OGC Opinion No. 07-07-26

The Office of General Counsel issued the following opinion on July 25, 2007 representing the position of the New York State Insurance Department.

Custodial Agreements

Question Presented:

What specific law requires an insurer to hold its investments within a custodial agreement?


No provision of the New York Insurance Law requires an insurance company to hold its investments within a custodial agreement.


The inquiry was general in nature and included no specific facts.


The New York Insurance Law does not require a domestic insurer to hold its investments in a custodial agreement with a bank. An insurer may keep its investments itself or may deposit them with a bank. Any custodial agreement between a bank and an insurer must set forth safeguards and provisions that must be assessed according to the guidelines followed by Department examiners, as set forth in Part I, Section IV (H) of the NAIC Examiner’s handbook and adopted in Regulation 172, 11 NYCRR § 83 (2006). These guidelines require, among other things, that securities held under custodial or safekeeping arrangements be in a bank or trust company licensed by the United States, or any state thereof, if such institutions are regularly examined by the licensing authority. There are also new and expanded general interrogatories that relate to an insurer’s custodial agreement attached to the annual financial statement.

For issues relating to the requirements of insurers to keep deposits of securities with the Superintendent of the New York Insurance Department, please refer to N.Y. Ins. Law §§ 1314, 1319, 1320, and 4104 (McKinney 2006). These statutes address the requirements imposed upon certain insurers, in particular alien and foreign insurers, to maintain a minimum amount of securities deposited with the superintendent.

For further information you may contact Supervising Attorney Michael Campanelli at the New York City Office.