This text of Texas § 885.407 (SOLVENCY.) is published on Counsel Stack Legal Research, covering Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Sec. 885.407. SOLVENCY.
(a)If a fraternal benefit society reports admissible assets greater than the society's liabilities in an amount that authorizes the commissioner to place the society under regulatory control and the commissioner reasonably believes the society's hazardous financial condition will not be promptly remedied without intervention by the department, the commissioner may order the society to promptly seek and negotiate an agreement to transfer in accordance with this section all benefit members, benefit certificates, assets, and liabilities of the society to another fraternal benefit society. A transfer under this section:
(1)may be by merger, consolidation, assumption, or otherwise;
(2)constitutes an entire novation of each benefit certificate transferred by the societ
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Sec. 885.407. SOLVENCY. (a) If a fraternal benefit society reports admissible assets greater than the society's liabilities in an amount that authorizes the commissioner to place the society under regulatory control and the commissioner reasonably believes the society's hazardous financial condition will not be promptly remedied without intervention by the department, the commissioner may order the society to promptly seek and negotiate an agreement to transfer in accordance with this section all benefit members, benefit certificates, assets, and liabilities of the society to another fraternal benefit society. A transfer under this section:
(1) may be by merger, consolidation, assumption, or otherwise;
(2) constitutes an entire novation of each benefit certificate transferred by the society in a hazardous financial condition, and the receiving society is legally and contractually responsible for each transferred certificate;
(3) must conclude before the deadline set by the commissioner;
(4) may be approved by a vote of the majority of the supreme governing body or board of directors of the society in a hazardous financial condition, notwithstanding Section 885.063 (a)(2)(C) or any provision of the society's laws to the contrary; and
(5) is subject to approval by the commissioner.
(b) Not later than the seventh day before the date the supreme governing body or board of directors of a fraternal benefit society votes on a transfer proposed under Subsection (a), the governing body or board shall provide the society's certificate holders written notice of and an opportunity to comment on the proposed transfer. If the governing body or board approves the transfer, the governing body or board shall provide the certificate holders' comments to the commissioner.
(c) The supreme governing body or board of directors of a fraternal benefit society receiving benefit certificates pursuant to a transfer under an agreement described by Subsection (a) may suspend or modify qualifications for membership in the receiving society to the extent necessary to permit the society to accept the certificate holders of the society transferring certificates under the agreement, notwithstanding any provision of the receiving society's laws to the contrary.
(d) The commissioner may grant to a fraternal benefit society that is not authorized to engage in the business of insurance in this state the authority to service benefit certificates transferred pursuant to Subsection (a) and fulfill all obligations to the holders of the certificates. Commissioner action under this subsection does not authorize the fraternal benefit society to otherwise engage in the business of insurance in this state.
(e) A transfer under Subsection (a) may be made to an insurer that is not a fraternal benefit society if the insurer is authorized to engage in the business of insurance in this state. A holder of a certificate subject to a transfer as authorized by this subsection is deemed to agree that any term in the certificate, including a term that makes the certificate subject to the transferring society's laws or that provides for maintenance of the transferring society's solvency that is inconsistent with transfer to an insurer that is not a fraternal benefit society, is void on transfer of the certificate. The receiving insurer shall endorse on a form approved by the commissioner each benefit certificate received by a transfer made under this section to reflect any terms of the certificate voided by this subsection. A certificate holder's obligation to pay an outstanding assessment under Section 885.311 that is not released under the transfer agreement is not released or voided by this subsection.
(f) The commissioner may request the attorney general bring an action under Section 885.502 to terminate a fraternal benefit society that fails to comply with an order under this section or fails to remedy the financial condition that gave rise to the order.
(g) The powers and authority of the commissioner under this section are cumulative and in addition to all other powers and authority to remediate the financial condition of a fraternal benefit society available to the commissioner.