1. (a) The amount of cash reserves recommended under Section 846.153(c)(2) may not be less than the greater of:

   1. (1) 20 percent of the total contributions in the preceding plan year; or
   2. (2) 20 percent of the total estimated contributions for the current plan year.

2. (b) Cash reserves required by this section must be:

   1. (1) computed with proper actuarial regard for:

      1. (A) known claims, paid and outstanding;
      2. (B) a history of incurred but not reported claims;
      3. (C) claims handling expenses;
      4. (D) unearned premium;
      5. (E) an estimate for bad debts;
      6. (F) a trend factor; and
      7. (G) a margin for error; and
   2. (2) maintained in cash or federally guaranteed obligations of less than five-year maturity that have a fixed or recoverable principal amount or in other investments as the commissioner may authorize by rule.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.