(a) As provided in §5.4123 of this division (relating
to Public Securities Request, Approval, and Issuance) and subject
to the commissioner's approval, the association's board of directors
may request that TPFA issue public securities after a catastrophic
event has occurred. The association's board of directors may make
the request:
(1) after the catastrophic event if the association's
board of directors determines that actual catastrophic losses are
estimated to exceed currently available net premium, other revenue,
and money in the CRTF; or
(2) before the catastrophic event if the association's
board of directors determines that public security proceeds may become
necessary to fund potential catastrophic losses. This paragraph does
not affect the requirements for issuing public securities that are
issued after a catastrophic event or the use of proceeds from public
securities issued after a catastrophic event.
(b) The association must submit its board of directors'
written request under subsection (a) of this section to the commissioner.
The request must include the following information:
(1) an estimate of the actual or potential losses and
expenses from the catastrophic event;
(2) the association's current premium and other revenue;
(3) the association's current net revenues;
(4) the sources and amount of loss funding other than
public securities, including:
(A) the amount of the loss paid from premium and other
revenue;
(B) the amount requested from the CRTF; and
(C) amounts available from other financing arrangements
and the association's obligations for other financing arrangements,
including whether the amounts must be repaid from public security
proceeds or from other means;
(5) the principal amount of each requested class of
public securities that is authorized and available to be issued and
that is requested;
(6) the estimated costs associated with each requested
amount and class of public securities under this section, including
any contractual coverage requirement and public security administrative
expenses;
(7) the structure and terms of the public securities;
(8) market conditions and requirements necessary to
sell marketable public securities;
(9) a cost-benefit analysis as described in §5.4135
of this division (relating to Marketable Public Securities; the Amount
of Class 1 Public Securities that Cannot be Issued; Market Conditions
and Requirements; and Cost-Benefit Analysis); and
(10) any other relevant information requested by the
commissioner.
(c) For each class of public securities requested under
this section, the association must determine and submit as part of
its request the authorized amount of public securities. This amount
must be the lesser of:
(1) the statutorily authorized principal amount for
that class, less any principal amount of that class of public security
that was issued in the catastrophe year, less, in the case of class
1 public securities, the proceeds of class 1 public securities issued
under §5.4124 of this division (relating to Issuance of Class
1 Public Securities before a Catastrophic Event), including the proceeds
of any outstanding Class 1 public securities issued on or before June
1, 2015, that were not depleted to pay for the association program
as of the beginning of the catastrophe year for which the class 1
public securities are requested under this section; or
(2) the amount of the estimated loss payable from proceeds
of that particular class, and estimated costs including the costs
associated with the issuance of that class of public security.
(d) For the purposes of determining the amount of proceeds
of class 1 public securities that were not depleted as described in
subsection (c)(1) of this section, public security proceeds used to
pay for public security issuance costs, establish a public security
reserve fund, capitalize interest, or provide for contractual coverage
amounts, are considered depleted in the same catastrophe year as,
and in proportion to, the public security proceeds used to pay for
losses or operating expenses, or used to pay principal on the public
securities.
(e) The association must, in aggregate for each catastrophe
year:
(1) impose an assessment of the statutorily authorized
amount of class 1 assessments under Insurance Code §2210.0725
and §5.4161 of this division (relating to Member Assessments)
before class 2 public securities may be issued; and
(2) impose an assessment of the statutorily authorized
amount of class 2 assessments under Insurance Code §2210.074
and §5.4161 of this division before class 3 public securities
may be issued.
(f) The association:
(1) may make one or more requests under this section;
(2) may, following a catastrophic event, request the
issuance of class 1 public securities under this section, before the
exhaustion of any remaining proceeds from class 1 public securities
issued before a catastrophic event, including the proceeds of any
outstanding class 1 public securities issued on or before June 1,
2015;
(3) must deplete the proceeds of any outstanding class
1 public securities issued before a catastrophic event, including
the proceeds of any outstanding class 1 public securities issued on
or before June 1, 2015, before using the proceeds of class 1 public
securities requested under this section; and
(4) may request the issuance of class 2 and class 3
public securities under this section, before the exhaustion of all
class 1 or class 2 assessments, respectively.
(g) For the issuance of class 2 or class 3 public securities
payable under Insurance Code §2210.6132, the association must
make a separate request under §5.4127 (relating to Contingent
Sources of Payment for Class 2 and Class 3 Public Securities) of this
division.
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