CHAPTER 425. RESERVES AND INVESTMENTS FOR LIFE INSURANCE COMPANIES AND RELATED ENTITIES
INSURANCE CODE
TITLE 4. REGULATION OF SOLVENCY
SUBTITLE B. RESERVES AND INVESTMENTS
CHAPTER 425. RESERVES AND INVESTMENTS FOR LIFE INSURANCE
COMPANIES AND RELATED ENTITIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 425.001. SECURITIES IN AMOUNT OF RESERVES REQUIRED. The
commissioner, after determining the amount of the reserves
required on all of a life insurance company's policies in force,
shall ensure that the company has at least that amount in
securities of the class and character required by the law of this
state, after all debts and claims against the company and the
minimum capital required by Chapter 841 or 982, as applicable,
have been provided for.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.002. CERTAIN INSURERS: DEPOSIT OF SECURITIES, MONEY,
OR PROPERTY IN AMOUNT OF LEGAL RESERVES. (a) Except as provided
by Subsection (b), a life insurance company incorporated under
the laws of this state may deposit with the department, for the
common benefit of all the holders of the company's policies and
annuity contracts and in an amount equal to the legal reserve on
all the company's outstanding policies and contracts in force,
securities of the character in which the law of this state
permits the company to invest, or against which the law of this
state permits the company to loan, the company's capital,
surplus, or reserves.
(b) A life insurance company may not make a new deposit of
securities after August 28, 1961, except to the extent expressly
required by Section 425.003.
(c) For purposes of this section, securities may be physically
delivered to the department without being accompanied by a
written transfer of a lien securing the securities. A life
insurance company may deposit registered or unregistered United
States government securities under this section.
(d) A life insurance company may deposit lawful money of the
United States instead of all or part of the securities described
by Subsection (a). A company may, for the purposes of the
deposit described by Subsection (a), convey to the department in
trust the real property in which any part of the company's
reserve is lawfully invested. If the company conveys the
property, the department shall hold the title to the property in
trust until the company deposits with the department securities
to take the place of the property, at which time the department
shall reconvey the property to the company.
(e) The department may have any securities or real property
appraised and valued before the securities or real property may
be deposited with or conveyed to the department under this
section. The life insurance company shall pay the reasonable
expense of the appraisal or valuation.
(f) For purposes of state, county, and municipal taxation, the
situs of the deposited securities is the municipality and county
in which the life insurance company's charter requires the
principal business office of the company making the deposit to be
located.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.003. CERTAIN INSURERS: REQUIRED DEPOSITS OF
SECURITIES; ADDITIONAL DEPOSITS AND WITHDRAWALS. (a) A life
insurance company that, before August 28, 1961, issued or assumed
the obligations of policies or annuity contracts that were
registered as provided by Article 3.18, as that article existed
before August 28, 1961, shall have on deposit with the department
securities of the character described by Section 425.002 in an
amount equal to or greater than the aggregate net value of the
company's outstanding registered policies and annuity contracts
in force.
(b) To comply with Subsection (a), a life insurance company
shall periodically make additional deposits of securities in
amounts of not less than $5,000. A company whose deposits exceed
the aggregate net value of the company's outstanding registered
policies and annuity contracts in force may periodically withdraw
the excess in amounts of not less than $5,000. A company may at
any time withdraw any of the company's deposited securities by
depositing in their place securities of equal value to the
securities replaced and of a character authorized by this
chapter.
(c) A life insurance company may at any time collect the
interest, rents, and other income from the company's securities
on deposit.
(d) The net value of each policy or annuity contract subject to
this section is the policy's or contract's value according to the
standard prescribed by state law when the first premium on the
policy or contract is paid, minus the amount of any liens the
life insurance company has against the policy or contract not to
exceed the policy's or contract's value.
(e) The department shall hold a life insurance company's
securities on deposit with the department under this section in
trust for the benefit of all holders of the company's outstanding
policies and annuity contracts that were registered as provided
by Article 3.18, as that article existed before August 28, 1961.
(f) A life insurance company that has outstanding registered
policies or annuity contracts in force may not reinsure all or
any part of that outstanding business, other than in a company
authorized to engage in business in this state.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.004. RECORDS OF SECURITIES DEPOSITED WITH DEPARTMENT;
REPORT OF VALUE. Each life insurance company that is required by
Section 425.003 to have securities on deposit with the department
shall:
(1) keep records of:
(A) all of the company's outstanding registered policies and
annuity contracts in force; and
(B) the net value of those policies and contracts; and
(2) not later than the 15th day after the last day of each
calendar month, file with the department a report stating whether
the value of the company's securities on deposit is equal to or
greater than the aggregate net value of the company's registered
policies and annuity contracts outstanding and in force at the
end of the preceding calendar month.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.005. DEPARTMENT DUTIES REGARDING DEPOSITED SECURITIES;
INSURANCE COMPANY ACCESS. (a) The department shall keep
securities deposited by a life insurance company under Sections
425.002 and 425.003 in a secure safe-deposit, fireproof box or
vault in the municipality of, or a municipality near the location
of, the company's home office.
(b) The life insurance company's officers may, in accordance
with reasonable rules adopted by the commissioner, have access to
the securities to detach interest coupons, credit payment, and
exchange securities as provided by Section 425.003.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.006. ADDITIONAL RESERVES REQUIRED: SUBSTANDARD OR
EXTRA HAZARDOUS POLICIES. (a) If a life insurance company
engaged in business under the laws of this state has written or
assumed risks that are substandard or extra hazardous and has
charged more for the policies under which those risks are written
or assumed than the company's published premium rates, the
commissioner shall, in valuing those policies, compute and charge
extra reserves on the policies as necessary because of the extra
hazard assumed and the extra premium charged.
(b) If the commissioner determines, after notice and hearing,
that a particular risk or class of risks is substandard or extra
hazardous, a life insurance company may not, after the
determination is made, write or assume the particular risk or
class of risks unless the company charges an extra premium as
necessary because of the extra hazard assumed.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.007. SUBSCRIPTION TO OR UNDERWRITING PURCHASE OR SALE
OF SECURITIES OR PROPERTY PROHIBITED; CONTROL OF DISPOSITION OF
PROPERTY. (a) A life insurance company organized under the laws
of this state may not:
(1) subscribe to, or participate in, any underwriting of the
purchase or sale of securities or property;
(2) enter into a transaction described by Subdivision (1) for a
purpose described by Subdivision (1);
(3) sell on account of the company jointly with any other
person, firm, or corporation; or
(4) enter into any agreement to withhold from sale any of the
company's property.
(b) The disposition of the life insurance company's property
must be at all times within the control of the company's board of
directors.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.008. AUTHORIZED INVESTMENTS FOR FOREIGN COMPANIES. A
foreign company shall invest the company's assets in:
(1) securities or property of the same classes in which the law
of this state permits a domestic insurance company to invest; or
(2) securities permitted by other law of this state and approved
by the commissioner as being of substantially the same grade as
securities or property in which a domestic insurance company is
permitted to invest.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.009. STUDENT LOANS. A foreign or domestic life
insurance company may make loans to a student enrolled in an
institution of higher education if the principal amount of the
loan is insured by:
(1) the federal government under the Higher Education Act of
1965 (Pub. L. No. 89-329), as amended; or
(2) the Texas Guaranteed Student Loan Corporation under Chapter
57, Education Code.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
SUBCHAPTER B. STANDARD VALUATION LAW
Sec. 425.051. SHORT TITLE. This subchapter may be cited as the
Standard Valuation Law.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.052. DEFINITIONS. (a) In this subchapter, "reserves"
means reserve liabilities.
(b) As used in this subchapter:
(1) an "issue year basis" of valuation means a valuation basis
under which the interest rate used to determine the minimum
valuation standard for the entire duration of the annuity or
guaranteed interest contract is the calendar year valuation
interest rate for the year of issue or year of purchase of the
annuity or guaranteed interest contract; and
(2) a "change in fund basis" of valuation means a valuation
basis under which the interest rate used to determine the minimum
valuation standard applicable to each change in the fund held
under the annuity or guaranteed interest contract is the calendar
year valuation interest rate for the year of the change in the
fund.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.053. ANNUAL VALUATION OF RESERVES. (a) The department
shall annually value or have valued the reserves for all
outstanding life insurance policies and annuity and pure
endowment contracts of each life insurance company engaged in
business in this state. The department may certify the amount of
those reserves, specifying the mortality table or tables, rate or
rates of interest, and methods, including the net level premium
method or another method, used in computing those reserves.
(b) In computing reserves under Subsection (a), the department
may use group methods and approximate averages for fractions of a
year or otherwise.
(c) Instead of valuing the reserves as required by Subsection
(a) for a foreign or alien company, the department may accept any
valuation made by or for the insurance supervisory official of
another state or jurisdiction if:
(1) the valuation complies with the minimum standard provided by
this subchapter; and
(2) the official accepts as sufficient and valid for all legal
purposes a certificate of valuation made by the department that
states the valuation was made in a specified manner according to
which the aggregate reserves would be at least as large as they
would be if computed in the manner prescribed by the law of that
state or jurisdiction.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.054. ACTUARIAL OPINION REQUIRED. (a) For purposes of
this section, "qualified actuary" means:
(1) a qualified actuary, as that term is defined by Section
802.002; or
(2) a person who, before September 1, 1993, satisfied the
requirements of the former State Board of Insurance to submit an
opinion under former Section 2A(a)(1), Article 3.28.
(b) In conjunction with the annual statement and in addition to
other information required by this subchapter, each life
insurance company engaged in business in this state shall
annually submit to the department the opinion of a qualified
actuary as to whether the reserves and related actuarial items
held in support of the policies and contracts specified by
commissioner rule:
(1) are computed appropriately;
(2) are based on assumptions that satisfy contractual
provisions;
(3) are consistent with prior reported amounts; and
(4) comply with applicable laws of this state.
(c) The commissioner by rule shall specify the requirements of
an actuarial opinion under Subsection (b), including any matters
considered necessary to the opinion's scope.
(d) The opinion required by this section must:
(1) apply to all of the life insurance company's business in
force, including individual and group health insurance plans; and
(2) be in the form and contain the substance specified by
commissioner rule and be acceptable to the commissioner.
(e) The commissioner may accept as an opinion required to be
submitted under Subsection (b) by a foreign or alien company the
opinion filed by that company with the insurance supervisory
official of another state if the commissioner determines that the
opinion filed in the other state reasonably meets the
requirements applicable to a company domiciled in this state.
(f) Except as exempted by or as otherwise provided by
commissioner rule, a life insurance company shall include in the
opinion required by Subsection (b) an opinion that states whether
the reserves and related actuarial items held in support of the
policies and contracts specified by commissioner rule adequately
provide for the company's obligations under the policies and
contracts, including the benefits under and expenses associated
with the policies and contracts.
(g) In making the opinion under Subsection (f), the reserves and
related actuarial items are considered in light of the assets
held by the life insurance company with respect to the reserves
and related actuarial items, including:
(1) the investment earnings on the assets; and
(2) the considerations anticipated to be received and retained
under the policies and contracts.
(h) The person who certifies the opinion required by Subsection
(b) must make the opinion required by Subsection (f).
(i) Rules adopted under this section may exempt life insurance
companies that would be exempt from the requirements of this
section under the most recently adopted regulation by the
National Association of Insurance Commissioners entitled "Model
Actuarial Opinion and Memorandum Regulation," or a successor to
that regulation, if the commissioner considers the exemption
appropriate.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.055. SUPPORTING MEMORANDUM FOR ACTUARIAL OPINION. (a)
A memorandum that, in form and substance, complies with the
commissioner's rules shall be prepared to support each actuarial
opinion required by Section 425.054.
(b) The commissioner may engage an actuary or other financial
specialist as defined by commissioner rule if:
(1) a life insurance company does not provide a supporting
memorandum at the request of the commissioner in the time
specified by rule; or
(2) the company provides a supporting memorandum, but the
commissioner determines that the supporting memorandum does not
meet the standards prescribed by rule or is otherwise
unacceptable to the commissioner.
(c) The actuary or other financial specialist under Subsection
(b) shall:
(1) review the actuarial opinion and the basis for the opinion;
and
(2) prepare the supporting memorandum.
(d) A life insurance company is responsible for the expense of
the actuary or other financial specialist under Subsection (b).
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.056. LIMITATION ON LIABILITY FOR ACTUARIAL OPINION.
(a) Except in cases of fraud or wilful misconduct or as provided
by Subsection (b), a person who certifies an opinion under
Section 425.054 is not liable for damages to a person, other than
the life insurance company covered by the opinion, for an act,
error, omission, decision, or other conduct with respect to the
person's opinion.
(b) Subsection (a) does not apply to an administrative penalty
imposed under Chapter 84.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.057. DISCIPLINARY ACTION: COMPANY OR PERSON CERTIFYING
OPINION. A company or person that certifies an opinion under
Section 425.054 and that violates Section 425.054 or 425.055 or
rules adopted under those sections is subject to disciplinary
action under Chapter 82.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.058. VALUATION OF POLICY OR CONTRACT: GENERAL RULE.
(a) Except as otherwise provided by Section 425.059, 425.060,
425.061, 425.062, or 425.063, the minimum standard for the
valuation of an outstanding life insurance policy or annuity or
pure endowment contract issued by a life insurance company on or
after the date on which Chapter 1105 applies to policies issued
by the company, as determined under Section 1105.002(a) or (b),
is the commissioners reserve valuation method described by
Sections 425.064, 425.065, and 425.068, computed using the table
prescribed by this section and with interest at 3-1/2 percent or
at the following rate, if applicable:
(1) in the case of a policy or contract issued on or after June
14, 1973, and before August 29, 1977, other than an annuity or
pure endowment contract, four percent;
(2) in the case of a single premium life insurance policy issued
on or after August 29, 1977, 5-1/2 percent; or
(3) in the case of a life insurance policy issued on or after
August 29, 1977, other than a single premium life insurance
policy, 4-1/2 percent.
(b) Except as provided by Subsection (c), for an ordinary life
insurance policy issued on the standard basis, excluding any
disability or accidental death benefits in the policy, the
applicable table is the Commissioners 1941 Standard Ordinary
Mortality Table, if the policy was issued before the date on
which Section 1105.152 would apply to the policy, as determined
under Section 1105.152(a) or (b), or the Commissioners 1958
Standard Ordinary Mortality Table, if Section 1105.152 applies to
the policy. For a policy that is issued to insure a female risk:
(1) a modified net premium or present value for a policy issued
before August 29, 1977, may be computed according to an age not
more than three years younger than the insured's actual age; and
(2) a modified net premium or present value for a policy issued
on or after August 29, 1977, may be computed according to an age
not more than six years younger than the insured's actual age.
(c) For an ordinary life insurance policy issued on the standard
basis, excluding any disability or accidental death benefits in
the policy, and to which Subchapter B, Chapter 1105, applies, the
applicable table is:
(1) the Commissioners 1980 Standard Ordinary Mortality Table;
(2) at the insurer's option for one or more specified life
insurance plans, the Commissioners 1980 Standard Ordinary
Mortality Table with Ten-Year Select Mortality Factors; or
(3) any ordinary mortality table adopted after 1980 by the
National Association of Insurance Commissioners that is approved
by commissioner rule for use in determining the minimum standard
valuation for a policy to which this subdivision applies.
(d) For an industrial life insurance policy issued on the
standard basis, excluding any disability or accidental death
benefits in the policy, the applicable table is:
(1) the 1941 Standard Industrial Mortality Table, if the policy
was issued before the date on which Section 1105.153 would apply
to the policy as determined under Section 1105.153(a) or (b); or
(2) if Section 1105.153 applies to the policy:
(A) the Commissioners 1961 Standard Industrial Mortality Table;
or
(B) any industrial mortality table adopted after 1980 by the
National Association of Insurance Commissioners that is approved
by commissioner rule for use in determining the minimum standard
of valuation for a policy to which this subdivision applies.
(e) For an individual annuity or pure endowment contract,
excluding any disability or accidental death benefits in the
policy, the applicable table is the 1937 Standard Annuity
Mortality Table, or at the insurer's option, the Annuity
Mortality Table for 1949, Ultimate, or a modification of either
table that is approved by the commissioner.
(f) For a group annuity or pure endowment contract, excluding
any disability or accidental death benefits in the policy, the
applicable table is:
(1) the Group Annuity Mortality Table for 1951;
(2) a modification of that table approved by the commissioner;
or
(3) at the insurance company's option, a table or a modification
of a table prescribed for an individual annuity or pure endowment
contract by Subsection (e).
(g) For total and permanent disability benefits in or
supplementary to an ordinary policy or contract, the applicable
tables are:
(1) for a policy or contract issued on or after January 1, 1966:
(A) the tables of Period 2 disablement rates and the 1930 to
1950 termination rates of the 1952 Disability Study of the
Society of Actuaries, with due regard to the type of benefit; or
(B) any table of disablement rates and termination rates adopted
after 1980 by the National Association of Insurance Commissioners
that are approved by commissioner rule for use in determining the
minimum standard of valuation for a policy to which this
subdivision applies;
(2) for a policy or contract issued on or after January 1, 1961,
and before January 1, 1966:
(A) a table described by Subdivision (1); or
(B) at the insurance company's option, the Class (3) Disability
Table (1926); or
(3) for a policy issued before January 1, 1961, the Class (3)
Disability Table (1926).
(h) A table described by Subsection (g) must, for an active
life, be combined with a mortality table permitted for computing
the reserves for a life insurance policy.
(i) For accidental death benefits in or supplementary to a
policy, the applicable table is:
(1) for a policy issued on or after January 1, 1966:
(A) the 1959 Accidental Death Benefits Table; or
(B) any accidental death benefits table adopted after 1980 by
the National Association of Insurance Commissioners that is
approved by commissioner rule for use in determining the minimum
standard of valuation for a policy to which this subdivision
applies;
(2) for a policy issued on or after January 1, 1961, and before
January 1, 1966:
(A) a table described by Subdivision (1); or
(B) at the insurance company's option, the Inter-Company Double
Indemnity Mortality Table; or
(3) for a policy issued before January 1, 1961, the
Inter-Company Double Indemnity Mortality Table.
(j) A table described by Subsection (i) must be combined with a
mortality table permitted for computing the reserves for a life
insurance policy.
(k) For group life insurance, life insurance issued on the
substandard basis and other special benefits, the applicable
table is a table approved by the commissioner.
(l)(1) Notwithstanding any other law, the minimum reserve
requirements applicable to a credit life policy issued under
Chapter 1153 before January 1, 2009, are met if, in the
aggregate, the reserves are maintained at 100 percent of the 1980
Commissioner's Standard Ordinary Mortality Table, with interest
that does not exceed 5.5 percent.
(2) For credit life policy reserves on contracts issued to be
effective on or after January 1, 2009, the reserve requirements
shall be based on minimum reserve standards established by the
commissioner by rule. The commissioner shall adopt the rules
based on either:
(A) the 2001 CSO Male Composite Ultimate Mortality Table for
male and female insureds; or
(B) another CSO Mortality Table approved by the National
Association of Insurance Commissioners on or after January 1,
2009, for use on credit life policy reserves.
(3) For a single premium credit accident and health contract
issued on or after January 1, 2009, the reserve requirements
shall be based on minimum reserve standards established by the
commissioner by rule. The commissioner shall adopt the rules
based on either:
(A) the 1985 Commissioners Individual Disability Table A
(85CIDA); or
(B) another Commissioner's Disability Table approved by the
National Association of Insurance Commissioners on or after
January 1, 2009, for use on credit accident and health policy
reserves.
(4) For all credit insurance contracts, if the net premium
refund liability exceeds the aggregate recorded contract reserve,
the insurer shall establish an additional reserve liability that
is equal to the excess of the net refund liability over the
contract reserve recorded. The net refund liability may include
consideration of commission, premium tax, and other expenses
recoverable.
(5) In addition to the rules required to be adopted under this
subsection, the commissioner may adopt other rules to implement
this subsection.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
399, Sec. 1, eff. June 19, 2009.
Sec. 425.059. VALUATION OF CERTAIN ANNUITIES AND PURE ENDOWMENT
CONTRACTS. (a) This section applies to an individual annuity or
pure endowment contract issued on or after January 1, 1979, and
an annuity or pure endowment purchased on or after January 1,
1979, under a group annuity or pure endowment contract. This
section also applies to an annuity or pure endowment contract
issued by an insurer after the date specified in a written
notice:
(1) that was filed with the State Board of Insurance after June
14, 1973, but before January 1, 1979; and
(2) under which the insurance company filing the notice elected
to comply before January 1, 1979, with former Section 4, Article
3.28, with respect to individual or group annuities and pure
endowment contracts as specified by the company in the notice.
(b) Except as provided by Section 425.060, 425.061, 425.062, or
425.063, the minimum standard for the valuation of an individual
or group annuity or pure endowment contract, excluding any
disability or accidental death benefits in the contract, is the
commissioners reserve valuation method described by Sections
425.064 and 425.065, computed using the table prescribed by this
section and with interest at the following interest rate, as
applicable:
(1) for an individual annuity or pure endowment contract issued
before August 29, 1977, other than an individual single premium
immediate annuity contract, four percent;
(2) for an individual single premium immediate annuity contract
issued before August 29, 1977, six percent;
(3) for an individual annuity or pure endowment contract issued
on or after August 29, 1977, other than an individual single
premium immediate annuity contract or an individual single
premium deferred annuity or pure endowment contract, 4-1/2
percent;
(4) for an individual single premium immediate annuity contract
issued on or after August 29, 1977, 7-1/2 percent;
(5) for an individual single premium deferred annuity or pure
endowment contract issued on or after August 29, 1977, 5-1/2
percent;
(6) for an annuity or pure endowment purchased before August 29,
1977, under a group annuity or pure endowment contract, six
percent; or
(7) for an annuity or pure endowment purchased on or after
August 29, 1977, under a group annuity or pure endowment
contract, 7-1/2 percent.
(c) For an individual annuity or pure endowment contract issued
before August 29, 1977, the applicable table is:
(1) the 1971 Individual Annuity Mortality Table; or
(2) a modification of that table approved by the commissioner.
(d) For an individual annuity or pure endowment contract issued
on or after August 29, 1977, including an individual single
premium immediate annuity contract, the applicable table is:
(1) the 1971 Individual Annuity Mortality Table;
(2) an individual annuity mortality table adopted after 1980 by
the National Association of Insurance Commissioners that is
approved by the commissioner by rule for use in determining the
minimum standard of valuation for a specified type of contract to
which this subsection applies; or
(3) a modification of one of those tables approved by the
commissioner.
(e) For an annuity or pure endowment purchased before August 29,
1977, under a group annuity or pure endowment contract, the
applicable table is:
(1) the 1971 Group Annuity Mortality Table; or
(2) a modification of that table approved by the commissioner.
(f) For an annuity or pure endowment purchased on or after
August 29, 1977, under a group annuity or pure endowment
contract, the applicable table is:
(1) the 1971 Group Annuity Mortality Table;
(2) a group annuity mortality table adopted after 1980 by the
National Association of Insurance Commissioners that is approved
by the commissioner by rule for use in determining the minimum
standard of valuation for an annuity or pure endowment to which
this subsection applies; or
(3) a modification of one of those tables approved by the
commissioner.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.060. APPLICABILITY OF CALENDAR YEAR STATUTORY VALUATION
INTEREST RATES. The calendar year statutory valuation interest
rates as defined by Sections 425.061, 425.062, and 425.063 are
the interest rates used in determining the minimum standard for
the valuation of:
(1) a life insurance policy to which Subchapter B, Chapter 1105,
applies;
(2) an individual annuity or pure endowment contract issued on
or after January 1, 1982;
(3) an annuity or pure endowment purchased on or after January
1, 1982, under a group annuity or pure endowment contract; or
(4) the net increase, if any, in a calendar year after January
1, 1982, in amounts held under a guaranteed interest contract.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.061. COMPUTATION OF CALENDAR YEAR STATUTORY VALUATION
INTEREST RATE: GENERAL RULE. (a) For purposes of Subsection
(b):
(1) R1 is the lesser of R or.09;
(2) R2 is the greater of R or.09;
(3) R is the reference interest rate determined under Section
425.063; and
(4) W is the weighting factor determined under Section 425.062.
(b) The calendar year statutory valuation interest rate ("I") is
determined as provided by this section, with the results rounded
to the nearest one-quarter of one percent:
(1) for life insurance:
I =.03 + W(R1 -.03) + (W/2)(R2 -.09); and
(2) for a single premium immediate annuity or annuity benefits
involving life contingencies arising from another annuity with a
cash settlement option or from a guaranteed interest contract
with a cash settlement option, or for an annuity or guaranteed
interest contract without a cash settlement option, or for an
annuity or guaranteed interest contract with a cash settlement
option that is valued on a change in fund basis:
I =.03 + W(R -.03).
(c) For an annuity or guaranteed interest contract with a cash
settlement option that is valued on an issue year basis, other
than an annuity or contract described by Subsection (b)(2):
(1) the formula prescribed by Subsection (b)(1) applies to an
annuity or guaranteed interest contract with a guarantee duration
determined under Section 425.062(f) greater than 10 years; and
(2) the formula prescribed by Subsection (b)(2) applies to an
annuity or guaranteed interest contract with a guarantee duration
determined under Section 425.062(f) of 10 years or less.
(d) Notwithstanding Subsections (b) and (c), if the calendar
year statutory valuation interest rate for a life insurance
policy issued in a calendar year as determined under Subsection
(b) or (c), as applicable, would differ from the corresponding
actual rate for similar policies issued in the preceding calendar
year by less than one-half of one percent, the calendar year
statutory valuation interest rate for the policy is the
corresponding actual rate for the preceding calendar year. For
purposes of this subsection, the calendar year statutory
valuation interest rate for a life insurance policy issued in a
calendar year is determined for 1980 using the reference interest
rate defined for 1979, and is determined for each subsequent
calendar year regardless of whether Subchapter B, Chapter 1105,
applies to the policy.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.062. WEIGHTING FACTORS. (a) This section prescribes
the weighting factors referred to in the formulas prescribed by
Section 425.061.
(b) The weighting factor for a life insurance policy is
determined by the following table:
Guarantee Duration (Years)
Weighting Factor
10 or less
.50
More than 10, but not more than 20
.45
More than 20
.35
(c) For purposes of Subsection (b), the guarantee duration is
the maximum number of years the life insurance can remain in
force on a basis guaranteed in the policy or under options to
convert to life insurance plans with premium rates or
nonforfeiture values, or both, that are guaranteed in the
original policy.
(d) The weighting factor for a single premium immediate annuity
or for annuity benefits involving life contingencies arising from
another annuity with a cash settlement option or from a
guaranteed interest contract with a cash settlement option is.80.
(e) The weighting factor for an annuity or a guaranteed interest
contract, other than an annuity or contract to which Subsection
(d) applies, is determined by the following tables:
(1) For an annuity or guaranteed interest contract that is
valued on an issue year basis:
Guarantee Duration (Years)
Weighting Factor for Plan Type
A
B
C
5 or less:
.80
.60
.50
More than 5, but not more
than 10:
.75
.60
.50
More than 10, but not more
than 20:
.65
.50
.45
More than 20:
.45
.35
.35
(2) For an annuity or guaranteed interest contract that is
valued on a change in fund basis, the factors prescribed by
Subdivision (1) increased by:
Plan Type
A B C
.15 .25 .05
(3) For an annuity or guaranteed interest contract that is
valued on an issue year basis that does not guarantee interest on
considerations received more than one year after issue or
purchase, other than an annuity or contract that does not have a
cash settlement option, or an annuity or guaranteed interest
contract that is valued on a change in fund basis that does not
guarantee interest rates on considerations received more than 12
months after the valuation date, the factors prescribed by
Subdivision (1) or determined under Subdivision (2), as
appropriate, increased by:
Plan Type
A B C
.05 .05 .05
(f) For purposes of Subsection (e):
(1) for an annuity or guaranteed interest contract with a cash
settlement option, the guarantee duration is the number of years
for which the contract guarantees interest rates greater than the
calendar year statutory valuation interest rate for life
insurance policies with guarantee duration greater than 20 years;
and
(2) for an annuity or guaranteed interest contract without a
cash settlement option, the guarantee duration is the number of
years from the issue or purchase date to the date annuity
benefits are scheduled to begin.
(g) For purposes of Subsection (e):
(1) a policy is a "Plan Type A" policy if:
(A) the policyholder may withdraw funds at any time, but only:
(i) with an adjustment to reflect changes in interest rates or
asset values after the insurance company receives the funds;
(ii) without an adjustment described by Subparagraph (i),
provided that the withdrawal is in installments over five years
or more; or
(iii) as an immediate life annuity; or
(B) the policyholder is not permitted to withdraw funds at any
time;
(2) a policy is a "Plan Type B" policy if:
(A) before the expiration of the interest rate guarantee:
(i) the policyholder may withdraw funds, but only:
(a) with an adjustment to reflect changes in interest rates or
asset values after the insurance company receives the funds; or
(b) without an adjustment described by Subsubparagraph (a),
provided that the withdrawal is in installments over five years
or more; or
(ii) the policyholder is not permitted to withdraw funds; and
(B) on the expiration of the interest rate guarantee, the
policyholder may withdraw funds in a single sum or in
installments over less than five years, without an adjustment
described by Paragraph (A)(i); and
(3) a policy is a "Plan Type C" policy if the policyholder may
withdraw funds before the expiration of the interest rate
guarantee in a single sum or in installments over less than five
years:
(A) without an adjustment to reflect changes in interest rates
or asset values after the insurance company receives the funds;
or
(B) subject only to a fixed surrender charge that is a
percentage of the fund stipulated in the contract.
(h) An insurance company may elect to value an annuity or
guaranteed interest contract with a cash settlement option on an
issue year basis or on a change in fund basis. A company must
value an annuity or guaranteed interest contract without a cash
settlement option on an issue year basis.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.063. REFERENCE INTEREST RATE. (a) In this section,
"Moody's Corporate Bond Yield Average" means the Moody's
Corporate Bond Yield Average--Monthly Average Corporates, as
published by Moody's Investors Service, Inc.
(b) Except as provided by Subsection (g), the reference interest
rate for purposes of Section 425.061 is determined as provided by
Subsections (c)-(f).
(c) The reference interest rate for a life insurance policy is
the lesser of the average over a period of 36 months or the
average over a period of 12 months, ending on June 30 of the
calendar year preceding the year of issue, of the Moody's
Corporate Bond Yield Average.
(d) The reference interest rate is the average over a period of
12 months, ending on June 30 of the calendar year of issue or
year of purchase, of the Moody's Corporate Bond Yield Average
for:
(1) a single premium immediate annuity or annuity benefits
involving life contingencies arising from another annuity with a
cash settlement option or from a guaranteed interest contract
with a cash settlement option;
(2) an annuity or guaranteed interest contract with a cash
settlement option, other than an annuity or contract described by
Subdivision (1), that is valued on an issue year basis and has a
guarantee duration as determined under Section 425.062(f) of 10
years or less; or
(3) an annuity or guaranteed interest contract without a cash
settlement option.
(e) The reference interest rate is the lesser of the average
over a period of 36 months or the average over a period of 12
months, ending on June 30 of the calendar year of issue or
purchase, of the Moody's Corporate Bond Yield Average for an
annuity or guaranteed interest contract with a cash settlement
option, other than an annuity or contract described by Subsection
(d)(1), that is valued on an issue year basis and has a guarantee
duration as determined under Section 425.062(f) greater than 10
years.
(f) The reference interest rate is the average over a period of
12 months, ending on June 30 of the calendar year of the change
in the fund, of the Moody's Corporate Bond Yield Average, for an
annuity or guaranteed interest contract with a cash settlement
option, other than an annuity or contract described by Subsection
(d)(1), that is valued on a change in fund basis.
(g) At least annually, the commissioner shall:
(1) determine whether the reference interest rates prescribed by
Subsections (c), (d), (e), and (f) continue to be a reasonably
accurate approximation of the average yield achieved from
purchases in the United States in publicly quoted markets of
investment grade fixed term and fixed interest corporate
obligations for the periods referenced in Subsection (c), (d),
(e), or (f), as applicable; and
(2) if the commissioner determines that a reference interest
rate prescribed by Subsection (c), (d), (e), or (f) is not a
reasonably accurate approximation of the average yield described
by Subdivision (1), adopt rules in the manner prescribed by
Chapters 2001 and 2002, Government Code, to prescribe an
alternative method of determining a reference interest rate, as
appropriate, that is a reasonably accurate approximation of that
average yield.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.064. COMMISSIONERS RESERVE VALUATION METHOD. (a)
Except as otherwise provided by Sections 425.065 and 425.068 and
subject to Subsection (b), for the life insurance and endowment
benefits of a policy that provides for a uniform amount of
insurance and that requires the payment of uniform premiums, the
reserve according to the commissioners reserve valuation method
is the difference, if greater than zero, of the present value on
the date of valuation of those future guaranteed benefits, minus
the present value on that date of any future modified net
premiums for a policy described by this subsection. The modified
net premiums for a policy described by this subsection are a
uniform percentage of the respective contract premiums for those
benefits, so that the present value on the policy's issue date of
all the modified net premiums is equal to the sum of:
(1) the present value on that date of those benefits; and
(2) the difference, if greater than zero, between:
(A) a net level annual premium equal to the present value on the
policy's issue date of the benefits provided for after the first
policy year, divided by the present value on the policy's issue
date of an annuity of one per year, payable on the first policy
anniversary and on each subsequent policy anniversary on which a
premium becomes due; and
(B) a net one-year term premium for the benefits provided for in
the first policy year.
(b) A net level annual premium under Subsection (a)(2)(A) may
not exceed the net level annual premium on the 19-year premium
whole life plan for insurance of the same amount at an age that
is one year older than the age on the policy's issue date.
(c) This subsection applies only to a life insurance policy
issued on or after January 1, 1985, for which the contract
premium for the first policy year exceeds the contract premium
for the second year, for which a comparable additional benefit is
not provided in the first year for the excess premium, and that
provides an endowment benefit, a cash surrender value, or a
combination of an endowment benefit and cash surrender value, in
an amount greater than the excess premium. For purposes of this
subsection, the "assumed ending date" is the first policy
anniversary on which the sum of any endowment benefit and any
cash surrender value available on that date is greater than the
excess premium. The reserve according to the commissioners
reserve valuation method for a policy to which this subsection
applies as of any policy anniversary occurring on or before the
assumed ending date is, except as otherwise provided by Section
425.068, the greater of:
(1) the reserve as of the policy anniversary computed as
prescribed by Subsection (a); or
(2) the reserve as of the policy anniversary computed as
prescribed by Subsection (a) but with:
(A) the value prescribed by Subsection (a)(2)(A) reduced by 15
percent of the amount of the excess first-year premium;
(B) each present value of a benefit or premium determined
without reference to a premium or benefit provided under the
policy after the assumed ending date;
(C) the policy assumed to mature on the assumed ending date as
an endowment; and
(D) the cash surrender value provided on the assumed ending date
considered to be an endowment benefit.
(d) In making the comparison required by Subsection (c), the
mortality tables and interest bases described by Sections
425.058, 425.061, 425.062, and 425.063 must be used.
(e) Reserves according to the commissioners reserve valuation
method for the following policies, contracts, and benefits must
be computed by a method consistent with the principles of this
section:
(1) a life insurance policy that provides for a varying amount
of insurance or that requires the payment of varying premiums;
(2) a group annuity or pure endowment contract purchased under a
retirement or deferred compensation plan established or
maintained by an employer, including a partnership or sole
proprietorship, by an employee organization, or by both, other
than a plan providing individual retirement accounts or
individual retirement annuities under Section 408, Internal
Revenue Code of 1986, and that section's subsequent amendments;
(3) disability or accidental death benefits in a policy or
contract; and
(4) all other benefits, other than life insurance and endowment
benefits in a life insurance policy or benefits provided by any
other annuity or pure endowment contract.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.065. COMMISSIONERS ANNUITY RESERVE VALUATION METHOD.
(a) This section applies to an annuity or pure endowment
contract other than a group annuity or pure endowment contract
purchased under a retirement or deferred compensation plan
established or maintained by an employer, including a partnership
or sole proprietorship, by an employee organization, or by both,
other than a plan providing individual retirement accounts or
individual retirement annuities under Section 408, Internal
Revenue Code of 1986, and that section's subsequent amendments.
(b) Reserves according to the commissioners annuity reserve
method for benefits under an annuity or pure endowment contract,
excluding any disability or accidental death benefits in the
contract, are the greatest of the respective excesses of the
present values on the valuation date of the future guaranteed
benefits under the contract at the end of each respective
contract year, including guaranteed nonforfeiture benefits, minus
the present value on the valuation date of any future valuation
considerations derived from future gross considerations that are
required by the contract terms and that become payable before the
end of the respective contract year. The future guaranteed
benefits must be determined by using the mortality table, if any,
and the interest rate or rates specified in the contract for
determining guaranteed benefits. The valuation considerations
are the portions of the respective gross considerations applied
under the contract terms to determine nonforfeiture values.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.066. MINIMUM AGGREGATE RESERVES. (a) An insurance
company's aggregate reserves for all life insurance policies,
excluding disability or accidental death benefits, issued by the
company on or after the date on which Chapter 1105 applies to
policies issued by the company, as determined under Section
1105.002(a) or (b), may not be less than the aggregate reserves
computed in accordance with the methods prescribed by Sections
425.064, 425.065, 425.068, and 425.069 and the mortality table or
tables and interest rate or rates used in computing nonforfeiture
benefits for those policies.
(b) The aggregate reserves of an insurance company to which this
section applies for all policies, contracts, and benefits may not
be less than the aggregate reserves determined to be necessary to
issue a favorable opinion under Section 425.054.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.067. OPTIONAL RESERVE COMPUTATIONS. (a) Reserves for
a policy or contract issued by a life insurance company before
the date on which Chapter 1105 would apply to the policy or
contract, as determined under Section 1105.002(a) or (b), may be
computed, at the company's option, according to any standard that
produces greater aggregate reserves for all those policies and
contracts than the minimum reserves required by the laws
applicable to those policies and contracts immediately before
that date.
(b) Reserves for any category, as established by the
commissioner, of policies, contracts, or benefits issued by a
life insurance company on or after the date on which Chapter 1105
applies to policies, contracts, or benefits issued by the
company, as determined under Section 1105.002(a) or (b), may be
computed, at the company's option, according to any standard that
produces greater aggregate reserves for the category than the
minimum aggregate reserves computed according to the standard
provided by this subchapter, but the interest rate or rates used
for those policies and contracts, other than annuity and pure
endowment contracts, may not be higher than the corresponding
interest rate or rates used in computing any nonforfeiture
benefits provided in those policies or contracts.
(c) An insurance company that has adopted a standard of
valuation that produces greater minimum aggregate reserves than
the aggregate reserves computed according to the standard
provided by this subchapter may, with the commissioner's
approval, adopt any lower standard of valuation that produces
aggregate reserves at least equal to the minimum aggregate
reserves computed according to the standard provided by this
subchapter.
(d) For purposes of this section, the holding of additional
reserves previously determined to be necessary to issue a
favorable opinion under Section 425.054 may not be considered to
be the adoption of a higher standard of valuation.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.068. RESERVE COMPUTATION: GROSS PREMIUM CHARGED LESS
THAN VALUATION NET PREMIUM. (a) If in a contract year the gross
premium charged by a life insurance company on a policy or
contract is less than the valuation net premium for the policy or
contract computed by the method used in computing the reserve on
the policy or contract but using the minimum valuation mortality
standards and interest rate, the minimum reserve required for the
policy or contract is the greater of:
(1) the reserve computed according to the mortality table,
interest rate, and method actually used for the policy or
contract; or
(2) the reserve computed by the method actually used for the
policy or contract but using the minimum valuation mortality
standards and interest rate and replacing the valuation net
premium with the actual gross premium in each contract year for
which the valuation net premium exceeds the actual gross premium.
(b) The minimum valuation mortality standards and interest rate
under Subsection (a) are the standards and rate provided by
Sections 425.058, 425.061, 425.062, and 425.063.
(c) This subsection applies only to a life insurance policy
issued on or after January 1, 1985, for which the gross premium
for the first policy year exceeds the gross premium for the
second policy year, for which a comparable additional benefit is
not provided in the first year for the excess premium, and that
provides an endowment benefit, a cash surrender value, or a
combination of an endowment benefit and cash surrender value, in
an amount greater than the excess premium. For a policy to which
this subsection applies, Subsections (a) and (b) shall be applied
as if the method actually used in computing the reserve for the
policy were the method described in Section 425.064, ignoring
Section 425.064(c). The minimum reserve at each policy
anniversary is the greater of:
(1) the minimum reserve computed in accordance with Section
425.064, including Section 425.064(c); or
(2) the minimum reserve computed in accordance with this
section.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.069. RESERVE COMPUTATION: INDETERMINATE PREMIUM PLANS
AND CERTAIN OTHER PLANS. (a) For a life insurance plan that
provides for future premium determination, the amounts of which
are to be determined by the insurance company based on estimates
of future experience, or a life insurance plan or annuity for
which the minimum reserves cannot be determined by the methods
described by Sections 425.064, 425.065, and 425.068, the reserves
held must:
(1) be appropriate in relation to the benefits and the pattern
of premiums for the plan; and
(2) be computed by a method that is consistent with the
principles of this subchapter, as determined by commissioner
rule.
(b) Notwithstanding any other provision of state law, the
commissioner must affirmatively approve a policy, contract, or
certificate that provides life insurance under a plan described
by Subsection (a) before the policy, contract, or certificate may
be marketed, issued, delivered, or used in this state.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.070. COMPUTATION OF RESERVE FOR CERTAIN POLICIES BY
CALENDAR YEAR OF ISSUE. (a) The reserve for a policy or
contract issued by a life insurance company before the date on
which Chapter 1105 would apply to the policy or contract, as
determined under Section 1105.002(a) or (b), must be computed in
accordance with the terms of the policy or contract and this
section.
(b) For a policy issued before January 1, 1910, the computation
must be based on the American Experience Table of Mortality and
4-1/2 percent annual interest.
(c) For a policy issued on or after January 1, 1910, and before
January 1, 1948, the computation must be based on:
(1) the Actuaries or Combined Experience Table of Mortality and
four percent annual interest, if the interest rate guaranteed in
the policy is four percent annually or higher; or
(2) the American Experience Table of Mortality and the lower
rate specified in the policy, if the policy was issued on a
reserve basis of an interest rate lower than four percent
annually.
(d) For a policy issued on or after January 1, 1948, the
computation must be based on the mortality table and interest
rate specified in the policy, provided that:
(1) the specified interest rate may not exceed 3-1/2 percent
annually;
(2) the specified table for a policy, other than an industrial
life insurance policy, is the American Experience Table of
Mortality, the American Men Ultimate Table of Mortality, the
Commissioners 1941 Standard Ordinary Mortality Table, or, for a
policy issued after December 31, 1959, the Commissioners 1958
Standard Ordinary Mortality Table; and
(3) the specified table for an industrial life insurance policy
is the American Experience Table of Mortality, the Standard
Industrial Mortality Table, the Sub-Standard Industrial Mortality
Table, the 1941 Standard Industrial Mortality Table, or the 1941
Sub-Standard Industrial Mortality Table, or, for a policy issued
after December 31, 1963, the Commissioners 1961 Standard
Industrial Mortality Table.
(e) For a policy, other than an industrial life insurance
policy, issued after December 31, 1959, to insure a female risk,
the computation must be based on any mortality table and interest
rate permitted under Subsection (d) and specified in the policy
but may, at the insurance company's option, be based on an age
not more than three years younger than the insured's actual age.
(f) Except as otherwise provided by Section 425.059 for coverage
purchased under a group annuity or pure endowment contract to
which that section applies, for a policy issued on a substandard
risk, an annuity contract, or a contract or policy for disability
benefits or accidental death benefits, the computation must be
based on the standards and methods adopted by the insurance
company and approved by the commissioner.
(g) For a group insurance policy issued before May 15, 1947, the
computation must be based on the American Men Ultimate Table of
Mortality with interest at the rate of three percent or 3-1/2
percent annually as provided by the policy. The reserve value of
a group insurance policy issued on or after May 15, 1947, and
before January 1, 1961, must be computed on the basis of either
the American Men Ultimate Table of Mortality or the Commissioners
1941 Standard Ordinary Mortality Table with interest at a rate
not to exceed 3-1/2 percent annually as provided by the policy.
For a group insurance policy issued on or after January 1, 1961,
the computation must be based on an interest rate not to exceed
3-1/2 percent annually and the mortality table adopted by the
insurance company with the commissioner's approval.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.071. LAPSE RATES IN MINIMUM STANDARD OF VALUATION. (a)
The minimum standard of valuation under this subchapter may
include lapse rates in the calculation of reserves for a
secondary guarantee in universal life contracts issued after
December 31, 2006.
(b) For purposes of this section, a secondary guarantee refers
to specified conditions in a universal life contract that, if
satisfied, provide for death benefits to remain in effect
regardless of the accumulation value in the contract.
(c) Lapse rates authorized by this section may not exceed two
percent per year.
(d) The commissioner is authorized to adopt rules to implement
this section.
Added by Acts 2007, 80th Leg., R.S., Ch.
681, Sec. 1, eff. June 15, 2007.
SUBCHAPTER C. AUTHORIZED INVESTMENTS AND TRANSACTIONS FOR CAPITAL
STOCK LIFE, HEALTH, AND ACCIDENT INSURERS
Sec. 425.101. DEFINITIONS. In this subchapter:
(1) "Assets" means the statutory accounting admitted assets of
an insurance company. The term includes lawful money of the
United States, whether in the form of cash or demand deposits in
solvent banks, savings and loan associations, credit unions, and
branches of those entities, organized under the laws of the
United States or a state of the United States, if held in
accordance with the laws or regulations applicable to those
entities. The term does not include the company's separate
accounts that are subject to Chapter 1152.
(2) "Securities valuation office" means the Securities Valuation
Office of the National Association of Insurance Commissioners.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 425.102. INAPPLICABILITY OF CERTAIN LAW. The definition of
"state" assigned by Section 311.005, Government Code, does not
apply to this s