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TITLE 28INSURANCE
PART 1TEXAS DEPARTMENT OF INSURANCE
CHAPTER 7CORPORATE AND FINANCIAL REGULATION
SUBCHAPTER BINSURANCE HOLDING COMPANY SYSTEMS
RULE §7.202Definitions

  (19) Person--An individual, corporation, partnership, association, joint stock company, trust, unincorporated organization, or similar entity or combination of them acting in concert, but not a securities broker performing only the usual and customary broker's function.

  (20) Security holder of a specified person--One who owns any security of the person, including common stock, preferred stock, debt obligations, and any other security convertible into or evidencing the right to acquire any of the foregoing. The term "debt obligation" does not include trade, commercial, or open accounts, matured claims, or agents' commissions.

  (21) Subsidiary of a specified person--An affiliate controlled by the person directly or indirectly through one or more intermediaries.

  (22) Ultimate controlling person--That person which is not controlled by another person (as defined in this subsection).

  (23) Voting security--Any security or other instrument giving or granting to the holder the power to vote at a meeting of shareholders, for or against the election of directors, or any other matter involving the direction of the management and policies of the person, or any other security or instrument the department deems to be of similar nature including, but not limited to, those described in the rules and regulations the department may prescribe in the public interest as a voting security.

(b) Exemption--Commercially Domiciled Insurer.

  (1) The commissioner may exempt from the provisions of Insurance Code Chapter 823 and these sections, except the registration requirement, any commercially domiciled insurer if the commissioner determines the insurer has assets physically located in this state or an asset to liability ratio sufficient to justify the conclusion that there is no reasonable danger that the operations or conduct of the business of the insurer could present a danger of loss to the policyholders of this state. The exemption granted under this subsection must set forth the specific criteria under which it is granted and will be subject to annual review. The commissioner may, after notice and opportunity for hearing, rescind an exemption granted to a commercially domiciled insurer under the provisions of Insurance Code Chapter 823 and these sections. A rescission of an exemption must set forth the rationale for the rescission. Requests for an exemption under this subsection must be filed with Financial Analysis, Mail Code 303-1A, Texas Department of Insurance, P.O. Box 149104, 333 Guadalupe, Austin, Texas 78714-9104. The request must contain a signed and notarized affidavit of an executive officer of the insurer that, should the exemption be granted, the insurer will notify Financial Analysis within 10 days after it no longer meets the criteria set out in this section on which the exemption is based. In determining that a commercially domiciled insurer has sufficient assets to justify the conclusion that there is no reasonable danger that the operations or conduct of the business of the insurer could present a danger of loss to policyholders of this state, the commissioner must give consideration to the matters contacted in subparagraphs (A) - (D) of this paragraph in connection with an exemption requested under Insurance Code §823.015, and these sections.

    (A) Assets in Texas, which are either:

      (i) permanent, free, and unencumbered and physically located in Texas in an amount equal to the total unpaid losses attributable to Texas risks; or

      (ii) qualifying authorized investments under the Insurance Code comprising 20 percent of the insurer's admitted assets and physically located in Texas.

    (B) Adequacy of policyholder surplus, based upon:

      (i) an asset-to-liability ratio of two to one, if the insurer is a property and casualty insurer;

      (ii) an asset-to-liability ratio of one and one-half to one, if the insurer is a life, accident and health insurer;

      (iii) the insurer having capital and surplus equal to 250 percent of the minimum risk-based capital described in §7.402 of this title (relating to Risk-Based Capital and Surplus Requirements for Insurers and HMOs); or

      (iv) the insurer having total capital and surplus of at least $50 million.

    (C) Consideration may be given to financial conditions specified in §8.3 of this title (relating to Hazardous Conditions) to justify the conclusion that there is no reasonable danger that the operations or conduct of the business of the insurer could present a danger of loss to the policyholders of this state.

    (D) Consideration may be given to other positive factors with regard to an insurer's operations or conduct.

  (2) The provisions of this subchapter do not apply to a foreign or alien insurer if the commissioner has approved a total withdrawal plan from writing all lines of insurance for the insurer under Insurance Code Chapter 827.


Source Note: The provisions of §7.202 adopted to be effective January 1, 1976; amended to be effective November 30, 1984, 9 TexReg 5926; amended to be effective April 29, 1988, 13 TexReg 1761; amended to be effective April 13, 1992, 17 TexReg 2273; amended to be effective December 24, 1993, 18 TexReg 9310; amended to be effective July 14, 1994, 19 TexReg 5098; amended to be effective May 15, 1996, 21 TexReg 3798; amended to be effective May 5, 2002, 27 TexReg 3559; amended to be effective October 26, 2009, 34 TexReg 7309; amended to be effective May 26, 2013, 38 TexReg 3033

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