SECTION 735:10-1-14. Acceptance of surety bonds to secure deposits

(a)   OST may accept surety bonds as collateral instruments to secure State funds on deposit with financial institutions. A surety bond must meet the following statutory conditions to be accepted:

(1)   subject to the terms and conditions of the bond, it is irrevocable and absolute,

(2)   the surety bond is issued by an insurance company authorized to do business in Oklahoma,

(3)   the issuer of the surety bond does not provide surety bonds for any one financial institution in an amount that exceeds ten percent (10%) of the surety bond insurer's policyholders' surplus and contingency reserve, net of reinsurance, and

(4)   the claims-paying ability of the authorized insurance company is rated, at all relevant times, in the highest category by at least two nationally recognized rating agencies acceptable to the State Treasurer. [62:72.5(A)(4)].

(b)   The issuer of a surety bond and the financial institution with State funds on deposit are required to notify OST by certified mail at least 45 days prior to cancellation or the non-renewal of a surety bond. Within 48 hours of discovery of a downgrade by a rating agency, notice must be given to OST by the issuer of the surety bond and the financial institution by certified mail. In the event an insurance company providing a surety bond to OST loses its authority to do business in the State of Oklahoma, experiences a rating downgrade below the statutory minimum, or in the event the insurance company exceeds the ten percent (10%) statutory limitation in providing a surety bond to a single financial institution, OST shall require the financial institution with State funds on deposit to substitute conforming collateral for the surety bond The financial institutions which use surety bonds to secure state deposits shall be solely responsible for the cost of securing a surety bond.

[Source: Added at 15 Ok Reg 2479, eff 4-29-98 (emergency); Added at 15 Ok Reg 2865, eff 6-25-98]