2011 Kentucky Revised Statutes Subtitle 50. Workers' Compensation Self-Insured Groups 304.50.050 Security deposits -- Dividends on and exchange of assets -- Collection by commissioner -- Release -- Commissioner to approve custodian bank or trust company for security deposits -- Qualifications for approval.
KY Rev Stat § 304.50.050 (1996 through Reg Sess) What's This?
304.50-050 Security deposits -- Dividends on and exchange of assets -- Collection by
commissioner -- Release -- Commissioner to approve custodian bank or trust
company for security deposits -- Qualifications for approval.
(1)
(2)
(3)
(4)
The group shall provide security deposits to the commissioner on a form prescribed
by the commissioner in an amount not less than two hundred fifty thousand dollars
(0,000), ten percent (10%) of the annual premium, or ten percent (10%) of the
reserve requirement as established in the most recent audited statement of financial
condition on file with the commissioner, whichever is greater.
The trustees may file cash, cash equivalents, or United States Treasuries as security
deposit or a bank letter of credit on a form or forms prescribed by the
commissioner, in satisfaction of the security deposit requirement. Notwithstanding
any other provision of law to the contrary, the deposit required under this section
shall be under trust agreements to which depositories, a self-insured group, and the
commissioner are parties. The commissioner may at any time inventory assets on
deposit for any self-insured group. Assets shall not be removed or deposited in or
from the bank or trust company in which the assets are deposited, except upon a
written order, approved by the commissioner, of at least two (2) officers authorized
for such purpose by the workers' compensation group self-insurance fund's board of
directors or other governing body, except that assets may be deposited or removed
under the direction and upon the order of a court of competent jurisdiction, and in
the presence of the commissioner. Deposit assets shall be valued at market.
(a) Unless a fund fails to cure a deficiency, is insolvent, subject to a delinquency
proceeding, or is in default as to taxes or other charges due under state law, a
group self-insurance fund shall be entitled:
1.
To collect and receive interest, dividends, and payments accruing upon
assets held on deposit for its account.
2.
From time to time, to exchange and substitute for any such assets, other
assets eligible for deposits.
(b) If the group self-insurance fund fails to cure a deficiency when required, is
insolvent, subject to delinquency proceedings, or is in default as to taxes or
other charges due to the Commonwealth under law, the commissioner shall
collect such interest, dividends, and payments and add them to the group selfinsurance fund's deposit.
(a) Any required deposit shall be released, in addition to circumstances already
provided for in the following instances only:
1.
Upon extinguishment of substantially all liabilities of the group selfinsurance fund for the security for which the deposit is held;
2.
If the deposit is no longer required under this subtitle; or
3.
Upon proper order of a court of competent jurisdiction, the deposit shall
be released to the receiver, conservator, rehabilitator, or liquidator of the
group self-insurance fund.
(b) No release of a deposit shall be made except on application to and written
order of the commissioner made upon proof satisfactory to the commissioner
(5)
(6)
of the existence of one (1) of the grounds required in paragraph (a) of this
subsection. The commissioner shall not have any personal liability for any
such release of any deposit or part thereof so ordered by the commissioner in
good faith.
(a) A proposed custodian bank or trust company for security deposits shall be
approved by the commissioner and shall be under a custodial agreement
approved by the commissioner.
(b) An approved custodian bank or trust company shall possess the following
qualifications:
1.
The custodian bank or trust company's custodial functions for the selfinsured group shall be carried out under its trust department;
2.
The custodian bank or trust company shall be audited annually by
independent certified public accountants, and the audit report, related
financial statements, and report on internal controls shall be available to
the self-insured group and the commissioner;
3.
The custodian bank or trust company shall be organized under the laws
recognizing that the custodied securities are special deposits rather than
general deposits, remain the specific property of the self-insured group,
and are not subject to any creditor relationship of the custodian bank or
trust company;
4.
The custodian bank or trust company shall maintain blanket coverage
relating to its custodial functions with limits to or exceeding those
suggested by the American Bankers Association;
5.
The custodian bank or trust company's capital and surplus shall equal or
exceed twenty-five million dollars (,000,000) unless it is licensed
and regulated by the Commonwealth of Kentucky, in which case its
capital and surplus shall equal or exceed ten million dollars
(,000,000); and
6.
The custodian bank or trust company has demonstrated sufficient
experience in handling custodial accounts.
The commissioner shall publish a list of banks or trust companies for the security
deposits or letter of credit as proposed by the group self-insurance fund.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1632, effective July 15, 2010. -Amended 2008 Ky. Acts ch. 183, sec. 3, effective July 15, 2008. -- Created 2005 Ky.
Acts ch. 7, sec. 10, effective March 1, 2005.
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