Texas Register, Volume 38, Number 47, Pages 8313-8478, November 22, 2013 Page: 8,376
8313-8478 p. ; 28 cm.View a full description of this periodical.
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sation insurance and employer's liability policies or its licensed,
if required by law, administrator or adjuster services all claims
incurred during the policy period, and complies with all require-
ments for an insurer under the Insurance Code, including Chap-
ter 462, and under Title 5, Labor Code. The section further al-
lows a credit for reserves on risks or portions of risks ceded to
reinsurers under Chapter 492, Subchapter C, and Chapter 493,
Subchapter C.
Section 964.053 provides that a captive insurance company may
be formed and operated in any form of business organization au-
thorized under the Business Organizations Code except as a risk
retention group or general partnership. The section further pro-
vides that the captive insurance company must have a board of
directors or governing body. Section 964.054 requires the cap-
tive insurance company to use generally accepted accounting
principles as an accounting basis, except that a captive insur-
ance company that is required to hold a certificate of authority
under another jurisdiction's insurance laws must use statutory
accounting principles.
Section 964.055 provides that a captive insurance company may
not engage in business as a captive insurance company domi-
ciled in this state unless it holds a certificate of authority issued by
the department to act as a captive insurance company. The sec-
tion further provides that the captive insurance company must
maintain its principal office and books and records in this state,
unless the commissioner grants an application to relocate the
entity's books and records under Chapter 803.
Section 964.056 requires the commissioner to determine the
amount of the captive insurance company's capital and surplus
based on the factors listed in this section and any other criteria
that has an impact on the operations of the captive insurance
company determined to be significant by the commissioner. The
section further provides the amount of capital and surplus deter-
mined by the commissioner may not be less than $250,000.
Section 964.056 also provides that the capital and surplus re-
quired by Subsection (a) may be in the form of an irrevocable
letter of credit, in a form approved by the commissioner and not
secured by a guarantee from an affiliate, naming the commis-
sioner as beneficiary for the security of the captive insurance
company's policyholders and issued by a bank approved by the
commissioner.
Section 964.057 establishes the requirements for an application
to obtain a certificate of authority for a captive insurance com-
pany, including a fee of $1,500.
Section 964.058 requires the commissioner to conduct an ex-
amination of the applicant to determine whether the minimum
capital and surplus requirements of 964.056 are satisfied, the
capital and surplus are the bona fide property of the applicant,
and the applicant has fully complied with applicable insurance
laws.
Section 964.059 requires the commissioner to determine if the
certificate of authority will be issued. The commissioner may
consider the factors listed in the section and any other factors
the commissioner considers relevant to determine whether the
applicant will be able to meet its policy obligations. The section
establishes an appeal process if the application is denied.
Section 964.060 requires a captive insurance company to file
with the commissioner on or before March 1 of each year, a state-
ment of the company's financial condition, verified by two of itsexecutive officers and filed in a format prescribed by the com-
missioner; and on or before June 1 of each year, a report of its
financial condition at last year end with an independent certified
public accountant's opinion of the company's financial condition.
The section further allows for the captive insurance company to
request filing its annual report required under this section at its
fiscal year end. The section provides that a captive insurance
company using a fiscal year end must provide its balance sheet,
income statement, and statement of cash flows, verified by two
of its executive officers, before March 1 of each year to provide
sufficient detail to support a premium tax return.
Section 964.062 requires the commissioner to approve in ad-
vance any amendments to the captive insurance company's cer-
tificate of formation.
Section 964.063 requires a captive insurance company to notify
the commissioner in writing when issuing policyholder dividends.
Section 964.065 provides that the commissioner, after notice and
an opportunity for hearing, may revoke or suspend the certificate
of authority of a captive insurance company.
Section 964.066 provides that the commissioner may adopt rules
establishing standards to ensure that an affiliated company is
able to exercise control of the risk management function of any
controlled unaffiliated business to be insured by the captive in-
surance company.
Section 964.067 requires captive management companies to
register with the commissioner before providing administrative
services to a captive insurance company by providing the
required registration information on a form adopted by the
commissioner.
Section 964.069 authorizes the commissioner to adopt reason-
able rules as necessary to implement the purposes and provi-
sions of this chapter.
Section 964.071(a) provides that an authorized foreign or alien
captive insurance company licensed under laws of any jurisdic-
tion may become a domestic captive insurance company in this
state on a determination by the commissioner that the captive in-
surance company has complied with the requirements of Insur-
ance Code Chapter 964. Section 964.071(c) provides that the
commissioner may postpone or waive the imposition of any fees
or taxes under this code for a period not to exceed two years for
any foreign or alien captive insurance company redomesticating
to this state.
Section 36.001 provides that the commissioner of insurance may
adopt any rules necessary and appropriate to implement the
powers and duties of the Texas Department of Insurance under
the Insurance Code and other laws of the state.
CROSS REFERENCE TO STATUTE. The proposal affects
the following statutes: Insurance Code 401.002, 401.006,
401.051, 803.005, 803.008, 964.002, 964.051, 964.052,
964.053, 964.054, 964.055, 964.056, 964.057, 964.057,
964.058, 964.059, 964.060, 964.062, 964.063, 964.065,
964.066, 964.067, 964.069, 964.071, 36.001 and Government
Code 411.083, 411.087, and 411.106.
6.301. Ongoing Requirements.
A captive insurance company must comply with Insurance Code Chap-
ter 964, the Business Organizations Code, and this chapter, including:38 TexReg 8376 November 22, 2013 Texas Register
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Texas. Secretary of State. Texas Register, Volume 38, Number 47, Pages 8313-8478, November 22, 2013, periodical, November 22, 2013; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth379965/m1/64/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.