Tex. Ins. Code Section 885.407
Solvency


(a)

If a fraternal benefit society reports admissible assets greater than the society’s liabilities in an amount that authorizes the commissioner to place the society under regulatory control and the commissioner reasonably believes the society’s hazardous financial condition will not be promptly remedied without intervention by the department, the commissioner may order the society to promptly seek and negotiate an agreement to transfer in accordance with this section all benefit members, benefit certificates, assets, and liabilities of the society to another fraternal benefit society. A transfer under this section:

(1)

may be by merger, consolidation, assumption, or otherwise;

(2)

constitutes an entire novation of each benefit certificate transferred by the society in a hazardous financial condition, and the receiving society is legally and contractually responsible for each transferred certificate;

(3)

must conclude before the deadline set by the commissioner;

(4)

may be approved by a vote of the majority of the supreme governing body or board of directors of the society in a hazardous financial condition, notwithstanding Section 885.063 (Merger or Transfer of Membership or Funds)(a)(2)(C) or any provision of the society’s laws to the contrary; and

(5)

is subject to approval by the commissioner.

(b)

Not later than the seventh day before the date the supreme governing body or board of directors of a fraternal benefit society votes on a transfer proposed under Subsection (a), the governing body or board shall provide the society’s certificate holders written notice of and an opportunity to comment on the proposed transfer. If the governing body or board approves the transfer, the governing body or board shall provide the certificate holders’ comments to the commissioner.

(c)

The supreme governing body or board of directors of a fraternal benefit society receiving benefit certificates pursuant to a transfer under an agreement described by Subsection (a) may suspend or modify qualifications for membership in the receiving society to the extent necessary to permit the society to accept the certificate holders of the society transferring certificates under the agreement, notwithstanding any provision of the receiving society’s laws to the contrary.

(d)

The commissioner may grant to a fraternal benefit society that is not authorized to engage in the business of insurance in this state the authority to service benefit certificates transferred pursuant to Subsection (a) and fulfill all obligations to the holders of the certificates. Commissioner action under this subsection does not authorize the fraternal benefit society to otherwise engage in the business of insurance in this state.

(e)

A transfer under Subsection (a) may be made to an insurer that is not a fraternal benefit society if the insurer is authorized to engage in the business of insurance in this state. A holder of a certificate subject to a transfer as authorized by this subsection is deemed to agree that any term in the certificate, including a term that makes the certificate subject to the transferring society’s laws or that provides for maintenance of the transferring society’s solvency that is inconsistent with transfer to an insurer that is not a fraternal benefit society, is void on transfer of the certificate. The receiving insurer shall endorse on a form approved by the commissioner each benefit certificate received by a transfer made under this section to reflect any terms of the certificate voided by this subsection. A certificate holder’s obligation to pay an outstanding assessment under Section 885.311 (Deficiency Payments) that is not released under the transfer agreement is not released or voided by this subsection.

(f)

The commissioner may request the attorney general bring an action under Section 885.502 (Initiation of Proceedings for Termination of Domestic Fraternal Benefit Society) to terminate a fraternal benefit society that fails to comply with an order under this section or fails to remedy the financial condition that gave rise to the order.

(g)

The powers and authority of the commissioner under this section are cumulative and in addition to all other powers and authority to remediate the financial condition of a fraternal benefit society available to the commissioner.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
Amended by:
Acts 2019, 86th Leg., R.S., Ch. 762 (H.B. 1251), Sec. 2, eff. September 1, 2019.

Source: Section 885.407 — Solvency, https://statutes.­capitol.­texas.­gov/Docs/IN/htm/IN.­885.­htm#885.­407 (accessed May 4, 2024).

885.001
Definitions
885.002
Limited Exemption from Insurance Laws
885.003
Exemption from Taxation
885.004
Inapplicability to Certain Societies
885.005
Fraternal Benefit Societies that Provide Benefits Resulting from Accidents Only
885.006
Treatment of Certain Grand Lodges
885.051
Fraternal Benefit Society Defined
885.052
Control of Fraternal Benefit Society
885.053
Lodge System Defined
885.054
Representative Form of Government Defined
885.055
Assembly as Supreme Governing Body
885.056
Assembly Meetings
885.057
Board as Supreme Governing Body
885.058
Board Members
885.059
Location of Meetings of Supreme Governing Body
885.060
Fraternal Benefit Society’s Laws Binding
885.061
Amendment of Fraternal Benefit Society’s Laws
885.062
Quarterly Lodge Meetings Required
885.063
Merger or Transfer of Membership or Funds
885.101
Qualifications for Fraternal Benefit Society Membership
885.102
Social Members
885.103
Children
885.104
Grievance or Complaint Procedures
885.151
Applicability to Certain Fraternal Benefit Societies Continuously Authorized to Engage in Business
885.152
Eligibility to Provide Benefits
885.153
Filing of Articles of Incorporation or Association
885.154
Name of Fraternal Benefit Society
885.155
Purposes of Fraternal Benefit Society
885.156
Surety Bond
885.157
Issuance of Preliminary Certificate of Authority
885.158
Powers and Duties Under Preliminary Certificate of Authority
885.159
Termination of Authority Under Preliminary Certificate of Authority
885.160
Issuance of Certificate of Authority
885.201
Certificate of Authority Required
885.202
Admission of Foreign Fraternal Benefit Society
885.203
Refusal to Issue Certificate of Authority to Foreign Fraternal Benefit Society
885.204
Notice of Intent to Revoke Foreign Fraternal Benefit Society’s Certificate of Authority
885.205
Revocation of Foreign Fraternal Benefit Society’s Certificate of Authority
885.206
Continuance of Contracts Following Revocation of Certificate of Authority
885.251
General Powers
885.252
Powers of Certain Fraternal Benefit Societies
885.253
Principal Office of Domestic Fraternal Benefit Society
885.254
Immunity
885.255
Indemnification or Reimbursement
885.256
Indemnification or Reimbursement in Relation to Breach of Duty Prohibited
885.257
Insurance for Directors, Officers, Employees, or Agents
885.258
Management and Use of Assets and Funds
885.259
Source of Funds
885.260
Specified Payments
885.261
Control of Fund by Lodge
885.262
Investment of Fraternal Benefit Society Funds
885.263
Treatment of Deferred Claims
885.301
Types of Benefits Permitted
885.302
Issuance of Benefit Contracts on Variable Basis
885.303
Benefits for Children
885.304
Beneficiaries
885.305
Organization as Beneficiary
885.306
Benefit Certificate
885.307
Grace Period
885.308
Assignment of Life Insurance Benefit Contract
885.309
Nonforfeiture Benefits
885.310
Enforcing Payment of Premiums
885.311
Deficiency Payments
885.312
Continuation of Benefit Certificate on Expulsion or Suspension of Member
885.313
Continuation of Benefit Certificate Issued on Child
885.314
Responsibility for Payment of Benefits
885.315
Damages for Failure to Timely Pay Benefits
885.316
Exemption of Benefits
885.351
Agents
885.352
Exception
885.353
Employment of Certain Persons to Solicit Business Prohibited
885.401
Annual Report
885.402
Reports of Certain Grand Lodges
885.403
Valuation of Benefit Certificates
885.404
Mortality Tables
885.405
Valuation of and Separate Fund for Disability Benefits
885.406
Publication of Valuation and Condition
885.407
Solvency
885.408
Reserves for Accident and Health Insurance
885.409
Reporting of Reserves
885.410
Examination of Domestic Fraternal Benefit Societies
885.411
Examination of Foreign Fraternal Benefit Societies
885.412
Adverse Publication Prohibited
885.413
Fees
885.414
Remedies Not Exclusive
885.451
Conversion of Fraternal Benefit Society to Mutual or Stock Company
885.452
Meeting of Lodge Representatives
885.453
Resolution to Convert
885.454
Conversion Documents
885.455
Sale of Stock of Converted Fraternal Benefit Society
885.456
Legal Effect of Conversion to Mutual Life Insurance Company
885.457
Completion and Legal Effect of Conversion to Stock Company
885.458
Continuing Obligations of Converted Fraternal Benefit Society
885.459
Name of Converted Fraternal Benefit Society
885.460
Principal Office of Converted Fraternal Benefit Society
885.461
Social or Charitable Clubs Formed by Members of Converted Fraternal Benefit Society
885.501
Discontinuation of Business by Domestic Fraternal Benefit Society
885.502
Initiation of Proceedings for Termination of Domestic Fraternal Benefit Society
885.503
Issuance of Injunction and Appointment of Receiver
885.701
False Statements
885.702
Soliciting Membership in Unauthorized Fraternal Benefit Society
885.703
Soliciting Membership in Lodge of Unauthorized Fraternal Benefit Society
885.704
Exception to Solicitation Offenses
885.705
General Criminal Penalty
885.706
Other Penalties

Accessed:
May 4, 2024

§ 885.407’s source at texas​.gov