Okla. Stat. tit. 36, § 36-1628

responsibilities.

A. As used in this section:

1. "Agent" shall mean a national bank, state bank, or trust

company which maintains an account in its name in a clearing

corporation or which is a member of the Federal Reserve System and

through which a custodian participates in a clearing corporation or

the Federal Reserve book-entry system, except that with respect to

securities issued by institutions organized or existing under the

laws of any foreign country or securities used to meet the deposit

requirements pursuant to the laws of a foreign country as a

condition of doing business therein, "agent" may, with the prior

approval of the Commissioner, include a corporation which is

organized or existing under the laws of any foreign country and

which is legally qualified under such law to accept custody of

securities;

2. "Clearing corporation" shall mean a corporation as defined

in paragraph (5) of subsection (a) of Section 8-102 of Title 12A of

the Oklahoma Statutes which is organized for the purpose of

effecting transactions in securities by computerized book-entry,

except that with respect to securities issued by institutions

organized or existing under the laws of any foreign country or

securities used to meet the deposit requirements pursuant to the

laws of a foreign country as a condition of doing business therein,

"clearing corporation" may include a corporation which is organized

or existing under the laws of any foreign country and which is

legally qualified under such laws to effect transactions in

securities by computerized book-entry. The term “clearing

corporation” also includes “Treasury/Reserve Automated Debt Entry

Securities System” and “Treasury Direct” book-entry securities

systems established pursuant to 31 U.S.C., Section 3100 et seq., 12

U.S.C. pt. 391 and 5 U.S.C. pt. 301. Clearing corporations shall

have been approved for use by the Commissioner;

3. "Commissioner" shall mean the Insurance Commissioner of the

State of Oklahoma or an authorized representative;

Oklahoma Statutes - Title 36. Insurance Page 441

4. "Custodian" shall mean a national bank, state bank, or trust

company which has at all times aggregate capital, surplus, and

undivided profits of not less than Five Hundred Thousand Dollars

($500,000.00) and which is regulated by either state banking laws or

is a member of the Federal Reserve System and which is legally

qualified to accept custody of securities in accordance with the

standards set forth below, or a broker-dealer as defined by Section

1-102 of Title 71 of the Oklahoma Statutes that is registered with

and subject to the jurisdiction of the Securities and Exchange

Commission, maintains membership in the Securities Investor

Protection Corporation, and has a tangible net worth equal to or

greater than Two Hundred Fifty Million Dollars ($250,000,000.00),

except that with respect to securities issued by institutions

organized or existing under the laws of any foreign country, or

securities used to meet the deposit requirements pursuant to the

laws of a foreign country as a condition of doing business therein,

"custodian" may include a bank, trust company, or similar

institution which has at all times aggregate capital, surplus, and

undivided profits of not less than the equivalent of Five Hundred

Thousand Dollars ($500,000.00) and which is legally qualified to

accept custody of securities;

5. "Federal Reserve book-entry system" shall mean the

computerized systems sponsored by the United States Department of

the Treasury and certain agencies and instrumentalities of the

United States for holding and transferring securities of the United

States government and the agencies and instrumentalities,

respectively, in Federal Reserve Banks through banks which are

members of the Federal Reserve System or which otherwise have access

to the computerized systems; and

6. "Securities" shall mean certificated securities and
nd certain agencies and instrumentalities of the

United States for holding and transferring securities of the United

States government and the agencies and instrumentalities,

respectively, in Federal Reserve Banks through banks which are

members of the Federal Reserve System or which otherwise have access

to the computerized systems; and

6. "Securities" shall mean certificated securities and

uncertificated securities as defined in paragraphs (4) and (18) of

subsection (a) of Section 8-102 of Title 12A of the Oklahoma

Statutes.

B. 1. a. Notwithstanding any other provision of law, a domestic

insurance company may deposit or arrange for the

deposit of securities held in or purchased for its

general account and its separate accounts in a

clearing corporation or the Federal Reserve book-entry

system. When securities are deposited with a clearing

corporation, certificates representing securities of

the same class of the same issuer may be merged and

held in bulk in the name of the nominee of the

clearing corporation with any other securities

deposited with the clearing corporation by any person,

regardless of the ownership of the securities, and

certificates representing securities of small

denominations may be merged into one or more

Oklahoma Statutes - Title 36. Insurance Page 442

certificates of larger denominations. The records of

any agent through which an insurance company holds

securities in the Federal Reserve book-entry system,

and the records of any custodian banks through which

an insurance company holds securities in a clearing

corporation, shall at all times show that the

securities are held for the insurance company and for

which accounts thereof.

b. Ownership of, and other interests in, the securities

may be transferred by bookkeeping entry on the books

of the clearing corporation or in the Federal Reserve

book-entry system without, in either case, physical

delivery of certificates representing such securities;

and

2. Notwithstanding any other provision of law, securities

eligible for deposit under the Oklahoma Insurance Code relating to

deposit of securities by an insurance company as a condition of

commencing or continuing to do an insurance business in this state

may be deposited with a clearing corporation or held in the Federal

Reserve book-entry system and used to meet the deposit requirements

under the Oklahoma Insurance Code and shall be under the control of

the Commissioner and shall not be withdrawn by the insurance company

without the approval of the Commissioner. Any insurance company

holding securities in this manner shall provide to the Commissioner

evidence issued by its custodian or an agent through which the

insurance company has deposited securities with a clearing

corporation or held in the Federal Reserve book-entry system,

respectively, in order to establish that the securities are actually

recorded in an account in the name of the custodian or agent and

evidence that the records of the custodian or agent reflect that

the securities are held subject to the order of the Commissioner.

C. 1. An insurance company may, by written agreement with a

custodian, provide for the custody of its securities with a

custodian, which securities may be held by the custodian or its

agent or in a clearing corporation or in the Federal Reserve book-

entry system. Securities so held, whether held by the custodian or

its agent or in a clearing corporation or in the Federal Reserve

book-entry system, are referred to herein as "custodied securities";

2. Any such agreement shall be in writing and shall be

authorized by a resolution of the board of directors of the

insurance company or of an authorized committee thereof. The terms

of the agreement shall comply with the following:

a. certified securities held by the custodian shall be

held either separate from the securities of the

custodian and of all of its other customers or in a
ties";

2. Any such agreement shall be in writing and shall be

authorized by a resolution of the board of directors of the

insurance company or of an authorized committee thereof. The terms

of the agreement shall comply with the following:

a. certified securities held by the custodian shall be

held either separate from the securities of the

custodian and of all of its other customers or in a

fungible bulk of securities as part of a Filing of

Securities by Issue (FOSBI) arrangement,

Oklahoma Statutes - Title 36. Insurance Page 443

b. securities held in a fungible bulk by the custodian

and securities in a clearing corporation or in the

Federal Reserve book-entry system shall be separately

identified on the custodian's official records as

being owned by the insurance company. The records

shall identify which custodied securities are held by

the custodian or by its agent and which securities are

in a clearing corporation or in the Federal Reserve

book-entry system. If the securities are in a

clearing corporation or in the Federal Reserve book-

entry system, the records shall also identify where

the securities are and if in a clearing corporation,

the name of the clearing corporation and if through an

agent, the name of the agent,

c. all custodied securities that are registered shall be

registered in the name of the company or in the name

of a nominee of the company or in the name of the

custodian or its nominee or, if in a clearing

corporation, in the name of the clearing corporation

or its nominee,

d. custodied securities shall be held subject to the

instructions of the insurance company and shall be

withdrawable upon the demand of the insurance company,

except that custodied securities used to meet the

deposit requirements set forth in the Insurance Code

shall, to the extent required by the Code, be under

the control of the Commissioner and shall not be

withdrawn by the insurance company without the

approval of the Commissioner,

e. the custodian shall be required to send or cause to be

sent to the insurance company a confirmation of all

transfers of custodied securities to or from the

account of the insurance company. In addition, the

custodian shall be required to furnish the insurance

company with reports of holdings of custodied

securities at such times and containing such

information as may be reasonably requested by the

insurance company,

f. during the course of the custodian's regular business

hours, any officer or employee of the insurance

company, any independent accountant selected by the

insurance company, and any representative of an

appropriate regulatory body shall be entitled to

examine, on the premises of the custodian, the

custodian's records relating to custodied securities,

but only upon furnishing the custodian with written

Oklahoma Statutes - Title 36. Insurance Page 444

instructions to that effect from an appropriate

officer of the insurance company,

g. the custodian and its agents shall be required to send

to the insurance company

(1) all reports which they receive from a clearing

corporation or the Federal Reserve book-entry

system on their respective systems of internal

accounting control, and
h written

Oklahoma Statutes - Title 36. Insurance Page 444

instructions to that effect from an appropriate

officer of the insurance company,

g. the custodian and its agents shall be required to send

to the insurance company

(1) all reports which they receive from a clearing

corporation or the Federal Reserve book-entry

system on their respective systems of internal

accounting control, and

(2) any reports prepared by outside auditors on the

custodian's or its agents' internal accounting

control of custodied securities that the

insurance company may reasonably request,

h. the custodian shall maintain records sufficient to

determine and verify information relating to custodied

securities that may be reported in the insurance

company's annual statement and supporting schedules

and information required in any audit of the financial

statements of the insurance company,

i. the custodian shall provide, upon written request from

an appropriate officer of the insurance company, the

appropriate affidavits, substantially in the form

provided in subsections F, G and H of this section,

with respect to custodied securities,

j. the custodian shall be obligated to indemnify the

insurance company for any loss of custodied securities

occasioned by the negligence or dishonesty of the

custodian's officers and employees, or burglary,

robbery, holdup, theft or mysterious disappearance,

including loss by damage or destruction,

k. in the event that there is a loss of custodied

securities for which the custodian shall be obligated

to indemnify the insurance company as provided in

subparagraph j of this paragraph, the custodian shall

promptly replace the securities or the value thereof

and the value of any loss of rights or privileges

resulting from said loss of securities,

l. the agreement may provide that the custodian will not

be liable for any failure to take any action required

to be taken under the agreement 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

Oklahoma Statutes - Title 36. Insurance Page 445

other cause whatever beyond its reasonable control,

and

m. in the event that the custodian gains entry in a

clearing corporation or in the Federal Reserve book-

entry system through an agent, there shall be an

agreement between the custodian and the agent under

which the agent shall be subject to the same liability

for loss of custodied securities as the custodian,

provided, however, that, if the agent shall be subject

to regulation under the laws of a jurisdiction which

is different from the jurisdiction the laws of which

regulate the custodian, the Commissioner may accept a

standard of liability applicable to the agent which is

different from the standard of liability applicable to

the custodian.

D. A company may loan stocks or obligations held by it pursuant

to the provisions of this act to a broker-dealer registered under

the Securities Exchange Act of 1934 or a member bank. The loan must

be evidenced by a written agreement which provides that:

1. The loan will be fully collateralized by cash or obligations

issued or guaranteed by the United States or an agency or an

instrumentality thereof, and the collateral will be adjusted each

business day during the term of the loan to maintain the required

collateralization in the event of market value changes in the loaned

securities or collateral;

2. The loan may be terminated by the company at any time, and

the borrower will return the loaned stocks or obligations or their

equivalent within five (5) business days after termination; and

3. The company has the right to retain the collateral or use
the term of the loan to maintain the required

collateralization in the event of market value changes in the loaned

securities or collateral;

2. The loan may be terminated by the company at any time, and

the borrower will return the loaned stocks or obligations or their

equivalent within five (5) business days after termination; and

3. The company has the right to retain the collateral or use

the collateral to purchase investments equivalent to the loaned

securities if the borrower defaults under the terms of the agreement

and the borrower remains liable for any losses and expenses incurred

by the company due to default that are not covered by the

collateral.

E. An investment may consist of an individual interest in a

pool of obligations or a fractional interest in a single obligation

if the certificate of participation or interest or the confirmation

of participation or interest in the investment shall be issued in

the name of the company or the name of the custodian bank or the

nominee of either and the certificate or confirmation must, if held

by a custodian bank, be kept separate and apart from the investments

of others so that at all times the participation may be identified

as belonging solely to the company making the investment.

F. The following shall be substantially the form of custodian

affidavit for use by a custodian bank where securities entrusted to

its care have not been redeposited elsewhere:

FORM A

Oklahoma Statutes - Title 36. Insurance Page 446

CUSTODIAN AFFIDAVIT

(For use by a custodian bank where securities entrusted to its care

have not been redeposited elsewhere.)

STATE OF _____________________)

) ss

COUNTY OF ____________________)

________________________, being duly sworn deposes and says that he

or she is _______________ of ___________________, a banking

corporation organized under and pursuant to the laws of the _______

with the principal place of business at __________________________

(hereinafter called the "bank"):

That his or her duties involve supervision of activities of the bank

as custodian and records relating thereto;

That the bank is custodian for certain securities of _______________

_____________________ having a place of business at ________________

_____________________________________________ (hereinafter called

the "insurance company") pursuant to an agreement between the bank

and the insurance company;

That the schedule attached hereto is a true and complete statement

of securities (other than those caused to be deposited with The

Depository Trust Company or like entity or a Federal Reserve Bank

under the Federal Reserve book-entry procedure) which were in the

custody of the bank for the account of the insurance company as of

the close of business on _______________; that, unless otherwise

indicated on the schedule, the next maturing and all subsequent

coupons were then either attached to coupon bonds or in the process

of collection; and that, unless otherwise shown on the schedule, all

such securities were in bearer form or in registered form in the

name of the insurance company or its nominee or of the bank or its

nominee, or were in the process of being registered in such form;

That the bank as custodian has the responsibility for the

safekeeping of the securities as that responsibility is specifically

set forth in the agreement between the bank as custodian and the

insurance company; and

That, to the best of his or her knowledge and belief, unless

otherwise shown on the schedule, the securities were the property of

the insurance company and were free of all liens, claims, or

encumbrances whatsoever.

Subscribed and sworn to

before me this ______ day

of________19__

_____________________(L.S.)

Vice President (or other

authorized officer)

G. The following shall be substantially the form of custodian

affidavit for use in instances where a custodian bank maintains

Oklahoma Statutes - Title 36. Insurance Page 447
rance company and were free of all liens, claims, or

encumbrances whatsoever.

Subscribed and sworn to

before me this ______ day

of________19__

_____________________(L.S.)

Vice President (or other

authorized officer)

G. The following shall be substantially the form of custodian

affidavit for use in instances where a custodian bank maintains

Oklahoma Statutes - Title 36. Insurance Page 447

securities on deposit with The Depository Trust Company or like

entity:

FORM B

CUSTODIAN AFFIDAVIT

(For use in instances where a custodian bank maintains securities on

deposit with The Depository Trust Company or like entity.)

STATE OF _____________________)

) ss

COUNTY OF ____________________)

________________________, being duly sworn deposes and says that he

or she is _______________ of ___________________, a banking

corporation organized under and pursuant to the laws of the _______

with the principal place of business at ____________________

(hereinafter called the "bank"):

That his or her duties involve supervision of activities of the bank

as custodian and records relating thereto;

That the bank is custodian for certain securities of _______________

with a place of business at _________________ (hereinafter called

the "insurance company") pursuant to an agreement between the bank

and the insurance company;

That the bank has caused certain of such securities to be deposited

with _______________________ and that the schedule attached hereto

is a true and complete statement of the securities of the insurance

company of which the bank was custodian as of the close of business

on______________________________, and which were so deposited on

such date;

That the bank as custodian has the responsibility for the

safekeeping of the securities both in the possession of the bank or

deposited with __________ as is specifically set forth in the

agreement between the bank as custodian and the insurance company;

and

That, to the best of his or her knowledge and belief, unless

otherwise shown on the schedule, the securities were the property of

the insurance company and were free of all liens, claims, or

encumbrances whatsoever.

Subscribed and sworn to

before me this _____day

of _______19__

_____________________(L.S.)

Vice President (or other

authorized officer)

H. The following shall be substantially the form of custodian

affidavit for use where ownership is evidenced by book-entry at a

Federal Reserve Bank:

FORM C

CUSTODIAN AFFIDAVIT

Oklahoma Statutes - Title 36. Insurance Page 448

(For use where ownership is evidenced by book-entry at a Federal

Reserve Bank.)

STATE OF _____________________)

) ss

COUNTY OF ____________________)

________________________, being duly sworn deposes and says that he

is _______________ of the ________________, a banking corporation

organized under and pursuant to the laws of the _________ with the

principal place of business at ___________________ (hereinafter

called the "bank"):

That his or her duties involve supervision of activities of the bank

as custodian and records relating thereto;

That the bank is custodian for certain securities of _____________

with a place of business at ____________________ (hereinafter called

the "insurance company") pursuant to an agreement between the bank

and the insurance company;

That it has caused certain securities to be credited to its

book-entry account with the Federal Reserve Bank of ______________

under the Federal Reserve book-entry procedure; and that the

schedule attached hereto is a true and complete statement of the

securities of the insurance company of which the bank was custodian

as of the close of business on __________ which were in a "General"

book-entry account maintained in the name of the bank on the books

and records of the Federal Reserve Bank of __________________ at

that date;

That the bank has the responsibility for the safekeeping of the
ched hereto is a true and complete statement of the

securities of the insurance company of which the bank was custodian

as of the close of business on __________ which were in a "General"

book-entry account maintained in the name of the bank on the books

and records of the Federal Reserve Bank of __________________ at

that date;

That the bank has the responsibility for the safekeeping of the

securities both in the possession of the bank or in the "General"

book-entry account as is specifically set forth in the agreement

between the bank as custodian and the insurance company; and

That, to the best of his or her knowledge and belief, unless

otherwise shown on the schedule, the securities were the property

of the insurance company and were free of all liens, claims, or

encumbrances whatsoever.

Subscribed and sworn to

before me this ____ day

of __________ 19__

__________________(L.S.)

Vice President (or other

authorized officer)