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As of March 11, the Securities Valuation Office of the National Association of Insurance Commissioners (NAIC) has removed Silicon Valley Bank (SVB) from the list of approved banks ("qualified U.S. financial institutions,"
As of March 11, the Securities Valuation Office of the National
Association of Insurance Commissioners (NAIC) has removed Silicon
Valley Bank (SVB) from the list of approved banks ("qualified
U.S. financial institutions," or QUSFIs) whose letters of
credit are permitted to secure reinsurance obligations owed to
U.S.-domiciled insurance company cedents such that the cedents can
record the reinsurance on their financial statements. The NAIC
indicated on March 13 it expected that Signature Bank is likely to
be removed from the list as well. The NAIC added that under the
model law for financial statement credit for reinsurance, there is
a "drafting note" providing for the circumstance where a
bank issuing a letter of credit is removed from the list. The
drafting note indicates that "letters of credit acceptable
when first obtained will, in the event of the subsequent
nonqualification of the issuing (or confirming) institution,
continue to be acceptable as security until the account party and
beneficiary would first have, in the normal course of business, an
opportunity to replace the credit support facility."
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