Instructions for Applying to be Approved as a Qualified Custodian
A. Requirements for Financial Institution
A Qualified Custodian pursuant to California Insurance Code (CIC) § 1104.9 must meet the following requirements:
- The financial institution must be one of the following:
- Commercial Bank (as defined in Section 105 of the Financial Code).
- Savings and Loan Association (as defined in Section 5102 of the Financial Code).
- Trust Company (other than trust departments of title companies).
- Any entity approved by the California Insurance Commissioner.
- The financial institution must be either:
- Domiciled and have a principal place of business in California; or
- A national banking association with a trust office located in California.
- The financial institution must also either have:
- A net worth of at least one hundred million dollars ($100,000,000); or
- Is able to demonstrate to the satisfaction of the Insurance Commissioner that it is financially secure.
- If the financial institution will hold insurer assets in subcustodians or depositories, then those subcustodians or depositories must be "qualified" as defined in California Insurance Code Section 1104.9(a), subsections (2) and (3).
B. Requirements for Custodian Agreement
In order to act as such for an insurer, the financial institution must submit a Master Custody Agreement for review and approval in compliance with CIC §1104.9(c).
The Master Custody Agreement must include the following provisions:
- The securities held by the qualified custodian are for the benefit of the insurer and the books and records of the qualified custodian shall so designate.
- Beneficial title to the securities remains in the insurer and the qualified subcustodian and qualified depository are the agents of the qualified custodian.
- The qualified custodian shall exercise the standard of care of 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.
Send a letter with the filing fee for applying to be a qualified custodian pursuant to CIC §1104.9(a)(5) designated in the current Schedule of Fees, to the California Department of Insurance, Corporate Affairs Bureau, 45 Fremont Street, 24th Floor, San Francisco, CA 94105. (Fees are nonrefundable.) Explain how the institution meets the requirements. Attach documents which verify compliance (copies of state or federal license, charter, and annual report or other document showing deposits and net worth.) Please provide a contact person for further correspondence. If the financial institution has any questions, please contact the Department at (415) 538-4035, or CAB-SF-Intake@insurance.ca.gov.
For a custodian agreement, send the agreement with the filing fee pursuant to CIC §1104.9(d) designated in the current Schedule of Fees, to the California Department of Insurance, Corporate Affairs Bureau, 45 Fremont Street, 24th Floor, San Francisco, CA 94105. (Fees are nonrefundable.) No fee will be required if the form of the agreement has been previously submitted for approval and approved by the Commissioner. Please provide a contact person for further correspondence. If the financial institution has any questions, please contact the Department at (415) 538-4035, or CAB-SF-Intake@insurance.ca.gov.