Texas Register, Volume 38, Number 47, Pages 8313-8478, November 22, 2013 Page: 8,381
8313-8478 p. ; 28 cm.View a full description of this periodical.
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(b) The financial projections must be in the format required for
the annual report and include the projected:
(1) asset page;
(2) liability, capital, and surplus page;
(3) income statement page; and
(4) cash flow page.
(c) A captive insurance company is not required to submit fi-
nancial projections under subsection (a)(4) of this section if:
(1) the captive insurance company provides the department
with financial projections covering the next four years of operations
during the calendar or fiscal year that will be covered by the annual
report described in subsection (a)(4) of this section; or
(2) the department waives the requirement in writing.
(d) The captive must note the reason for not including the fi-
nancial projections in its annual report as requested under subsection
(a)(4) of this section.
(e) The department will reassess the captive insurance com-
pany's minimum capital and surplus when there is an update to the cap-
tive insurance company's projections. The captive insurance company
must provide an actuarial opinion on the effect of the change in the pro-
jections if requested by the department.
6.407. Loans to Affiliates.
(a) Except as provided in subsection (d) of this section, the
captive insurance company must submit a written request to the com-
missioner for prior approval of a loan agreement with an affiliate.
(b) Terms of the loan agreement under subsection (a) of this
section must:
(1) be fair and equitable;
(2) prohibit advancement of funds by the captive insurance
company to the affiliate except as defined in the agreement;
(3) include standards for termination of the agreement with
and without cause; and
(4) specify that, if the captive insurance company is placed
in receivership or seized by the commissioner under Insurance Code
Chapter 443:
(A) all of the rights of the captive insurance company
under the agreement extend to the receiver or commissioner; and
(B) all books and records will immediately be made
available to the receiver or the commissioner and must be turned over
to the receiver or commissioner immediately upon the receiver or the
commissioner's request.
(c) The request under subsection (a) of this section must be
labeled as "Loans to Affiliates - Captives" and include the following
information:
(1) the name of the captive insurance company and affili-
ate;
(2) the home office address of affiliate;
(3) the relationship of the affiliate to the captive insurance
company, for example, parent entity or affiliate; and
(4) a description of the loan, including:
(A) a statement of the nature of the loan and the reasons
for entering into or changing the loan;(B) a statement of how the loan complies with subsec-
tion (b) of this section;
(C) the proposed effective date of the loan;
(D) the financial impact of the loan on the captive in-
surance company;
(E) a description of the maximum amount the captive
insurance company will be obligated to make available under the loan,
the date on which the loan will terminate, and any provisions for the
accrual or deferral of interest; and
(F) a description of the amount and source of funds or
any other assets for the loan.
(d) If the captive insurance company is affiliated with an in-
surer that is part of an insurance holding company system and subject
to Insurance Code Chapter 823, the captive insurance company must
comply with the requirements under 6.410 of this title (relating to Ap-
plication of Holding Company Requirements).
6.408. Letters of Credit.
(a) A letter of credit must comply with this subsection to be
reported as an asset of the captive insurance company.
(1) The letter of credit cannot be supported or collateralized
by a guaranty of an affiliate.
(2) The beneficiary of the letter of credit must be the com-
missioner as beneficiary for the security of the captive insurance com-
pany's policyholders.
(3) The letter of credit must:
(A) be clean, irrevocable, and unconditional, and issued
by a qualified United States financial institution;
(B) contain an issue date and must stipulate that the ben-
eficiary (the commissioner) need only draw a draft under the letter of
credit and present it to obtain funds and that no other document need
be presented;
(C) show only one amount on the letter of credit;
(D) be readily available for viewing by the department
upon request, including at any time to the department in conducting an
examination under Insurance Code Chapter 401;
(E) indicate that it is not subject to any condition or
qualifications outside of the letter of credit. In addition, the letter of
credit itself must not contain reference to any other agreements, docu-
ments, or entities;
(F) contain a statement to the effect that the obligation
of the qualified United States financial institution under the letter of
credit is in no way contingent upon reimbursement; and
(G) state that it is subject to and governed by either the
laws of the State of Texas, or the laws of the state of domicile of the
issuing bank, and in the event of any conflict must specify whether
the laws of Texas or the laws of the state in which the issuing bank is
domiciled will apply, and all drafts drawn on the letter of credit will be
presentable at an office in the United States of a qualified United States
financial institution;
(4) The letter of credit must not:
(A) have a schedule of periodic payments;
(B) name any beneficiary other than the commissioner;
andPROPOSED RULES November 22, 2013 38 TexReg 8381
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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/m1/69/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.