Tex. Ins. Code § 425.128 · Subchapter C. AUTHORIZED INVESTMENTS AND TRANSACTIONS FOR CAPITAL STOCK LIFE, HEALTH, AND ACCIDENT INSURERS
RISK CONTROL TRANSACTIONS: OVERSIGHT BY COMMISSIONER.
Text — Current through the 89th 2nd Called Legislative Session, 2025
(a) An insurance company must be able to demonstrate to the commissioner on request the intended hedging characteristics and continuing effectiveness of a derivative transaction or combination of transactions through:
(1) cash flow testing;
(2) duration analysis; or
(3) other appropriate analysis.
(b) Ten days before entering into an initial hedging transaction, an insurance company shall notify the commissioner in writing that:
(1) the company's board of directors has adopted an investment plan that authorizes hedging transactions; and
(2) each hedging transaction will comply with Sections 425.124-425.132.
(c) After providing the notice under Subsection (b), the insurance company may enter into a hedging transaction under Section 425.124 if as a result of and after making the transaction:
(1) the aggregate statement value of all outstanding options other than collars, and of all caps, floors, swaptions, and warrants under Sections 425.124-425.132 not attached to another financial instrument purchased by the company does not exceed 7.5 percent of the company's assets;
(2) the aggregate statement value of all outstanding options other than collars, and of all caps, floors, swaptions, and warrants written by the company under Sections 425.124-425.132 does not exceed three percent of the company's assets; and
(3) the aggregate potential exposure of all outstanding collars, swaps, forwards, and futures entered into or acquired by the company under Sections 425.124-425.132 does not exceed 6.5 percent of the company's assets.
(d) If the hedging transaction does not comply with Sections 425.124-425.132, or if continuing the transaction may create a hazardous financial condition for the insurance company that affects the company's policyholders or creditors or the public, the commissioner may, after notice and an opportunity for a hearing, order the company to take action reasonably necessary to:
(1) remedy a hazardous financial condition; or
(2) prevent an impending hazardous financial condition from occurring.
Notes and commentary — not statutory text
History
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
Source of truth
- Edition
- Current through the 89th 2nd Called Legislative Session, 2025
- Official file
- https://statutes.capitol.texas.gov/Docs/IN/htm/IN.425.htm
- Text hash
- sha256 19f4712ee4374558a189919464505eee816c6c50c3cb2f9f5964c9540f5488d9
- Composed by
- compose_tx.py 2026-10-05: the Legislative Council's chapter files read in document order; verify_tx.py's independent reading (lxml DOM walk) agrees character for character
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