Texas Insurance Code

§ 424.205 — DERIVATIVE USE PLAN

IN § 424.205Title 4. REGULATION OF SOLVENCY · Part B. RESERVES AND INVESTMENTS · Ch. 424. INVESTMENTS FOR CERTAIN INSURERS · Art. E. RISK CONTROL TRANSACTIONS

Statute text

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(a)Before an insurer enters into a derivative transaction, the insurer's board of directors must approve a derivative use plan as part of the insurer's investment plan otherwise required by law.

(b)The derivative use plan must:

(1)describe investment objectives and risk constraints, such as counterparty exposure amounts;

(2)define permissible transactions, identifying the risks to be hedged and the assets or liabilities being replicated; and

(3)require compliance with the insurer's internal control procedures established under Section 424.206.

Legislative history

Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.