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Texas Statutes (Last Updated: January 4, 2014) |
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INSURANCE CODE |
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Title 4. REGULATION OF SOLVENCY |
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Subtitle B. RESERVES AND INVESTMENTS |
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Chapter 424. INVESTMENTS FOR CERTAIN INSURERS |
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Subchapter E. RISK CONTROL TRANSACTIONS |
Sec. 424.214. LIMITATION ON SALE OF PUT OPTION ON ASSETS
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(a) If an income generation transaction is a sale of a put option on assets, the insurer must:
(1) during the entire period the option is outstanding, hold sufficient cash, cash equivalents, or interests in a short-term investment pool to purchase the underlying assets on exercise of the option; and
(2) have the ability to hold the underlying assets in the insurer's portfolio.
(b) If during the entire period the put option is outstanding the total market value of all put options sold by the insurer exceeds two percent of the insurer's assets, the insurer shall set aside, under a custodial or escrow agreement, cash or cash equivalents that have a market value equal to the amount of the insurer's put option obligations in excess of two percent of the insurer's assets.