May 5, 1976
Circular Letter No. 13
Addendum to Circular Letter No. 1
(March 14, 1975)
TO: ALL INSURERS AUTHORIZED TO WRITE INSURANCE IN THE STATE OF NEW YORK
RE: FEDERAL RESERVE "BOOK-ENTRY" PROGRAM
The Insurance Department has reviewed Circular Letter No. 1 (March 14, 1975) and the custodian affidavits which will be required on the examination of insurance companies. Since the Insurance Department has determined that insurance company participation in the Federal Reserve "book-entry" program is proper and should be implemented as expeditiously as possible, ATTACHMENT D to Circular Letter No. 1 (affidavit for custodians through which insurance companies participate in the Federal Reserve "book-entry" program) is approved.
It should be noted that an insurance company can participate in said program only through a member bank in the Federal Reserve System acting as a custodian pursuant to a custodian agreement between the bank and insurance company. In its review of Circular Letter No. 1, the Department has determined to shift its emphasis from the form of the custodian affidavit to the form of the underlying custodian agreement * (which will be incorporated by reference) with respect to the responsibility of the bank, as custodian. It is to be specifically understood that this letter of approval refers only to AFFIDAVIT D and in no way is intended to cover the other custodian affidavits attached to Circular Letter No. 1.
* Note: Attached hereto is the Department's suggested paragraphs to be included in custodian agreement with respect to the responsibility of the custodian bank.
Very truly yours,
THOMAS A. HARNETT
Superintendent of Insurance
SUGGESTED PARAGRAPHS TO BE INCLUDED IN CUSTODIAN AGREEMENT
That the bank as custodian is obligated to indemnify the insurance company for any loss of securities of the insurance company in the bank's custody occasioned by the dishonesty of the bank's officers or employees, burglary, robbery, holdup, theft, or mysterious disappearance, including loss by damage or destruction;
That in the event that there is a loss of the securities in the custody of the bank that same shall be promptly replaced or the value thereof and the value of any loss of rights or privileges resulting from said loss of securities and that the bank shall make available to the insurance company any and all securities or value amounts so replaced.
The bank shall not be liable for any failure to take any action required to be taken hereunder in the event and to the extent that the taking of such action is prevented or delayed by war (whether declared or not and including existing wars), revolution, insurrection, riot, civil commotion, act of God, accident, fire, explosion, stoppage of labor, strikes or other differences with employees, laws, regulations, orders or other acts of any governmental authority, or any other cause whatever beyond its reasonable control.