Texas § 424.205 DERIVATIVE USE PLAN.

Texas Statutes

§ 424.205 — DERIVATIVE USE PLAN.

Texas § 424.205

Code INInsurance Code

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Bluebook

Tex. Insurance Code Code Ann. § 424.205 (2026).

Text

Sec. 424.205. DERIVATIVE USE PLAN.

(a)Before an insurer enters into a derivative transaction, the insurer's board of directors must approve a derivative use plan as part of the insurer's investment plan otherwise required by law.

(b)The derivative use plan must:

(1)describe investment objectives and risk constraints, such as counterparty exposure amounts;

(2)define permissible transactions, identifying the risks to be hedged and the assets or liabilities being replicated; and

(3)require compliance with the insurer's internal control procedures established under Section 424.206 .

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Sec. 424.205. DERIVATIVE USE PLAN. (a) Before an insurer enters into a derivative transaction, the insurer's board of directors must approve a derivative use plan as part of the insurer's investment plan otherwise required by law.
(b) The derivative use plan must:
(1) describe investment objectives and risk constraints, such as counterparty exposure amounts;
(2) define permissible transactions, identifying the risks to be hedged and the assets or liabilities being replicated; and
(3) require compliance with the insurer's internal control procedures established under Section 424.206 .