Tex.
Ins. Code Section 424.206
Internal Control Procedures
(1)
a quarterly report to the board of directors that reviews:(A)
each derivative transaction entered into, outstanding, or closed out;(B)
the results and effectiveness of the derivatives program; and(C)
the credit risk exposure to each counterparty for over-the-counter derivative transactions based on the counterparty exposure amount;(2)
a system for determining whether hedging or replication strategies used by the insurer have been effective;(3)
a system of reports, at least as frequent as monthly, to the insurer’s management, that include:(A)
a description of each derivative transaction entered into, outstanding, or closed out during the period since the last report;(B)
the purpose of each outstanding derivative transaction;(C)
a performance review of the derivative instrument program; and(D)
the counterparty exposure amount for each over-the-counter derivative transaction;(4)
a written authorization that identifies the responsibilities and limitations of authority of each person authorized to effect and maintain derivative transactions; and(5)
appropriate documentation for each transaction, including:(A)
the purpose of the transaction;(B)
the assets or liabilities to which the transaction relates;(C)
the specific derivative instrument used in the transaction;(D)
for an over-the-counter derivative transaction, the name of the counterparty and the counterparty exposure amount; and(E)
for an exchange-traded derivative instrument, the name of the exchange and the name of the firm that handled the transaction.
Source:
Section 424.206 — Internal Control Procedures, https://statutes.capitol.texas.gov/Docs/IN/htm/IN.424.htm#424.206 (accessed Jun. 5, 2024).
