Colorado § 10-3-210 - Deposit and safekeeping of securities.

§ 10-3-210. Deposit and safekeeping of securities.

(1) (a) The commissioner shall give receipts for all securities deposited with the commissioner, as required or permitted by law, to the company depositing them.

(b) If the company depositing securities in accordance with paragraph (a) of this subsection (1) is adjudged insolvent, such deposit shall be released only upon the entry of an order of a court acting in accordance with the provisions of part 5 of this article. If a company that has not been adjudged insolvent elects to dissolve, the commissioner may release securities under joint control upon a showing by the insurance company satisfactory to the commissioner that all debts, obligations, and liabilities of the insurance company have been paid and discharged, or adequate provisions for payment and discharge have been made, and upon return of the company's certificate of authority to the commissioner.

(c) (Deleted by amendment, L. 2004, p. 1061, § 8, effective July 1, 2004.)

(d) If the company depositing securities in accordance with paragraph (a) of this subsection (1) remains solvent, the commissioner shall permit such company, or its assigns, to:

(I) Collect and receive the interest and dividends on deposited securities; and

(II) Withdraw any deposited securities if the company simultaneously deposits other securities to replace those withdrawn.

(e) The provisions of this subsection (1) shall not apply to securities subject to part 12 of this article.

(2) (a) (I) Notwithstanding any other provision of law, the securities qualified for deposit under this section may be deposited as provided in part 12 of this article with a clearing corporation or held in the federal reserve book-entry system.

(II) Securities deposited with a clearing corporation or held in the federal reserve book-entry system and used to meet the deposit requirements set forth in this section shall be under the control of the commissioner and shall not be withdrawn by the company without the approval of the commissioner.

(b) The commissioner may prescribe or approve reasonable arrangements and safeguards under which a solvent company may sell a particular deposited security if the company:

(I) Immediately reinvests the proceeds of the sale in other securities eligible for deposit under this article; and

(II) Deposits other securities to replace those securities that were sold.

(c) Any owner, nominee owner, depository, or custodian of securities held in accordance with paragraph (a) of this subsection (2) shall not sell, claim against, or otherwise dispose of said securities without written permission of the commissioner.

(d) Any company holding securities in accordance with paragraph (a) of this subsection (2) shall provide to the commissioner evidence issued by its custodian or member bank through which such company has deposited such securities in a clearing corporation or through which such securities are held in the federal reserve book-entry system, respectively, in order to establish that the securities are actually recorded in an account in the name of the custodian or other direct participant or member bank and that the records of the custodian, other participant, or member bank reflect that such securities are held subject to the order of the commissioner.

(e) If the company depositing securities in accordance with paragraph (a) of this subsection (2) remains solvent, the commissioner shall permit such company, or its assigns, to:

(I) Collect and receive the interest and dividends on those deposited securities; and

(II) Withdraw any deposited securities if the company simultaneously deposits other securities to replace those withdrawn.

(f) If the company depositing securities in accordance with paragraph (a) of this subsection (2) is adjudged insolvent, such deposit shall be released only upon the entry of an order of a court acting in accordance with the provisions of part 5 of this article. If a company that has not been adjudged insolvent elects to dissolve, the commissioner may release securities under joint control upon a showing satisfactory to the commissioner that all debts, obligations, and liabilities of the insurance company have been paid and discharged, or adequate provisions for payment and discharge have been made, and upon return of the company's certificate of authority to the commissioner.

(g) (I) The commissioner may designate any solvent national bank, state bank, or trust company located in the city and county of Denver as the commissioner's depository for receiving and holding as custodian any deposit of securities in accordance with paragraph (a) of this subsection (2).

(II) Any deposit received and held pursuant to this subsection (2) shall be received and held at the expense of the company.

Source: L. 25: p. 313, § 3. CSA: C. 87, § 44. CRS 53: § 72-2-4. C.R.S. 1963: § 72-2-3. L. 83: Entire section amended, p. 450, § 1, effective May 3. L. 92: (1) amended, p. 1549, § 39, effective May 20. L. 96: Entire section amended, p. 97, § 1, effective July 1. L. 2004: (1)(a), (1)(b), (1)(c), and (2)(f) amended, p. 1061, § 8, effective July 1.

Cross references: For requirement of deposit, see § 10-3-201; for certificate of deposit, see § 10-3-206.

ANNOTATION

Securities deposited by an insurance company to protect its policyholders cannot be surrendered until the last of the policyholders is satisfied in full, and the fact that the policies have been reinsured and that the company holds sufficient funds to secure all outstanding policies, cannot avoid this conclusion. Cochrane v. Pacific States Life Ins. Co., 93 Colo. 462, 27 P.2d 196 (1933).