§ 1501 Authorized deposits of insurers.
The following deposits of insurers, when made through the Commissioner, shall be accepted and held by the Commissioner in trust, subject to the provisions of this chapter:
(1) Deposits required under this title for authority to transact insurance in this State;
(2) Deposits of domestic insurers when made pursuant to the laws of other states, provinces and countries as requirement for authority to transact insurance in such state, province or country;
(3) Deposits in such additional amounts as are permitted to be made under § 1508 of this title.
§ 1502 Purpose of deposit.
(a) Deposits made in this State under § 513 (deposit requirements, in general) of this title shall be held in trust for the respective purposes stated in that section.
(b) A deposit made in this State by a domestic insurer transacting insurance in another state, province or country, and as required by the laws of such other state, province or country, shall be held for the protection of all the insurer’s policyholders or all its policyholders and creditors or for such other purpose or purposes as may be specified pursuant to such laws.
(c) Deposits made by domestic life insurers in connection with registered policies and bonds shall be made and held for the special protection of the holders of such policies and bonds.
(d) Deposits required under the retaliatory law, § 532 of this title, shall be held for such purposes as is required by such law, and as specified by the Commissioner’s order requiring such deposit to be made.
18 Del. C. 1953, § 1502; 56 Del. Laws, c. 380, § 1.;
§ 1503 Securities eligible for deposit.
(a) All such deposits required under § 513 of this title for authority to transact insurance in this State shall consist of good interest-bearing or dividend-paying securities of kinds eligible for investment of the funds of domestic insurers under Chapter 13 of this title.
(b) All other deposits of a domestic insurer held in this State pursuant to the laws of another state, province or country shall be comprised of securities of the kinds described in subsection (a) of this section above, and of such additional kind or kinds of securities required or permitted by the laws of such state, province or country.
(c) Deposits of foreign insurers made in this State under the retaliatory law, § 532 of this title, shall consist of such assets as are required by the Commissioner pursuant to such law.
(d) All securities placed on deposit on and after July 1, 1973, shall be of such a nature that the interest or dividends are payable without the necessity of access to the depository.
§ 1504 Depository; access; costs.
(a) Deposits made in this State under this title shall be made through the Commissioner and kept in safe deposit with an established bank or trust company located in this State and selected by the Commissioner.
(b) Wherever reasonably possible all deposited securities shall be registered in the name of the Insurance Commissioner, State of Delaware, in trust for the depositing insurer, or registered in the insurer’s name and be accompanied by a duly executed power of attorney in favor of the Commissioner. The State shall be responsible for the safekeeping of all securities deposited under this subsection and shall charge the costs of maintaining these deposits to the insurer.
(c) If securities for deposit are submitted in form other than as provided in subsection (b) of this section above or in connection with “registered” policies or bonds, the Commissioner or his or her representative shall forthwith deposit the same in the presence of the president, vice-president or authorized agent of the insurer, in a strong metal box, which shall require 2 distinct and different keys to unlock the same, 1 key to be kept by the Commissioner and the other by the insurer. The box shall not be opened except in the presence of the Commissioner or duly authorized representative, and the president, vice-president or authorized agent of the insurer. The insurer shall bear the costs of the depository.
(d) In addition to the manner of making deposits under this title provided for above, any such deposits may also be made by sufficient securities or cash being deposited directly with any established bank or trust company located in this State pursuant to an escrow agreement entered into between the person making such deposits and the bank receiving them which agreement has first been approved in writing by the Commissioner. If deposits are made in this manner, the provisions of subsections (a), (b) and (c) of this section above shall not apply to such deposits, except as required by the Commissioner in granting approval of such escrow agreement and the arrangements made pursuant thereto.
§ 1505 Record of deposits.
(a) The Commissioner shall give to the depositing insurer vouchers as to all assets and securities so deposited with the Commissioner.
(b) The Commissioner shall keep a record of the assets and securities comprising each deposit, showing as far as practical the amount and market value of each item, and all the Commissioner’s transactions relative thereto.
§ 1506 Assignment, transfer of securities.
All securities deposited by an insurer and not negotiable by delivery shall be duly registered in the name of the Commissioner and his or her successors in office, or with power of attorney as provided in § 1504 of this title. Upon release of any such security to the insurer, the Commissioner shall reassign or surrender the power of attorney to the insurer.
§ 1507 Appraisal.
The Commissioner may, in his or her discretion, prior to acceptance for deposit of any particular asset or security, or at any time thereafter while so deposited, have the same appraised or valued by competent appraisers. The reasonable costs of any such appraisal or valuation shall be borne by the insurer.
§ 1508 Excess deposits.
(a) If assets deposited by an insurer under this chapter are subject to material fluctuations in market value, the Commissioner may, in his or her discretion, require the insurer to deposit and maintain on deposit additional assets in an amount reasonably necessary to assure that the deposit at all times has a market value of not less than the amount specified under the law by which the deposit is required.
(b) An insurer may otherwise at its option deposit assets in an amount exceeding its deposit required or otherwise permitted under this title by not more than 20% of such required or permitted deposit, or $20,000, whichever is the larger amount, for the purpose of absorbing fluctuations in the value of assets deposited and to facilitate exchange and substitution of such assets. During the solvency of the insurer any such excess shall be released to the insurer upon its request. During the insolvency of the insurer, such excess deposit shall be released only as provided in § 1512(e) of this title.
§ 1509 Rights of insurer during solvency.
So long as the insurer remains solvent and is in compliance with this title it may:
(1) Demand, receive, sue for and recover the income from the assets deposited;
(2) Exchange and substitute for the deposited assets, assets of equivalent or greater fair market value; and
(3) At any reasonable time inspect any such deposit.
18 Del. C. 1953, § 1510; 56 Del. Laws, c. 380, § 1.;
§ 1510 Levy upon deposit.
(a) Except as provided in subsection (b) of this section below, no judgment creditor or other claimant of an insurer shall have the right to levy upon any of the assets held in this State as a deposit for the protection of the insurer’s policyholders or policyholders and creditors. As to deposits made pursuant to the retaliatory provision, § 532 of this title, levy thereupon shall be permitted if so provided in the Commissioner’s order under which the deposit is required.
(b) Securities comprising the special deposit of a surety insurer required under § 513(b) of this title shall not be subject to levy under any writ of attachment, but shall be subject to process against the insurer, by final judgment and execution issued against the insurer on account of its default upon any surety contract issued by it in this State, upon 30 days written notice to the insurer specifying the time, place and manner of sale and the process under which and purposes for which the securities are to be sold and accompanied by a copy of such process.
18 Del. C. 1953, § 1511; 56 Del. Laws, c. 380, § 1.;
§ 1511 Deficiency of deposit.
If for any reason the market value of assets of an insurer held on deposit in this State as required under this title falls below the required amount, the insurer shall promptly deposit other or additional assets eligible for deposit sufficient to cure the deficiency. If the insurer has failed to cure the deficiency within 20 days after receipt of notice thereof by registered mail from the Commissioner, the Commissioner shall forthwith revoke the insurer’s certificate of authority.
18 Del. C. 1953, § 1512; 56 Del. Laws, c. 380, § 1.;
§ 1512 Duration and release of deposit, in general.
(a) Every deposit made in this State by an insurer pursuant to the retaliatory law, § 532 of this title, shall be held for so long as the basis of such retaliation exists.
(b) When an insurer determines to discontinue business in this State, whether through merger, bulk reinsurance, or otherwise, and desires to withdraw its deposit, upon the insurer’s application and at its expense the Commissioner shall publish notice of such intention in a newspaper of general circulation in the State once a week for 4 weeks. After such publication the Commissioner shall deliver the securities remaining on deposit to the insurer or its assigns when the Commissioner is satisfied, upon examination and the oaths of the president and secretary or other chief officers of the insurer, that all debts and liabilities of every kind due or to become due which the deposit was made to secure are paid or extinguished or otherwise adequately provided for.
(c) If the insurer has reinsured all its outstanding risks in another insurer or insurers, the Commissioner shall deliver such assets and securities to such insurer or insurers so assuming such risks, after publication of the notice required under subsection (b) of this section above, and upon proof to the Commissioner’s satisfaction that:
(1) The assuming insurer has assumed and agreed to discharge all liabilities of every kind due and to become due which the deposit was to secure;
(2) The assuming insurer has on deposit in this State or with a state official in the United States, securities of a quality and in an amount and value not less than the deposit required of the reinsured insurer under this title and which will subsist for the security of the obligations of the reinsured insurer so assumed; and
(3) Such assets and securities have been duly assigned, transferred and set over to such assuming insurer or insurers.
(d) If such a withdrawal of deposit is desired by a foreign insurer, in addition to other requirements therefor the insurer shall notify its domiciliary state or province of the intended withdrawal and furnish to the Commissioner written acknowledgment by such state of such notification, in form satisfactory to the Commissioner.
(e) If the insurer is subject to delinquency proceedings as defined in § 5901 of this title, upon the order of a court of competent jurisdiction, the Commissioner shall yield the insurer’s assets held on deposit to the receiver, conservator, rehabilitator or liquidator of the insurer, or to any other properly designated official or officials who succeed to the management and control of the insurer’s assets.
(f) No release of deposited assets shall be made except upon application to and the written order of the Commissioner. The Commissioner shall have no personal liability for any release of any such deposit or part thereof so made by him or her in good faith.
§ 1513 Deposit for “registered” life insurance policies and bonds.
(a) Deposits made with the Commissioner in connection with “registered” policies and bonds heretofore issued in this State by a life insurer shall be held as long as the policy or contract with respect to which such deposit was made continues in force.
(b) Deposits held with respect to policies and bonds still in force shall not be released, whether or not such policies and bonds have been reinsured or the entire liability thereunder assumed by another insurer, or the issuing insurer has become insolvent, subject to delinquency proceedings, or dissolved.
(c) Upon proof satisfactory to the Commissioner that certain of such policies or bonds have lapsed, been surrendered for cash value, matured, or otherwise terminated, and that all liabilities of the insurer to policyholders and beneficiaries or bondholders with respect thereto have been fully paid and discharged, the Commissioner may release any applicable portion of the deposit if the deposit is then in excess of the amount otherwise required. The Commissioner may accept and rely upon the records of the insurer, as kept, summarized, and reported to him or her in regular course of its business, as to any such payment and discharge.
§ 1514 Commissioner’s liability.
If the Commissioner wilfully fails faithfully to require, deposit, keep, account, and receipt for, or surrender in the manner by law authorized or required any assets as provided in this title, the Commissioner shall be responsible upon his or her official bond therefor and suit may be brought upon his or her bond by any person injured by such failure; and the Commissioner so offending shall be guilty of a felony, and fined not more than $10,000 and imprisoned not less than 2 years or more than 10 years.