AUTHORIZED INVESTMENTS FOR CAPITAL, SURPLUS, AND CONTINGENCY FUNDS: LIFE INCOME INTERESTS IN QUALIFIED TRUSTS

(a) Subject to this section, an insurer may invest the insurer's capital, surplus, and contingency funds in a life income interest in a qualified irrevocable express testamentary trust. (b) For purposes of this section, a trust is a qualified trust if: (1) each fee simple recipient of any part of the corpus of the trust: (A) is a public charity, church, educational institution, or scientific institution; (B) is located in this state; and (C) is recognized by the United States Internal Revenue Service as exempt from payment of income taxes; (2) the corpus of the trust is wholly or partly composed of interests in real estate, stocks, bonds, debentures, and other securities of an aggregate total value of at least $5 million; and (3) the corpus of the trust produces annual income of at least $100,000. (c) An insurer's life income interest in a qualified trust may not exceed 10 percent of the insurer's admitted assets. (d) Before an insurer may acquire a life income interest in a qualified trust, the insurer must present evidence satisfactory to the commissioner that shows: (1) the interest is subject to transfer and is recognized as transferable; (2) the interest is capable of reasonable valuation; (3) a market for the sale of the interest exists; and (4) the interest is supported by life insurance in: (A) an amount not less than the admitted value of the interest; and (B) a form approved by the commissioner. (e) In valuing a life income interest in a qualified trust on the insurer's books, the insurer may value the interest only on the basis of the lesser of: (1) the recognized market established in accordance with Subsection (d)(3); or (2) the ratio that the fractional life income interest in the income of the trust bears to the total market value of the properties held by the trust that are of a type of property an insurer may lawfully acquire under the investment statutes of this state.