Texas 2019 - 86th Regular

Texas House Bill HB2694 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	H.B. No. 2694
	1	+	By: Lucio III (Senate Sponsor - Creighton) H.B. No. 2694
	2	+	(In the Senate - Received from the House April 29, 2019;
	3	+	April 29, 2019, read first time and referred to Committee on
	4	+	Business & Commerce; May 9, 2019, reported adversely, with
	5	+	favorable Committee Substitute by the following vote: Yeas 8,
	6	+	Nays 0; May 9, 2019, sent to printer.)
	7	+	Click here to see the committee vote
	8	+	COMMITTEE SUBSTITUTE FOR H.B. No. 2694 By: Creighton
2	9
3	10
	11	+	A BILL TO BE ENTITLED
4	12		AN ACT
5	13		relating to the authority of certain insurers to make investments
6	14		in bond exchange-traded funds.
7	15		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	16		SECTION 1. Subchapter B, Chapter 424, Insurance Code, is
9	17		amended by adding Section 424.075 to read as follows:
10	18		Sec. 424.075. AUTHORIZED INVESTMENTS: BOND EXCHANGE-TRADED
11	19		FUNDS. (a) An insurer may invest the insurer's funds in excess of
12	20		minimum capital and surplus in shares of a bond exchange-traded
13	21		fund registered under the Investment Company Act of 1940 (15 U.S.C.
14	22		Section 80a-1 et seq.), as amended, if:
15	23		(1) the exchange-traded fund is solvent and reported
16	24		at least $100 million of net assets in the exchange-traded fund's
17	25		latest annual or more recent certified audited financial statement;
18	26		(2) the securities valuation office has designated the
19	27		exchange-traded fund as meeting the criteria to be placed on the
20	28		list promulgated by the securities valuation office of
21		-	exchange-traded funds eligible for reporting as a ~~long-term bond in~~
22		-	~~the Purposes and Procedures Manual of the securities valuation~~
23		-	~~office or a successor publication~~; and
	29	+	exchange-traded funds eligible for reporting as a statutory
	30	+	long-term bond obligation on Internal Revenue Service Form 1040,
	31	+	Schedule D; and
24	32		(3) the amount of the insurer's investment in the
25	33		exchange-traded fund does not exceed 15 percent of the insurer's
26	34		capital and surplus.
27	35		(b) This section does not authorize an insurer to invest in
28	36		a bond exchange-traded fund that has:
29	37		(1) embedded structural features designed to deliver
30	38		performance that does not track the full unlevered and positive
31	39		return of the underlying index or exposure, including a leveraged
32	40		or inverse exchange-traded fund; or
33	41		(2) an expense ratio in excess of 100 basis points.
34	42		(c) An insurer may deposit with the department shares of a
35	43		bond exchange-traded fund described by Subsection (a) as a
36	44		statutory deposit if state law requires a statutory deposit from
37	45		the insurer.
38	46		SECTION 2. Subchapter C, Chapter 425, Insurance Code, is
39	47		amended by adding Section 425.1231 to read as follows:
40	48		Sec. 425.1231. AUTHORIZED INVESTMENTS: BOND
41	49		EXCHANGE-TRADED FUNDS. (a) An insurance company may invest the
42	50		insurer's funds in excess of minimum capital and surplus in shares
43	51		of a bond exchange-traded fund registered under the Investment
44	52		Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.), as amended,
45	53		if:
46	54		(1) the exchange-traded fund is solvent and reported
47	55		at least $100 million of net assets in the exchange-traded fund's
48	56		latest annual or more recent certified audited financial statement;
49	57		(2) the securities valuation office has designated the
50	58		exchange-traded fund as meeting the criteria to be placed on the
51	59		list promulgated by the securities valuation office of
52		-	exchange-traded funds eligible for reporting as a ~~long-term bond in~~
53		-	~~the Purposes and Procedures Manual of the securities valuation~~
54		-	~~office or a successor publication~~; and
	60	+	exchange-traded funds eligible for reporting as a statutory
	61	+	long-term bond obligation on Internal Revenue Service Form 1040,
	62	+	Schedule D; and
55	63		(3) the amount of the insurance company's investment
56	64		in the exchange-traded fund does not exceed 15 percent of the
57	65		insurance company's capital and surplus.
58	66		(b) This section does not authorize an insurance company to
59	67		invest in a bond exchange-traded fund that has:
60	68		(1) embedded structural features designed to deliver
61	69		performance that does not track the full unlevered and positive
62	70		return of the underlying index or exposure, including a leveraged
63	71		or inverse exchange-traded fund; or
64	72		(2) an expense ratio in excess of 100 basis points.
65	73		(c) A bond exchange-traded fund described by Subsection (a)
66	74		shall be considered a business entity for purposes of Section
67	75		425.110.
68	76		(d) An insurance company may deposit with the department
69	77		shares of a bond exchange-traded fund described by Subsection (a)
70	78		as a statutory deposit if state law requires a statutory deposit
71	79		from the insurance company.
72		-	SECTION 3.
73		-	Subchapter D, Chapter 425, Insurance Code, is
74		-	amended by adding Section 425.2061 to read as follows:
75		-	Sec. 425.2061. AUTHORIZED INVESTMENTS FOR ALL FUNDS: BOND
76		-	EXCHANGE-TRADED FUNDS. Subject to Section 425.157(b), an insurer
77		-	may invest any of the insurer's funds and accumulations in a bond
78		-	exchange-traded fund described by Section 425.1231(a).
79		-	SECTION 4. This Act takes effect September 1, 2019.
80		-	______________________________ ______________________________
81		-	President of the Senate Speaker of the House
82		-	I certify that H.B. No. 2694 was passed by the House on April
83		-	26, 2019, by the following vote: Yeas 139, Nays 0, 2 present, not
84		-	voting; and that the House concurred in Senate amendments to H.B.
85		-	No. 2694 on May 22, 2019, by the following vote: Yeas 144, Nays 0,
86		-	1 present, not voting.
87		-	______________________________
88		-	Chief Clerk of the House
89		-	I certify that H.B. No. 2694 was passed by the Senate, with
90		-	amendments, on May 14, 2019, by the following vote: Yeas 31, Nays
91		-	0.
92		-	______________________________
93		-	Secretary of the Senate
94		-	APPROVED: __________________
95		-	Date
96		-	__________________
97		-	Governor
	80	+	SECTION 3. This Act takes effect September 1, 2019.
	81	+	* * * * *