reglab/statecodes huggingface dataset:
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 404 - Financial Condition › Subchapter B. Impairment of Stock or Surplus › Section 404.053. Remedy for Impairment

Sec. 404.053.  REMEDY FOR IMPAIRMENT.  (a)  The commissioner shall order an insurer to remedy an impairment of the insurer's surplus, aggregate surplus, or aggregate of guaranty fund and surplus, as applicable, by bringing the surplus to an acceptable level specified by the commissioner, or to cease engaging in business in this state, if the commissioner determines that:
(1)  the surplus required by Section 822.054, 822.202, 822.203, 822.205, 822.210, 822.211, or 822.212 of a stock insurance company engaged in the kind of insurance business described by the company's certificate of authority:
(A)  is impaired by more than 50 percent; or
(B)  is less than the minimum level of surplus required by risk-based capital and surplus rules adopted by the commissioner; or
(2)  the required aggregate of guaranty fund and surplus of a Lloyd's plan, or the required aggregate surplus of a reciprocal or interinsurance exchange or of a mutual company, other than a life insurance company, engaged in the kind of insurance business described by the insurer's certificate of authority:
(A)  is impaired by more than 25 percent; or
(B)  is less than the minimum level of surplus required by risk-based capital and surplus rules adopted by the commissioner.
(b)  After issuing an order described by Subsection (a), the commissioner shall immediately institute any proceeding necessary to determine what further actions the commissioner will take in relation to the matter.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 406 - Special Deposits Required Under Potentially Hazardous Conditions › Section 406.001. Definition

Sec. 406.001.  DEFINITION.  In this chapter, "insurer" includes:
(1)  a capital stock insurance company;
(2)  a reciprocal or interinsurance exchange;
(3)  a Lloyd's plan;
(4)  a fraternal benefit society;
(5)  a mutual company, including a mutual assessment company;
(6)  a statewide mutual assessment company;
(7)  a local mutual aid association;
(8)  a burial association;
(9)  a county mutual insurance company;
(10)  a farm mutual insurance company;
(11)  a fidelity, guaranty, or surety company;
(12)  a title insurance company;
(13)  a stipulated premium company;
(14)  a group hospital service corporation;
(15)  a health maintenance organization;
(16)  a risk retention group; and
(17)  any other organization or person engaged in the business of insurance.
Added by Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 1C.001, eff. April 1, 2009.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 406 - Special Deposits Required Under Potentially Hazardous Conditions › Section 406.002. Applicability of Chapter

Sec. 406.002.  APPLICABILITY OF CHAPTER.  This chapter  applies to a person or organization engaged in the business of insurance without regard to whether the person or organization is listed in Section 406.001, unless another statute specifically cites this chapter and exempts the person or organization from this chapter.
Added by Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 1C.001, eff. April 1, 2009.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 406 - Special Deposits Required Under Potentially Hazardous Conditions › Section 406.003. Required Deposit: Standards and Criteria

Sec. 406.003.  REQUIRED DEPOSIT: STANDARDS AND CRITERIA.  The commissioner, in the commissioner's sole discretion, may require an insurer to make a deposit under this chapter if the commissioner determines that one of the following conditions, if not rectified, may potentially be hazardous to the insurer's policyholders, enrollees, or creditors, or to the public:
(1)  the insurer's financial or operating condition, reviewed in conjunction with the kinds and nature of risks insured;
(2)  the insurer's method of operation;
(3)  the insurer's relationship with affiliates;
(4)  the nature and amount of the insurer's investments;
(5)  the insurer's contracts that may lead to a contingent liability; or
(6)  the insurer's agreements with respect to guaranty and surety.
Added by Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 1C.001, eff. April 1, 2009.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 406 - Special Deposits Required Under Potentially Hazardous Conditions › Section 406.004. Required Deposit: Form of Security

Sec. 406.004.  REQUIRED DEPOSIT: FORM OF SECURITY.  A deposit required under Section 406.003 must be made with the comptroller and approved by the commissioner.  The deposit must be made in:
(1)  cash;
(2)  securities authorized under this code to be a legal investment for the insurer that:
(A)  are readily marketable over a national exchange with a maturity date of not more than one year, are listed by the Securities Valuation Office of the National Association of Insurance Commissioners, and qualify as admitted assets; or
(B)  are clean, irrevocable, and unconditional letters of credit issued or confirmed by a financial institution organized and licensed under the laws of the United States or a state of the United States; or
(3)  another form of security acceptable to the commissioner.
Added by Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 1C.001, eff. April 1, 2009.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 406 - Special Deposits Required Under Potentially Hazardous Conditions › Section 406.005. Duration of Deposit

Sec. 406.005.  DURATION OF DEPOSIT.  Subject to Section 406.006, the comptroller shall hold a deposit required under this chapter until the commissioner issues a written order finding that the condition for which the deposit was required no longer exists.
Added by Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 1C.001, eff. April 1, 2009.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 406 - Special Deposits Required Under Potentially Hazardous Conditions › Section 406.006. Substitution or Withdrawal of Deposit

Sec. 406.006.  SUBSTITUTION OR WITHDRAWAL OF DEPOSIT.  (a)  An insurer may file a written application with the commissioner requesting:
(1)  withdrawal of all or part of the deposit held by the comptroller under this chapter; or
(2)  substitution of all or part of the deposited securities held by the comptroller under this chapter.
(b)  The application must state the basis for the request to withdraw the deposit or to substitute the deposited security.
(c)  An insurer's application for the substitution of a deposited security must provide specific information regarding the security to be deposited as a substitute for the security held by the comptroller.
(d)  The commissioner shall issue a letter approving or an order denying an application under this section not later than the 30th day after the date the department receives the application.  If the commissioner does not approve or deny the application within that period, the application is denied.
(e)  The commissioner may, in the commissioner's sole discretion, approve an application to withdraw a deposit or substitute a deposited security if the commissioner determines that the withdrawal or substitution will not be hazardous to the insurer's policyholders, enrollees, or creditors, or to the public.
(f)  The comptroller may not release a deposit made under this chapter, or any part of the deposit, and may not accept a substitute for a deposited security unless the commissioner issues a letter approving the withdrawal or substitution.
Added by Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 1C.001, eff. April 1, 2009.
Amended by:
Acts 2013, 83rd Leg., R.S., Ch. 553 (S.B. 631), Sec. 1, eff. June 14, 2013.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 406 - Special Deposits Required Under Potentially Hazardous Conditions › Section 406.007. Appeal

Sec. 406.007.  APPEAL.  An insurer may appeal an action of the commissioner under this chapter in accordance with Subchapter D, Chapter 36.
Added by Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 1C.001, eff. April 1, 2009.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle A - General Provisions › Chapter 406 - Special Deposits Required Under Potentially Hazardous Conditions › Section 406.008. Cumulative of Other Deposits

Sec. 406.008.  CUMULATIVE OF OTHER DEPOSITS.  A deposit required to be made under this chapter is in addition to any other deposit that the insurer is required or authorized to make under this code.
Added by Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 1C.001, eff. April 1, 2009.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 421 - Reserves in General › Section 421.001. Reserves Required

Sec. 421.001.  RESERVES REQUIRED.  (a)  An insurer shall maintain reserves in an amount estimated in the aggregate to provide for the payment of all losses or claims for which the insurer may be liable and that are:
(1)  incurred on or before the date of statement, whether reported or unreported; and
(2)  unpaid as of the date of statement.
(b)  In addition to the reserves required by Subsection (a), an insurer shall maintain reserves in an amount estimated to provide for the expenses of adjustment or settlement of the losses or claims described by that subsection.
(c)  The commissioner shall adopt each current formula recommended by the National Association of Insurance Commissioners for establishing reserves for each line of insurance.  Each insurer writing a line of insurance to which a formula adopted under this subsection applies shall establish reserves in compliance with that formula.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 421 - Reserves in General › Section 421.002. Certificates From Other States

Sec. 421.002.  CERTIFICATES FROM OTHER STATES.  In computing the reserve liability of an insurer, the commissioner may accept the certificate of the officer of another state charged with the duty of supervising the insurer if:
(1)  the insurer is organized under the laws of the other state; and
(2)  the certificate shows that the reserve liability has been computed in accordance with Section 421.001.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 422 - Asset Protection Act › Subchapter A. General Provisions › Section 422.001. Short Title

Sec. 422.001.  SHORT TITLE.  This chapter may be cited as the Asset Protection Act.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 422 - Asset Protection Act › Subchapter A. General Provisions › Section 422.002. Purposes

Sec. 422.002.  PURPOSES.  (a)  The purposes of this chapter are to:
(1)  require an insurer to maintain unencumbered assets in an amount equal to the insurer's policy reserve liabilities;
(2)  provide preferential claims against assets in favor of an owner, beneficiary, assignee, certificate holder, or third-party beneficiary of an insurance policy; and
(3)  prevent the pledge or encumbrance of assets in excess of certain amounts without a prior written order of the commissioner.
(b)  This chapter and the powers granted and functions authorized by this chapter shall be exercised to accomplish the purposes of this chapter.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2021, 87th Leg., R.S., Ch. 61 (S.B. 1954), Sec. 1, eff. September 1, 2021.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 422 - Asset Protection Act › Subchapter A. General Provisions › Section 422.003. Definitions

Sec. 422.003.  DEFINITIONS.  In this chapter:
(1)  "Asset" means any property in which an insurer owns a legal or equitable interest that is reported as an asset in the domestic insurer's statutory financial statements most recently filed with the department.
(2)  "Claimant" means an owner, beneficiary, assignee, certificate holder, or third-party beneficiary of an insurance benefit or right arising from the coverage of an insurance policy to which this chapter applies.
(3)  "Reserve assets" means the assets of an insurer that are authorized investments for policy reserves under this code.
(4)  "Policy reserve liabilities" means the liabilities that an insurer is required under this code to establish for all of the insurer's outstanding insurance policies.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2021, 87th Leg., R.S., Ch. 61 (S.B. 1954), Sec. 2, eff. September 1, 2021.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 422 - Asset Protection Act › Subchapter A. General Provisions › Section 422.004. Applicability of Chapter

Sec. 422.004.  APPLICABILITY OF CHAPTER.  This chapter applies to:
(1)  the following domestic insurers:
(A)  a stock life, health, or accident insurance company;
(B)  a mutual life, health, or accident insurance company;
(C)  a stock fire or casualty insurance company;
(D)  a mutual fire or casualty insurance company;
(E)  a title insurance company;
(F)  a mutual assessment company;
(G)  a local mutual aid association;
(H)  a local mutual burial association;
(I)  a statewide mutual assessment company;
(J)  a stipulated premium company;
(K)  a fraternal benefit society;
(L)  a group hospital service corporation;
(M)  a county mutual insurance company;
(N)  a Lloyd's plan;
(O)  a reciprocal or interinsurance exchange;
(P)  a farm mutual insurance company; and
(Q)  a mortgage guaranty insurer; and
(2)  all kinds of insurance written by an insurer to which this chapter applies.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 422 - Asset Protection Act › Subchapter A. General Provisions › Section 422.005. Exemptions

Sec. 422.005.  EXEMPTIONS.  (a)  This chapter does not apply to:
(1)  variable contracts for which separate accounts are required to be maintained;
(2)  a reinsurance agreement and any trust account related to the reinsurance agreement if the reinsurance agreement and related trust account meet the requirements of Chapter 493;
(3)  an assessment-as-needed company or insurance coverage written by an assessment-as-needed company;
(4)  an insurer while:
(A)  the insurer is subject to a conservatorship order issued by the commissioner; or
(B)  a court-appointed receiver is in charge of the insurer's affairs;
(5)  an insurer's reserve assets that are held, deposited, pledged, or otherwise encumbered to secure, offset, protect, or meet the insurer's policy reserve liabilities established in a reinsurance agreement under which the insurer reinsures the insurance policy liabilities of a ceding insurer if:
(A)  the ceding insurer and the reinsurer are authorized to engage in business in this state; and
(B)  in accordance with a written agreement between the ceding insurer and the reinsurer, reserve assets substantially equal to the policy reserve liabilities the reinsurer must establish on the reinsured business are:
(i)  deposited by or withheld from the reinsurer and held in the custody of the ceding insurer, or deposited and held in a trust account with a state or national bank domiciled in this state, as security for the payment of the reinsurer's obligations under the reinsurance agreement;
(ii)  held subject to withdrawal by the ceding insurer; and
(iii)  held under the separate or joint control of the ceding insurer; or
(6)  any pledge, encumbrance, or lien contemplated by or customarily included in the documentation for:
(A)  an investment or transaction authorized by:
(i)  Section 424.068, Subchapter D, Chapter 424, or Section 425.121 or 425.151; or
(ii)  Section 424.068, Subchapter E, Chapter 424, or Section 425.124, 425.125, 425.126, 425.127, 425.128, 425.129, 425.130, 425.131, or 425.132; and
(B)  a custodial or trust agreement for an insurer's securities authorized by Section 423.103 that provides for a limited grant or lien or security interest for payment of fees and expenses due to a service provider or intermediary under the custodial or trust agreement.
(b)  Notwithstanding this section, the commissioner may examine any asset, reinsurance agreement, or deposit arrangement described by Subsection (a)(5) at any time, in accordance with the commissioner's authority under this code to examine an insurer.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2017, 85th Leg., R.S., Ch. 594 (S.B. 1070), Sec. 3.02, eff. September 1, 2017.
Acts 2021, 87th Leg., R.S., Ch. 61 (S.B. 1954), Sec. 3, eff. September 1, 2021.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 422 - Asset Protection Act › Subchapter A. General Provisions › Section 422.006. Conflict With Other Law

Sec. 422.006.  CONFLICT WITH OTHER LAW.  If this chapter conflicts with another law relating to the subject matter or application of this chapter, this chapter controls.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 422 - Asset Protection Act › Subchapter A. General Provisions › Section 422.007. Rules

Sec. 422.007.  RULES.  The commissioner may adopt rules regarding the provisions of this chapter.
Added by Acts 2021, 87th Leg., R.S., Ch. 61 (S.B. 1954), Sec. 4, eff. September 1, 2021.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 422 - Asset Protection Act › Subchapter B. Encumbrance of Assets › Section 422.051. Restrictions on Encumbrance of Assets

Sec. 422.051.  RESTRICTIONS ON ENCUMBRANCE OF ASSETS.  (a)  An insurer shall at all times maintain unencumbered assets in an amount equal to the insurer's policy reserve liabilities.
(b)  An insurer may not pledge or otherwise encumber:
(1)  the insurer's assets in an amount that exceeds the amount of the insurer's capital and surplus; or
(2)  more than 10 percent of the insurer's reserve assets.
(b-1)  The calculation of the quantitative limits in Subsections (a) and (b) must be based on the statutory financial statements for the insurer most recently filed with the department as of the date compliance is determined.  The date that a pledge or encumbrance is made is the date used to determine compliance with the limits in Subsection (b).
(b-2)  Compliance with the quantitative limits in Subsection (b) is achieved when, on the date of determination of compliance, the sum of the value of a proposed pledge or encumbrance, when added to the values of the sum of all previous and still outstanding pledges and encumbrances, does not exceed any quantitative limit in Subsection (b).
(c)  Notwithstanding any other provision of this section, on application made to the commissioner, the commissioner may issue a written order approving the pledge or encumbrance of an insurer's asset in any amount if the commissioner determines that the pledge or encumbrance will not adversely affect the insurer's solvency.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2021, 87th Leg., R.S., Ch. 61 (S.B. 1954), Sec. 5, eff. September 1, 2021.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 422 - Asset Protection Act › Subchapter B. Encumbrance of Assets › Section 422.052. Report to Commissioner

Sec. 422.052.  REPORT TO COMMISSIONER.  (a)  Not later than the 10th day after the date an insurer pledges or otherwise encumbers an asset, the insurer shall report in writing to the commissioner:
(1)  the amount and identity of the pledged or encumbered asset; and
(2)  the terms of the transaction.
(b)  Annually, or more often as required by the commissioner, the insurer shall file with the commissioner a statement sworn to by the insurer's chief executive officer that:
(1)  title to assets that equal the amount of the insurer's policy reserve liabilities and that are not pledged or otherwise encumbered is vested in the insurer;
(2)  the only assets of the insurer that are pledged or otherwise encumbered are those identified and reported in the sworn statement, and no other assets of the insurer are pledged or otherwise encumbered; and
(3)  the terms of the transaction pledging or otherwise encumbering the assets are those reported in the sworn statement.
(c)  The insurer is not required to file the report described by Subsection (a) for a pledge or encumbrance permitted in a transaction approved by the commissioner under Section 1152.055.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2021, 87th Leg., R.S., Ch. 61 (S.B. 1954), Sec. 6, eff. September 1, 2021.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 422 - Asset Protection Act › Subchapter B. Encumbrance of Assets › Section 422.053. Claimant Lien on Certain Assets

Sec. 422.053.  CLAIMANT LIEN ON CERTAIN ASSETS.  (a)  A person, corporation,  association, governmental entity, or any other legal entity that accepts as security for an insurer's debt or other obligation a pledge or encumbrance of an asset of the insurer that is not made in accordance with this chapter is considered to have accepted the asset subject to a superior, preferential, and automatically perfected lien in favor of a claimant of the insurer.
(b)  Subsection (a) does not apply to:
(1)  an asset of an insurer in conservatorship or receivership if the commissioner in the conservatorship proceeding, or the court in which the receivership is pending, approves the pledge or encumbrance of the asset; or
(2)  a pledge or encumbrance of an asset permitted in a transaction approved by the commissioner under Section 1152.055.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2021, 87th Leg., R.S., Ch. 61 (S.B. 1954), Sec. 7, eff. September 1, 2021.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 422 - Asset Protection Act › Subchapter B. Encumbrance of Assets › Section 422.054. Preferential Claims on Liquidation

Sec. 422.054.  PREFERENTIAL CLAIMS ON LIQUIDATION.  If an insurer is involuntarily or voluntarily liquidated, a claimant of the insurer has a prior and preferential claim against all assets of the insurer other than the assets that have been pledged or encumbered in accordance with this chapter or the assets that are subject to a pledge or encumbrance of an asset described by Section 422.053(b)(2).  All claimants have equal status, and their prior and preferential claim is superior to any claim or cause of action against the insurer by any other person, corporation, association, or legal entity.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2021, 87th Leg., R.S., Ch. 61 (S.B. 1954), Sec. 8, eff. September 1, 2021.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 423 - Transactions With Money and Other Assets › Subchapter A. General Provisions › Section 423.001. Applicability of Chapter

Sec. 423.001.  APPLICABILITY OF CHAPTER.  (a)  This chapter applies to a domestic insurer regulated under this code, including:
(1)  a stock company;
(2)  a reciprocal or interinsurance exchange;
(3)  a Lloyd's plan;
(4)  a fraternal benefit society;
(5)  a stipulated premium company;
(6)  a mutual insurance company of any kind, including:
(A)  a statewide mutual assessment company;
(B)  a local mutual aid association;
(C)  a burial association;
(D)  a county mutual insurance company; and
(E)  a farm mutual insurance company; and
(7)  any other organization or person engaged in the business of insurance.
(b)  A provision of this code limiting the regulation of an insurer under this code does not limit the application of this chapter, except that this chapter does not apply to an insurer that is exempted from its application by another statute that cites this chapter.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 423 - Transactions With Money and Other Assets › Subchapter A. General Provisions › Section 423.002. Ambiguities and Conflicts With Other Law

Sec. 423.002.  AMBIGUITIES AND CONFLICTS WITH OTHER LAW.  This chapter controls to the extent of an ambiguity or a conflict between this chapter and another provision of this code.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 423 - Transactions With Money and Other Assets › Subchapter A. General Provisions › Section 423.003. Rules

Sec. 423.003.  RULES.  The commissioner may adopt rules necessary to implement this chapter.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 423 - Transactions With Money and Other Assets › Subchapter A. General Provisions › Section 423.004. Statutory Deposits With Department

Sec. 423.004.  STATUTORY DEPOSITS WITH DEPARTMENT.  (a)  Except as provided by Subsection (c), notwithstanding any requirement under this code that an insurer deposit with the comptroller money or other assets for the security of an insurer's policyholders or creditors, including a deposit required by another state, an insurer may deposit the required money or other assets with the department in accordance with this section.
(b)  A deposit authorized by Subsection (a):
(1)  must be approved by the commissioner;
(2)  is subject to any requirements applicable to the type of deposit;
(3)  must be held under the commissioner's control; and
(4)  may not be substituted or withdrawn by the insurer without the commissioner's approval.
(c)  This section does not apply to any deposit made under Chapter 406 or a deposit of fees or taxes under this code.
Added by Acts 2015, 84th Leg., R.S., Ch. 263 (S.B. 1427), Sec. 1, eff. September 1, 2015.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 423 - Transactions With Money and Other Assets › Subchapter B. Transactions With Money › Section 423.051. Deposit and Investment of Money

Sec. 423.051.  DEPOSIT AND INVESTMENT OF MONEY.  A director, member of a committee, officer, or clerk of a domestic insurer who has the duty to handle or invest the insurer's money may not:
(1)  invest the money other than in the corporate name of the insurer, except as provided by Section 423.102;
(2)  deposit the money unless the deposit is:
(A)  in the corporate name of the insurer;
(B)  in a pooling account with one or more affiliates, as described by Section 823.003; or
(C)  in accordance with a reinsurance agreement;
(3)  borrow the insurer's money;
(4)  have any interest in a loan, pledge, security, or property of the insurer, except as a stockholder; or
(5)  take or receive for the individual's use a fee, brokerage, commission, gift, or other consideration for, or on account of, a loan made by or on behalf of the insurer.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 423 - Transactions With Money and Other Assets › Subchapter B. Transactions With Money › Section 423.052. Money Held in Pooling Account

Sec. 423.052.  MONEY HELD IN POOLING ACCOUNT.  (a)  Only a domestic insurer and an affiliate, as described by Section 823.003, may hold money in a pooling account.
(b)  The accounting and operating records and books of the insurer and affiliate must be adequately detailed to identify specific insurance policies and policyholders with the money from premiums received by the insurer that issues the policies.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 423 - Transactions With Money and Other Assets › Subchapter B. Transactions With Money › Section 423.053. Authority to Deposit Money in Account of Reinsurer

Sec. 423.053.  AUTHORITY TO DEPOSIT MONEY IN ACCOUNT OF REINSURER.  A reinsurance agreement between a domestic insurer and an affiliate, as described by Section 823.003, must specifically authorize the deposit of money from premiums to the account of the affiliate that assumes the reinsurance.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 423 - Transactions With Money and Other Assets › Subchapter C. Transactions With Other Assets › Section 423.101. Definition

Sec. 423.101.  DEFINITION.  In this subchapter, "clearing corporation" means:
(1)  a clearing corporation as defined by Section 8.102(a), Business & Commerce Code; or
(2)  a clearance system that:
(A)  is organized or operating under the laws of at least one foreign country;
(B)  provides for book-entry settlement and custody of internationally traded securities; and
(C)  has been organized and in operation for not less than 15 consecutive years.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 423 - Transactions With Money and Other Assets › Subchapter C. Transactions With Other Assets › Section 423.102. Deposit and Holding of Securities

Sec. 423.102.  DEPOSIT AND HOLDING OF SECURITIES.  (a)  A domestic insurer that has securities held in or purchased for the insurer's general account or separate accounts may deposit the securities or arrange through an agent, broker, or dealer for deposit of the securities with a clearing corporation or in the Federal Reserve book-entry system.
(b)  If securities are deposited directly with a clearing corporation or deposited indirectly through a participating custodian bank, certificates representing securities of the same class of the same issuer may be merged and held in bulk, in the name of a nominee of the clearing corporation, with any other securities deposited with the clearing corporation by any person, regardless of the ownership of the securities.
(c)  Certificates under Subsection (b) that represent securities of small denominations may be merged into one or more certificates of larger denominations.
(d)  The records of an agent, broker, dealer, or member bank through which an insurer holds securities in the Federal Reserve book-entry system and the records of a custodian bank through which an insurer holds securities with a clearing corporation must show that the securities are held for the insurer and show the accounts for which the securities are held.
(e)  A bank must enter into a custodial agreement with an insurer to be eligible to act as a participating custodian bank for the insurer under this section.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 423 - Transactions With Money and Other Assets › Subchapter C. Transactions With Other Assets › Section 423.103. Securities Held Under Custodial or Trust Agreement

Sec. 423.103.  SECURITIES HELD UNDER CUSTODIAL OR TRUST AGREEMENT.  A domestic insurer's securities that are held under a custodial agreement or trust agreement with a bank, Federal Home Loan Bank, or trust company may be issued in the name of a nominee of the bank, Federal Home Loan Bank, or trust company only if the bank, Federal Home Loan Bank, or trust company:
(1)  has corporate trust powers;
(2)  is authorized to act as a custodian or trustee;
(3)  is organized under the laws of the United States or any state of the United States; and
(4)  meets one of the following requirements:
(A)  is a member of the Federal Reserve System;
(B)  is a member of or is eligible to receive deposits that are insured by the Federal Deposit Insurance Corporation;
(C)  maintains an account with a Federal Reserve Bank and is subject to supervision and examination by the Board of Governors of the Federal Reserve System; or
(D)  is subject to supervision and examination by the Federal Housing Finance Board.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 423 - Transactions With Money and Other Assets › Subchapter C. Transactions With Other Assets › Section 423.104. Proof of Ownership of Securities

Sec. 423.104.  PROOF OF OWNERSHIP OF SECURITIES.  (a)  A domestic insurer may demonstrate ownership of a security through a definitive certificate or in accordance with rules adopted under this section.
(b)  The commissioner shall adopt rules under which a domestic insurer may demonstrate ownership of an uncertificated security, as defined by Section 8.102(a), Business & Commerce Code, consistent with common practices of securities exchanges and markets.  The rules must establish:
(1)  standards for the types of uncertificated securities the insurer may hold;
(2)  the manner in which the insurer may demonstrate ownership of the security; and
(3)  adequate financial safeguards relating to the ownership of uncertificated securities.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 423 - Transactions With Money and Other Assets › Subchapter C. Transactions With Other Assets › Section 423.105. Mandatory Deposit of Securities; Commissioner Control

Sec. 423.105.  MANDATORY DEPOSIT OF SECURITIES; COMMISSIONER CONTROL.  (a)  An insurer that is required to deposit securities as a condition of engaging in the business of insurance in this state may deposit the securities with a clearing corporation or in the Federal Reserve book-entry system.
(b)  Securities under Subsection (a) are under the commissioner's control and may not be withdrawn by the insurer without the commissioner's approval.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 423 - Transactions With Money and Other Assets › Subchapter C. Transactions With Other Assets › Section 423.106. Required Evidence for Securities

Sec. 423.106.  REQUIRED EVIDENCE FOR SECURITIES.  (a)  An insurer that deposits securities under Section 423.105 shall provide evidence to the commissioner to establish that:
(1)  the securities are recorded in an account in the name of:
(A)  the participating custodian bank or member bank through which the insurer deposits the securities with a clearing corporation or in the Federal Reserve book-entry system; or
(B)  the insurer, if the insurer makes the deposit directly with the clearing corporation as a direct participant; and
(2)  the records of the participating custodian bank, direct participant, or member bank and of the clearing corporation show that the securities are under the commissioner's control.
(b)  Evidence under Subsection (a)(1) must be issued, as applicable, by:
(1)  the participating custodian bank;
(2)  the member bank; or
(3)  the insurer, when the insurer makes the deposit directly with the clearing corporation as a direct participant.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 423 - Transactions With Money and Other Assets › Subchapter C. Transactions With Other Assets › Section 423.107. Assets Deposited With Clearing Corporation

Sec. 423.107.  ASSETS DEPOSITED WITH CLEARING CORPORATION.  A domestic insurer may deposit assets with a clearing corporation only if:
(1)  the insurer is a member of an insurance holding company system that has assets of at least $5 billion, as shown by annual statements of member insurers for the preceding year;
(2)  the insurer uses the clearing corporation only as a depository for investments in internationally traded securities;
(3)  the insurer's total investment in internationally traded securities under Subdivision (2) does not exceed the insurer's policyholders' surplus; and
(4)  the insurer does not use securities deposited with the clearing corporation as security for reinsurance.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 423 - Transactions With Money and Other Assets › Subchapter C. Transactions With Other Assets › Section 423.108. Limitation on Assets Deposited With Clearing Corporation

Sec. 423.108.  LIMITATION ON ASSETS DEPOSITED WITH CLEARING CORPORATION.  The commissioner by rule may adopt a reasonable limit on the percentage of a domestic insurer's assets that may be deposited with a clearing corporation.  The limit may not exceed five percent of the insurer's total assets, as shown by the insurer's annual statement filed with the department for the year preceding the year for which the limit is adopted.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 424 - Investments for Certain Insurers › Subchapter A. General Provisions › Section 424.001. Definitions

Sec. 424.001.  DEFINITIONS.  In this chapter:
(1)  "Insurer" means any insurer organized under the laws of this state other than an insurer writing life, health, and accident insurance.
(2)  "Minimum capital and surplus" means the minimum amount of capital stock and minimum amount of surplus required of an insurer under Section 822.054 or 822.210.
(3)  "Securities valuation office" means the Securities Valuation Office of the National Association of Insurance Commissioners.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 424 - Investments for Certain Insurers › Subchapter A. General Provisions › Section 424.002. Inapplicability of Certain Law

Sec. 424.002.  INAPPLICABILITY OF CERTAIN LAW.  The definition of "state" assigned by Section 311.005, Government Code, does not apply to this chapter.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 424 - Investments for Certain Insurers › Subchapter B. Investment of Funds in Excess › Section 424.051. General Investment Authority Specified by Law

Sec. 424.051.  GENERAL INVESTMENT AUTHORITY SPECIFIED BY LAW.  An insurer may not invest the insurer's funds in excess of minimum capital and surplus, except that an insurer may invest as otherwise authorized by this code.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 424 - Investments for Certain Insurers › Subchapter B. Investment of Funds in Excess › Section 424.052. Additional General Investment Authority

Sec. 424.052.  ADDITIONAL GENERAL INVESTMENT AUTHORITY.  An insurer may make investments that are not otherwise authorized by this chapter or otherwise authorized by this code for the insurer if:
(1)  the investment is not specifically prohibited by law and does not exceed the limits prescribed by this code;
(2)  the amount of a single investment under this section does not exceed five percent of the insurer's capital and surplus in excess of the insurer's minimum capital and surplus; and
(3)  the aggregate amount of all investments made by the insurer under this section does not exceed five percent of the insurer's assets.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 424 - Investments for Certain Insurers › Subchapter B. Investment of Funds in Excess › Section 424.053. Limitation as to Single Issuer or Borrower

Sec. 424.053.  LIMITATION AS TO SINGLE ISSUER OR BORROWER.  (a)  Notwithstanding Sections 424.051, 424.056-424.071, and 424.074, the aggregate amount of an insurer's investments in all or any type of securities, loans, obligations, or evidences of indebtedness of a single issuer or borrower, other than investments described by Subsection (c), may not exceed five percent of the insurer's total assets.
(b)  For purposes of this section, a single issuer or borrower includes:
(1)  the issuer's or borrower's majority-owned subsidiaries;
(2)  the issuer's or borrower's parent; or
(3)  the majority-owned subsidiaries of the issuer's or borrower's parent.
(c)  This section does not apply to:
(1)  an authorized investment that:
(A)  is a direct obligation of or guaranteed by the full faith and credit of the United States, this state, or a political subdivision of this state; or
(B)  is insured by an agency of the United States or this state; or
(2)  an investment described by Section 424.061 or 424.063.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 424 - Investments for Certain Insurers › Subchapter B. Investment of Funds in Excess › Section 424.054. Applicability of Percentage Authorizations and Limitations

Sec. 424.054.  APPLICABILITY OF PERCENTAGE AUTHORIZATIONS AND LIMITATIONS.  (a)  The percentage authorizations and limitations established by Sections 424.051, 424.053-424.071, and 424.074 apply only at the time an investment is originally acquired or a transaction is entered into and do not apply to the insurer or the investment or transaction after that time.
(b)  An investment, once qualified under a law described by Subsection (a), remains qualified notwithstanding any refinancing, restructuring, or modification of the investment, except that an insurer may not refinance, restructure, or modify an investment solely to circumvent the requirements or limitations of a law described by Subsection (a).
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 424 - Investments for Certain Insurers › Subchapter B. Investment of Funds in Excess › Section 424.055. Waiver by Commissioner of Quantitative Limitations

Sec. 424.055.  WAIVER BY COMMISSIONER OF QUANTITATIVE LIMITATIONS.  (a)  Notwithstanding Sections 424.051, 424.056-424.071, and 424.074, the commissioner may waive a quantitative limitation on any investment authorized by those laws if:
(1)  the insurer seeks the waiver before making the investment;
(2)  a hearing is held to determine whether the waiver should be granted;
(3)  the applicant seeking the waiver establishes that unreasonable or unnecessary loss or harm will result to the insurer if the commissioner denies the waiver;
(4)  the excess investment will not have a material adverse effect on the insurer; and
(5)  the size of the investment is reasonable in relation to the insurer's assets, capital, surplus, and liabilities.
(b)  The commissioner's waiver must be in writing and may treat the resulting excess investment as a nonadmitted asset.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 424 - Investments for Certain Insurers › Subchapter B. Investment of Funds in Excess › Section 424.056. Written Investment Plan

Sec. 424.056.  WRITTEN INVESTMENT PLAN.  (a)  Each insurer's board of directors, or, if the insurer does not have a board of directors, the corresponding authority designated by the insurer's charter, bylaws, or plan of operation, shall adopt a written investment plan consistent with the requirements of:
(1)  this chapter;
(2)  Sections 822.204, 822.209, 861.258, and 862.002; and
(3)  other statutes governing investments by the insurer.
(b)  The investment plan must:
(1)  specify the diversification of the insurer's investments designed to reduce the risk of large losses, by:
(A)  broad categories, such as bonds and real property loans;
(B)  kinds, such as government obligations, obligations of business entities, mortgage-backed securities, and real property loans on office, retail, industrial, or residential properties;
(C)  quality;
(D)  maturity;
(E)  type of industry;  and
(F)  geographical areas, as to both domestic and foreign investments;
(2)  balance safety of principal with yield and growth;
(3)  seek a reasonable relationship of assets and liabilities as to term and nature; and
(4)  be appropriate considering the capital and surplus and the business conducted by the insurer.
(c)  At least annually, the board of directors or corresponding authority shall review the adequacy of the investment plan and the implementation of the plan.
(d)  An insurer shall maintain the insurer's investment plan in the insurer's principal office and provide the plan to the commissioner or the commissioner's designee on request.  The commissioner or the commissioner's designee shall maintain the plan as a privileged and confidential document.  The plan is not subject to public disclosure.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 424 - Investments for Certain Insurers › Subchapter B. Investment of Funds in Excess › Section 424.057. Investment Records

Sec. 424.057.  INVESTMENT RECORDS.  An insurer shall maintain investment records covering each transaction.  The insurer must be able to demonstrate at all times to the department that the insurer's investments are within the limitations imposed by the statutes listed in Section 424.056(a).
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.