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A BILL TO BE ENTITLED
|
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AN ACT
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relating to premium tax credit for certain investments. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS |
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SECTION 1. Subtitle B, Title 3 of the Insurance Code is |
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amended to add new Chapter 228A to read as follows: |
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CHAPTER 228A. PREMIUM TAX CREDIT FOR CERTAIN INVESTMENTS IN |
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INSURANCE-CAPITAL COMPANIES |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 228A.001. GENERAL DEFINITIONS. In this chapter: |
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(1) "Allocation date" means the date on which |
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certified investors are allocated premium tax credits. |
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(2) "Certified capital" means cash invested by a |
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certified investor that fully funds the purchase price of an equity |
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interest in a certified insurance-capital company or a qualified |
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debt instrument issued by that company. |
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(3) "Certified insurance-capital company" means a |
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partnership, corporation, or trust or limited liability company, |
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whether organized on a profit or nonprofit basis, that: |
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(A) has as its business activity the investment |
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of cash in a qualified insurance carrier or carriers; and |
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(B) is certified as meeting the criteria of this |
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chapter. |
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(4) "Certified investor" means an insurance company or |
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other person that has state premium tax liability and that |
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contributes certified capital pursuant to an allocation of premium |
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tax credits under this chapter. |
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(5) "Early stage carrier" means an insurance carrier |
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or proposed insurance carrier described by Section 228A.152. |
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(6) First Tier Coastal County" means: |
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(A) Aransas County; |
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(B) Brazoria County; |
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(C) Calhoun County; |
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(D) Cameron County; |
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(E) Chambers County; |
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(F) Galveston County; |
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(G) Jefferson County; |
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(H) Kennedy County; |
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(I) Kleberg County; |
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(J) Matagorda County; |
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(K) Nueces County; |
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(L) Refugio County; |
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(M) San Patricio County; or |
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(N) Willacy County. |
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(7) "Person" means an individual or entity, including |
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a corporation, general or limited partnership, or trust or limited |
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liability company. |
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(8) "Premium tax credit allocation claim" means a |
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claim for allocation of premium tax credits. |
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(9) "Qualified insurance carrier" means a business |
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described by Section 228A.201. |
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(10) "Qualified debt instrument" means a debt |
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instrument issued by a certified insurance-capital company, at par |
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value or a premium, that: |
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(A) has an original maturity date that is a date |
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on or after the fifth anniversary of the date of issuance; |
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(B) has a repayment schedule that is not faster |
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than a level principal amortization over five years; and |
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(C) does not have interest, distribution, or |
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payment features that are related to: |
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(i) the profitability of the company; or |
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(ii) the performance of the company's |
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investment portfolio. |
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(11) "Qualified investment" means the investment of |
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cash by a certified insurance-capital company in a qualified |
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insurance carrier for the purchase of any debt, debt participation, |
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or hybrid security. |
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(12) "Second Tier Coastal County" means: |
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(A) Bee County; |
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(B) Brooks County; |
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(C) Fort Bend County; |
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(D) Goliad County; |
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(E) Hardin County; |
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(F) Harris County; |
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(G) Hildago County; |
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(H) Jackson County; |
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(I) Jim Wells County |
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(J) Liberty County; |
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(K) Live Oak County; |
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(L) Orange County; |
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(M) Victoria County; or |
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(N) Wharton County |
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(13) "State premium tax liability" means: |
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(A) any liability incurred by any person under |
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Chapter 221, 222, 223, or 224; or |
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(B) if the tax liability imposed under Chapter |
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222, 223, or 224 is eliminated or reduced, any tax liability imposed |
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on an insurer or other person that had premium tax liability under |
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Subchapter A, Chapter 4, or Article 9.59 as those laws existed on |
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January 1, 2003. |
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Sec. 228A.002. DEFINITION OF AFFILIATE. In this chapter, |
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"affiliate" of another person means: |
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(1) a person that is an affiliate for purposes of |
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Section 823.003; |
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(2) a person that directly or indirectly: |
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(A) beneficially owns 10 percent or more of the |
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outstanding voting securities or other voting or management |
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interests of the other person, whether through rights, options, |
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convertible interests, or otherwise; or |
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(B) controls or holds power to vote 10 percent or |
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more of the outstanding voting securities or other voting or |
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management interests of the other person; |
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(3) a person 10 percent or more of the outstanding |
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voting securities or other voting or management interests of which |
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are directly or indirectly: |
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(A) beneficially owned by the other person, |
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whether through rights, options, convertible interests, or |
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otherwise; or |
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(B) controlled or held with power to vote by the |
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other person; |
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(4) a partnership in which the other person is a |
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general partner; |
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(5) an officer, director, employee, or agent of the |
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other person; or |
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(6) an immediate family member of an officer, |
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director, employee, or agent described by Subdivision (5). |
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SUBCHAPTER B. ADMINISTRATION AND PROMOTION |
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Sec. 228A.051. ADMINISTRATION BY COMPTROLLER AND |
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COMMISSIONER. |
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The comptroller shall administer this chapter in a manner |
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consistent with section 228 provided that the commissioner shall |
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administer the licensing of any qualified insurance carrier |
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described by Section 228A.201 and adopt carrier licensing rules |
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under section 228A.052. |
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Sec. 228A.052. RULES AND FORMS ADOPTED BY THE COMPTROLLER. |
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The comptroller shall adopt rules and forms as necessary to |
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implement this subchapter, including rules that: |
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(1) establish the application procedures for |
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certified insurance-capital companies; and |
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(2) facilitate the transfer or assignment of premium |
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tax credits by certified investors. |
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Sec. 228A.053. RULES AND FORMS ADOPTED BY THE COMMISSIONER. |
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(a) The commissioner shall adopt rules and forms as |
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necessary to implement this chapter, including rules that: |
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(1) require as a condition of licensure that qualified |
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insurance carriers implement catastrophe management plans to |
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ensure the payment of insured claims resulting from no less than two |
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reasonably anticipated probable maximum loss events; |
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(2) require that qualified insurance carriers offer |
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coverage for wind exposure at actuarially justified rates beginning |
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no later than the third annual anniversary from the date the carrier |
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obtained its certificate of authority to operate in Texas; |
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(3) require that qualified insurance carriers offer |
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coverage for flood insurance on a direct basis, or facilitate the |
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procurement of flood insurance offered through a federal flood |
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insurance program, no later than the third annual anniversary from |
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the date the carrier obtained its certificate of authority to |
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operate in Texas; |
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(4) establish initial capitalization requirements |
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that shall not be less than $10 million in initial capital for |
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qualifying insurance carriers; |
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(5) establish the percentage maximum limitation of |
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business that may be written outside of Tier 1 and Tier 2 coastal |
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counties, which in no event may exceed 50% of the qualified |
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insurance carriers business; |
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(6) require the filing of rate information; and, |
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(7) provide for penalties that are in addition and |
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cumulative of the penalties provided by this chapter that require |
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the disgorgement of capital and surplus to replenish the state's |
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general revenue if a qualified insurance carrier receives an |
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investment of certified capital but fails to use that capital to |
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write a substantial amount of insurance business in one or more Tier |
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1 or Tier Coastal County or counties. |
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(b) The rules adopted by the commissioner pursuant to |
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subsection (2) shall provide for a five-year transition period that |
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incepts with the carrier's third anniversary date that |
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incrementally increase the amount of wind coverage required to be |
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offered by the end of the transition period. |
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Sec 228A.054. REPORTS TO LEGISLATURE. |
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(a) The comptroller shall prepare a biennial report |
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concerning the results of the implementation of this chapter. The |
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report must include: |
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(1) the number of certified insurance-capital |
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companies holding certified capital under this subchapter; |
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(2) the amount of certified capital invested in each |
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certified insurance-capital company; |
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(3) the amount of certified capital the certified |
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insurance-capital company invested in qualified insurance carriers |
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as of January 1, 2008, and the cumulative total for each subsequent |
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year; |
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(4) the total amount of tax credits granted under this |
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chapter for each year that credits have been granted; |
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(5) the performance of each certified |
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insurance-capital company with respect to renewal and reporting |
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requirements imposed under this chapter; |
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(6) with respect to the qualified insurance carriers |
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in which certified insurance-capital companies have invested: |
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(A) the total number of jobs created by the |
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investment and the average wages paid for the jobs; and |
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(B) the total number of jobs retained as a result |
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of the investment and the average wages paid for the jobs; and |
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(C) the certified insurance-capital companies |
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that have been decertified or that have failed to renew the |
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certification and the reason for any decertification. |
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(b) The commissioner shall prepare a biennial report |
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concerning the results of the implementation of this subchapter. |
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The report must include: |
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(1) the number and identity of the qualified insurance |
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carriers created under this subchapter; |
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(2) the amount of premiums sold to Texas consumers and |
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insured property value covered by qualified insurance carriers; |
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(3) information related to the rates charged consumers |
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by qualified insurance carriers; and |
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(4) information related to the capital adequacy and |
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catastrophe management programs implemented by qualified insurance |
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carriers. |
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(c) The comptroller and commissioner shall file the reports |
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with the governor, the lieutenant governor, and the speaker of the |
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house of representatives not later than December 15 of each |
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even-numbered |
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Sec. 228A.055. PROMOTION OF PROGRAM. |
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The Texas Economic Development and Tourism Office shall |
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promote the program established under this chapter in the Texas |
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Business and Community Economic Development Clearinghouse. |
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SUBCHAPTER C. APPLICATION FOR AND GENERAL OPERATION OF CERTIFIED |
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INSURANCE-CAPITAL COMPANIES. |
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Sec. 228A.101. APPLICATION FOR CERTIFICATION. |
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(a) An applicant for certification must file the |
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application in the form prescribed by the comptroller. The |
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application must be accompanied by a nonrefundable application fee |
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of $7,500. |
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(b) The application must include an audited balance sheet of |
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the applicant, with an unqualified opinion from an independent |
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certified public accountant, as of a date not more than 35 days |
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before the date of the application. |
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Sec. 228A.102. QUALIFICATION. |
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To qualify as a certified insurance-capital company: |
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(1) the applicant must have, at the time of |
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application for certification, an equity capitalization of at least |
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$500,000 in unencumbered cash or cash equivalents; |
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(2) at least two principals or persons employed to |
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manage the funds of the applicant must have at least four years of |
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experience in the venture capital industry; and |
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(3) the applicant must satisfy any additional |
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requirement imposed by the comptroller by rule. |
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Sec. 228A.103. MANAGEMENT BY AND CERTAIN OWNERSHIP |
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INTERESTS OF INSURANCE ENTITIES PROHIBITED. |
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(a) An insurer, group of insurers, or other persons who may |
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have state premium tax liability or the insurer's or person's |
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affiliates may not directly or indirectly: |
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(1) manage a certified insurance-capital company; |
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(2) beneficially own, whether through rights, |
|
options, convertible interests, or otherwise, more than 10 percent |
|
of the outstanding voting securities of a certified |
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insurance-capital company; or |
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(3) control the direction of investments for a |
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certified insurance-capital company. |
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(b) Subsection (a) applies without regard to whether the |
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insurer or other person or the affiliate of the insurer or other |
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person is authorized by or engages in business in this state. |
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(c) Subsections (a) and (b) do not preclude an insurer, |
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certified investor, or any other party from exercising its legal |
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rights and remedies, including interim management of a certified |
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insurance-capital company, if authorized by law, with respect to a |
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certified insurance-capital company that is in default of the |
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company's statutory or contractual obligations to the insurer, |
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certified investor, or other party. |
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(d) This chapter does not limit an insurer's ownership of |
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nonvoting equity interests in a certified insurance-capital |
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company. |
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228A.104. ACTION ON APPLICATION. |
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(a) The comptroller shall: |
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(1) review the application, organizational documents, |
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and business history of each applicant; and |
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(2) ensure that the applicant satisfies the |
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requirements of this chapter. |
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(b) Not later than the 30th day after the date an |
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application is filed, the comptroller shall: |
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(1) issue the certification; or |
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(2) refuse to issue the certification and communicate |
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in detail to the applicant the grounds for the refusal, including |
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suggestions for the removal of those grounds. |
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Sec. 228A.105. CONTINUATION OF CERTIFICATION. |
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To continue to be certified, a certified insurance-capital |
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company must make qualified investments according to the schedule |
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established by Section 228A.151. |
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Sec. 228A.106. REPORTS TO COMPTROLLER; AUDITED FINANCIAL |
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STATEMENT. |
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(a) Each certified insurance-capital company shall report |
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to the comptroller as soon as practicable after the receipt of |
|
certified capital: |
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(1) the name of each certified investor from whom the |
|
certified capital was received, including the certified investor's |
|
insurance premium tax identification number; |
|
(2) the amount of each certified investor's investment |
|
of certified capital and premium tax credits; and |
|
(3) the date on which the certified capital was |
|
received. |
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(b) Not later than January 31 of each year, each |
|
certified-insurance capital company shall report to the |
|
comptroller: |
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(1) the amount of the company's certified capital at |
|
the end of the preceding year; |
|
(2) whether or not the company has invested more than |
|
25 percent of the company's total certified capital in a single |
|
carrier; |
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(3) each qualified investment that the company made |
|
during the preceding year and, with respect to each qualified |
|
investment, the number of employees of the qualified insurance |
|
carrier at the time the qualified investment was made; and |
|
(4) any other information required by the comptroller, |
|
including any information required by the comptroller to comply |
|
with Section 228A.053. |
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(c) Not later than April 1 of each year, each certified |
|
insurance-capital company shall provide to the comptroller an |
|
annual audited financial statement that includes the opinion of an |
|
independent certified public accountant. The audit must address |
|
the methods of operation and conduct of the business of the company |
|
to determine whether: |
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(1) the company is complying with this chapter and the |
|
rules adopted under this chapter; |
|
(2) the funds received by the company have been |
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invested as required within the time provided by Section 228A.151; |
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(3) the company has invested the funds in qualified |
|
insurance carriers and other specifically authorized investments. |
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Sec. 228A.107. RENEWAL FEE; LATE FEE; EXCEPTION. |
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(a) Not later than January 31 of each year, each certified |
|
insurance-capital company shall pay a nonrefundable renewal fee of |
|
$5,000 to the comptroller. |
|
(b) If a certified insurance-capital company fails to pay |
|
the renewal fee on or before the date specified by Subsection (a), |
|
the company must pay, in addition to the renewal fee, a late fee of |
|
$5,000 to continue the company's certification. |
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(c) A renewal fee is not required within six months of the |
|
date on which a certified insurance-capital company's initial |
|
certification is issued under Section 228A.104(b). |
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Sec. 228A.108. OFFERING MATERIAL USED BY CERTIFIED CAPITAL |
|
COMPANY. |
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Any offering material involving the sale of securities of the |
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certified insurance-capital company must include the following |
|
statement: |
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"By authorizing the formation of a certified insurance-capital |
|
company, the State of Texas does not endorse the quality of |
|
management or the potential for earnings of the company and is not |
|
liable for damages or losses to a certified investor in the company. |
|
Use of the word "certified" in an offering does not constitute a |
|
recommendation or endorsement of the investment by the comptroller |
|
of public accounts. If applicable provisions of law are violated, |
|
the State of Texas may require forfeiture of unused premium tax |
|
credits and repayments of used premium tax credits." |
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SUBCHAPTER D. INVESTMENT BY CERTIFIED INSURANCE-CAPITAL COMPANIES |
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Sec. 228A.151. SCHEDULE OF INVESTMENT. |
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(a) Before the third anniversary of a certified |
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insurance-capital company's allocation date, the company must make |
|
qualified investments in one or more qualified insurance carriers |
|
in an amount cumulatively equal to at least 30 percent of the |
|
company's certified capital, subject to section 228A.152(b). |
|
(b) Before the fifth anniversary of a certified |
|
insurance-capital company's allocation date, the company must make |
|
qualified investments in one or more qualified insurance carriers |
|
in an amount cumulatively equal to at least 50 percent of the |
|
company's certified capital, subject to section 228A.152(b). |
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Sec. 228A.152. INVESTMENT IN EARLY STAGE CARRIER REQUIRED. |
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(a) In this section, "early stage carrier" means a qualified |
|
insurer or proposed insurer that: |
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(1) is involved, at the time of a certified insurance |
|
capital company's first investment, in activities related to the |
|
organization of the carrier, such as its original incorporation or |
|
development of a proposed business model; |
|
(2) was initially organized less than two years before |
|
the date of the certified insurance-capital company's first |
|
investment; or |
|
(3) during the fiscal year immediately preceding the |
|
year of the certified insurance-capital company's first investment |
|
had, gross revenues of not more than $2 million as determined in |
|
accordance with generally accepted accounting principles. |
|
(b) A certified insurance-capital company must place 50 |
|
percent of the amount of qualified investments required by Section |
|
228A.151 in early stage carriers. |
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Sec. 228A.153. INVESTMENT IN EXISTING QUALIFIED INSURANCE |
|
CARRIERS. |
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A certified insurance-capital company may invest up to 50 |
|
percent of the amount of qualified investments in an existing |
|
qualified insurance carrier or carriers that do not qualify as |
|
early stage carriers under section 228A.152. |
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Sec. 228A.154. CERTIFIED CAPITAL NOT INVESTED IN QUALIFIED |
|
INVESTMENTS. |
|
A certified insurance-capital company shall invest any |
|
certified capital not invested in qualified investments only in: |
|
(1) cash deposited with a federally insured financial |
|
institution; |
|
(2) certificates of deposit in a federally insured |
|
financial institution; |
|
(3) investment securities that are: |
|
(A) obligations of the United States or agencies |
|
or instrumentalities of the United States; or |
|
(B) obligations that are guaranteed fully as to |
|
principal and interest by the United States; |
|
(4) debt instruments rated at least "A" or the |
|
equivalent by a nationally recognized credit rating organization, |
|
or issued by, or guaranteed with respect to payment by, an entity |
|
whose unsecured indebtedness is rated at least "A" or the |
|
equivalent by a nationally recognized credit rating organization, |
|
and which indebtedness is not subordinated to other unsecured |
|
indebtedness of the issuer or the guarantor; |
|
(5) obligations of this state or a municipality or |
|
political subdivision of this state; or |
|
(6) any other investment approved in advance in |
|
writing by the comptroller. |
|
Sec. 228A.155. COMPUTATION OF AMOUNT OF INVESTMENTS. |
|
(a) The aggregate cumulative amount of all qualified |
|
investments made by a certified insurance-capital company after the |
|
company's allocation date shall be considered in the computation of |
|
the percentage requirements under this subchapter. |
|
(b) A certified insurance-capital company may invest |
|
proceeds received from a qualified investment in another qualified |
|
investment, and that investment counts toward any requirement of |
|
this chapter with respect to investments of certified capital. |
|
Sec. 228A.156. LIMIT ON QUALIFIED INVESTMENT. |
|
A certified insurance-capital company may not make a qualified |
|
investment at a cost to the company that is greater than 50 percent |
|
of the company's total certified capital at the time of investment. |
|
228A.157. DISTRIBUTIONS BY CERTIFIED INSURANCE-CAPITAL |
|
COMPANY. |
|
(a) In this section, "qualified distribution" means any |
|
distribution or payment from certified insurance-capital by a |
|
certified capital company in connection with: |
|
(1) the reasonable costs and expenses of forming, |
|
syndicating, managing, and operating the company, provided that the |
|
distribution or payment is not made directly or indirectly to a |
|
certified investor, including: |
|
(A) reasonable and necessary fees paid for |
|
professional services, including legal and accounting services, |
|
related to the company's formation and operation; and |
|
(B) an annual management fee in an amount that |
|
does not exceed 2.5 percent of the company's certified capital; and |
|
(2) a projected increase in federal or state taxes, |
|
including penalties and interest related to state and federal |
|
income taxes, of the company's equity owners resulting from the |
|
earnings or other tax liability of the company to the extent that |
|
the increase is related to the ownership, management, or operation |
|
of the company. |
|
(b) A certified insurance-capital company may make a |
|
qualified distribution at any time. To make a distribution or |
|
payment other than a qualified distribution, a company must have |
|
made qualified investments in an amount cumulatively equal to 100 |
|
percent of the company's certified capital. |
|
(c) If a business in which a qualified investment is made |
|
relocates the business 's principal business operations to another |
|
state during the term of the certified insurance capital company's |
|
investment in the business, the cumulative amount of qualified |
|
investments made by the certified insurance-capital company for |
|
purposes of satisfying the requirements of Subsection (b) only is |
|
reduced by the amount of the certified insurance-capital company's |
|
qualified investments in the business that has relocated. |
|
(d) Subsection (c) does not apply if the business |
|
demonstrates that the business has returned the business's |
|
principal business operations to this state not later than the 90th |
|
day after the date of the relocation. |
|
Sec. 228A.158. REPAYMENT OF DEBT. |
|
Notwithstanding Section 228A.157(b), a certified |
|
insurance-capital company may make repayments of principal and |
|
interest on the company's indebtedness without any restriction, |
|
including repaying the company's indebtedness on which certified |
|
investors earned premium tax credits. |
|
SUBCHAPTER E. QUALIFIED INSURANCE CARRIER |
|
Sec. 228A.201. DEFINITION OF QUALIFIED INSURANCE CARRIER. |
|
(a) In this chapter, "qualified insurance carrier" means a |
|
carrier that complies with this section at the time of a certified |
|
insurance-capital company's first investment in the business. |
|
(b) A qualified insurance carrier must: |
|
(1) be legally domiciled in this state and intend to |
|
remain domiciled in this state after receipt of the certified |
|
insurance-capital company's investment; |
|
(2) have the carrier 's principal business operations |
|
located in this state and intend to maintain business operations in |
|
this state after receipt of the certified insurance-capital |
|
company's investment; |
|
(3) be licensed by the commissioner as a property and |
|
casualty insurance company, subject to section 822, subsection |
|
228A.202 and rules adopted under section 228A.053 or, in the case of |
|
an early stage carrier, apply for a such a license within 12 months |
|
of receipt of any funding from a certified insurance-capital |
|
company; and |
|
(4) receive matching capital funds from private |
|
sources, which may be in the form of a surplus debenture, that match |
|
dollar-for-dollar all investments of certified capital received |
|
from certified insurance-capital companies. |
|
(c) A qualified insurance carrier must agree to use the |
|
qualified investment to: |
|
(1) to write commercial and personal property |
|
insurance in one or more Tier 1 and Tier 2 Coastal County or |
|
counties; |
|
(2) in the case of a proposed or start-up carrier, |
|
support the establishment or creation of a carrier to conduct the |
|
business of insurance in one or more Tier 1 and Tier 2 Coastal |
|
County or counties; and |
|
(3) support business operations in this state and the |
|
economic development of the state and its seacoast. |
|
(d) an early stage carrier or qualified insurance carrier is |
|
exempt from the rate filing requirements of Subchapters C and D of |
|
Chapter 2251, except that such carrier shall file with the |
|
department a schedule of the amounts the carrier charges a |
|
policyholder or an applicant for a policy, regardless of the term |
|
the carrier uses to refer to those charges, including "rate", |
|
"policy fee", "inspection fee", or "initial charge". |
|
(e) A qualified insurance carrier must: |
|
(1) employ at least 80 percent of the carrier's |
|
employees in this state; or |
|
(2) pay 80 percent of the carrier's payroll to |
|
employees in this state. |
|
Sec. 228A.202. REQUIREMENT TO CONDUCT TIER 1 AND TIER 2 |
|
COASTAL COUNTY INSURANCE BUSINESS. |
|
(a) A qualified insurance carrier shall at all times be |
|
primarily engaged in the business of selling commercial and |
|
personal property insurance in one or more Tier 1 and Tier 2 Coastal |
|
County or counties and is prohibited from selling more than 50 |
|
percent of its insurance business in other counties. |
|
(b) The failure to comply with subsection (a) may result in |
|
penalties under section 228.303 and the recapture and forfeiture of |
|
premium tax credits under section 228.351. |
|
Sec. 228A.203. LOCATION OF PRINCIPAL BUSINESS OPERATIONS. |
|
If, before the 90th day after the date a certified |
|
insurance-capital company makes an investment in a qualified |
|
insurance carrier, the qualified insurance carrier moves its |
|
principal business operations from this state, the investment may |
|
not be considered a qualified investment for purposes of the |
|
percentage requirements under this chapter. |
|
Sec. 228A.204. EVALUATION OF BUSINESS BY COMPTROLLER. |
|
(a) A certified insurance-capital company may, before |
|
making an investment in an entity, request a written opinion from |
|
the comptroller as to whether the entity in which the company |
|
proposes to invest is a qualified insurance carrier or an early |
|
stage carrier. |
|
(b) The Department of Insurance shall provide information |
|
requested by the comptroller necessary for making a determination |
|
as to whether an entity meets the definition of a qualified |
|
insurance carrier or an early stage carrier, as applicable. |
|
(c) Not later than the 30th business day after the date of |
|
the receipt of a request under Subsection (a), the comptroller |
|
shall: |
|
(1) determine whether the entity meets the definition |
|
of a qualified insurance carrier or an early stage carrier, as |
|
applicable, and notify the certified insurance-capital company of |
|
the determination and provide an explanation of the determination; |
|
or |
|
(2) notify the company that an additional 15 days will |
|
be needed to review the request and make the determination. |
|
(c) If the comptroller fails to notify the certified |
|
insurance-capital company with respect to the proposed investment |
|
within the period specified by Subsection (c), the entity in which |
|
the company proposes to invest is considered to be a qualified |
|
insurance carrier or an early stage carrier, as appropriate, which |
|
determination will be solely for the tax credits contemplated under |
|
section 228A.251 and for no other reason. |
|
Sec. 228A.205. CONTINUATION OF CLASSIFICATION AS QUALIFIED |
|
BUSINESS; FOLLOW-ON INVESTMENTS AUTHORIZED. |
|
(a) A business that is classified as a qualified business at |
|
the time of the first investment in the business by a certified |
|
insurance-capital company: |
|
(1) remains classified as a qualified business; and |
|
(2) may receive follow-on investments from any |
|
certified insurance-capital company. |
|
(b) Except as provided by Subsection (c), a follow-on |
|
investment made under Subsection (a) is a qualified investment even |
|
though the business may not meet the definition of a qualified |
|
business at the time of the follow-on investment. |
|
(c) A follow-on investment does not qualify as a qualified |
|
investment if, at the time of the follow-on investment, the |
|
qualified business no longer has the business's principal business |
|
operations in this state. |
|
SUBCHAPTER F. PREMIUM TAX CREDIT |
|
Sec. 228A.251. PREMIUM TAX CREDIT. |
|
(a) A certified investor who makes an investment of |
|
certified capital shall earn in the year of investment a vested |
|
credit against state premium tax liability equal to 100 percent of |
|
the certified investor's investment of certified capital, subject |
|
to the limits imposed by this chapter. |
|
(b) Beginning with the tax report due March 1, 2009, for the |
|
2008 tax year, a certified investor may take up to 25 percent of the |
|
vested premium tax credit in any taxable year of the certified |
|
investor. The credit may not be applied to estimated payments due |
|
in 2008. |
|
Sec. 228A.252. LIMIT ON PREMIUM TAX CREDIT. |
|
(a) The credit to be applied against state premium tax |
|
liability of a certified investor in any one year may not exceed the |
|
state premium tax liability of the investor for the taxable year. |
|
(b) A certified investor may carry forward any unused credit |
|
against state premium tax liability indefinitely until the premium |
|
tax credits are used. |
|
Sec. 228A.253. PREMIUM TAX CREDIT ALLOCATION CLAIM |
|
REQUIRED. |
|
(a) A certified investor must prepare and execute a premium |
|
tax credit allocation claim on a form provided by the comptroller. |
|
(b) The certified insurance-capital company must have filed |
|
the claim with the comptroller on the date on which the comptroller |
|
accepted premium tax credit allocation claims on behalf of |
|
certified investors under the comptroller's rules. |
|
(c) The premium tax credit allocation claim form must |
|
include an affidavit of the certified investor under which the |
|
certified investor becomes legally bound and irrevocably committed |
|
to make an investment of certified capital in a certified |
|
insurance-capital company in the amount allocated even if the |
|
amount allocated is less than the amount of the claim, subject only |
|
to the receipt of an allocation under Section 228A.255. |
|
(d) A certified investor may not claim a premium tax credit |
|
under Section 228A.251 for an investment that has not been funded, |
|
without regard to whether the certified investor has committed to |
|
fund the investment. |
|
Sec. 228A.254. TOTAL LIMIT ON PREMIUM TAX CREDITS. |
|
(a) The total amount of certified capital for which premium |
|
tax credits may be allowed under this chapter for all years in which |
|
premium tax credits are allowed is $200 million. |
|
(b) The total amount of certified capital for which premium |
|
tax credits may be allowed for all certified investors under this |
|
chapter may not exceed the amount that would entitle all certified |
|
investors in certified capital companies to take total credits of |
|
$50 million in a year. |
|
(c) A certified insurance-capital company and the company's |
|
affiliates may not file premium tax credit allocation claims in |
|
excess of the maximum amount of certified capital for which premium |
|
tax credits may be allowed as provided by this section. |
|
Sec. 228A.255. ALLOCATION OF PREMIUM TAX CREDIT. |
|
(a) If the total premium tax credits claimed by all |
|
certified investors exceeds the total limits on premium tax credits |
|
established by Section 228A.254(a), the comptroller shall allocate |
|
the total amount of premium tax credits allowed under this chapter |
|
to certified investors in certified capital companies on a pro rata |
|
basis in accordance with this section. |
|
(b) The pro rata allocation for each certified investor |
|
shall be the product of: |
|
(1) a fraction, the numerator of which is the amount of |
|
the premium tax credit allocation claim filed on behalf of the |
|
investor and the denominator of which is the total amount of all |
|
premium tax credit allocation claims filed on behalf of all |
|
certified investors; and |
|
(2) the total amount of certified capital for which |
|
premium tax credits may be allowed under this chapter. |
|
(c) The maximum amount of certified capital for which |
|
premium tax credit allocation may be allowed on behalf of single |
|
certified investor and the investor 's affiliates, whether by one |
|
or more certified insurance-capital companies, may not exceed the |
|
greater of: |
|
(1) $10 million; or |
|
(2) 15 percent of the maximum aggregate amount |
|
available under Section 228A.254(a). |
|
Sec. 228A.256. TREATMENT OF CREDITS AND CAPITAL. |
|
In any case under this code or another insurance law of this |
|
state in which the assets of a certified investor are examined or |
|
considered, the certified capital may be treated as an admitted |
|
asset, subject to the applicable statutory valuation procedures. |
|
Sec. 228A.257. TRANSFERABILITY OF CREDIT. |
|
(a) A certified investor may transfer or assign premium tax |
|
credits only in compliance with the rules adopted under Section |
|
228A.052. |
|
(b) The transfer or assignment of a premium tax credit does |
|
not affect the schedule for taking the premium tax credit under this |
|
chapter. |
|
Sec. 228A.258. IMPACT OF PREMIUM TAX CREDIT ON INSURANCE |
|
RATEMAKING. |
|
A certified investor is not required to reduce the amount of |
|
premium tax included by the investor in connection with ratemaking |
|
for an insurance contract written in this state because of a |
|
reduction in the investor's premium tax derived from premium tax |
|
credits granted under this chapter. |
|
Sec. 228A.259. RETALIATORY TAX. |
|
A certified investor claiming a credit against state premium |
|
tax liability earned through an investment in a company is not |
|
required to pay any additional retaliatory tax levied under Chapter |
|
281 as a result of claiming that credit. |
|
SUBCHAPTER G. ENFORCEMENT |
|
228A.301. ANNUAL REVIEW BY COMPTROLLER. |
|
(a) The comptroller shall conduct an annual review of each |
|
certified insurance-capital company to: |
|
(1) ensure that the company: |
|
(A) continues to satisfy the requirements of this |
|
chapter; and |
|
(B) has not made any investment in violation of |
|
this chapter; and |
|
(2) determine the eligibility status of the company's |
|
qualified investments. |
|
(b) Each certified insurance-capital company shall pay the |
|
cost of the annual review according to a reasonable fee schedule |
|
adopted by the comptroller. |
|
Sec. 228A.302. DECERTIFICATION OF CERTIFIED CAPITAL 15 |
|
COMPANY. |
|
(a) A material violation of Section 228A.105, 228A.106, |
|
228A.107, 228A.151, 228A.152, 228A.153, 228A.154, 228A.155, |
|
228A.156, 228A.202, or 228A.204 is grounds for decertification of a |
|
certified insurance-capital company. |
|
(b) If the comptroller determines that a certified |
|
insurance-capital company is not in compliance with a law listed in |
|
Subsection (a), the comptroller shall notify the company's officers |
|
in writing that the company may be subject to decertification after |
|
the 120th day after the date the notice is mailed unless the |
|
company: |
|
(1) corrects the deficiencies; and |
|
(2) returns to compliance with that law. |
|
(c) The comptroller may decertify a certified insurance |
|
capital company, after opportunity for hearing, if the comptroller |
|
finds that the company is not in compliance with a law listed in |
|
Subsection (a) at the end of the period established by Subsection |
|
(b). |
|
(d) Decertification under this section is effective on |
|
receipt of notice of decertification by the certified |
|
insurance-capital company. |
|
(e) The comptroller shall notify any appropriate state |
|
agency of a decertification of a certified insurance-capital |
|
company. |
|
Sec. 228A.303. ADMINISTRATIVE PENALTY. |
|
(a) The comptroller may impose an administrative penalty on |
|
a certified insurance-capital company that violates this chapter. |
|
(b) The amount of the penalty may not exceed $25,000. Each |
|
day a violation continues or occurs is a separate violation for the |
|
purpose of imposing the penalty. The amount of the penalty shall be |
|
based on: |
|
(1) the seriousness of the violation, including the |
|
nature, circumstances, extent, and gravity of the violation; |
|
(2) the economic harm caused by the violation; |
|
(3) the history of previous violations; |
|
(4) the amount necessary to deter a future violation; |
|
(5) efforts to correct the violation; and |
|
(6) any other matter that justice may require. |
|
(c) A certified insurance-capital company assessed a |
|
penalty under this chapter may request a redetermination as |
|
provided by Chapter 111, Tax Code. |
|
(d) The attorney general may sue to collect the penalty. |
|
(e) A proceeding to impose the penalty is a contested case |
|
under Chapter 2001, Government Code. |
|
SUBCHAPTER H. RECAPTURE AND FORFEITURE OF PREMIUM TAX CREDITS |
|
Sec. 228A.351. RECAPTURE AND FORFEITURE OF PREMIUM TAX |
|
CREDIT FOLLOWING DECERTIFICATION. |
|
(a) Decertification of a certified insurance-capital |
|
company may, in accordance with this section, cause: |
|
(1) the recapture of premium tax credits previously |
|
claimed by the company's certified investors; and |
|
(2) the forfeiture of future premium tax credits to be |
|
claimed by the investors. |
|
(b) Decertification of a certified insurance-capital |
|
company on or before the third anniversary of the company's |
|
allocation date causes the recapture of any premium tax credits |
|
previously claimed and the forfeiture of any future premium tax |
|
credits to be claimed by a certified investor with respect to the |
|
company. |
|
(c) For a certified insurance-capital company that meets |
|
the requirements for continued certification under Section |
|
228A.151(a) and subsequently fails to meet the requirements for |
|
continued certification under Subsection (b) of that section: |
|
(1) any premium tax credit that has been or will be |
|
taken by a certified investor on or before the third anniversary of |
|
the allocation date is not subject to recapture or forfeiture; and |
|
(2) any premium tax credit that has been or will be |
|
taken by a certified investor after the third anniversary of the |
|
company 's allocation date is subject to recapture or forfeiture. |
|
(d) For a certified insurance-capital company that has met |
|
the requirements for continued certification under Section |
|
228A.151 and is subsequently decertified: |
|
(1) any premium tax credit that has been or will be |
|
taken by a certified investor on or before the fifth anniversary of |
|
the allocation date is not subject to recapture or forfeiture; and |
|
(2) any premium tax credit to be taken after the fifth |
|
anniversary of the allocation date is subject to forfeiture only if |
|
the company is decertified on or before the fifth anniversary of the |
|
company 's allocation date. |
|
(e) For a certified insurance-capital company that has |
|
invested an amount cumulatively equal to 100 percent of the |
|
company's certified capital in qualified investments, any premium |
|
tax credit claimed or to be claimed by a certified investor is not |
|
subject to recapture or forfeiture under this section. |
|
Sec. 228A.352. NOTICE OF RECAPTURE AND FORFEITURE OF |
|
PREMIUM TAX CREDIT. |
|
The comptroller shall send written notice to the address of |
|
each certified investor whose premium tax credit is subject to |
|
recapture or forfeiture, using the address shown on the investor's |
|
last premium tax filing. |
|
Sec. 228A.353. INDEMNITY AGREEMENTS AND INSURANCE |
|
AUTHORIZED. |
|
(a) A certified insurance-capital company may agree to |
|
indemnify, or purchase insurance for the benefit of, a certified |
|
investor for losses resulting from the recapture or forfeiture of |
|
premium tax credits under Section 228A.351. |
|
(b) Any guaranty, indemnity, bond, insurance policy, or |
|
other payment undertaking made under this section may not be |
|
provided by more than one certified investor of the certified |
|
insurance-capital company or affiliate of the certified investor. |
|
SECTION 2. This Act takes effect immediately if it receives |
|
a vote of the 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 September 1, 2007. |