Risk Control Transactions: Derivative Use Plan

Sec. 425.126. RISK CONTROL TRANSACTIONS: DERIVATIVE USE PLAN. (a) Before an insurance company enters into a derivative transaction, the company's board of directors must approve a derivative use plan as part of the investment plan required by Section 425.105. (b) The derivative use plan must: (1) describe investment objectives and risk constraints, such as counterparty exposure amounts; (2) define permissible transactions identifying the risks to be hedged or the assets or liabilities being replicated; and (3) require compliance with internal control procedures. Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.