(a) A security deposit shall be one or a combination of any of the following:
(1) surety bond. The surety bond must be issued by a company authorized to conduct such business in Texas and possess either a current A.M. Best rating of B+ or better or a Standard & Poor’s rating of claims paying ability of A or better;
(2) cash, bonds, or other evidence of indebtedness issued, assumed or guaranteed by the United States of America or the State of Texas. Any such securities shall be deposited with the Comptroller of Public Accounts pursuant to a trust agreement prescribed by the commissioner; or
(3) irrevocable letter of credit issued by a Texas state chartered bank or a federally chartered bank with a branch office in Texas. The bank shall have a long-term debt rating of at least A or better in the current monthly edition of “Moody’s Statistical Handbook” or a long-term investment grade rating of at least A or better in the current edition of “Global Ratings Handbook” prepared by Standard & Poor’s Corporation. If the bank’s rating subsequent to issuing the letter of credit falls below the acceptable rating, the certified self-insurer shall replace the letter of credit within 60 days with a new letter of credit issued by a bank with an acceptable rating.
(b) Bonds and irrevocable letters of credit must be in a form approved by the commissioner.
(c) A security deposit in the form of cash must be in United States currency.
(d) The amount of the security deposit shall in no case be less than the retention amount of the excess insurance required by the commissioner.
(e) The commissioner will not issue a certificate before the guarantor of the security has submitted to the division a security deposit that meets the requirements of this section.
(f) The certified self-insurer shall notify the division if the security bond or letter of credit no longer meets the requirements of subsection (a) of this section. This notice shall be provided in writing to the division within 30 days of that change.
(g) The division may require a substitution of the security deposit in the event that the certified self-insurer’s surety or guarantor no longer meets the requirements of subsection (a) of this section.
The provisions of this §114.4 adopted to be effective January 1, 1993, 17 TexReg 7896; amended to be effective December 2, 1997, 22 TexReg 11692; amended to be effective May 9, 2004, 29 TexReg 4186; amended to be effective January 6, 2019, 44 TexReg 99.