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A BILL TO BE ENTITLED
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AN ACT
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relating to unencumbered surplus or guaranty fund requirements for |
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county mutual insurance companies. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 822.205(a), Insurance Code, is amended |
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to read as follows: |
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(a) Except as provided by Section 912.308, this [This] |
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section applies only to an insurance company that: |
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(1) writes insurance only in this state; and |
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(2) is not required by law to have capital stock. |
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SECTION 2. Section 912.308, Insurance Code, is amended by |
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amending Subsection (b) and adding Subsections (c)-(f) to read as |
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follows: |
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(b) A county mutual insurance company is subject to |
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Subchapter B, Chapter 404, and Sections 822.203, [822.205,] |
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822.210, and 822.212. |
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(c) Except as provided by Subsection (d), a county mutual |
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insurance company organized under this chapter shall maintain |
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unencumbered surplus equal to: |
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(1) $2 million; or |
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(2) the amount required by rules adopted by the |
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commissioner under Section 822.210. |
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(d) A county mutual insurance company organized under this |
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chapter that cedes 95 percent or more of its gross written premium |
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to one or more unaffiliated reinsurers shall maintain, as an asset |
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or deduction from liability, unencumbered surplus equal to at least |
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five percent of the insurance company's total credit for |
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reinsurance ceded. |
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(e) Notwithstanding Subsection (d), the amount of required |
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unencumbered surplus: |
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(1) shall be reduced for: |
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(A) ceded premiums payable, and collateral held, |
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under Section 493.104; and |
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(B) reinsurance placed with a reinsurer earning |
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an "A" rating from at least two nationally recognized statistical |
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rating organizations acceptable to the commissioner; |
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(2) must be fulfilled within a planned transition |
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period, not to exceed 10 years, as reported to the commissioner; and |
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(3) must be at least $2 million. |
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(f) The commissioner shall adopt rules consistent with this |
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section as necessary to implement Subsections (c), (d), and (e). |
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SECTION 3. This Act takes effect September 1, 2009. |