provided under the SPFC contract; or
   4. (d) to pay any other amounts the counterparty claims are legally and properly due under the SPFC contract.
2. (2) Any assets deposited into an account of the counterparty pursuant to subitem (c) of item (1) or withdrawn by the counterparty pursuant to subitem (d) of item (1) and any interest or other earnings on them, must be held by the counterparty in trust and separate and apart from any general assets of the counterparty, for the sole purpose of funding the payments and reimbursements of the SPFC contract described in subitems (a) through (d) of item (1).
3. (3) The counterparty shall return to the SPFC amounts withdrawn under subitems (a) through (d) of item (1) in excess of actual amounts required under subitems (a) through (c) of item (1), and in excess of the amounts subsequently determined to be due under subitem (d) of item (1), plus interest at a rate not in excess of the prime rate for the amounts held pursuant to subitem (c) of item (1) unless a higher rate of interest has been awarded by a panel of arbitration, and any net costs or expenses, including attorneys' fees, awarded by a panel of arbitration.
4. (4) If the counterparty has received notification of termination of the trust account, and where the SPFC's entire obligations secured under the specific SPFC contract remain unliquidated and undischarged ten days before the termination date, to withdraw amounts equal to the obligations and deposit the amounts in a separate account, in the name of the counterparty, in a qualified United States financial institution, separate and apart from the counterparty's general assets, to the extent the obligations or liabilities have not been funded by the SPFC, in trust only for those uses and purposes specified in subitem (a) of item (1) as may remain executory after the withdrawal and for any period after the termination date until discharged.