Texas Insurance Code - Section 425.110. Authorized Investments: Obligations Of And Other Investments In Business Entities
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§ 425.110. AUTHORIZED INVESTMENTS: OBLIGATIONS OF AND
OTHER INVESTMENTS IN BUSINESS ENTITIES. (a) In this section:
(1) "Business entity" includes a sole proprietorship,
corporation, association, general or limited partnership, limited
liability company, joint- stock company, joint venture, trust, or
other form of business organization, regardless of whether
organized for profit, that is organized under the laws of the United
States, another state, Canada, or any district, province, or
territory of Canada.
(2) "Counterparty exposure amount" has the meaning
assigned by Section 425.125.
(b) Subject to this section, an insurance company may invest
in an obligation, including a bond or evidence of indebtedness, a
participation in a bond or evidence of indebtedness, or an
asset-backed security, that is issued, assumed, guaranteed, or
insured by a business entity.
(c) An insurance company's investments in the obligations
or counterparty exposure amounts of a single business entity rated
by the securities valuation office may not exceed 20 percent of the
company's statutory capital and surplus.
(d) An insurance company may not invest in an obligation,
counterparty exposure amount, or preferred stock of a business
entity if, after making the investment:
(1) the aggregate amount of those investments then
held by the company that are rated 3, 4, 5, or 6 by the securities
valuation office would exceed 20 percent of the company's assets;
(2) the aggregate amount of those investments then
held by the company that are rated 4, 5, or 6 by the securities
valuation office would exceed 10 percent of the company's assets;
(3) the aggregate amount of those investments then
held by the company that are rated 5 or 6 by the securities
valuation office would exceed three percent of the company's
assets; or
(4) the aggregate amount of those investments then
held by the company that are rated 6 by the securities valuation
office would exceed one percent of the company's assets.
(e) If an insurance company attains or exceeds the limit of
a rating category referred to in Subsection (d), the company is not
precluded from acquiring investments in other rating categories
subject to the specific and multiple category limits applicable to
those investments.
(f) Notwithstanding Subsections (c)-(e), an insurance
company may invest in an additional obligation of a business entity
in which the company holds one or more obligations if the investment
is made to protect an investment previously made in that business
entity. Obligations invested in under this subsection may not
exceed one-half percent of the company's assets.
(g) This section does not prohibit an insurance company from
investing in an obligation as a result of a restructuring of an
already held obligation or preferred stock that is rated 3, 4, 5, or
6 by the securities valuation office.
(h) An insurance company shall include all counterparty
exposure amounts in determining compliance with the limitations of
this section.
Added by Acts 2005, 79th Leg., ch. 727, § 1, eff. April 1, 2007.
Section: 425.103 425.104 425.105 425.106 425.107 425.108 425.109 425.110 425.111 425.112 425.113 425.114 425.115 425.116 425.117
Last modified: August 11, 2007
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