Section 425.126 - Risk Control Transactions: Derivative Use Plan(a) Before an insurance company enters into a derivative transaction, the company's board of directors must approve a derivative use plan as part of the investment plan required by Section 425.105.(b) The derivative use plan must:(1) describe investment objectives and risk constraints, such as counterparty exposure amounts;(2) define permissible transactions identifying the risks to be hedged or the assets or liabilities being replicated; and(3) require compliance with internal control procedures.Added by Acts 2005, 79th Leg., Ch. 727, Sec. 1, eff. 4/1/2007.