78S10035 KCR-F

By:  Madden                                                       H.B. No. 39 



A BILL TO BE ENTITLED

AN ACT

relating to the reinsurance of certain insurance business.                    
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Article 3.10(l), Insurance Code, is amended to 
read as follows:  
	(l)  An insurer shall account for reinsurance agreements and 
shall record those reinsurance agreements in the insurer's 
financial statement in a manner that accurately reflects the effect 
of the reinsurance agreements on the financial condition of the 
company.  The department [State Board of Insurance] may adopt 
reasonable rules relating to the accounting and financial statement 
requirements of this section and the treatment of reinsurance 
agreements between insurance companies, including minimum risk 
transfer standards, asset debits or credits, reinsurance debits or 
credits, and reserve debits or credits relating to the transfer of 
all or any part of an insurer's risks or liabilities by reinsurance 
agreements and any contingencies arising from reinsurance 
agreements.  Gains and losses for reinsurance of in-force blocks of 
insurance business may be recognized immediately by the assuming 
insurer in its summary of operations, including gains or losses 
related to the adjustment of reserves consistent with current 
reserve regulations. The assuming insurer shall notify the 
department of the assuming insurer's intent to recognize gains or 
losses based on reserves not later than the 30th day after the date 
of the transaction. Rules adopted subsequent to September 1, 1995, 
shall apply to reinsurance agreements entered into on or after the 
effective date of such rules, and to reinsurance agreements that 
are amended on or after the effective date of such rules.  A 
reinsurance agreement may contain a provision that allows the 
offset of mutual debts and credits between a ceding insurer and the 
assuming insurer, whether arising out of one or more reinsurance 
agreements.
	SECTION 2.  The change in law made by this Act to Article 
3.10(l), Insurance Code, begins to apply with the first reporting 
period beginning on or after the effective date of this Act.
	SECTION 3.  This Act takes effect immediately if it receives 
a vote of two-thirds of all the members elected to each house, as 
provided by Section 39, Article III, Texas Constitution.  If this 
Act does not receive the vote necessary for immediate effect, this 
Act takes effect November 1, 2003.