CHAPTER 822. GENERAL INCORPORATION AND REGULATORY REQUIREMENTS FOR INSURANCE COMPANIES OTHER THAN LIFE, HEALTH, OR ACCIDENT INSURANCE COMPANIES
INSURANCE CODE
TITLE 6. ORGANIZATION OF INSURERS AND RELATED ENTITIES
SUBTITLE B. ORGANIZATION OF REGULATED ENTITIES
CHAPTER 822. GENERAL INCORPORATION AND REGULATORY REQUIREMENTS
FOR INSURANCE COMPANIES OTHER THAN LIFE, HEALTH, OR ACCIDENT
INSURANCE COMPANIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 822.001. APPLICABILITY OF CHAPTER. Except as otherwise
provided by this code, this chapter applies to the formation of
each company or organization that proposes to engage in any kind
of insurance business other than a life, health, or accident
insurance company organized or operating under Chapter 841, 881,
882, 884, 885, 886, 887, or 888.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.002. APPLICABILITY OF LAW GOVERNING CORPORATIONS. An
insurance company incorporated in this state is subject to the
Texas Business Corporation Act, the Texas Miscellaneous
Corporation Laws Act (Article 1302-1.01 et seq., Vernon's Texas
Civil Statutes), and any other law of this state that governs
corporations in general to the extent those laws are not
inconsistent with this code.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.003. EFFECT ON TRANSACTIONS BETWEEN INSURANCE COMPANIES
AND OTHERS. The following sections do not restrict or modify any
provision of this code relating to a transaction between an
insurance company and the insurance company's affiliates, or
between an insurance company and certain shareholders, directors,
or officers of the insurance company, as provided by Subchapter
A, Chapter 805, and Chapter 823:
(1) Sections 822.055 and 822.056;
(2) Section 822.057(a)(4);
(3) Section 822.061;
(4) Section 822.156;
(5) Sections 822.158(d) and (e); and
(6) Sections 822.206 and 822.207.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER B. FORMATION AND STRUCTURE OF COMPANY
Sec. 822.051. FORMATION OF COMPANY. (a) Any number of persons
may form a company for the purpose of engaging in the business of
insurance.
(b) To form a company, each incorporator must adopt and sign the
articles of incorporation of the company as provided by this
code.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.052. ARTICLES OF INCORPORATION. Articles of
incorporation of a proposed insurance company must state:
(1) the name of the company;
(2) the location of the company's principal business office;
(3) the kind of insurance business in which the company proposes
to engage;
(4) the amount of the company's capital stock; and
(5) the amount of the company's surplus.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.053. COMPANY'S NAME. An insurance company's name may
not be so similar to the name of another insurance company as to
likely mislead the public.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.054. CAPITAL STOCK AND SURPLUS REQUIREMENTS. (a) An
insurance company must have capital stock in an amount of at
least $2.5 million and surplus in an amount of at least $2.5
million.
(b) At the time of incorporation, the required capital and
surplus must be in cash.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1275, Sec. 1, eff. September 1, 2009.
Sec. 822.055. SHARES OF STOCK WITH PAR VALUE. (a) An insurance
company organized under the laws of this state may authorize the
issuance of shares of stock with a par value of not less than $1
or more than $100. The company may increase from time to time the
number of shares with a par value by an amendment to the
company's charter.
(b) Each par value share of stock must be fully paid before
issuance in an amount that is not less than the share's par
value. Par value shares issued under this section are not subject
to additional call or assessment, and the subscriber or holder of
those shares is not required to make an additional payment with
respect to those shares.
(c) When an application for charter or an amendment to the
charter authorizing the issuance of shares of stock with a par
value is filed, the insurance company shall file with the
department a statement under oath stating:
(1) the total number of par value shares subscribed; and
(2) the actual total consideration the company received for
those shares.
(d) The shareholders of an insurance company authorizing par
value shares of stock must in good faith subscribe and fully pay
for shares representing at least 50 percent of the total par
value of the authorized shares with a par value before the
company:
(1) is granted a charter; or
(2) amends its charter to:
(A) authorize the issuance of par value shares; or
(B) increase or decrease from time to time the number of
authorized par value shares.
(e) If all of the authorized par value shares of stock are not
subscribed and paid for when the charter is granted or the
amendment is filed, respectively, the insurance company shall
file with the department a certificate authenticated by a
majority of the directors stating the total number of shares
issued and the total consideration received for those shares. The
company shall file the certificate not later than the 90th day
after the date of issuance of those remaining shares. The company
is not required to file an amendment to its charter or take
further action to effect the increase in the capital and surplus
of the company.
(f) The consideration received by an insurance company for a par
value share constitutes capital to the extent of its par value
and the remainder, if any, constitutes surplus.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.056. SHARES OF STOCK WITHOUT PAR VALUE. (a) An
insurance company organized under the laws of this state, on
incorporation or by an amendment to its charter, may authorize
the issuance of shares of stock without par value.
(b) Each share of stock without par value must be equal in all
respects.
(c) An insurance company may issue and dispose of authorized
shares without par value for money or for notes, bonds,
mortgages, and stock in the form authorized by law for capital
stock of insurance companies. Each share of stock without par
value must be fully paid before issuance. After the company
receives payment for a share of stock issued under this section,
the share is not subject to additional call or assessment and the
subscriber or holder of the share is not required to make an
additional payment with respect to the share.
(d) The shareholders of an insurance company authorizing shares
of stock without par value must in good faith subscribe and pay
for shares representing at least 50 percent of the authorized
shares without par value before the company is granted a charter
or has its charter amended to authorize the issuance of shares
without par value. The total amount paid for the shares must be
at least $250,000.
(e) If all of the authorized shares of stock without par value
are not subscribed and paid for when the charter is granted or
the amendment is filed, respectively, the insurance company shall
file with the department a certificate authenticated by a
majority of the directors stating the number of shares without
par value issued and the consideration received for those shares.
An insurance company may issue and dispose of those remaining
authorized shares for money or an instrument authorized for
minimum capital under:
(1) a provision of Subchapter B, Chapter 424, other than Section
424.052, 424.072, or 424.073; and
(2) Section 822.204.
(f) The insurance company shall file the certificate required by
Subsection (e) not later than the 90th day after the date of
issuance of those remaining shares. The portion of the
consideration received for shares without par value that is
designated as capital by the company's directors, or by the
company's shareholders if the charter or articles of
incorporation reserve the right to make that determination to the
shareholders, constitutes capital and the remainder, if any,
constitutes surplus. The company is not required to file an
amendment to its charter or take further action to effect the
increase in the capital and surplus of the company.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2E.005, eff. April 1, 2009.
Sec. 822.057. APPLICATION FOR CHARTER. (a) To obtain a charter
for an insurance company, the incorporators must pay to the
department the fees prescribed by law and file with the
department:
(1) an application for charter on the form and containing the
information prescribed by the commissioner;
(2) the company's proposed articles of incorporation;
(3) an affidavit made by the incorporators or officers of the
company that states that:
(A) the capital and surplus is the bona fide property of the
company; and
(B) the information in the articles of incorporation is true and
correct; and
(4) if the application provides for the issuance of shares of
stock without par value, a certificate authenticated by the
incorporators stating:
(A) the number of shares without par value that are subscribed;
and
(B) the actual consideration received by the company for those
shares.
(b) If the commissioner is not satisfied with the affidavit
filed under Subsection (a)(3), the commissioner may require that
the incorporators provide at their expense additional evidence of
a matter required in the affidavit before the commissioner:
(1) receives the proposed articles of incorporation or the
application for charter; or
(2) issues a certificate of authority to the company.
(c) Repealed by Acts 2009, 81st Leg., R.S., Ch. 1022, Sec.
19(1), eff. June 19, 2009.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1022, Sec. 4, eff. June 19, 2009.
Acts 2009, 81st Leg., R.S., Ch.
1022, Sec. 19(1), eff. June 19, 2009.
Sec. 822.058. ACTION BY COMMISSIONER AFTER FILING OF APPLICATION
FOR CHARTER. (a) Repealed by Acts 2009, 81st Leg., R.S., Ch.
1022, Sec. 19(2), eff. June 19, 2009.
(b) After the items required for a charter under Sections
822.057(a)(1) and (2) are filed with the department and the
proposed insurance company has complied with all legal
requirements, the commissioner shall conduct an examination of
the company to determine whether:
(1) the minimum capital stock and surplus requirements of
Section 822.054 are satisfied;
(2) the capital stock and surplus is the bona fide property of
the company; and
(3) the insurance company has fully complied with insurance
laws.
(c) The commissioner may appoint a competent and disinterested
person to conduct the examination required by this section. The
examiner shall file an affidavit of the examiner's findings with
the commissioner. The commissioner shall record the affidavit.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1022, Sec. 5, eff. June 19, 2009.
Acts 2009, 81st Leg., R.S., Ch.
1022, Sec. 19(2), eff. June 19, 2009.
Sec. 822.060. ACTION ON APPLICATION. (a) In considering the
application, the commissioner shall determine if:
(1) the proposed capital structure of the company meets the
requirements of this code;
(2) the proposed officers, directors, attorney in fact, or
managing head of the company have sufficient insurance
experience, ability, standing, and good record to make success of
the proposed company probable; and
(3) the applicants are acting in good faith.
(b) If the commissioner determines that the applicant has not
met the standards set out by Subsection (a), the commissioner
shall deny the application in writing, giving the reason for the
denial.
(c) If the commissioner does not deny the application under
Subsection (b), the commissioner shall approve the application.
On approval of an application, the articles of incorporation of
the company shall be filed with the department.
(d) On the applicant's request, the commissioner shall hold a
hearing on a denial. Not later than the 30th day after the date
of the applicant's request for a hearing, the commissioner shall
request a hearing date.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1022, Sec. 6, eff. June 19, 2009.
Sec. 822.061. ISSUANCE OF CHARTER. (a) On receipt of a charter
fee in the amount determined under Chapter 202, the commissioner
shall examine the articles of incorporation filed with the
department under Section 822.060 and any certificate filed under
Section 822.057(a)(4).
(b) If the commissioner approves the articles of incorporation
and, if applicable, the certificate filed under Section
822.057(a)(4), the commissioner shall certify and file the
approved documents with the department records and, on receipt of
a fee in the amount determined under Chapter 202, the
commissioner shall issue a certified copy of the charter to the
incorporators.
(c) When the insurance company's charter is issued, the charter
is effective and the incorporators may proceed with the
organization of the company as provided by this code.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2E.006, eff. April 1, 2009.
SUBCHAPTER C. AUTHORITY TO ENGAGE IN BUSINESS IN THIS STATE
Sec. 822.101. CERTIFICATE OF AUTHORITY. When the articles of
incorporation of an insurance company have been filed with the
department under Section 822.060 or the company has been
authorized to engage in business as provided by law, the
commissioner shall issue to the company a certificate of
authority to commence business as proposed in the company's
articles of incorporation or application for charter if the
commissioner determines that the company has fully complied with
the law.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER D. MANAGEMENT OF COMPANY
Sec. 822.151. CONDUCTING SHAREHOLDERS MEETING. (a) Except as
otherwise provided by this code, at a meeting of an insurance
company's shareholders to elect the company's board of directors
or to transact other company business, a quorum is any number of
shareholders whose cumulative ownership in the company represents
at least 51 percent of the company's stock.
(b) A shareholder may vote in person or by proxy.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.152. BOARD OF DIRECTORS. (a) An insurance company
organized under the laws of this state is managed by its board of
directors.
(b) The board consists of not fewer than seven directors. A
director:
(1) is not required to be a shareholder unless such a
qualification is required by the articles of incorporation or
bylaws of the company; and
(2) serves until the director's successor is elected and accepts
the position.
(c) The board of directors may adopt bylaws and regulations as
necessary to conduct the company's business. A majority of the
board is a quorum.
(d) The board of directors shall keep a full and correct record
of the board's transactions. The shareholders or other interested
persons may inspect those records during business hours.
(e) The directors shall fill a vacancy that occurs on the board
or in any office of the company.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.153. ELECTION OF DIRECTORS. (a) Not later than the
30th day after the date on which the company's subscription books
are filed, the shareholders of an insurance company shall meet to
elect the company's initial board of directors. At the meeting,
each shareholder is entitled to one vote for each share of stock.
(b) The shareholders of an insurance company shall meet before
May 1 of each year as provided by the company's bylaws to elect
successor directors.
(c) If the shareholders do not elect directors at an annual
meeting, the shareholders may elect the directors at a special
shareholders meeting called for that purpose. Not later than the
30th day before the date of the special meeting, the shareholders
must publish notice of the meeting in a newspaper of general
circulation in the county in which the principal office of the
company is located.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.154. OFFICERS. (a) An insurance company's directors
shall choose one of the directors to serve as the company's
president.
(b) Other officers of the insurance company shall be chosen in
accordance with the company's bylaws. An officer other than the
president is not required to be a director or a shareholder
unless such a qualification is required by the company's bylaws
or articles of incorporation.
(c) An insurance company's officers shall perform duties,
receive compensation, and provide security as stated in the
company's bylaws.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.155. APPLICATION FOR AMENDMENT OF CHARTER. A domestic
insurance company may amend its charter by paying to the
commissioner a fee in the amount determined under Chapter 202 and
by filing with the department:
(1) an application for a charter amendment on the form and
containing the information prescribed by the commissioner; and
(2) the company's proposed amendment.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2E.007, eff. April 1, 2009.
Sec. 822.156. CERTIFICATE REQUIRED FOR AMENDMENT OF CHARTER TO
AUTHORIZE SHARES WITHOUT PAR VALUE. (a) If a proposed amendment
to the charter of an insurance company authorizes the issuance of
shares of stock without par value, the insurance company must
file with the department, at the time the proposed amendment is
filed, a certificate authenticated by a majority of the directors
stating:
(1) the number of shares without par value that are subscribed;
and
(2) the consideration the company received for those shares.
(b) On receipt of the certificate, the commissioner shall
examine the certificate. The commissioner shall certify and file
the certificate if the commissioner approves the certificate.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.157. ACTION BY COMMISSIONER AFTER FILING OF APPLICATION
FOR CHARTER AMENDMENT. (a) The commissioner may hold a hearing
on an application for a charter amendment. If the commissioner
determines to hold a hearing on the application, the
commissioner, after the items required for the charter amendment
are filed with the commissioner, shall set a date for the hearing
and publish notice of the hearing in one or more daily newspapers
of this state.
(b) The commissioner may not require a hearing for an amendment
relating to one or more of the following issues:
(1) a stock dividend resulting from a legal transfer of surplus
to capital;
(2) a change in the name of the insurance company; or
(3) a change in the location of the insurance company's
principal business office.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.158. DETERMINATION ON APPLICATION FOR CHARTER
AMENDMENT. (a) Not later than the 60th day after the date the
application under Section 822.155 is filed, the commissioner
shall determine whether:
(1) the proposed capital structure of the insurance company
meets the requirements of this code;
(2) the officers, directors, and managing head of the insurance
company have sufficient insurance experience, ability, standing,
and good record to make success of the company probable;
(3) the applicants are acting in good faith;
(4) if the proposed amendment relates to a diminution of the
insurance company's charter powers with respect to the kinds of
insurance business in which the company may be engaged, all
liabilities incidental to the exercise of the powers to be
eliminated have been terminated or wholly reinsured; and
(5) the property involved in an increase of capital or surplus,
or both, is:
(A) properly valued; and
(B) in the form authorized by the following provisions, to the
extent those provisions apply:
(i) Subchapter B, Chapter 424, other than Sections 424.052,
424.072, and 424.073; and
(ii) Section 822.204.
(b) If the commissioner determines that the applicant has not
met the requirements set out by Subsection (a), the commissioner
shall deny the application. On the applicant's request, the
commissioner shall hold a hearing on a denial. Not later than
the 30th day after the date of the applicant's request for a
hearing, the commissioner shall request a hearing date.
(c) If the commissioner does not deny the application under
Subsection (b), the commissioner shall approve the application
and the amendment shall be filed with the department.
(d) Except as provided by Subsection (e), when an amendment to
an insurance company's charter is filed with the department, the
amendment is effective.
(e) On approval of a certificate required under Section 822.156
and receipt of a fee in the amount determined under Chapter 202,
the commissioner shall issue to the directors a certified copy of
an amendment authorizing the issuance of shares of stock without
par value that is filed under this section. The amendment is
effective on issuance of the certified copy of the amendment.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2E.008, eff. April 1, 2009.
Acts 2009, 81st Leg., R.S., Ch.
1022, Sec. 7, eff. June 19, 2009.
SUBCHAPTER E. CAPITAL, SURPLUS, AND GUARANTY FUND REQUIREMENTS
Sec. 822.201. APPLICABILITY OF CAPITAL AND SURPLUS REQUIREMENTS.
The capital and surplus requirements of this chapter apply to
each insurance company or other entity, other than a farm mutual
insurance company, authorized to write property and casualty
insurance in this state including:
(1) a county mutual insurance company;
(2) a mutual insurance company, other than a mutual life
insurance company;
(3) a Lloyd's plan; and
(4) a reciprocal or interinsurance exchange.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.202. FULL COVERAGE AUTOMOBILE INSURANCE; DETERMINATION
OF AMOUNTS. Full coverage automobile insurance is one line of
casualty insurance for purposes of determining:
(1) the amount of capital and surplus of a capital stock company
under this code;
(2) the amount of surplus of a mutual insurance company or
reciprocal exchange under this code; or
(3) the amount of the guaranty fund and surplus of a Lloyd's
plan under this code.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.203. CAPITAL REQUIRED GENERALLY. To engage in the
kinds of insurance business for which an insurance company
organized under this chapter holds a certificate of authority,
the company must have at least the minimum amount of capital
required for a newly incorporated company under Section 822.054.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.204. FORM OF CAPITAL AND SURPLUS. (a) After
incorporation and the issuance of a certificate of authority to
an insurance company, the minimum capital stock and surplus of
the company may consist only of:
(1) United States currency;
(2) bonds of this state;
(3) bonds or other evidences of indebtedness of the United
States the principal and interest of which are guaranteed by the
United States;
(4) bonds or other interest-bearing evidences of indebtedness of
a county or municipality of this state; and
(5) notes secured by first mortgages:
(A) on otherwise unencumbered real property in this state the
title to which is valid; and
(B) the payment of which is insured wholly or partly by the
United States.
(b) Not more than 50 percent of the minimum capital stock and
minimum surplus of an insurance company may be invested in an
investment described by Subsection (a)(5).
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.205. UNENCUMBERED SURPLUS OR GUARANTY FUND REQUIREMENTS
FOR CERTAIN INSURANCE COMPANIES. (a) Except as provided by
Section 912.308, this section applies only to an insurance
company that:
(1) writes insurance only in this state; and
(2) is not required by law to have capital stock.
(b) Notwithstanding any other provision of this subchapter other
than Sections 822.212(b) and (c), an insurance company must have
a minimum amount of unencumbered surplus or a minimum amount of
guaranty fund and unencumbered surplus equal to the greater of:
(1) the amount of unencumbered surplus or the amount of guaranty
fund and surplus, as appropriate, the company was required to
have on August 31, 1991; or
(2) one-third of the company's net written premium for the
preceding 12 months after deducting:
(A) lawfully ceded reinsurance; and
(B) any policy fees not ceded to reinsurers.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
677, Sec. 1, eff. September 1, 2009.
Sec. 822.206. REPURCHASE OF CAPITAL STOCK BY TENDER OFFER OR
PRIVATE TRANSACTION. (a) An insurance company may, on prior
approval of the department, purchase outstanding shares of the
company's capital stock in accordance with the Texas Business
Corporation Act either by making a tender offer or by entering
into a negotiated private transaction.
(b) The application for approval under Subsection (a) must:
(1) state the number of shares offered;
(2) describe the shares;
(3) contain any pertinent information regarding the value of the
shares, including:
(A) the price offered by the company for the shares;
(B) the book value of the shares; and
(C) the market value of the shares if a market exists for those
shares; and
(4) demonstrate that the shares will be purchased using
uncommitted earned surplus.
(c) Before filing the application the insurance company must
present a copy of the application to the seller of the shares.
(d) The commissioner shall approve the application promptly if:
(1) the price offered by the insurance company for the shares
appears to be a reasonably fair price; and
(2) the application complies with the requirements of this
section and the Texas Business Corporation Act.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.207. REPURCHASE OF CAPITAL STOCK ON OPEN MARKET. (a)
On prior approval of the commissioner, an insurance company, the
capital stock of which is listed on a national securities
exchange, may purchase from time to time outstanding shares of
the company's capital stock on the open market. The shares must
be purchased:
(1) in the name of the company for its own account; and
(2) in accordance with the Texas Business Corporation Act.
(b) The application for approval under Subsection (a) must:
(1) state the maximum number of shares to be purchased;
(2) state the maximum period, not to exceed 180 days, during
which the purchase will be made;
(3) describe the shares;
(4) contain a commitment that the company will not pay a price
for the shares to be purchased that is greater than an amount
equal to the average of the bid price and the asked price at the
time of the purchase plus a standard broker's commission;
(5) contain any pertinent information relating to the value of
the shares, including the book value of the shares; and
(6) demonstrate that the shares will be purchased using
uncommitted earned surplus.
(c) The commissioner shall approve the application promptly if
the application complies with the requirements of this section
and the Texas Business Corporation Act.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.208. APPLICATION FOR REPURCHASE OF COMPANY'S SHARES
SUBJECT TO OTHER LAW. An application filed by an insurance
company under Section 822.206 or 822.207 is subject to the
substantive requirements for the approval of payment of an
extraordinary dividend under Chapter 823.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.209. REINVESTMENT OF CAPITAL STOCK. An insurance
company may, as circumstances require, exchange and reinvest its
capital stock in like securities.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.210. COMMISSIONER MAY REQUIRE LARGER CAPITAL AND
SURPLUS AMOUNTS. (a) The commissioner by rule or guideline may
require an insurance company organized under this chapter to
maintain capital and surplus in amounts that exceed the minimum
amounts required by this chapter because of:
(1) the nature and kind of risks the company underwrites or
reinsures;
(2) the premium volume of risks the company underwrites or
reinsures;
(3) the composition, quality, duration, or liquidity of the
company's investments;
(4) fluctuations in the market value of securities the company
holds; or
(5) the adequacy of the company's reserves.
(b) A rule adopted under Subsection (a) must be designed to
ensure the financial solvency of an insurance company for the
protection of policyholders.
(c) An insurance company that, after notifying the commissioner,
ceases to write or assume business continues to be subject to
this section.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 822.211. ACTION OF COMMISSIONER WHEN CAPITAL OR SURPLUS
REQUIREMENTS NOT SATISFIED. If an insurance company does not
comply with the capital and surplus requirements of this chapter,
the commissioner may enter an order prohibiting the company from
writing new business and may:
(1) place the company under state supervision or
conservatorship;
(2) declare the company to be in a hazardous condition as
provided by Subchapter A, Chapter 404;
(3) declare the company to be impaired as provided by Subchapter
B, Chapter 404; or
(4) apply to the company any other applicable sanction provided
by this code.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2E.009, eff. April 1, 2009.
Sec. 822.212. INCREASE OF CAPITAL AND SURPLUS. (a)
Notwithstanding Section 822.203, to engage in the kinds of
insurance business for which an insurance company organized under
this chapter holds a certificate of authority in this state, an
insurance company organized under this chapter that on September
1, 2009, had less than the minimum amount of capital and surplus
required for a newly incorporated company under Section 822.054
must:
(1) not later than December 31, 2010, have increased the amount
of its capital by at least 10 percent of the difference between
the amount of minimum capital required for a newly incorporated
company under Section 822.054 and the amount of the company's
capital on December 31, 2009;
(2) not later than December 31, 2011, have increased the amount
of its capital by at least 20 percent of the difference between
the amount of minimum capital required for a newly incorporated
company under Section 822.054 and the amount of the company's
capital on December 31, 2009;
(3) not later than December 31, 2012, have increased the amount
of its capital by at least 30 percent of the difference between
the amount of minimum capital required for a newly incorporated
company under Section 822.054 and the amount of the company's
capital on December 31, 2009;
(4) not later than December 31, 2013, have increased the amount
of its capital by at least 40 percent of the difference between
the amount of minimum capital required for a newly incorporated
company under Section 822.054 and the amount of the company's
capital on December 31, 2009;
(5) not later than December 31, 2014, have increased the amount
of its capital by at least 50 percent of the difference between
the amount of minimum capital required for a newly incorporated
company under Section 822.054 and the amount of the company's
capital on December 31, 2009;
(6) not later than December 31, 2015, have increased the amount
of its capital by at least 60 percent of the difference between
the amount of minimum capital required for a newly incorporated
company under Section 822.054 and the amount of the company's
capital on December 31, 2009;
(7) not later than December 31, 2016, have increased the amount
of its capital by at least 70 percent of the difference between
the amount of minimum capital required for a newly incorporated
company under Section 822.054 and the amount of the company's
capital on December 31, 2009;
(8) not later than December 31, 2017, have increased the amount
of its capital by at least 80 percent of the difference between
the amount of minimum capital required for a newly incorporated
company under Section 822.054 and the amount of the company's
capital on December 31, 2009;
(9) not later than December 31, 2018, have increased the amount
of its capital by at least 90 percent of the difference between
the amount of minimum capital required for a newly incorporated
company under Section 822.054 and the amount of the company's
capital on December 31, 2009; and
(10) not later than December 31, 2019, have at least the minimum
amount of capital required under Section 822.054 for a newly
incorporated company.
(b) An insurance company that on September 1, 2009, had less
than the minimum amount of capital and surplus required for a
newly incorporated company under Section 822.054 shall
immediately increase the amount of its capital and surplus to an
amount equal to the required amount of capital and surplus under
Section 822.054 if there is:
(1) a change in the control of at least 50 percent of the voting
securities of the insurance company;
(2) a change in the control of at least 50 percent of the voting
securities of a holding company controlling the insurance
company; or
(3) a change in control of at least 50 percent by any other
method of control if the insurance company or holding company is
not controlled by voting securities.
(c) For purposes of Subsection (b), a transfer of ownership that
occurs because of death, regardless of whether the decedent dies
testate or intestate, may not be considered a change in the
control of an insurance company or holding company if ownership
is transferred solely to one or more individuals each of whom
would be an heir of the decedent if the decedent had died
intestate.
(d) An insurance company that, after notifying the commissioner,
ceases to write or assume business is not required to comply with
this section. If the company resumes writing business at a later
date, the company shall comply with this section on the date the
company resumes business.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1275, Sec. 2, eff. September 1, 2009.