1. (a) Security may be one or a combination of any of the following:

   1. (1) surety bond. The surety bond is issued by a company authorized to conduct such business in Texas and possessing a current A.M. Best rating of B+ or better or possessing a Standard & Poor's rating of claims paying ability of A or better;
   2. (2) security deposit of 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 director; or
   3. (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 quarterly edition or monthly supplement of "Financial Institutions Rating" prepared by Standard & Poor's Corporation. If the bank's rating subsequent to issuing the letter of credit falls below the acceptable rating, the self-insurer shall replace the letter of credit within 60 days with a new letter issued by a bank with an acceptable rating.
2. (b) Bonds and irrevocable letters of credit must be in a form approved by the director.
3. (c) Security in the form of cash must be in United States currency.
4. (d) The amount of security shall in no case be less than the retention amount of the excess insurance required by the director.
5. (e) The application shall include a letter from the potential guarantor of the security to indicate that security will be provided within 10 working days after the commissioners issue a certificate.
6. (f) The self-insurer shall notify the director 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 director within 30 days of that change.
7. (g) The director may require a substitution of securities in the event that the self-insurer's surety or guarantor no longer meets the requirements of subsection (a) of this section.

Source Note: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.