| (a) While class 1 public securities are outstanding,
the association must deposit net premium and other revenue in the
class 1 public security trust fund at periods and in amounts as required
by the class 1 public security agreements to fund the class 1 payment
obligation. As required by Insurance Code §2210.609(c), the association
must deposit association surcharges collected under Insurance Code §2210.612
in the class 1 public security trust fund.
(b) Without limiting other options, the class 1 public
security agreements may include an operating reserve fund. If the
class 1 public security trust fund does not contain sufficient money
to pay debt service on the class 1 public securities, administrative
expenses on the class 1 public securities, or other class 1 public
security obligations, the association must transfer sufficient money
from any operating reserve fund or other association-held funds to
the class 1 public security trust fund to make the payment.
(c) The association may not directly or indirectly
use, borrow, or in any manner pledge or encumber association surcharges
collected or to be collected, except for the payment of class 1 public
security obligations and as otherwise authorized in this title.
(d) The trust company must deposit any net investment
income earned on net premium and other revenue and on the association
surcharges into the class 1 public security trust fund while these
amounts are on deposit.
(e) Following the issuance of public securities, net
premium may be pledged for the payment of class 2 and class 3 payment
obligations. Net premium earned in one catastrophe year may be pledged
for the repayment of public securities issued in prior catastrophe
years.
|
