CHAPTER 58-7
INSURERS' DEPOSITS WITH STATE
58-7-1 Amounts required to be deposited by domestic insurers--Financial institutions to report to director.
58-7-2 Assets acceptable for deposit of reserves.
58-7-3 Credit of other deposit against reserve deposit.
58-7-4 Annual deposit of additional securities to cover increase of reserves.
58-7-5 Ineligibility for deposit of securities in default.
58-7-6 Authorized deposits of insurers.
58-7-7 Purpose of deposits.
58-7-8 Certificates of deposit--Eligible securities--Purpose of deposits.
58-7-9 Deposit of domestic insurer held in this state pursuant to laws of another state or country--Assets comprising--Protection of all policyholders of insurer.
58-7-10 Deposits of reserves of domestic life insurer--Assets comprising--Holding for common benefit of policyholders and annuity contracts.
58-7-11 Deposits of reserves of domestic insurers other than life--Holding for common benefit of all policyholders.
58-7-12 Deposits of foreign insurers--Assets comprising--Holding for purposes required by law and as specified by director.
58-7-13 Assignment to director of securities not negotiable by delivery--Power of attorney.
58-7-14 Real estate used as deposit--Deed of trust, execution, and recording prior to deposit with director--Appraisal required.
58-7-15 58-7-15. Repealed by SL 1991, ch 398, § 7
58-7-16 Record by director of assets deposited.
58-7-17 Release of assigned security--Reassignment to insurer or other person.
58-7-18 Deposit of reserves in financial institutions.
58-7-19 58-7-19. Repealed by SL 1991, ch 398, § 10
58-7-20 Terms of depository or custodial arrangements for deposit of reserves.
58-7-21 Forms and terms of depository or custodial arrangement.
58-7-22 Compensation and expenses of depository or custodian borne by insurer.
58-7-23 Nonliability of director and state for safekeeping by custodian.
58-7-24 Custodial arrangements--Termination by director--New arrangements.
58-7-25 Effect of deposit in foreign state.
58-7-26 Sufficiency of deposit--Valuation of assets.
58-7-27 Decline in market value of deposited assets--Deposit of additional assets or securities.
58-7-28 Appraisal or valuation of deposited assets or securities--Cost borne by insurer.
58-7-29 Deposit exceeding requirements--Release to insurer upon request--Release during insolvency of insurer.
58-7-30 Right of insurer to deposited assets and securities during solvency.
58-7-31 Levy upon deposited assets and securities.
58-7-32 Deposits by foreign or alien insurers not subject to taxation.
58-7-33 Duration of deposit of assets and securities.
58-7-34 Release of deposit on request of domestic insurer.
58-7-35 Return of deposit of foreign insurer.
58-7-36 Return of deposit upon merger or consolidation of insurer.
58-7-37 Insurer subject to delinquency proceedings--Surrender of deposited assets and securities to authorized officer of court.
58-7-38 Release of deposited assets--Terms--Nonliability of director acting in good faith.
58-7-39 Certain depository or custodial requirements superseded.
58-7-1. Amounts required to be deposited by domestic insurers--Financial institutions to report to director.
All deposits required by this title shall be kept in a financial institution approved by the director. A domestic property and casualty or health insurer shall deposit an amount not less than fifty percent of the required unearned premium reserves on their outstanding policies. Domestic life insurers shall deposit an amount not less than the required reserves on their outstanding policies, including annuity and supplementary contracts, but excluding premium notes, policy loans, and other policy liens referred to in subdivision 58-26-1(3) and the net amount of uncollected and deferred premiums and annuity considerations referred to in subdivision 58-26-1(4). The financial institution shall report quarterly to the director the insurers that have deposits with it and the amounts and kinds of assets and securities. Withdrawal of securities and assets on deposit shall be pursuant to the custodial agreement.
Source: SL 1966, ch 111, ch 7, § 1 (1); SL 1977, ch 406; SL 1991, ch 398, § 1.
58-7-2. Assets acceptable for deposit of reserves.
Deposits of reserves of a domestic insurer under § 58-7-1 shall consist of securities and assets which the insurer is authorized to hold as admitted assets.
Source: SL 1966, ch 111, ch 7, § 1 (4).
58-7-3. Credit of other deposit against reserve deposit.
A domestic insurer may credit toward the deposit the amount of any other deposit of the insurer required by the director for the protection of its policyholders.
Source: SL 1966, ch 111, ch 7, § 1 (3); SL 1991, ch 398, § 2.
58-7-4. Annual deposit of additional securities to cover increase of reserves.
Annually on or before April first, the insurer shall deposit any additional securities required under § 58-7-1 and related to the increase of such reserves during the calendar year next preceding as determined from the insurer's annual statement as of December thirty-first of such preceding year.
Source: SL 1966, ch 111, ch 7, § 1 (2).
58-7-5. Ineligibility for deposit of securities in default.
If default occurs in the payment of interest or principal of any deposited security and such default continues for a period of one hundred twenty days, the director may declare such security no longer eligible for deposit under § 58-7-1.
Source: SL 1966, ch 111, ch 7, § 1 (5).
58-7-6. Authorized deposits of insurers.
The following deposits of insurers shall be accepted and held, and are subject to the provisions of this chapter:
(1) Deposits required under this title for authority to transact insurance business in this state;
(2) Deposits of domestic insurers if made pursuant to the laws of other states, provinces, and countries as requirement for authority to transact insurance in that state, province, or country;
(3) Deposits of reserves made by domestic insurers;
(4) Deposits in additional amounts as are permitted to be made under § 58-7-29.
Source: SL 1966, ch 111, ch 7, § 2; SL 1991, ch 398, § 3.
58-7-7. Purpose of deposits.
Such deposits shall be held for purposes set forth in §§ 58-7-8 to 58-7-12, inclusive.
Source: SL 1966, ch 111, ch 7, § 3.
58-7-8. Certificates of deposit--Eligible securities--Purpose of deposits.
All such deposits required under §§ 58-6-33 to 58-6-35, inclusive, for authority to transact insurance in this state shall consist of certificates of deposit, or any combination of securities of the kinds described in §§ 58-27-9, 58-27-11, 58-27-12, 58-27-14, and 58-27-15. Deposits made in this state under §§ 58-6-33 to 58-6-35, inclusive, shall be held for the purpose stated in § 58-6-34.
Source: SL 1966, ch 111, ch 7, §§ 3 (1), 4 (1).
58-7-9. Deposit of domestic insurer held in this state pursuant to laws of another state or country--Assets comprising--Protection of all policyholders of insurer.
All other deposits of a domestic insurer held in this state pursuant to the laws of another state, province, or country shall be comprised of assets of the kinds described in § 58-7-8, and of such additional securities required or permitted by the laws of such state, province, or country except common stocks, mortgages and real estate. A deposit made in this state by a domestic insurer transacting insurance in another state, province, or country, and as required by the laws of such other state, province, or country, shall be held for the protection of all the insurer's policyholders or all its policyholders and creditors or for such other purpose or purposes as may be specified pursuant to such laws.
Source: SL 1966, ch 111, ch 7, §§ 3 (2), 4 (2).
58-7-10. Deposits of reserves of domestic life insurer--Assets comprising--Holding for common benefit of policyholders and annuity contracts.
Deposits of the reserves of a domestic life insurer shall consist of securities and assets permitted for investment by chapter 58-27. Deposits of reserves made by domestic life insurers shall be held for the common benefit of all the holders of its life insurance policies and annuity contracts.
Source: SL 1966, ch 111, ch 7, §§ 3 (3), 4 (3).
58-7-11. Deposits of reserves of domestic insurers other than life--Holding for common benefit of all policyholders.
Deposits of reserves made by domestic insurers other than life shall be held for the common benefit of all the holders of its policies.
Source: SL 1966, ch 111, ch 7, § 3 (5).
58-7-12. Deposits of foreign insurers--Assets comprising--Holding for purposes required by law and as specified by director.
Deposits of foreign insurers made under this title shall consist of such assets as are required by the director. Deposits required pursuant to this title shall be held for such purposes as is required by such law, and as specified by the director's order requiring such deposit to be made.
Source: SL 1966, ch 111, ch 7, §§ 3 (4), 4 (4); SL 1991, ch 398, § 5.
58-7-13. Assignment to director of securities not negotiable by delivery--Power of attorney.
The director shall require the insurer to either assign to the director and his successors in office all securities being deposited under this title which are not negotiable by delivery or to give the director irrevocable power of attorney authorizing the transfer of the securities or any part thereof then or thereafter on deposit for any purpose within the scope of the director's statutory powers.
Source: SL 1966, ch 111, ch 7, § 8 (1); SL 1991, ch 398, § 4.
58-7-14. Real estate used as deposit--Deed of trust, execution, and recording prior to deposit with director--Appraisal required.
If the insurer uses real estate as a deposit, the insurer shall execute and record a deed of trust to the director which shall be kept by the financial institution. Prior to the execution and recordation of the deed of trust, the insurer shall submit to the director a current appraisal of the real estate by an appraiser approved by the director.
Source: SL 1966, ch 111, ch 7, § 8 (3); SL 1991, ch 398, § 6.
58-7-16. Record by director of assets deposited.
The director shall keep a record of the assets and securities comprising each deposit, showing as far as practical the amount and market value of each item.
Source: SL 1966, ch 111, ch 7, § 6 (2); SL 1991, ch 398, § 8.
58-7-17. Release of assigned security--Reassignment to insurer or other person.
Upon release to the insurer, or other person entitled thereto, of any security that may have been assigned pursuant to § 58-7-13, the director shall reassign the same to such insurer or other person entitled thereto.
Source: SL 1966, ch 111, ch 7, § 8 (2).
58-7-18. Deposit of reserves in financial institutions.
Deposits required under this title may be made in South Dakota safe deposit institutions, banks, or trust companies selected by the insurer with the director's prior approval or may be made in the depository outside of the state approved by the director. The director may, upon written request of the insurer, permit a deposit to be made with and held by the trust department of a national or state bank approved by the director for the purpose and under depository or custodial arrangements approved by the director.
Source: SL 1966, ch 111, ch 7, § 5 (1); SL 1991, ch 398, § 9.
58-7-20. Terms of depository or custodial arrangements for deposit of reserves.
All depository or custodial arrangements shall comply in substance with the requirements of this title as to like deposits of other insurers, as to the amount, purposes, maintenance, replenishment, release, and withdrawal of such deposit or part thereof, as to the rights of the insurer therein, and in all other respects except as to actual custody.
Source: SL 1966, ch 111, ch 7, § 5 (4); SL 1991, ch 398, § 11.
58-7-21. Forms and terms of depository or custodial arrangement.
The form and terms of all depository or custodial arrangements shall be prescribed or approved by the director consistent with the applicable provisions of this title.
Source: SL 1966, ch 111, ch 7, § 5 (6); SL 1991, ch 398, § 12.
58-7-22. Compensation and expenses of depository or custodian borne by insurer.
The compensation and expenses of the depository or custodian shall be borne by the insurer.
Source: SL 1966, ch 111, ch 7, § 5 (7).
58-7-23. Nonliability of director and state for safekeeping by custodian.
The director and the State of South Dakota shall have no liability as to the safekeeping of any such deposit by the depository or custodian thereof.
Source: SL 1966, ch 111, ch 7, § 7.
58-7-24. Custodial arrangements--Termination by director--New arrangements.
The director may terminate any depository or custodial arrangement and require a new arrangement. No arrangement may be terminated without the written authorization of the director.
Source: SL 1966, ch 111, ch 7, § 5 (5); SL 1991, ch 398, § 13.
58-7-25. Effect of deposit in foreign state.
If any domestic insurer is required to deposit with a public officer of any foreign state or any agency of that state any securities or assets for security of policyholders, to the extent that those securities or assets are admissible for that purpose under this chapter, and upon approval by the director that by the deposit the insurer's policyholders are as adequately secured as if such deposit had been made under this chapter, the deposit in the foreign state shall have the same effect as if made with the director. If any change is made in the deposit, the insurer shall be required to immediately notify the director of the change.
Source: SL 1966, ch 111, ch 7, § 5 (8); SL 1991, ch 398, § 14.
58-7-26. Sufficiency of deposit--Valuation of assets.
For the purpose of determining the sufficiency of its deposit in this state the assets and securities of the insurer on deposit shall be valued at current market value except bonds which may, in the discretion of the director, be valued as provided in § 58-26-2.
Source: SL 1966, ch 111, ch 7, § 13 (1); SL 1969, ch 134.
58-7-27. Decline in market value of deposited assets--Deposit of additional assets or securities.
If for any reason the current market value of such assets and securities falls below the amount of deposit required of the insurer under this title, the insurer shall promptly deposit other or additional assets or securities eligible for deposit and in amount sufficient to cure the deficiency. If the insurer has failed to cure the deficiency within thirty days after receipt of notice thereof by registered or certified mail from the director, the director shall forthwith without further notice revoke the insurer's certificate of authority.
Source: SL 1966, ch 111, ch 7, § 13 (2).
58-7-28. Appraisal or valuation of deposited assets or securities--Cost borne by insurer.
The director may, prior to acceptance for deposit of any particular asset or security, or at any time thereafter while so deposited, have the same appraised or valued by appraisers approved by the director. The costs of any appraisal or valuation shall be borne by the insurer.
Source: SL 1966, ch 111, ch 7, § 9; SL 1991, ch 398, § 15.
58-7-29. Deposit exceeding requirements--Release to insurer upon request--Release during insolvency of insurer.
An insurer may so deposit and have on deposit assets or securities in an amount exceeding its deposit required or otherwise permitted under this title, for the purpose of absorbing fluctuations in the value of assets and securities deposited, and to facilitate the exchange and substitution of such assets and securities. During the solvency of the insurer any such excess shall be released to the insurer upon its request. During the insolvency of the insurer such excess deposit shall be released only as provided in § 58-7-37.
Source: SL 1966, ch 111, ch 7, § 11.
58-7-30. Right of insurer to deposited assets and securities during solvency.
While the insurer remains solvent and is in compliance with this title it may:
(1) Demand, receive, sue for, and recover the income from the assets or securities deposited;
(2) Exchange and substitute for the deposited assets or securities, or any part thereof, other eligible assets or securities of equivalent or greater value; and
(3) At any reasonable time inspect any such deposit.
Source: SL 1966, ch 111, ch 7, § 10.
58-7-31. Levy upon deposited assets and securities.
No judgment creditor or other claimant of an insurer shall have the right to levy or to proceed by any remedies, provisional or otherwise, upon any of the assets or securities of the insurer held on deposit in this state. As to deposits pursuant to the retaliatory law, §§ 58-6-70 to 58-6-73, inclusive, levy thereupon shall be permitted if so provided in the director's order under which the deposit is made.
Source: SL 1966, ch 111, ch 7, § 12.
58-7-32. Deposits by foreign or alien insurers not subject to taxation.
Deposits made by foreign or alien insurers shall not be subject to taxation.
Source: SL 1966, ch 111, ch 7, § 5 (2).
58-7-33. Duration of deposit of assets and securities.
Every deposit made in this state by an insurer pursuant to this title, including assets and securities held in another state under custodial arrangements, shall be held as long as there is outstanding any liability of the insurer as to which the deposit was so required; or if a deposit required under the retaliatory law, §§ 58-6-70 to 58-6-73, inclusive, the deposit shall be held for so long as the basis of such retaliation exists.
Source: SL 1966, ch 111, ch 7, § 14 (1); SL 2021, ch 210, § 4.
58-7-34. Release of deposit on request of domestic insurer.
Upon the request of a domestic insurer, the director shall direct the depository or custodian to return to the insurer the whole or any portion of the assets and securities of the insurer held on deposit if the director is satisfied that the assets and securities to be returned are subject to no liability and are no longer required to be held by any provision of law or purposes of the original deposit. If the insurer has reinsured all its outstanding risks in another insurer or insurers authorized to transact insurance in this state and the insurer, by written notice, notifies the director that the assets and securities have been assigned, transferred and set over to the reinsuring insurer or insurers, the director shall require the depository or custodian to deliver the assets and securities to the insurer or insurers assuming the risks. The notice shall be accompanied by a duly verified copy of the assignment, transfer, or conveyance. In the case of deposits of the reserves of domestic life insurers, the insurers shall submit proof satisfactory to the director that the reinsurer has deposited or will deposit, and will maintain on deposit in public custody through the insurance supervisory official of its state of domicile, assets and securities of like quality in an amount not less than the reserves of the policies and contracts so reinsured, in addition to any other deposit of such insurer required or permitted by law. Unless the reinsurer is required to have on deposit all of its reserves, the insurer shall submit proof satisfactory to the director that the deposit of the reserves will be maintained by the state of its domicile for the special benefit and protection of the holders of the life insurance policies and annuity contracts so reinsured.
Source: SL 1966, ch 111, ch 7, § 14 (2); SL 1991, ch 398, § 16.
58-7-35. Return of deposit of foreign insurer.
The director shall direct the depository or custodian to return to a foreign insurer any deposit made pursuant to this title by the insurer, if:
(1) The insurer has ceased transacting business in this state, or in the United States, and the insurer is not subject to any liability in this state on account of which the deposit was held; or
(2) The deposit is no longer required by any provision of law; or
(3) The insurer, during its solvency has made a similar deposit in another state and has filed with the director the certificate or evidence thereof, under the conditions provided for in subdivisions 58-6-34(1) and (2).
Source: SL 1966, ch 111, ch 7, § 14 (3); SL 1991, ch 398, § 17.
58-7-36. Return of deposit upon merger or consolidation of insurer.
Upon the merger or consolidation of an insurer that has made a deposit in this state, the director may, after preserving the interests of South Dakota policyholders, direct the depository or custodian to return the deposit to the resulting or surviving corporation, or to any person it may designate for that purpose, if the resulting or surviving corporation is or becomes authorized to transact an insurance business in this state.
Source: SL 1966, ch 111, ch 7, § 14(3); SL 1988, ch 393; SL 1991, ch 398, § 18.
58-7-37. Insurer subject to delinquency proceedings--Surrender of deposited assets and securities to authorized officer of court.
If the insurer is subject to delinquency proceedings as defined in this title, upon the order of a court of competent jurisdiction, the director shall yield the assets and securities held on deposit to the receiver, conservator, rehabilitator, or liquidator of the insurer, or to any other properly designated official.
Source: SL 1966, ch 111, ch 7, § 14 (4).
58-7-38. Release of deposited assets--Terms--Nonliability of director acting in good faith.
No release of deposited assets and securities may be made except upon application to and the written order of the director and under the terms of the custodial or depository arrangement. The director is not personally liable for the release of any deposit made by him in good faith.
Source: SL 1966, ch 111, ch 7, § 14 (5); SL 1991, ch 398, § 19.
58-7-39. Certain depository or custodial requirements superseded.
The provisions of the 1991 amendments to §§ 58-7-1, 58-7-3, 58-7-6, 58-7-12, 58-7-13, 58-7-14, 58-7-16, 58-7-18, 58-7-20, 58-7-21, 58-7-24, 58-7-25, 58-7-28, 58-7-34, 58-7-35, 58-7-36, 58-7-38, and 58-7-39 shall supersede any and all depository or custodial requirements found in any other sections of this title.
Source: SL 1991, ch 398, § 20.
