CHAPTER 822. GENERAL INCORPORATION AND REGULATORY REQUIREMENTS FOR INSURANCE COMPANIES OTHER THAN LIFE, HEALTH, OR ACCIDENT INSURANCE COMPANIES

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INSURANCE CODE

TITLE 6. ORGANIZATION OF INSURERS AND RELATED ENTITIES

SUBTITLE B. ORGANIZATION OF REGULATED ENTITIES

CHAPTER 822. GENERAL INCORPORATION AND REGULATORY REQUIREMENTS

FOR INSURANCE COMPANIES OTHER THAN LIFE, HEALTH, OR ACCIDENT

INSURANCE COMPANIES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 822.001. APPLICABILITY OF CHAPTER. Except as otherwise

provided by this code, this chapter applies to the formation of

each company or organization that proposes to engage in any kind

of insurance business other than a life, health, or accident

insurance company organized or operating under Chapter 841, 881,

882, 884, 885, 886, 887, or 888.

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

2003.

Sec. 822.002. APPLICABILITY OF LAW GOVERNING CORPORATIONS. An

insurance company incorporated in this state is subject to the

Texas Business Corporation Act, the Texas Miscellaneous

Corporation Laws Act (Article 1302-1.01 et seq., Vernon's Texas

Civil Statutes), and any other law of this state that governs

corporations in general to the extent those laws are not

inconsistent with this code.

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

2003.

Sec. 822.003. EFFECT ON TRANSACTIONS BETWEEN INSURANCE COMPANIES

AND OTHERS. The following sections do not restrict or modify any

provision of this code relating to a transaction between an

insurance company and the insurance company's affiliates, or

between an insurance company and certain shareholders, directors,

or officers of the insurance company, as provided by Subchapter

A, Chapter 805, and Chapter 823:

(1) Sections 822.055 and 822.056;

(2) Section 822.057(a)(4);

(3) Section 822.061;

(4) Section 822.156;

(5) Sections 822.158(d) and (e); and

(6) Sections 822.206 and 822.207.

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

2003.

SUBCHAPTER B. FORMATION AND STRUCTURE OF COMPANY

Sec. 822.051. FORMATION OF COMPANY. (a) Any number of persons

may form a company for the purpose of engaging in the business of

insurance.

(b) To form a company, each incorporator must adopt and sign the

articles of incorporation of the company as provided by this

code.

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

2003.

Sec. 822.052. ARTICLES OF INCORPORATION. Articles of

incorporation of a proposed insurance company must state:

(1) the name of the company;

(2) the location of the company's principal business office;

(3) the kind of insurance business in which the company proposes

to engage;

(4) the amount of the company's capital stock; and

(5) the amount of the company's surplus.

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

2003.

Sec. 822.053. COMPANY'S NAME. An insurance company's name may

not be so similar to the name of another insurance company as to

likely mislead the public.

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

2003.

Sec. 822.054. CAPITAL STOCK AND SURPLUS REQUIREMENTS. (a) An

insurance company must have capital stock in an amount of at

least $2.5 million and surplus in an amount of at least $2.5

million.

(b) At the time of incorporation, the required capital and

surplus must be in cash.

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

2003.

Amended by:

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

1275, Sec. 1, eff. September 1, 2009.

Sec. 822.055. SHARES OF STOCK WITH PAR VALUE. (a) An insurance

company organized under the laws of this state may authorize the

issuance of shares of stock with a par value of not less than $1

or more than $100. The company may increase from time to time the

number of shares with a par value by an amendment to the

company's charter.

(b) Each par value share of stock must be fully paid before

issuance in an amount that is not less than the share's par

value. Par value shares issued under this section are not subject

to additional call or assessment, and the subscriber or holder of

those shares is not required to make an additional payment with

respect to those shares.

charter authorizing the issuance of shares of stock with a par

value is filed, the insurance company shall file with the

department a statement under oath stating:

(1) the total number of par value shares subscribed; and

(2) the actual total consideration the company received for

those shares.

(d) The shareholders of an insurance company authorizing par

value shares of stock must in good faith subscribe and fully pay

for shares representing at least 50 percent of the total par

value of the authorized shares with a par value before the

company:

(1) is granted a charter; or

(2) amends its charter to:

(A) authorize the issuance of par value shares; or

(B) increase or decrease from time to time the number of

authorized par value shares.

(e) If all of the authorized par value shares of stock are not

subscribed and paid for when the charter is granted or the

amendment is filed, respectively, the insurance company shall

file with the department a certificate authenticated by a

majority of the directors stating the total number of shares

issued and the total consideration received for those shares. The

company shall file the certificate not later than the 90th day

after the date of issuance of those remaining shares. The company

is not required to file an amendment to its charter or take

further action to effect the increase in the capital and surplus

of the company.

(f) The consideration received by an insurance company for a par

value share constitutes capital to the extent of its par value

and the remainder, if any, constitutes surplus.

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

2003.

Sec. 822.056. SHARES OF STOCK WITHOUT PAR VALUE. (a) An

insurance company organized under the laws of this state, on

incorporation or by an amendment to its charter, may authorize

the issuance of shares of stock without par value.

(b) Each share of stock without par value must be equal in all

respects.

shares without par value for money or for notes, bonds,

mortgages, and stock in the form authorized by law for capital

stock of insurance companies. Each share of stock without par

value must be fully paid before issuance. After the company

receives payment for a share of stock issued under this section,

the share is not subject to additional call or assessment and the

subscriber or holder of the share is not required to make an

additional payment with respect to the share.

(d) The shareholders of an insurance company authorizing shares

of stock without par value must in good faith subscribe and pay

for shares representing at least 50 percent of the authorized

shares without par value before the company is granted a charter

or has its charter amended to authorize the issuance of shares

without par value. The total amount paid for the shares must be

at least $250,000.

(e) If all of the authorized shares of stock without par value

are not subscribed and paid for when the charter is granted or

the amendment is filed, respectively, the insurance company shall

file with the department a certificate authenticated by a

majority of the directors stating the number of shares without

par value issued and the consideration received for those shares.

An insurance company may issue and dispose of those remaining

authorized shares for money or an instrument authorized for

minimum capital under:

(1) a provision of Subchapter B, Chapter 424, other than Section

424.052, 424.072, or 424.073; and

(2) Section 822.204.

(f) The insurance company shall file the certificate required by

Subsection (e) not later than the 90th day after the date of

issuance of those remaining shares. The portion of the

consideration received for shares without par value that is

designated as capital by the company's directors, or by the

company's shareholders if the charter or articles of

incorporation reserve the right to make that determination to the

shareholders, constitutes capital and the remainder, if any,

constitutes surplus. The company is not required to file an

amendment to its charter or take further action to effect the

increase in the capital and surplus of the company.

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.005, eff. April 1, 2009.

Sec. 822.057. APPLICATION FOR CHARTER. (a) To obtain a charter

for an insurance company, the incorporators must pay to the

department the fees prescribed by law and file with the

department:

(1) an application for charter on the form and containing the

information prescribed by the commissioner;

(2) the company's proposed articles of incorporation;

(3) an affidavit made by the incorporators or officers of the

company that states that:

(A) the capital and surplus is the bona fide property of the

company; and

(B) the information in the articles of incorporation is true and

correct; and

(4) if the application provides for the issuance of shares of

stock without par value, a certificate authenticated by the

incorporators stating:

(A) the number of shares without par value that are subscribed;

and

(B) the actual consideration received by the company for those

shares.

(b) If the commissioner is not satisfied with the affidavit

filed under Subsection (a)(3), the commissioner may require that

the incorporators provide at their expense additional evidence of

a matter required in the affidavit before the commissioner:

(1) receives the proposed articles of incorporation or the

application for charter; or

(2) issues a certificate of authority to the company.

19(1), eff. June 19, 2009.

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

2003.

Amended by:

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

1022, Sec. 4, eff. June 19, 2009.

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

1022, Sec. 19(1), eff. June 19, 2009.

Sec. 822.058. ACTION BY COMMISSIONER AFTER FILING OF APPLICATION

FOR CHARTER. (a) Repealed by Acts 2009, 81st Leg., R.S., Ch.

1022, Sec. 19(2), eff. June 19, 2009.

(b) After the items required for a charter under Sections

822.057(a)(1) and (2) are filed with the department and the

proposed insurance company has complied with all legal

requirements, the commissioner shall conduct an examination of

the company to determine whether:

(1) the minimum capital stock and surplus requirements of

Section 822.054 are satisfied;

(2) the capital stock and surplus is the bona fide property of

the company; and

(3) the insurance company has fully complied with insurance

laws.

person to conduct the examination required by this section. The

examiner shall file an affidavit of the examiner's findings with

the commissioner. The commissioner shall record the affidavit.

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

2003.

Amended by:

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

1022, Sec. 5, eff. June 19, 2009.

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

1022, Sec. 19(2), eff. June 19, 2009.

Sec. 822.060. ACTION ON APPLICATION. (a) In considering the

application, the commissioner shall determine if:

(1) the proposed capital structure of the company meets the

requirements of this code;

(2) the proposed officers, directors, attorney in fact, or

managing head of the company have sufficient insurance

experience, ability, standing, and good record to make success of

the proposed company probable; and

(3) the applicants are acting in good faith.

(b) If the commissioner determines that the applicant has not

met the standards set out by Subsection (a), the commissioner

shall deny the application in writing, giving the reason for the

denial.

Subsection (b), the commissioner shall approve the application.

On approval of an application, the articles of incorporation of

the company shall be filed with the department.

(d) On the applicant's request, the commissioner shall hold a

hearing on a denial. Not later than the 30th day after the date

of the applicant's request for a hearing, the commissioner shall

request a hearing date.

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

2003.

Amended by:

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

1022, Sec. 6, eff. June 19, 2009.

Sec. 822.061. ISSUANCE OF CHARTER. (a) On receipt of a charter

fee in the amount determined under Chapter 202, the commissioner

shall examine the articles of incorporation filed with the

department under Section 822.060 and any certificate filed under

Section 822.057(a)(4).

(b) If the commissioner approves the articles of incorporation

and, if applicable, the certificate filed under Section

822.057(a)(4), the commissioner shall certify and file the

approved documents with the department records and, on receipt of

a fee in the amount determined under Chapter 202, the

commissioner shall issue a certified copy of the charter to the

incorporators.

is effective and the incorporators may proceed with the

organization of the company as provided by this code.

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.006, eff. April 1, 2009.

SUBCHAPTER C. AUTHORITY TO ENGAGE IN BUSINESS IN THIS STATE

Sec. 822.101. CERTIFICATE OF AUTHORITY. When the articles of

incorporation of an insurance company have been filed with the

department under Section 822.060 or the company has been

authorized to engage in business as provided by law, the

commissioner shall issue to the company a certificate of

authority to commence business as proposed in the company's

articles of incorporation or application for charter if the

commissioner determines that the company has fully complied with

the law.

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

2003.

SUBCHAPTER D. MANAGEMENT OF COMPANY

Sec. 822.151. CONDUCTING SHAREHOLDERS MEETING. (a) Except as

otherwise provided by this code, at a meeting of an insurance

company's shareholders to elect the company's board of directors

or to transact other company business, a quorum is any number of

shareholders whose cumulative ownership in the company represents

at least 51 percent of the company's stock.

(b) A shareholder may vote in person or by proxy.

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

2003.

Sec. 822.152. BOARD OF DIRECTORS. (a) An insurance company

organized under the laws of this state is managed by its board of

directors.

(b) The board consists of not fewer than seven directors. A

director:

(1) is not required to be a shareholder unless such a

qualification is required by the articles of incorporation or

bylaws of the company; and

(2) serves until the director's successor is elected and accepts

the position.

necessary to conduct the company's business. A majority of the

board is a quorum.

(d) The board of directors shall keep a full and correct record

of the board's transactions. The shareholders or other interested

persons may inspect those records during business hours.

(e) The directors shall fill a vacancy that occurs on the board

or in any office of the company.

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

2003.

Sec. 822.153. ELECTION OF DIRECTORS. (a) Not later than the

30th day after the date on which the company's subscription books

are filed, the shareholders of an insurance company shall meet to

elect the company's initial board of directors. At the meeting,

each shareholder is entitled to one vote for each share of stock.

(b) The shareholders of an insurance company shall meet before

May 1 of each year as provided by the company's bylaws to elect

successor directors.

meeting, the shareholders may elect the directors at a special

shareholders meeting called for that purpose. Not later than the

30th day before the date of the special meeting, the shareholders

must publish notice of the meeting in a newspaper of general

circulation in the county in which the principal office of the

company is located.

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

2003.

Sec. 822.154. OFFICERS. (a) An insurance company's directors

shall choose one of the directors to serve as the company's

president.

(b) Other officers of the insurance company shall be chosen in

accordance with the company's bylaws. An officer other than the

president is not required to be a director or a shareholder

unless such a qualification is required by the company's bylaws

or articles of incorporation.

receive compensation, and provide security as stated in the

company's bylaws.

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

2003.

Sec. 822.155. APPLICATION FOR AMENDMENT OF CHARTER. A domestic

insurance company may amend its charter by paying to the

commissioner a fee in the amount determined under Chapter 202 and

by filing with the department:

(1) an application for a charter amendment on the form and

containing the information prescribed by the commissioner; and

(2) the company's proposed amendment.

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.007, eff. April 1, 2009.

Sec. 822.156. CERTIFICATE REQUIRED FOR AMENDMENT OF CHARTER TO

AUTHORIZE SHARES WITHOUT PAR VALUE. (a) If a proposed amendment

to the charter of an insurance company authorizes the issuance of

shares of stock without par value, the insurance company must

file with the department, at the time the proposed amendment is

filed, a certificate authenticated by a majority of the directors

stating:

(1) the number of shares without par value that are subscribed;

and

(2) the consideration the company received for those shares.

(b) On receipt of the certificate, the commissioner shall

examine the certificate. The commissioner shall certify and file

the certificate if the commissioner approves the certificate.

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

2003.

Sec. 822.157. ACTION BY COMMISSIONER AFTER FILING OF APPLICATION

FOR CHARTER AMENDMENT. (a) The commissioner may hold a hearing

on an application for a charter amendment. If the commissioner

determines to hold a hearing on the application, the

commissioner, after the items required for the charter amendment

are filed with the commissioner, shall set a date for the hearing

and publish notice of the hearing in one or more daily newspapers

of this state.

(b) The commissioner may not require a hearing for an amendment

relating to one or more of the following issues:

(1) a stock dividend resulting from a legal transfer of surplus

to capital;

(2) a change in the name of the insurance company; or

(3) a change in the location of the insurance company's

principal business office.

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

2003.

Sec. 822.158. DETERMINATION ON APPLICATION FOR CHARTER

AMENDMENT. (a) Not later than the 60th day after the date the

application under Section 822.155 is filed, the commissioner

shall determine whether:

(1) the proposed capital structure of the insurance company

meets the requirements of this code;

(2) the officers, directors, and managing head of the insurance

company have sufficient insurance experience, ability, standing,

and good record to make success of the company probable;

(3) the applicants are acting in good faith;

(4) if the proposed amendment relates to a diminution of the

insurance company's charter powers with respect to the kinds of

insurance business in which the company may be engaged, all

liabilities incidental to the exercise of the powers to be

eliminated have been terminated or wholly reinsured; and

(5) the property involved in an increase of capital or surplus,

or both, is:

(A) properly valued; and

(B) in the form authorized by the following provisions, to the

extent those provisions apply:

(i) Subchapter B, Chapter 424, other than Sections 424.052,

424.072, and 424.073; and

(ii) Section 822.204.

(b) If the commissioner determines that the applicant has not

met the requirements set out by Subsection (a), the commissioner

shall deny the application. On the applicant's request, the

commissioner shall hold a hearing on a denial. Not later than

the 30th day after the date of the applicant's request for a

hearing, the commissioner shall request a hearing date.

Subsection (b), the commissioner shall approve the application

and the amendment shall be filed with the department.

(d) Except as provided by Subsection (e), when an amendment to

an insurance company's charter is filed with the department, the

amendment is effective.

(e) On approval of a certificate required under Section 822.156

and receipt of a fee in the amount determined under Chapter 202,

the commissioner shall issue to the directors a certified copy of

an amendment authorizing the issuance of shares of stock without

par value that is filed under this section. The amendment is

effective on issuance of the certified copy of the amendment.

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.008, eff. April 1, 2009.

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

1022, Sec. 7, eff. June 19, 2009.

SUBCHAPTER E. CAPITAL, SURPLUS, AND GUARANTY FUND REQUIREMENTS

Sec. 822.201. APPLICABILITY OF CAPITAL AND SURPLUS REQUIREMENTS.

The capital and surplus requirements of this chapter apply to

each insurance company or other entity, other than a farm mutual

insurance company, authorized to write property and casualty

insurance in this state including:

(1) a county mutual insurance company;

(2) a mutual insurance company, other than a mutual life

insurance company;

(3) a Lloyd's plan; and

(4) a reciprocal or interinsurance exchange.

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

2003.

Sec. 822.202. FULL COVERAGE AUTOMOBILE INSURANCE; DETERMINATION

OF AMOUNTS. Full coverage automobile insurance is one line of

casualty insurance for purposes of determining:

(1) the amount of capital and surplus of a capital stock company

under this code;

(2) the amount of surplus of a mutual insurance company or

reciprocal exchange under this code; or

(3) the amount of the guaranty fund and surplus of a Lloyd's

plan under this code.

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

2003.

Sec. 822.203. CAPITAL REQUIRED GENERALLY. To engage in the

kinds of insurance business for which an insurance company

organized under this chapter holds a certificate of authority,

the company must have at least the minimum amount of capital

required for a newly incorporated company under Section 822.054.

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

2003.

Sec. 822.204. FORM OF CAPITAL AND SURPLUS. (a) After

incorporation and the issuance of a certificate of authority to

an insurance company, the minimum capital stock and surplus of

the company may consist only of:

(1) United States currency;

(2) bonds of this state;

(3) bonds or other evidences of indebtedness of the United

States the principal and interest of which are guaranteed by the

United States;

(4) bonds or other interest-bearing evidences of indebtedness of

a county or municipality of this state; and

(5) notes secured by first mortgages:

(A) on otherwise unencumbered real property in this state the

title to which is valid; and

(B) the payment of which is insured wholly or partly by the

United States.

(b) Not more than 50 percent of the minimum capital stock and

minimum surplus of an insurance company may be invested in an

investment described by Subsection (a)(5).

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

2003.

Sec. 822.205. UNENCUMBERED SURPLUS OR GUARANTY FUND REQUIREMENTS

FOR CERTAIN INSURANCE COMPANIES. (a) Except as provided by

Section 912.308, this section applies only to an insurance

company that:

(1) writes insurance only in this state; and

(2) is not required by law to have capital stock.

(b) Notwithstanding any other provision of this subchapter other

than Sections 822.212(b) and (c), an insurance company must have

a minimum amount of unencumbered surplus or a minimum amount of

guaranty fund and unencumbered surplus equal to the greater of:

(1) the amount of unencumbered surplus or the amount of guaranty

fund and surplus, as appropriate, the company was required to

have on August 31, 1991; or

(2) one-third of the company's net written premium for the

preceding 12 months after deducting:

(A) lawfully ceded reinsurance; and

(B) any policy fees not ceded to reinsurers.

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

2003.

Amended by:

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

677, Sec. 1, eff. September 1, 2009.

Sec. 822.206. REPURCHASE OF CAPITAL STOCK BY TENDER OFFER OR

PRIVATE TRANSACTION. (a) An insurance company may, on prior

approval of the department, purchase outstanding shares of the

company's capital stock in accordance with the Texas Business

Corporation Act either by making a tender offer or by entering

into a negotiated private transaction.

(b) The application for approval under Subsection (a) must:

(1) state the number of shares offered;

(2) describe the shares;

(3) contain any pertinent information regarding the value of the

shares, including:

(A) the price offered by the company for the shares;

(B) the book value of the shares; and

shares; and

(4) demonstrate that the shares will be purchased using

uncommitted earned surplus.

present a copy of the application to the seller of the shares.

(d) The commissioner shall approve the application promptly if:

(1) the price offered by the insurance company for the shares

appears to be a reasonably fair price; and

(2) the application complies with the requirements of this

section and the Texas Business Corporation Act.

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

2003.

Sec. 822.207. REPURCHASE OF CAPITAL STOCK ON OPEN MARKET. (a)

On prior approval of the commissioner, an insurance company, the

capital stock of which is listed on a national securities

exchange, may purchase from time to time outstanding shares of

the company's capital stock on the open market. The shares must

be purchased:

(1) in the name of the company for its own account; and

(2) in accordance with the Texas Business Corporation Act.

(b) The application for approval under Subsection (a) must:

(1) state the maximum number of shares to be purchased;

(2) state the maximum period, not to exceed 180 days, during

which the purchase will be made;

(3) describe the shares;

(4) contain a commitment that the company will not pay a price

for the shares to be purchased that is greater than an amount

equal to the average of the bid price and the asked price at the

time of the purchase plus a standard broker's commission;

(5) contain any pertinent information relating to the value of

the shares, including the book value of the shares; and

(6) demonstrate that the shares will be purchased using

uncommitted earned surplus.

the application complies with the requirements of this section

and the Texas Business Corporation Act.

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

2003.

Sec. 822.208. APPLICATION FOR REPURCHASE OF COMPANY'S SHARES

SUBJECT TO OTHER LAW. An application filed by an insurance

company under Section 822.206 or 822.207 is subject to the

substantive requirements for the approval of payment of an

extraordinary dividend under Chapter 823.

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

2003.

Sec. 822.209. REINVESTMENT OF CAPITAL STOCK. An insurance

company may, as circumstances require, exchange and reinvest its

capital stock in like securities.

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

2003.

Sec. 822.210. COMMISSIONER MAY REQUIRE LARGER CAPITAL AND

SURPLUS AMOUNTS. (a) The commissioner by rule or guideline may

require an insurance company organized under this chapter to

maintain capital and surplus in amounts that exceed the minimum

amounts required by this chapter because of:

(1) the nature and kind of risks the company underwrites or

reinsures;

(2) the premium volume of risks the company underwrites or

reinsures;

(3) the composition, quality, duration, or liquidity of the

company's investments;

(4) fluctuations in the market value of securities the company

holds; or

(5) the adequacy of the company's reserves.

(b) A rule adopted under Subsection (a) must be designed to

ensure the financial solvency of an insurance company for the

protection of policyholders.

ceases to write or assume business continues to be subject to

this section.

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

2003.

Sec. 822.211. ACTION OF COMMISSIONER WHEN CAPITAL OR SURPLUS

REQUIREMENTS NOT SATISFIED. If an insurance company does not

comply with the capital and surplus requirements of this chapter,

the commissioner may enter an order prohibiting the company from

writing new business and may:

(1) place the company under state supervision or

conservatorship;

(2) declare the company to be in a hazardous condition as

provided by Subchapter A, Chapter 404;

(3) declare the company to be impaired as provided by Subchapter

B, Chapter 404; or

(4) apply to the company any other applicable sanction provided

by this code.

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.009, eff. April 1, 2009.

Sec. 822.212. INCREASE OF CAPITAL AND SURPLUS. (a)

Notwithstanding Section 822.203, to engage in the kinds of

insurance business for which an insurance company organized under

this chapter holds a certificate of authority in this state, an

insurance company organized under this chapter that on September

1, 2009, had less than the minimum amount of capital and surplus

required for a newly incorporated company under Section 822.054

must:

(1) not later than December 31, 2010, have increased the amount

of its capital by at least 10 percent of the difference between

the amount of minimum capital required for a newly incorporated

company under Section 822.054 and the amount of the company's

capital on December 31, 2009;

(2) not later than December 31, 2011, have increased the amount

of its capital by at least 20 percent of the difference between

the amount of minimum capital required for a newly incorporated

company under Section 822.054 and the amount of the company's

capital on December 31, 2009;

(3) not later than December 31, 2012, have increased the amount

of its capital by at least 30 percent of the difference between

the amount of minimum capital required for a newly incorporated

company under Section 822.054 and the amount of the company's

capital on December 31, 2009;

(4) not later than December 31, 2013, have increased the amount

of its capital by at least 40 percent of the difference between

the amount of minimum capital required for a newly incorporated

company under Section 822.054 and the amount of the company's

capital on December 31, 2009;

(5) not later than December 31, 2014, have increased the amount

of its capital by at least 50 percent of the difference between

the amount of minimum capital required for a newly incorporated

company under Section 822.054 and the amount of the company's

capital on December 31, 2009;

(6) not later than December 31, 2015, have increased the amount

of its capital by at least 60 percent of the difference between

the amount of minimum capital required for a newly incorporated

company under Section 822.054 and the amount of the company's

capital on December 31, 2009;

(7) not later than December 31, 2016, have increased the amount

of its capital by at least 70 percent of the difference between

the amount of minimum capital required for a newly incorporated

company under Section 822.054 and the amount of the company's

capital on December 31, 2009;

(8) not later than December 31, 2017, have increased the amount

of its capital by at least 80 percent of the difference between

the amount of minimum capital required for a newly incorporated

company under Section 822.054 and the amount of the company's

capital on December 31, 2009;

(9) not later than December 31, 2018, have increased the amount

of its capital by at least 90 percent of the difference between

the amount of minimum capital required for a newly incorporated

company under Section 822.054 and the amount of the company's

capital on December 31, 2009; and

(10) not later than December 31, 2019, have at least the minimum

amount of capital required under Section 822.054 for a newly

incorporated company.

(b) An insurance company that on September 1, 2009, had less

than the minimum amount of capital and surplus required for a

newly incorporated company under Section 822.054 shall

immediately increase the amount of its capital and surplus to an

amount equal to the required amount of capital and surplus under

Section 822.054 if there is:

(1) a change in the control of at least 50 percent of the voting

securities of the insurance company;

(2) a change in the control of at least 50 percent of the voting

securities of a holding company controlling the insurance

company; or

(3) a change in control of at least 50 percent by any other

method of control if the insurance company or holding company is

not controlled by voting securities.

occurs because of death, regardless of whether the decedent dies

testate or intestate, may not be considered a change in the

control of an insurance company or holding company if ownership

is transferred solely to one or more individuals each of whom

would be an heir of the decedent if the decedent had died

intestate.

(d) An insurance company that, after notifying the commissioner,

ceases to write or assume business is not required to comply with

this section. If the company resumes writing business at a later

date, the company shall comply with this section on the date the

company resumes business.

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

2003.

Amended by:

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

1275, Sec. 2, eff. September 1, 2009.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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