BILL NUMBER: AB 2905	CHAPTERED  07/19/00

	CHAPTER   141
	FILED WITH SECRETARY OF STATE   JULY 19, 2000
	APPROVED BY GOVERNOR   JULY 19, 2000
	PASSED THE SENATE   JUNE 29, 2000
	PASSED THE ASSEMBLY   MAY 18, 2000

INTRODUCED BY   Committee on Insurance (Scott (Chair), Calderon,
Floyd, Gallegos, Keeley, Washington, and Wayne)

                        MARCH 14, 2000

   An act to amend Section 1823 of the Insurance Code, relating to
insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2905, Committee on Insurance.    Surety company reserve funds.
   Existing law requires surety companies that execute undertakings
of bail for bail licensees to maintain reserve funds in segregated
interest bearing trust accounts guaranteed by certain United States
government banking entities.
   This bill would allow surety companies to maintain these reserve
funds in other account forms, including those consisting of
guaranteed United States government bonds or securities or money
market funds meeting specified criteria.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 1823 of the Insurance Code is amended to read:

   1823.  All surety companies which execute undertakings of bail
shall keep any moneys collected from agents licensed pursuant to this
code as buildup or reserve funds in segregated trust accounts within
the state.  These accounts shall be maintained as any of the
following:
   (a) A Federal Deposit Insurance Corporation (FDIC) insured
account.
   (b) United States government bonds and treasury certificates or
other obligations for which the faith of the United States is pledged
for the payment of principal and interest.
   (c) Repurchase agreements collateralized by securities issued by
the United States government.
   (d) A money market fund that limits its portfolio to those
securities listed in subdivisions (a) and (b).
   The accounts described in this section shall not be hypothecated
or offered as collateral.
   The accounts described in this section shall be used to satisfy
the unfulfilled obligations of the undertakings of bail written by
the agents from whom the moneys have been collected and to otherwise
satisfy the unfulfilled obligations which may be owing to the surety
by those agents.