Ins 52.05(1)(a) (a) “Beneficiary” means the person for whose sole benefit the trust has been established and any successor of the beneficiary by operation of law, including, but not limited to, any liquidator, rehabilitator, receiver, or conservator.

Ins 52.05(1)(b) (b) “Grantor” means the person that has established a trust, including, but not limited to, an unlicensed, unaccredited assuming insurer that establishes a trust.

Ins 52.05(1)(c) (c) “Reinsurance obligations” means:

Ins 52.05(1)(c)1. 1. Reinsured losses and allocated loss expenses paid by the ceding insurer, but not recovered from the assuming insurer;

Ins 52.05(1)(c)2. 2. Reserves for reinsured losses reported and outstanding;

Ins 52.05(1)(c)3. 3. Reserves for reinsured losses incurred but not reported; and

Ins 52.05(1)(c)4. 4. Reserves for allocated reinsured loss expenses and unearned premiums.

Ins 52.05(2) (2) A ceding insurer may take credit under s. Ins 52.04 (3) only if:

Ins 52.05(2)(a) (a) There is a written trust agreement between the beneficiary, the grantor and a trustee and the trustee is a qualified fiduciary United States financial institution.

Ins 52.05(2)(b) (b) The trust agreement creates a trust account and all the assets are deposited in the trust account.

Ins 52.05(2)(c) (c) The trustee holds all assets in the trust account at the trustee’s office in the United States, except that a bank may apply for the permission of the commissioner or equivalent official of the ceding insurer’s state of domicile or entry to use a foreign branch office of the bank as trustee for trust agreements established under this section. If the commissioner or equivalent official approves the use of a foreign branch office as trustee, then its use must be approved by the beneficiary in writing and the trust agreement must provide that the written notice described in par. (d) 1. must also be presentable, as a matter of legal right, at the trustee’s principal office in the United States.

Ins 52.05(2)(d) (d) The trust agreement provides that:

Ins 52.05(2)(d)1. 1. The beneficiary may withdraw assets from the trust account at any time, without notice to the grantor, subject only to written notice from the beneficiary to the trustee;

Ins 52.05(2)(d)2. 2. No statement or document is required to be presented in order to withdraw assets, except that the beneficiary may be required to acknowledge receipt of withdrawn assets;

Ins 52.05(2)(d)3. 3. It is not subject to any conditions or qualifications outside of the trust agreement; and

Ins 52.05(2)(d)4. 4. It does not contain references to any other agreements or documents except as provided under par. (k).

Ins 52.05(2)(e) (e) The trust agreement is established for the sole benefit of the beneficiary.

Ins 52.05(2)(f) (f) The trust agreement requires the trustee to:

Ins 52.05(2)(f)1. 1. Receive assets and hold all assets in a safe place;

Ins 52.05(2)(f)2. 2. Determine that all assets are in such form that the beneficiary, or the trustee upon direction by the beneficiary, may whenever necessary negotiate any of the assets, without consent or signature from the grantor or any other person;

Ins 52.05(2)(f)3. 3. Furnish to the grantor and the beneficiary a statement of all assets in the trust account upon its inception and at intervals no less frequent than the end of each calendar quarter;

Ins 52.05(2)(f)4. 4. Notify the grantor and the beneficiary within 10 days, of any deposits to or withdrawals from the trust account;

Ins 52.05(2)(f)5. 5. Upon written demand of the beneficiary, immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title and interest in the assets held in the trust account to the beneficiary and deliver physical custody of the assets to the beneficiary; and

Ins 52.05(2)(f)6. 6. Allow no substitutions or withdrawals of assets from the trust account, except on written instructions from the beneficiary, except that the trustee may, without the consent of but with notice to the beneficiary, upon call or maturity of any trust asset, withdraw such asset upon condition that the proceeds are paid into the trust account.

Ins 52.05(2)(g) (g) The trust agreement provides that at least 30 days, but not more than 45 days, prior to termination of the trust account, written notification of termination shall be delivered by the trustee to the beneficiary.

Ins 52.05(2)(h) (h) The trust agreement provides that it is subject to and governed by the laws of the state in which the trust is established.

Ins 52.05(2)(i) (i) The trust agreement prohibits invasion of the trust corpus for the purpose of paying compensation to, or reimbursing the expenses of, the trustee. In order for a letter of credit to qualify as an asset of the trust, the trustee shall have the right and the obligation pursuant to the deed of trust or some other binding agreement, approved by the commissioner, to immediately draw down the full amount of the letter of credit and hold the proceeds in trust for the beneficiaries of the trust if the letter of credit will otherwise expire without being renewed or replaced.

Ins 52.05(2)(j) (j) The trust agreement provides that the trustee is liable for its own negligence, willful misconduct or lack of good faith. The failure of the trustee to draw against a letter of credit in circumstances where such a draw would be required shall be deemed negligence and willful misconduct.

Ins 52.05(2)(k) (k) Notwithstanding other provisions of this subchapter, when a trust agreement is established in conjunction with a reinsurance agreement covering risks other than life, annuities and accident and health, and where it is customary practice to provide a trust agreement for a specific purpose, the trust agreement may, notwithstanding any other conditions in this subchapter, provide that the ceding insurer agrees to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, for the following purposes: