Texas 2011 - 82nd Regular

Texas House Bill HB3086 Compare Versions

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1	1	82R23397 RWG-F
2	2	By: Smithee H.B. No. 3086
3	3	Substitute the following for H.B. No. 3086:
4	4	By: Smithee C.S.H.B. No. 3086
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to credit to certain ceding insurers for reinsurance ceded
10	10	to certain certified assuming insurers.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Section 492.102(a), Insurance Code, is amended
13	13	to read as follows:
14	14	(a) A ceding insurer may be allowed credit for reinsurance
15	15	ceded, as an asset or as a deduction from liability, only if the
16	16	reinsurance is ceded to an assuming insurer that:
17	17	(1) is authorized to engage in the business of
18	18	insurance or reinsurance in this state;
19	19	(2) is accredited as a reinsurer in this state, as
20	20	provided by Section 492.103; [or]
21	21	(3) subject to Subchapter D, maintains, in a qualified
22	22	United States financial institution that has been granted the
23	23	authority to operate with fiduciary powers, a trust fund to pay
24	24	valid claims of:
25	25	(A) the assuming insurer's United States
26	26	policyholders and ceding insurers; and
27	27	(B) the policyholders' and ceding insurers'
28	28	assigns and successors in interest; or
29	29	(4) is determined by the commissioner to meet the
30	30	requirements of Section 492.1035.
31	31	SECTION 2. Subchapter C, Chapter 492, Insurance Code, is
32	32	amended by adding Sections 492.1035, 492.1036, and 492.1037 to read
33	33	as follows:
34	34	Sec. 492.1035. CREDIT FOR CERTAIN CERTIFIED REINSURERS. (a)
35	35	An asset or deduction from liability shall be allowed for
36	36	reinsurance ceded to an assuming insurer that the commissioner
37	37	certifies as a reinsurer and that secures its obligations in
38	38	accordance with the requirements of this section.
39	39	(b) The commissioner may certify an assuming insurer that:
40	40	(1) is domiciled and licensed to transact insurance or
41	41	reinsurance in a qualified jurisdiction under Subsections (e)-(g);
42	42	(2) maintains minimum capital and a surplus in an
43	43	amount the commissioner determines acceptable;
44	44	(3) maintains a financial strength rating from two or
45	45	more rating agencies the commissioner determines are acceptable;
46	46	(4) submits to this state's jurisdiction;
47	47	(5) designates the commissioner as an agent for
48	48	service of process in any action, suit, or proceeding instituted in
49	49	this state;
50	50	(6) provides security for 100 percent of the assuming
51	51	insurer's liabilities for reinsurance ceded by United States ceding
52	52	insurers if the assuming reinsurer resists enforcement of a valid,
53	53	nonappealable United States judgment; and
54	54	(7) satisfies other requirements for certification
55	55	the commissioner determines relevant.
56	56	(c) A ceding insurer or certified reinsurer may apply to the
57	57	commissioner for a waiver from the requirement of Subsection
58	58	(b)(6). The commissioner may enter an order that grants a waiver
59	59	from these requirements if the commissioner determines the waiver
60	60	is appropriate in the interests of ensuring market stability.
61	61	(d) The commissioner may certify a group of insurers,
62	62	including incorporated and individual unincorporated underwriters,
63	63	as a certified reinsurer if, in addition to satisfying requirements
64	64	of Subsection (a):
65	65	(1) the group of insurers satisfies minimum capital
66	66	and surplus requirements in an amount determined by the
67	67	commissioner to provide adequate protection by placing the group
68	68	and its members' capital and surplus equivalents into a joint
69	69	central fund that may be applied to an unsatisfied obligation of the
70	70	group or its members;
71	71	(2) each incorporated member of the group of insurers
72	72	is not engaged as a member of the group in business other than
73	73	underwriting and is subject to the same level of regulation and
74	74	solvency control by the group's domiciliary regulator as the
75	75	unincorporated members; and
76	76	(3) the group of insurers provides to the
77	77	commissioner, not later than the 90th day after the date the group's
78	78	financial statements are due to be filed with the group's
79	79	domiciliary regulator, the annual certification of solvency of
80	80	each underwriter member by the group's domiciliary regulator, or if
81	81	a certification is unavailable, financial statements prepared by
82	82	independent public accountants of each underwriter member of the
83	83	group.
84	84	(e) The commissioner shall publish a list of qualified
85	85	jurisdictions with respect to which an assuming insurer licensed
86	86	and domiciled in the jurisdiction may be considered for
87	87	certification by the commissioner as a certified reinsurer.
88	88	(f) To determine whether a jurisdiction of an assuming
89	89	insurer located outside of the United States may be eligible to be a
90	90	qualified jurisdiction, the commissioner must:
91	91	(1) evaluate the appropriateness and effectiveness of
92	92	the reinsurance supervisory system of the jurisdiction, both
93	93	initially and on an ongoing basis; and
94	94	(2) consider whether that jurisdiction imposes credit
95	95	for reinsurance requirements on reinsurers licensed and domiciled
96	96	in the United States that are at least as favorable as those
97	97	provided by this section.
98	98	(g) A qualified jurisdiction must share information and
99	99	cooperate with the commissioner with respect to all certified
100	100	reinsurers doing business within the jurisdiction. Jurisdictions
101	101	within the United States that meet the requirement for
102	102	accreditation under the National Association of Insurance
103	103	Commissioners' financial standards and accreditation program shall
104	104	be recognized as qualified jurisdictions. A jurisdiction may not
105	105	be recognized as a qualified jurisdiction if the commissioner has
106	106	determined that the jurisdiction does not adequately and promptly
107	107	enforce final United States judgments and arbitration awards. The
108	108	commissioner may also:
109	109	(1) defer to a list of qualified jurisdictions
110	110	published by the National Association of Insurance Commissioners;
111	111	and
112	112	(2) suspend a reinsurer's certification indefinitely,
113	113	if a certified reinsurer's domiciliary jurisdiction ceases to be a
114	114	qualified jurisdiction.
115	115	(h) The commissioner shall develop a rating system and
116	116	assign a rating to each certified reinsurer. The commissioner
117	117	shall publish a list of each certified reinsurer and the certified
118	118	reinsurer's rating. In rating certified reinsurers, the
119	119	commissioner shall consider:
120	120	(1) the certified reinsurer's financial strength
121	121	ratings assigned by rating agencies recognized by the commissioner;
122	122	and
123	123	(2) the reinsurer's reputation for promptly paying
124	124	claims to United States ceding insurers, including cases in which
125	125	the reinsurer has resisted the enforcement of a final United States
126	126	judgment.
127	127	(i) The commissioner shall determine the security a
128	128	certified reinsurer must maintain on obligations assumed from
129	129	ceding insurers domiciled in this state at a level consistent with
130	130	its rating.
131	131	(j) A domestic ceding insurer may qualify for full financial
132	132	statement credit for reinsurance ceded to a certified reinsurer if
133	133	the certified reinsurer maintains security:
134	134	(1) in a form acceptable to the commissioner and
135	135	consistent with the insurance laws of this state; or
136	136	(2) in a trust in accordance with Subchapter D, except
137	137	as otherwise provided.
138	138	(k) If a certified reinsurer maintains a trust under
139	139	Subchapter D to secure its obligations, the certified reinsurer
140	140	shall maintain separate trust accounts for its obligations incurred
141	141	under reinsurance agreements issued or renewed as a certified
142	142	reinsurer with reduced security as permitted by this section or
143	143	comparable laws of other United States jurisdictions and for its
144	144	obligations subject to Subchapter D.
145	145	(l) The minimum trust surplus requirements in Subchapter D
146	146	are not applicable to a multibeneficiary trust maintained by a
147	147	certified reinsurer for the purpose of securing obligations
148	148	incurred under this section.
149	149	(m) If a certified reinsurer insufficiently secures
150	150	obligations incurred under this section, the commissioner:
151	151	(1) shall reduce the allowable credit by an amount
152	152	proportionate to the deficiency; and
153	153	(2) may impose further reductions in allowable credit
154	154	if the commissioner determines that there is a material risk the
155	155	certified reinsurer will not pay its obligations in full when due.
156	156	(n) The commissioner shall require a certified reinsurer
157	157	whose certification has been terminated under this section to
158	158	secure 100 percent of its obligations. This subsection does not
159	159	apply to a certified reinsurer with inactive status or to a
160	160	reinsurer whose certification has been suspended, even if the
161	161	commissioner assigns a higher rating to that reinsurer.
162	162	(o) If a jurisdiction accredited by the National
163	163	Association of Insurance Commissioners certifies an applicant for
164	164	certification as a reinsurer, the commissioner:
165	165	(1) may defer to that jurisdiction's certification and
166	166	the rating assigned by that jurisdiction; and
167	167	(2) shall consider the assuming insurer a certified
168	168	reinsurer.
169	169	(p) A certified reinsurer that ceases to assume new business
170	170	in this state may request to maintain its certification in inactive
171	171	status in order to continue to qualify for a reduction in security
172	172	for its in-force business. An inactive certified reinsurer shall
173	173	continue to comply with all applicable requirements of this section
174	174	and the commissioner shall assign an applicable rating that
175	175	describes why the reinsurer is not assuming new business.
176	176	Sec. 492.1036. SUSPENSION OR REVOCATION OF ACCREDITATION OR
177	177	CERTIFICATION. The commissioner may suspend or revoke a
178	178	reinsurer's accreditation or certification if an accredited or
179	179	certified reinsurer ceases to meet the requirements for
180	180	accreditation or certification. The commissioner must give the
181	181	reinsurer notice and opportunity for hearing. The suspension or
182	182	revocation may not take effect until after the commissioner's order
183	183	on the hearing, unless:
184	184	(1) the reinsurer waives its right to a hearing;
185	185	(2) the suspension or revocation is based on a
186	186	regulatory action in the reinsurer's domiciliary jurisdiction or
187	187	United States port of entry, or on the voluntary surrender or
188	188	termination of the reinsurer's eligibility to transact insurance or
189	189	reinsurance business in its domiciliary jurisdiction or in its
190	190	United States port of entry; or
191	191	(3) the commissioner determines that an emergency
192	192	requires immediate action and a court of competent jurisdiction has
193	193	not stayed the commissioner's action.
194	194	Sec. 492.1037. CONTINUED CREDIT FOLLOWING CHANGE OR
195	195	WITHDRAWAL IN RATING, ACCREDITATION, OR CERTIFICATION.
196	196	Notwithstanding the change or withdrawal of a reinsurer's rating,
197	197	accreditation, or certification, on request by the ceding insurer,
198	198	the commissioner may, in the interest of ensuring market stability
199	199	and the solvency of the ceding insurer, authorize the ceding
200	200	insurer to continue to take credit for all or part of the
201	201	recoverable reinsurance that relates to the change or withdrawal
202	202	for a specified period following the change or withdrawal.
203	203	SECTION 3. Section 492.151, Insurance Code, is amended to
204	204	read as follows:
205	205	Sec. 492.151. APPLICABILITY OF SUBCHAPTER. This subchapter
206	206	applies to:
207	207	(1) a trust that is used to qualify for a reinsurance
208	208	credit under Section 492.102(a)(3) and as described by Sections
209	209	492.1035(j) and (k); and
210	210	(2) [to] the assuming insurer that maintains the trust
211	211	fund.
212	212	SECTION 4. Section 492.152, Insurance Code, is amended by
213	213	adding Subsection (c) to read as follows:
214	214	(c) The commissioner may, after assessing the risk and
215	215	determining that the new required surplus level is adequate for the
216	216	protection of United States ceding insurers, policyholders, and
217	217	claimants in light of reasonably foreseeable adverse loss
218	218	development, authorize a reduction in the required trusteed surplus
219	219	under Subsection (a)(2) if the assuming insurer has discontinued
220	220	underwriting new business secured by the trust for more than three
221	221	years. The risk assessment may involve an actuarial review,
222	222	including an independent analysis of reserves and cash flows, and
223	223	must consider all material risk factors, including, if applicable,
224	224	the lines of business involved, the stability of the incurred loss
225	225	estimates, and the effect of the surplus requirements on the
226	226	assuming insurer's liquidity or solvency. The minimum required
227	227	trusteed surplus may not be reduced to an amount less than 30
228	228	percent of the assuming insurer's liabilities attributable to
229	229	reinsurance ceded by United States ceding insurers.
230	230	SECTION 5. Section 492.155(b), Insurance Code, is amended
231	231	to read as follows:
232	232	(b) To enable the commissioner to determine the sufficiency
233	233	of the trust fund under Section 492.102(a)(3) and for purposes of
234	234	Sections 492.1035(j) and (k), the assuming insurer shall report to
235	235	the department not later than March 1 of each year information
236	236	substantially the same as the information required to be reported
237	237	by an authorized insurer on the National Association of Insurance
238	238	Commissioners' Annual Statement form.
239	239	SECTION 6. Section 492.156(a), Insurance Code, is amended
240	240	to read as follows:
241	241	(a) A ceding insurer may not be allowed credit under Section
242	242	492.102(a)(3) for reinsurance ceded to an assuming insurer that is
243	243	not authorized, [or] accredited, or certified to engage in the
244	244	business of insurance or reinsurance in this state unless the
245	245	assuming insurer agrees in the reinsurance contract:
246	246	(1) that, if the assuming insurer fails to perform the
247	247	assuming insurer's obligations under the reinsurance contract, the
248	248	assuming insurer, at the request of the ceding insurer, will:
249	249	(A) submit to the jurisdiction of a court in any
250	250	state of the United States;
251	251	(B) comply with all requirements necessary to
252	252	give the court jurisdiction; and
253	253	(C) abide by the final decision of that court or,
254	254	if the court's decision is appealed, of the appellate court; and
255	255	(2) to designate the commissioner or an attorney as an
256	256	agent for service of process in any action, suit, or proceeding
257	257	instituted by or on behalf of the ceding insurer.
258	258	SECTION 7. Section 493.102(a), Insurance Code, is amended
259	259	to read as follows:
260	260	(a) A ceding insurer may be allowed credit for reinsurance
261	261	ceded, as an asset or as a deduction from liability, only if the
262	262	reinsurance is ceded to an assuming insurer that:
263	263	(1) is authorized to engage in the business of
264	264	insurance or reinsurance in this state;
265	265	(2) is accredited as a reinsurer in this state, as
266	266	provided by Section 493.103; [or]
267	267	(3) subject to Subchapter D, maintains, in a qualified
268	268	United States financial institution that has been granted the
269	269	authority to operate with fiduciary powers, a trust fund to pay
270	270	valid claims of:
271	271	(A) the assuming insurer's United States
272	272	policyholders and ceding insurers; and
273	273	(B) the policyholders' and ceding insurers'
274	274	assigns and successors in interest; or
275	275	(4) the commissioner determines meets the
276	276	requirements of Section 493.1035.
277	277	SECTION 8. Subchapter C, Chapter 493, Insurance Code, is
278	278	amended by adding Sections 493.1035, 493.1036, and 493.1037 to read
279	279	as follows:
280	280	Sec. 493.1035. CREDIT FOR CERTAIN CERTIFIED REINSURERS.
281	281	(a) An asset or deduction from liability shall be allowed for
282	282	reinsurance ceded to an assuming insurer that the commissioner
283	283	certifies as a reinsurer and that secures its obligations in
284	284	accordance with the requirements of this section.
285	285	(b) The commissioner may certify an assuming insurer that:
286	286	(1) is domiciled and licensed to transact insurance or
287	287	reinsurance in a qualified jurisdiction under Subsections (e)-(g);
288	288	(2) maintains minimum capital and a surplus in an
289	289	amount the commissioner determines acceptable;
290	290	(3) maintains a financial strength rating from two or
291	291	more rating agencies the commissioner determines are acceptable;
292	292	(4) submits to this state's jurisdiction;
293	293	(5) designates the commissioner as an agent for
294	294	service of process in any action, suit, or proceeding instituted in
295	295	this state;
296	296	(6) provides security for 100 percent of the assuming
297	297	insurer's liabilities for reinsurance ceded by United States ceding
298	298	insurers if the assuming reinsurer resists enforcement of a valid,
299	299	nonappealable United States judgment; and
300	300	(7) satisfies other requirements for certification
301	301	the commissioner determines relevant.
302	302	(c) A ceding insurer or certified reinsurer may apply to the
303	303	commissioner for a waiver from the requirement of Subsection
304	304	(b)(6). The commissioner may enter an order that grants a waiver
305	305	from these requirements if the commissioner determines the waiver
306	306	is appropriate in the interests of ensuring market stability.
307	307	(d) The commissioner may certify a group of insurers,
308	308	including incorporated and individual unincorporated underwriters,
309	309	as a certified reinsurer if, in addition to satisfying requirements
310	310	of Subsection (a):
311	311	(1) the group of insurers satisfies minimum capital
312	312	and surplus requirements in an amount determined by the
313	313	commissioner to provide adequate protection by placing the group
314	314	and its members' capital and surplus equivalents into a joint
315	315	central fund that may be applied to an unsatisfied obligation of the
316	316	group or its members;
317	317	(2) each incorporated member of the group of insurers
318	318	is not engaged as a member of the group in business other than
319	319	underwriting and is subject to the same level of regulation and
320	320	solvency control by the group's domiciliary regulator as the
321	321	unincorporated members; and
322	322	(3) the group of insurers provides to the
323	323	commissioner, not later than the 90th day after the date the group's
324	324	financial statements are due to be filed with the group's
325	325	domiciliary regulator, the annual certification of solvency of
326	326	each underwriter member by the group's domiciliary regulator, or if
327	327	a certification is unavailable, financial statements prepared by
328	328	independent public accountants of each underwriter member of the
329	329	group.
330	330	(e) The commissioner shall publish a list of qualified
331	331	jurisdictions with respect to which an assuming insurer licensed
332	332	and domiciled in the jurisdiction may be considered for
333	333	certification by the commissioner as a certified reinsurer.
334	334	(f) To determine whether a jurisdiction of an assuming
335	335	insurer located outside of the United States may be eligible to be a
336	336	qualified jurisdiction, the commissioner must:
337	337	(1) evaluate the appropriateness and effectiveness of
338	338	the reinsurance supervisory system of the jurisdiction, both
339	339	initially and on an ongoing basis; and
340	340	(2) consider whether that jurisdiction imposes credit
341	341	for reinsurance requirements on reinsurers licensed and domiciled
342	342	in the United States that are at least as favorable as those
343	343	provided by this section.
344	344	(g) A qualified jurisdiction must share information and
345	345	cooperate with the commissioner with respect to all certified
346	346	reinsurers doing business within the jurisdiction. Jurisdictions
347	347	within the United States that meet the requirement for
348	348	accreditation under the National Association of Insurance
349	349	Commissioners' financial standards and accreditation program shall
350	350	be recognized as qualified jurisdictions. A jurisdiction may not
351	351	be recognized as a qualified jurisdiction if the commissioner has
352	352	determined that the jurisdiction does not adequately and promptly
353	353	enforce final United States judgments and arbitration awards. The
354	354	commissioner may also:
355	355	(1) defer to a list of qualified jurisdictions
356	356	published by the National Association of Insurance Commissioners;
357	357	and
358	358	(2) suspend a reinsurer's certification indefinitely,
359	359	if a certified reinsurer's domiciliary jurisdiction ceases to be a
360	360	qualified jurisdiction.
361	361	(h) The commissioner shall develop a rating system and
362	362	assign a rating to each certified reinsurer. The commissioner
363	363	shall publish a list of each certified reinsurer and the certified
364	364	reinsurer's rating. In rating certified reinsurers, the
365	365	commissioner shall consider:
366	366	(1) the certified reinsurer's financial strength
367	367	ratings assigned by rating agencies recognized by the commissioner;
368	368	and
369	369	(2) the reinsurer's reputation for promptly paying
370	370	claims to United States ceding insurers, including cases in which
371	371	the reinsurer has resisted the enforcement of a final United States
372	372	judgment.
373	373	(i) The commissioner shall determine the security a
374	374	certified reinsurer must maintain on obligations assumed from
375	375	ceding insurers domiciled in this state at a level consistent with
376	376	its rating.
377	377	(j) A domestic ceding insurer may qualify for full financial
378	378	statement credit for reinsurance ceded to a certified reinsurer if
379	379	the certified reinsurer maintains security:
380	380	(1) in a form acceptable to the commissioner and
381	381	consistent with the insurance laws of this state; or
382	382	(2) in a trust in accordance with Subchapter D, except
383	383	as otherwise provided.
384	384	(k) If a certified reinsurer maintains a trust under
385	385	Subchapter D to secure its obligations, the certified reinsurer
386	386	shall maintain separate trust accounts for its obligations incurred
387	387	under reinsurance agreements issued or renewed as a certified
388	388	reinsurer with reduced security as permitted by this section or
389	389	comparable laws of other United States jurisdictions and for its
390	390	obligations subject to Subchapter D.
391	391	(l) The minimum trust surplus requirements in Subchapter D
392	392	are not applicable to a multibeneficiary trust maintained by a
393	393	certified reinsurer for the purpose of securing obligations
394	394	incurred under this section.
395	395	(m) If a certified reinsurer insufficiently secures
396	396	obligations incurred under this section, the commissioner:
397	397	(1) shall reduce the allowable credit by an amount
398	398	proportionate to the deficiency; and
399	399	(2) may impose further reductions in allowable credit
400	400	if the commissioner determines that there is a material risk the
401	401	certified reinsurer will not pay its obligations in full when due.
402	402	(n) The commissioner shall require a certified reinsurer
403	403	whose certification has been terminated under this section to
404	404	secure 100 percent of its obligations. This subsection does not
405	405	apply to a certified reinsurer with inactive status or to a
406	406	reinsurer whose certification has been suspended, even if the
407	407	commissioner assigns a higher rating to that reinsurer.
408	408	(o) If a jurisdiction accredited by the National
409	409	Association of Insurance Commissioners certifies an applicant for
410	410	certification as a reinsurer, the commissioner:
411	411	(1) may defer to that jurisdiction's certification and
412	412	the rating assigned by that jurisdiction; and
413	413	(2) shall consider the assuming insurer a certified
414	414	reinsurer.
415	415	(p) A certified reinsurer that ceases to assume new business
416	416	in this state may request to maintain its certification in inactive
417	417	status in order to continue to qualify for a reduction in security
418	418	for its in-force business. An inactive certified reinsurer shall
419	419	continue to comply with all applicable requirements of this section
420	420	and the commissioner shall assign an applicable rating that
421	421	describes why the reinsurer is not assuming new business.
422	422	Sec. 493.1036. SUSPENSION OR REVOCATION OF ACCREDITATION OR
423	423	CERTIFICATION. The commissioner may suspend or revoke a
424	424	reinsurer's accreditation or certification if an accredited or
425	425	certified reinsurer ceases to meet the requirements for
426	426	accreditation or certification. The commissioner must give the
427	427	reinsurer notice and opportunity for hearing. The suspension or
428	428	revocation may not take effect until after the commissioner's order
429	429	on the hearing, unless:
430	430	(1) the reinsurer waives its right to a hearing;
431	431	(2) the suspension or revocation is based on a
432	432	regulatory action in the reinsurer's domiciliary jurisdiction or
433	433	United States port of entry, or on the voluntary surrender or
434	434	termination of the reinsurer's eligibility to transact insurance or
435	435	reinsurance business in its domiciliary jurisdiction or in its
436	436	United States port of entry; or
437	437	(3) the commissioner determines that an emergency
438	438	requires immediate action and a court of competent jurisdiction has
439	439	not stayed the commissioner's action.
440	440	Sec. 493.1037. CONTINUED CREDIT FOLLOWING CHANGE OR
441	441	WITHDRAWAL IN RATING, ACCREDITATION, OR CERTIFICATION.
442	442	Notwithstanding the change or withdrawal of a reinsurer's rating,
443	443	accreditation, or certification, on request by the ceding insurer,
444	444	the commissioner may, in the interest of ensuring market stability
445	445	and the solvency of the ceding insurer, authorize the ceding
446	446	insurer to continue to take credit for all or part of the
447	447	recoverable reinsurance that relates to the change or withdrawal
448	448	for a specified period following the change or withdrawal.
449	449	SECTION 9. Section 493.151, Insurance Code, is amended to
450	450	read as follows:
451	451	Sec. 493.151. APPLICABILITY OF SUBCHAPTER. This subchapter
452	452	applies to:
453	453	(1) a trust that is used to qualify for a reinsurance
454	454	credit under Section 493.102(a)(3) and as described by Sections
455	455	493.1035(j) and (k); and
456	456	(2) [to] the assuming insurer that maintains the trust
457	457	fund.
458	458	SECTION 10. Section 493.152, Insurance Code, is amended by
459	459	adding Subsection (d) to read as follows:
460	460	(d) The commissioner may, after assessing the risk and
461	461	determining that the new required surplus level is adequate for the
462	462	protection of United States ceding insurers, policyholders, and
463	463	claimants in light of reasonably foreseeable adverse loss
464	464	development, authorize a reduction in the required trusteed surplus
465	465	under Subsection (a)(2) if the assuming insurer has discontinued
466	466	underwriting new business secured by the trust for more than three
467	467	years. The risk assessment may involve an actuarial review,
468	468	including an independent analysis of reserves and cash flows, and
469	469	must consider all material risk factors, including, if applicable,
470	470	the lines of business involved, the stability of the incurred loss
471	471	estimates, and the effect of the surplus requirements on the
472	472	assuming insurer's liquidity or solvency. The minimum required
473	473	trusteed surplus may not be reduced to an amount less than 30
474	474	percent of the assuming insurer's liabilities attributable to
475	475	reinsurance ceded by United States ceding insurers.
476	476	SECTION 11. Section 493.155(b), Insurance Code, is amended
477	477	to read as follows:
478	478	(b) To enable the commissioner to determine the sufficiency
479	479	of the trust fund under Section 493.102(a)(3) and for purposes of
480	480	Sections 493.1035(j) and (k), the assuming insurer shall report to
481	481	the department not later than March 1 of each year information
482	482	substantially the same as the information required to be reported
483	483	by an authorized insurer on the National Association of Insurance
484	484	Commissioners' Annual Statement form.
485	485	SECTION 12. Section 493.156(a), Insurance Code, is amended
486	486	to read as follows:
487	487	(a) A ceding insurer may not be allowed credit under Section
488	488	493.102(a)(3) for reinsurance ceded to an assuming insurer that is
489	489	not authorized, [or] accredited, or certified to engage in the
490	490	business of insurance or reinsurance in this state unless the
491	491	assuming insurer agrees in the reinsurance contract:
492	492	(1) that, if the assuming insurer fails to perform the
493	493	assuming insurer's obligations under the reinsurance contract, the
494	494	assuming insurer, at the request of the ceding insurer, will:
495	495	(A) submit to the jurisdiction of a court in any
496	496	state of the United States;
497	497	(B) comply with all requirements necessary to
498	498	give the court jurisdiction; and
499	499	(C) abide by the final decision of that court or,
500	500	if the court's decision is appealed, of the appellate court; and
501	501	(2) to designate the commissioner or an attorney as an
502	502	agent for service of process in any action, suit, or proceeding
503	503	instituted by or on behalf of the ceding insurer.
504	504	SECTION 13. This Act applies only to a reinsurance contract
505	505	that is entered into or renewed on or after January 1, 2012. A
506	506	reinsurance contract that is entered into or renewed before January
507	507	1, 2012, is governed by the law as it existed immediately before the
508	508	effective date of this Act, and that law is continued in effect for
509	509	that purpose.
510	510	SECTION 14. This Act takes effect September 1, 2011.