Current through Reg. 50, No. 13; March 28, 2025
(a) As provided in § 5.4123 of this
division (relating to Public Securities Request, Approval, and Issuance) and
subject to the commissioner's approval, the association's board of directors
may request that TPFA issue public securities after a catastrophic event has
occurred. The association's board of directors may make the request:
(1) after the catastrophic event if the
association's board of directors determines that actual catastrophic losses are
estimated to exceed currently available net premium, other revenue, and money
in the CRTF; or
(2) before the
catastrophic event if the association's board of directors determines that
public security proceeds may become necessary to fund potential catastrophic
losses. This paragraph does not affect the requirements for issuing public
securities that are issued after a catastrophic event or the use of proceeds
from public securities issued after a catastrophic event.
(b) The association must submit its board of
directors' written request under subsection (a) of this section to the
commissioner. The request must include the following information:
(1) an estimate of the actual or potential
losses and expenses from the catastrophic event;
(2) the association's current premium and
other revenue;
(3) the
association's current net revenues;
(4) the sources and amount of loss funding
other than public securities, including:
(A)
the amount of the loss paid from premium and other revenue;
(B) the amount requested from the CRTF;
and
(C) amounts available from
other financing arrangements and the association's obligations for other
financing arrangements, including whether the amounts must be repaid from
public security proceeds or from other means;
(5) the principal amount of each requested
class of public securities that is authorized and available to be issued and
that is requested;
(6) the
estimated costs associated with each requested amount and class of public
securities under this section, including any contractual coverage requirement
and public security administrative expenses;
(7) the structure and terms of the public
securities;
(8) market conditions
and requirements necessary to sell marketable public securities;
(9) a cost-benefit analysis as described in
§ 5.4135 of this division (relating to Marketable Public Securities; the
Amount of Class 1 Public Securities that Cannot be Issued; Market Conditions
and Requirements; and Cost-Benefit Analysis); and
(10) any other relevant information requested
by the commissioner.
(c)
For each class of public securities requested under this section, the
association must determine and submit as part of its request the authorized
amount of public securities. This amount must be the lesser of:
(1) the statutorily authorized principal
amount for that class, less any principal amount of that class of public
security that was issued in the catastrophe year, less, in the case of class 1
public securities, the proceeds of class 1 public securities issued under
§ 5.4124 of this division (relating to Issuance of Class 1 Public
Securities before a Catastrophic Event), including the proceeds of any
outstanding Class 1 public securities issued on or before June 1, 2015, that
were not depleted to pay for the association program as of the beginning of the
catastrophe year for which the class 1 public securities are requested under
this section; or
(2) the amount of
the estimated loss payable from proceeds of that particular class, and
estimated costs including the costs associated with the issuance of that class
of public security.
(d)
For the purposes of determining the amount of proceeds of class 1 public
securities that were not depleted as described in subsection (c)(1) of this
section, public security proceeds used to pay for public security issuance
costs, establish a public security reserve fund, capitalize interest, or
provide for contractual coverage amounts, are considered depleted in the same
catastrophe year as, and in proportion to, the public security proceeds used to
pay for losses or operating expenses, or used to pay principal on the public
securities.
(e) The association
must, in aggregate for each catastrophe year:
(1) impose an assessment of the statutorily
authorized amount of class 1 assessments under Insurance Code §
2210.0725 and §
5.4161 of this division (relating to Member Assessments) before class 2 public
securities may be issued; and
(2)
impose an assessment of the statutorily authorized amount of class 2
assessments under Insurance Code §
2210.074 and §
5.4161 of this division before class 3 public securities may be
issued.
(f) The
association:
(1) may make one or more
requests under this section;
(2)
may, following a catastrophic event, request the issuance of class 1 public
securities under this section, before the exhaustion of any remaining proceeds
from class 1 public securities issued before a catastrophic event, including
the proceeds of any outstanding class 1 public securities issued on or before
June 1, 2015;
(3) must deplete the
proceeds of any outstanding class 1 public securities issued before a
catastrophic event, including the proceeds of any outstanding class 1 public
securities issued on or before June 1, 2015, before using the proceeds of class
1 public securities requested under this section; and
(4) may request the issuance of class 2 and
class 3 public securities under this section, before the exhaustion of all
class 1 or class 2 assessments, respectively.
(g) For the issuance of class 2 or class 3
public securities payable under Insurance Code §
2210.6132, the
association must make a separate request under § 5.4127 (relating to
Contingent Sources of Payment for Class 2 and Class 3 Public Securities) of
this division.