Conn. Gen. Stat. § 36a-337: (Formerly Sec. 36-390). Securing of public deposits.

(a) All qualified public depositories shall have power to secure public deposits in accordance with sections 36a-330 to 36a-338, inclusive. Except as provided in said sections, no bond or other security shall be required of or given by any qualified public depository for any public deposit.

(b) In lieu of eligible collateral required under section 36a-333, at least to the extent provided by said section, not more than fifty per cent of the public deposits held by any qualified public depository may be secured solely by a private insurance policy purchased by the depository, the depositor, or any other third party. Any private insurance policy used to secure public deposits shall be issued by an insurance company licensed to do business in Connecticut.

(c) In lieu of eligible collateral required under section 36a-333, all or any part of the uninsured public deposits held by any qualified public depository may be secured solely by an irrevocable letter of credit issued by a federal home loan bank that has a credit rating of the highest rating level from a rating service recognized by the commissioner or by a federal home loan bank that has otherwise been deemed acceptable for such purposes by the commissioner, provided the amount of the letter of credit when combined with any eligible collateral pledged by the depository, as a percentage of the uninsured public deposits, is no less than the amount required by section 36a-333 for eligible collateral for the particular depository.