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CHAPTER 941. LLOYD'S PLAN

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INSURANCE CODETITLE 6. ORGANIZATION OF INSURERS AND RELATED ENTITIESSUBTITLE G. LLOYD'S PLAN AND RECIPROCAL AND INTERINSURANCEEXCHANGESCHAPTER 941. LLOYD'S PLANSUBCHAPTER A. GENERAL PROVISIONSSec. 941.001.DEFINITIONS.In this chapter:(1)"Affiliate" has the meaning described by Section 823.003.(2)"Attorney in fact" means an attorney in fact authorizedunder a power of attorney to act for the underwriters of aLloyd's plan.(3)"Lloyd's plan" means an entity engaged in the business ofwriting insurance on the Lloyd's plan.(4)"Underwriter" means an individual, partnership, orassociation of individuals that writes insurance on the Lloyd'splan.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.002.LLOYD'S PLAN INSURANCE AUTHORIZED; LIFE INSURANCEPROHIBITED.(a)Except as provided by Subsection (b), a Lloyd'splan may write any kind of insurance that may be lawfully writtenin this state, including:(1)fire insurance, including tornado, hail, crop, and floaterinsurance;(2)automobile insurance, including fire, theft, transportation,property damage, collision liability, and tornado insurance;(3)liability insurance;(4)marine insurance;(5)accident and health insurance;(6)burglary insurance;(7)plate glass insurance; and(8)fidelity and surety bonds insurance.(b)A Lloyd's plan may not write life insurance.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.003.LIMITED EXEMPTION FROM INSURANCE LAWS; APPLICATIONOF CERTAIN LAWS.(a)A Lloyd's plan is exempt from theoperation of all insurance laws of this state except asspecifically provided in this chapter or unless it isspecifically provided in the other law that the law isapplicable.(b)A Lloyd's plan is subject to:(1)Subchapter A, Chapter 5, Chapter 254, Subchapters A and B,Chapter 1806, and Subtitle C, Title 10;(2) Articles 5.35, 5.39, and 5.40;(3) Article 5.13-2, as provided by that article, Chapter 2251, asprovided by that chapter, and Chapter 2301, as provided by thatchapter;(4) Chapters 251, 252, 402, 541, and 2253;(5)Subchapter A, Chapter 401;(6)Subchapter B, Chapter 404;(7)Subchapter C, Chapter 1806; and(8)Sections 38.001, 501.159, 822.203, 822.205, 822.210,822.212, 2002.005, 2002.051, and 2002.052.(c)Chapter 2007 applies to rates for motor vehicle insurancewritten by a Lloyd's plan.(d)Underwriters and their attorney in fact are subject toSections 822.051, 822.057, 822.058, 822.059, 822.060, and822.201, except that:(1)the articles of agreement executed by the underwriters areinstead of the articles of incorporation; and(2)the aggregate of the guaranty fund and unencumbered surplusof the Lloyd's plan constitutes capital structure for purposes ofSection 822.060.(e)A Lloyd's plan is subject to Chapter 2210, as provided bythat chapter.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 21.43(a),(b), eff. June 11, 2003.Amended by:Acts 2005, 79th Leg., Ch.631, Sec. 5, eff. September 1, 2005.Acts 2005, 79th Leg., Ch.1295, Sec. 2, eff. September 1, 2005.Acts 2007, 80th Leg., R.S., Ch.730, Sec. 2E.114, eff. April 1, 2009.Acts 2007, 80th Leg., R.S., Ch.730, Sec. 3B.026, eff. September 1, 2007.Acts 2007, 80th Leg., R.S., Ch.921, Sec. 9.026, eff. September 1, 2007.Acts 2009, 81st Leg., R.S., Ch.1408, Sec. 42, eff. June 19, 2009.Sec. 941.004.WITHDRAWAL FROM THE BUSINESS OF INSURANCE.(a)ALloyd's plan may withdraw from the business of insurance only ifthe department determines that adequate provision has been made,through reinsurance or other means, for:(1)payment of all unadjusted losses of the Lloyd's plan; and(2)reinsurance of all outstanding risks in favor of residentsof this state or covering property located in this state.(b)On compliance with the requirements of Subsection (a):(1)any bond of the attorney in fact shall be released; and(2)the department shall release to the underwriters any netassets over which the department has joint control.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.SUBCHAPTER B. FORMATION AND STRUCTURE OF LLOYD'S PLANSec. 941.051.FORMATION OF LLOYD'S PLAN.(a)To writeinsurance on the Lloyd's plan, underwriters must:(1)execute articles of agreement expressing the intent to writeinsurance; and(2)comply with the requirements of this chapter.(b)A Lloyd's plan must have at least 10 underwriters.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.052.ATTORNEY IN FACT.(a)The attorney in fact mayexecute insurance policies for the Lloyd's plan.(b)The principal office of the attorney in fact must bemaintained at the place designated by the underwriters in thearticles of agreement.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.053.DEPUTY OR SUBSTITUTE ATTORNEY IN FACT.Anappointed deputy attorney in fact or substitute attorney in factfor an attorney in fact holding a certificate of authority underthis chapter and accepting powers of attorney from underwritersis authorized by the certificate of authority to:(1)issue or make a policy or contract of insurance; and(2)perform any other act incident to issuing or making a policyor contract of insurance.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.054.NAME OF LLOYD'S PLAN.The name under which aLloyd's plan engages in business:(1)must contain the word "Lloyd's"; and(2)may not be so similar to any name in use in this state as tobe likely to confuse or deceive.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.SUBCHAPTER C. AUTHORITY TO ENGAGE IN BUSINESSSec. 941.101.CERTIFICATE OF AUTHORITY REQUIRED.(a)Anattorney in fact may not write insurance in this state or forresidents of this state or covering property located in thisstate unless the attorney in fact holds a certificate ofauthority issued under this chapter.(b)Except as otherwise provided by this chapter, an attorney infact must:(1)be a resident of this state; and(2)maintain the attorney in fact's office in this state.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.102.APPLICATION FOR CERTIFICATE OF AUTHORITY.(a)The attorney in fact shall file with the department a verifiedapplication for a certificate of authority that states:(1)the name of the attorney in fact;(2)the name under which the Lloyd's plan will engage in thebusiness of insurance;(3)the names and addresses of the underwriters;(4)the location of the principal office; and(5)the kinds of insurance to be written.(b)The application must be accompanied by:(1)a copy of each form of policy or contract under whichinsurance will be written;(2)a copy of the form of the power of attorney under which theattorney in fact will act for and bind the underwriters;(3)a copy of the articles of agreement executed by theunderwriters and the attorney in fact;(4)a financial statement showing in detail:(A)assets held by the attorneys in fact, committee ofunderwriters, trustees, or other officers of the Lloyd's plan;(B)liabilities incurred and outstanding; and(C)income received and disbursements made by the attorney infact;(5)an instrument executed by each underwriter authorizing theattorney in fact to accept service of process for eachunderwriter in any action on a policy or contract of insurance;and(6)an instrument from the attorney in fact that delegates tothe department the power of the attorney in fact to acceptservice of process.(c)On filing the application, the attorney in fact shall pay tothe department a fee of $10. A fee collected under thissubsection shall be deposited to the credit of the TexasDepartment of Insurance operating account.(d)Sections 201.001 and 201.002 apply to a fee collected underSubsection (c).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.115, eff. April 1, 2009.Sec. 941.103.ISSUANCE OF CERTIFICATE OF AUTHORITY.Ondetermination by the department that the underwriters andattorney in fact have complied with the law, the departmentshall, in accordance with Sections 801.001, 801.002,801.051-801.055, 801.057, and 801.101, issue a certificate ofauthority to the attorney in fact.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.SUBCHAPTER D. OPERATION, POWERS, AND DUTIES OF LLOYD'S PLANSec. 941.151.LIABILITY OF UNDERWRITER.(a)Subject toSubsection (c), an underwriter by contract with the personsinsured may limit the underwriter's liability to the percentageof the loss that equals the ratio of the underwriter'ssubscription paid in cash or securities allowed by this chapterto the total guaranty fund contributed by all the underwriters.(b)Subject to Subsection (c), an underwriter's total liabilityon all risks may be limited to the amount of the underwriter'ssubscription, as expressed in the underwriter's power of attorneyand agreement with the attorney in fact.(c)At least half of an underwriter's subscription must be paidor contributed to the guaranty fund in cash or admissiblesecurities.(d)An underwriter is responsible solely for the underwriter'sliability as provided by the insurance contract. An underwriteris not liable as a partner.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.152.LIABILITY OF ADDITIONAL OR SUBSTITUTEDUNDERWRITER.An additional or substituted underwriter is liablein the same manner and to the same extent as an originalsubscriber to the articles of agreement and power of attorney onfile with the department.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.153.ACCRUAL OF PROFITS.The profits of a Lloyd's planmay accrue to an underwriter only on the basis of theunderwriter's actual investment in cash or convertiblesecurities, without regard to any obligation or subscription ofthe underwriter to pay additional cash or securities in thefuture.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.154.ASSUMPTION OF RISK BY CERTAIN AFFILIATED INSURERS.An insurer who is subject to Article 5.26 may not directly orindirectly assume all or a substantial part of a risk covered bya policy written by a Lloyd's plan that is an affiliate of theinsurer if the risk is written at a rate less than the rate thatmay be lawfully charged by:(1)the insurer; or(2)one of the insurer's affiliates that is subject to Article5.26.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.155.PROMOTION OF LLOYD'S PLAN.(a)An individual,firm, or corporation may not be instrumental in organizing aLloyd's plan if, in the organization of the Lloyd's plan,compensation is paid to the individual, firm, or corporation orto a representative of the individual, firm, or corporation forprocuring underwriters or a guaranty fund for the Lloyd's planunless the individual, firm, or corporation holds a permit issuedby the department that authorizes the charging of a commission inconnection with organizing the Lloyd's plan.(b)Not more than 10 percent of the total amount of anunderwriter's subscription to a Lloyd's plan may be paid to anyperson as a commission for the sale of units of or an interest inthe Lloyd's plan or for procuring underwriters for the Lloyd'splan.(c)This section applies to the continued organization orextension of a Lloyd's plan, if a commission is to be paid inconnection with the organization or extension. With respect to acontinued organization or extension of a Lloyd's plan, thecommissioner may not refuse the permit because of thecontemplated size or amount of the guaranty fund of the Lloyd'splan.(d)After the permit has been granted, securities may not beaccepted as contributions to the guaranty fund unless thesecurities have been approved in advance by the department ascomplying with this chapter with respect to the investment of thefunds of a Lloyd's plan.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.156.REINSURANCE PERMITTED.This chapter does notprevent a domestic Lloyd's plan from reinsuring:(1)the Lloyd's plan's excess lines with a solvent foreignLloyd's plan acceptable to the department that does not hold acertificate of authority to engage in the business of insurancein this state; or(2)any business from a foreign Lloyd's plan described bySubdivision (1).Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.SUBCHAPTER E. FINANCIAL REQUIREMENTSSec. 941.201.REQUIRED NET ASSETS.The department may not issuea certificate of authority to an attorney in fact unless the netassets contributed to the attorney in fact, a committee ofunderwriters, a trustee, or other officers as provided for in thearticles of agreement constitute a guaranty fund and surplus overand above all of the Lloyd's plan's liabilities that is at leastequal to the minimum capital stock and surplus required of astock insurance company engaging in the same kinds of business.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.202.LIMITATION OF BUSINESS.(a)Except as providedby Subsection (c), a Lloyd's plan may not assume or writeinsurance risks in this state, for residents of this state, orcovering property located in this state that produce an amount ofnet premium income that exceeds 10 times the value of the netassets of the underwriters.(b)If the insurance risks written or assumed by a Lloyd's planproduce a net premium income that exceeds the limit specified bySubsection (a), the Lloyd's plan may not write or assume anadditional insurance risk until the net assets have beenincreased to a level that brings the net premium income producedby the additional insurance risk within that limit.(c)The limit imposed by Subsection (a) does not apply to aLloyd's plan if:(1)the Lloyd's plan's net assets equal at least the amount ofmoney required of a stock insurance company engaged in the samekind of business in this state; or(2)the department determines that the Lloyd's plan, throughreinsurance or other contracts with other responsible and solventinsurers, has reduced the net lines at risk carried by theLloyd's plan so that its operations are safe and its solvency isnot in danger.(d)An attorney in fact for a Lloyd's plan may not assume aninsurance risk that exceeds one-tenth of the sum of the amount ofthe net assets of the underwriters as described in thissubchapter and the amount of the additional liability assumed bythe individual underwriters in the articles of agreement and inpolicies or contracts of insurance, unless the excess insurancerisk is promptly reinsured.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.203.COMPUTATION OF RESERVE.A Lloyd's plan shallcompute reserve liabilities for outstanding business and incurredlosses on the same basis required for a stock insurance companyengaged in the same kinds of business in this state.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.204.AUTHORIZED INVESTMENTS.(a)The minimum guarantyfund and surplus required of a Lloyd's plan under Sections822.054, 822.202, 822.210, 822.211, and 941.201 must be:(1)in cash; or(2)invested as provided by:(A)Section 822.204; or(B)any other law governing the investment of the capital stockand minimum surplus of a capital stock insurance company engagedin the same kind of business.(b)Funds of a Lloyd's plan other than the minimum guaranty fundand surplus described by Subsection (a) must, if invested, beinvested as provided by:(1)the provisions of Subchapter B, Chapter 424, other thanSections 424.052, 424.072, and 424.073; or(2)any other law governing the investment of the funds of acapital stock insurance company engaged in the same kind ofbusiness.(c)A Lloyd's plan may purchase, hold, or convey real propertyin accordance with Section 862.002.(d)A Lloyd's plan organized before August 10, 1943, andengaging in business under a certificate of authority issued bythe former Board of Insurance Commissioners is not required tocomply with this section except as to securities acquired on orafter August 10, 1943, regardless of whether those securitieswere substituted for securities held before that date or wereacquired from additional, successor, or substituted underwriters.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.116, eff. April 1, 2009.Sec. 941.205.JOINT CONTROL OF MINIMUM ASSETS.(a)To theextent of the minimum required under this subchapter, the assetsof a Lloyd's plan must be made subject to the joint control ofthe attorney in fact and the department, in a manner satisfactoryto the department, so that the assets may not be withdrawn,diverted, or spent without the approval of the department or fora purpose not permitted under this chapter.(b)The underwriters are entitled to the interest or incomeaccruing from property or securities placed under joint controlunder Subsection (a) as the interest or income becomes payable.(c)As an alternative to submitting assets to joint controlunder Subsection (a), an attorney in fact for a Lloyd's planengaged in business before August 20, 1929, may execute a bond inthe amount of $25,000 for the safekeeping of assets, to bereleased only on approval of the department. The corporate suretyand the form of the bond must be approved by the department.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.206.HAZARDOUS FINANCIAL CONDITION, SUPERVISION,CONSERVATORSHIP, AND LIQUIDATION; IMPAIRMENT OF SURPLUS.(a)Subchapter A, Chapter 404, and Chapters 441 and 443 apply to aLloyd's plan engaged in the business of insurance in this state.(b)Subchapter B, Chapter 404, applies to a Lloyd's plan.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.117, eff. April 1, 2009.SUBCHAPTER F. REGULATION OF LLOYD'S PLANSec. 941.251.EXAMINATIONS.(a)The provisions of Sections86.001, 86.002, 401.051, 401.052, 401.054-401.062, 401.151,401.152, 401.155, and 401.156 that relate to the examination ofinsurers apply to a Lloyd's plan.(b)The department may examine the books and affairs of anattorney in fact for a Lloyd's plan. The attorney in fact andeach deputy attorney in fact shall facilitate the examination andfurnish any information reasonably required by the department.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.118, eff. April 1, 2009.Sec. 941.252.ANNUAL REPORT.(a)An attorney in fact shallannually file with the department a verified report on a formprepared by the department of:(1)the business conducted by the attorney in fact on behalf ofthe Lloyd's plan during the preceding year;(2)the condition of the affairs of the Lloyd's plan; and(3)any other information required by the department.(b)The report must cover all of the business conducted by theattorney in fact on behalf of the Lloyd's plan, without regard tothe place where the business was conducted.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.SUBCHAPTER G. FOREIGN LLOYD'S PLANSec. 941.301.FOREIGN LLOYD'S PLAN; BOND OR MINIMUM NET ASSETSREQUIRED.(a)Except as provided by Subsection (b), thecommissioner may not issue a certificate of authority to anattorney in fact if:(1)the underwriters are not residents of this state; or(2)the underwriters maintain their principal office outside ofthis state.(b)The department may issue a certificate of authority to anattorney in fact in circumstances described by Subsection (a) ifthe underwriters, at their option:(1)file a bond with the department that complies with Section941.302; or(2)maintain net assets in this state that:(A)are subject to the joint control of the attorney in fact andthe commissioner; and(B)meet the requirements of Subchapter E regarding the minimumamount of net assets of a Lloyd's plan.(c)A deposit of securities made under Subsection (b)(2) isconsidered to have been made on the same terms and conditions asa bond executed in accordance with Section 941.302.(d)If there is recovery on a deposit or bond made under thissection, the commissioner shall immediately demand thatadditional security be provided to increase the amount of thebonds to the minimum amount required by this section. Theadditional bond must be posted not later than the 30th day afterthe date the commissioner makes the demand. Successive recoveriesmay be made on a bond made under this section until the principalamount of the bond is exhausted.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.302.BOND OF FOREIGN LLOYD'S PLAN.(a)A bond filedunder Section 941.301 must:(1)be executed by corporate sureties that:(A)meet the requirements imposed by the department; and(B)are authorized to engage in guaranty, fidelity, and suretybusiness in this state;(2)be in a principal amount that equals the minimum amount ofnet assets of a Lloyd's plan under this subchapter;(3)be payable to the department;(4)be conditioned for the payment of all claims arising underinsurance policies or contracts:(A)issued in this state;(B)issued to residents of this state; or(C)covering property located in this state; and(5)be held by the department for the benefit of any person witha valid claim arising under an insurance policy or contractdescribed by Subdivision (4).(b)The bond must also provide that if a Lloyd's plan withoutstanding insurance policies in favor of residents of thisstate or covering property located in this state becomesinsolvent or ceases to engage in the business of insurance inthis state, the department, after 10 days' notice to the attorneyin fact for the Lloyd's plan or any receiver in charge of theLloyd's plan's property and affairs, may contract with anotherinsurer engaging in the business of insurance in this state forthe assumption of and reinsurance by that insurer of:(1)all of the Lloyd's plan's insurance risks outstanding inthis state; and(2)all unsatisfied lawful claims outstanding against theLloyd's plan.(c)If the department enters into a contract described bySubsection (b) and the attorney general approves the contract asreasonable, the assuming insurer is entitled to recover from themakers of the bond filed under Section 941.301 the amount of thepremium or compensation for reinsurance that is specified in thecontract.(d)A bond filed under Section 941.301 binds any additional orsubstitute underwriters of the Lloyd's plan.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.SUBCHAPTER H. CONVERSION TO CAPITAL STOCK INSURANCE COMPANYSec. 941.351.CONVERSION AUTHORIZED.The underwriters mayconvert a Lloyd's plan to a capital stock insurance companygoverned by Chapter 822 by complying with this subchapter.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.352.ADOPTION OF CONVERSION PLAN.The underwriters bya two-thirds vote may adopt a plan to convert the Lloyd's plan toa capital stock insurance company.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.353.REQUIREMENTS OF CONVERSION PLAN.The conversionplan must provide that a capital stock insurance company will beformed in accordance with Chapter 822, except that:(1)the company's required minimum capital and surplus mustequal the required minimum guaranty fund and surplus of theLloyd's plan;(2)the company's assets may be in cash or in the form of aninvestment lawfully held by the Lloyd's plan; and(3)an original examination under Section 822.058(b) is notrequired unless directed by the commissioner.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.354.COMMISSIONER APPROVAL OF CONVERSION PLAN.On thecommissioner's approval of the conversion plan and the formationof the capital stock insurance company, all assets, interests,obligations, and liabilities of the Lloyd's plan, including alloutstanding policies and insurance obligations, are transferredto the capital stock insurance company, except as otherwiseprovided by this subchapter.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.355.CONVERSION OF MEMBER OF HOLDING COMPANY SYSTEM.If the Lloyd's plan is a member of a holding company systemidentified in registration information that the Lloyd's planfiled with the department in accordance with Chapter 823, therights and interests of the underwriters in the capital stockinsurance company may be assigned at the time of conversion toany affiliated person in that holding company system. Anassignment under this subsection is not:(1)a change in control for the purposes of Section 822.212; or(2)an acquisition of control for the purposes of Chapter 823.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.SUBCHAPTER O. PENALTIESSec. 941.701.REVOCATION OF CERTIFICATE OF AUTHORITY.Thecommissioner shall revoke a certificate of authority issued to anattorney in fact if the attorney in fact or an underwriterviolates this chapter or any other law of this state.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.Sec. 941.702.CRIMINAL PENALTY.(a)A person commits anoffense if the person, as a principal, attorney in fact, agent,broker, or other representative, engages in the business ofwriting insurance on the Lloyd's plan in violation of thischapter.(b)An offense under this section is punishable by a fine of notmore than $500.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,2003.
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  • INSURANCE CODE

    TITLE 6. ORGANIZATION OF INSURERS AND RELATED ENTITIES

    SUBTITLE G. LLOYD'S PLAN AND RECIPROCAL AND INTERINSURANCE

    EXCHANGES

    CHAPTER 941. LLOYD'S PLAN

    SUBCHAPTER A. GENERAL PROVISIONS

    Sec. 941.001. DEFINITIONS. In this chapter:

    (1) "Affiliate" has the meaning described by Section 823.003.

    (2) "Attorney in fact" means an attorney in fact authorized

    under a power of attorney to act for the underwriters of a

    Lloyd's plan.

    (3) "Lloyd's plan" means an entity engaged in the business of

    writing insurance on the Lloyd's plan.

    (4) "Underwriter" means an individual, partnership, or

    association of individuals that writes insurance on the Lloyd's

    plan.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.002. LLOYD'S PLAN INSURANCE AUTHORIZED; LIFE INSURANCE

    PROHIBITED. (a) Except as provided by Subsection (b), a Lloyd's

    plan may write any kind of insurance that may be lawfully written

    in this state, including:

    (1) fire insurance, including tornado, hail, crop, and floater

    insurance;

    (2) automobile insurance, including fire, theft, transportation,

    property damage, collision liability, and tornado insurance;

    (3) liability insurance;

    (4) marine insurance;

    (5) accident and health insurance;

    (6) burglary insurance;

    (7) plate glass insurance; and

    (8) fidelity and surety bonds insurance.

    (b) A Lloyd's plan may not write life insurance.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.003. LIMITED EXEMPTION FROM INSURANCE LAWS; APPLICATION

    OF CERTAIN LAWS. (a) A Lloyd's plan is exempt from the

    operation of all insurance laws of this state except as

    specifically provided in this chapter or unless it is

    specifically provided in the other law that the law is

    applicable.

    (b) A Lloyd's plan is subject to:

    (1) Subchapter A, Chapter 5, Chapter 254, Subchapters A and B,

    Chapter 1806, and Subtitle C, Title 10;

    (2) Articles 5.35, 5.39, and 5.40;

    (3) Article 5.13-2, as provided by that article, Chapter 2251, as

    provided by that chapter, and Chapter 2301, as provided by that

    chapter;

    (4) Chapters 251, 252, 402, 541, and 2253;

    (5) Subchapter A, Chapter 401;

    (6) Subchapter B, Chapter 404;

    (7) Subchapter C, Chapter 1806; and

    (8) Sections 38.001, 501.159, 822.203, 822.205, 822.210,

    822.212, 2002.005, 2002.051, and 2002.052.

    (c) Chapter 2007 applies to rates for motor vehicle insurance

    written by a Lloyd's plan.

    (d) Underwriters and their attorney in fact are subject to

    Sections 822.051, 822.057, 822.058, 822.059, 822.060, and

    822.201, except that:

    (1) the articles of agreement executed by the underwriters are

    instead of the articles of incorporation; and

    (2) the aggregate of the guaranty fund and unencumbered surplus

    of the Lloyd's plan constitutes capital structure for purposes of

    Section 822.060.

    (e) A Lloyd's plan is subject to Chapter 2210, as provided by

    that chapter.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 21.43(a),

    (b), eff. June 11, 2003.

    Amended by:

    Acts 2005, 79th Leg., Ch.

    631, Sec. 5, eff. September 1, 2005.

    Acts 2005, 79th Leg., Ch.

    1295, Sec. 2, eff. September 1, 2005.

    Acts 2007, 80th Leg., R.S., Ch.

    730, Sec. 2E.114, eff. April 1, 2009.

    Acts 2007, 80th Leg., R.S., Ch.

    730, Sec. 3B.026, eff. September 1, 2007.

    Acts 2007, 80th Leg., R.S., Ch.

    921, Sec. 9.026, eff. September 1, 2007.

    Acts 2009, 81st Leg., R.S., Ch.

    1408, Sec. 42, eff. June 19, 2009.

    Sec. 941.004. WITHDRAWAL FROM THE BUSINESS OF INSURANCE. (a) A

    Lloyd's plan may withdraw from the business of insurance only if

    the department determines that adequate provision has been made,

    through reinsurance or other means, for:

    (1) payment of all unadjusted losses of the Lloyd's plan; and

    (2) reinsurance of all outstanding risks in favor of residents

    of this state or covering property located in this state.

    (b) On compliance with the requirements of Subsection (a):

    (1) any bond of the attorney in fact shall be released; and

    (2) the department shall release to the underwriters any net

    assets over which the department has joint control.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    SUBCHAPTER B. FORMATION AND STRUCTURE OF LLOYD'S PLAN

    Sec. 941.051. FORMATION OF LLOYD'S PLAN. (a) To write

    insurance on the Lloyd's plan, underwriters must:

    (1) execute articles of agreement expressing the intent to write

    insurance; and

    (2) comply with the requirements of this chapter.

    (b) A Lloyd's plan must have at least 10 underwriters.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.052. ATTORNEY IN FACT. (a) The attorney in fact may

    execute insurance policies for the Lloyd's plan.

    (b) The principal office of the attorney in fact must be

    maintained at the place designated by the underwriters in the

    articles of agreement.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.053. DEPUTY OR SUBSTITUTE ATTORNEY IN FACT. An

    appointed deputy attorney in fact or substitute attorney in fact

    for an attorney in fact holding a certificate of authority under

    this chapter and accepting powers of attorney from underwriters

    is authorized by the certificate of authority to:

    (1) issue or make a policy or contract of insurance; and

    (2) perform any other act incident to issuing or making a policy

    or contract of insurance.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.054. NAME OF LLOYD'S PLAN. The name under which a

    Lloyd's plan engages in business:

    (1) must contain the word "Lloyd's"; and

    (2) may not be so similar to any name in use in this state as to

    be likely to confuse or deceive.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    SUBCHAPTER C. AUTHORITY TO ENGAGE IN BUSINESS

    Sec. 941.101. CERTIFICATE OF AUTHORITY REQUIRED. (a) An

    attorney in fact may not write insurance in this state or for

    residents of this state or covering property located in this

    state unless the attorney in fact holds a certificate of

    authority issued under this chapter.

    (b) Except as otherwise provided by this chapter, an attorney in

    fact must:

    (1) be a resident of this state; and

    (2) maintain the attorney in fact's office in this state.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.102. APPLICATION FOR CERTIFICATE OF AUTHORITY. (a)

    The attorney in fact shall file with the department a verified

    application for a certificate of authority that states:

    (1) the name of the attorney in fact;

    (2) the name under which the Lloyd's plan will engage in the

    business of insurance;

    (3) the names and addresses of the underwriters;

    (4) the location of the principal office; and

    (5) the kinds of insurance to be written.

    (b) The application must be accompanied by:

    (1) a copy of each form of policy or contract under which

    insurance will be written;

    (2) a copy of the form of the power of attorney under which the

    attorney in fact will act for and bind the underwriters;

    (3) a copy of the articles of agreement executed by the

    underwriters and the attorney in fact;

    (4) a financial statement showing in detail:

    (A) assets held by the attorneys in fact, committee of

    underwriters, trustees, or other officers of the Lloyd's plan;

    (B) liabilities incurred and outstanding; and

    (C) income received and disbursements made by the attorney in

    fact;

    (5) an instrument executed by each underwriter authorizing the

    attorney in fact to accept service of process for each

    underwriter in any action on a policy or contract of insurance;

    and

    (6) an instrument from the attorney in fact that delegates to

    the department the power of the attorney in fact to accept

    service of process.

    (c) On filing the application, the attorney in fact shall pay to

    the department a fee of $10. A fee collected under this

    subsection shall be deposited to the credit of the Texas

    Department of Insurance operating account.

    (d) Sections 201.001 and 201.002 apply to a fee collected under

    Subsection (c).

    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.115, eff. April 1, 2009.

    Sec. 941.103. ISSUANCE OF CERTIFICATE OF AUTHORITY. On

    determination by the department that the underwriters and

    attorney in fact have complied with the law, the department

    shall, in accordance with Sections 801.001, 801.002,

    801.051-801.055, 801.057, and 801.101, issue a certificate of

    authority to the attorney in fact.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    SUBCHAPTER D. OPERATION, POWERS, AND DUTIES OF LLOYD'S PLAN

    Sec. 941.151. LIABILITY OF UNDERWRITER. (a) Subject to

    Subsection (c), an underwriter by contract with the persons

    insured may limit the underwriter's liability to the percentage

    of the loss that equals the ratio of the underwriter's

    subscription paid in cash or securities allowed by this chapter

    to the total guaranty fund contributed by all the underwriters.

    (b) Subject to Subsection (c), an underwriter's total liability

    on all risks may be limited to the amount of the underwriter's

    subscription, as expressed in the underwriter's power of attorney

    and agreement with the attorney in fact.

    (c) At least half of an underwriter's subscription must be paid

    or contributed to the guaranty fund in cash or admissible

    securities.

    (d) An underwriter is responsible solely for the underwriter's

    liability as provided by the insurance contract. An underwriter

    is not liable as a partner.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.152. LIABILITY OF ADDITIONAL OR SUBSTITUTED

    UNDERWRITER. An additional or substituted underwriter is liable

    in the same manner and to the same extent as an original

    subscriber to the articles of agreement and power of attorney on

    file with the department.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.153. ACCRUAL OF PROFITS. The profits of a Lloyd's plan

    may accrue to an underwriter only on the basis of the

    underwriter's actual investment in cash or convertible

    securities, without regard to any obligation or subscription of

    the underwriter to pay additional cash or securities in the

    future.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.154. ASSUMPTION OF RISK BY CERTAIN AFFILIATED INSURERS.

    An insurer who is subject to Article 5.26 may not directly or

    indirectly assume all or a substantial part of a risk covered by

    a policy written by a Lloyd's plan that is an affiliate of the

    insurer if the risk is written at a rate less than the rate that

    may be lawfully charged by:

    (1) the insurer; or

    (2) one of the insurer's affiliates that is subject to Article

    5.26.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.155. PROMOTION OF LLOYD'S PLAN. (a) An individual,

    firm, or corporation may not be instrumental in organizing a

    Lloyd's plan if, in the organization of the Lloyd's plan,

    compensation is paid to the individual, firm, or corporation or

    to a representative of the individual, firm, or corporation for

    procuring underwriters or a guaranty fund for the Lloyd's plan

    unless the individual, firm, or corporation holds a permit issued

    by the department that authorizes the charging of a commission in

    connection with organizing the Lloyd's plan.

    (b) Not more than 10 percent of the total amount of an

    underwriter's subscription to a Lloyd's plan may be paid to any

    person as a commission for the sale of units of or an interest in

    the Lloyd's plan or for procuring underwriters for the Lloyd's

    plan.

    (c) This section applies to the continued organization or

    extension of a Lloyd's plan, if a commission is to be paid in

    connection with the organization or extension. With respect to a

    continued organization or extension of a Lloyd's plan, the

    commissioner may not refuse the permit because of the

    contemplated size or amount of the guaranty fund of the Lloyd's

    plan.

    (d) After the permit has been granted, securities may not be

    accepted as contributions to the guaranty fund unless the

    securities have been approved in advance by the department as

    complying with this chapter with respect to the investment of the

    funds of a Lloyd's plan.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.156. REINSURANCE PERMITTED. This chapter does not

    prevent a domestic Lloyd's plan from reinsuring:

    (1) the Lloyd's plan's excess lines with a solvent foreign

    Lloyd's plan acceptable to the department that does not hold a

    certificate of authority to engage in the business of insurance

    in this state; or

    (2) any business from a foreign Lloyd's plan described by

    Subdivision (1).

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    SUBCHAPTER E. FINANCIAL REQUIREMENTS

    Sec. 941.201. REQUIRED NET ASSETS. The department may not issue

    a certificate of authority to an attorney in fact unless the net

    assets contributed to the attorney in fact, a committee of

    underwriters, a trustee, or other officers as provided for in the

    articles of agreement constitute a guaranty fund and surplus over

    and above all of the Lloyd's plan's liabilities that is at least

    equal to the minimum capital stock and surplus required of a

    stock insurance company engaging in the same kinds of business.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.202. LIMITATION OF BUSINESS. (a) Except as provided

    by Subsection (c), a Lloyd's plan may not assume or write

    insurance risks in this state, for residents of this state, or

    covering property located in this state that produce an amount of

    net premium income that exceeds 10 times the value of the net

    assets of the underwriters.

    (b) If the insurance risks written or assumed by a Lloyd's plan

    produce a net premium income that exceeds the limit specified by

    Subsection (a), the Lloyd's plan may not write or assume an

    additional insurance risk until the net assets have been

    increased to a level that brings the net premium income produced

    by the additional insurance risk within that limit.

    (c) The limit imposed by Subsection (a) does not apply to a

    Lloyd's plan if:

    (1) the Lloyd's plan's net assets equal at least the amount of

    money required of a stock insurance company engaged in the same

    kind of business in this state; or

    (2) the department determines that the Lloyd's plan, through

    reinsurance or other contracts with other responsible and solvent

    insurers, has reduced the net lines at risk carried by the

    Lloyd's plan so that its operations are safe and its solvency is

    not in danger.

    (d) An attorney in fact for a Lloyd's plan may not assume an

    insurance risk that exceeds one-tenth of the sum of the amount of

    the net assets of the underwriters as described in this

    subchapter and the amount of the additional liability assumed by

    the individual underwriters in the articles of agreement and in

    policies or contracts of insurance, unless the excess insurance

    risk is promptly reinsured.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.203. COMPUTATION OF RESERVE. A Lloyd's plan shall

    compute reserve liabilities for outstanding business and incurred

    losses on the same basis required for a stock insurance company

    engaged in the same kinds of business in this state.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.204. AUTHORIZED INVESTMENTS. (a) The minimum guaranty

    fund and surplus required of a Lloyd's plan under Sections

    822.054, 822.202, 822.210, 822.211, and 941.201 must be:

    (1) in cash; or

    (2) invested as provided by:

    (A) Section 822.204; or

    (B) any other law governing the investment of the capital stock

    and minimum surplus of a capital stock insurance company engaged

    in the same kind of business.

    (b) Funds of a Lloyd's plan other than the minimum guaranty fund

    and surplus described by Subsection (a) must, if invested, be

    invested as provided by:

    (1) the provisions of Subchapter B, Chapter 424, other than

    Sections 424.052, 424.072, and 424.073; or

    (2) any other law governing the investment of the funds of a

    capital stock insurance company engaged in the same kind of

    business.

    (c) A Lloyd's plan may purchase, hold, or convey real property

    in accordance with Section 862.002.

    (d) A Lloyd's plan organized before August 10, 1943, and

    engaging in business under a certificate of authority issued by

    the former Board of Insurance Commissioners is not required to

    comply with this section except as to securities acquired on or

    after August 10, 1943, regardless of whether those securities

    were substituted for securities held before that date or were

    acquired from additional, successor, or substituted underwriters.

    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.116, eff. April 1, 2009.

    Sec. 941.205. JOINT CONTROL OF MINIMUM ASSETS. (a) To the

    extent of the minimum required under this subchapter, the assets

    of a Lloyd's plan must be made subject to the joint control of

    the attorney in fact and the department, in a manner satisfactory

    to the department, so that the assets may not be withdrawn,

    diverted, or spent without the approval of the department or for

    a purpose not permitted under this chapter.

    (b) The underwriters are entitled to the interest or income

    accruing from property or securities placed under joint control

    under Subsection (a) as the interest or income becomes payable.

    (c) As an alternative to submitting assets to joint control

    under Subsection (a), an attorney in fact for a Lloyd's plan

    engaged in business before August 20, 1929, may execute a bond in

    the amount of $25,000 for the safekeeping of assets, to be

    released only on approval of the department. The corporate surety

    and the form of the bond must be approved by the department.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.206. HAZARDOUS FINANCIAL CONDITION, SUPERVISION,

    CONSERVATORSHIP, AND LIQUIDATION; IMPAIRMENT OF SURPLUS. (a)

    Subchapter A, Chapter 404, and Chapters 441 and 443 apply to a

    Lloyd's plan engaged in the business of insurance in this state.

    (b) Subchapter B, Chapter 404, applies to a Lloyd's plan.

    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.117, eff. April 1, 2009.

    SUBCHAPTER F. REGULATION OF LLOYD'S PLAN

    Sec. 941.251. EXAMINATIONS. (a) The provisions of Sections

    86.001, 86.002, 401.051, 401.052, 401.054-401.062, 401.151,

    401.152, 401.155, and 401.156 that relate to the examination of

    insurers apply to a Lloyd's plan.

    (b) The department may examine the books and affairs of an

    attorney in fact for a Lloyd's plan. The attorney in fact and

    each deputy attorney in fact shall facilitate the examination and

    furnish any information reasonably required by the department.

    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.118, eff. April 1, 2009.

    Sec. 941.252. ANNUAL REPORT. (a) An attorney in fact shall

    annually file with the department a verified report on a form

    prepared by the department of:

    (1) the business conducted by the attorney in fact on behalf of

    the Lloyd's plan during the preceding year;

    (2) the condition of the affairs of the Lloyd's plan; and

    (3) any other information required by the department.

    (b) The report must cover all of the business conducted by the

    attorney in fact on behalf of the Lloyd's plan, without regard to

    the place where the business was conducted.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    SUBCHAPTER G. FOREIGN LLOYD'S PLAN

    Sec. 941.301. FOREIGN LLOYD'S PLAN; BOND OR MINIMUM NET ASSETS

    REQUIRED. (a) Except as provided by Subsection (b), the

    commissioner may not issue a certificate of authority to an

    attorney in fact if:

    (1) the underwriters are not residents of this state; or

    (2) the underwriters maintain their principal office outside of

    this state.

    (b) The department may issue a certificate of authority to an

    attorney in fact in circumstances described by Subsection (a) if

    the underwriters, at their option:

    (1) file a bond with the department that complies with Section

    941.302; or

    (2) maintain net assets in this state that:

    (A) are subject to the joint control of the attorney in fact and

    the commissioner; and

    (B) meet the requirements of Subchapter E regarding the minimum

    amount of net assets of a Lloyd's plan.

    (c) A deposit of securities made under Subsection (b)(2) is

    considered to have been made on the same terms and conditions as

    a bond executed in accordance with Section 941.302.

    (d) If there is recovery on a deposit or bond made under this

    section, the commissioner shall immediately demand that

    additional security be provided to increase the amount of the

    bonds to the minimum amount required by this section. The

    additional bond must be posted not later than the 30th day after

    the date the commissioner makes the demand. Successive recoveries

    may be made on a bond made under this section until the principal

    amount of the bond is exhausted.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.302. BOND OF FOREIGN LLOYD'S PLAN. (a) A bond filed

    under Section 941.301 must:

    (1) be executed by corporate sureties that:

    (A) meet the requirements imposed by the department; and

    (B) are authorized to engage in guaranty, fidelity, and surety

    business in this state;

    (2) be in a principal amount that equals the minimum amount of

    net assets of a Lloyd's plan under this subchapter;

    (3) be payable to the department;

    (4) be conditioned for the payment of all claims arising under

    insurance policies or contracts:

    (A) issued in this state;

    (B) issued to residents of this state; or

    (C) covering property located in this state; and

    (5) be held by the department for the benefit of any person with

    a valid claim arising under an insurance policy or contract

    described by Subdivision (4).

    (b) The bond must also provide that if a Lloyd's plan with

    outstanding insurance policies in favor of residents of this

    state or covering property located in this state becomes

    insolvent or ceases to engage in the business of insurance in

    this state, the department, after 10 days' notice to the attorney

    in fact for the Lloyd's plan or any receiver in charge of the

    Lloyd's plan's property and affairs, may contract with another

    insurer engaging in the business of insurance in this state for

    the assumption of and reinsurance by that insurer of:

    (1) all of the Lloyd's plan's insurance risks outstanding in

    this state; and

    (2) all unsatisfied lawful claims outstanding against the

    Lloyd's plan.

    (c) If the department enters into a contract described by

    Subsection (b) and the attorney general approves the contract as

    reasonable, the assuming insurer is entitled to recover from the

    makers of the bond filed under Section 941.301 the amount of the

    premium or compensation for reinsurance that is specified in the

    contract.

    (d) A bond filed under Section 941.301 binds any additional or

    substitute underwriters of the Lloyd's plan.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    SUBCHAPTER H. CONVERSION TO CAPITAL STOCK INSURANCE COMPANY

    Sec. 941.351. CONVERSION AUTHORIZED. The underwriters may

    convert a Lloyd's plan to a capital stock insurance company

    governed by Chapter 822 by complying with this subchapter.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.352. ADOPTION OF CONVERSION PLAN. The underwriters by

    a two-thirds vote may adopt a plan to convert the Lloyd's plan to

    a capital stock insurance company.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.353. REQUIREMENTS OF CONVERSION PLAN. The conversion

    plan must provide that a capital stock insurance company will be

    formed in accordance with Chapter 822, except that:

    (1) the company's required minimum capital and surplus must

    equal the required minimum guaranty fund and surplus of the

    Lloyd's plan;

    (2) the company's assets may be in cash or in the form of an

    investment lawfully held by the Lloyd's plan; and

    (3) an original examination under Section 822.058(b) is not

    required unless directed by the commissioner.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.354. COMMISSIONER APPROVAL OF CONVERSION PLAN. On the

    commissioner's approval of the conversion plan and the formation

    of the capital stock insurance company, all assets, interests,

    obligations, and liabilities of the Lloyd's plan, including all

    outstanding policies and insurance obligations, are transferred

    to the capital stock insurance company, except as otherwise

    provided by this subchapter.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.355. CONVERSION OF MEMBER OF HOLDING COMPANY SYSTEM.

    If the Lloyd's plan is a member of a holding company system

    identified in registration information that the Lloyd's plan

    filed with the department in accordance with Chapter 823, the

    rights and interests of the underwriters in the capital stock

    insurance company may be assigned at the time of conversion to

    any affiliated person in that holding company system. An

    assignment under this subsection is not:

    (1) a change in control for the purposes of Section 822.212; or

    (2) an acquisition of control for the purposes of Chapter 823.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    SUBCHAPTER O. PENALTIES

    Sec. 941.701. REVOCATION OF CERTIFICATE OF AUTHORITY. The

    commissioner shall revoke a certificate of authority issued to an

    attorney in fact if the attorney in fact or an underwriter

    violates this chapter or any other law of this state.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

    Sec. 941.702. CRIMINAL PENALTY. (a) A person commits an

    offense if the person, as a principal, attorney in fact, agent,

    broker, or other representative, engages in the business of

    writing insurance on the Lloyd's plan in violation of this

    chapter.

    (b) An offense under this section is punishable by a fine of not

    more than $500.

    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,

    2003.

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