Texas Insurance Code

§ 424.215 — LIMITATION ON SALE OF CALL OPTION ON DERIVATIVE INSTRUMENT

IN § 424.215Title 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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If an income generation transaction is a sale of a call option on a derivative instrument, including a swaption, the insurer must:

(1)during the entire period the call option is outstanding, hold, or have a currently exercisable right to acquire, assets generating the cash flow necessary to make any payment for which the insurer is liable under the underlying derivative instrument; and

(2)have the ability to enter into the underlying derivative transaction for the insurer's portfolio.

Legislative history

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