By Bomer H.B. No. 643
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the authority of a governmental body to set reasonable
1-3 financial criteria for a surety company that provides a surety bond
1-4 required by that governmental body.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 1, Chapter 87, Acts of the 56th
1-7 Legislature, Regular Session, 1959 (Article 7.19-1, Vernon's Texas
1-8 Insurance Code), is amended to read as follows:
1-9 Sec. 1. (a) Whenever a <any> bond<, undertaking,
1-10 recognizance or other obligation> is, by law or the charter,
1-11 ordinances, rules and regulations of a municipality, board, body,
1-12 organization, court, judge, <or> public officer, or other
1-13 governmental authority, required or permitted to be made, given,
1-14 tendered or filed, and whenever the performance of any act, duty or
1-15 obligation, or the refraining from any act, is required or
1-16 permitted to be guaranteed, such bond<, undertaking, obligation,
1-17 recognizance> or guarantee shall <may> be executed by a surety
1-18 company duly authorized to write the bond or guarantee <do
1-19 business> in this state; and, except as provided by Subsection (b)
1-20 of this section, such execution by such company of such bond<,
1-21 undertaking, obligation, recognizance> or guarantee shall be in all
1-22 respects a full and complete compliance with every law, charter,
1-23 rule or regulation that such bond<, undertaking, obligation,
1-24 recognizance> or guarantee shall be executed by one <surety or by
2-1 one> or more sureties having particular qualifications or meeting
2-2 particular criteria<, or that such sureties shall be residents, or
2-3 householders, or freeholders, or either, or both, or possess any
2-4 other qualification> and all courts, judges, heads of departments,
2-5 boards, bodies, municipalities, and public officers of every
2-6 character shall accept and treat such bond<, undertaking,
2-7 obligation, recognizance> or guarantee when so executed by such
2-8 company, as conforming to, and fully and completely complying with,
2-9 every requirement of every such law, charter, ordinance, rule or
2-10 regulation.
2-11 Provided, however, that any municipality may require in any
2-12 specifications for work or supplies, on which sealed bids are
2-13 required, that any corporate surety tender shall designate, in a
2-14 manner satisfactory to it, an agent resident in the county of such
2-15 municipality to whom any requisite notices may be delivered and on
2-16 whom service of process may be had in matters arising out of such
2-17 suretyship.
2-18 (b) A municipality, board, body, organization, court, judge,
2-19 public officer, or other governmental authority may require that
2-20 the surety company executing a bond described by Subsection (a) of
2-21 this section:
2-22 (1) hold a certificate of authority as an acceptable
2-23 surety on federal bonds executed by the United States Department of
2-24 the Treasury;
2-25 (2) provide the municipality, board, body,
2-26 organization, court, judge, public officer, or other governmental
2-27 authority a written certification that the surety company has
3-1 reinsured the portion of the risk that exceeds 10 percent of the
3-2 surety company's capital and surplus with one or more reinsurers
3-3 who are duly authorized, accredited, or trusteed to do business in
3-4 this state; or
3-5 (3) both hold a certificate of authority and provide a
3-6 written certification as described by Subdivisions (1) and (2) of
3-7 this subsection <If any bond, undertaking, recognizance, or other
3-8 obligation described in Subsection (a) of this section is in an
3-9 amount in excess of 10 percent of the surety company's capital and
3-10 surplus, the municipality, board, body, organization, court, judge,
3-11 or public officer may require, as a condition to accepting the
3-12 bond, undertaking, obligation, recognizance, or other obligation,
3-13 written certification that the surety company has reinsured the
3-14 portion of the risk that exceeds 10 percent of the surety company's
3-15 capital and surplus with one or more reinsurers who are duly
3-16 authorized, accredited, or trusteed to do business in this state>.
3-17 (c) For the purposes of Subsection (b)(2) of this section
3-18 <this subsection>, the amount reinsured by any reinsurer may not
3-19 exceed 10 percent of the reinsurer's capital and surplus. The
3-20 State Board of Insurance shall furnish, on request, the amount of
3-21 the allowed capital and surplus as of the date of the last annual
3-22 statutory financial statement for a surety company or reinsurer
3-23 authorized and admitted to do business in this state.
3-24 SECTION 2. (a) This Act takes effect September 1, 1993.
3-25 (b) This Act applies only to a bond or guarantee executed or
3-26 required to be executed on or after the effective date of this Act.
3-27 A bond or guarantee executed or required to be executed before the
4-1 effective date of this Act is governed by the law in effect on the
4-2 date the bond was executed or required to be executed, and the
4-3 former law is continued in effect for that purpose.
4-4 SECTION 3. The importance of this legislation and the
4-5 crowded condition of the calendars in both houses create an
4-6 emergency and an imperative public necessity that the
4-7 constitutional rule requiring bills to be read on three several
4-8 days in each house be suspended, and this rule is hereby suspended.