BOND OF FOREIGN LLOYD'S PLAN.

(a) A bond filed under Section 941.301 must:

(1) be executed by corporate sureties that:

(A) meet the requirements imposed by the department; and

(B) are authorized to engage in guaranty, fidelity, and surety business in this state;

(2) be in a principal amount that equals the minimum amount of net assets of a Lloyd's plan under this subchapter;

(3) be payable to the department;

(4) be conditioned for the payment of all claims arising under insurance policies or contracts:

(A) issued in this state;

(B) issued to residents of this state; or

(C) covering property located in this state; and

(5) be held by the department for the benefit of any person with a valid claim arising under an insurance policy or contract described by Subdivision (4).

(b) The bond must also provide that if a Lloyd's plan with outstanding insurance policies in favor of residents of this state or covering property located in this state becomes insolvent or ceases to engage in the business of insurance in this state, the department, after 10 days' notice to the attorney in fact for the Lloyd's plan or any receiver in charge of the Lloyd's plan's property and affairs, may contract with another insurer engaging in the business of insurance in this state for the assumption of and reinsurance by that insurer of:

(1) all of the Lloyd's plan's insurance risks outstanding in this state; and

(2) all unsatisfied lawful claims outstanding against the Lloyd's plan.

(c) If the department enters into a contract described by Subsection (b) and the attorney general approves the contract as reasonable, the assuming insurer is entitled to recover from the makers of the bond filed under Section 941.301 the amount of the premium or compensation for reinsurance that is specified in the contract.

(d) A bond filed under Section 941.301 binds any additional or substitute underwriters of the Lloyd's plan.