Bill Text: TX HB2694 | 2019-2020 | 86th Legislature | Comm Sub
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to the authority of certain insurers to make investments in bond exchange-traded funds.
Spectrum: Bipartisan Bill
Status: (Passed) 2019-06-14 - Effective on 9/1/19 [HB2694 Detail]
Download: Texas-2019-HB2694-Comm_Sub.html
Bill Title: Relating to the authority of certain insurers to make investments in bond exchange-traded funds.
Spectrum: Bipartisan Bill
Status: (Passed) 2019-06-14 - Effective on 9/1/19 [HB2694 Detail]
Download: Texas-2019-HB2694-Comm_Sub.html
86R19708 JES-F | |||
By: Lucio III | H.B. No. 2694 | ||
Substitute the following for H.B. No. 2694: | |||
By: Lucio III | C.S.H.B. No. 2694 |
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relating to the authority of certain insurers to make investments | ||
in bond exchange-traded funds. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subchapter B, Chapter 424, Insurance Code, is | ||
amended by adding Section 424.075 to read as follows: | ||
Sec. 424.075. AUTHORIZED INVESTMENTS: BOND EXCHANGE-TRADED | ||
FUNDS. (a) In this section, "bond exchange-traded fund" means an | ||
exchange-traded fund registered as an investment company under the | ||
Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.), as | ||
amended, that has a principal investment strategy of investing | ||
primarily in bonds, loans, or other debt instruments. | ||
(b) An insurer may invest the insurer's funds in excess of | ||
minimum capital and surplus in shares of a bond exchange-traded | ||
fund if: | ||
(1) the exchange-traded fund is solvent and reported | ||
at least $10 million of net assets in the exchange-traded fund's | ||
latest annual or more recent certified audited financial statement; | ||
(2) the exchange-traded fund is eligible for reporting | ||
as a long-term bond in the Purposes and Procedures Manual of the | ||
securities valuation office or a successor publication; and | ||
(3) the amount of the insurer's investment in the | ||
exchange-traded fund does not exceed 15 percent of the insurer's | ||
funds in excess of minimum capital and surplus. | ||
(c) An insurer may deposit with the department shares of a | ||
bond exchange-traded fund described by Subsection (b) as a | ||
statutory deposit if state law requires a statutory deposit from | ||
the insurer. | ||
SECTION 2. Subchapter C, Chapter 425, Insurance Code, is | ||
amended by adding Section 425.1231 to read as follows: | ||
Sec. 425.1231. AUTHORIZED INVESTMENTS: BOND | ||
EXCHANGE-TRADED FUNDS. (a) In this section, "bond exchange-traded | ||
fund" means an exchange-traded fund registered as an investment | ||
company under the Investment Company Act of 1940 (15 U.S.C. Section | ||
80a-1 et seq.), as amended, that has a principal investment | ||
strategy of investing primarily in bonds, loans, or other debt | ||
instruments. | ||
(b) An insurance company may invest the company's funds in | ||
excess of minimum capital and surplus in shares of a bond | ||
exchange-traded fund if: | ||
(1) the exchange-traded fund is solvent and reported | ||
at least $10 million of net assets in the exchange-traded fund's | ||
latest annual or more recent certified audited financial statement; | ||
(2) the exchange-traded fund is eligible for reporting | ||
as a long-term bond in the Purposes and Procedures Manual of the | ||
securities valuation office or a successor publication; and | ||
(3) the amount of the insurance company's investment | ||
in the exchange-traded fund does not exceed the investment amount | ||
limit in Section 425.157(b). | ||
(c) An insurance company may deposit with the department | ||
shares of a bond exchange-traded fund described by Subsection (b) | ||
as a statutory deposit if state law requires a statutory deposit | ||
from the insurance company. | ||
(d) Each bond exchange-traded fund described by Subsection | ||
(b) shall be considered a separate issuer of shares and a business | ||
entity for purposes of Section 425.110. | ||
SECTION 3. Subchapter D, Chapter 425, Insurance Code, is | ||
amended by adding Section 425.2061 to read as follows: | ||
Sec. 425.2061. AUTHORIZED INVESTMENTS FOR ALL FUNDS: BOND | ||
EXCHANGE-TRADED FUNDS. Subject to Section 425.157(b), an insurer | ||
may invest any of the insurer's funds and accumulations in a bond | ||
exchange-traded fund, as defined by Section 425.1231(a). | ||
SECTION 4. This Act takes effect September 1, 2019. |