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CA Department of Insurance

Certificate of Authority Section 3

Guidelines & Sample Language

This section of the application contains detailed guidelines and sample language intended to assist you with preparing many of the documents you will be required to submit.

All forms are located in a separate forms packet which you can request by calling the department at (415) 538-4035. Guidelines and samples of some contract language are set forth below. The item number listed for each guideline corresponds to the item number assigned to the document in Section III and, therefore, represents the item number you should assign to the document in your application.

If, after reviewing this section, you still have questions about any portion of the Certificate of Authority application, please do not hesitate to contact the department's Legal Division at (415) 538-4035. Our Corporate Affairs staff is always available to answer your questions and provide assistance.


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Application Item #3

Profile

One of the most important items in any Certificate of Authority application is a full and complete profile of the applicant. By providing organization charts along with an in-depth plan of operation at the outset, the applicant will avoid a delay in the review of its application. For purposes of these guidelines, the word "entity" refers to the applicant, its parent, its affiliate, or any non-affiliate. The profile should include the organization charts and list of affiliates referenced in Section III, accompanied by a detailed plan of operation, as discussed in this guideline.

The plan of operation must be verified by an officer of the applicant who has knowledge of the facts set forth in the plan. For your convenience, a sample verification form is enclosed. The plan must cover the following topics.

Competition

California is a highly competitive insurance market. The applicant must explain in detail how the applicant plans to break into that market successfully. Please note that California Insurance Code Section 12919 provides that communications to the department concerning an application for a certificate of authority are confidential.

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Products

Provide a detailed description of the products that will be marketed in California. A general description of the classes to be transacted is not an adequate response. For example, if the applicant plans to market credit life and disability products tailored for use by credit unions, simply stating that it will transact credit life and disability is inadequate.

If a parent, subsidiary and/or affiliated insurer is admitted for the classes of insurance requested in the pending application, please differentiate the products and/or markets of the applicant from those of the admitted insurer(s).

Sales

Provide a detailed description of the applicant's sales techniques. The description should include information regarding recruitment and training of sales representatives.

Identify whether the applicant will be a direct writer or will use agents, brokers or a combination thereof. Explain the compensation and control to be provided by the applicant to its agents, brokers or sales personnel. Provide sample copies of any agreements entered into between the applicant and its agents or brokers.

If the applicant will use a specific agency or managing general agent in California, identify the agency or managing general agent and provide a copy of the agreement for this arrangement.

Underwriting

Explain in detail how the applicant's policies will be underwritten. Identify the entity which will perform the applicant's underwriting functions. This explanation must also describe how the underwriting personnel will be trained, supervised, and compensated.

If personnel for underwriting will be shared with another entity or if another entity will be performing the applicant's underwriting, please explain this arrangement and provide a copy of the agreement for this service.

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Claims Adjusting/Payment

Explain in detail how the applicant will adjust and pay claims. Identify the entity which will perform the applicant's claims adjusting and claims payment functions. This explanation must also describe how the personnel handling claims adjusting and claims payment will be trained, supervised and compensated. (See CIC §815 and 816.)

If personnel for claims adjusting or claims payment will be shared with another entity or another entity will be performing the applicant's claims adjusting and claims payment, please explain this arrangement and provide a copy of the agreement for this service.

Also provide detailed information as to how and by whom claims reserves will be set and modified.

Advertising

Provide a detailed description of the advertising that will be used by the applicant to market its products in California. Include a detailed explanation as to how the applicant will develop, purchase, control and supervise its advertising.

Investment

Identify the entity which will manage the applicant's investments. Provide detailed information as to how the applicant will supervise the management of its investments, including detailed information as to the compensation that will be paid for management of the applicant's investments. Also provide copies of the applicant's investment management agreements and any investment guidelines.

Compensation

Provide detailed information as to all compensation (including but not limited to salary) of the applicant's officers, directors, and key managerial personnel. In this context, see California Insurance Code Sections 10434 and 1649.

A sample Plan of Operation is provided in the forms packet. While your Plan of Operation will obviously differ from the sample plan, it may be used as a guide to determine whether or not your plan is sufficient to satisfy the state's admission requirements.

Attach to your Plan of Operation a sample copy of the applicant's conflict of interest statement, as completed annually by all of its officers, directors, and key managerial personnel.

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Application Item #4

Seasoning Requirements

Section 716 of the California Insurance Code states that:

"No Certificate of Authority shall be granted to a foreign or alien applicant that has not actively transacted for three years the classes of insurance for which it seeks to be admitted.

This section shall not apply to any of the following:

  1. An applicant 51 percent or more of whose voting shares are owned by a reputable insurer admitted to this State for at least three years.
  2. An applicant which is the successor in interest, by merger, transformation, consolidation, purchase, or other transaction, of substantially all the insurance business and going concern value of a reputable insurer which was, and still is, the dominant factor in such transaction, and could itself have been admitted.
  3. An applicant 51 percent or more of whose voting shares are owned by a non-insurance corporation, or a corporation authorized as an insurer but not actively engaged in the insurance business, which corporation, directly or indirectly, owns 51 percent or more of the voting shares of one or more insurers all of which, except the applicant and those which are alien insurers, are reputable insurers admitted to this state for at least three years.
  4. An applicant which meets the conditions established by the Commissioner for exemption from this section."

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To qualify for an exemption from seasoning requirements, as permitted by CIC §716(d), an applicant must meet the following criteria:

  1. The applicant must have actively transacted business for at least one year as evidenced by an Annual Statement and/or Quarterly Statements. There must be a continuity as to ownership, management and block of business.
  2. In the case of an independent applicant, the property and casualty applicant must possess a minimum capital and surplus of at least $5 million or more. A life and disability applicant must have a minimum capital and surplus of $5 million. "Independent" means the applicant is owned by an individual or public shareholders and is not part of a larger holding company system. Affiliated assets are considered not admitted for purposes of determining an exemption to seasoning requirements.
  3. In the case of a property and casualty applicant which is owned by a financially strong and reputable parent, the applicant must provide evidence, in the form of the parent company's Board of Directors' Resolution, that the parent will maintain the applicant's surplus at the statutory capital and surplus minimum until the normal three-year seasoning requirement is fulfilled. The commitment of a life and disability applicant must be to maintain capital and surplus at $5 million.
  4. The applicant must agree that no dividends will be paid to shareholders during the normal seasoning period and that all profits will be retained as surplus, subject to any restrictions of taxing authorities.
  5. The applicant shall agree to department approval of its reinsurance agreements for the normal three-year seasoning period.
  6. If the applicant uses a manager and is a party to a management agreement, the applicant shall not modify, amend or negotiate any new management agreement without prior approval of the department during the normal three-year seasoning period. To facilitate the department's approval, proposed changes must be submitted 30 days in advance of the proposed effective date of the changes.

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Application Item #7

Fingerprint Instructions

All officers, directors, key managerial personnel and individuals with a 10 percent or more beneficial ownership in the applicant and the applicant's ultimate controlling parent will need to be fingerprinted (CIC §704.5 and California Penal Code §11100-11112). The fingerprints will be examined in connection with a criminal history record check by California and federal agencies.

This document is available electronically. In the past, applicants submitted fingerprint cards with impressions directly to the Commissioner for processing. However, as of January 1, 2004, the Commissioner no longer accepts fingerprint cards directly. Instead, fingerprints must be taken at either a live-scan vendor or by a local law enforcement agency on a card that is to be sent to Accurate Biometrics. The following options are available for fingerprint processing.

1.  Live-Scan

Submit a live-scan fingerprint through a live-scan vendor.

Submit a live-scan fingerprint through a live-scan vendor. Electronic fingerprints may be submitted through the vendor of your choice. However, for California residents the vendor must be able to transmit the prints electronically to the California Department of Justice.

This service may also be obtained at most law enforcement agencies. To obtain the location of live-scan fingerprinting services available in California, you may go to the Attorney General's home page at http://ag.ca.gov/fingerprints/publications/contact.php. Mobile services to your site may also be available.

The California Department of Insurance also has arrangements with Accurate Biometrics to provide electronic fingerprinting services. You may review a list of fingerprinting locations by contacting their website at www.accuratebiometrics.com or you may call (866) 361-9944 to set up an appointment.

Individuals residing outside California, should contact their local law enforcement agency about state-approved live-scan fingerprinting services.  The CDI live-scan form LIC 051-CIU must be printed and taken to the vendor or local law enforcement at the time of the fingerprint appointment.

The cost of the live-scan service will include the FBI processing fee of $17, the DOJ processing fee of $32, and an additional "rolling fee" charged by the DOJ authorized vendor.  The additional "rolling fee" will vary depending on the vendor and is noted on the Attorney General's website at http://ag.ca.gov/fingerprints/publications/contact.php.  

The fingerprint card along with a Accurate Biometrics Credit Card Authorization form or a check in the amount of $58.30 made payable to Accurate Biometrics, the vendor processing the fingerprints, must be mailed directly to:

Accurate Biometrics
455 Capitol Mall, Suite 233
Sacramento, CA  95814

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Application Item #7 and Item #8

Affidavit Instructions

As part of the application process, it will be necessary for the applicant to ensure completion of both the Individual Affidavit(s) and the Organizational Affidavit provided in the forms packet.

The Individual Affidavit(s) must be completed by all of the following individuals:
  • The applicant's officers, directors and key management personnel;
  • Individuals having a 10 percent or more beneficial ownership of the applicant (direct or indirect including attribution); and
  • Individuals having a 10 percent or more beneficial ownership of the applicant's ultimate controlling parent.

For insurers, "key management personnel" includes all persons responsible for oversight of any of the following functions:

  • Actuarial
  • Claims
  • Finance
  • Investments
  • Rating
  • Reinsurance
  • Risk Management
  • Sales and Marketing
  • Underwriting

For underwritten title companies, "key management personnel" includes all of the following:

  • Chief Escrow Officer
  • Chief Title Officer
  • County Manager
  • Subdivision Manager
  • Title Plant Manager

The Organizational Affidavit must be completed by an executive officer of the applicant's organization.

The affidavits must be typed and all questions must be answered. Do not leave any spaces blank. If additional space is required, attach an addendum, numbering the response to the corresponding question. Please be sure to submit your originals.

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Application Item #10

Advisory, Management and Service Agreements

These guidelines set forth functions that the department considers to be basic elements of an insurance business. The department will require a written agreement for any function identified herein that is delegated to an entity other than the applicant. The written agreement must include specific safeguard provisions, as indicated below, to ensure that the applicant retains sufficient control of its business. The term "entity" includes an insurer's parent, its affiliate or any non-affiliate. A sample service agreement is provided in the forms packet.

The following are examples of different types of agreements that may delegate a function.

  • Cost sharing agreement
  • Employment agreement
  • Facility sharing agreement
  • Investment agreement
  • General agent agreement
  • Managing general agent agreement
  • Service agreement

In the forms packet, you will find a checklist of the various insurer functions identified in these guidelines. This Delegation of Insurer Functions Checklist must be completed whether or not the applicant delegates a function to another entity.

When submitting a copy of an agreement for review, identify in the margin of the agreement where the specific topics set forth in this guideline have been addressed.

Insurer Functions

Claims Payment or Adjusting

  1. Underwriting
  2. Investment Advice or Servicing
  3. Tax Allocation
  4. Producer's Commissions Computation or Payment
  5. Appointment and Cancellation of Agents
  6. Issuance of Policies and Endorsements
  7. Cancellation of Policies
  8. Collection and Handling of Premiums and Other Funds
  9. Reinsurance
  10. Facility Sharing
  11. Preparation of Financial Reports
  12. Advertising, Sales Promotion and Agency Development
  13. Reserving for Claims and Expenses
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Safeguard Provisions

General Provisions

The following provisions must be included in every agreement.

  1. The insurer shall have ultimate control and responsibility of the functions that it has delegated.
  2. The insurer shall own and have custody of its general corporate accounts and records.
  3. The term of the agreement shall not be for more than five years unless the agreement contains a provision for renegotiation at least every three years.
  4. The insurer shall retain the right to terminate the agreement in the event that the service provider does not perform satisfactorily.
  5. The agreement shall not be assigned.
  6. Compensation:
    1. Compensation of an entity which is an affiliate shall be limited to reimbursement of actual expenses.
    2. Compensation of a non-affiliate entity will be disfavored if it is based on a percentage of premium volume.

Specific Provisions

The following provisions will need to be included in the agreement if the specific function identified below is delegated to another entity.

  1. Collection and Handling of Premiums - Any premiums that are collected must be held in a fiduciary capacity and be paid over to the insurer immediately following collection. If the agreement is with a U.S. manager of an alien insurer, the premiums must be deposited into a trust account for the benefit of the U.S. branch.
  2. Investments - The agreement shall specifically set forth Investment Guidelines under which the applicant has directed the investment manager/advisor to act on its behalf. The agreement shall provide that the investment manager/advisor will adhere to specific investment guidelines set by the insurer and that the insurer may change those guidelines from time to time.

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Application Item #11

Custody Agreements

This guideline is provided to assist applicants and their custodians with drafting custodial agreements that will be acceptable to the department. This discussion is not an exclusive list of provisions which may or may not be used in custodial agreements, but it presents the department's views on the provisions most frequently encountered. In our experience, following the provisions set forth in this guideline will result in a more expeditious review and approval of your application. In addition, a sample of an acceptable Custody Agreement is included in the forms packet.

As used herein, the term "custodied securities" refers to securities held by the custodian, by depositories, by subcustodians or their nominees, or by any other agent of the custodian. The term "agent" means any person or entity used by the custodian to facilitate the handling of custodied securities.

Liability

Standard of Care
The agreement should contain one of two alternative standards of liability:

  1. Strict Liability - The agreement may provide that the custodian is strictly liable for any loss of custodied securities resulting from fire, robbery, burglary, theft or mysterious disappearance. The custodian may designate certain causes for which it will not be strictly liable if the excluded causes are mentioned by name and are unambiguous. Examples of acceptable exclusions would include war, hurricane or nuclear fission. Examples of unacceptable exclusions include acts of God or a public enemy, strikes or other employee disturbances, civil commotion, a cause beyond the custodian's control, accident, or explosion.

    For causes of loss other than fire, robbery, burglary, theft or mysterious disappearance, the custodian will be liable unless it proves that its employees, officers and agents were not negligent and did not act with willful misconduct. The burden of disproving negligence must be shifted to the custodian even if loss occurs while custodied securities are held by an agent of the custodian. The rebuttable presumption should apply to simple negligence, not merely to gross negligence.

  2. Professional Standard - Alternatively, the agreement may provide that the custodian shall exercise the standard of care which a professional custodian engaged in the banking or trust company industry and having professional expertise in financial and securities processing transactions and custody would observe in these affairs. (See CIC §1104.9)

    In addition, if the agreement sets forth a professional standard of care provision, language should be added to explicitly state that the custodian shall be liable to the insurer for loss of securities or other property in the custodial account which result from the negligence or willful misconduct of the custodian, the subcustodian, depository or any of their respective officers, employees, agents or nominees.

Burden of Proof

The agreement should not limit or reduce the burden of proof placed on the custodian by applicable law in any action for breach of the custodian's standard of care.

Agents

Regardless of the standard used, the agreement should specify that no provision in any contract or arrangement between the primary custodian and any agent authorized by the agreement to hold the insurer's assets (whether in definitive or book-entry form) shall diminish or otherwise alter the custodian's liability to the insurer. (See also "Use of Depositories and Other Agents" and "Registration of Custodied Securities" below.)

Indemnity

The custodian should not demand indemnity for all claims, losses, liabilities, damages or expenses incurred in performing custodial duties for an insurer. Indemnification should be limited to situations where the loss, expense, etc., was the fault of the insurer or the insurer's agents, or was incurred while the custodian strictly and diligently followed the insurer's instruction.

Brokers
The agreement may relieve the custodian of liability for insolvency or legal inability of brokers or dealers to perform in only two cases:

  1. When the custodian has not breached its standards of care in selecting or using any such agent; or
  2. When the agent is not financially affiliated with the custodian.

The agreement should not provide that brokers or dealers selected by the custodian become agents of the insurer or that the custodian is not responsible for the omissions of those brokers or dealers.

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Advice of Counsel

A custodian may disclaim liability for acts or omissions resulting from its good faith reliance on the advice of legal counsel only when the advice is received from counsel employed or retained by the insurer. The custodian may not negate liability based on advice received from counsel employed or retained by the custodian.

Replacement Provision

The agreement should contain a replacement provision which specifies that in the event of loss or damage to custodied securities, the custodian shall, on demand by the insurer, promptly replace those securities with securities of like kind and quality, together with all rights and privileges pertaining to such securities or, if acceptable to the insurer, deliver cash equal to the fair market value of the securities on the date when the loss was discovered.

The replacement provision should remain operative while the parties are negotiating or litigating the cause of the loss. The contract may provide that if the custodian replaces or reimburses for lost custodied securities, and is later exonerated from liability, the insurer shall reimburse the custodian for the cost of such replacement or reimbursement.

Use of Depositories and Other Agents

The agreement should clearly state whether or not the custodian may use correspondent banks, subcustodians, depositories, Federal Reserve banks, brokers, nominees, etc. to hold or transfer custodied securities. If the custodian may use any of these facilities, the agreement should specifically deem them to be the custodian's agents and should clearly specify their function. If custodied securities are retained by the issuer (either in definitive or book-entry form), the agreement should so specify and should deem the issuer to be the custodian's agent. (See also "Liability" and "Registration of Custodied Securities" in this guideline.)

Holding of Assets

Only "qualified depositories" should be used for long-term immobilization of custodied securities. A "qualified depository" is:

  • A depository that provides for long-term immobilization of securities, or a clearing corporation that is also a depository, which in either case has been approved by or registered with the Securities and Exchange Commission;
  • A Federal Reserve bank; or
  • An entity approved by the department as a qualified depository and which has been registered with or approved by the Securities and Exchange Commission.

The agreement should use the word "depository" in any authorizing language (although the depository may be defined as a "clearing agency," "clearing corporation" or entity that provides "handling, clearance or safekeeping services," as long as it has been approved by the SEC).

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Registration of Custodied Securities

The agreement should specify whether or not custodied securities may be registered in nominee name.

Permitted Nominees

Only the nominee name of the custodian, subcustodian, or a qualified depository may be used. (See also "Use of Depositories and Other Agents" and "Holding of Assets" above.)

Nominee Identification

An affidavit, from an officer of the custodian, describing the legal structure of the nominee and its officer, directors or partners should be filed. Alternatively, the agreement itself may specify the nominee's legal structure.

The department generally does not object to custodial nominees consisting of a partnership composed of employees, officers, directors, and/or corporate affiliates. However, the nominee may not be a corporation, and no unaffiliated corporation may be a partner in a partnership.

The name of the nominee used by any qualified depository should be disclosed. To date, the department has approved the nominees of four acceptable depositories: the Depository Trust Company (New York), Midwest Trust Company (Chicago), Philadelphia Depository Trust Company (Philadelphia), and Participants Trust Company (New York).

Federal Securities

Custodied federal securities usually will be held in book-entry form. The agreement should specifically mention such arrangements and specifically deem the Federal Reserve bank maintaining such book-entry securities to be the custodian's agent. (See also "Use of Depositories and Other Agents" above.)

The agreement should state that custodied securities in bearer form will be maintained in that form and not re-registered in any nominee name, except on specific instruction from the insurer as to a particular security.

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Maintenance of Securities

The agreement should specify whether custodied securities will be maintained separate from all securities held by the custodian on behalf of others, or will be commingled.

The agreement should require the custodian to maintain sufficient records at all times to identify all custodied securities held for the insurer. The custodian should provide the insurer with an updated list of custodied securities at least quarterly.

Inspection

The agreement should require the custodian to allow insurance and banking regulatory authorities to inspect the custodied securities, and all related records, promptly on demand.

Proxies

The custodian should not be given authority to vote proxies. The agreement should require the custodian to forward to the insurer all proxy statements, proxies (executed in blank), prospectuses and other corporate reports.

Cash Accounts

Cash accounts maintained with the custodian for deposit of cash, interest, dividends, or proceeds of security sales should be deemed a part of the custody account, subject to all other terms and provisions of the agreement. (See also "Sweep Accounts" below.)

Sweep Accounts

The agreement should specifically state whether a "sweep" account may be used for automatic investment of cash. The agreement should deem the sweep account to be part of the custody account and thus subject to all other terms of the agreement. (See also "Cash Accounts" above.) If multiple accounts or mutual funds are available, the agreement should permit the insurer to select the account or fund to be used.

Compensation

Banker's Liens

The agreement should not permit any charge or lien against the custodial account, including any cash account deemed part of the custodial account. (See also "Cash Accounts" above.) The agreement should expressly disclaim such liens because many states' laws provide for banker's liens even without express contractual authorization.

Since custodied securities represent the insurer's required reserves, those reserve assets must remain free from encumbrances. Charges or liens against such assets would give the custodian preferential treatment over policyholders and would be inconsistent with California insurance insolvency laws. A custodian can always seek recovery of its compensation and expenses from the insurer itself. Similarly, when the agreement is terminated, the custodian may not refuse to release any custodied securities or cash due to nonpayment of the custodian's compensation or expenses. (See also "Termination" below.)

An exception to the rule on banker's liens is permitted when the custodian advances its own funds at the insurer's request to pay for securities purchased by the insurer. (This exception does not apply to other out-of-pocket expenses of the custodian in such acquisitions or to expenses incurred in processing sales, conversions, redemptions, etc., for the insurer.) The contract should require the custodian to notify the insurer promptly of the amount and nature of the debit to the custody account.

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Authorized Debits

The agreement may permit direct recoupment of expenses incurred by the custodian only if the custodian receives the insurer's specific written authorization to debit a specific sum, and only after the custodian has provided the insurer with an invoice for the specific amount to be charged. This exception does not apply to the custodian's fees. Neither custodied securities nor a cash demand account may be debited to recoup custodial fees.

Statute of Limitations

The agreement should not directly or indirectly shorten the time period of any statute of limitations otherwise applicable to actions brought against the custodian by the insurer.

An example of such an unacceptable indirect limitation would be the following:

"The custodian shall mail monthly statements of the securities accounts and cash account to the client. The client agrees that each such statement shall be binding on the client thirty days after it has been mailed."

Investments by Custodian

The agreement should not authorize the custodian to make investments on behalf of the insurer without specific instructions from the insurer in each instance. Such authority would be an excessive delegation of an essential managerial function, which the insurer must retain unless the function has been formally delegated to an investment advisor (which may be the custodian) pursuant to a separate contractual arrangement with appropriate safeguards. (See the guidelines for Item 12 in this Section.)

Investments in Custodian

The agreement should not give the custodian carte blanche authority to invest in debt obligations, commercial paper, mutual funds or other instruments issued by the custodian or by its financial affiliates while insulating the custodian from liability for financial loss resulting from those investments. These arrangements create inherent conflicts of interest between the custodian's own financial interest and its role as a fiduciary. The conflict can be alleviated if the agreement specifies that: (a) all such investments require specific prior approval from the insurer; (b) no commissions will be paid to the custodian or its financial affiliates for arranging or participating in such transactions; and (c) all such investments will be purchased at fair market value.

Delivery of Securities

The agreement may disclaim liability for delivery of securities prior to payment by the purchaser only if the delivery is made at the specific request of the insurer in a particular instance.

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Termination

The agreement should allow either party to terminate without cause on at least 60 days' written notice. The agreement should also provide that, upon termination, the custodian will return to the insurer all custodied securities. (See also "Compensation" above.)

The agreement should require the custodian to transfer the securities to the successor custodian, if one has been arranged, along with all records pertaining to the securities held by the depository (including those records pertaining to securities held in book-entry form, by Federal Reserve banks, or retained by the issuer). The agreement should also provide that the custodian's responsibilities continue until the successor custodian's appointment becomes effective and all custodied securities have been transferred.

Domestic Insurers

If the insurer is domiciled in California, then both the custodian and the custodied securities must be located in California pursuant to California Insurance Code Section 1104.1, except as provided in Department Bulletin No. 87-7 or in California Insurance Code Section 1104.9.

Except as provided in Department Bulletin No. 87-7 and in California Insurance Code Section 1104.9, the custodian may not, with or without a subcustody agreement, hold securities in out-of-state subcustodians, Federal Reserve banks, depositories, or any other entity.

Bulletin No. 87-7 and California Insurance Code Section 1104.9 set forth alternative procedures for holding securities out of state. Domestic insurers should contact the department for further information concerning filings and determinations to be made to hold securities out of state.

Agreements may contain provisions, or provide for services, not discussed in this document. Those provisions or services will be reviewed and evaluated on their own merits and under the circumstances presented.

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Application Item #14

Name Approval
The applicant's corporate name must be approved by both the California Insurance Commissioner and the California Secretary of State. (See CIC §880 and 881.) You may request name approval either before or after your application for Certificate of Authority is filed. The filing fee for a pre-application request is $103.00.  No additional filing fee is required if the name approval request is filed coincident with your application for Certificate of Authority. However, to avoid any delays with the processing of your application, we recommend seeking name approval prior to filing your application for Certificate of Authority.

For name approval by the California Insurance Commissioner, submit a written request to:

California Department of Insurance
Legal Division - Name Reservation Unit
45 Fremont Street, 21st Floor
San Francisco, CA 94105.

Include either the necessary filing fee or reference to the pending application for admission. A department request for further information may follow, dependent upon the name requested.

In the absence of either a name conflict or any statutory violation, names for foreign applicants are customarily reserved for 180 days from the date of the approval certificate. If an application for admission is filed within this period, the reservation will be held until the application is granted, denied or abandoned.

Upon receipt of the Commissioner's approval, the proposed name must be approved by the California Secretary of State. See Section V for additional information about contacting the Secretary of State's office. Please be aware that approval by one agency does not guarantee approval by the other.

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Application Item #17

Special Power of Attorney to Appoint Agents
A notarized Power of Attorney to Appoint and Certify Agents form (provided in the forms packet) must be filed in duplicate. It must be signed by officers who have authority to execute such powers.

Only one insurer may be named in a single power. If a person is to be appointed for several insurers comprising a group, separate powers must be filed by each insurer authorizing such person.

More than one person may be named in a single power. However, only natural persons should be named. Do not name corporations or partnerships. For example, do not name the "Blank Agency, Incorporated." Instead, name "John Doe and James Roe" of said agency.

A power must authorize a person to appoint agents for an insurer and must not limit authority to an underwriting department of the insurer.

Do not alter the Power of Attorney form. This is a universal form. If the person named is not to be permitted to appoint and certify life agents (including disability only agents), please restrict his or her authority within your own organization and do not alter the form's language.

Appointments of attorneys-in-fact are effective on the dates filed, as shown by the date received stamp of this department thereon. For the purpose of being able to send you an acknowledgment, these forms must be filed in duplicate. The duplicate copy will be date-stamped and returned to you and will constitute an acknowledgment of filing.

Interinsurance Exchanges

The Certificate of Authority of an interinsurance exchange is issued to its attorney-in-fact. A Power should be executed in the name of the attorney-in-fact as attorney for the exchange. (For example: "Blank Corporation, Attorney-in-Fact for Blank Insurance Company, an Interinsurance Exchange").

Alien Insurers

In the case of an alien insurer, the document may be executed by the United States Manager before a notary. No seal is required.

Note: The instructions set forth herein apply only to the Special Power of Attorney to Appoint and Certify Agents and have no reference to other Power of Attorney forms. There is no fee required for filing.

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