Security deposit

Security deposit information

Instructions for deposit

1. A transmittal letter must be sent to the bank and to the Division of Financial Regulation before any transaction.
2. The transmittal letter should include the following:
   1. Description of maturing asset if applicable.
   2. Description of assets being placed (see Eligible Security section for details).
   3. Details of purpose and dedication of funds (i.e. workers' comp, surety etc.). Funds will be dedicated similar to the maturing item if no instruction is given.
      
   4. Specific bank related information such as routing instructions (contact US Bank for details).
3. Assets must be approved by the Division of Financial Regulation before you proceed with your transaction.
4. All security deposits are held by US Bank in Portland, Oregon.
5. Delivery instructions will be provided by the bank upon request.

You are urged to periodically review your security deposits to assure your company maintains sufficient market value for the class or classes for which the deposit is required. This is particularly important for workers' compensation deposits. ORS 731.616(3) provides only a 30-day period for increasing a deposit deficiency after notice from the director.

Assignment of deposited securities

Securities held at US Bank are held in a custodial account under the control of the director.

ORS 731.620(1) requires that "the insurer shall assign in trust to the director of the Department of Consumer and Business Services and successors in office all securities being deposited through the director under the insurance code that are not negotiable by delivery…"

Eligible securities

Eligible securities are amply secured obligations of the United States, a state, or a political subdivision of a state.

For deposit purposes, securities must have a NAIC SVO rating of 1 per the most recent Valuation of Securities Manual. Should the designation be lowered after the deposit is made, the insurer must replace the security within 30 days.

The margin between the amount requested and the basic requirement stated in the Oregon insurance code is set to cover market value fluctuations, under ORS 731.616(2).

The following describes some acceptable and unacceptable deposits for Oregon statutory deposit requirements:

Acceptable Securities

• U.S. Treasury notes, bonds, bills, and strips
• General obligation or revenue bonds if rated 1 by NAIC Securities Valuation Office
• Certificate of Deposits ONLY if purchased from US Bank
• Federal National Mortgage Association (FNMA)
• Federal Home Loan Mortgage Corporation (FHLMC)

Unacceptable Securities

• Government agency bonds NOT backed by federal government
• Any certificate of deposit issued by a bank other than US Bank
• Temporary Liquidity Guarantee Program (TLGP)
• Corporate bonds [unless total deposit exceeds $50 million, ORS 731.640(e)]