| (a) While class 2 or class 3 public securities payable
under Insurance Code §2210.613 and §2210.6131, respectively,
are outstanding, the association must deposit net premium and other
revenue in the class 2 public security trust fund and the class 3
public security trust fund, respectively, at periods and in amounts
as required by the class 2 and class 3 public security agreements
to fund the class 2 and class 3 payment obligations. As required by
Insurance Code §2210.609(c), the association must deposit association
surcharges collected under Insurance Code §2210.613 and §2210.6131
in the class 2 public security trust fund and the class 3 public security
trust fund, respectively.
(b) Without limiting other options, for public securities
payable under Insurance Code §2210.613 and §2210.6131, the
class 2 and class 3 public security agreements may include an operating
reserve fund. If the class 2 or class 3 public security trust funds
do not contain sufficient money to pay debt service on the class 2
or class 3 public securities, administrative expenses on the class
2 or class 3 public securities, or other class 2 or class 3 public
security obligations, the association must transfer sufficient money
from any operating reserve fund or other association-held funds to
the class 2 or class 3 public security trust fund, as applicable,
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 the applicable
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 appropriate trust fund accounts 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.
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