SECTION 5.4121. Financing Arrangements

(a) The association may enter into financing arrangements. The financing arrangement must:

(1) enable the association to:

(A) pay losses under Insurance Code §2210.072, or

(B) obtain public securities under Insurance Code §2210.072; and

(2) be approved by the association's board of directors before the association enters into the financing arrangement.

(b) The association may pay a financing arrangement with any or all:

(1) net premium and other revenue of the association that is not required for payment of class 1, class 2, or class 3 payment obligations;

(2) reinsurance proceeds;

(3) the proceeds of any financing arrangement;

(4) the proceeds of any class of public security issued under Insurance Code Chapter 2210; or

(5) any other association asset.

(c) As collateral security for these financial arrangements, including interest-bearing loans or other financial instruments, the association may grant in favor of the applicable market source a collateral assignment and security interest in and to all or any portion of the association's assets, including without limitation, all or any portion of the association's right, title, and interest in and to all proceeds of any class of public security issued under Insurance Code Chapter 2210.

Source Note: The provisions of this §5.4121 adopted to be effective February 3, 2011, 36 TexReg 551; amended to be effective June 12, 2014, 39 TexReg 4435; amended to be effective March 9, 2016, 41 TexReg 1697