(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.

Source Note: The provisions of this §5.4125 adopted to be effective June 12, 2014, 39 TexReg 4435; amended to be effective March 9, 2016, 41 TexReg 1697