Texas Insurance Code 424.215 – Limitation On Sale of Call Option On Derivative Instrument
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Terms Used In Texas Insurance Code 424.215
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
If an income generation transaction is a sale of a call option on a derivative instrument, including a swaption, the insurer must:
(1) during the entire period the call option is outstanding, hold, or have a currently exercisable right to acquire, assets generating the cash flow necessary to make any payment for which the insurer is liable under the underlying derivative instrument; and
(2) have the ability to enter into the underlying derivative transaction for the insurer’s portfolio.