South Carolina Code 38-90-520. Requirements and guidelines for asset management
(1) The assets of a SPFC must be preserved and administered by or on behalf of the SPFC to satisfy the liabilities and obligations of the SPFC incident to the insurance securitization and other related agreements.
Terms Used In South Carolina Code 38-90-520
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Contract: A legal written agreement that becomes binding when signed.
- Department: means the South Carolina Department of Insurance. See South Carolina Code 38-90-10
- Director: means the Director of the South Carolina Department of Insurance or the director's designee. See South Carolina Code 38-90-10
- Fiduciary: A trustee, executor, or administrator.
- Fraud: Intentional deception resulting in injury to another.
- insurance: includes annuities. See South Carolina Code 38-1-20
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: means an individual, corporation, partnership, association, joint stock company, trust, unincorporated organization, or any similar entity or combination thereof. See South Carolina Code 38-90-10
- Trustee: A person or institution holding and administering property in trust.
(2) Assets held by a SPFC in trust must be valued at their fair value.
(3) The proceeds from the sale of securities pursuant to the insurance securitization must be deposited with the trustee to the extent required to secure its obligations under the SPFC contract as provided by this article and must be held or invested by the trustee pursuant to the provisions of § 38-90-530 and the asset management agreement, if any, filed with the department.
(4) Assets of the SPFC, other than those held in trust for the counterparty, and income on trust assets received by the SPFC may be used to pay interest or other consideration on any securities or outstanding debt or other obligation of the SPFC, and nothing in this article may be construed or interpreted to prevent a SPFC from entering into a swap agreement or other asset management transaction that has the effect of hedging or guaranteeing the fixed or floating interest rate returns paid on the assets in trust or required for the securities issued by the SPFC generated from or other consideration or payment flows in the transaction.
(5) In the SPFC insurance securitization, the contracts or other relating documentation must contain provisions identifying the SPFC.
(6) Unless otherwise approved by the director, a SPFC may not:
(a) issue or otherwise administer primary insurance policies;
(b) enter into a SPFC contract with a person that is not licensed or otherwise authorized to transact the business of insurance or reinsurance in at least its state or country of domicile;
(c) assume or retain exposure to insurance or reinsurance losses for its own account that is not funded by proceeds from a SPFC securitization that meets the provisions of this article. However, the SPFC may wholly or partially reinsure or retrocede the risks assumed to a third party reinsurer on terms approved by the director.
(7) A SPFC may not:
(a) have any direct obligation to the policyholders or reinsureds of the counterparty;
(b) lend or otherwise invest, or place in custody, trust, or under management any of its assets with, or to borrow money or receive a loan from, other than by issuance of the securities pursuant to an insurance securitization, or advance from, anyone convicted of a felony, anyone who is untrustworthy or of known bad character, or anyone convicted of a criminal offense involving the conversion or misappropriation of fiduciary funds or insurance accounts, theft, deceit, fraud, misrepresentation, or corruption.