Sec. 2210.608. USE OF PUBLIC SECURITY PROCEEDS. (a) Public security proceeds, including investment income, shall be held in trust for the exclusive use and benefit of the association. The association may use the proceeds to:
(1) pay incurred claims and operating expenses of the association;
(2) purchase reinsurance for the association;
(3) pay the costs of issuing the public securities, and public security administrative expenses, if any;
(4) provide a public security reserve;
(5) pay capitalized interest and principal on the public securities for the period determined necessary by the association;
(6) pay private financial agreements entered into by the association as temporary sources of payment of losses and operating expenses of the association; and
(7) reimburse the association for any cost described by Subdivisions (1)-(6) paid by the association before issuance of the public securities.
(b) Any excess public security proceeds remaining after the purposes for which the public securities were issued are satisfied may be used to purchase or redeem outstanding public securities. If there are no outstanding public security obligations or public security administrative expenses, the excess proceeds shall be transferred to the catastrophe reserve trust fund.
(c) Notwithstanding Subsection (a)(2), the proceeds from public securities issued under Section 2210.072 before an occurrence or series of occurrences that results in incurred losses, including investment income, may not be used to purchase reinsurance for the association.
Added by Acts 2009, 81st Leg., R.S., Ch. 1408 (H.B. 4409), Sec. 41, eff. June 19, 2009.
Amended by:
Acts 2011, 82nd Leg., 1st C.S., Ch. 2 (H.B. 3), Sec. 45, eff. September 28, 2011.
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