Bill Text: TX HB3237 | 2015-2016 | 84th Legislature | Introduced
Bill Title: Relating to the authority of certain domestic life, health, and accident insurance companies to make certain investments; adding provisions that may be subject to a criminal penalty.
Sponsorship: Partisan Bill (Republican 1)
Status: (Engrossed - Dead) 2015-05-20 - Referred to Business & Commerce [HB3237 Detail]
Download: Texas-2015-HB3237-Introduced.html
| 84R11359 PMO-F | ||
| By: Frullo | H.B. No. 3237 | |
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| relating to the authority of certain domestic life, health, and | ||
| accident insurance companies to make certain investments; adding | ||
| provisions that may be subject to a criminal penalty. | ||
| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
| SECTION 1. Subchapter C, Chapter 425, Insurance Code, is | ||
| amended by adding Section 425.1185 to read as follows: | ||
| Sec. 425.1185. AUTHORIZED INVESTMENTS: MEZZANINE REAL | ||
| ESTATE LOANS. (a) In this section, "mezzanine real estate loan" | ||
| means a loan that is secured by a pledge of a direct or indirect | ||
| equity interest in an entity that owns real estate. | ||
| (b) Subject to Subsections (c) and (d), an insurance company | ||
| with more than $10 billion in admitted assets may invest in a | ||
| mezzanine real estate loan if the loan documents: | ||
| (1) require that each pledgor abstain from granting an | ||
| additional security interest in the equity interest pledged; | ||
| (2) employ techniques to minimize the likelihood or | ||
| impact of a bankruptcy filing by the real estate owner or the | ||
| mezzanine real estate loan borrower; and | ||
| (3) require the real estate owner and the mezzanine | ||
| real estate loan borrower to: | ||
| (A) hold no assets other than, in the case of the | ||
| owner, the real estate, and in the case of the borrower, the equity | ||
| interest in the entity; | ||
| (B) not engage in any business other than, in the | ||
| case of the owner, the ownership and operation of the real estate, | ||
| and in the case of the borrower, holding the ownership interest in | ||
| the owner; and | ||
| (C) not incur additional debt, other than limited | ||
| trade payables, a first mortgage loan, or the mezzanine real estate | ||
| loan. | ||
| (c) Before making an initial investment in a mezzanine real | ||
| estate loan, an insurance company shall corroborate that the sum of | ||
| the first mortgage on the real estate and the mezzanine real estate | ||
| loan does not exceed 100 percent of the value of the current | ||
| appraised value of the real estate. | ||
| (d) An insurance company's cumulative investment under this | ||
| section may not exceed three percent of the insurance company's | ||
| admitted assets. | ||
| SECTION 2. Section 425.1185, Insurance Code, as added by | ||
| this Act, applies only to an investment made on or after the | ||
| effective date of this Act. An investment made before the effective | ||
| date of this Act is governed by the law as it existed immediately | ||
| before that date, and that law is continued in effect for that | ||
| purpose. | ||
| SECTION 3. This Act takes effect September 1, 2015. | ||
