Amend HB 1476 by adding new SECTION 3 as follows, on Page 4,
Line 3 and re-numbering the subsequent sections:
      SECTION 3.  Section 10(a) and 10(b), Article 21.28, Insurance
Code, amended to read as follows:
      "Reinsurance.  (a)  Reinsurer's liability.  If the receiver
has claims under policies covered by reinsurance, there shall be no
diminution of the liability of the reinsurer to the receiver under
the contracts reinsured because of the delinquency proceeding
against the delinquent company, regardless of any provisions in the
reinsurance contract to the contrary, except:  (i)  where the
contract or other written agreement entered into prior to the
delinquency proceeding and otherwise permitted by law specifically
provides another payee of such reinsurance in the event of the
insolvency of the ceding insurer, or (ii), where the assuming
insurer, with the consent of the direct insured, has assumed such
policy obligations of the ceding insurer pursuant to an assumption
reinsurance agreement as direct obligations of the assuming insurer
to the payees under policies and in substitution for the
obligations of the ceding insurer to such payees.  The reinsurance
shall be payable under a contract reinsured by the assuming insurer
on the basis of reported approved claims allowed in the liquidation
proceeding pursuant to Section 3(h) of the article.
      (b)  Notice to Reinsurer.  The liquidator or receiver shall
give written notice to the affected reinsurers of the pendency of a
claim against the receiver under a policy covered by reinsurance
within a reasonable time after such claim is filed in the
delinquency proceeding.  During the pendency of such claim any
affected reinsurer may investigate such claim and interpose, at its
own expense, in the proceeding where the claim is to be adjusted
any defense or defenses which it may deem available to the
delinquent company, the liquidator or the receiver.  Subject to
court approval, the expense thus incurred shall be chargeable
against the delinquent company as part of the expense of
liquidation to the extent of a proportionate share of the benefit
which may accrue to the delinquent company solely as a result of
the defense undertaken by the assuming insurer.  Where two or more
assuming insurers are involved in the same claim and a majority in
interest elect to interpose a defense to such claim, the expense
shall be apportioned in accordance with the terms of the
reinsurance agreement as though such expense had been incurred by
the ceding insurer.