SECTION 735:20-1-11. Acceptance of surety bonds to secure deposits

(a)   Public entities may accept surety bonds as collateral instruments to secure public entity 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 O.S. § 517.5(A)(4)].

(b)   The financial institutions which use surety bonds to secure public entity deposits shall be solely responsible for the cost of securing a surety bond. Surety bonds from any particular company may only be accepted after the State Treasurer's approval of the company.

[Source: Added at 16 Ok Reg 1275, eff 5-13-99; Amended at 18 Ok Reg 2857, eff 7-1-01; Amended at 19 Ok Reg 2474, eff 6-27-02]