Texas Insurance Code 425.115 – Authorized Investments: Equity Interests
(a) In this section, “business entity” means a real estate investment trust, corporation, limited liability company, association, limited partnership, joint venture, mutual fund, trust, joint tenancy, or other similar form of business organization, regardless of whether organized for profit.
(b) Subject to this section, an insurance company may invest in an equity interest, including common stock, an equity investment in an investment company other than a money market fund described by § 425.123, a real estate investment trust, a limited partnership interest, a warrant, another right to acquire an equity interest that is created by the person that owns or would issue the equity in which the interest is acquired, and an equity interest in a business entity that is organized under the laws of the United States, a state of the United States, Canada, or a province or territory of Canada.
Terms Used In Texas Insurance Code 425.115
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Joint tenancy: A form of property ownership in which two or more parties hold an undivided interest in the same property that was conveyed under the same instrument at the same time. A joint tenant can sell his (her) interest but not dispose of it by will. Upon the death of a joint tenant, his (her) undivided interest is distributed among the surviving joint tenants.
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Person: includes corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity. See Texas Government Code 311.005
- United States: includes a department, bureau, or other agency of the United States of America. See Texas Government Code 311.005
(c) If a market value from a generally recognized source is not available for an equity interest, the business entity or other investment in which the interest is acquired must be subject to:
(1) an annual audit by an independent certified public accountant; or
(2) another method of valuation acceptable to the commissioner.
(d) An insurance company may not invest in a partnership as a general partner except through an investment subsidiary.
(e) An insurance company’s investments under this section in a single business entity, other than a money market fund described by § 425.123, may not exceed 15 percent of the company’s capital and surplus.
(f) The aggregate amount of an insurance company’s investments under this section may not exceed 25 percent of the company’s assets.