(a) The conventional operations of any life insurance company shall be accounted for separately from the company's property and casualty reinsurance business. Accordingly, each life insurance company proposing to engage in property and casualty reinsurance shall account for this business as a separate line of business with its own allocated surplus. Life insurance companies transacting the business of property and casualty reinsurance shall be subject to the same statutory provisions and administrative rules relating to the maintenance of reserves for unearned premiums, unpaid losses, and loss adjustment expenses as are applicable to property and casualty insurers transacting the same kind of business.
(b) As a condition precedent to the approval of and continuation of a life insurance company in the business of property and casualty reinsurance, the life insurance company shall demonstrate that 20% of its total capital and surplus, as of the end of the preceding year, is at least equal to the sum of the capital and surplus required of a property and casualty insurer transacting the same kind of business, with such amount to be a minimum of $2 million.
(c) The life insurance company must make a statutory deposit in the State of Texas of $50,000 either in securities as described in the Insurance Code, Article 2.10, or in cash with the Texas state treasurer.
(d) A special or contingency reserve, equal to 1.0% of net annual premium volume at the end of the preceding year, must be established and maintained in its separate account on an annual basis. If not used, this fund may be taken into operations at the end of 10 years at the rate of 0.25% of the 1.0% net annual premium volume or any portion up to that amount.

Source Note: The provisions of this §7.1203 adopted to be effective November 3, 1989, 14 TexReg 5625