Texas Insurance Code

§ 425.126 — RISK CONTROL TRANSACTIONS: DERIVATIVE USE PLAN

IN § 425.126Title 4. REGULATION OF SOLVENCY · Part B. RESERVES AND INVESTMENTS · Ch. 425. RESERVES AND INVESTMENTS FOR LIFE INSURANCE · Art. C. AUTHORIZED INVESTMENTS AND TRANSACTIONS FOR CAPITAL STOCK LIFE, HEALTH, AND ACCIDENT INSURERS

Statute text

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(a)Before an insurance company enters into a derivative transaction, the company's board of directors must approve a derivative use plan as part of the investment plan required by Section 425.105.

(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 or the assets or liabilities being replicated; and

(3)require compliance with internal control procedures.

Legislative history

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