Bill Text: TX HB2694 | 2019-2020 | 86th Legislature | Enrolled
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-Enrolled.html
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) An insurer may invest the insurer's funds in excess of | ||
minimum capital and surplus in shares of a bond exchange-traded | ||
fund registered under the Investment Company Act of 1940 (15 U.S.C. | ||
Section 80a-1 et seq.), as amended, if: | ||
(1) the exchange-traded fund is solvent and reported | ||
at least $100 million of net assets in the exchange-traded fund's | ||
latest annual or more recent certified audited financial statement; | ||
(2) the securities valuation office has designated the | ||
exchange-traded fund as meeting the criteria to be placed on the | ||
list promulgated by the securities valuation office of | ||
exchange-traded funds 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 | ||
capital and surplus. | ||
(b) This section does not authorize an insurer to invest in | ||
a bond exchange-traded fund that has: | ||
(1) embedded structural features designed to deliver | ||
performance that does not track the full unlevered and positive | ||
return of the underlying index or exposure, including a leveraged | ||
or inverse exchange-traded fund; or | ||
(2) an expense ratio in excess of 100 basis points. | ||
(c) An insurer may deposit with the department shares of a | ||
bond exchange-traded fund described by Subsection (a) 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) An insurance company may invest the | ||
insurer's funds in excess of minimum capital and surplus in shares | ||
of a bond exchange-traded fund registered under the Investment | ||
Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.), as amended, | ||
if: | ||
(1) the exchange-traded fund is solvent and reported | ||
at least $100 million of net assets in the exchange-traded fund's | ||
latest annual or more recent certified audited financial statement; | ||
(2) the securities valuation office has designated the | ||
exchange-traded fund as meeting the criteria to be placed on the | ||
list promulgated by the securities valuation office of | ||
exchange-traded funds 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 15 percent of the | ||
insurance company's capital and surplus. | ||
(b) This section does not authorize an insurance company to | ||
invest in a bond exchange-traded fund that has: | ||
(1) embedded structural features designed to deliver | ||
performance that does not track the full unlevered and positive | ||
return of the underlying index or exposure, including a leveraged | ||
or inverse exchange-traded fund; or | ||
(2) an expense ratio in excess of 100 basis points. | ||
(c) A bond exchange-traded fund described by Subsection (a) | ||
shall be considered a business entity for purposes of Section | ||
425.110. | ||
(d) An insurance company may deposit with the department | ||
shares of a bond exchange-traded fund described by Subsection (a) | ||
as a statutory deposit if state law requires a statutory deposit | ||
from the insurance company. | ||
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 described by Section 425.1231(a). | ||
SECTION 4. This Act takes effect September 1, 2019. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I certify that H.B. No. 2694 was passed by the House on April | ||
26, 2019, by the following vote: Yeas 139, Nays 0, 2 present, not | ||
voting; and that the House concurred in Senate amendments to H.B. | ||
No. 2694 on May 22, 2019, by the following vote: Yeas 144, Nays 0, | ||
1 present, not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
I certify that H.B. No. 2694 was passed by the Senate, with | ||
amendments, on May 14, 2019, by the following vote: Yeas 31, Nays | ||
0. | ||
______________________________ | ||
Secretary of the Senate | ||
APPROVED: __________________ | ||
Date | ||
__________________ | ||
Governor |