83R11680 PMO-F

By: Eiland H.B. No. 3451

Substitute the following for H.B. No. 3451:

By: Eiland C.S.H.B. No. 3451

A BILL TO BE ENTITLED

AN ACT

relating to the formation, operation, and authority to engage in business of insurance companies and other entities regulated under the Insurance Code; restructuring or changing fees.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

ARTICLE 1. FORMATION, OPERATION, AND AUTHORITY OF ENTITIES

SECTION 1.01. The heading to Chapter 801, Insurance Code, is amended to read as follows:

CHAPTER 801. INCORPORATION; CERTIFICATE OF AUTHORITY

SECTION 1.02. Section 801.001(2), Insurance Code, is amended to read as follows:

(2) "Insurer" or "insurance company" means the issuer of an insurance policy that is issued to another in consideration of a premium and that insures against a loss that may be insured against under the law. The term includes [a]:

(A) a stock company operating under a valid charter or certificate of authority [fraternal benefit society];

(B) a mutual company operating under a valid charter or certificate of authority [Lloyd's plan]; and

(C) any of the following issuers, operating under a valid certificate of authority [mutual company of any kind, including a]:

(i) a statewide mutual assessment association;

(ii) a local mutual aid association or burial association; [and]

(iii) a county or farm mutual insurance company;

(iv) a [(D)] reciprocal or interinsurance exchange;

(v) a [(E)] group hospital service corporation;

(vi) a fraternal benefit society;

(vii) a Lloyd's plan;

(viii) a stipulated premium company;

(ix) a [(F)] health maintenance organization;

(x) a [(G)] nonprofit legal services corporation; and

(xi) any foreign [(H) stock] company, alien company, port of entry, or branch office.

SECTION 1.03. Section 822.002, Insurance Code, is transferred to Subchapter A, Chapter 801, Insurance Code, redesignated as Section 801.0011, Insurance Code, and amended to read as follows:

Sec. 801.0011 [822.002]. APPLICABILITY OF LAW GOVERNING CORPORATIONS. An insurance company incorporated in this state is subject to the Texas Business Organizations Code [Corporation Act, the Texas Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq., Vernon's Texas Civil Statutes),] and any other law of this state that governs corporations in general to the extent those laws are not inconsistent with this code.

SECTION 1.04. Chapter 801, Insurance Code, is amended by adding Subchapter A-1, and a heading is added to that subchapter to read as follows:

SUBCHAPTER A-1. INCORPORATION OF INSURANCE COMPANIES; RELATED

REGULATORY REQUIREMENTS

SECTION 1.05. Section 822.051, Insurance Code, is transferred to Subchapter A-1, Chapter 801, Insurance Code, as added by this Act, redesignated as Section 801.021, Insurance Code, and amended to read as follows:

Sec. 801.021 [822.051]. FORMATION OF COMPANY; AUTHORITY OF INSURER GENERALLY. (a) Any number of persons or incorporators may form a company for the purpose of engaging in the business of insurance.

(b) To form a company, each incorporator must adopt and sign the articles of incorporation of the company as provided by this chapter [code].

(c) Incorporators shall appoint the initial board of directors. The board must always have at least three members. The initial board members shall appoint the officers or managers of the proposed insurer. On approval of the proposed insurer's incorporation and certificate of authority, the initial board members and the shareholders or members shall meet to formally appoint the board of directors and officers of the incorporated insurer.

(d) The insurance company's board of directors, trustees, or managers shall adopt and amend bylaws that include provisions establishing the qualifications, duties, and terms of office of and the manner of electing directors, trustees, or managers and officers of the company. The bylaws shall require, at a minimum, an annual meeting of the board of directors and shareholders or members at which directors and officers are appointed or elected.

(e) An insurer may sue or be sued.

(f) An insurer may make or enforce contracts in relation to the insurer's business.

(g) An insurer may in the insurer's own name, or through a trustee chosen by the board of directors, acquire, purchase, hold, and dispose of real and personal property to further the purposes of the insurer.

SECTION 1.06. Section 822.052, Insurance Code, is transferred to Subchapter A-1, Chapter 801, Insurance Code, as added by this Act, redesignated as Section 801.022, Insurance Code, and amended to read as follows:

Sec. 801.022 [822.052]. ARTICLES OF INCORPORATION. (a) Articles of incorporation of a proposed insurance company must state:

(1) the name of the insurance company;

(2) the address at which [location of] the insurance company's registered agent for service of process in this state is located [company's principal business office];

(3) the type of insurance company, whether a stock or mutual company;

(4) the kind of insurance business in which the company proposes to engage;

(5) if the company is a stock company:

(A) [(4)] the amount of the company's authorized shares, the par value, if any, of the shares, and the amount of the initial shares fully issued and subscribed, representing initial funding, which should include minimum capital and minimum surplus; and

(B) if any shares do not have par value, a statement authenticated by the incorporators stating the number of shares without par value that are subscribed and the actual consideration received by the company for those shares, representing initial funding, which should include minimum capital and minimum surplus [stock]; and

(6) if the company is a mutual company, [(5)] the initial amount of the company's unencumbered surplus, which should include minimum unencumbered surplus, representing minimum requirements and initial funding.

(b) Articles of incorporation must be submitted as part of an application to incorporate and obtain a certificate of authority to engage in the business of insurance in this state. The articles of incorporation must be submitted in a format prescribed by the commissioner.

SECTION 1.07. Sections 822.054 and 841.054, Insurance Code, are transferred to Subchapter A-1, Chapter 801, Insurance Code, as added by this Act, redesignated as Section 801.023, Insurance Code, and amended to read as follows:

Sec. 801.023 [822.054]. CAPITAL STOCK AND SURPLUS REQUIREMENTS. (a) A stock property and casualty [An] insurance company must have capital stock in an amount of at least $2.5 million and surplus in an amount of at least $2.5 million. A mutual property and casualty insurance company must have unencumbered surplus of at least $5 million.

(b) [At the time of incorporation, the required capital and surplus must be in cash.

[Sec. 841.054. CAPITAL STOCK AND SURPLUS REQUIREMENTS. (a)] A stock life [domestic] insurance company must have capital stock in an amount of at least $700,000 and surplus in an amount of at least $700,000. A mutual life insurance company must have unencumbered surplus of at least $1.4 million.

(c) On the date of incorporation, the required capital, surplus, and unencumbered surplus must be in cash or a cash equivalent.

(d) After [(b) All of the capital stock required by Subsection (a) must be fully subscribed and paid up and delivered to the incorporators before the articles of incorporation are filed.

[(c) At the time of] incorporation and the issuance of a certificate of authority to an insurance company, the minimum [required] capital stock and surplus of the company may [shall] consist only of:

(1) United States currency;

(2) bonds of [the United States, this state, or a county or municipality of] this state; [or]

(3) bonds or other evidences of indebtedness of the United States the principal and interest of which are guaranteed by the United States;

(4) bonds or other interest-bearing evidences of indebtedness of a county or municipality of this state; and

(5) notes secured by first mortgages:

(A) on otherwise unencumbered real property in this state the title to which is valid; and

(B) the payment of which is insured wholly or partly by the United States.

(e) Not [government insured mortgage loans that are authorized by this chapter or Chapter 425, with not] more than 50 percent of the minimum [required] capital stock and minimum surplus of an insurance company may be invested in notes described by Subsection (d)(5) [first mortgage real property loans].

SECTION 1.08. Section 841.205, Insurance Code, is transferred to Subchapter A-1, Chapter 801, Insurance Code, as added by this Act, redesignated as Section 801.024, Insurance Code, and amended to read as follows:

Sec. 801.024 [841.205]. COMMISSIONER MAY REQUIRE LARGER CAPITAL AND SURPLUS AMOUNTS. (a) The commissioner by rule or guideline may require a domestic insurance company [that writes or assumes a life insurance or annuity contract or assumes liability on or indemnifies one person for any risk under an accident and health insurance policy, or a combination of these policies, in an amount that exceeds $10,000,] to maintain capital and surplus in amounts that exceed the minimum amounts required by this chapter because of:

(1) the nature and kind of risks the company underwrites or reinsures;

(2) the premium volume of risks the company underwrites or reinsures;

(3) the composition, quality, duration, or liquidity of the company's investment portfolio;

(4) fluctuations in the market value of securities the company holds; or

(5) the adequacy of the company's reserves.

(b) A rule adopted under Subsection (a) must be designed to ensure the financial solvency of an insurance company for the protection of policyholders.

(c) A rule adopted under Subsection (a) [but] may not require that the total admitted assets of a life, health, or accident insurance company exceed 106 percent of its total liabilities.

(d) An [(c) A fraternal benefit society operating under Chapter 885 and a mutual life] insurance company that ceases to write or assume business continues to be [operating under Chapter 882 are] subject to [a rule adopted under] this section.

SECTION 1.09. Section 841.206, Insurance Code, is transferred to Subchapter A-1, Chapter 801, Insurance Code, as added by this Act, redesignated as Section 801.025, Insurance Code, and amended to read as follows:

Sec. 801.025 [841.206]. IMPAIRMENT OF CAPITAL AND SURPLUS. (a) An insurance company incorporated or authorized to engage in [do] the lines of business authorized in this chapter may not have:

(1) the company's required capital impaired;

(2) more than 90 percent of the company's required minimum surplus impaired; or

(3) the surplus required under Section 801.024 [841.205] impaired.

(b) If the commissioner determines that an insurance company's capital or surplus is impaired in violation of this section, the commissioner shall:

(1) order the company to immediately reduce the level of impairment to an acceptable level of impairment as specified by the commissioner or prohibit the company from engaging in the business of insurance in this state; and

(2) begin proceedings as necessary to determine any further actions with respect to the impairment.

SECTION 1.10. Section 841.207, Insurance Code, is transferred to Subchapter A-1, Chapter 801, Insurance Code, as added by this Act, redesignated as Section 801.026, Insurance Code, and amended to read as follows:

Sec. 801.026 [841.207]. ACTIONS OF COMMISSIONER WHEN CAPITAL AND SURPLUS REQUIREMENTS NOT SATISFIED. If an insurance company does not comply with the capital and surplus requirements of this chapter, the commissioner may order the insurance company to cease writing new business and may:

(1) take action under Chapter 406, 441, or 443 [place the insurance company under state supervision or conservatorship];

(2) declare the insurance company to be in a hazardous condition as provided by Subchapter A, Chapter 404;

(3) declare the insurance company to be impaired as provided by Section 801.025 [841.206]; or

(4) apply to the insurance company any other applicable sanction provided by this code.

SECTION 1.11. Subchapter A-1, Chapter 801, Insurance Code, as added by this Act, is amended by adding Section 801.027 to read as follows:

Sec. 801.027. EXAMINATION OF COMPANY. Unless otherwise expressly provided by this code, an insurance company organized under this chapter is subject to examination under Chapters 86, 401, 751, and 823.

SECTION 1.12. Section 822.053, Insurance Code, is transferred to Subchapter A-1, Chapter 801, Insurance Code, as added by this Act, redesignated as Section 801.028, Insurance Code, and amended to read as follows:

Sec. 801.028 [822.053]. COMPANY [COMPANY'S] NAME. An insurance company's name may not be so similar to the name of another insurance company as to likely mislead the public. A mutual insurance company must have "mutual" in the company's name.

SECTION 1.13. Section 982.304, Insurance Code, is transferred to Subchapter A-1, Chapter 801, Insurance Code, as added by this Act, redesignated as Section 801.029, Insurance Code, and amended to read as follows:

Sec. 801.029 [982.304]. SAME OR DECEPTIVELY SIMILAR NAME. A foreign or alien insurance company may not be denied permission to engage in the business of insurance in this state because the name of the company is the same as or deceptively similar to the name of a domestic corporation existing under the laws of this state or of another foreign or alien insurance company authorized to engage in the business of insurance in this state if the company desiring to engage in the business of insurance in this state:

(1) files with the department [and with any county clerk as provided by Subchapter B or C, Chapter 71, Business & Commerce Code,] an assumed name certificate stating a name permitted under the laws of this state; and

(2) does not engage in any business in this state except under the assumed name.

SECTION 1.14. Chapter 801, Insurance Code, is amended by adding Subchapter A-2, and a heading is added to that subchapter to read as follows:

SUBCHAPTER A-2. ISSUANCE AND AMENDMENT OF CHARTER AND

CERTIFICATE OF AUTHORITY

SECTION 1.15. Section 822.057, Insurance Code, is transferred to Subchapter A-2, Chapter 801, Insurance Code, as added by this Act, redesignated as Section 801.031, Insurance Code, and amended to read as follows:

Sec. 801.031 [822.057]. APPLICATION FOR CHARTER AND CERTIFICATE OF AUTHORITY. [(a)] To obtain a charter and certificate of authority [for an insurance company], the incorporators or managers must pay to the department a filing fee [the fees] prescribed by Chapter 202 and any applicable rules [law] and file with the department:

(1) an application for a charter and certificate of authority on the most current version of the form adopted by the National Association of Insurance Commissioners for that purpose [and containing the information prescribed by the commissioner];

(2) the [company's] proposed articles of incorporation; and

(3) [an affidavit made by the incorporators or officers of the company that states that:

[(A) the capital and surplus is the bona fide property of the company; and

[(B) the information in the articles of incorporation is true and correct; and

[(4)] if the application provides for the issuance of shares of stock without par value, a certificate authenticated by the incorporators or officers stating:

(A) the number of shares without par value that are subscribed; and

(B) the actual consideration received by the insurance company for those shares.

[(b) If the commissioner is not satisfied with the affidavit filed under Subsection (a)(3), the commissioner may require that the incorporators provide at their expense additional evidence of a matter required in the affidavit before the commissioner:

[(1) receives the proposed articles of incorporation or the application for charter; or

[(2) issues a certificate of authority to the company.]

SECTION 1.16. Section 822.060, Insurance Code, is transferred to Subchapter A-2, Chapter 801, Insurance Code, as added by this Act, redesignated as Section 801.032, Insurance Code, and amended to read as follows:

Sec. 801.032 [822.060]. ACTION ON CHARTER AND CERTIFICATE APPLICATION OR CHARTER OR CERTIFICATE AMENDMENT APPLICATION. (a) In considering an [the] application for a charter and certificate of authority or an application to amend a charter or certificate of authority, the commissioner shall conduct an examination, limited to the filed application and related information, including a review to determine whether [if]:

(1) the proposed capital structure of the company meets the requirements of this code;

(2) the proposed officers, directors, attorney in fact, or managing head of the company have sufficient insurance experience, ability, standing, and good record to make success of the [proposed] company probable;

(3) the company's funding plan and operational history, if any, demonstrate that the operation or expanded operation of the company in this state or its operations outside this state will not create a condition that might be hazardous to the company's policyholders or creditors or to the public;

(4) for a proposed charter amendment that eliminates the company's power to engage in one or more kinds of insurance business, all liabilities incidental to the exercise of the eliminated charter power have been terminated or wholly reinsured;

(5) the property involved in an increase of capital or surplus, or both, is:

(A) properly valued; and

(B) in the form authorized by this code; and

(6) [(3)] the applicants are acting in good faith.

(b) If the commissioner determines that the applicant has not met the standards set out by Subsection (a), the commissioner shall deny the application in writing, giving the reason for the denial.

(c) If the commissioner does not deny the application under Subsection (b), the commissioner shall approve the application for or amendment of the charter or certificate of authority. [On approval of an application, the articles of incorporation of the company shall be filed with the department.]

(d) On the applicant's request, the commissioner shall hold a hearing on a denial. Not later than the 30th day after the date of the applicant's request for a hearing, the commissioner shall request a hearing date.

SECTION 1.17. Section 801.151, Insurance Code, is transferred to Subchapter A-2, Chapter 801, Insurance Code, as added by this Act, redesignated as Section 801.033, Insurance Code, and amended to read as follows:

Sec. 801.033 [801.151]. CERTAIN FELONIES; ISSUANCE OF CERTIFICATE PROHIBITED. The [Except as provided by Sections 801.153 and 801.154, the] department may not issue a certificate of authority to an applicant if a corporate officer, [or] member of the board of directors, or person having control of the applicant has been convicted of a felony involving:

(1) moral turpitude; or

(2) breach of a fiduciary duty.

SECTION 1.18. Section 801.152, Insurance Code, is transferred to Subchapter A-2, Chapter 801, Insurance Code, as added by this Act, redesignated as Section 801.034, Insurance Code, and amended to read as follows:

Sec. 801.034 [801.152]. CERTAIN FELONIES; REVOCATION OF CERTIFICATE. The [After notice and hearing, the] department may revoke the certificate of authority of an insurer if a corporate officer, [or] member of the board of directors, or person having control of the insurer is convicted of a felony involving:

(1) moral turpitude; or

(2) breach of a fiduciary duty.

SECTION 1.19. Sections 801.153, 801.154, and 801.155, Insurance Code, are transferred to Subchapter A-2, Chapter 801, Insurance Code, as added by this Act, redesignated as Section 801.035, Insurance Code, and amended to read as follows:

Sec. 801.035 [801.153]. PETITION FOR ISSUANCE OR REINSTATEMENT OF CERTIFICATE. (a) An insurance [A] company may petition the commissioner for issuance or reinstatement of a certificate of authority of the company that is denied or revoked under Section 801.033 or 801.034 [this subchapter]:

(1) not earlier than the later of:

(A) the fifth anniversary of the date of the final conviction; or

(B) if the officer, [or] director, or person having control is sentenced to confinement or imprisonment or placed on community supervision, the fifth anniversary of the date the person [officer or director] completes the sentence or period of community supervision; or

(2) after the person [officer or director] ceases to be an officer or director of the insurer or relinquishes control of the insurer, as applicable.

(b) [Sec. 801.154. GRANT OF PETITION.] The commissioner shall grant a petition for issuance or reinstatement of a certificate of authority under this section [subchapter] if the petitioner demonstrates that granting the petition would be in the public interest and that justice would best be served by granting the petition.

(c) [Sec. 801.155. RULES RELATING TO CONTENTS OF PETITION.] The department may adopt rules [under this subchapter] prescribing the contents of a petition for issuance or reinstatement of a certificate of authority under this section.

SECTION 1.20. Subchapter A-2, Chapter 801, Insurance Code, as added by this Act, is amended by adding Section 801.036 to read as follows:

Sec. 801.036. ADOPTION OF NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS LICENSING STANDARDS. (a) A domestic, foreign, or alien insurance company applying to become authorized to engage in the business of insurance in this state must use the most current version of any processes and related forms adopted by the National Association of Insurance Commissioners for charter and license application.

(b) A domestic, foreign, or alien insurance company authorized to engage in the business of insurance in this state that requests an amendment to a charter or certificate of authority must use the most current version of applicable processes and forms adopted by the National Association of Insurance Commissioners.

(c) An insurer authorized under this chapter shall provide written notice to the department, in the manner prescribed by the commissioner by rule, of a change in contact information or a change of officers or directors not later than the 30th day after the date of the change.

(d) This section does not relieve an insurer of any obligation imposed under Chapter 823.

(e) The commissioner may exempt any class of insurance companies from the requirements of this section if the commissioner determines the information required under this section is not useful for regulatory purposes with respect to that class of companies.

SECTION 1.21. Section 822.155, Insurance Code, is transferred to Subchapter A-2, Chapter 801, Insurance Code, as added by this Act, redesignated as Section 801.037, Insurance Code, and amended to read as follows:

Sec. 801.037 [822.155]. APPLICATION FOR AMENDMENT OF CHARTER. A domestic insurance company may amend its charter by [paying to the commissioner a fee in the amount determined under Chapter 202 and by] filing with the department:

(1) an application for a charter amendment on the form and containing the information prescribed by the commissioner; and

(2) the company's proposed amendment.

SECTION 1.22. Section 801.052, Insurance Code, is amended to read as follows:

Sec. 801.052. EFFECT AND CONTENTS OF CERTIFICATE. (a) A certificate of authority issued to an insurer under this chapter authorizes the insurer to engage in the business of insurance. The certificate of authority must state the specific lines of business or kinds of insurance authorized under the certificate.

(b) In this section, "line of business" and "kind of insurance" include each line of business or kind of insurance listed in Subsections (c), (d), and (e) and any line of business or kind of insurance promulgated on the annual statement pages for which financial data is required to be reported by the insurer or health maintenance organization.

(c) For an insurer required to file a life and accident and health annual statement, each of the following is a line of business:

(1) ordinary life;

(2) group and individual credit life;

(3) group life;

(4) industrial life;

(5) ordinary annuity;

(6) group annuity;

(7) ordinary annuity and other fund deposits (variable life or variable annuity);

(8) group annuity and other fund deposits (variable life or variable annuity);

(9) guaranteed investment contracts, funding agreements, or similar instruments not based on mortality or morbidity contingencies;

(10) small employer coverage;

(11) group and individual credit accident and health;

(12) individual accident and health coverage, including collectively renewable accident and health, noncancelable accident and health, guaranteed renewable accident and health, nonrenewable for stated reasons only accident and health, and other accident only;

(13) group accident and health other than association, large employer, or small employer coverage;

(14) Medicare Plus Choice plan;

(15) coverage under the state child health plan program commonly known as CHIP;

(16) association coverage;

(17) large employer coverage; and

(18) Medicare supplement.

(d) For an insurer required to file a property and casualty annual statement, each of the following is a kind of insurance:

(1) fire;

(2) allied lines;

(3) earthquake;

(4) flood;

(5) farm owners multiple peril;

(6) homeowners multiple peril;

(7) Texas commercial multiple peril (non-liability portion);

(8) growing crops (all other);

(9) multiple peril crop;

(10) inland marine;

(11) ocean marine;

(12) small employer coverage;

(13) group and individual credit accident and health;

(14) individual accident and health coverage, including collectively renewable accident and health, noncancelable accident and health, guaranteed renewable accident and health, nonrenewable for stated reasons only accident and health, and other accident only;

(15) group accident and health other than association, large employer, or small employer coverage;

(16) Medicare Plus Choice plans;

(17) coverage under the state child health plan program commonly known as CHIP;

(18) association coverage;

(19) large employer coverage;

(20) workers' compensation or employers liability;

(21) Texas commercial multiple peril (liability portion);

(22) financial guaranty;

(23) medical malpractice liability for physicians, including surgeons and osteopaths;

(24) medical malpractice liability for health care professionals other than physicians;

(25) medical malpractice liability for hospitals;

(26) medical malpractice liability for health care facilities other than hospitals;

(27) product liability;

(28) other general liability, including professional liability;

(29) fidelity and surety;

(30) bail bonds;

(31) glass;

(32) burglary and theft, including forgery;

(33) boiler and machinery;

(34) credit;

(35) type I and type II mortgage guaranty;

(36) aircraft (all perils);

(37) private passenger auto no-fault personal injury protection;

(38) other private passenger auto liability;

(39) commercial auto no-fault personal injury protection;

(40) other commercial auto liability;

(41) private passenger auto physical damage;

(42) commercial auto physical damage;

(43) hail (growing crops only);

(44) rain;

(45) title;

(46) livestock mortality;

(47) Medicare supplement; and

(48) warranty, including contractual liability.

(e) For a health maintenance organization or insurer required to file a health annual statement, each of the following is a line of business:

(1) small employer coverage;

(2) large employer coverage;

(3) health care services for Medicaid delivered under a contract with the Health and Human Services Commission;

(4) health care services for Medicare or a Medicare Plus Choice plan delivered under a contract with the federal Centers for Medicare and Medicaid Services;

(5) coverage under the state child health plan program commonly known as CHIP;

(6) individual coverage;

(7) association coverage;

(8) limited service group coverage;

(9) limited service individual coverage;

(10) single service group coverage;

(11) single service individual coverage; and

(12) Medicare supplement.

SECTION 1.23. Section 801.055, Insurance Code, is amended to read as follows:

Sec. 801.055. DEPOSIT OF FEES. A fee collected by the department under this chapter for a charter or certificate of authority shall be deposited to the credit of the Texas Department of Insurance operating account.

SECTION 1.24. Section 801.056(b), Insurance Code, is amended to read as follows:

(b) The department may deny an application for an authorization if the applicant or a corporate officer, director, or person having control of the applicant fails to provide a complete set of fingerprints on request by the department.

SECTION 1.25. Section 801.057, Insurance Code, is amended to read as follows:

Sec. 801.057. FAILURE TO FILE ANNUAL OR QUARTERLY STATEMENT: GROUND FOR REVOCATION OR SUSPENSION. A certificate of authority of an insurer that fails to file an annual or quarterly statement required by law is subject to being suspended or revoked by the department.

SECTION 1.26. The heading to Chapter 802, Insurance Code, is amended to read as follows:

CHAPTER 802. ANNUAL AND QUARTERLY STATEMENTS; ACCOUNTING AND

FINANCIAL STANDARDS [STATEMENT]

SECTION 1.27. Sections 802.001, 802.002, and 802.003, Insurance Code, are amended to read as follows:

Sec. 802.001. APPLICABILITY OF CHAPTER [FORM OF ANNUAL STATEMENT]. This chapter applies to all insurers and certain other regulated entities authorized to engage in the business of insurance in this state, including:

(1) life insurers;

(2) accident insurers;

(3) life and accident insurers;

(4) life and health insurers;

(5) accident and health insurers;

(6) life, accident, and health insurers;

(7) mutual life insurers;

(8) stipulated premium insurers;

(9) limited purpose subsidiary life insurance companies under Subchapter I, Chapter 841;

(10) group hospital service corporations;

(11) fire insurers;

(12) fire and marine insurers;

(13) United States branches of alien insurers;

(14) Mexican casualty insurers;

(15) general casualty insurers;

(16) fire and casualty insurers;

(17) mutual insurers other than life;

(18) statewide mutual assessment companies;

(19) local mutual aid associations;

(20) mutual burial associations;

(21) exempt associations;

(22) county mutual insurers;

(23) Lloyd's plans;

(24) reciprocal and interinsurance exchanges;

(25) domestic risk retention groups;

(26) domestic joint underwriting associations;

(27) title insurers;

(28) fraternal benefit societies;

(29) farm mutual insurers;

(30) health maintenance organizations;

(31) nonprofit health corporations;

(32) nonprofit legal services corporations;

(33) the Texas Health Insurance Pool;

(34) the Texas Mutual Insurance Company;

(35) the Texas Windstorm Insurance Association; and

(36) the Texas FAIR Plan Association. [(a) The commissioner, as necessary to obtain an accurate indication of the company's condition and method of transacting business, may change the form of any annual statement required to be filed by any kind of insurance company.

[(b) The form may require only information that relates to the business of the insurance company.]

Sec. 802.002. ANNUAL STATEMENT; QUARTERLY STATEMENT; ACTUARIAL OPINION [REQUIRED]. (a) Insurers and other regulated entities must properly report each calendar year to the department and the National Association of Insurance Commissioners by completing, in accordance with applicable instructions, due dates, and rules, the appropriate paper copy annual and quarterly statement blanks, other reporting forms, and electronic filings specified in this section and applicable rules.

(b) Each insurer and other regulated entity authorized to engage in the business of insurance in this state must file its annual statement using:

(1) the annual statement blanks, the quarterly statement blanks, the annual and quarterly supplemental reporting forms, and the related instruction manuals as adopted and published by the National Association of Insurance Commissioners each year; and

(2) any reporting forms unique to this state required by the commissioner by rule.

(c) If an insurer or other regulated entity fails to deliver an annual or quarterly statement in a timely manner, the department shall notify the insurer or other entity that the insurer or other entity may not issue new insurance until the date the statement is delivered to the department.

(d) In this section, "qualified actuary" means:

(1) a member in good standing of the American Academy of Actuaries; or

(2) a person who has otherwise demonstrated actuarial competence to the satisfaction of the commissioner or an insurance regulatory official of another state in which the insurance company is domiciled.

(e) [(b)] An insurer's or other regulated entity's [insurance company's] annual statement must include a statement of a qualified actuary, as prescribed by this section and applicable rules, entitled "Statement of Actuarial Opinion," that:

(1) is located on or is attached to the first page of the annual statement; and

(2) provides the opinion of the actuary relating to policy reserves and other actuarial items for life insurance, accident and health insurance, and annuities, or loss and loss adjustment expense reserves for property and casualty risks, as described in the annual statement instructions of the National Association of Insurance Commissioners as appropriate for the type of risks insured.

Sec. 802.003. FILING DATE OF ANNUAL OR QUARTERLY STATEMENT DELIVERED BY POSTAL SERVICE. Except as otherwise specifically provided, for an annual or quarterly statement that is required to be filed in the offices of the commissioner and that is delivered by the United States Postal Service to the offices of the commissioner after the date on which the [annual] statement is required to be filed, the date of filing is the date of:

(1) the postal service postmark stamped on the cover in which the document is mailed; or

(2) any other evidence of mailing authorized by the postal service reflected on the cover in which the document is mailed.

SECTION 1.28. Sections 802.052, 802.053, 802.054, 802.055, and 802.056, Insurance Code, are redesignated as Sections 802.004, 802.005, 802.006, 802.007, and 802.008, Insurance Code, and amended to read as follows:

Sec. 802.004 [802.052]. CONCURRENT FILING WITH NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS. (a) Each domestic, foreign, or alien insurance company or other regulated entity to which this chapter applies authorized to engage in the business of insurance in this state shall file a copy of the company's annual and quarterly statements [statement] with the National Association of Insurance Commissioners at the time the company files the statements [statement] with the commissioner.

(b) The statements [statement] required by Subsection (a) must:

(1) meet requirements adopted by the commissioner, including:

(A) a change in substance or form;

(B) an additional filing; and

(C) any requirement that the statement be in a computer compatible format; and

(2) include the signed jurat page and the actuarial opinion, as required by the jurisdiction in which the insurance company is domiciled.

(c) The insurance company shall also file with the National Association of Insurance Commissioners a copy of any amendment or addition to the annual or quarterly statements [statement] that is subsequently filed with the commissioner.

Sec. 802.005 [802.053]. EXEMPTION AUTHORITY. The commissioner may exempt any class of insurance companies from the requirements of this chapter [subchapter] if the commissioner believes the information required under this chapter [subchapter] will not be useful for regulatory purposes with respect to that class.

Sec. 802.006 [802.054]. COMPLIANCE. The commissioner may consider a foreign insurance company to be in compliance with the requirements of Section 802.004 [802.052] if the company is domiciled in a state with a law substantially similar to that section.

Sec. 802.007 [802.055]. COSTS PAID BY INSURANCE COMPANY. An insurance company shall pay all costs of preparing and furnishing to the National Association of Insurance Commissioners the information required under Section 802.004 [802.052], including any related filing fees.

Sec. 802.008 [802.056]. STATUS OF REPORTS AND OTHER INFORMATION. A report or any other information resulting from the collection, review, analysis, and distribution of information developed from the filing of annual statement convention blanks and provided to the department by the National Association of Insurance Commissioners is considered part of the process of examination of insurance companies under this code, including Chapters 86, [and] 401, and 823.

SECTION 1.29. Chapter 802, Insurance Code, is amended by adding Section 802.009 to read as follows:

Sec. 802.009. ADOPTION OF ACCOUNTING AND FINANCIAL STANDARDS. (a) Each domestic, foreign, or alien insurance company authorized to engage in the business of insurance in this state shall use the applicable Accounting Practices and Procedures Manual, Supplements, Amendments, and related guidance as adopted and published by the National Association of Insurance Commissioners each year, subject to any exceptions and modifications prescribed by the commissioner by rule. The department shall adopt the Accounting Practices and Procedures Manual and related guidance as adopted and published by the National Association of Insurance Commissioners each year, subject to any exceptions and modifications prescribed by the commissioner by rule, as the source of accounting principles for the department when analyzing financial reports and for conducting statutory examinations and rehabilitations of insurers and health maintenance organizations authorized to engage in the business of insurance in this state, except as otherwise provided by law.

(b) Each domestic, foreign, or alien insurance company authorized to engage in the business of insurance in this state shall use and comply with the Risk-Based Capital Report Including Overview and Instructions for Companies, as appropriate based on the particular line of business, and the risk-based capital formulas contained in the report, as adopted and published by the National Association of Insurance Commissioners annually, subject to any exceptions and modifications prescribed by the commissioner by rule. Each company subject to this subsection must file an electronic version of the company's yearly Risk-Based Capital Report and any supplemental forms and reports with the National Association of Insurance Commissioners in accordance with and by the due dates specified in the instructions.

(c) An insurer providing only casualty insurance as defined by Chapter 822 may include in the insurer's assets, if the total value of the equipment exceeds $2,000, the value of all electronic machines that are part of a data processing system and of all other office equipment, furniture, machines, and labor-saving devices purchased for and used in connection with the business of the insurer to the extent that the total actual cash market value of those assets is less than five percent of the other admitted assets of the insurer.

SECTION 1.30. The heading to Chapter 822, Insurance Code, is amended to read as follows:

CHAPTER 822. GENERAL [INCORPORATION AND] REGULATORY

REQUIREMENTS FOR INSURANCE COMPANIES OTHER THAN LIFE,

HEALTH, OR ACCIDENT INSURANCE COMPANIES

SECTION 1.31. Sections 822.001 and 822.201, Insurance Code, are amended to read as follows:

Sec. 822.001. APPLICABILITY OF CHAPTER. Except as otherwise provided by this code, this chapter applies to [the formation of] each company or organization engaging [that proposes to engage] in any kind of insurance business other than a life, health, or accident insurance company [organized or] operating under Chapter 841, 881, 882, 884, 885, 886, 887, or 888.

Sec. 822.201. APPLICABILITY OF CAPITAL AND SURPLUS REQUIREMENTS. The capital and surplus requirements of this chapter and Chapter 801 apply to each insurance company or other entity, other than a farm mutual insurance company, authorized to write property and casualty insurance in this state including:

(1) a county mutual insurance company;

(2) a mutual insurance company, other than a mutual life insurance company;

(3) a Lloyd's plan; and

(4) a reciprocal or interinsurance exchange.

SECTION 1.32. Section 822.206(a), Insurance Code, is amended to read as follows:

(a) An insurance company may, on prior approval of the department and subject to Chapter 823, purchase outstanding shares of the company's capital stock in accordance with the Texas Business Corporation Act either by making a tender offer or by entering into a negotiated private transaction.

SECTION 1.33. Section 822.207(a), Insurance Code, is amended to read as follows:

(a) On prior approval of the commissioner and subject to Chapter 823, an insurance company, the capital stock of which is listed on a national securities exchange, may purchase from time to time outstanding shares of the company's capital stock on the open market. The shares must be purchased:

(1) in the name of the company for its own account; and

(2) in accordance with the Texas Business Corporation Act.

SECTION 1.34. Sections 822.212(a) and (b), Insurance Code, are amended to read as follows:

(a) Notwithstanding Chapter 801 [Section 822.203], to engage in the kinds of insurance business for which an insurance company organized under this chapter holds a certificate of authority in this state, an insurance company organized under this chapter that on September 1, 2009, had less than the minimum amount of capital and surplus required for a newly incorporated company under Chapter 801 [Section 822.054] must:

(1) not later than December 31, 2010, have increased the amount of its capital by at least 10 percent of the difference between the amount of minimum capital required for a newly incorporated company under former Section 822.054 and the amount of the company's capital on December 31, 2009;

(2) not later than December 31, 2011, have increased the amount of its capital by at least 20 percent of the difference between the amount of minimum capital required for a newly incorporated company under former Section 822.054 and the amount of the company's capital on December 31, 2009;

(3) not later than December 31, 2012, have increased the amount of its capital by at least 30 percent of the difference between the amount of minimum capital required for a newly incorporated company under former Section 822.054 and the amount of the company's capital on December 31, 2009;

(4) not later than December 31, 2013, have increased the amount of its capital by at least 40 percent of the difference between the amount of minimum capital required for a newly incorporated company under Chapter 801 [Section 822.054] and the amount of the company's capital on December 31, 2009;

(5) not later than December 31, 2014, have increased the amount of its capital by at least 50 percent of the difference between the amount of minimum capital required for a newly incorporated company under Chapter 801 [Section 822.054] and the amount of the company's capital on December 31, 2009;

(6) not later than December 31, 2015, have increased the amount of its capital by at least 60 percent of the difference between the amount of minimum capital required for a newly incorporated company under Chapter 801 [Section 822.054] and the amount of the company's capital on December 31, 2009;

(7) not later than December 31, 2016, have increased the amount of its capital by at least 70 percent of the difference between the amount of minimum capital required for a newly incorporated company under Chapter 801 [Section 822.054] and the amount of the company's capital on December 31, 2009;

(8) not later than December 31, 2017, have increased the amount of its capital by at least 80 percent of the difference between the amount of minimum capital required for a newly incorporated company under Chapter 801 [Section 822.054] and the amount of the company's capital on December 31, 2009;

(9) not later than December 31, 2018, have increased the amount of its capital by at least 90 percent of the difference between the amount of minimum capital required for a newly incorporated company under Chapter 801 [Section 822.054] and the amount of the company's capital on December 31, 2009; and

(10) not later than December 31, 2019, have at least the minimum amount of capital required under Chapter 801 [Section 822.054] for a newly incorporated company.

(b) An insurance company that on September 1, 2009, had less than the minimum amount of capital and surplus required for a newly incorporated company under former Section 822.054 shall immediately increase the amount of its capital and surplus to an amount equal to the required amount of capital and surplus under Chapter 801 [Section 822.054] if there is:

(1) a change in the control of at least 50 percent of the voting securities of the insurance company;

(2) a change in the control of at least 50 percent of the voting securities of a holding company controlling the insurance company; or

(3) a change in control of at least 50 percent by any other method of control if the insurance company or holding company is not controlled by voting securities.

SECTION 1.35. Chapter 822, Insurance Code, is amended by adding Subchapter F to read as follows:

SUBCHAPTER F. PROVISIONS APPLICABLE TO CASUALTY COMPANIES

Sec. 822.251. DEFINITIONS. (a) In this subchapter, "casualty company" means an insurer engaging in the business of insurance under Chapter 801 that writes marine insurance, including insurance against hazards and perils incident to war, or insures:

(1) a person against:

(A) bodily injury, disability, or death that results from an accident; or

(B) disability that results from disease;

(2) against loss or damage that results from an accident or injury sustained by:

(A) an employee or other person, for which accident or injury the insured is liable; or

(B) a person, for which loss the insured is liable, other than employers liability insurance under Paragraph (A);

(3) against loss or damage by:

(A) burglary, theft, or housebreaking; or

(B) water to goods or premises that arises from the breakage or leakage of a sprinkler or water pipe;

(4) glass against breakage;

(5) a steam boiler, elevator, electrical device, or engine and any machinery or appliance used or operated in connection with a steam boiler, elevator, electrical device, or engine;

(6) against loss or damage from injury to a person or property that results accidentally from an item described by Subdivision (5);

(7) against loss that:

(A) results from accidental damage to an automobile; or

(B) is caused accidentally by an automobile;

(8) a person, association, or corporation against loss or damage that results from giving or extending credit;

(9) against loss that results from the nonpayment of the principal of or interest on a bond, mortgage, or other evidence of indebtedness; or

(10) against any other casualty or insurance risk, other than fire or life insurance, specified in the company's articles of incorporation that:

(A) may be lawfully made the subject of insurance; and

(B) is not otherwise provided for by this chapter.

(b) A casualty company may insure one or more risks listed in Subsection (a).

SECTION 1.36. Section 861.154, Insurance Code, is transferred to Subchapter F, Chapter 822, Insurance Code, as added by this Act, redesignated as Section 822.252, Insurance Code, and amended to read as follows:

Sec. 822.252 [861.154]. DIVIDENDS. Except as authorized by Sections 403.001 and 403.051, the directors of a [general] casualty company may not issue dividends.

SECTION 1.37. Section 861.251, Insurance Code, is transferred to Subchapter F, Chapter 822, Insurance Code, as added by this Act, redesignated as Section 822.253, Insurance Code, and amended to read as follows:

Sec. 822.253 [861.251]. MINIMUM CAPITAL AND SURPLUS. (a) [A general casualty company must have at least the minimum capital and surplus applicable to casualty, fidelity, guaranty, surety, and trust companies under Sections 822.054, 822.210, and 822.211. At the time of incorporation, the required capital and surplus must be in cash.

[(b)] After incorporation and issuance of a certificate of authority, a [general] casualty company shall invest the minimum capital and surplus as provided by Section 801.023 [822.204]. The company shall invest all other funds [of the company] in excess of the minimum capital and surplus as provided by:

(1) a provision of Subchapter B, Chapter 424, other than Section 424.052, 424.072, or 424.073; and

(2) Section 862.002.

(b) [(c)] A [general] casualty company may not loan any part of the company's capital or paid in surplus to an officer of the company.

SECTION 1.38. Section 861.255, Insurance Code, is transferred to Subchapter F, Chapter 822, Insurance Code, as added by this Act, redesignated as Section 822.254, Insurance Code, and amended to read as follows:

Sec. 822.254 [861.255]. RULES REGARDING CERTAIN ASSETS. (a) The value of the electronic machines and systems, office equipment, furniture, other machines, and labor-saving devices specified in Chapter 802 [Section 861.254(c)(9), as determined under this section] and in accordance with rules adopted by the commissioner[,] is an admitted asset of the company.

(b) The commissioner may adopt rules:

(1) defining electronic machines and systems, office equipment, furniture, other machines, and labor-saving devices as specified in Chapter 802; [Section 861.254(c)(9)] and

(2) stating the maximum period for which each class of equipment may be amortized.

SECTION 1.39. Section 861.258, Insurance Code, is transferred to Subchapter F, Chapter 822, Insurance Code, as added by this Act, redesignated as Section 822.255, Insurance Code, and amended to read as follows:

Sec. 822.255 [861.258]. REAL PROPERTY. (a) A [general] casualty company is subject to Section 862.002 and may not purchase, hold, or convey real property except as authorized by that section.

(b) A [general] casualty company shall sell real property acquired in compliance with Subsection (a) not later than the 10th anniversary of the date the real property was acquired.

(c) A [general] casualty company may retain real property after the date specified by Subsection (b) if the commissioner issues a certificate stating:

(1) that sale of the real property in compliance with Subsection (b) would cause the company to incur a material loss; and

(2) a later date by which the real property must be sold.

(d) Subsection (b) does not apply to:

(1) real property occupied by buildings used in whole or in part by a [general] casualty company in the transaction of business;

(2) an interest in minerals or royalty reserved on the sale of real property acquired under Sections 862.002(c)(1)-(3); and

(3) investment real property acquired under Section 424.064.

SECTION 1.40. Section 861.701, Insurance Code, is transferred to Subchapter F, Chapter 822, Insurance Code, as added by this Act, redesignated as Section 822.256, Insurance Code, and amended to read as follows:

Sec. 822.256 [861.701]. REVOCATION OF CERTIFICATE. (a) If, as a result of an examination under Section 801.027 [861.257], the commissioner determines that a [general] casualty company has not complied with this chapter, the commissioner shall:

(1) revoke the company's certificate of authority; and

(2) notify the attorney general of the revocation.

(b) On receipt of notification under Subsection (a)(2), the attorney general shall request court appointment of a receiver for the [general] casualty company. Under the direction of the court, the receiver shall wind up the affairs of the company.

SECTION 1.41. Section 861.702, Insurance Code, is transferred to Subchapter F, Chapter 822, Insurance Code, as added by this Act, redesignated as Section 822.257, Insurance Code, and amended to read as follows:

Sec. 822.257 [861.702]. PENALTY. A [general] casualty company that engages in the business of insurance without a certificate of authority issued under Chapter 801 [violates Section 861.101] is subject to a penalty of $100 for each day the company writes new business in this state without the certificate of authority required by that chapter [section].

SECTION 1.42. Section 861.703, Insurance Code, is transferred to Subchapter F, Chapter 822, Insurance Code, as added by this Act, redesignated as Section 822.258, Insurance Code, and amended to read as follows:

Sec. 822.258 [861.703]. COLLECTION OF PENALTY. (a) The attorney general or a district or county attorney under the direction of the attorney general may file an action in the name of the state to collect a penalty under this subchapter [chapter].

(b) An action filed under this section must be filed in Travis County or in the county in which the [general] casualty company's principal office is located.

SECTION 1.43. Section 861.252, Insurance Code, is transferred to Subchapter F, Chapter 822, Insurance Code, as added by this Act, redesignated as Section 822.259, Insurance Code, and amended to read as follows:

Sec. 822.259 [861.252]. SECURITY DEPOSIT. (a) [On granting of the charter to a general casualty company, the company shall deposit with the comptroller $50,000 in:

[(1) cash; or

[(2) securities of the kind described by a provision of Subchapter B, Chapter 424, other than Section 424.052, 424.072, or 424.073.

[(b)] If, as a prerequisite to engaging in the business of insurance in another state, country, or province, a [general] casualty company is required to deposit securities or cash with the appropriate officer of that state, country, or province, or with the comptroller, [securities or cash in excess of the deposit made under Subsection (a),] the company may deposit with the comptroller any authorized securities or cash sufficient to meet the requirement. The comptroller shall receive and hold the deposit exclusively for the protection of policyholders of the company.

(b) [(c)] A [general] casualty company may withdraw a deposit made under Subsection (a) [(b)] if the company files with the department satisfactory evidence, as determined by the commissioner, that the company:

(1) has withdrawn from business in the other state, country, or province; and

(2) has no unsecured liabilities outstanding in the other state, country, or province.

(c) [(d)] A [general] casualty company may change the company's securities on deposit with the comptroller by withdrawing those securities and substituting an equal amount of other securities that meet the requirements to engage in the business of insurance in the relevant state, country, or province [authorized by Subsection (a)].

SECTION 1.44. Sections 841.002 and 841.003, Insurance Code, are amended to read as follows:

Sec. 841.002. APPLICABILITY OF CHAPTER AND OTHER LAW. Except as otherwise expressly provided by this code, each insurance company incorporated or engaging in business in this state as a life insurance company, an accident insurance company, a life and accident insurance company, a health and accident insurance company, or a life, health, and accident insurance company is subject to:

(1) this chapter and Chapter 801;

(2) Chapter 3;

(3) Chapters 425 and 492;

(4) Title 7;

(5) Sections 1202.051, 1204.151, 1204.153, and 1204.154;

(6) Subchapter A, Chapter 1202, Subchapters A and F, Chapter 1204, Subchapter A, Chapter 1273, Subchapters A, B, and D, Chapter 1355, and Subchapter A, Chapter 1366;

(7) Subchapter A, Chapter 1507;

(8) Chapters 1203, 1210, 1251-1254, 1301, 1351, 1354, 1359, 1364, 1368, 1505, 1506, 1651, 1652, and 1701; and

(9) Chapter 177, Local Government Code.

Sec. 841.003. APPLICABILITY OF LAW GOVERNING CORPORATIONS. An insurance company operating under this chapter is subject to the Texas Business Organizations Code [Corporation Act, the Texas Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq., Vernon's Texas Civil Statutes),] and any other law of this state that governs corporations in general to the extent those laws are not inconsistent with this chapter or another law described by Section 841.002.

SECTION 1.45. Section 841.104, Insurance Code, is transferred to Subchapter A, Chapter 841, Insurance Code, and redesignated as Section 841.005, Insurance Code, to read as follows:

Sec. 841.005 [841.104]. TAX PAYMENT REQUIRED FOR ISSUANCE OF CERTAIN CERTIFICATES OF AUTHORITY. (a) This section applies to a life insurance company that:

(1) has previously held a certificate of authority to engage in the business of life insurance in this state;

(2) ceased to write new business in this state under that certificate of authority; and

(3) after ceasing to write new business, continued to collect from residents of this state renewal or other premiums on policies written under that certificate of authority.

(b) A life insurance company to which this section applies may not obtain a new certificate of authority to engage in the business of life insurance in this state until the company:

(1) files with the department under oath a report that discloses the gross amount of renewal or other premiums received each calendar year from residents of this state after the period covered by the company's last tax report of gross premium receipts filed under this code; and

(2) pays to the state occupation taxes on those premiums.

(c) The life insurance company shall pay the occupation tax for each year of nonpayment. The company shall pay the tax for each year at the same rate for that year as a company engaged in the business of life insurance in this state during that year.

(d) The life insurance company shall remit the penalties for failure to pay the taxes and file required reports when the company pays the taxes and receives a certificate of authority.

SECTION 1.46. Section 841.201, Insurance Code, is amended to read as follows:

Sec. 841.201. FORM OF REQUIRED CAPITAL AND SURPLUS. Notwithstanding any other provision of this code, [after a charter is granted under this chapter,] the domestic insurance company:

(1) shall maintain the company's minimum capital at all times in a form described by Chapter 801 [Section 841.054(c)]; and

(2) may invest the company's surplus as provided by this code.

SECTION 1.47. Sections 841.256 and 841.257, Insurance Code, are amended to read as follows:

Sec. 841.256. BUSINESS IN SEPARATE DEPARTMENTS OF DOMESTIC INSURANCE COMPANY. A domestic insurance company may not transact more than one of the following kinds of insurance business [described by Section 841.051(a)] unless the company establishes separate departments to transact each kind of business:

(1) life insurance;

(2) accident insurance; and

(3) health insurance.

Sec. 841.257. KINDS OF BUSINESS LIMITED. An insurance company authorized to engage in the business of insurance under Chapter 801 and operating under this chapter [or in accordance with Section 982.051] may not accept a risk or write an insurance policy in this state or any other state or country other than:

(1) a life, accident, or health insurance policy;

(2) reinsurance under Sections 492.051(b) and (c) or Chapter 493 by a life insurance company authorized to engage in the business of insurance in this state; or

(3) reinsurance under Chapter 494 by a domestic insurance company.

SECTION 1.48. Section 882.001, Insurance Code, is amended to read as follows:

Sec. 882.001. APPLICABILITY OF THIS CHAPTER AND OTHER LAW. Except to the extent of any conflict with this chapter, a law governing a company organized under Chapter 801 and operating under Chapter 841 applies to a mutual life insurance company operating [organized] under this chapter.

SECTION 1.49. Section 883.001(1), Insurance Code, is amended to read as follows:

(1) "Domestic mutual insurance company" means a mutual insurance company organized under Chapter 801 and operating under this chapter.

SECTION 1.50. Section 883.163, Insurance Code, is amended to read as follows:

Sec. 883.163. IMMEDIATE NOTIFICATION WHEN ASSETS ARE INSUFFICIENT; EXAMINATION. The president and the secretary of a mutual insurance company operating under this chapter [the law providing for the incorporation of mutual fire, lightning, hail, and storm insurance companies] shall immediately notify the commissioner any time the admitted assets of the company are less than the largest single risk for which the company is liable. The commissioner may make an examination into the affairs of the company as the commissioner considers best.

SECTION 1.51. Section 982.253(a), Insurance Code, is amended to read as follows:

(a) If the commissioner determines from a statement filed under Chapter 802 [Section 982.252] or any report that an alien insurance company's trusteed surplus is less than the greater of the minimum capital required of, or the minimum surplus required to be maintained by, a domestic insurance company authorized to engage in the same kinds of insurance, the commissioner shall:

(1) determine the amount of the impairment; and

(2) order the company, through its United States manager or attorney, to eliminate the impairment within the period designated by the commissioner.

ARTICLE 2. CONFORMING AMENDMENTS

SECTION 2.01. Section 34.004, Insurance Code, is amended to read as follows:

Sec. 34.004. IMMUNITY FOR USE OF ANNUAL OR QUARTERLY STATEMENT INFORMATION. (a) A person is not liable in a civil action, including an action for libel or slander, for collecting, reviewing, analyzing, disseminating, or reporting information collected from annual or quarterly statements filed under Chapter 802 if the person is:

(1) the department, the commissioner, or an employee of the department;

(2) a member or employee of or delegate to the National Association of Insurance Commissioners or an authorized committee, subcommittee, or task force of that association; or

(3) another person who is responsible for collecting, reviewing, analyzing, and disseminating information from filed annual statement convention blanks.

(b) Subsection (a) does not apply to a person who acts with malice.

SECTION 2.02. Section 38.003(b), Insurance Code, is amended to read as follows:

(b) For purposes of this section, "insurer" means a reciprocal or interinsurance exchange, mutual insurance company, capital stock company, county mutual insurance company, Lloyd's plan, life, accident, or health or casualty insurance company, health maintenance organization, mutual life insurance company, mutual insurance company other than life, mutual, or natural premium life insurance company, [general] casualty company, fraternal benefit society, group hospital service company, or other legal entity engaged in the business of insurance in this state. The term includes an affiliate as described by Section 823.003(a) if that affiliate is authorized to write and is writing insurance in this state.

SECTION 2.03. Section 222.001(a), Insurance Code, is amended to read as follows:

(a) This chapter applies to any insurer, including a group hospital service corporation, any health maintenance organization, and any managed care organization that receives gross premiums or revenues subject to taxation under Section 222.002, including companies operating under Subchapter F, Chapter 822, or Chapter 841, 842, 843, [861,] 881, 882, 883, 884, 941, 942, 982, or 984, Insurance Code, Chapter 533, Government Code, or Title XIX of the federal Social Security Act.

SECTION 2.04. Section 401.001(4), Insurance Code, is amended to read as follows:

(4) "Insurer" means an insurer authorized to engage in business in this state, including:

(A) a life, health, or accident insurance company;

(B) a fire and marine insurance company;

(C) a [general] casualty company;

(D) a title insurance company;

(E) a fraternal benefit society;

(F) a mutual life insurance company;

(G) a local mutual aid association;

(H) a statewide mutual assessment company;

(I) a mutual insurance company other than a mutual life insurance company;

(J) a farm mutual insurance company;

(K) a county mutual insurance company;

(L) a Lloyd's plan;

(M) a reciprocal or interinsurance exchange;

(N) a group hospital service corporation;

(O) a stipulated premium company; and

(P) a nonprofit legal services corporation.

SECTION 2.05. Section 404.004, Insurance Code, is amended to read as follows:

Sec. 404.004. CONSTRUCTION WITH LAW RELATING TO CAPITAL AND SURPLUS. The commissioner's authority under Section 404.003 to require an increase in an insurer's capital and surplus by contribution, and any capital and surplus requirements imposed by the commissioner under that section, prevail over:

(1) the capital and surplus requirements of:

(A) Sections 801.023, 801.024, 801.026, 822.201, 822.202 [822.054, 822.201-822.203], 822.205, 822.212 [822.210-822.212, 841.054], 841.201, [841.204, 841.205, 841.207,] 884.206, 884.308, and 884.309; and

(B) Subchapter G, Chapter 841;

(2) any other provision of this code or other law establishing capital and surplus requirements for insurers; and

(3) any rule adopted under a law described by Subdivision (1) or (2).

SECTION 2.06. Section 404.053(a), Insurance Code, is amended to read as follows:

(a) The commissioner shall order an insurer to remedy an impairment of the insurer's surplus, aggregate surplus, or aggregate of guaranty fund and surplus, as applicable, by bringing the surplus to an acceptable level specified by the commissioner, or to cease engaging in business in this state, if the commissioner determines that:

(1) the surplus required by Section 801.023 [822.054], 822.202, [822.203,] 822.205, [822.210, 822.211,] or 822.212 of a stock insurance company engaged in the kind of insurance business described by the company's certificate of authority:

(A) is impaired by more than 50 percent; or

(B) is less than the minimum level of surplus required by risk-based capital and surplus rules adopted by the commissioner; or

(2) the required aggregate of guaranty fund and surplus of a Lloyd's plan, or the required aggregate surplus of a reciprocal or interinsurance exchange or of a mutual company, other than a life insurance company, engaged in the kind of insurance business described by the insurer's certificate of authority:

(A) is impaired by more than 25 percent; or

(B) is less than the minimum level of surplus required by risk-based capital and surplus rules adopted by the commissioner.

SECTION 2.07. Section 424.001(2), Insurance Code, is amended to read as follows:

(2) "Minimum capital and surplus" means the minimum amount of capital stock and minimum amount of surplus required of an insurer under Section 801.023 [822.054 or 822.210].

SECTION 2.08. Section 424.056(a), Insurance Code, is amended to read as follows:

(a) Each insurer's board of directors, or, if the insurer does not have a board of directors, the corresponding authority designated by the insurer's charter, bylaws, or plan of operation, shall adopt a written investment plan consistent with the requirements of:

(1) this chapter;

(2) Sections 822.255 [822.204, 822.209, 861.258,] and 862.002; and

(3) other statutes governing investments by the insurer.

SECTION 2.09. Section 424.058, Insurance Code, is amended to read as follows:

Sec. 424.058. AUTHORIZED INVESTMENTS: FORM OF MINIMUM CAPITAL AND SURPLUS. An insurer may invest the insurer's funds in excess of minimum capital and surplus in any manner authorized by Subchapter A-1, Chapter 801, [Section 822.204] for investment of the insurer's minimum capital and surplus.

SECTION 2.10. Section 443.003, Insurance Code, is amended to read as follows:

Sec. 443.003. COVERED PERSONS. The provisions of this chapter apply to all:

(1) insurers who are doing or have done an insurance business in this state and against whom claims arising from that business may exist now or in the future and to all persons subject to examination by the commissioner;

(2) insurers who purport to do an insurance business in this state;

(3) insurers who have insureds resident in this state;

(4) other persons organized or doing insurance business, or in the process of organizing with the intent to do insurance business in this state;

(5) nonprofit health corporations and all fraternal benefit societies subject to Chapters 844 and 885, respectively;

(6) title insurance companies subject to Title 11;

(7) health maintenance organizations subject to Chapter 843; and

(8) surety and trust companies subject to Chapter 7, [general] casualty companies subject to Subchapter F, Chapter 822 [861], statewide mutual assessment companies subject to Chapter 881, mutual insurance companies subject to Chapter 882 or 883, local mutual aid associations subject to Chapter 886, burial associations subject to Chapter 888, farm mutual insurance companies subject to Chapter 911, county mutual insurance companies subject to Chapter 912, Lloyd's plans subject to Chapter 941, reciprocal or interinsurance exchanges subject to Chapter 942, and fidelity, guaranty, and surety companies.

SECTION 2.11. Section 443.004(a)(13), Insurance Code, is amended to read as follows:

(13) "Insolvency" or "insolvent" means an insurer:

(A) is unable to pay its obligations when they are due;

(B) does not have admitted assets at least equal to all its liabilities; or

(C) has a total adjusted capital that is less than that required under:

(i) Chapter 801 [822], 841, or 843, as applicable; or

(ii) applicable rules or guidelines adopted by the commissioner under Section 801.024 [822.210, 841.205,] or 843.404.

SECTION 2.12. Section 464.052(b), Insurance Code, is amended to read as follows:

(b) The commissioner may identify collected penalties to be deposited into the fund account from:

(1) administrative penalties assessed by the commissioner for violations of Chapter 101 or penalties under Section 822.257 [861.702], including amounts collected through state warrant holds;

(2) civil penalties assessed under Chapter 101 when the commissioner is the party requesting penalties;

(3) administrative penalties assessed by the commissioner against a person holding a certificate of authority, license, registration, or other authorization to engage in the business of insurance that is issued or recognized by the commissioner for engaging in conduct outside the scope of the person's certificate, license, registration, or authorization;

(4) administrative penalties assessed by the commissioner against a person holding a certificate of authority, license, registration, or authorization issued or recognized by the commissioner for using unapproved forms, rates, or advertisements if the forms, rates, or advertisements are required to be approved by the commissioner before being used in this state; and

(5) forfeitures of bonds issued under Section 101.353 or 101.354.

SECTION 2.13. Section 541.082(a), Insurance Code, is amended to read as follows:

(a) In this section, "insurer" includes:

(1) a life insurance company;

(2) a health insurance company;

(3) an accident insurance company;

(4) a [general] casualty company;

(5) a mutual life insurance company or other mutual insurance company;

(6) a mutual or natural premium life insurance company;

(7) a Lloyd's plan;

(8) a county mutual insurance company;

(9) a farm mutual insurance company;

(10) a reciprocal or interinsurance exchange;

(11) a fraternal benefit society;

(12) a local mutual aid association;

(13) a health maintenance organization;

(14) a group hospital service corporation; or

(15) a multiple employer welfare arrangement that holds a certificate of coverage under Chapter 846.

SECTION 2.14. Section 544.101(1), Insurance Code, is amended to read as follows:

(1) "Health benefit plan issuer" means an insurance company, association, organization, group hospital service corporation, or health maintenance organization that delivers or issues for delivery an individual, group, blanket, or franchise insurance policy or insurance agreement, a group hospital service contract, or an evidence of coverage that provides health insurance or health care benefits. The term includes:

(A) a life, health, and accident insurance company operating under Chapter 841 or 982;

(B) a [general] casualty insurance company operating under Subchapter F, Chapter 822 [861];

(C) a fraternal benefit society operating under Chapter 885;

(D) a mutual life insurance company operating under Chapter 882;

(E) a local mutual aid association operating under Chapter 886;

(F) a statewide mutual assessment company operating under Chapter 881;

(G) a mutual assessment company or mutual assessment life, health, and accident association operating under Chapter 887;

(H) a mutual insurance company operating under Chapter 883 that writes coverage other than life insurance;

(I) a Lloyd's plan operating under Chapter 941;

(J) a reciprocal exchange operating under Chapter 942; and

(K) a stipulated premium company operating under Chapter 884.

SECTION 2.15. Section 803.001(1), Insurance Code, is amended to read as follows:

(1) "Domestic company" means any entity licensed, chartered, or organized under this code, including:

(A) a county mutual insurance company;

(B) a farm mutual insurance company;

(C) a fire and marine insurance company;

(D) a fraternal benefit society;

(E) a [general] casualty company;

(F) a group hospital service corporation;

(G) a health maintenance organization;

(H) a life, health, and accident insurance company;

(I) a Lloyd's plan;

(J) a local mutual aid association;

(K) a mutual life insurance company;

(L) a mutual insurance company other than a mutual life insurance company;

(M) a nonprofit legal services corporation;

(N) a reciprocal exchange;

(O) a statewide mutual assessment company;

(P) a stipulated premium insurance company;

(Q) a surety and trust company; and

(R) a title insurance company.

SECTION 2.16. Section 826.203, Insurance Code, is amended to read as follows:

Sec. 826.203. APPLICABILITY OF CERTAIN LAWS; INCORPORATION. A mutual holding company that results from the reorganization of a domestic mutual insurance company operating [organized] under Chapter 883 must be organized under Chapter 801 [Sections 883.051, 883.052, 883.054, and 883.056]. The articles of incorporation, and any amendments to those articles, of the mutual holding company are subject to approval of the commissioner in the same manner as those of a mutual insurance company.

SECTION 2.17. Section 829.004(d), Insurance Code, is amended to read as follows:

(d) A mutual holding company that results from a reorganization of an exchange must be organized under Chapter 801 [Sections 883.051, 883.052, 883.054, and 883.056]. The articles of incorporation of the mutual holding company, and any amendments to those articles, are subject to approval of the commissioner in the same manner as those of a mutual insurance company.

SECTION 2.18. Sections 841.301(a) and (c), Insurance Code, are amended to read as follows:

(a) A domestic insurance company may not assume liability on or indemnify one person for any risk under one or more accident, health, or hospitalization insurance policies, or a combination of those policies, in an amount that exceeds $10,000, unless the amount of the issued, outstanding, and stated capital of the company is at least equal to the minimum amount of capital required for a newly incorporated company under Section 801.023 [841.054].

(c) A domestic insurance company that is exempt under Subsection (b) shall maintain its issued, outstanding, and stated capital in an amount that is at least $100,000 and is at least:

(1) the amount of capital held by the company on December 31, 1991, plus 10 percent of the difference between that amount and an amount equal to the minimum amount of capital required for a newly incorporated company under former Section 841.054, if the last date that the company writes a policy described by Subsection (a) is during 1993;

(2) the amount of capital held by the company on December 31, 1991, plus 20 percent of the difference between that amount and an amount equal to the minimum amount of capital required for a newly incorporated company under former Section 841.054, if the last date that the company writes a policy described by Subsection (a) is during 1994;

(3) the amount of capital held by the company on December 31, 1991, plus 30 percent of the difference between that amount and an amount equal to the minimum amount of capital required for a newly incorporated company under former Section 841.054, if the last date that the company writes a policy described by Subsection (a) is during 1995;

(4) the amount of capital held by the company on December 31, 1991, plus 40 percent of the difference between that amount and an amount equal to the minimum amount of capital required for a newly incorporated company under former Section 841.054, if the last date that the company writes a policy described by Subsection (a) is during 1996;

(5) the amount of capital held by the company on December 31, 1991, plus 50 percent of the difference between that amount and an amount equal to the minimum amount of capital required for a newly incorporated company under former Section 841.054, if the last date that the company writes a policy described by Subsection (a) is during 1997;

(6) the amount of capital held by the company on December 31, 1991, plus 60 percent of the difference between that amount and an amount equal to the minimum amount of capital required for a newly incorporated company under former Section 841.054, if the last date that the company writes a policy described by Subsection (a) is during 1998;

(7) the amount of capital held by the company on December 31, 1991, plus 70 percent of the difference between that amount and an amount equal to the minimum amount of capital required for a newly incorporated company under former Section 841.054, if the last date that the company writes a policy described by Subsection (a) is during 1999;

(8) the amount of capital held by the company on December 31, 1991, plus 80 percent of the difference between that amount and an amount equal to the minimum amount of capital required for a newly incorporated company under former Section 841.054, if the last date that the company writes a policy described by Subsection (a) is during 2000; and

(9) the amount of capital held by the company on December 31, 1991, plus 90 percent of the difference between that amount and an amount equal to the minimum amount of capital required for a newly incorporated company under former Section 841.054, if the last date that the company writes a policy described by Subsection (a) is during 2001.

SECTION 2.19. Sections 843.155(c) and (d), Insurance Code, are amended to read as follows:

(c) Sections 36.108 and 201.055 and Chapter 802 apply to the annual and quarterly reports [report] of a health maintenance organization.

(d) The annual and quarterly reports [report] filed by the health maintenance organization shall be made publicly available on the department's Internet website in a user-friendly format that allows consumers to make direct comparisons of the financial and other data reported by health maintenance organizations under this section.

SECTION 2.20. Section 862.002(e), Insurance Code, is amended to read as follows:

(e) Section 822.255 [861.258] applies to real property acquired under Subsection (c)(1), (2), or (3).

SECTION 2.21. Section 862.151, Insurance Code, is amended to read as follows:

Sec. 862.151. REDUCTION OF CAPITAL STOCK AND PAR VALUE OF SHARES. (a) If the minimum surplus of a fire, marine, or inland marine insurance company is impaired in excess of the amount permitted under Subchapter B, Chapter 404, the commissioner may allow the company to amend its charter [as provided by Sections 822.157 and 822.158] to reduce the amount of the company's capital stock and the par value of its shares in proportion to the extent of the permitted amount of impairment.

(b) A company acting under Subsection (a):

(1) [may not reduce the par value of its shares below the sum computed under Section 822.055;

[(2)] may not deduct from the assets and property on hand more than $125,000;

(2) [(3)] shall retain the remainder of the assets and property on hand as surplus assets;

(3) [(4)] may not distribute any of the assets or property to the shareholders; and

(4) [(5)] may not reduce the capital stock or surplus of the company to an amount less than the minimum capital and the minimum surplus required by Section [Sections] 822.202, [822.210, and 822.211,] subject to Subchapter B, Chapter 404.

SECTION 2.22. Section 862.152(b), Insurance Code, is amended to read as follows:

(b) The company shall promptly call on its shareholders for an amount necessary to make the company's capital and surplus equal to the amount required by Section 801.023 [Sections 822.054 and 822.210], subject to Subchapter B, Chapter 404.

SECTION 2.23. Section 862.153(a), Insurance Code, is amended to read as follows:

(a) If a shareholder of the insurance company who is given notice under Section 862.152 does not pay the amount called for by the company under that section, the company may:

(1) require the return of the original certificate of stock held by the shareholder; and

(2) issue a new certificate for a number of shares that the shareholder may be entitled to in the proportion that the value of the funds of the company, computed without inclusion of any money or other property paid by shareholders in response to the notice under Section 862.152, bears to the total amount of the original capital and the minimum surplus of the company required by Section 801.023 [822.054 or 822.210], subject to Subchapter B, Chapter 404.

SECTION 2.24. Section 862.154, Insurance Code, is amended to read as follows:

Sec. 862.154. CREATION AND DISPOSAL OF NEW STOCK. (a) A fire, marine, or inland marine insurance company that complies with Section 801.037 [Sections 822.155, 822.157, and 822.158] may:

(1) create new stock;

(2) dispose of the new stock according to applicable law; and

(3) issue new certificates for the new stock.

(b) The insurance company shall sell any new stock created under Subsection (a) for an amount sufficient to make up any impairment of the company's required minimum capital and to make up the surplus of the company as required by Section 801.023 [822.054 or 822.210], subject to Subchapter B, Chapter 404, but may not impair the capital of the company.

SECTION 2.25. Section 882.201, Insurance Code, is amended to read as follows:

Sec. 882.201. APPLICABILITY OF SUBCHAPTER. This subchapter does not apply to a mutual life insurance company organized under this chapter that has a surplus of at least the minimum amount of capital and surplus required of a capital stock company under Sections 801.023, 801.024 [841.054, 841.204, 841.205], 841.301, and 841.302.

SECTION 2.26. Section 882.301(a), Insurance Code, is amended to read as follows:

(a) A mutual life insurance company that engages in the business of insurance in this state shall maintain an unencumbered surplus of at least $100,000 that consists of cash or classes of investment authorized by Section 801.023 [as provided by Section 882.055].

SECTION 2.27. Section 882.451, Insurance Code, is amended to read as follows:

Sec. 882.451. APPLICABILITY OF CERTAIN PROVISIONS. Sections 882.452, 882.453, and 882.454 do not apply to a mutual life insurance company organized under this chapter that has a surplus of at least the minimum amount of capital and surplus required of a capital stock company under Sections 801.023, 801.024 [841.054, 841.204, 841.205], 841.301, and 841.302.

SECTION 2.28. Section 882.556(c), Insurance Code, is amended to read as follows:

(c) At a meeting under Subsection (a), each policyholder[:

[(1) is entitled to the number of votes as provided by Section 882.155; and

[(2)] may vote:

(1) [(A)] in person;

(2) [(B)] by written proxy; or

(3) [(C)] by mailed ballot.

SECTION 2.29. Section 882.701, Insurance Code, is amended to read as follows:

Sec. 882.701. APPLICABILITY OF SUBCHAPTER. This subchapter does not apply to a mutual life insurance company organized under this chapter that has a surplus of at least the minimum amount of capital and surplus required of a capital stock company under Sections 801.023, 801.024 [841.054, 841.204, 841.205], 841.301, and 841.302.

SECTION 2.30. Section 884.002(c), Insurance Code, is amended to read as follows:

(c) The following provisions of this code apply to a stipulated premium company:

(1) Article 21.47;

(2) Section 38.001;

(3) Chapter 86;

(4) Subchapter A, Chapter 401;

(5) Sections 401.051, 401.052, 401.054-401.062, 401.151, 401.152, 401.155, and 401.156;

(6) Sections 403.001, 403.052, and 403.102;

(7) Subchapter A, Chapter 404;

(8) Section 421.001;

(9) Subchapter D, Chapter 425;

(10) Chapter 443;

(11) Chapter 492, other than Sections 492.051(b) and (c);

(12) Chapter 541;

(13) Sections 801.001 and 801.002 [801.001-801.002];

(14) Sections 801.052-801.055 [801.051-801.055];

(15) Section 801.057;

(16) Sections 801.101-801.102;

(17) Subchapter A, Chapter 821;

(18) Chapter 824;

(19) Chapter 828;

(20) Section 841.251;

(21) Section 841.259;

(22) Section 841.261;

(23) Section 841.703; and

(24) Chapter 4152.

SECTION 2.31. Section 884.402, Insurance Code, is amended to read as follows:

Sec. 884.402. ADDITIONAL COVERAGE. A stipulated premium company that, at the time it begins to issue coverages under this subchapter, possesses the amounts of capital and unencumbered surplus equal to or greater than the corresponding amounts required for organization of a life and health company under Sections 801.023, 801.024 [841.052, 841.054, 841.204, 841.205], 841.301, and 841.302 may, subject to Section 884.403:

(1) issue any kind of life insurance coverage authorized by Chapter 3, 841, or 1701 or Title 7;

(2) issue any kind of health or accident insurance coverage authorized by:

(A) Title 7;

(B) Chapter 3, 704, 841, 846, 982, 1201, 1202, 1203, 1210, 1251, 1252, 1253, 1254, 1301, 1351, 1354, 1359, 1364, 1368, 1501, 1504, 1505, 1506, 1552, 1575, 1576, 1579, 1581, 1625, 1651, 1652, or 1701;

(C) Chapter 492, other than Sections 492.051(b) and (c);

(D) Subchapter B, Chapter 38, Subchapter D, Chapter 425, Subchapter A or F, Chapter 1204, Subchapter A, Chapter 1273, Subchapter A, B, or D, Chapter 1355, Subchapter A, Chapter 1366, Subchapter A, Chapter 1507;

(E) Section 1204.151, 1204.153, 1204.154, or 1451.051; or

(F) Chapter 177, Local Government Code; or

(3) issue life insurance coverage through policies without cash surrender values or nonforfeiture values and that exceed $10,000 on one life.

SECTION 2.32. Sections 885.453(c) and (d), Insurance Code, are amended to read as follows:

(c) If the fraternal benefit society is converting to a mutual life insurance company:

(1) the resolution authorizing the conversion must also state the amount of the unencumbered surplus;

(2) the amount and form of the unencumbered surplus must comply with Sections [882.055,] 882.301(a), 882.302, 882.304, and 882.404; and

(3) the conversion must comply with Chapter 801 [Sections 882.056(a) and (b), 882.057, 882.058, 882.059, and 882.101].

(d) If the fraternal benefit society is converting to an incorporated stock company:

(1) the resolution authorizing the conversion must also state:

(A) the amount of the surplus, the amount of capital stock authorized, and the number of shares into which the capital stock is divided; and

(B) the amount of capital stock to be immediately paid in;

(2) the amounts and form of the surplus and capital must comply with Sections 801.023, 801.024 [841.054, 841.055, 841.056, 841.057, 841.204, 841.205], 841.301, and 841.302; and

(3) the conversion must comply with Chapter 801 [Sections 841.058, 841.059(a)(1), 841.060, 841.061, 841.062, and 841.063].

SECTION 2.33. Section 887.003(b), Insurance Code, is amended to read as follows:

(b) Except as provided by Section 887.004, this chapter applies to insurance companies and associations, whether incorporated or not:

(1) that issue policies or certificates of insurance on the lives of individuals on a mutual assessment plan or that provide health and accident benefits on a mutual assessment plan or whose funds are derived from assessments on certificate holders or members; and

(2) that are not governed by:

(A) Subchapter F, Chapter 882;

(B) Chapter 841, [861,] 882, 883, 885, 941, or 942; or

(C) [(B)] Chapter 5, Title 78, Revised Statutes, as provided by Section 18, Chapter 40, Acts of the 41st Legislature, 1st Called Session, 1929, as amended by Section 1, Chapter 60, General Laws, Acts of the 41st Legislature, 2nd Called Session, 1929.

SECTION 2.34. Section 887.504, Insurance Code, is amended to read as follows:

Sec. 887.504. AMENDMENT OF CHARTER OR ARTICLES OF ASSOCIATION REQUIRED. On authorization under Section 887.503, the board of directors and officers of the association shall amend the association's charter or articles of association to comply with Chapter 801 as applicable to a stock legal reserve life insurance company [Sections 841.051, 841.052, and 841.053].

SECTION 2.35. Section 911.001(c), Insurance Code, is amended to read as follows:

(c) Except to the extent of any conflict with this chapter, the following provisions apply to a farm mutual insurance company:

(1) Subchapter A, Chapter 32;

(2) Subchapter D, Chapter 36;

(3) Sections 31.002(2), 32.021(c), 32.023, 32.041, 33.002, 38.001, 81.001-81.004, 201.005, 201.055, 401.051, 401.052, 401.054-401.062, 401.103-401.106, 401.151, 401.152, 401.155, 401.156, 421.001, 801.052-801.055 [801.051-801.055], 801.057, 801.101, 801.102, [822.204,] 841.004, 841.251, 841.252, 862.101, 1806.001, 1806.101, 1806.103(b), and 1806.104-1806.107;

(4) Chapter 86;

(5) Subchapter A, Chapter 401;

(6) Subchapter B, Chapter 404;

(7) Chapter 422;

(8) Subchapter B, Chapter 424, other than Section 424.052, 424.072, or 424.073;

(9) Chapter 441;

(10) Chapter 443;

(11) Chapter 462;

(12) Chapter 481;

(13) Chapter 541;

(14) Chapter 802;

(15) Subchapter A, Chapter 805;

(16) Chapter 824; and

(17) Article 1.09-1.

SECTION 2.36. Section 911.101, Insurance Code, is amended to read as follows:

Sec. 911.101. AUTHORITY TO ENGAGE IN BUSINESS. Except to the extent of any conflict with this chapter, a farm mutual insurance company must hold a certificate of authority under Chapter 801 [Section 801.051] to engage in the business of insurance in this state under this chapter.

SECTION 2.37. Section 911.308(c), Insurance Code, is amended to read as follows:

(c) A company described by Subsection (b) shall invest the minimum unencumbered surplus as provided by Subchapter A-1, Chapter 801 [Section 822.204]. The company may invest funds in excess of the minimum unencumbered surplus as provided by the provisions of Subchapter B, Chapter 424, other than Sections 424.052, 424.072, and 424.073.

SECTION 2.38. Section 912.002(b), Insurance Code, is amended to read as follows:

(b) A county mutual insurance company is subject to:

(1) Sections 38.001, 401.051, 401.052, 401.054-401.062, 401.151, 401.152, 401.155, 401.156, 501.159, 501.202, 501.203, [822.204,] 1806.001, 1806.101, 1806.103(b), 1806.104-1806.107, 2002.002, and 2002.005;

(2) Subchapter A, Chapter 86;

(3) Subchapter A, Chapter 401;

(4) the provisions of Subchapter B, Chapter 424, other than Sections 424.052, 424.072, and 424.073;

(5) Chapters 221, 251, 252, 254, 541, and 2210; and

(6) Articles 5.39 and 5.40.

SECTION 2.39. Section 912.308, Insurance Code, is amended to read as follows:

Sec. 912.308. AMOUNT AND INVESTMENT OF SURPLUS. (a) A county mutual insurance company shall maintain an unencumbered surplus which may be invested only as provided by Subchapter A-1, Chapter 801 [in items listed in Section 822.204]. The unencumbered surplus must be at least:

(1) $25,000, if the company is organized to write insurance coverage locally in only the county of its domicile;

(2) $50,000, if the company is organized to write insurance coverage in only the county of its domicile and any adjacent county; or

(3) an amount equal to the aggregate of the minimum capital and minimum surplus required under Sections 801.023 and [822.054,] 822.202[, 822.210, and 822.211,] for a fire insurance company if the county mutual insurance company is organized to write insurance coverage statewide.

(b) Except as provided by Section 912.056, a county mutual insurance company is subject to Subchapter B, Chapter 404, and Section [Sections 822.203, 822.210, and] 822.212.

SECTION 2.40. Sections 941.003(b) and (d), Insurance Code, are amended to read as follows:

(b) A Lloyd's plan is subject to:

(1) Subchapter A, Chapter 5, Chapter 254, Subchapters A and B, Chapter 1806, and Subtitle C, Title 10;

(2) Articles 5.35, 5.39, and 5.40;

(3) Article 5.13-2, as provided by that article, Chapter 2251, as provided by that chapter, and Chapter 2301, as provided by that chapter;

(4) Chapters 251, 252, 402, 541, and 2253;

(5) Subchapter A, Chapter 401;

(6) Subchapter B, Chapter 404;

(7) Subchapter C, Chapter 1806; and

(8) Sections 38.001, 501.159, [822.203,] 822.205, [822.210,] 822.212, 2002.005, 2002.051, and 2002.052.

(d) Underwriters and their attorney in fact are subject to Sections 801.021, 801.031, 801.032 [822.051, 822.057, 822.058, 822.059, 822.060], and 822.201, except that:

(1) the articles of agreement executed by the underwriters are instead of the articles of incorporation; and

(2) the aggregate of the guaranty fund and unencumbered surplus of the Lloyd's plan constitutes capital structure for purposes of Section 801.032 [822.060].

SECTION 2.41. Section 941.103, Insurance Code, is amended to read as follows:

Sec. 941.103. ISSUANCE OF CERTIFICATE OF AUTHORITY. On determination by the department that the underwriters and attorney in fact have complied with the law, the department shall, in accordance with Sections 801.001, 801.002, 801.052-801.055 [801.051-801.055], 801.057, and 801.101, issue a certificate of authority to the attorney in fact.

SECTION 2.42. Section 941.204(a), Insurance Code, is amended to read as follows:

(a) The minimum guaranty fund and surplus required of a Lloyd's plan under Sections 801.023 [822.054], 822.202, [822.210, 822.211,] and 941.201 must be:

(1) in cash; or

(2) invested as provided by the[:

[(A) Section 822.204; or

[(B) any other] law governing the investment of the capital stock and minimum surplus of a capital stock insurance company engaged in the same kind of business.

SECTION 2.43. Section 941.353, Insurance Code, is amended to read as follows:

Sec. 941.353. REQUIREMENTS OF CONVERSION PLAN. The conversion plan must provide that a capital stock insurance company will be formed in accordance with Chapter 822, except that:

(1) the company's required minimum capital and surplus must equal the required minimum guaranty fund and surplus of the Lloyd's plan;

(2) the company's assets may be in cash or in the form of an investment lawfully held by the Lloyd's plan; and

(3) an original examination [under Section 822.058(b)] is not required unless directed by the commissioner.

SECTION 2.44. Sections 942.003(b) and (e), Insurance Code, are amended to read as follows:

(b) An exchange is subject to:

(1) Subchapter A, Chapter 5, Chapter 254, Subchapters A and B, Chapter 1806, and Subtitle C, Title 10;

(2) Articles 5.35, 5.39, and 5.40;

(3) Article 5.13-2, as provided by that article, Chapter 2251, as provided by that chapter, and Chapter 2301, as provided by that chapter;

(4) Chapters 402, 541, and 2253;

(5) Subchapter A, Chapter 401, and Sections 401.051, 401.052, 401.054-401.062 [401.054, 401.055, 401.056, 401.057, 401.058, 401.059, 401.060, 401.061, 401.062], 401.151, 401.152, 401.155, and 401.156;

(6) Subchapter B, Chapter 404;

(7) Subchapter C, Chapter 1806; and

(8) Sections 38.001, 501.159, [822.203,] 822.205, [822.210,] 822.212, 822.254 [861.254(a)-(f), 861.255], 862.001(b), 862.003, 2002.002, 2002.005, 2002.051, and 2002.052.

(e) Subscribers and their attorney in fact are subject to Sections 801.021, 801.031, 801.032 [822.051, 822.057-822.060], and 822.201, except that:

(1) the declaration of the subscribers prescribed by Section 942.053 replaces the articles of incorporation; and

(2) the unencumbered surplus of the exchange constitutes capital structure for purposes of Section 801.032 [822.060].

SECTION 2.45. Section 942.052(d), Insurance Code, is amended to read as follows:

(d) Instead of a bond, an attorney in fact may deposit with the appropriate official of the exchange's state of domicile cash or securities of the kind in which a [general] casualty company is authorized to invest its funds. The deposit must be made in the same amount, and must be conditioned, approved, and payable in the same manner, as a bond required under this section.

SECTION 2.46. Section 942.053(b), Insurance Code, is amended to read as follows:

(b) The declaration must include:

(1) the name of the proposed exchange;

(2) the kinds of insurance to be provided under the reciprocal or interinsurance contract;

(3) a copy of the form of the power of attorney or other authorization of the attorney in fact under which the insurance is to be provided;

(4) the location of each office from which the reciprocal or interinsurance contracts are to be issued; and

(5) any other information prescribed by the department[, including an affidavit comparable to the affidavit prescribed by Section 822.057(a)(3)].

SECTION 2.47. Section 942.101(a), Insurance Code, is amended to read as follows:

(a) An attorney in fact must hold a certificate of authority issued by the department under Sections 801.001, 801.002, 801.052-801.055 [801.051-801.055], 801.057, 801.101, and 801.102. A certificate of authority obtained in accordance with this section authorizes the attorney in fact named in the certificate to exercise all powers and perform all duties of an attorney in fact.

SECTION 2.48. Section 942.155(c), Insurance Code, is amended to read as follows:

(c) An exchange shall maintain the required assets as to:

(1) minimum surplus requirements[, as provided by Section 822.204]; and

(2) other funds, as provided by the provisions of Subchapter B, Chapter 424, other than Sections 424.052, 424.072, and 424.073.

SECTION 2.49. Section 961.002(b), Insurance Code, is amended to read as follows:

(b) The following provisions of this code apply to a nonprofit legal services corporation in the same manner that they apply to an insurer or a person engaged in the business of insurance, to the extent the provisions do not conflict with this chapter:

(1) Articles 1.09-1 and 21.47;

(2) Sections 31.002, 31.004, 31.007, 31.021, 31.022, 31.023, 31.026, 31.027, 32.021, 32.022(a), 32.023, 33.002, 33.006, 36.108, 38.001, 81.004, 201.005, 201.055, 401.051, 401.052, 401.054-401.062, 401.103-401.106, 401.151, 401.152, 401.155, 401.156, 801.001, 801.002, 801.052-801.055 [801.051-801.055], 801.057, 801.101, 801.102, 841.251, and 841.252;

(3) Subchapter B, Chapter 31;

(4) Subchapters A and C, Chapter 32;

(5) Subchapter D, Chapter 36;

(6) Subchapter A, Chapter 401;

(7) Subchapter A, Chapter 542;

(8) Subchapter A, Chapter 805; and

(9) Chapters 86, 402, 441, 443, 481, 541, 802, and 824.

SECTION 2.50. Section 962.004, Insurance Code, is amended to read as follows:

Sec. 962.004. APPLICABILITY OF OTHER LAW. An insurer operating under this chapter is subject to the following provisions, if not in conflict with this chapter:

(1) the other chapters of this code, including:

(A) Chapter 221;

(B) Chapter 281, other than any minimum capital and surplus requirements specified in that chapter;

(C) Chapter 822, including Sections [822.203,] 822.205[, 822.210,] and 822.212; and

(D) [Chapter 861; and

[(E)] Chapter 402; and

(2) Section 171.0525, Tax Code.

SECTION 2.51. Section 962.054, Insurance Code, is amended to read as follows:

Sec. 962.054. INSURERS NOT MEETING CERTAIN REQUIREMENTS. To write the insurance coverages authorized by Section 962.101, a domestic or foreign insurer that does not meet the requirements of Sections 962.051 and 962.052 must comply with Chapter [Chapters] 822 [and 861].

SECTION 2.52. Section 962.055, Insurance Code, is amended to read as follows:

Sec. 962.055. CAPITAL AND SURPLUS REQUIREMENTS. A domestic or foreign insurer operating under this chapter shall maintain the minimum capital and surplus required by Section [Sections] 801.023 [822.054, 822.210, and 822.211].

SECTION 2.53. Section 982.251, Insurance Code, is amended to read as follows:

Sec. 982.251. TRUSTEED SURPLUS OF ALIEN INSURANCE COMPANY. The total value of an alien insurance company's general state deposits and trusteed assets less the total net amount of all the company's liabilities and reserves in the United States[, as determined in accordance with Section 982.252,] is the company's trusteed surplus in the United States.

SECTION 2.54. Section 1102.001(2), Insurance Code, is amended to read as follows:

(2) "Insurer" means any insurer, including a:

(A) life, accident, health, or casualty insurance company;

(B) mutual life insurance company;

(C) mutual insurance company other than a life insurance company;

(D) mutual or natural premium life insurance company;

(E) [general] casualty company;

(F) Lloyd's plan or a reciprocal or interinsurance exchange;

(G) fraternal benefit society; or

(H) group hospital service corporation.

SECTION 2.55. Section 1132.001(a), Insurance Code, is amended to read as follows:

(a) In this section, "insurer" means:

(1) a life insurance company;

(2) an accident insurance company;

(3) a [general] casualty [insurance] company;

(4) a mutual life insurance company;

(5) a mutual or natural premium life insurance company;

(6) a fraternal benefit society; or

(7) a local mutual aid association.

SECTION 2.56. Section 1152.107(b), Insurance Code, is amended to read as follows:

(b) The company shall file the statement:

(1) on a form prescribed or approved by the department; and

(2) simultaneously with the annual statement required by Chapter 802 [Sections 841.255 and 882.003].

SECTION 2.57. Section 1201.003(b), Insurance Code, is amended to read as follows:

(b) Except as otherwise provided by this chapter, this chapter applies only to an individual accident and health insurance policy delivered or issued for delivery by:

(1) a life, health, and accident insurance company;

(2) a mutual insurance company, including:

(A) a mutual life insurance company; and

(B) a mutual assessment life insurance company;

(3) a local mutual aid association;

(4) a mutual or natural premium life or casualty insurance company;

(5) a [general] casualty company;

(6) a Lloyd's plan;

(7) a reciprocal or interinsurance exchange;

(8) a nonprofit hospital, medical, or dental service corporation, including a corporation operating under Chapter 842; or

(9) another insurer required by law to be authorized by the department.

SECTION 2.58. Section 1204.051(6), Insurance Code, is amended to read as follows:

(6) "Insurer" means an insurance company, association, or organization authorized to engage in business in this state under Subchapter F, Chapter 822, or Chapter 841, [861,] 881, 882, 883, 884, 885, 886, 887, 888, 941, 942, or 982.

SECTION 2.59. Section 1254.001(a), Insurance Code, is amended to read as follows:

(a) In this section, "insurer" means:

(1) a life insurance company;

(2) a health insurance company;

(3) an accident insurance company;

(4) a [general] casualty company;

(5) a mutual life insurance company or other mutual insurance company;

(6) a mutual or natural premium life insurance company;

(7) a Lloyd's plan;

(8) a reciprocal or interinsurance exchange;

(9) a fraternal benefit society;

(10) a local mutual aid association; or

(11) a group hospital service corporation.

SECTION 2.60. Section 1273.001(3), Insurance Code, is amended to read as follows:

(3) "Insurer" means an insurance company, association, or organization authorized to engage in business in this state under Subchapter F, Chapter 822, or Chapter 841, 842, [861,] 881, 882, 883, 884, 885, 886, 887, 888, 941, 942, or 982.

SECTION 2.61. Section 1451.102, Insurance Code, is amended to read as follows:

Sec. 1451.102. APPLICABILITY OF SUBCHAPTER. Except as provided by this subchapter, this subchapter applies only to an individual, group, blanket, or franchise insurance policy, insurance agreement, or group hospital service contract that provides health benefits, accident benefits, or health and accident benefits for medical or surgical expenses incurred as a result of an accident or sickness and that is delivered, issued for delivery, or renewed in this state by any incorporated or unincorporated insurance company, association, or organization, including:

(1) a fraternal benefit society operating under Chapter 885;

(2) a [general] casualty company operating under Subchapter F, Chapter 822 [861];

(3) a life, health, and accident insurance company operating under Chapter 841 or 982;

(4) a Lloyd's plan operating under Chapter 941;

(5) a local mutual aid association operating under Chapter 886;

(6) a mutual insurance company writing insurance other than life insurance operating under Chapter 883;

(7) a mutual life insurance company operating under Chapter 882;

(8) a reciprocal exchange operating under Chapter 942;

(9) a statewide mutual assessment company, mutual assessment company, or mutual assessment life, health, and accident association operating under Chapter 881 or 887; and

(10) a stipulated premium company operating under Chapter 884.

SECTION 2.62. Section 1651.001(b), Insurance Code, is amended to read as follows:

(b) This chapter applies only to a policy, certificate, or evidence of coverage that is issued by:

(1) a capital stock insurance company, including a life, health and accident, or [general] casualty [insurance] company;

(2) a mutual life insurance company;

(3) a mutual assessment life insurance company, including a statewide mutual assessment corporation, local mutual aid association, and burial association;

(4) a mutual or mutual assessment association, including an association subject to Section 887.101;

(5) a mutual insurance company other than a life insurance company;

(6) a mutual or natural premium life or casualty insurance company;

(7) a fraternal benefit society;

(8) a Lloyd's plan insurer;

(9) a reciprocal or interinsurance exchange;

(10) a nonprofit medical, hospital, or dental service corporation, including a company subject to Chapter 842;

(11) a stipulated premium company;

(12) a health maintenance organization under Chapter 843; or

(13) another insurer required to be licensed by the department.

SECTION 2.63. Section 1652.003, Insurance Code, is amended to read as follows:

Sec. 1652.003. APPLICABILITY OF CHAPTER. This chapter applies to an individual or group Medicare supplement benefit plan delivered or issued for delivery in this state and, regardless of the place where the plan was delivered or issued for delivery, a certificate that was issued under a group Medicare supplement benefit plan and delivered or issued for delivery in this state, if the plan or certificate is issued by:

(1) a capital stock insurance company, including a life, health and accident, and [general] casualty [insurance] company;

(2) a mutual life insurance company;

(3) a mutual assessment life insurance company, including a statewide mutual assessment company, local mutual aid association, and burial association;

(4) a mutual or mutual assessment association of any kind, including an association subject to Section 887.102;

(5) a mutual insurance company other than a life insurance company;

(6) a mutual or natural premium life or casualty insurance company;

(7) a fraternal benefit society;

(8) a Lloyd's plan;

(9) a reciprocal or interinsurance exchange;

(10) a nonprofit hospital, medical, or dental service corporation, including a corporation operating under Chapter 842;

(11) a stipulated premium company;

(12) another insurer that by law is required to be authorized by the department; or

(13) a health maintenance organization operating under Chapter 843, to the extent required by federal law.

SECTION 2.64. Section 1701.003(a), Insurance Code, is amended to read as follows:

(a) Except as provided by Subsection (b), this chapter applies to any insurer that uses a document described by Section 1701.002 in this state, including:

(1) a life, accident, health, or casualty insurance company;

(2) a mutual life insurance company;

(3) a mutual insurance company other than a mutual life insurance company;

(4) a mutual or natural premium life insurance company;

(5) a [general] casualty company;

(6) a Lloyd's plan;

(7) a reciprocal or interinsurance exchange;

(8) a fraternal benefit society; and

(9) a group hospital service corporation.

SECTION 2.65. Section 1701.057(c), Insurance Code, is amended to read as follows:

(c) To enable the department to determine compliance with Subsection (b), the commissioner:

(1) shall require an insurer to file the rates charged by that insurer for individual accident and health insurance policies; and

(2) may adopt and require an insurer to file in conjunction with the annual statement required under Chapter 802 [Section 841.255, 982.101, or 982.103] a form for reporting the insurer's experience on individual accident and health insurance policy forms issued by the insurer.

SECTION 2.66. Section 2201.101, Insurance Code, is amended to read as follows:

Sec. 2201.101. ELIGIBILITY REQUIREMENTS. Except as otherwise provided by this chapter, a risk retention group that applies to be chartered in this state must:

(1) be chartered and authorized to engage in the business of insurance under Chapter 822, [861,] 883, or 942; and

(2) comply with all the laws, rules, and requirements, including Chapter 804, applicable to insurers authorized to engage in business under those chapters and with Subchapter D to the extent those requirements do not limit the laws, rules, or requirements of this state.

SECTION 2.67. Section 2201.104(a), Insurance Code, is amended to read as follows:

(a) In addition to all other fees imposed on an insurer chartered and authorized to engage in business under Chapter 822, [861,] 883, or 942, a risk retention group chartered in this state shall pay a filing fee in an amount not to exceed $1,000 as set by rules adopted by the commissioner.

SECTION 2.68. Section 2201.209(a), Insurance Code, is amended to read as follows:

(a) A risk retention group that is authorized to engage in business in this state under Subchapter C or D and that violates this chapter is subject to all sanctions and penalties applicable to an insurer that holds a certificate of authority under Chapter [Chapters] 822 [and 861], including revocation of the authority to engage in business in this state.

SECTION 2.69. Sections 2551.001(a) and (c), Insurance Code, are amended to read as follows:

(a) Except as provided by Subsection (c) and unless the business of title insurance or title insurance companies are expressly mentioned, the provisions of this code other than this title do not apply to:

(1) a corporation incorporated or engaging in business exclusively under this title; or

(2) any title insurance business engaged in by a corporation created under[:

[(A)] Subdivision 57, Article 1302, Revised Statutes, before repeal of that statute,[;

[(B) Chapter 861;] or

[(C)] any other law.

(c) To the extent applicable, the following provisions of this code apply to a title insurance company:

(1) Articles 1.09-1 and 21.47;

(2) Subsection (b), Article 1.04D;

(3) Chapters 33, 82, 83, 84, 86, 102, 261, 281, 401, 402, 493, 494, 541, 547, 555, 701, 801, 802, 824, 828, 1805, and 2204;

(4) Chapter 31, other than Section 31.005;

(5) Chapter 32, other than Section 32.022(b);

(6) Chapter 36, other than Sections 36.003, 36.004, and 36.101-36.105 [36.101-36.106];

(7) Subchapter A, Chapter 38;

(8) Subchapters A-G, Chapter 101;

(9) Chapter 982, other than Sections 982.003 and [, 982.051, 982.101, 982.105, 982.106(b),] 982.109[, and 982.113]; and

(10) Sections 37.052, 39.001, 39.002, 81.001, 81.002, 81.004, 201.004, 201.005, 201.051, 201.055, 403.001, 403.051, 403.101, 521.002-521.004, 801.021, 801.022(a)(1), (2), and (4), 801.031 except Subdivision (3), 801.032, 801.037, 801.053, 805.021, 822.001, [822.051, 822.052(1), (2), and (3), 822.053, 822.057, except Subsection (a)(4), 822.058, 822.059, 822.060, 822.155, 822.157, 822.158, except Subsection (a)(5),] 841.004, 841.251, 841.252(a)-(c), and 4001.103.

SECTION 2.70. Section 2703.001(a), Insurance Code, is amended to read as follows:

(a) This section applies to a corporation organized under this title, a foreign corporation, and, to the extent that the corporation is engaged in the business of title insurance, a corporation organized under another law, including[:

[(1)] Subdivision 57, Article 1302, Revised Statutes, before repeal of that statute[; and

[(2) Chapter 861].

SECTION 2.71. Section 3502.152, Insurance Code, is amended to read as follows:

Sec. 3502.152. CAPITAL AND SURPLUS REQUIREMENTS. An insurer may not write mortgage guaranty insurance unless the insurer has the minimum capital and surplus required [by Chapter 861] for a [general] casualty company under Subchapter F, Chapter 822.

SECTION 2.72. Section 3503.201, Insurance Code, is amended to read as follows:

Sec. 3503.201. MERGER OR CONSOLIDATION OF CERTAIN COMPANIES. When two or more companies authorized to write fidelity, guaranty, and surety insurance in this state merge or consolidate and, incident to the merger or consolidation, enter into a total reinsurance contract under which the merged or ceding company is dissolved and that company's assets are acquired and liabilities are assumed by the new or surviving company, the commissioner, on finding that the contracting companies have on deposit with the comptroller two or more deposits made for the same or similar purposes under former Article 7.03, repealed by Chapter 388, Acts of the 55th Legislature, Regular Session, 1957, [or] under former Section 861.252, or under Section 822.259 shall authorize the comptroller to:

(1) retain for a single purpose only the deposit of the greatest amount and value; and

(2) permit the new or surviving company, on proper showing that there is duplication of deposits and that the new or surviving company is the owner of those deposits, to withdraw a duplicate or excessive deposit.

SECTION 2.73. Section 4001.009(a), Insurance Code, is amended to read as follows:

(a) As referenced in Section 4001.003(9), a reference to an agent in the following laws includes a subagent without regard to whether a subagent is specifically mentioned:

(1) Chapters 281, 402, 421-423, 441, 444, 461-463, 541-556, 558, 559, 703, 705, 821, 823-825, 827, 828, 844, 963, 1108, 1205-1208, 1211, 1213, 1214, 1352, 1353, 1357, 1358, 1360-1363, 1369, 1453-1455, 1503, 1550, [1801,] 1803, 2151-2154, 2201-2203, 2205-2213, 3501, 3502, 4007, 4102, and 4201-4203;

(2) Chapter 403, excluding Section 403.002;

(3) Subchapter A, Chapter 491;

(4) Subchapter C, Chapter 521;

(5) Subchapter A, Chapter 557;

(6) Subchapter B, Chapter 805;

(7) Subchapters D, E, and F, Chapter 982;

(8) Subchapter D, Chapter 1103;

(9) Subchapters B, C, D, and E, Chapter 1204, excluding Sections 1204.153 and 1204.154;

(10) Subchapter B, Chapter 1366;

(11) Subchapters B, C, and D, Chapter 1367, excluding Section 1367.053(c);

(12) Subchapters A, C, D, E, F, H, and I, Chapter 1451;

(13) Subchapter B, Chapter 1452;

(14) Sections 551.004, 841.303, 982.001, 982.002, [982.004, 982.052, 982.102, 982.103, 982.104, 982.106,] 982.107, 982.108, 982.110, 982.111, 982.112, and 1802.001; and

(15) Chapter 107, Occupations Code.

SECTION 2.74. Section 4007.001, Insurance Code, is amended to read as follows:

Sec. 4007.001. APPLICABILITY OF CHAPTER. This chapter applies only to an insurance company authorized to engage in the business of insurance in this state under:

(1) a provision of:

(A) Subchapter F, Chapter 822;

(B) Chapter 5, 1805, or 2171; or

(C) [(B)] Subtitle B, C, D, E, F, H, or I, Title 10; or

(2) Chapter [861,] 862, 883, 911, 912, 941, 942, 984, or 3503.

SECTION 2.75. Section 1704.160(h), Occupations Code, is amended to read as follows:

(h) The certificate of authority to do business in this state issued [under Section 861.102, Insurance Code,] to an applicant that is a corporation is conclusive evidence of:

(1) the sufficiency of the applicant's security; and

(2) the applicant's solvency and credits.

ARTICLE 3. REPEALER

SECTION 3.01. The following provisions of the Insurance Code are repealed:

(1) Section 36.106;

(2) Section 492.053;

(3) Section 801.051;

(4) the heading to Subchapter D, Chapter 801;

(5) the heading to Subchapter A, Chapter 802;

(6) the heading to Subchapter B, Chapter 802;

(7) Section 802.051;

(8) Section 822.003;

(9) the heading to Subchapter B, Chapter 822;

(10) Section 822.055;

(11) Section 822.056;

(12) Section 822.058;

(13) Section 822.061;

(14) Subchapter C, Chapter 822;

(15) the heading to Subchapter D, Chapter 822;

(16) Section 822.151;

(17) Section 822.152;

(18) Section 822.153;

(19) Section 822.154;

(20) Section 822.156;

(21) Section 822.157;

(22) Section 822.158;

(23) Section 822.203;

(24) Section 822.204;

(25) Section 822.210;

(26) Section 822.211;

(27) the heading to Subchapter B, Chapter 841;

(28) Section 841.051;

(29) Section 841.052;

(30) Section 841.053;

(31) Section 841.055;

(32) Section 841.056;

(33) Section 841.057;

(34) Section 841.058;

(35) Section 841.059;

(36) Section 841.061;

(37) Section 841.062;

(38) Section 841.063;

(39) the heading to Subchapter C, Chapter 841;

(40) Section 841.101;

(41) Section 841.102;

(42) Section 841.103;

(43) Subchapter D, Chapter 841;

(44) Section 841.202;

(45) Section 841.203;

(46) Section 841.204;

(47) Section 841.255;

(48) the heading to Chapter 861;

(49) Subchapter A, Chapter 861;

(50) Subchapter B, Chapter 861;

(51) Subchapter C, Chapter 861;

(52) the heading to Subchapter D, Chapter 861;

(53) Section 861.151;

(54) Section 861.152;

(55) Section 861.153;

(56) Section 861.155;

(57) Subchapter E, Chapter 861;

(58) the heading to Subchapter F, Chapter 861;

(59) Section 861.253;

(60) Section 861.254;

(61) Section 861.256;

(62) Section 861.257;

(63) the heading to Subchapter O, Chapter 861;

(64) Section 882.002;

(65) Section 882.003;

(66) Subchapter B, Chapter 882;

(67) Subchapter C, Chapter 882;

(68) Subchapter D, Chapter 882;

(69) Subchapter B, Chapter 883;

(70) Subchapter C, Chapter 883;

(71) Section 883.151;

(72) Section 883.201;

(73) Section 883.202;

(74) Section 883.204;

(75) Subchapter O, Chapter 883;

(76) Section 982.004;

(77) Subchapter B, Chapter 982;

(78) Section 982.101;

(79) Section 982.102;

(80) Section 982.103;

(81) Section 982.104;

(82) Section 982.105;

(83) Section 982.106;

(84) Section 982.113;

(85) Section 982.252; and

(86) Section 982.306.

ARTICLE 4. EFFECTIVE DATE

SECTION 4.01. 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 September 1, 2013.