(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. § 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.