Tex. Insurance Code § 425.220
This is the official text of Tex. Insurance Code § 425.220, part of Texas’s Insurance Code — regulates insurance companies and the policies they sell.
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§ 425.220.
Official statutory text
Sec. 425.220. AUTHORIZED INVESTMENTS FOR CAPITAL, SURPLUS, AND CONTINGENCY FUNDS: CAPITAL STOCK, BONDS, AND OTHER CORPORATE OBLIGATIONS. (a) Subject to this section and Section 425.226, an insurer may invest the insurer's capital, surplus, and contingency funds in the capital stock, bonds, bills of exchange, or other commercial notes or bills and securities of:
(1) a solvent corporation that has not defaulted in the payment of any debt during the five years preceding the investment; or
(2) a solvent corporation that has not been in existence for the five years preceding the investment, if:
(A) the corporation has succeeded to the business and assets and has assumed the liabilities of another corporation; and
(B) neither the successor corporation nor the corporation succeeded has defaulted in the payment of any debt during the five years preceding the investment.
(b) An insurer may not invest in the stock of:
(1) a manufacturing corporation with a net worth of less than $25,000; or
(2) an oil corporation with a net worth of less than $500,000.
(c) Except as provided by Subsection (d), an insurer's investment in the insurer's own capital stock or in the stock of a single corporation may not be in an amount exceeding 10 percent of the amount of the insurer's capital, surplus, and contingency funds.
(d) An insurer may own, and the insurer may invest not more than 25 percent of the insurer's capital, surplus, and contingency funds in, the capital stock of a single fire and casualty insurance company if that investment gives the insurer a majority of the outstanding stock of the fire and casualty insurance company.
(e) In addition to the investments authorized by this section and subject to Section 425.226, an insurer may invest in the capital stock, bonds, and other obligations of one or more solvent corporations that portion of the insurer's surplus funds that exceeds the greater of:
(1) 10 percent of the insurer's admitted assets, as determined from the insurer's latest annual statement on file with the department; or
(2) the minimum capital and surplus requirements for incorporating a life insurance company under Chapter 841.
(1) a solvent corporation that has not defaulted in the payment of any debt during the five years preceding the investment; or
(2) a solvent corporation that has not been in existence for the five years preceding the investment, if:
(A) the corporation has succeeded to the business and assets and has assumed the liabilities of another corporation; and
(B) neither the successor corporation nor the corporation succeeded has defaulted in the payment of any debt during the five years preceding the investment.
(b) An insurer may not invest in the stock of:
(1) a manufacturing corporation with a net worth of less than $25,000; or
(2) an oil corporation with a net worth of less than $500,000.
(c) Except as provided by Subsection (d), an insurer's investment in the insurer's own capital stock or in the stock of a single corporation may not be in an amount exceeding 10 percent of the amount of the insurer's capital, surplus, and contingency funds.
(d) An insurer may own, and the insurer may invest not more than 25 percent of the insurer's capital, surplus, and contingency funds in, the capital stock of a single fire and casualty insurance company if that investment gives the insurer a majority of the outstanding stock of the fire and casualty insurance company.
(e) In addition to the investments authorized by this section and subject to Section 425.226, an insurer may invest in the capital stock, bonds, and other obligations of one or more solvent corporations that portion of the insurer's surplus funds that exceeds the greater of:
(1) 10 percent of the insurer's admitted assets, as determined from the insurer's latest annual statement on file with the department; or
(2) the minimum capital and surplus requirements for incorporating a life insurance company under Chapter 841.
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