Per the authority in 8 V.S.A. § 3304, your entity may be required to place a cash or security deposit with the Vermont State Treasurer for the benefit of Vermont policyholders or other purpose relating to the regulation of your entity. This may be in connection with a license application, requirements of another jurisdiction, other condition imposed by statute or regulation, or at the discretion of the commissioner.
Who Will Hold and Control the Funds?
The funds are held in the State of Vermont’s Custodial Account. Currently the Vermont State Treasurer uses M&T Bank for this account. Once deposited in this account the funds are held in your entity’s name but they are under the control of the Commissioner of Financial Regulation. As such, the State of Vermont is the Account Holder and M&T Bank will only accept direction from the Commissioner of DFR regarding investments, disbursements and transactions related to the collateral.
What Type of Securities May I Invest In?
The statute gives discretion to the Commissioner of DFR to determine acceptable forms of security in this account. Each investment and transaction completed within the Custodial Account requires the advance permission of the Insurance Division. Generally we will approve investments in the following instruments and securities:
- Cash
- Certificates of Deposits
- Marketable Government or Government Agency Securities. This includes but is not limited to: U.S. Treasury Bonds & Notes and FHLB, GNMA, and FNMA securities.
To request approval of a particular security please email relevant details (such as CUSIP, Coupon, Maturity, etc.) of the proposed security to Company Licensing.
What Happens to the Investment Income Generated from the Deposits?
Provided that the minimum balance is maintained, all earnings generated from the deposit will generally be paid directly to your entity, less a $50.00 fee per interest disbursement. Normally interest disbursements are paid semi-annually.
How Do I Set Up the Deposit?
You have the option of depositing cash or directly transferring an acceptable and approved security (per above) into the Statutory Account. To arrange this, please email the Company Licensing Section. The bank will be informed of the pending deposit and we put you in touch with a representative at M&T Bank who will give you the necessary account information in order to make the deposit or security transfer.
Balance Confirmations
M&T Bank will only respond to statement or balance confirmation requests from the account holder, which is the State of Vermont. Therefore, if you or your Independent Auditors are seeking to confirm the balance in the Statutory Account please send those inquiries to:
VT DFR - Insurance Division
Company Licensing
89 Main Street
Montpelier, VT 05620-3101
(802)828-2470 direct
DFR.CompLic@vermont.gov